Market Corruption Becomes Business as Usual

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here.
Week after week, the news is filled with reports of law-breaking by institutions and individuals that hold positions of trust in society. Last week, FIFA, the body that rules the multi-billion dollar business of soccer, was hit by indictments of many of its senior officials who were charged with running a multi-year corruption scheme.
The week ended with former Speaker of the House of Representatives, Dennis Hastert – who for 8 years was the second in line to the presidency – being indicted for violating banking laws in connection with a scheme to pay hush money to a man with whom he had an illicit sexual relationship thirty years ago.
A week ago, several of the largest banks in the world agreed to pay $5.6 billion to settle charges that they manipulated foreign exchange rates. All of these institutions were serial offenders who had previously admitted to committing other serious financial crimes.
On top of it all, the U. S. presidential campaign is being conducted under the cloud of allegations that the presumptive Democratic nominee, Hillary Clinton, used her family’s charitable foundation to solicit huge donations from foreign businesses and countries. And there are serious questions emerging about her tenure as Secretary of State and her independence from foreign influence were she to enter the White House.

This post was published at Wall Street Examiner by Michael E. Lewitt ‘ May 31, 2015.

The Real Reason Nixon Created the DEA – Part I

When the DEA is seen in a negative light by Americans, it is due almost entirely to the agency’s relatively small relationship to the domestic war on drugs.
But, the reason for this agency coming into being was much broader than to knight a batch of domestic ‘narcs.’ The domestic aspect represented only one tentacle; the one that Americans see. Actually, the lion’s share of investigative and ‘enforcement’ work done in the domestic war on drugs is conducted by state and local officers. They often act with federal funding and equipment and occasionally access federal prosecution with accompanying federal minimum mandatory sentencing rules. These state and local officers also often make use of less restrictive federal asset forfeiture mechanisms via federal ‘adoptions’ of their seizures. But they are not DEA agents.
What then, other than the domestic war on drugs, is the DEA’s purpose? The DEA, while a relatively small federal law enforcement agency, has many more foreign offices than any other. The FBI dwarfs the DEA in overall number of agents, but has few foreign offices. The DEA can get into places, obtain diplomatic cover, and run networks of confidential spies that the CIA, the military, and the FBI cannot because the DEA has no stated political mission, regime toppling imperative, or anti-corruption mandate as do its sister agencies. The FBI has relatively few foreign posts and even fewer that are staffed with active investigative personnel; the main exceptions being occasional showy importations to ‘hotspots’ that have the potential for media headlines. FBI foreign assignments consist mostly of single-man suit-adorned supervisory ‘Legal Attach’ assignments in a relatively small number of U. S. embassies. These negligible foreign FBI posts don’t have teams of investigative agents assigned with the paramilitary infrastructure (aircraft, weapons, and dedicated teams of foreign officials) and imbedded sources needed to carry out covert or overt missions in those places.

This post was published at Lew Rockwell on May 30, 2015.

Henningsen: FIFA Is An Outdated ‘Corrupt Old Boys Club’

21st Century Wire says…
This week, against numerous calls of protest within international football, seventy-nine-year-old Joseph Sepp Blatter, was elected to his fifth term as FIFA president. Normally we’d say, ‘who cares’, but this story has much wider geopolitical implications – far beyond an inflatable ball…
21WIRE’s Patrick Henningsen speaks with RT International about what this story really means to the sport, and also what the geopolitical ramifications are to a potential US and Swiss-led ‘anti-corruption’ investigation against Russia who is scheduled to host the World Cup in 2018.
Watch:


This post was published at 21st Century Wire on MAY 30, 2015.

How FIFA Makes (And Spends) Its Money

Following today’s “successful” vote confirming Sepp Blatter’s 5th term running the farce called FIFA, and amid soccer’s governing body being investigated by US and Swiss authorities over claims of corruption, we thought a summary of just where the money comes from and (apart from the $150 million in bribes and kickbacks to 14 executives) where it goes for the Swiss-based entity…
How does the Zurich-based multi-million-pound organisation make its money and what does it spend it on?

This post was published at Zero Hedge on 05/29/2015 –.

