The lack of prosecution of US bankers responsible for the great financial crisis has been a much debated topic over the years, leading to the coinage of such terms as “Too Big To Prosecute”, the termination of at least one corrupt DOJ official, the revelation that Eric Holder is the most useless Attorney General in history, and of course billions in cash kickbacks between Wall Street and D. C. And, naturally, the lack of incentives that punish cheating and fraud, is one of the main reasons why such fraud will not only continue but get bigger until once again, the entire system crashes under the weight of accumulated theft, corruption and Fed-driven malinvestment. But what can be done? In this case, Vietnam may have just shown the way – sentence embezzling bankers to death. Because if one wants to promptly stop an end to all financial crime, few things motivate as efficiently as a firing squad. According to the BBC, the former head of a major Vietnamese bank has been sentenced to death for his role in a fraud case involving some 800 billion dong (which sounds like a lot of dong, but equals roughly $35 million) of illegal loans. Nguyen Xuan Son, who served as general director of OceanBank, was convicted of embezzlement, abuse of power and economic mismanagement. Bank founder, tycoon Ha Van Tham, and dozens of other banking officials are also on trial, accused of lending violations.
This post was published at Zero Hedge on Sep 29, 2017.
One definition of insanity is doing the same thing over and over while expecting different results. The Okaloosa County Commission is by definition dysfunctional, corrupt or both. Any governmental unit that believes a 47% budget increase over the space of a mere five years is defensible has rocks in their head. That the Commission managed to paint over this by drawing down reserves when the cause was not a one-year hit from an event like a hurricane (which is what reserves are for) ought to be treated as criminal corruption and result in the incarceration of everyone involved. The “escalating” expenses in the budget this year alone are primarily (1) reserve restoration (that is, paying back what the commission took through gross mismanagement), (2) adding to said reserves (possibly arguably ok), (3) more law enforcement (big shock) and (4) insane health care cost escalations. If Okaloosa County wishes to improve its economic attractiveness it must address these issues along with the outrageous actions and inactions by the Commission not only over previous years, but on a forward basis. Like many if not most counties Okaloosa County’s ad-valorem tax revenue almost exclusively goes to the Sheriff’s Office (and related expenditures, such as the county jail.) This is not unusual; there are in fact counties where more than 100% of ad-valorem revenue goes to law enforcement. If you’re wondering why county sheriffs like to write tickets, well, you just figured it out since traffic fines of course offset some of their ad-valorem tax demand. But in this county, as in other tourist areas, there’s a problem: The majority of services provided by the Sheriff’s Office, most of which are quite-mundane (e.g. traffic accidents, etc) involve and are provided to tourists. The issue is that tourists pay almost zero ad-valorem tax; while if they rent someone’s condo that person does pay the tax they only occupy the building for a tiny part of the year and thus on a pro-rata basis, that is, on a per-capita/year basis, they pay almost nothing. Yet on a per-capita/year basis tourists form the majority of the Sheriff Department’s load.
This is the begging-for-the-overthrow-of-a-corrupt-status-quo economy we have thanks to the Federal Reserve giving the J. P. Morgans and Jamie Dimons of the world the means to skim and scam the bottom 95%. Dear Jamie Dimon: quick quiz: which words/phrases are associated with you and your employer, J. P. Morgan? Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized losses, low interest rates = gift from savers to banks, bloviating overpaid C. E. O., propaganda favoring the financial elite, tool of the top .01%, destroyer of democracy, financial fraud goes unpunished, free money for financiers, debt-serfdom, produces nothing of value to society or the bottom 99.5%. Jamie, if you answered “all of them,” you’re correct. The only reason you have a soapbox from which you can bloviate is the central bank (Federal Reserve) saved you and your neofeudal looting machine (bank) from well-deserved oblivion in 2008-09, and the unprecedented, co-ordinated campaign by global central banks to buy trillions of dollars of bonds and stocks.
