STOCK MARKET WATCH -- Tuesday, 16 July 2013

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 16 July 2013[font color=black][/font]

SMW for 15 July 2013

AT THE CLOSING BELL ON 15 July 2013
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Dow Jones 15,484.26 +19.96 (0.13%)
S&P 500 1,682.50 +2.31 (0.14%)
Nasdaq 3,607.49 +7.41 (0.21%)


[font color=red]10 Year 2.68% +0.06 (2.29%)
30 Year 3.69% +0.06 (1.65%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.










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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Tansy_Gold]

1. I'M GOING ON VACATION!

And will need a temporary SMW front page poster for a little over a week, starting next Monday.

I will post next Monday's (7/22) on Sunday night, the 21st, as per usual, but then will need a stand-in for Tuesday through the following Tuesday. I'll be back in my usual habitat on Tuesday, the 30th. Although I'll have the laptop with me, I have no idea what my schedule will be.

PM me or Hugin.

Let the good times roll!

[Demeter]

2. You know I love you, TG, but I cannot fill your shoes

(let alone find my own). So everybody, don't wait for me to volunteer!

[Tansy_Gold]

23. Hey, you guys!

Seriously, Demeter does way way way more than her fair share with WEE and all her bazillions of posts in this thread. I also know she doesn't have a nice neat same-time-every-day schedule.

And Demeter, don't you jump in right away. Give 'em, a day or two to think it over. . . .


START THINKIN', SMWers!

[Demeter]

3. Obama Admin: Here's How the Obamacare Rollout Will Work

OR NOT...

http://www.motherjones.com/mojo/2013/07/obamacare-press-briefing-insurance-exchange

There are a mere 80 days left until one of the main components of Obamacare goes into effect. The health insurance exchanges—where uninsured Americans will be able to buy health coverage with federal subsidies—open up for business on October 1. Naysayers are predicting delays and confusion. And not without reason. According to a June survey, 79 percent of Americans haven't heard of the exchanges. (Forty-two percent are still unsure if Obamacare is even law.) GOPers spreading misinformation about the law have outspent proponents by a factor of five. The administration is altering provisions of the law as it unfolds, even as Congress blocks efforts to improve it. Needless to say, the Obama administration has some work to do in the next couple of months to convince the American public that it is up to the task of signing up millions of people for coverage over the next year. As part of that effort, the White House held a press briefing with liberal reporters on Friday to advertise the fact that, despite all the gloom and doom, those insurance exchanges are ready to go, and darnit, people are going to like them. Here's how that will work, according to several senior administration officials:

First of all, it's no big thing: The insurance exchange roll-out has been portrayed as a gargantuan task, requiring the Department of Health and Human Services to coordinate 50 separate exchanges, and craft an entirely new online marketplace. But the administration insists the infrastructure for signing all these people up already exists: more people signed up for Medicare part D under President Bush II than will ever enroll in the exchanges. And out of the 30 million uninsured Americans, only 15.4 million will be purchasing coverage on the individual market through the exchanges. Out of these people, the officials say, the administration really only needs to worry about signing up a good proportion of young and healthy folks—or 2.7 million 18 to 35 year-olds—so premiums won't be too expensive.

Micro-targeting will win again: This target group is mostly male, mostly minority, and mostly concentrated in urban areas, according to Census data. In order to sign up these Americans, the administration is deploying the same kinds of micro-targeting techniques it relied on during the re-election campaign—advertising through radio, social media, churches, community health centers, and retailers. Every Walgreens will distribute info on the healthcare law. The administration has also been working with women's networks and magazines, like Cosmo, to promote Obamacare...

WHY THE F WOULD ANY OF THESE "TARGETS" SIGN UP TO A TAX OF $100+/MONTH? FOR THE PRIVILEGE OF SUPPORTING PRIVATE PROFITEERING INSURANCE SCAMS AND STILL PAYING DEDUCTIBLES AND CO-PAYS? IF YOU CAN'T GET THEM TO ENLIST TO BE SHOT OR MAIMED IN THE ARMY AND DENIED HEALTHCARE FROM THE VA, WHY WOULD THEY SIGN UP FOR THIS?

[bread_and_roses]

26. Union Letter: Obamacare Will ‘Destroy The Very Health and Wellbeing’ of Workers

Crosspost from dkf: http://www.democraticunderground.com/10023270612

WSJ

http://blogs.wsj.com/corporate-intelligence/2013/07/12/union-letter-obamacare-will-destroy-the-very-health-and-wellbeing-of-workers/

... The leaders of three major U.S. unions, including the highly influential Teamsters, have sent a scathing open letter to Democratic leaders in Congress, warning that unless changes are made, President Obama’s health care reform plan will “destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

...Dear Leader Reid and Leader Pelosi:

... First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.

Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most of our members participate. These non-profit plans are governed jointly by unions and companies under the Taft-Hartley Act. Our health plans have been built over decades by working men and women. Under the ACA as interpreted by the Administration, our employees will treated differently and not be eligible for subsidies afforded other citizens. As such, many employees will be relegated to second-class status and shut out of the help the law offers to for-profit insurance plans.

And finally, even though non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies. Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies.

and a huge 2nd to your comment in CAPS above

[Demeter]

4. Lawyer sentenced to prison for role in $2.4 billion fraud at Refco

http://news.yahoo.com/lawyer-sentenced-prison-role-2-4-billion-fraud-220524572.html

A former partner at the Mayer Brown law firm whose clients included Refco Inc was sentenced on Monday to one year and one day in federal prison for his role in a multibillion-dollar fraud at the now defunct commodities broker. Joseph Collins also must spend two years under supervised release following his prison term under the sentence imposed by U.S. District Court Chief Judge Loretta Preska.

Collins was found guilty in November on seven counts in helping the owners and executives of Refco conceal a $2.4 billion fraud that caused the firm's demise in 2005. It was the second trial for Collins, who was found guilty on charges including conspiracy, securities fraud and wire fraud. In January 2012, the 2nd U.S. Circuit Court of Appeals tossed the 2009 conviction of Collins, who at that time was sentenced to seven years in prison. The appeals court found that the judge at the first trial should have called defense lawyers in before advising a recalcitrant juror to continue deliberating. The court remanded the case for a new trial, which began in October 2012.

At Monday's sentencing, Collins' attorney William Schwartz portrayed his client as a family man and a community volunteer in Chicago. In her ruling, Preska said she took Collins's track record of community service into account. She said his case deviated from a standard fraud trial because Collins did not directly financially benefit from the scheme perpetrated by Refco executives to hide the company's financial woes and that he served in a "secondary role" as an advisor.

The Refco fraud, which was revealed soon after the company's August 2005 initial public offering, led to the prosecution of several executives. Former chief executive Phillip Bennett is serving a 16-year prison sentence and former president Tone Grant is serving 10 years. Santo Maggio, the former chief of Refco who pleaded guilty to the fraud, died last year. Schwartz said on Monday that he intends to appeal Preska's ruling and hopes that his client may be allowed bail.

The sentencing marks a rare instance in which a corporate lawyer has been found guilty and sentenced for legal work done in connection with a client's fraud.

In November, California attorney and former Nixon Peabody partner David Tamman was found guilty of helping a onetime client and former investment fund manager cover up a Ponzi scheme that swindled investors out of more than $20 million. He has still to be sentenced.

[Demeter]

14. Jon Corzine will not face criminal charges over MF Global

http://blogs.marketwatch.com/thetell/2013/07/08/jon-corzine-will-not-face-criminal-charges-over-mf-global-report/

There will be no criminal charges for former New Jersey Governor Jon Corzine over the use of customer funds leading up to collapse of MF Global.

The criminal probe into whether there was wrongdoing on the part of Corzine by the Department of Justice will now be dropped due to lack of evidence, said a report in The New York Post, citing a person with knowledge of the matter.

But the former CEO of Goldman Sachs is not out of the woods.

