STOCK MARKET WATCH -- Friday, 15 May 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 15 May 2015[font color=black][/font]

SMW for 14 May 2015

AT THE CLOSING BELL ON 14 May 2015
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Dow Jones 18,252.24 +191.75 (1.06%)
S&P 500 2,121.10 +22.62 (1.08%)
Nasdaq 5,050.79 +69.10 (1.39%)


[font color=green]10 Year 2.24% -0.02 (-0.88%)
30 Year 3.05% -0.02 (-0.65%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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(click on link for latest updates)
Market Updates
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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.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts







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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. bonus 'toon

Cartoonist is Signe Wilkinson of the Philadelphia Daily News

[haikugal]

2. The toons are sadly on target....thanks

[Demeter]

13. Welcome to our little group

Please feel safe and free to post here.

[haikugal]

22. Thank you Demeter...wish I understood more :-)...

but I come by to read and absorb what I can. This is a good group of people!

[Demeter]

25. every one of us had to start somewhere

and a few have a decade or more at it.

[haikugal]

26. Well I'm an old person but I feel understanding how this works is important.

I'll keep trying. It's nice of you to encourage me.

[DemReadingDU]

29. Many of us are older

60+

Please return often. I learn something new everyday here.

[Demeter]

3. Abolish Human Rentals; Support Worker Cooperatives

http://www.abolishhumanrentals.org/

Welcome to AbolishHumanRentals.org home of the modern abolitionist movement.

This site examines the standard employment relationship, the human rental, and shows that it is invalid on inalienable rights grounds.

The human rental today manifests itself as the voluntary exchange of personal labor for a salary or wage. A legitimate arrangement requires workplace democracy and worker ownership whenever human labor is involved.

This site is an educational resource that seeks to promote public awareness and understanding of the problems associated with human rentals.

Inquiry into the legitimacy of human rentals has long been buried by a barrage of propaganda with the complicity of the economic establishment. Such a fundamental question is notably absent from our education system and ignored by the mass media. These ideas must be revived in public discourse. The theory of inalienable rights is only useful to the extent it is widely known and consistently applied in practice. Inalienable rights are based on the already broadly held principle of the non-transferability of responsibility for one’s actions. That principle, taken to its logical conclusion, means the rental of humans have no more legitimacy than their sale.

The issue is not one of coercion, willfully choosing to be rented, or the treatment and compensation of workers. Humans cannot choose to be rented for the same reason people cannot choose to sell themselves into slavery or sell their vote, regardless of their consent or how much they are paid.

The abolition of human rentals will be no small task given their widespread prevalence and firm entrenchment in the economic system. The modern abolitionist movement must begin by destroying the false perception of legitimacy that human rentals currently maintain. Inalienable rights arguments pose a lethal threat to the practice of renting humans.

At stake is nothing less than the employment system, the labor market, and the stock market through which ownership of human rental contracts are exchanged. As with slavery, inalienable rights issues cannot be addressed directly by proponents of human rentals without inviting destruction of the system. There are only two possible responses: Silence in the hope that inalienable rights are never widely understood, or vilification and harassment of the advocates in the event they gain traction.

The strategy has thus far been successful in diverting attention from a profound idea and its revolutionary implications. The alternative to human rentals is universal self employment in democratically managed worker owned businesses, or worker cooperatives. Workplace democracy eliminates the alienation of decision making power, and worker ownership means workers appropriate any resulting profits or losses, thus bearing financial responsibility for their actions.

The contents of this website are also available as an ebook in .azw3 and .epub formats.

For information about generating more worker coop startups and higher growth see the Worker Cooperative Development website.

AN INTERESTING CONCEPT...REQUIRING MUCH BETTER PEOPLE TO IMPLEMENT IT THAN I'VE BEEN PRIVILEGED TO MEET IN MY 60 YEARS....

[haikugal]

23. Wow, thanks for the link...I too wish I knew someone strong enough to implement this.

I can't think of the guys name, he worked at MSNBC then quit and started a co-op working with Vets to learn veggie growing...I wonder if he's doing something similar. A very good idea and I totally agree, I always felt like I had sold all rights to my employer...it's wrong but I've never experienced anything else.

Good post, thought provoking.

[DemReadingDU]

30. Dylan Ratigan?

[haikugal]

32. Yes, thT's who I'm thinking of..

But after doing some searching I think not. Thanks for the help..

[Demeter]

4. ECB Said to Leave Greek Collateral Haircuts Unchanged For Now

http://www.bloomberg.com/news/articles/2015-05-12/ecb-said-to-leave-greek-collateral-haircuts-unchanged-for-now



The European Central Bank decided not to tighten Greek banks’ access to emergency cash just yet, people familiar with the matter said.

The Governing Council agreed in a telephone conference on Tuesday to raise the cap on Emergency Liquidity Assistance by 1.1 billion euros ($1.2 billion) to 80 billion euros, the people said, asking not to be named because the call was private. A decision on whether to increase the discount on the collateral posted -- making it harder for banks to get the cash -- could still be made at next week’s council meeting in Frankfurt. An ECB spokesman declined to comment.

As the ECB tries to keep Greek lenders afloat, it also needs to protect itself and the Greek central bank against any debt default. That’s becoming tougher as the Mediterranean nation stalls on reform promises that would unlock aid payments.

