“And Wall Street claims they are the Capitalists! Personal freedom is the ultimate casualty of this corrupt manipulation. The axis among the heirs of the House of Morgan, Corporate International and Federal Government, is the death of real business. With the demise of the Merchant Class, the last vestige of LIBERTY ceases to exist and the transition into an Empire of the ‘New Work Order’, becomes complete.” – Sartre
High premiums are being paid today not particularly for quality service or long-term building of a business but rather for making money quickly, getting rich, and getting out. And that’s wrong. – Willard C. Butcher
Wall Street, Money and the Merchant Class
Capitalism is NOT Wall Street. In order to correctly comprehend the nature of the Free Enterprise system, one needs to understand the fundamentals of a business transaction. Real business requires that goods or services are purchased from a seller by a buyer, at a price that both agree upon. A tangible product, skilled service or intellectual property may qualify as an entity of substance. But when we closely examine the composition of equities, warrants, bonds, options, futures or derivatives; we enter a realm that falls outside the scope of normal business transactions.
Some will claim that a stock represents the equity ownership of a particular enterprise. In theory, that would be correct; but in practice the average shareholder has vitally no input into the management of a publicly traded company. A warrant is a right to exercise a future defined claim. Bonds are fixed promises to repay that trade in value as interest rates vary. An Option is the ability to buy or sell purchased at a strike price during a specified time period, for an agreed cost. Futures are leveraged speculation or hedged bets on price movements. And it’s anyone guess what a derivative is . . .
Wall Street was created ostensibly as an auction market for raising capital to finance new business ventures or additional funds to grow a company. The underlying value of the stock price of a company would trade as shareholders wager on the direction of the equity or changes in their needs. Bonds were sold as loans that companies have an obligation to pay and retire the debt. Warrants, options, futures and derivatives emerged as sophisticated methods of refining the general purpose of funding business endeavors.
As any investor knows, they assume the risk or loss of their capital when they gamble on any specific instrument in a financial venture. The Capital Markets offer no guarantee that profits are assured, and provide no pledge that losses will not result. Risk is always present. But the essential question is whether this culture of finance qualifies as legitimate business? Continue reading →
“During the 2008 Wall Street crisis, both Goldman Sachs and Morgan Stanley applied to become bank holding companies and were quickly approved as such by the Federal Reserve. That gave them immediate access to trillions of dollars in below market-rate loans from the Federal Reserve while leaving all their rights to engage in high-risk speculations in commodity markets, to own and store oil while also making wagers on it, intact.” – P Martens & R Martens
Physical Possession and Storage of Oil by Wall Street Firms Had the Blessing of the Federal Reserve
In July 2013 and again this past January, the U.S. Senate’s Subcommittee on Financial Institutions and Consumer Protection, part of Senate Banking, convened hearings to get a handle on the extensive physical commodity holdings of Wall Street banks. At the January hearing, Senator Sherrod Brown, chair of the Subcommittee, told hearing participants that “the six largest U.S. bank holding companies have 14,420 subsidiaries, only 19 of which are traditional banks.”
At the time of the July 2013 hearing, Morgan Stanley, one of the nation’s largest retail brokerage firms, an investment bank, as well as an FDIC insured depository bank, owned sprawling crude oil operations. Congress had been aware of Morgan Stanley’s foray into the oil business since at least 2009 when 60 Minutes reported that Morgan Stanley had acquired the capacity to store 20 million barrels of oil.
Ostensibly as a result of the scrutiny, Morgan Stanley announced last December that it was selling its Global Oil Merchanting unit to a 100 percent subsidiary of Rosneft Oil Company, a large Russian crude oil producer. According to the press release Morgan Stanley issued at the time, the sale was to include an “international network of oil terminal storage agreements; inventory; physical oil purchase, sale and supply agreements; equity investments; and freight shipping contracts.” Continue reading →
”Mediocrity requires aloofness to preserve its dignity.” – Charles G. Dawes
Many pundits have presented the case that society needs to reward the achiever. It is argued that the most talented should attain positions of authority, based upon their superior ability. The end result is the formation of a power structure of Elites – making the decisions, formulating policies and directing the organizations that carry out the plan. It is most difficult to quarrel with the notion that talent is not distributed equally, but it becomes a giant leap to conclude that the very attribute of aptitude, is the sole criteria that justifies positions of authority.