Corzine is facing civil charges by the Commodities Futures Trading Commission for illegally using customer funds in the last few days of MF Global to help keep the company afloat. The firm’s former assistant treasurer Edith O’Brien is also caught up in the scandal and charged by the CFTC for making the transfers.

Ultimately Corzine was charged by the regulator for failure to segregate and misuse of customer funds and failure to supervise diligently. O’Brien was charged with one count failure to segregate and misuse of customer funds.

To support the allegations, the CFTC used a recorded telephone conversations to support their charges that Corzine was fully aware of the transfers.

Both Corzine and O’Brien have denied any wrongdoing.

[Demeter]

5. Economy skids dangerously close to contraction SURPRISE, SURPRISE!

http://www.marketwatch.com/story/economy-skids-dangerously-close-to-contraction-2013-07-15

U.S. economic growth has again slowed sharply, skidding dangerously close in the second quarter to an outright contraction in gross domestic product.

Following the releases Monday of tepid reports on retail sales and inventory accumulation, forecasters marked down their GDP expectations from 1.4% to 1.1%. It’s probable that U.S. GDP rose less than 2% for the third quarter in a row, and it’s possible that growth was less than 1% for the second quarter in the last three.

It’s not news that the global growth is sluggish, and that sluggishness is weighing on U.S. manufacturers’ export growth. And we know that the federal government is cutting back its spending. But we thought that the household sector was holding up a little better. The surprise Monday was that U.S. consumers were more cautious as well. Retail sales rose 0.4% in June, with most of the growth coming from automobile sales. Most retailers reported weak sales for the month. HOLDING UP WITH WHAT? HOPIUM?

Because spending started the quarter on a weak note, it’s likely that consumer spending increased at less than a 2% annual rate in the quarter. Without stronger growth in consumer spending, businesses won’t invest as much. And investors are likely to be disappointed with flat revenue growth at their favorite companies.

Most people have been expecting a weak first half of the year, what with the tax hikes, falling government spending and anemic global growth. But the assumption has always been that the economy would pull out of its funk in the second half of the year....

WELL, WE ALL KNOW WHAT HAPPENS WHEN WE ASSUME=ASS outta U & ME.

[Demeter]

11. Business confidence back to financial crisis lows

http://www.cnbc.com/id/100882699

Worldwide business confidence has fallen back to its financial crisis lows, with sharp declines in optimism in both the U.S. and China, according to an economic sentiment survey by Markit. The report, which surveys around 11,000 global manufacturers and service providers, found that business optimism darkened in the first half of this year, dropping back to levels not seen in four years. The net balance of companies predicting rising business activity over the next twelve months fell to 30 percent in June, a low reached only twice before: in late 2009, and October 2012.

"The global economy is clearly in a soft-patch again, largely reflecting darker outlooks in the U.S. and China," said Chris Williamson, chief economist at Markit. "It calls into question the ability of the economy to continue generating jobs at anything like the pace seen in recent months," Williamson said. "Any thoughts of an imminent tapering of the Fed's stimulus are looking premature on this basis."

Among the world's largest developed economies, the U.K. was an exception to the gloomy picture, with optimism at its highest levels since the crisis. Notably, the U.K. service sector was at its most optimistic since Autumn 2006, while manufacturing sentiment held steady at a two-year high. Markit's U.K. findings backed-up a raft of surveys that suggest the country is bucking the global trend when it comes to medium-term economic sentiment. A Lloyds TSB Commercial Banking Business survey, also released on Monday, showed business confidence at a five-year high, with expectations that orders, sales and profits would increase over the next six months.

...Among the BRIC nations, Brazil showed improved business confidence, according to the Markit survey, while sentiment in India and Russia remained steady. In Japan, the lift to business confidence from "Abenomics" was seen waning, although confidence remained high compared to the previous two years.

[Demeter]

22. Retailers keep inventories low for back-to-school sales

http://www.reuters.com/article/2013/07/14/us-usa-backtoschool-orders-analysis-idUSBRE96D0AR20130714

Stung by leftover inventory because of a wet, cold spring and unsure about consumer spending, many retailers are ordering conservatively for the second busiest selling season of the year behind the end of the year holiday period, according to executives in shipping, banking and manufacturing.

"I don't think this is going to be a blowout year. I think this is going to be a little bit of a tough year," John Barbour, CEO of educational products maker LeapFrog Enterprises Inc said about the rest of 2013. "People have less money in their pockets."

While the U.S. economy has recovered modestly since the financial crisis, median household income is still below where it was before the 2007-2009 recession began, a recent report from Sentier Research showed. (For a related graphic, click link.reuters.com/taf69t)

Better inventory tracking tools also enable retailers to wait longer than usual to place back-to-school orders. That could mean higher profit margins in the back half of the year as retailers will likely not have to offer as many discounts to get rid of excess inventory. But they also risk not having enough stock if consumers spend more than anticipated....MORE

[Demeter]

6. The Origins of the Overclass By Steve Kangas

http://www.huppi.com/kangaroo/L-overclass.html

The wealthy have always used many methods to accumulate wealth, but it was not until the mid-1970s that these methods coalesced into a superbly organized, cohesive and efficient machine. After 1975, it became greater than the sum of its parts, a smooth flowing organization of advocacy groups, lobbyists, think tanks, conservative foundations, and PR firms that hurtled the richest 1 percent into the stratosphere.

The origins of this machine, interestingly enough, can be traced back to the CIA. This is not to say the machine is a formal CIA operation, complete with code name and signed documents. (Although such evidence may yet surface — and previously unthinkable domestic operations such as MK-ULTRA, CHAOS and MOCKINGBIRD show this to be a distinct possibility.) But what we do know already indicts the CIA strongly enough. Its principle creators were Irving Kristol, Paul Weyrich, William Simon, Richard Mellon Scaife, Frank Shakespeare, William F. Buckley, Jr., the Rockefeller family, and more. Almost all the machine's creators had CIA backgrounds.

During the 1970s, these men would take the propaganda and operational techniques they had learned in the Cold War and apply them to the Class War. Therefore it is no surprise that the American version of the machine bears an uncanny resemblance to the foreign versions designed to fight communism. The CIA's expert and comprehensive organization of the business class would succeed beyond their wildest dreams. In 1975, the richest 1 percent owned 22 percent of America’s wealth. By 1992, they would nearly double that, to 42 percent — the highest level of inequality in the 20th century.

How did this alliance start? The CIA has always recruited the nation’s elite: millionaire businessmen, Wall Street brokers, members of the national news media, and Ivy League scholars. During World War II, General "Wild Bill" Donovan became chief of the Office of Strategic Services (OSS), the forerunner of the CIA. Donovan recruited so exclusively from the nation’s rich and powerful that members eventually came to joke that "OSS" stood for "Oh, so social!"

MORE

[Demeter]

7. The N.S.A., the “Encroaching Police State,” and the System

http://www.newyorker.com/online/blogs/comment/2013/07/the-nsa-the-encroaching-police-state-and-the-system.html?mbid=nl_Daily%20%28282%29

...Yes, I did say that the N.S.A.’s data-collection-and-mining program appears to have been conducted lawfully, i.e., within the letter of the law. Whether I’m right or wrong on that point, I probably should have mentioned Kinsley’s Law of Scandals: “The scandal isn’t what’s illegal. The scandal is what’s legal.”

But I truly don’t think we’re living under an encroaching police state. I still don’t know of a single instance where the N.S.A. data program has encroached on or repressed any particular person’s or group’s freedom of expression or association in a tangible way. Nor have I come across a clear explanation of exactly how the program could be put to such a purpose.

But even if the program could be misused in that way, for it to happen you would have to have a malevolent government—or, at least, a government with a malevolent, out-of-control component or powerful official or officials. You would have to have a Nixon or a J. Edgar Hoover. But when you have a government or a powerful government official bent on repression and willing to flout the law, there are always plenty of tools at hand. Nixon and Hoover didn’t need data mining to do their mischief—and, again, I haven’t seen an explanation of how data mining would have helped them do worse than they did....