Answers emerge. Including offshore private accounts. Mexico’s public debt-to-GDP of 50% may seem modest by today’s inflated standards, but when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press, and if you borrow in a foreign currency that you don’t control. As the debt load grows, more and more of the States’ financial resources must be used to service it. As El Financiero reports, the cost of servicing Mexico’s debt, despite super-low interest rates globally, has almost doubled in the last five years, and is now higher than it has been at any time since 1990. In fact, according to the Government’s own figures, more state funds will be spent this year on servicing the debt than on all public infrastructure projects put together. Yet as the government scrimps and scrapes in areas that might actually help to boost economic growth, it’s more than happy to dig deep to fill its own pockets. A joint investigation by the news website Animal Politico and the NGO Mexicans Against Corruption and Impunity has revealed that, amidst all the budget cuts, the Pea Nieto Government has been using a complex web of shell companies to make hundreds of millions of dollars of public funds, originally intended for public causes such as combating poverty or financing public education, completely vanish.
This post was published at Wolf Street on Sep 11, 2017.
In what’s likely to be remembered as one of the most spectacular policy failures in recent Indian history, Prime Minister Narendra Modi’s decision to abruptly cancel high-denomination banknotes – a move meant to punish corrupt officials and criminals – instead destroyed the savings of middle- and low-income Indians and caused widespread chaos in the country’s financial system. And now, less than a year since the ‘war on cash’ was announced, prominent former government officials are speaking out and placing the blame for the policy squarely on Modi’s shoulders, including former Reserve Bank of India governor Raghuram Rajan, who told the Times of India that he had cautioned the government that the short-term costs of demonetization would outweigh the long-term benefits, and suggested “alternatives” to achieve the goal of stamping out black money. When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals – popularly believed to hoard large sums of illicit cash – would be stuck with ‘worthless pieces of paper’. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy – as the wealthy abandoned or destroyed it, rather than admit to their hoardings – reducing central bank liabilities and creating a windfall for India’s government. Meanwhile, ordinary Indians would opt to keep more of their money in electronic deposits at their bank, helping to shore up the country’s financial system.
This post was published at Zero Hedge on Sep 4, 2017.
It is altogether fitting that crypto currencies, in particular Bitcoin, have witnessed a meteoric rise in this illusionary age. Not only has their monetary value gone to dizzying heights, but they are now being touted as the destroyer of the current, crumbling monetary order and the next paradigm upon which a new money and banking system will emerge. In an era where sacrifice, hard work, loyalty, ingenuity, tradition, and independent thought are considered anathemas, while affirmative action, sloth, effeminacy, office seeking, and something-for-nothing schemes are endemic in every walk of life, it is not surprising that non-tangible, computer-generated currencies would become a ‘natural’ feature of such a world. While it has always been a haven for charlatans, traitors, cheats, thieves, liars, and serial adulterers, contemporary political life has become even more of a sham. The most glaring example of politics’ utter corruption can be seen in the recent departed chief executive officer of the US. Unless one abandons all critical thinking, Obummer was unqualified to be president because of the obvious fact that he was not born on American soil. Not only did this disqualify him, but his educational and professional backgrounds have not been verified. Neither his collegiate records nor his supposed teaching career at the University of Chicago Law School have ever been exposed to public scrutiny. From the few utterances he has made about his supposed specialty – constitutional law – it appears that he has only a rudimentary knowledge of the subject.
This post was published at Zero Hedge on Aug 21, 2017.
When there is an epic financial crash in the U. S. that collapses century old Wall Street institutions and brings about the greatest economic collapse since the Great Depression, one would think that the root causes would be chiseled in stone by now. But when it comes to the 2008 crash, expensive corporate media real estate is happy to allow bogus theories to go unchallenged by editors. What is happening ever so subtly over time is that the unprecedented greed, corruption and unrestrained manufacture of fraudulent securities by iconic brands on Wall Street that actually caused the crash are getting a gentle rewrite. The insidious danger of this is that Wall Street is never reformed or adequately regulated – that it remains a skulking financial monster with its unseen tentacles wrapped tightly around every economic artery of American life, retaining its ever present strangulation potential. On August 10 of this year, Wall Street Journal reporter James Mackintosh penned the following astonishing sentence: ‘The global financial crisis began 10 years ago this week, when a French bank suspended three money-market funds. What savers thought was money turned out to be merely credit, and the realization rapidly trashed U. S. money-market funds and the global banking system.’
