One Way Wall Street Is Fleecing Investors

No Country for Old Men We are sitting in the lobby of the China World Hotel in Beijing. It is a very large space and very unlike most hotels. Monday, we stopped into the lobby of the Marriott Opera Ambassador Hotel on Boulevard Haussmann in Paris. Like most lobbies, it was quiet, with just a few people having coffee.
Here, there are hundreds of people – almost all young. I am the oldest person, a fossil from another continent and another time. The young people are dressed casually but well. They sit in groups talking… as though planning their next marketing campaign.
There is scarcely anyone over the age of 40. We have started a small publishing business in China. It, too, is staffed by people in their twenties. What happened to the old people? Maybe they have not been able to keep up with the breathtaking changes in China. This is no country for old men…
‘Everyone has great confidence in the future,’ says a Chinese colleague. ‘Things have gotten so much better over the last 20 years. And we expect that to continue.
‘Our new president, Xi Jinping, is serious about trying to get rid of corruption, even at the highest levels. He is trying to deregulate whole industries. Regulations and licenses were just a way for officials to demand bribes and payoffs. So, Xi wants to get rid of a lot of this so we can do business more freely.’
Whether he will succeed or not, we can’t say. But at least it sounds promising.

Charlie Chaplin stands on Douglas Fairbanks’ shoulders during a rally at Wall Street in 1918.
(Photo author unknown)

This post was published at Acting-Man on September 5, 2014.

Minsky Moment for Markets Driven by ‘Relentless Bids’

During the past decade, US equity markets have experienced structural changes with major macroeconomic implications, as policies of both companies and investors have evolved.
An unprecedented change in corporate financial policy.
Many corporate executives now not only channel their companies’ cash flow to shareholders, but leverage up to do so – often at the expense of capex, R&D, and employee compensation and training. This price-insensitive buying of stocks, mirroring the similarly price-insensitive buying by central banks, amounts to a ‘relentless bid.’
We’re now seeing the result in slowing growth of, or even falling, productivity and corporate revenue.
Andrew Lapthorne of SocGen has documented this in detail. Andrew Smithers has also written about this in his column at the FT website. Now the mainstream news media have noticed.
‘In corporations, it’s owner-take-all,’ by Harold Meyerson, op-ed in the Washington Post, 26 August 2014 ‘Why have U. S. companies become such skinflints?’ Paul Roberts, op-ed in the LA Times, 27 August 2014 Soon the investment banks will begin writing about it.

This post was published at Wolf Street on Sept 3, 2014.

Mexican Judge Departs From Script, Turns Monsanto’s Mexican Dream Into Legal Nightmare

The U. S. agribusiness giant Monsanto is long accustomed to getting its own way. Through a combination of back-channel lobbying, opaque political funding and revolving-door politics, the multinational agrochemical and biotechnology corporation has subverted, corrupted and infiltrated the elected governments of countries around the world, from the smallest and poorest to the biggest and richest.
However, if recent events in Europe and Latin America are any indication, the tide may well be subtly turning against the interests of Monsanto and its fellow GMO oligopolies and in the favor of independent food growers and consumers. Despite their tireless lobbying efforts in Brussels, the ‘Big Six’ (Monsanto, Du Pont Pioneer, Syngenta, Vilmorin, Winfield and KWS) continue to hit a brick wall of resistance in many of Europe’s biggest markets, including Germany and France. As I reported in April this year, popular resistance is on the rise across Latin America, as indigenous and peasant communities rise up against government legislation that would apply brutally rigid intellectual copyright laws to the crop seeds they are able to grow.

This post was published at Wolf Street on September 1, 2014.

Monsanto Trickbag 101

Use a GMO contaminated bag of conventional seed, get sued for patent infringement. By the way, expect contamination.
It’s a setup, the game is rigged, the fix is in. Monsanto sues if its agents find the company’s patented gene in your crop, even if you never bought its genetically engineered (GMO) seeds. But does that mean diddley squat to Monsanto?
No. Here is a bit of logic, Monsanto style:
If the plant is found in your possession, then that means you have used the seed. If you have used the seed, then you have agreed to the technology use agreement, and owe Monsanto your crop, your seed and your profits. It doesn’t matter how the seed actually arrived in your possession.
Just ask Percy…


This post was published at FarmWars on August 31st, 2014.

It’s Not Just Politics That’s Broken–The Status Quo’s Model of “How the World Works” Is Broken

The Status Quo is dysfunctional because its model of how the world works is broken.
Much has been written about the dysfunction in Washington D. C. Pundits have been wringing their hands for years over the rise of bitter partisan politics and the resulting gridlock. The impact of this–what I have termed profound political disunity–extends beyond the narrow confines of domestic politics, a reality reflected in Foreign Affairs new survey of our winter of political discontent, Dysfunction Junction.
But all these discussions of our dysfunctional politics ignore the larger truth, which is the entire model of the Status Quo is broken. Even if reformers succeeded in ridding the political system of cronyism and favors-for-campaign-contributions–two essentially impossible reforms, given the legalistic cover provided for cronyism and bought and paid for representatives, the basic model of “how the world works” that dominates the world-view of leaders across the political spectrum would remain broken. There are only three alternatives: 1. The current gridlock continues, and the policies in place grind on with minor tweaks.
2. The Democrats win a sweeping victory and are able to unilaterally impose their reforms.
3. The Republicans win a sweeping victory and are able to unilaterally impose their reforms.

This post was published at Charles Hugh Smith on MONDAY, AUGUST 25, 2014.

Obamacare: Cronies are Raking in the Money

Feds spent $5 billion to get state Obamacare exchanges operational.
Maryland, Massachusetts, Oregon and Nevada have gone through nearly a half billion dollars building inoperable Obamacare websites for vastly overpriced state exchanges. For government, though, nothing succeeds like failure, especially if it rewards selected partners in crime, so the feds will continue with little resistance to pour millions of dollars more down these rat holes.
In total, as of February, 14 states have received federal money to get Obamacare exchanges up. California alone received a whopping $1 billion to set-up its exchange.

Read more …

Crony Congress

Did you know 47% of Congress members are millionaires?  And while in office they have all kinds of advantages to make them even richer while they’re in office:

  • Access to private information prior to key activities that make them money in the stock market
  • Earmarks placed in law codes to support their personal projects
  • Support for lobbies ensures they have cushy jobs after their “public service” is finished


How We’ve Devolved into the Current System of Crony Capitalism

In this interview with Bill Moyers, David Stockman, who first coined the term Crony Capitalism, explains what’s happened in the political-economic realm since his post as Budget Director under Reagan. The evidence that we’ve embarked on a “new system” has become more obvious with time. Beginning with the $20 billion bailout of the Mexican peso in 1994, progressing with the bailout of Long Term Capital Management in 1998 and the recent bailout in 2008 with the $700 billion Wall Street package, Stockman explains that the benefactors are not limited to those being bailed out. The investors who financed those failures are the ones who’ve really benefited.  These are the so-called cronies, who have ties to those in high positions, capable of bending laws to ensure the majority of profits go to themselves, while losses are always taken by the tax payers.