LET ME REMIND THIS INFANT OF SOMETHING WE LEARNED IN WWII:


“First they came for the communists, and I did not speak out—because I was not a communist;

Then they came for the socialists, and I did not speak out—because I was not a socialist;

Then they came for the trade unionists, and I did not speak out—because I was not a trade unionist;

Then they came for the Jews, and I did not speak out—because I was not a Jew;

Then they came for me—and there was no one left to speak out for me.”

― Martin Niemöller

[Demeter]

8. Florida Considers Eliminating Laws Altogether by Andy Borowitz (THE LOGICAL OUTCOME)

http://www.newyorker.com/online/blogs/borowitzreport/2013/07/florida-considers-eliminating-laws-altogether.html?mbid=nl_Borowitz%20%28150%29

Arguing that its current system of laws is out of step with life in today’s Florida, a growing chorus of lawmakers in the state are arguing for a measure that would eliminate laws altogether.

“Florida is rife with laws that say ‘Do this, don’t do that,’ ” said Gov. Rick Scott, a supporter of the measure. “Speaking as a Floridian, I have found it exhausting pretending to obey them.”

There is broad support in the state for abolishing laws, according to a poll commissioned by the political action committee Citizens For a Lawless Florida. According to that poll, a majority of Floridians favor ridding the state of laws, while a sizable number did not know that the state had any.

“We’ve been trying to remove laws piecemeal for the past few decades, but this measure seems like the most efficient way to take care of the whole problem,” Gov. Scott said.

For those who fear that eradicating Florida’s laws would wreak havoc on life in the state, Gov. Scott offered this reassurance: “Honestly, I don’t think you’ll notice a difference.”

DAVE BARRY WOULD NO DOUBT AGREE, SPECIALLY THE TRAFFIC LAWS, WHICH HE HAS REMARKED UPON ON MORE THAN ONE OCCASION...

[Fuddnik]

9. Chris Hedges has an excellent rebuttal.

http://www.truthdig.com/report/item/locking_out_the_voices_of_dissent_20130714/

Locking Out the Voices of Dissent

y Chris Hedges

NEW YORK—The security and surveillance state, after crushing the Occupy movement and eradicating its encampments, has mounted a relentless and largely clandestine campaign to deny public space to any group or movement that might spawn another popular uprising. The legal system has been grotesquely deformed in most cities to, in essence, shut public space to protesters, eradicating our right to free speech and peaceful assembly. The goal of the corporate state is to criminalize democratic, popular dissent before there is another popular eruption. The vast state surveillance system, detailed in Edward Snowden’s revelations to the British newspaper The Guardian, at the same time ensures that no action or protest can occur without the advanced knowledge of our internal security apparatus. This foreknowledge has allowed the internal security systems to proactively block activists from public spaces as well as carry out pre-emptive harassment, interrogation, intimidation, detention and arrests before protests can begin. There is a word for this type of political system—tyranny.

If the state is ultimately successful in preventing us from mobilizing in public spaces, then dissent will mutate from nonviolent mass protests to clandestine and perhaps violent acts of resistance. Some demonstrators have already been branded “domestic terrorists” under the law. The rear-guard effort by a handful of activists to protect our rights to be heard and peaceably assemble is perhaps the most crucial, though unseen, struggle we currently are engaged in with the corporate state. It is a struggle to salvage what is left of our civil society and our right to nonviolent resistance against corporate tyranny. This is why the New York City trial last week of members of Veterans for Peace, along with other activists, took on an importance that belied the simple trespassing charges against them.

The activists were arrested Oct. 7, 2012, while they were placing flowers in 11 vases and reading the names of the dead inscribed on the wall in New York’s Vietnam Veterans Memorial Plaza after the official closing time, 10 p.m. The defiance of the plaza’s official closing time—which appears to be enforced against political activists only—was spawned by a May 1, 2012, protest by Occupy Wall Street activists. The Occupy activists had attempted to hold a meeting in the plaza and been driven out by police. A number of Veterans for Peace activists, most of them veterans of the Vietnam War, formed a line in front of the advancing police that May night and refused to move. They were arrested.

Many of these veterans came back to the plaza on a rainy, windy night in October to protest on the 11th anniversary of the invasion of Afghanistan and again assert their right to carry out nonviolent protests in public spaces. They included Jay Wenk, an 86-year-old combat veteran of World War II who served with Gen. George Patton’s Third Army in Europe. When he was arrested Wenk was beating a gong in the downpour as the names of the dead were read. During the October protest 25 people were seized by police for refusing to leave the park after 10 p.m. Twelve went to trail last week. Manhattan Criminal Court Judge Robert Mandelbaum on Friday found the dozen activists guilty. The judge, however, quickly threw out his own verdict, calling the case a “unique circumstance.” “Justice,” he said, “cries out for a dismissal.” His dismissal shuts down the possibility of an appeal.

“The legislative system, the judicial system, the whole national security state that’s invading all of our privacy are taking away our right to dissent,” Dr. Margaret Flowers, one of the defendants, told me on a lunch break during the trial. “But everything that’s happening is happening legally. It’s a slippery slope. People will look at this case and they’re going to say, ‘So what? They were in a park. There was a rule. It was closing. The police arrested them. That makes sense to me!’ And they don’t put it in the bigger context. That’s how all of this is happening. It’s all being justified. The whole system is being flipped on its head. The judicial and law enforcement system should be protecting our rights. We have the right to dissent. It’s in the Bill of Rights. The question is, can we halt that slide for a second, maybe even reverse it a little bit?”

The executive, legislative and judicial branches of government have been taken over by corporations and used to protect and promote the criminal activity of Wall Street, the destruction of the ecosystem by the fossil fuel industry, the looting of the U.S. Treasury by the banking industry and the corporate seizure of all major centers of power. The primacy of corporate profit trumps our right to a living wage, affordable and adequate health care, the regulation of industry and environmental controls, protection from corporate fraud and abuse, the right to a good and affordable public education, the ability to form labor unions, and having a government that serves the basic needs of ordinary citizens. Our voices, our rights and our aspirations are no longer of concern to the state. And if we try to assert them, the state now has mechanisms in place to shut us down.

(snip) more

[Demeter]

10. REGULATING THE US MARKETS (OR NOT) COMPENDIUM

U.S. securities watchdog to seek reporting of 'dark pool' trading

http://www.reuters.com/article/2013/07/12/us-finra-darkpools-idUSBRE96B12W20130712

An industry-funded watchdog for the U.S. securities industry is seeking to bolster its monitoring of stock transactions in "dark pools" at a time when the alternative trading systems have come under greater scrutiny. The Financial Industry Regulatory Authority (FINRA) will seek approval from the Securities and Exchange Commission to obtain information on trading volumes, on a weekly basis, from dark pools and all other alternative trading systems, known as ATS. FINRA also plans to require each ATS to use a unique identifier when it reports order or trade information, the watchdog said in a statement on its website.

The agency's board authorized FINRA to submit the proposed rules to the SEC after a meeting on Thursday. The rules would require ATS to report total trading volume, by security, to FINRA, which would then post that information on its website. Currently there is no public dissemination of ATS data.

FINRA Chief Executive Rick Ketchum said in a video that the rules will greatly increase information about ATS trading in general, and in particular about dark pools - private trading systems. Ketchum said that dark pools have raised significant concerns among investors who are trying to understand them better and the trading that occurs on them.

In April, the chief executives of three U.S. exchanges met with regulators in Washington to express concerns about increased trading taking place away from public markets. The exchanges have long argued that the rise of off-exchange trading distorts prices in the public market and contributes to less transparent trading activity. Off-exchange trading has approached almost 40 percent of U.S. stock activity trading volume at times this year, according to industry consultants. Dark pools account for about one-third of that activity.