Libor, the nearly 50-year-old global borrowing benchmark that became a byword for corruption, is headed for the trash heap of history. The U.K. Financial Conduct Authority will phase out the key interest-rate indicator by the end of 2021 after it became clear there wasn’t enough meaningful data to sustain the benchmark that underpins more than $350 trillion in securities, Andrew Bailey, the head of the regulator, said in a speech Thursday at Bloomberg’s London office. The end of the London interbank offered rate, or Libor, is welcome on many levels for regulators. It was tied to some of the banking industry’s biggest scandals, leading to about $9 billion in fines and the conviction of several bankers for manipulating the rate. Relying on the opinions of industry insiders to set the daily estimates based on interbank lending — some in markets that saw fewer than 20 transactions annually — was unacceptable, Bailey said. “Libor is trying to do too many things: it’s trying to be a measure of bank risk and it’s trying to substitute for interest-rate risk markets where really it would be better to use a risk-free rate,” said Bailey in an interview with Bloomberg News before the speech. “It’s had to come to a conclusion.”
Debt is serfdom, capital in all its forms is freedom. If we accept that our financial system is nothing but a wealth-transfer mechanism from the productive elements of our economy to parasitic, neofeudal rentier-cartels and self-serving state fiefdoms, that raises a question: what do we do about it? The typical answer seems to be: deny it, ignore it, get distracted by carefully choreographed culture wars or shrug fatalistically and put one’s shoulder to the debt-serf grindstone. There is another response, one that very few pursue: fanatic frugality in service of financial-political independence. Debt-serfs and dependents of the state have no effective political power, as noted yesterday in It Isn’t What You Earn and Owe, It’s What You Own That Generates Income. There are only three ways to accumulate productive capital/assets: marry someone with money, inherit money or accumulate capital/savings and invest it in productive assets. (We’ll leave out lobbying the Federal government for a fat contract or tax break, selling derivatives designed to default and the rest of the criminal financial skims and scams used so effectively by the New Nobility financial elites.)
This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission. Bloomberg has nice piece on the battle between JPMorganChase’s Jamie Dimon and the Minneapolis Fed’s Neel Kashkari. (Bloomberg) Jamie Dimon is America’s most famous banker, and Neel Kashkari is its most outspoken bank regulator, so it’s not a shock that they would eventually come to blows. What’s interesting is that their contretemps is over an acronym that most Americans have never heard of, but one that may be central to preventing another recession. TLAC, which is pronounced TEE-lack, is something you need to know about if you want to judge the sparring between Dimon, the well-coiffed chief executive of JPMorgan Chase & Co., and Kashkari, the very bald man who ran for governor of California on the Republican ticket and is now president of the Federal Reserve Bank of Minneapolis. On April 6, Kashkari went after Dimon in a way that circumspect central bankers ordinarily don’t. In an essay published on Medium and republished on the Minneapolis Fed website, he challenged Dimon’s assertion in his annual letter to shareholders that 1) there’s no longer a risk that taxpayers will be stuck with the bill if a big bank fails, and 2) banks have too much capital (meaning an unnecessarily thick safety cushion). Wrote Kashkari: ‘Both of these assertions are demonstrably false.’
News coming out of Venezuela over the past two years has reeked of corruption and failed political leadership: a long list of shortages, rampant poverty, incrimination of the opposition, and a recent move that puts the regime of Nicolas Maduro one step closer to a dictatorship. And these are only the developments that are recorded, with a recent LA Times Op-Ed suggesting that a Venezuelan homicide epidemic rages ‘unreported’ due to the country’s scrapping of crime statistics reporting over a decade ago. Despite all of this, the Organization of Petroleum Exporting Countries (OPEC) expects Venezuela, endowed with the world’s largest oil reserves (depending on who you ask), to play a major role in the cartel’s plan to curb global supply. In OPEC’s November agreement, Venezuela accounted for almost 10 percent of the net supply cut from member nations (calculated as cuts minus allotted increases)
This post was published at Zero Hedge on Apr 11, 2017.
On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico. Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’ Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico. It’s a Complicated World Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action. However, coming to a decisive viewpoint on NAFTA’s success or failure can be difficult to achieve. Over two decades, the economic and political landscape has changed. China has risen and created a surplus of cheap labor, technology has changed massively, and central banks have kept the spigots on with QE and ultra-low interest rates. Deciphering what results have been the direct cause of NAFTA – and what is simply the result of a fast-changing world – is not quite straightforward.