Inside Q1’s Punk GDP Numbers – – Why Bubble Vision Doesn’t Get It

Promptly upon release of today’s GDP update, Steve Liesman and his Wall Street economist pals spent 10 minutes bloviating about why the negative print should be completely ignored. Herein is an essay on why it is they who should be given the heave-ho.
According to Liesman & Co the GDP shrinkage reported by the BEA for Q1 was all a mistake due to winter, strikes and unseasonal seasonals. So don’t sweat the small stuff, they brayed to what remains of the CNBC audience, the US economy actually continues bounding along at a 2.5% growth rate, as it has for the entire recovery.
Well, hold it right there. I am all for ignoring the quarterly jerks and flops embedded in the GDP data, too. But if you want to talk trend and context – -let’s do exactly that. And first and foremost there is no such trend as 2.5% growth.
After all, Liesman and his Wall Street cronies have been cheerleaders for the Fed’s insane 80 months of ZIRP and massive QE on the grounds that extraordinary measures were needed to combat the deep economic plunge known as the Great Recession. In fact, measured from peak to trough, the latter was the worst downturn since 1950. Real GDP shrank by 4.2%compared to an average of 1.7% during the previous nine recessions, and handily topped the 2.6% decline in 1981-1982 and the 3.0% decline in 1973-1975.

This post was published at David Stockmans Contra Corner by David Stockman ‘ May 29, 2015.

Japan’s Super QQE Continues To Fail – – -Because Its Based On Crackpot Monetarism

At some point in the middle of the last century, economics of money shifted to economics of psychology. When Milton Friedman wrote his 1963 book, A Monetary History, it was an effort that uncovered the role of money in the collapse of the Great Depression as he and his co-author, Anna Schwartz, saw it. Whether or not it was a full explanation, it wasn’t, it became widely adopted as the model for central bank behavior. At its heart, however, it was a treatise about the role of currency and liquidity.
It was still largely faithful to the Bagehot paradigm of central banks as agents of elasticity, with some modification about the terms at which that would be available. It is, however, nothing like what central banks around the world do today, even though outwardly there is a rough resemblance.
Almost as soon as A Monetary History was published there was a shift underway in more general economic theory about taking what was believed the next step – from monetary management to economic management. The impulse in that direction was not new, but the academy about its possibilities was. In 1958, AW Phillips in the UK put together an empirical analysis of a seeming durable correlation between inflation and employment. That was expanded in 1960 by Paul Samuelson and Robert Solow in the United States that posited the Phillips Curve, as it came to be known, as the means to exploit economic factors to introduce greater management and command.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ May 29, 2015.

Autonomous Killer Robots Almost Here: ‘3rd Revolution in Warfare After Gunpowder, Nuclear’

The warnings have been sounded for decades.
It won’t be long now: all the parts and systems to create lethal machines with a mind of their own, deciding who and when to kill without human oversight are conceptually already developed. It is just a matter of time, and by all accounts that time is short.
At least since 1991′s Terminator 2: Judgement Day, the public has known (through Hollywood, anyway) of the dangers posed to humanity by artificial intelligence, robotics and the computer revolution.
But today, they are more real than ever.
Researchers are issuing a red alert, as the industry stands at the cusp of developing Lethal, Autonomous Weapons Systems (LAWS), an acronym for machines with a mind of their own, capable of cutting humans out of the loop in determining who is a threat, who to target and when to kill. Nature reports:

This post was published at shtfplan on May 29th, 2015.

The Austerity Howlers Strike Again – More Rubbish From Bloomberg

Bloomberg’s terminal business takes in approximately $7 billion annually – -of which upwards of $5 billion is variable profit. For whatever reason, the organization chooses to waste large amounts of that on Bloomberg News, Bloomberg Television, Bloomberg View, Bloomberg BusinessWeek and a variety similar dubious news and media operations.
But thank heavens for Bloomberg’s perpetual wastathon. It provides employment and a forum for an army of the stupidest and laziest journalists in the financial world. On any given day you can count on them to reduce the Washington /Wall Street policy line to its most specious and primitive formulation.
So it is today that one Peter Gosselin explains that the struggling U. S. recovery was all due to a spree of misguided ‘austerity’:
The U. S. is paying a big price in growth, jobs and wages by practicing the kind of fiscal austerity that it criticizes European nations for pursuing.
If you think Gosselin is writing for the Onion you would be wrong. He means this with a straight face:

This post was published at David Stockmans Contra Corner by David Stockman ‘ May 28, 2015.