FSOC’s Role in Money-Fund Rule Sparks Probe by House Republicans

http://www.bloomberg.com/news/2013-07-12/fsoc-s-role-in-money-fund-rule-sparks-probe-by-house-republicans.html

House Republican investigators have asked five U.S. financial regulators to produce records showing the extent to which their rulemaking has been influenced by the Financial Stability Oversight Council.

The House Government Oversight and Reform Committee sent the request Wednesday after obtaining what its members say is evidence of interference by the FSOC in rulemaking by the Securities and Exchange Commission last year. Those records show former SEC Chairman Mary Schapiro and her aides coordinated with FSOC officials to build support for and write a money-market mutual funds rule before other SEC commissioners had seen the proposal.

FSOC is an umbrella group of financial regulators led by the Treasury secretary. It was created by the Dodd-Frank Act to identify and respond to threats to financial stability. The SEC is an independent agency charged with overseeing capital markets.

“The committee is concerned that the council may be structured and operating in a manner that vitiates the independence and core competence of the council’s constituent regulatory bodies,” committee chairman Darrell E. Issa and Representative Jim Jordan wrote in a letter seeking more records by July 21...MORE NUTCAKERY AT LINK


U.S. regulator adopts cross-border rules for swaps

http://www.reuters.com/article/2013/07/12/financial-regulation-crossborder-idUSL1N0FI15720130712

The top U.S. derivatives watchdog voted on Friday to allow U.S. banks operating overseas to be governed by foreign rules in some cases, soothing Wall Street concerns that banks might have to comply with both U.S. and foreign regulations. The Commodity Futures Trading Commission adopted the plan in a public vote a day after it ended a months-long trans-Atlantic rift with European regulators over how to address the complex issue of cross-border trading of derivatives. Under the CFTC's guidance, foreign branches of U.S. banks will be allowed to operate under other countries' regulations for some trading rules, though the CFTC will first determine whether these are sufficiently tough. The CFTC, headed by former Goldman Sachs banker Gary Gensler , also granted banks a period of delays during which the new rules would be phased in.

"The far-flung operations of U.S. financial institutions have to comply with Dodd-Frank, though at times it might be through comparable regimes elsewhere," Gensler said. Dodd-Frank is the 2010 U.S. Wall Street reform law.

The CFTC would start determining for each of a large group of trading rules whether other jurisdictions - such as the European Union, Japan, Switzerland and Hong Kong - were comparable with U.S. rules over the coming months.

Regulators are cracking down on the $630 trillion swaps market, which mushroomed into a vast playground for speculators from modest beginnings in the mid-1980s to become one of the main arenas of the 2007-09 credit meltdown. The CFTC's so-called final guidance was the last major piece of a raft of new rules the agency is writing in an effort to make the derivatives market safer. The plan contained no major shifts from what the CFTC proposed a year ago, lawyers said, though much of the impact on the market would depend on the wording of the final version, which will be published in the coming days.

"I'm sure it's a few hundreds pages and we only got the highlights, but it sounds like to a significant extent it's similar to where they were at the beginning," said Joel Telpner, a New-York based partner at law firm Jones Day.

EU CRUCIAL

Investment banks such as Citigroup, JPMorgan Chase and Bank of America, which dominate the lucrative derivatives market, had been anxiously waiting to see the finer print of the rules. The Institute of International Bankers, a lobby group, said the CFTC had come up with a "workable approach." The CFTC's only Republican commissioner, Scott O'Malia, who at times was visibly irritated, was the only to vote against the plan.


...Friday's plan will close a loophole that had allowed New York hedge funds to avoid most of the CFTC's rules because their funds are incorporated in the Cayman Islands, which means they are not U.S. persons by law....

[Demeter]

13. IRS Offers Tax Change to Ease SEC’s Money Fund Proposal

http://www.bloomberg.com/news/2013-07-05/irs-offers-tax-change-to-ease-sec-s-money-fund-proposal.html

The U.S. Internal Revenue Service has proposed a change in tax rules to ease the impact on investors should the U.S. Securities and Exchange Commission force some money-market mutual funds to abandon their fixed $1 share price.

The plan, outlined in a notice posted July 3, would exempt small losses on the sale of money-fund shares from the wash-sale rule, which prohibits investors from recognizing a loss when selling a security if they repurchase the same security within 30 days.

“Tracking wash sales of money-market fund shares will present shareholders of floating-NAV money-market funds with significant practical challenges,” the agency said in the notice. “Therefore, it is in the interest of sound tax administration” to not treat redemptions from money funds as a wash sale, the IRS said.

SEC commissioners on June 5 approved a proposal aimed at making money funds less susceptible to runs that could destabilize the short-term credit markets in which they invest. One of the options in the proposal would require institutional funds that invest in corporate debt to drop their $1 share price for a floating price that tracks the market value of their holdings.

The IRS invited public comment on the proposal through Oct. 28. The plan falls short of addressing an industry concern that floating-value funds would introduce record-keeping burdens by making small gains and losses taxable transactions, Joan Swirsky, an attorney at Philadelphia law firm Stradley, Ronon, Stevens & Young LLP, said in an interview.

[Demeter]

16. AIG, GE Capital tagged "systemically important," will face greater regulation YEAH, SURE

http://money.cnn.com/2013/07/09/news/economy/ge-capital-aig/index.html

American International Group and GE Capital will face increased supervision after regulators announced Tuesday that the firms had been deemed systemically important and "potential threats to financial stability."

The rulings do not mean that AIG and GE Capital are in any distress right now. Rather, the government's Financial Stability Oversight Council has concluded they could destabilize the financial system if they faced problems.

"These designations will help protect the financial system and broader economy from the types of risks that contributed to the financial crisis," Treasury Secretary Jack Lew said in a statement.

AIG was one of the largest recipients of bailout funds during the crisis, receiving over $180 billion. The insurer hemorrhaged money after selling credit default swaps -- essentially, insurance contracts -- on mortgage securities that failed in huge numbers when the housing market collapsed.

GE Capital, the financing arm of General Electric (GE, Fortune 500), benefited from a bailout program in which financial institutions were allowed to issue billions of dollars in debt backed by the government...

[Demeter]

17. NYSE Euronext to take over scandal-hit Libor

http://www.reuters.com/article/2013/07/09/us-libor-nyse-idUSBRE9680FD20130709

The U.S. owner of the New York Stock Exchange (NYX.N) announced Tuesday it will take over the running of Libor, the benchmark interest rate at the center of a global rigging scandal, in a move that Britain's financial regulator said would restore its integrity.

A central cog in the world financial system, Libor rates are used as a reference for some $550 trillion in contracts ranging from complex derivatives to everyday credit card bills. Trust in the London interbank offered rate (Libor) was shaken by revelations last year that traders had routinely manipulated it, prompting an overhaul of the system by which it is calculated.

NYSE Euronext will take over Libor from the British Bankers' Association (BBA) for a token 1 pound (US$1.50), according to a source who declined to be identified because the contract details are confidential. The BBA, a trade body, had since the 1980s administered the rate which reflects what banks say they are charged to borrow by other banks.

The focus for NYSE Euronext will be on restoring credibility and integrity to Libor and ensuring it remains one of the most important global rates, another source who declined to be named said, adding that since Libor underpinned the interest rate trading market it was vital to the exchange's own banking and brokerage customers.

London is not losing oversight of the benchmark that bears its name because the rate will continue to be regulated for the time being by Britain's Financial Conduct Authority (FCA)...MORE

[Demeter]

18. Regulators See Dodd-Frank Substantially Complete by End of Year DITTO, DITTO

http://www.bloomberg.com/news/2013-07-10/regulators-see-dodd-frank-substantially-complete-by-end-of-year.html

BLATHER

[Demeter]

20. Newedge Fined for Lax Oversight of Manipulative Trades

http://online.wsj.com/article/SB10001424127887324425204578597962040067332.html?mod=dist_smartbrief

Wall Street's stock-market cops slapped a New York brokerage firm with a record fine for failing to stop computer-driven trading clients who sought to manipulate U.S. markets for nearly four years.