Democracy has failed miserably to ensure a Just society, but so has rule by a cadre of whiz kids. The problem with ALL attempts to design and implement social systems through central planning is that it ignores the dynamics of the market place of individual needs, aspirations and fears. Neither Government nor NGO Institutions have the ability to mold humanity to their conception of paradise. Only the accumulative interaction of countless individual dreams and nightmares, can set the course on this ‘ship of fools’. Mankind, by the nature of its common humanity, is unable to achieve perfection. Those who seek and scheme to be the architects of paragon, and those who lust and plot to be the regents of dominance, possess the same flaws.
‘Meritocracy’ attempts to establish a standard by which motivated crusaders can achieve success. Well, that’s fine and commendable if we could all agree upon the criteria for defining achievement. But society has such a varied view of significance in collective accomplishment, that consensus is virtually impossible. Continue reading →
Shares of Fannie Mae and Freddie Mac dropped on Wednesday after some of Wall Street’s best known money managers lost a legal battle that would have forced the bailed-out Fannie and Freddie to share profits with private stock holders. On Tuesday, a US district Judge threw out a lawsuit brought by Fairholme Capital Management and Perry Capital that challenged the US government’s 2012 decision to sweep nearly all of Fannie and Freddie’s profits to the US Treasury, rather than collect set dividend payments. Erin weighs in.
Then, Erin is joined by Paul Craig Roberts – chairman of The Institute for Political Economy and former assistant secretary to the Treasury in the Reagan Administration – to talk about Attorney General Eric Holder and his policy toward big banks. Roberts sees nothing good in the incestuous relationship between Wall Street and its regulators. Continue reading →
“On July 18, 2013, the Government Accountability Office (GAO) issued a report on the declining morale among SEC employees. The report found that the SEC ranked 19 out of 22 similarly sized Federal agencies in overall satisfaction and commitment. ” – P & R Martens
Wall Street’s crime spree has been coming at the public for the past six years like a geyser spewing from a broken water main. It’s been tough for the public to keep tract of the twists and turns, and equally so for Congress.
What has been lost in all the media frenzy over the tapes released by Carmen Segarra, an attorney and bank examiner at the New York Fed who was fired for wanting to hold Goldman Sachs accountable, according to her lawsuit, is that four other regulatory lawyers have stepped forward from 2006 to earlier this year to report that their Wall Street regulator has been captured. In the case of those four, the captured regulator is the Securities and Exchange Commission.
When you have five Wall Street insiders with law degrees telling you that Wall Street regulators are not upholding the laws they are mandated to enforce while the nation is still struggling to recover from an epic financial crash this corrupt cronyism produced just six years ago, it’s time to allow the public to hear directly from all of these voices at one Senate witness table.
On March 27 of this year, a 28-year legal veteran at the SEC, James Kidney, used the occasion of his retirement party to deliver a blistering assessment of the regulatory capture at this key Wall Street watchdog. Kidney castigated upper management at the SEC for policing “the broken windows on the street level” while ignoring the “penthouse floors.” Kidney further noted that “On the rare occasions when Enforcement does go to the penthouse, good manners are paramount. Tough enforcement – risky enforcement – is subject to extensive negotiation and weakening.” Continue reading →
“In early 2012, as JPMorgan was making wild bets with derivatives in London, using the insured deposits of its banking customers, its Chairman and CEO, Jamie Dimon, was sitting on the Board of Directors of the New York Fed. As the bank was being investigated by the New York Fed, Jamie Dimon continued to sit on its Board, serving out his two terms which ended in late 2012.” – P Martens
If you missed our coverage in 2012 of the Lower Manhattan Security Coordination Center where Wall Street sleuths from those serially charged firms like Goldman Sachs and JPMorgan dunk donuts alongside New York’s finest in a $150 million spy center, keeping tabs on the comings and goings of their own Wall Street employees as well as innocent pedestrians, then you may not fully appreciate why Carmen Segarra has been celebrated all weekend for her temerity in taping her boss and colleagues at the New York Fed, as well as employees inside the cloistered bowels of Goldman Sachs.
While Wall Street was spying on everyone else in lower Manhattan in a high tech center funded by the taxpayer, Segarra strolled over to a Spy Store, plunked down a modest sum and walked out with a tiny tape recorder. She then proceeded to capture the essence of the quintessential captured regulators who didn’t see the 2008 crash coming and won’t see the next one coming either – because their job is not to see too much. (We called the Spy Store on Saturday to ask if they had experienced an upsurge in sales of the tiny recorder. We were informed that sales were brisk but not unusual.)