Long-time Congressional staffer Mike Lofgren refers to the murky agencies at work to ensure this planetary plan stays on track as the ‘deep state,’ in his book of the same name. He writes that it includes key elements of the national security state, which ensure continuity of policy despite the superficial about-faces from one administration to the next. The deep state is effectively a warlike oligarchy, hell-bent on full spectrum dominance, driven by a lust for wealth and power, and anxious to inscribe its name in history. Specifically, Lofgren says, the deep state includes the Department of Defense, the State Department, the National Intelligence Agencies, Wall Street, the defense industry, and the energy consortium, among other major private players. They share common agendas, operate a revolving door of employees, and have a collective distaste for democracy, transparency, and regulation. The deep state is the link between military interventions and trans-pacific trade deals, between sanctions and IMF loans. All of these tools, be they arms or loans or legal structures, serve a single purpose: the overarching control of world resources by a global community of corporate elites. One can also see how these three instruments of policy and power all do tremendous damage to a particular entity, the nation-state.
This post was published at Zero Hedge on Mar 12, 2017.
Ever since governments began banning and licensing different parts of the economy, the black market has made sure people still have access to the things they need. Unstable governments always turn on their own citizens by using price controls, heavy taxes, and even the threat of imprisonment to prop up their failing systems. As conditions inevitably deteriorate, as they have in Venezuela and Greece, the underground economy becomes invaluable to those living through the crisis. The shadow economy refers to more than just the trade of illegal goods. A grey market, for example, provides legal products that have become difficult to find. Since basic things like toilet paper, medicine, and even food have disappeared from store shelves in Venezuela, the peer-to-peer network has become the only reliable way to secure life’s necessities. In desperate situations like this, the existence of independent merchants can mean the difference between life and death. Even the value of Venezuela’s currency has started to move away from the government’s control. At one point, the official exchange rate was fraudulently set at 10 bolivars per U. S. dollar, while on the black market it was trading at 1,000 to one. This action hurt millions by suppressing wages across the country and eroding any remaining trust. Inflation has quickly become the most imminent threat to the Venezuelan people, stealing the value of their labor and savings. For years, the bolivar has experienced hyperinflation, increasing the cost of living almost exponentially. The State’s desperate response was to institute price controls, but that has only led to shortages across the board. Luckily, the unregulated markets have been able to determine the true value of goods and provide vital support for the struggling communities. Many people think that so-called price gouging is unethical, but isn’t it better to buy what you need at twice the price than to not be able to get it at all?
This post was published at Zero Hedge on Mar 10, 2017.
Russia’s largest bank, Sberbank, has confirmed that it hired the consultancy of Tony Podesta, the elder brother of John Podesta who chaired Hillary Clinton’s presidential campaign, for lobbying its interests in the United States and proactively seeking the removal of various Obama-era sanctions, the press service of the Russian institution told TASS on Thursday. “The New York office of Sberbank CIB indeed hired Podesta Group. Engagement of external consultants is part of standard business practices for us,” Sberbank said. Previously, The Daily Caller reported that Tony Podesta was proactively lobbying for cancellation of a range of anti-Russian sanctions against the banking sector. In particular, he represented interests of Sberbank and was paid $170,000 for his efforts over a six-month period last year to seek to end one of the Obama administration’s economic sanctions against that country. Podesta, founder and chairman of the Podesta Group, is listed as a key lobbyist on behalf of Sberbank, according to Senate lobbying disclosure forms. His firm received more than $24 million in fees in 2016, much of it coming from foreign governments, according to the nonpartisan Center for Responsive Politics. Former President Barack Obama imposed the Russian sanctions following the break out in violence in east Ukraine in 2014.
This post was published at Zero Hedge on Mar 9, 2017.
It didn’t take much for the Greek bank run jog to return: with Greece once again stuck between an IMF rock and a Schauble hard case, and whispers that another bailout may be on the horizon, the local population took advantage of whatever capital controls loopholes they could find, and withdrew money from the local banking sector, which to this day remains on ECB life support, almost two years after the 3rd Greek bailout in the summer of 2015. According to Greece central bank data, Greek private sector bank deposits declined in January for the second month in a row, driven by renewed concerns over the country’s neverending bailout. Business and household deposits fell by 1.63 billion, or 1.34% month-on-month to 119.75 billion ($126.8 billion), the lowest level since November 2001. The January outflow follows a “jog” of 3.4 billion in December, making the two-month drop the worst since the latest Greek bailout panic in July of 2015.