The Financial Industry Regulatory Authority and several stock-exchange regulators fined Newedge USA LLC $9.5 million for lax oversight of the trading firms from early 2008 to late 2011, according to a regulatory filing and documents reviewed by The Wall Street Journal.

The sanctions come as regulators step up scrutiny of computer-driven trading amid worries that it is enabling market manipulation that could pose risks to the financial system and damage investor confidence. Regulators have fined several trading firms for manipulative activities over the past year, and expect to bring more such cases in the near future, according to people familiar with the matter.

Newedge allowed the questionable behavior—some of which was executed by day-trading firms—to persist despite numerous red flags, including concerns raised by employees, an independent consultant, exchanges and regulators, the filing and documents show. Regulators said Newedge's failure to track client orders over the four-year period "caused considerable systemic risk to the marketplace," according to a settlement document reviewed by the Journal.

Newedge "turned a blind eye toward a lot of red flags," said Thomas Gira, head of market regulation for Finra, in an interview. "It was really unbridled access into the marketplace that some of these customers had."

MORE

[Demeter]

12. EUROBANK BUYING GREEKS' BANKS: After Proton, Eurobank acquires Hellenic Postbank, too

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_14/07/2013_509226



Eurobank will be the lender to absorb Hellenic Postbank, according to the decision made on Saturday evening by the Hellenic Financial Stability Fund, that controls both lenders.

As expected, Eurobank, the least strong of the four systemic banks and the only one to have been recapitalized exclusively by the HFSF, was chosen to acquire the healthy part of Hellenic Postbank (TT), on top of absorbing Proton Bank as the HFSF had decided a day earlier.

"The HFSF completed today, July 13, the tender procedure for the sale of the New Hellenic Postbank and decided to proceed to the sale of the New Hellenic Postbank to Eurobank," announced the fund.

The HFSF chose Eurobank on the grounds of system stability as it was deemed necessary that the fourth pillar of the sector should be bolstered ahead of its privatization that the country's creditors want to proceed as soon as possible.

TT has a deposits portfolio of 3 billion euros, which was eyed by all four systemic lenders in the tender that took place this week.

"The HFSF and Eurobank will cooperate with an aim to sign a binding agreement by Monday, July 15," read the fund's statement.

[Demeter]

15. Greece Wins Release of Aid, Stays Lashed to Tightness

http://www.bloomberg.com/news/2013-07-08/euro-finance-chiefs-said-to-back-3-9-billion-greek-aid-payment.html

European governments agreed to release 3 billion euros ($3.9 billion) of aid for Greece, seeking to buy enough financial calm to prevent another debt-crisis showdown until after Germany’s elections in September.

Greece will get 2.5 billion euros this month and the rest in October, as long as Prime Minister Antonis Samaras’s tottering coalition delivers on economic reforms and cuts to spending. It can also count on recouping 2 billion euros in central bank profits on Greek bonds and on 1.8 billion euros from the International Monetary Fund. Bonds advanced today.

European governments led by Germany are continuing to keep Greece on life support, unwilling to let it go bankrupt and exit the euro while doling out aid in the smallest possible doses to avoid upsetting their own taxpayers....MORE

[Demeter]

19. Ruble to Real Roiled as No Brick in BRICs $13.9 Billion Lost

WHAT? BLOOMBERG THINKS IT'S VARIETY?

http://www.bloomberg.com/news/2013-07-09/ruble-to-real-roiled-with-no-brick-in-brics-13-9-billion-lost.html

Capital flight from the BRICs, Brazil, Russia, India and China, is sending their stocks, bonds and currencies down in tandem for the first time since 2006 as the 10-year love affair with the largest emerging markets ends.

...Investors withdrew $13.9 billion from equity mutual funds invested in the four countries this year, or 27 percent of the inflows since 2005, according to EPFR Global. The MSCI BRIC Index fell 12 percent last quarter while the nations’ currencies sank 4.1 percent against the dollar and government bonds lost an average 0.6 percent, the only such correlation in data compiled by Bloomberg going back seven years....

MORE

[Demeter]

21. Obama's secret kill list – the disposition matrix

TOO DISGUSTING FOR WORDS

http://www.guardian.co.uk/world/2013/jul/14/obama-secret-kill-list-disposition-matrix

[Demeter]

24. Thug Politics

http://www.nakedcapitalism.com/2013/07/thug-politics.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



Evan Williams reports from Athens. He is now based in London as an independent TV journalist and documentary filmmaker working regularly as a reporter for Channel 4’s weekly international current affairs program Unreported World. Here’s his report on Golden Dawn (hat tip, Into the Fire). VIDEO AT LINK: GOLDEN DAWN IN GREECE...Listen to it all, because Yikes! Plenty of fascist iconography. This part of the William’s report caught my eye; Golden Dawn is running a soup kitchen:

WILLIAMS: This aid is race-based. Party officials check papers to make sure food only goes to those who can prove they’re Greek. Once approved the people are given potatoes, eggs, bread, and lamb. All Greek, of course.

Williams interviews a Golden Dawn MP; I can't transcribe the name, who says:

Golden down wants to become and will become like the Hezbollah in Lebanon, which is in effect a second government which helps even the poorest citizen. And over time, Golden Dawn will do more for our fellow citizens.

Here’s Ian Welsh on Hezbollah:

Americans, Israelis and the West in general are used to assuming they’ll win the surveillance, electronic and information war. But Hezbollah defeated or drew Israel in all three. A network of tunnels, pre-prepared camouflage positions for missile launchers and the use of civilian clothes when troops were traveling made aerial surveillance and satellites virtually useless. The Israelis were never able to shut down the majority of Hezbollah’s missile launchers, any more than they’ve been able to find those of the Palestinians.

Hezbollah’s army is a secret one. It’s like an old fashioned spy agency. It doesn’t exist.

If you’re enrolled in it, you don’t tell anyone. The war was rife with stories of soldiers being killed, and their families finding out for the first time that they were even in Hezbollah’s army. This, of course, is to make it impossible to use assassination, mostly aerial assassination, to take out key leaders.

Hezbollah is an almost perfect Darwinian organization. Israel uses informants and assassination? Great – we’ll keep even our membership secret. Israel uses air power? We’ll dig tunnels and set up aerial blinds for our missile launchers. Israel doesn’t like taking heavy infantry casualties – fine then, we’ll set up overlapping bunkers which simply cannot be cleared without taking losses.

Hezbollah has created the new model army, and a new model state. Call it the Hidden Army. An army that blends in with the population, that moves only when it cannot be seen, that sets up in the expectation of surveillance. An army that knows all the high tech games, and spent the time to figure out how to nullify them. It sounds like a guerilla army, and it is, but it’s also much more: it’s an army capable of engaging in strategic warfare and an army capable of engaging in full on attrition defense warfare against Israeli main battle forces. It’s hard to overstate how impressive this is.

It’s an unrecognized State with a hidden army. Oh, the UN says there’s a Lebanese government with authority over Hezbollah. But everyone knows that the real government in southern Lebanon is Hezbollah. They pick up the garbage, they give out the pensions, heck, they have their own phone network. Crazy. When the Lebanese “government” picks a fight with Hezbollah, Hezbollah wins.

We are going to see many more of these unrecognized governments, with their hidden armies. Why? Because they work, and they work very well, both at providing government services to a population, and at frustrating much larger, more powerful and expensive conventional armies. As official governments fail, less recognized ones will pick up the pieces. And they will look to Lebanon to see how to do it, survive, and even win. …

Hezbollah might be the most interesting and successful neo-state in the world. Anyone who isn’t studying it is a fool. Clearly, the Golden Dawn leadership aren’t fools. Do the European leaders laugh alone in the night at what they’re creating with their austerity programs?

WHICH EXPLAINS WHY THE 1% WENT AFTER THE UNIONS...IN MANY CITIES IN THE US, THE DOMINANT UNION ACTED MUCH LIKE HEZBOLLAH DURING THE LAST CENTURY. THEY WANTED TO DISMANTLE THE ORGANIZATION THAT COULD NULLIFY THE FASCISTS.