Government – Designed for Robbery

Why I’m Looking Forward to the Next Big Crash
First, the Dow dropped 190 points on Monday – or 1%. It was threatening to close below 18,000 for the first time in almost three weeks. We’ll wait to find out. Yesterday, a London-based magazine and a TV station interviewed us. Both asked if we were ‘pessimistic.’
‘Of course not,’ we replied. ‘We expect today’s financial system to fall apart in a terrible crash and depression. But we’re looking forward to it.’
This was not exactly the answer they were looking for… And there’s not enough time in an interview to explain why this view makes any sense at all. The audience must have thought we had lost our mind.
We also had a meeting with our old friend and editor of the Gloom, Boom & Doom Report Marc Faber yesterday. He helped make sense of our ‘pessimism.’
‘The system is corrupt,’ he said. ‘The government. The banks. The central banks. Big business.’
People always use their wealth and power to try to protect themselves. Sometimes they use it to take wealth and power away from others, too. That’s corruption.
Of course, that’s what government was designed for: to allow one group to rob another. If the elite could take no advantage from it, why would they bother with government at all?

This post was published at Acting-Man on May 28, 2015.

Financial Vulnerability Still Haunts U.S. Households – – 47% Couldn’t Come Up With $400 For An Emergency

Five years after the recession ended, many Americans still teeter on the financial brink, barely prepared to handle an emergency expense and aging toward retirements they haven’t saved for, a Federal Reserve report shows.
About 47 percent of 5,896 respondents in the Fed’s 2014 household survey, taken last October and November, wouldn’t be able to cover an emergency $400 expense without selling something or borrowing money. While that marks an improvement from 52 percent last year, the report states that it shows many Americans to be ‘ill-prepared for a financial disruption.’
The survey paints an image of fragile households, seemingly at odds with climbing consumer confidence and a healing economy. The findings demonstrate that the hangover from the financial crisis and downturn of 2007 to 2009 still weighs heavily on family balance sheets.
‘We are failing as an economy if we have a huge swath of American households who can’t come up with $400,’ said Josh Bivens, research and policy director at the Economic Policy Institute in Washington. ‘The really dire financial situations’ of many survey respondents can be largely attributed to ‘the fact that we’re still far from fully recovered from the Great Recession.’
The report comes two weeks before Fed officials meet to continue the debate over when the economy will be healthy enough for the first interest-rate increase since 2006.

This post was published at David Stockmans Contra Corner on May 28, 2015.

Saving the Fourth Amendment – Good Riddance To The Patriot Act Section 215

The Patriot Act has a bad pedigree and an evil history. In the fearful days immediately following 9/11, the Department of Justice quickly sent draft legislation to Congress that, if enacted, would have permitted federal agents to violate their oaths to uphold the Constitution by writing their own search warrants. The draft subsequently was revealed to have been written before 9/11, but that’s another story.
The House Judiciary Committee reviewed the legislation and revised it so that it would meet Fourth Amendment norms. The revised version permitted federal agents to write their own search warrants for business records, but the warrants could be challenged by the custodian of the records or by the person whose records were being sought. Because the records were in the hands of a third party, they were in no danger of destruction.
The Fourth Amendment was written largely to assure that the general warrants British soldiers used to search the colonists’ homes would never be lawful in the United States. General warrants were issued by secret courts in London based on the government’s needs, not on evidence of wrongdoing. They authorized the bearer to search wherever he wished and seize whatever he found.
In order to protect the natural right to be left alone – privacy – the Framers enacted standards in the Fourth Amendment that required the government to produce evidence about the person whose records it wants – called probable cause – and present that evidence to a judge when it wants a search warrant. If granted, the Constitution requires that the warrant particularly describe the place to be searched or the person or thing to be seized.

This post was published at David Stockmans Contra Corner by Andrew P. Napolitano ‘ May 28, 2015.

The End Of Markets: Central Banks Took Over Everything, Changed Everything

Yesterday I looked at funding markets and currency proxies for detecting the end to the ‘dollar’ pause that began on March 18. Broader credit markets agree with that assessment so far, as nominal yields and the UST curve shape have started, at least, to be redrawn back into the tightening format. Nominal yields and inflation breakevens turned right at May 6 when Janet Yellen spoke more of the common sense that should be the default setting for monetary everything.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ May 28, 2015.

The “Revolving Door” Goes Full Retard: SEC Hires Goldmanite Who Previously Worked At The SEC

Just when you thought the US regulators may have finally become less tone deaf to the shame of the revolving door, especially following last year’s latest scandal confirming Goldman runs the New York Fed (and every other central bank), here comes the SEC with an absolute shocker, not only proving once and for all that when it comes to regulatory capture, there is nobody in charge quite like Lloyd Blankfein, but unveiling what may have been the first ever double revolving door in SEC history, after the SEC announced it had hired as its new chief of staff a former Goldman worker who had previously worked at… the SEC. And with that the we have gone not only full circle but full retard as well.
From the SEC:

This post was published at Zero Hedge on 05/28/2015.