Segarra is a lawyer and former bank examiner at the Federal Reserve Bank of New York, one of Wall Street’s key regulators, who charged in a lawsuit filed in October 2013 that she was told to change her negative examination of Goldman Sachs by colleagues, who also obstructed and interfered with her investigation. According to her lawsuit, when she refused to alter her findings, she was terminated in retaliation and escorted from the Fed premises. Continue reading →
“Unlike the young and the rich on Instagram (as chronicled on Rich Kids of Instagram, a tumblr that aggregates their shameless bragging on the photo sharing app) the rich of Netropolitan.club will be far more discreet — limiting their sharing to their peer group.” B Herman
Are you a 1-percenter who needs a safe social media outlet to talk about your first-world problems, without the risk of alienating your commoner friends? Now you have an alternative to the impoverished unwashed masses of Facebook. Enter Netropolitan.club, an exclusive digital country club — essentially, Facebook for rich people.
For a cool $9,000 first-year membership fee (and $3,000 a year every year after that), high-rollers can crowdsource names for their yachts or complain about having to fly commercial to a like-minded, sympathetic audience. Netropolitan is billing itself as “the world’s most exclusive online community,” one that will allow “affluent and accomplished individuals worldwide to socialize in a completely private and secure manner.” With the hefty subscription prices, Netropolitan can afford to be ad-free. And the posts will be moderated by the company’s own “professional moderators.” Businesses will be able to create groups and advertise to each other, albeit under strict guidelines, according to Netropolitan’s information site.
“The Fed made another unusual move on Friday when it announced that it was forming an internal committee to be headed by Vice Chairman Stanley Fischer to oversee the work of its Office of Financial Stability Policy and Research. Fed Chair Janet Yellen already sits on the Financial Stability Oversight Council (FSOC) which includes the top representative of every bank regulator in the country.” P & R Martens
Last Friday, the Dow Jones Industrial Average closed down a mere 61.49 points or 0.36 percent, but the overall market breadth (number of stocks advancing versus those declining) was abysmal. At the New York Stock Exchange, there were 666 stocks advancing versus 2,515 declining. Nasdaq showed 893 advancers versus 1,834 decliners.
Equally troubling for those who have jumped into stocks with both feet, Bloomberg News has a heart-stopper headline out today: “Record S&P 500 Masks 47% of Nasdaq Mired in Bear Market.” The article, by Lu Wang and Joseph Ciolli, advises that:
“Beneath the U.S. Stock market’s record-setting gains, trouble is stirring. About 47 percent of stocks in the Nasdaq Composite (CCMP) Index are down at least 20 percent from their peak in the last 12 months while more than 40 percent have fallen that much in the Russell 2000 Index and the Bloomberg IPO Index.” Continue reading →
“The next time President Obama considers delivering well wishes to a Wall Street big bank CEO, it might do him well to remember just who put the country in this lingering economic situation.” P Martens & R Martens
Sometimes we have to pinch ourselves to make sure we are not sleepwalking in a Dickensian dream. Earlier this week we heard Senator Elizabeth Warren tell a Senate Banking session how JPMorgan’s CEO, Jamie Dimon, got a $8.5 million raise after craftily negotiating away all of the bank’s crimes with the payment of billions in shareholders’ money. (Two of those crimes, by the way, were felony counts for aiding and abetting Bernie Madoff in his Ponzi scheme – also craftily settled under a deferred prosecution agreement with the Justice Department, which effectively puts the bank on probation for two years.)
Last night, the Wall Street Journal informed the public that, apparently, none of this criminal activity at JPMorgan has dulled President Obama’s fondness for its CEO Jamie Dimon, who has recently been undergoing treatments for throat cancer. The Journal reported: “During one of his earliest treatments, Mr. Dimon received a call on his cellphone from President Barack Obama, who wished him a healthy recovery, the bank confirmed.”
A President with a kind heart toward those experiencing health issues is, of course, a virtue. But it is more than likely that the President hasn’t similarly dialed up the victims of JPMorgan’s various and sundry wealth transfer assaults when they fall ill.
One day before the news of the President’s phone call to Dimon emerged, we learned from the U.S. Senate’s Special Committee on Aging and the Government Accountability Office (GAO) that some senior citizens are having their Social Security payments garnished over unpaid student loan debt, forcing them below the poverty threshold. Continue reading →