[Demeter]

25. The artificial pressure on gold has been abandoned, it seems.

and the war-mongering has elevated oil by $10/bbl, according to report...

[Demeter]

27. David Stockman: Financial Engineering As The ATM Of The Prosperous Classes

MORE LIKE THE TRAP DOOR IN YOUR WALLET, WHICH ONLY THEY CAN OPERATE...TO PICK YOUR POCKETS AND ROB YOUR SAVINGS


http://www.testosteronepit.com/home/2013/7/12/david-stockman-financial-engineering-as-the-atm-of-the-prosp.html

David Stockman, Budget Director under President Reagan, then a partner at private-equity firm Blackstone Group, and now bestselling author, graciously gave me permission to post the particularly relevant and prescient Chapter 23 of his book, The Great Deformation: The Corruption of Capitalism in America. Here is the sixth installment (for the fifth installment, see David Stockman: Bubble Finance Personified.

The Fed’s frenetic interest rate cutting and renewed commitment to the Greenspan Put after December 2000 generated another spree of financial engineering. In all three variations, buybacks, buyouts, and M&A takeovers, the common effect was equity extraction from the business sector. However, unlike the case of mortgage equity withdrawal by households, where the cash windfall was distributed widely across the middle class, corporate equity withdrawal resulted mainly in cash distributions to the very top of the economic ladder. In generating a cornucopia of CEW, therefore, financial engineering functioned as the ATM of the prosperous classes.

That CEW went overwhelmingly to the bank accounts of the wealthy is a balance sheet given. By the end of the first Greenspan bubble, about 80 percent of financial assets were owned by the top 10 percent of households, which therefore got at least 80 percent of the cash from buyouts and buybacks. In fact, far more than a proportionate share went to the top, and even then the windfall was not so egalitarian in the manner in which it was whacked up among the affluent classes. Among the 10 percent at the top, it was the 1 percent at the very top who got the lion’s share of the CEW.

The reason for this ultra-skew to the very top lies in the subtle and convoluted manner in which monetary inflation deforms the financial markets. What happens is that cheap credit and market-pegging actions by the central bank foster an irregular and syncopated path of financial asset inflation. This bumpy rise is punctuated by sudden windfall gains in stocks and other risk assets which occur with increasing scale and frequency.

These windfalls are heavily “event” driven, as in the case of 75 percent M&A takeover premiums, corporate announcements of giant stock buyback programs, and the huge short-term price ramps that periodically occur among so-called growth stocks. By providing opportunities for outsized rewards to agile traders, as distinguished from fundamental investors, such event driven windfalls recruit more and more speculators to the craps tables.

MORE

[xchrom]

28. Stiglitz Explains How Patent Protection Both Slows Growth and Increases Inequality

http://www.commondreams.org/view/2013/07/15-7



Very nice column from one of my favorite Nobel prize winning economists. Stiglitz explains some of the ways in which patent protection impedes growth and increases inequality.

It's great to see Stiglitz raising alternatives to patents for financing research, but I would disagree with the prize for patent buyouts that he proposes as being the best alternative. I have always preferred a system of direct upfront funding, which could be done through private firms operating on long-term contracts. In response to a number of requests, here is the argument in brief. (Here's a little longer discussion.)

First, I doubt very much that the prizes will typically go to the right person. As we know, and Stiglitz writes in his piece, innovation is inevitably a cumulative process. If we allow people to get patents and then have them bought up for a prize and put in the public domain, I have little confidence that we will typically give our prize to the person or company that had the key innovation. There may well be a situation where a great innovation brought research 99 percent of the way to the final product, but the main innovator was blind to the last simple step. A patent buyout system is likely to reward the last simple step, not the innovation that got us 99 percent of the way there.

I am well aware of the ideology that says we have to be able to find the "best" innovator, but this is just an ideology. Years ago when I was teaching, we had a small prize that went to the best undergrad econ major. Half of the faculty had one student who they considered outstanding, the other half had another student. There was no one who had both students. For some reason the prize could not be shared.

[xchrom]

29. Greeks go on strike against public sector cuts

http://www.bbc.co.uk/news/world-europe-23324336

Thousands of Greek workers have joined a 24-hour strike called by trade unions to protest against government plans to cut public sector jobs.

The government needs to pass the bill this week to start receiving 6.8bn euros (£5.8bn) of fresh bailout loans to keep the country afloat.

Hospital services and public transport have been affected by the strike.

Demonstrations have been building for several days over the latest set of deeply unpopular austerity measures.

[xchrom]

30. Eurozone employment picture bleak, says OECD

http://www.bbc.co.uk/news/business-23328468

Young workers in the eurozone will continue to suffer from high unemployment rates, the Organisation for Economic Co-operation and Development (OECD) has warned.

In its yearly Employment Outlook, it also said many elderly workers face financial pressures and the closure of access to early retirement schemes.

And it said the low-skilled around the world would struggle to find work.

The report highlighted the disparity in jobless levels around the eurozone.

[Demeter]

31. The Overworked and the Idle

http://www.oftwominds.com/blogjuly13/overworked7-13.html

A society of the increasingly overworked and involuntarily idle is not a stable or happy one.

Though I don't have any data on this, anecdotal evidence suggests the nation's workforce is dividing into two classes: the overworked and the idle. The overworked work more than 40 hours a week and are increasingly given impossible workloads, while the idle can't find any work or can only get part-time jobs with limited hours. This bifurcation crosses income and class lines: highly paid and poorly paid workers alike are overtasked, and both the highly trained and low-skilled are idled. The income stratification in the U.S. workforce suggests that America is now a Three-and-a-Half Class Society (October 22, 2012):

The entrenched incumbents on top (the "half class&quot , the high-earners who pay most of the taxes (the first class), the working poor who pay Social Security payroll taxes and sales taxes (the second class), and State dependents who pay nothing (the third class).

This class structure has political ramifications. In effect, those paying most of the tax are in a pressure cooker: the lid is sealed by the entrenched incumbents on top, and the fire beneath is the Central State's insatiable need for more tax revenues to support its entrenched incumbents and growing army of dependents.

In Bifurcation Nation (June 24, 2013), I discussed the cultural and political divides that overlay these income-based classes:

There is a palpable zeitgeist that the nation is bifurcating into two camps which no longer overlap or communicate using the same cultural signifiers and symbology.

There is also a growing awareness that the divide between very wealthy and the middle income households has widened into an enormous canyon of inequality.

These classes are coalescing into a Tyranny of the Majority, where the entrenched incumbents in State fiefdoms and state-funded cartels are joined by state dependents in demanding higher taxes on the 25% who pay 90% of the Federal income taxes.

This leads to a systemic question: Is Democracy Possible in a Corrupt Society? (November 12, 2012) We can phrase the question as WTAFA Corollary #1: (named in honor of my book Why Things Are Falling Apart and What We Can Do About It (print) (Kindle)):

If the citizenry cannot replace a dysfunctional government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

If the citizenry cannot dislodge a parasitic, predatory financial/political Aristocracy via elections, then "democracy" is merely a public-relations facade, a simulacra designed to create the illusion that the citizenry "have a voice" when in fact they are debt-serfs in a neofeudal State.

In other words, the overworked are powerless to change the system they serve. The overworked often have big mortgages to pay, kids in college, huge medical bills and a high-cost lifestyle that is a legacy of better times, a lifestyle they try to maintain even as their net income after taxes and healthcare insurance declines year after year. The involuntarily idle are equally powerless, of course, but they tend to think the status quo is rewarding the overworked. The overworked, meanwhile, look with envy on the involuntarily idle who manage to live pretty well on government programs and transfers.