Wall Street Gamblers At Work – – U.S. Firms Spend More On Buybacks Than Factories

Every proposed project at U. S. Steel, whose Granite City, Ill., plant is shown in March, must be linked to the value it could create for shareholders. PHOTO: HUY MACH/ST. LOUIS POST-DISPATCH/ASSOCIATED PRESS
U. S. businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital.
Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and research and development.
Activist investors have been pushing for such changes, but it isn’t just their target companies that are shifting gears. More businesses sitting on large piles of extra cash are deciding to satisfy investors by giving some of it back. Rock-bottom interest rates have made it cheap to borrow to buy back shares, which can boost a company’s stock price. And technology-driven productivity gains are enabling some businesses to do more with less.
As the trend picks up steam, so too has debate about whether activist investors – who take sizable stakes in companies, then agitate for changes they think will boost share prices – have caused companies to tilt too far toward short-term rewards.
Laurence Fink, chief executive of BlackRock Inc., the world’s largest money manager, argued as much in a March 31 letter to S&P 500 CEOs. ‘More and more corporate leaders have responded with actions that can deliver immediate returns to shareholders, such as buybacks or dividend increases, while underinvesting in innovation, skilled workforces or essential capital expenditures necessary to sustain long-term growth.’

This post was published at David Stockmans Contra Corner By VIPAL MONGA, DAVID BENOIT and THEO FRANCIS The Wall Street Journal ‘ May 28, 2015.

Putin Slams US Over FIFA Arrests: “Another Blatant Attempt By The US To Meddle Outside Its Jurisdiction”

Following yesterday’s political intervention by the US in which 14 FIFA affiliates were perp-walked out of Zurich’s swankiest hotel just days ahead of Sepp Blatter’s re-election, one person was quite displeased with this latest US intervention on the international arena: Russian president Vladimir Putin who accused the United States of meddling outside its jurisdiction by arresting officials from FIFA, further hinting that it was part of an attempt to take the 2018 World Cup away from his country.
As a reminder, Russia won the right to stage the 2018 World Cup during 2010 under Blatter’s governance. The award is now the subject of a Swiss criminal investigation.
As a further reminder, epic corruption at FIFA, as well as every other global institution, from the Clinton foundation to the global capital markets, to US Congress, has been firmly established and well known toeveryone for years, if not decades. And yet, the rigged system has worked well enough that nobody dared to touch it.
That is until US AG Loretta Lynch decided it was time to take matters into American hands. This, in turn, raised Putin’s blood pressure as the Russian understands what the true purpose of this latest US intervention was.
According to Putin, the DOJ indictment which led to the arrest of over a dozen individuals on massive corruption charges “is yet another blatant attempt [by the US] to extend its jurisdiction to other states.”

This post was published at Zero Hedge on 05/28/2015 –.

Crony Capitalism At Work – Boeing Threatens To Leave US If Ex-Im Subsidy Yanked

When has crony capitalism really gotten out of control? How about when a major U. S. corporation (a huge defense contractor, no less) is publicly threatening government officials to leave the country if the federal government doesn’t continue to boost their profits through government handouts:
Boeing is stepping up pressure on opponents of the US Export-Import Bank with threats to shift manufacturing abroad if the agency that finances purchases by foreign customers is killed off next month.
The threats come as a new push is being made in Congress to find ways of wresting reauthorisation of the bank from a committee controlled by one of the agency’s fiercest opponents.
Scott Scherer, Boeing’s head of regulatory strategy at Boeing Capital, said the aerospace and defense group would ‘not sit idly by’ if the ExIm Bank’s mandate was not renewed by the end of June. ‘Boeing is not going to let itself be hurt by the lack of an ExIm Bank,’ he said in an interview with the Financial Times. ‘If it means sourcing … to other countries who will support us we may have to look at that. Other countries have more aggressive export policies. We will find an alternative.’

This post was published at Zero Hedge on 05/27/2015.