This post was published at Zero Hedge on Feb 28, 2017.
The biggest banks on Wall Street, both foreign and domestic, have been repeatedly charged with rigging and colluding in markets from New York to London to Japan. Thus, it is natural to ask, have the big banks formed a cartel to rig the prices of their own stocks? This time last year, Wall Street banks were in a slow, endless bleed. The Federal Reserve had raised interest rates for the first time since the 2008 financial crisis on December 16, 2015 with strong hints that more rate hikes would be coming in 2016. Bank stocks never do well in a rising interest rate environment because their dividend yield has to compete with rising yields on bonds. Money gravitates out of dividend paying stocks into bonds and/or into hard assets like real estate based on the view that it will appreciate from inflationary forces. This is classic market thinking 101. Bizarrely, to explain the current run up in bank stock prices, market pundits are shoving their way onto business news shows to explain to the gullible public that bank stocks like rising interest rates because the banks will be able to charge more on loans. That rationale pales in comparison to the negative impact of outflows from stocks into bonds (if and when interest rates actually do materially rise) and the negative impact of banks taking higher reserves for loan losses because their already shaky loan clients can’t pay loans on time because of rising rates. That is also classic market thinking 101. Big bank stocks also like calm and certainty – as does the stock market in general. At the risk of understatement, since Donald Trump took the Oath of Office on January 20, those qualities don’t readily come to mind in describing the state of the union. Prior to the cravenly corrupt market rigging that led to the epic financial crash in 2008 (we’re talking about the rating agencies being paid by Wall Street to deliver triple-A ratings to junk mortgage securitizations and banks knowingly issuing mortgage pools in which they had inside knowledge that they would fail) the previous episode of that level of corruption occurred in the late 1920s and also led to an epic financial crash in 1929. The U. S. only avoided a Great Depression following 2008 because the Federal Reserve, on its own, secretly funneled $16 trillion in almost zero interest rate loans to Wall Street banks and their foreign cousins. (Because the Fed did this without the knowledge of Congress or the public, this was effectively another form of market rigging. Had the rest of us known this was happening, we also could have made easy bets on the direction of the stock market.)
Toxic loans as a result of corruption, political kickbacks, fraud, and abuse. The Bank of Italy’s Target 2 liabilities towards other Eurozone central banks – one of the most important indicators of banking stress – has risen by 129 billion in the last 12 months through November to 358.6 billion. That’s well above the 289 billion peak reached in August 2012 at the height of Europe’s sovereign debt crisis. Foreign and local investors are dumping Italian government bonds and withdrawing their funding to Italian banks. The bank at the heart of Italy’s financial crisis, Monte dei Paschi di Siena (MPS), has bled 6 billion of ‘commercial direct deposits’ between September 30 and December 13, 2 billion of which since December 4, the date of Italy’s constitutional referendum. Italy’s new Prime Minister Paolo Gentiloni, who took over from Matteo Renzi after his defeat in the referendum, said his government – a virtual carbon copy of the last one – is prepared to do whatever it takes to stop MPS from collapsing and thereby engulfing other European banks. His options would include directly supporting Italy’s ailing banks, in contravention of the EU’s bail-in rules passed into law at the beginning of this year. Though now, that push comes to shove, the EU seems happy to look the other way. While attention is focused on the rescue of MPS, news regarding another Italian bank, Banca Erturia, has quietly slipped by the wayside.
This post was published at Wolf Street on Dec 18, 2016.
As the mainstream media continues to blast Trump with allegations of conflicts of interest related to his many real estate holdings around the world, at least one conflict they won’t have to worry about anymore is his holdings of public stocks. Per the Washington Post, a Trump spokesman told the press yesterday that Trump unloaded all of his public shares back in June. Then, in what was supposed to be an interview congratulating Trump for his Time Person of the Year award, Matt Lauer of the Today Show decided to grill the president-elect on his public stock holdings and why he decided to sell. “Well I’ve never been a big person for the stock market, frankly. But, over the years I bought stocks. And, I bought them when they were low and I saw what was going on with interest rates were so low that it almost seemed like it was easy to predict what was going to happen with the stock market.” When pressed on why he chose June to dump all his shares, Trump responded simply that he felt “like I was very much going to be winning.”
This post was published at Zero Hedge on Dec 7, 2016.
Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have ‘skewered’ the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank. Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living. By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.