There are structural reasons why the managerial and most productive classes are increasingly overworked. Our entire economy is suffering from diminishing returns: global competition is eating away at profit margins, and increasing debt no longer boosts the gross domestic product (GDP). To maintain profits and output, managers are given additional duties even as support staff is trimmed. I have often wondered if the fascination with the TV series Mad Men wasn't partly the result of our amazement at how little these guys actually worked and how many had secretaries/admin assistants. This phenomenon is also visible in low-pay service work, where adverts for poorly paid administrative jobs demand familiarity with a dozen software programs, and fast-food workers are expected to maintain a punishing level of productivity for minimum wages. This trend to loading existing employees with more work while keeping pay more or less the same is seen as cost-effective: training a new hire is both costly and risky, as once the training is complete the new hire will likely be poached by a competitor who doesn't have an expensive training program. The overworked, from minimum wage earner to manager, are increasingly unsympathetic to workers in government fiefdoms who work less than 40 hours a week and enjoy luxe benefits and pay scales that are simply unavailable in the private sector. Bay Area Rapid Transit (BART) unions who recently went on strike, paralyzing public transit for 6.5 million inhabitants of the San Francisco Bay Area, were apparently caught off guard by the public animosity to their demands for 23% raises on top of their 50%-above-market base salaries and unavailable-at-any-private-job benefits. Memo to BART union members: the overworked earn on average slightly over half ($47,000) of what you earn for "driving" an automated train and staffing station offices ($80,000), and those who earn more than you in the private sector often work 50% more than your 37 hours a week in highly stressful jobs. The highly paid private-sector techies you envy constitute 2% of the workforce, and they work a lot more hours than you in intrinsically insecure industries.

The self-employed are in the Red Queen's Race, running as fast as they can to keep from falling into poverty. The self-employed pay all the taxes and healthcare costs paid by the employer, so their Real-World Tax Rate is 75% (July 5, 2012). The self-employed people I know are working the equivalent of two jobs to earn the net of one job, and that's if they're doing well. Thus it's no surprise that the ranks of the self-employed have thinned:



The stress levels of the overworked are high due to impossible workloads, while the involuntarily idle suffer from financial stress and depression. This is one systemic reason why the nation's mental and physical health continues to deteriorate...Yes, there are pockets of state fiefdoms and private sectors where workers are well-compensated for low-stress work, but these are exceptions, not the norm. No wonder those who can do so are quitting and filing for Social Security or tapping their 401K retirement plans to get by, or otherwise opting out of the labor force. A society of the increasingly overworked and involuntarily idle is not a stable or happy one. Pressure is building along multiple fault lines beneath the supposedly expanding American economy. What's really expanding are stress, ill health, chronic depression, financial insecurity and the frustrations of the powerless.

[xchrom]

32. subprime Borrowers With Best Credit Score Denied Help

Subprime Borrowers With Best Credit Score Denied Help

http://www.bloomberg.com/news/2013-07-16/subprime-borrowers-with-best-credit-score-denied-help.html

Travis Armstrong, a long-haul trucker, has made his mortgage payments for six years and has a credit score of about 800 that would entice most lenders. Because he owes more than his home is worth and his debt lacks federal backing, he’s stuck paying 7.5 percent interest, almost twice the rate of new loans.

U.S. President Barack Obama has failed to win Congressional backing for his proposal to expand eligibility for government-backed refinancing nationally to include people with mortgages like Armstrong’s. The only inroad so far -- a $10 million pilot program that began last month in Oregon that will purchase mortgages out of bonds and refinance them -- won’t help Armstrong, though. He lives about 14 miles (23 kilometers) from the only county accepting applications.

“It’s OK to skip payments and get help, or walk away and let the bank foreclose, but I’m stuck with no help ’cause I keep making my payments every month,” Armstrong said in a mobile phone interview from Interstate 64 in Illinois as he headed to Oregon. “It feels like the world has forgotten about people like me.”

As the U.S. real estate recovery accelerates into its second year, home prices are still 26 percent below the 2006 peak and almost 10 million people are underwater, or owe more than their houses are worth. While some of the hardest-hit regions such as Phoenix and Las Vegas are rebounding the fastest, cities like Cleveland are struggling to keep pace with national gains.

[Fuddnik]

33. The Return of Lawrence Summers, Mr. Spectacular Failure

By Robert Scheer

Tell me it’s a sick joke: Former U.S. Treasury Secretary Lawrence Summers, the guy who tops the list of those responsible for sabotaging the world’s economy, is lobbying to be the next chairman of the Federal Reserve. But no, it makes perfect sense, since Summers has long succeeded spectacularly by failing.

Why should his miserable record in the Clinton and Obama administrations hold him back from future disastrous adventures at our expense? With Ben Bernanke set to step down in January, and Obama still in deep denial over the pain and damage his former top economic adviser Summers brought to tens of millions of Americans, this darling of Wall Street has yet another shot to savage the economy.

Summers was one of the key players during the Clinton years in creating the mortgage derivative bubble that ended up costing tens of millions of Americans their homes and life savings. This is the genius who, as Clinton’s Treasury secretary, supported the banking lobby’s successful effort to make the sale of unregulated bundles of mortgage securities and the phony insurance swaps that backed them perfectly legal and totally unmonitored. Those are the toxic bundles that the Federal Reserve is still unloading from the banks at a cost of trillions of dollars.

But back on July 30, 1998, when he was deputy Treasury secretary, Summers assured the Senate agriculture committee that the “thriving” derivatives market was the driving force of American prosperity and would be fatally hurt by any government regulation of the sort proposed by Brooksley Born, the stunningly prescient chair of the Commodity Futures Trading Commission.

Summers opined that “the parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies. ... ”

Consider the astounding stupidity of that statement and the utter ignorance upon which it was based. One financial CEO after another has testified to not knowing how the derivatives were created and why their worth evaporated. Think of AIG and the other marketers of these products that were saved from disaster only by the injection of government funds not available to foreclosed homeowners whose mortgages were wrapped into those toxic securities.

Most of those dubious financial gimmicks were marketed by the too-big-to-fail banks made legal by another piece of legislation supported by Summers and passed a year later when Clinton tapped him to be Treasury secretary. Summers was an ardent proponent of repealing the Glass-Steagall Act that prevented the merger of highflying investment houses with traditional commercial banks entrusted with the government insured deposits of ordinary folks.

(snip)
http://www.truthdig.com/report/item/the_return_of_lawrence_summers_mr_spectacular_failure_20130715/

[Tansy_Gold]

35. Remember, Remember, the 24th of November

For anyone who doesn't -- and that would have to be a new lurker or passing troll, 'cause I think everyone who is here regularly remembers all too well.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=7922946#7922951

And it's depressing as hell to read it now.


fuck.

[DemReadingDU]

39. yep, you called it 5 years ago

and since then, the rich are all richer, and most of the rest of us are poorer

[Fuddnik]

41. I remember back then

Most people in Jonestown were calling us fascists for looking at his economic team and seeing where it was all going. I got into a few tiffs with a certain feline in that thread more than once.

[bread_and_roses]

42. 2nd that ...

It still gives me that sinking feeling in my gut/heart/head when I remember - I remember looking at those appointments with utter disbelief. That was it, for me - I freely admit, I was suckered. I say it so often to remind myself - I literally wept when the election was announced. There was a whole group of us that night - union members, local progressives - we'd been working local elections and keeping the TV on the election results as we ran in and out. After the polls closed we all went to a local bar to watch ... and I wasn't the only one crying.

I was literally stunned when those appointments came out. Stunned. They told me everything I needed to know about how deluded we'd all been. And nothing since has changed that. We get some scraps and bones but when it comes to the money and real power we are totally fucked.

[Tansy_Gold]

43. And I wept. . . .

. .. just reading your post.

[Fuddnik]

44. I remember a post by a now banned member

Who posted that all three choices sucked, when it was down to McCain, Hillary and Obama.