When Chasing The Tape – – Please Mind The Lemmings

Prior to today’s open MarketWatch provided a reminder that the lemmings are still rampaging in the casino. With respect to Tiffany’s (TIF) pre-market earnings announcement, it telegraphed the reason why TIF soared by 12% or about $1.5 billion during the course of the trading day:
Tiffany & Co.’s stock climbed 3.5% in premarket trade Wednesday, after the luxury jewelry retailer reported better-than-expected fiscal first-quarter profit and sales, and provided an upbeat earnings outlook for the year.
Well, not exactly. Worldwide sales fell by 5% from $1.01 billion in the April quarter last year to $962 million during the current the quarter. Same store sales dropped even more – -by 7%.
Likewise, net income of $105 million represented a 17% plunge from last year’s $126 million. Not surprisingly, however, this was greeted as rip-roaring good news because the street ‘consensus’ had marked down expected earnings to just $91 million or by 27% from last year’s QI level.
As for the ‘upbeat’ earnings guidance, it amounted to this:
For the full fiscal year, Tiffany said it expects ‘minimal growth’ in earnings per share from the $4.20 earned in fiscal 2014….
Apparently, flat is the new ‘upbeat’, but even then TIF didn’t actually earn $4.20 in the year ending in January. That’s the ex-items fiction that they use in the casino. TIF actually earned $3.73 per share last year.

This post was published at David Stockmans Contra Corner by David Stockman ‘ May 27, 2015.

The Farce Is Complete: FIFA, Qatar Donated To The Clinton Foundation

Earlier today, when commenting on the latest global criminal scandal, that of “rampant corruption” at FIFA, we – jokingly – said: “And now we just sit back and wait to see how many of the defendants sent “donations” to the Clinton Foundation and how many speeches Hillary and/or Bill gave at the Baur au Lac in the past two decades.”
Then we decided to make sure the joke wouldn’t be on us and that FIFA hadn’t indeed donated to the Clinton foundation.
The joke was on us… because not only did FIFA donate to the Clinton Foundation…

This post was published at Zero Hedge on 05/27/2015.

Take That, PATRIOT Act!

‘I wonder if anyone ever considers the easiest way to end such abuses of power,’ one fellow LFT reader Caleb L. writes on the crony collectivism tip.
‘Of course you’ll get a ton of rich-hating emails about how lobbyists have to stop, should be a law against this and that, etc.
But, says Caleb, the real solution is much simpler: ‘Remove the power.
‘In other words, if government wasn’t allowed to be in the business of making laws and regulations about – well, everything.
‘You know if they had some document they had to follow that specifically told them their powers and said that they had NO other powers than what was listed – that instead that power is given to states and the people…
‘… I know, we could call it a constitution!
‘… And if followed, the Gov would have no power to influence business (or anything really) – so there would be no need to ‘lobby it’ because it is powerless to help. Those companies could use that money to do something more productive … like business.
‘I could go on and on…’
Heh. Thanks, Caleb.
This ‘constitution’ idea you speak of is intriguing. Sounds like something I could get behind. Tell me more sometime over a beer.
Caleb, just so you know, is a long-time sufferer of LFT. And he also works with us here at Laissez Faire. In fact, just last week, he paid a visit to our office. And he’s working on some exciting stuff (more on that to come).
Last week, Caleb and I got the chance to sit down and reminisce about the good old days. Back when tax collectors were tarred and feathered and the government feared the people.
Alas, we reminded ourselves, we’re in the complete opposite position today.
The other side’s gotten too big. Our side, too complacent. But we do, despite the bloated bull, come today bearing one glimmer of good news…
We’re sure you heard: The Senate (thanks to Rand Paul) successfully blocked reauthorization of the Patriot Act.
By holding the floor for over ten hours, with the help of ten fellow senators, his filibuster prevented McConnell from filing cloture on a bill to extend or reform the PATRIOT Act.
Yes, Congress skipped town without passing a bill to reauthorize or reform. With very little time to renew the law when Congress returns from recess just hours before the deadline, it looks like three key spy provisions – Section 215, the ‘Lone Wolf,’ and the ‘roving wiretap’ – could expire.
‘Five days,’ Paul said yesterday in an email. ‘That’s how long you and I have until the U. S. Senate meets in a rare Sunday session on May 31st where surveillance state apologists will do everything they can to RAM through an extension of the so-called ‘PATRIOT Act’s’ ILLEGAL and unconstitutional spying program.’

This post was published at Laissez Faire on May 27, 2015.

Rigging Soccer Is Good For Jail, But Banks/Health Care….

The hypocrisy is amusing…. and disturbing.
A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.
The defendants charged in the indictment include high-ranking officials of the Fdration Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella. Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses. The defendants also include U. S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

This post was published at Market-Ticker on 2015-05-27.