[Demeter]

34. Montana Passes Sweeping Anti-Government Spying Bill

http://www.zerohedge.com/news/2013-07-15/montana-passes-sweeping-anti-government-spying-bill

What is so interesting about Montana’s House Bill 603, which passed overwhelmingly the state Senate by a 96-4 margin, is that it was passed in April, or several months before Edward Snowden’s NSA revelations. Talk about some foresight. Hopefully, we will see many more such bills sweep across the nation, as “change” will have to be done at the local level. The central government in D.C. is hopelessly corrupt and I don’t see that changing. We must just decentralize away from the District of Criminals on our own. From the Atlantic Wire:

http://www.theatlanticwire.com/national/2013/07/if-you-dont-want-government-spy-you-move-montana/66962/

Privacy advocates, behold the Montana legislature and House Bill 603, a measure that requires the government to obtain a probable cause warrant before spying on you through your cell phone or laptop. HB 603 was signed into law this past spring, effectively making Montana the first state to have an anti-spy law long before anyone heard of Edward Snowden. To be clear, HB 603 passed the state Senate overwhelmingly by a vote of 96-4 in April and was signed into law on May

At the time, the law might have seemed extraneous, or even paranoid. But knowing what we know now, the law seems prophetic. The law is pretty straightforward—the government can’t spy on Montanans through their electronic devices unless they obtain a warrant:

That effectively makes Montana the first state in the country’s history to pass an electronic privacy law that protects you from the government. The bill’s sponsor, Rep. Daniel Zolnikov, and Montana’s lawmakers outpaced all the states in the country when it comes to privacy.

“The younger Democrats and Republicans were the ones really for the bill. The older legislators in Helena didn’t say much for or against it,” Zolnikov told the Daily Interlake.

The above line explains precisely why the government is concerned about “an increasingly disgruntled, post-Great Recession workforce and the entry of younger, ‘Gen Y’ employees who were ‘raised on the Internet,’” as noted in the recent “Insider Threat” article from McClatchy.

[xchrom]

36. Goldman Beats Estimates on Trading, Investment-Banking

http://www.bloomberg.com/news/2013-07-16/goldman-beats-estimates-on-rise-in-trading-investment-banking.html

Goldman Sachs Group Inc. (GS), the world’s most profitable securities firm before the financial crisis, said earnings doubled, beating analysts’ estimates on a jump in trading and investment-banking revenue.

Second-quarter net income rose to $1.93 billion, or $3.70 a share, from $962 million, or $1.78, a year earlier, the New York-based company said today in a statement. That beat the $2.89 average estimate of 27 analysts in a Bloomberg survey.

Fixed-income trading climbed 12 percent and gains from the firm’s debt investments almost tripled as Chief Executive Officer Lloyd C. Blankfein, 58, led the firm through a drop in bond prices sparked by indications in May that the Federal Reserve may ease economic-stimulus measures. The bank has said it will benefit from a rebound in the U.S. economy and $1.9 billion in expense cuts completed last year.

“In a recovering economy, investment-banking picks back up and fixed income doesn’t drop off a cliff,” Brad Hintz, an analyst at Sanford C. Bernstein & Co., said in a Bloomberg Radio interview before the results were announced. “With Goldman, you should be at a point where you’re going to get the expansion in investment banking.”

[xchrom]

37. Italy to Spain Beckon as Yields Beat Germany: Real Estate

http://www.bloomberg.com/news/2013-07-15/italy-to-spain-beckon-as-yields-beat-germany-real-estate.html

Europe’s biggest real estate managers are making their first investments in southern Europe since the financial crisis as low prices and diminishing risk make commercial properties more attractive.

Axa Real Estate Investment Managers, the largest European property fund manager, bought Barcelona office buildings from the Catalan government for 172 million euros ($224 million) last month, only its second purchase in the country in five years. When the unit of Europe’s second-largest insurer considered buying the same properties two years ago, it rejected the idea.

“There was too much uncertainty in the market at the time,” said Anne Kavanagh, the Paris-based insurer’s head of global asset management. “There’s an indication now that we’re at or near the bottom, even though there might be more volatility ahead.”

Insurance companies such as Germany’s Allianz SE (ALV), private-equity firms and sovereign-wealth funds are seeking deals in Spain and Italy as the economic prospects for the countries improve and the likelihood of a euro-currency breakup recedes. Returns in the commercial hubs of Madrid and Milan have become more attractive compared with other European cities after a slide in investment in both countries last year boosted yields.

[xchrom]

38. Consumer Prices in U.S. Rise More Than Forecast on Gasoline

http://www.bloomberg.com/news/2013-07-16/consumer-prices-in-u-s-rise-more-than-forecast-on-gasoline.html

The cost of living in the U.S. rose in June by the most in four months as gasoline prices increased, a sign inflation is advancing toward the Federal Reserve’s goal.

The consumer-price index increased 0.5 percent after a 0.1 percent gain the prior month, Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey called for a 0.3 percent rise. The biggest advance in gasoline prices in four months accounted for about two-thirds of the gain the in the CPI. The core measure, which excludes food and fuel, climbed 0.2 percent from May.

Some retailers such as Pier 1 Imports Inc. (PIR) are prepared to reduce prices to attract shoppers should demand weaken. Inflation readings closer to the Fed’s goal will give the central bank the flexibility to move forward later this year with reductions in its monthly asset purchases designed to stoke the economy.

“Inflation is going to remain tepid,” Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, said before the report. “Pricing power will be limited until retailers see much more strength in demand. Tapering by the Fed seems to be on track.”

[xchrom]

40. Goldman's Earnings Were Great…Until You Look At The Details

http://www.businessinsider.com/takeaways-from-goldman-q2-2013-earnings-2013-7

Goldman Sachs may have just crushed earnings estimates, but that's in no way the whole story here. To get the bigger picture of how the bank (and thus The Street) is fairing you need to look at debt and equity underwriting, sales and trading, and the bank's return on equity (ROE) all together.
That's when things get a little more complicated. Even though things are looking great year over year, a slight rise in interest rates and additional volatility in the market held Goldman down in Q2.

Yes, that was expected across the Street, but it still contributes the bank's less than stellar ROE and shows that the banking business is still struggling toward boom times.

This isn't to take away from Goldman's earnings beat. Q2 is a traditionally tougher quarter all around as companies tend to issue more debt (generating more business for banks) at the beginning of the year. Wall Street's army of analysts estimated that Goldman would post an adjusted EPS of $2.88 and a revenue of $7.972 billion. The bank posted an adjusted EPS of $3.70 and a revenue of $8.61 billion.



Read more: http://www.businessinsider.com/takeaways-from-goldman-q2-2013-earnings-2013-7#ixzz2ZDQcKsoA

[xchrom]

45. Swiss Bank Leaker: 'Money Is Easy to Hide'

http://www.spiegel.de/international/business/interview-hsbc-swiss-bank-whistleblower-herve-falciani-on-tax-evasion-a-911279.html

At the end of 2008, Hervé Falciani committed what is believed to have been the most portentous theft of banking data in history. The systems engineer and former employee at the Geneva offices of HSBC left Switzerland for France and took data from around 130,000 customers at the Anglo-Asian bank along with him.

France's finance minister at the time, current International Monetary Fund head Christine Lagarde, then handed data supplied by Falciani on to other countries. With the help of the information, authorities were able to uncover hundreds of cases of tax evasion, including those involving members of Spain's Botín banking family. In Greece, the data, which is often referred to as the "Lagarde List," was largely forgotten until it returned to the headlines during the debt crisis.

Falciani, 41, has also cooperated with the American authorities. Indeed, on the strength of the information he provided, HBSC was forced to pay a $1.9 billion settlement with the United States after a Senate committee found that failures in HSBC's money-laundering controls had enabled terrorists and drug cartels to gain access to the US financial system.

Last year, officials in Spain arrested Falciani in Barcelona. After a Spanish court rejected a Swiss extradition request for the Franco-Italian, he returned a few weeks ago to France, where examining magistrates have opened a new investigation into HSBC. SPIEGEL met with Falciani for an interview near Place d'Italie. He came wearing a beard and accompanied by three body guards with dark sunglasses. Flaciani says he is still the subject of a Swiss international arrest warrant.