While some officials have pushed for collateral haircuts, the ECB was waiting to see if euro-area finance ministers made any advances in bailout negotiations in Brussels on Monday. Those talks ended with a statement from ministers that welcomed progress so far, yet said more time and effort is still needed before payments can be released.

Greek ELA is offered to solvent lenders to replace outflows of customer deposits. While the cash is provided by the Greek central bank at its own risk, the ECB’s Governing Council has the power to restrict the funding.

THE BANKSTER BAILOUTS WILL CONTINUE, UNTIL THERE ARE WHAT?

[Demeter]

5. Ex-BOE’s King Says Global Policy Easing Risks Currency War

SPEAKING ABOUT BANKSTER BAILOUTS

http://www.bloomberg.com/news/articles/2015-05-12/ex-boe-s-king-says-global-policy-easing-risks-currency-war

Former Bank of England Governor Mervyn King said central banks risk tipping the world into a currency war as they pursue ever looser policy to stimulate their economies.

“Many countries have now seen that they’ve taken monetary policy about as far as it can go,” King said in a speech on Tuesday in Oxford, England. “With interest rates close to zero, in some cases below, with fiscal policy constrained in many countries, the objective of economic policy will be to lower the exchange rate.”

“There is a real risk that focusing attention on bringing the exchange rate down will become an implicit or explicit currency war,” he said.

More than 20 countries have cut interest rates or taken other measures to ease monetary policy -- moves that can curb demand for their currencies -- since the start of the year. In the euro area, European Central Bank loosening has helped push the region’s currency down almost 20 percent against the dollar in the past year.

“In countries as far apart as New Zealand, Australia, Japan, France, Italy, central banks and governors are becoming more and more strident in their determination towards the exchange rate,” he said. “Some might say we’re already in a de facto currency war.”

NO KIDDING. MORE AT LINK

[Demeter]

6. Debt Traders to Fed: We Dare You to Try Raising Rates This Year

http://www.bloomberg.com/news/articles/2015-05-14/debt-traders-to-fed-we-dare-you-to-try-raising-rates-this-year

Go ahead, Federal Reserve, keep trying to prepare markets for an interest-rate increase this year.

It isn’t working.

The longer U.S. central bankers wait to initiate their tightening cycle, the more traders push back their expectations for when borrowing costs will start rising. On Thursday, futures contracts were implying that traders saw the fed funds rate at about 0.3 percent rate by December. That’s the lowest estimate of the year, and about half the forecast for the overnight lending benchmark that the Fed gave in March.

The market is essentially calling the Fed’s bluff. Traders are betting that policy makers won’t be able to raise rates this year without disrupting stocks and bonds, something that they’d really rather not do. So either U.S. policy makers will have to risk another market-wide tantrum, or they’ll give in to traders who embrace the idea of these historically low borrowing costs sticking around for longer.

“In the end, the Fed is more likely to ‘cave’ to the market as opposed to ‘fight it’ by hiking when the market does not have it priced in,” Jim Bianco, president of Bianco Research LLC, said in an e-mail. The Fed still sees low rates “as beneficial and does not want to undermine all the work they have done over the past several years.”

FRONT-RUNNING THE FEDERAL RESERVE---IS THIS A GREAT COUNTRY, OR WHAT?

[Demeter]

7. Dollar Bulls Wondering What Went Wrong in Drop to Four-Month Low

Dollar bulls are pondering what’s left of the rally that had pundits talking of dollar hegemony just months ago.

The U.S. currency slid toward the lowest in almost four months a day after stagnant retail sales became the latest data to undermine prospects for Federal Reserve interest-rate increases. The greenback climbed nine straight months through March on speculation the first hike in almost a decade was looming. The dollar’s decline brought it to the lowest level in almost three months against the euro.

“It’s not surprising that we’ve seen a healthy retracement,” Robert Sinche, a strategist at Amherst Pierpont Securities LLC in Stamford, Connecticut, said in a phone interview. Sluggish economic growth isn’t “consistent with early Fed tightening that we think is probably needed to support the next leg up for the dollar.”

The Bloomberg Dollar Spot Index, which tracks the greenback versus 10 major trading partners, slipped 0.4 percent to 1,150.04 as of 9:45 a.m. in New York, after it dropped 0.7 percent on Wednesday in the biggest one-day decline since March 23. The index is down 4.1 percent over the past month, stalling after a 20 percent rally that started in early July.

The greenback fell 0.4 percent to $1.1403 per euro, after dropping 1.3 percent Wednesday. That brought its decline versus the common currency to about 7 percent in the past month. It was little changed at 119 yen.

MORE AT http://www.bloomberg.com/news/articles/2015-05-13/euro-strengthens-for-second-day-versus-dollar-before-growth-data

INCLUDING VIDEO CLIP

[Demeter]

8. The Koch Brothers Lost More Than $1 Billion Yesterday(TUESDAY). Each

http://www.bloomberg.com/news/articles/2015-05-13/euro-strengthens-for-second-day-versus-dollar-before-growth-data

Billionaire brothers Charles and David Koch each lost $1.1 billion on Tuesday, a drop that might devastate even the wealthiest of the one percent. For the Kochs, the fifth- and sixth-richest people on earth, it represents just 2 percent of their individual fortunes...Yesterday's fall is the third such swing in the past 12 months and the fifth in the past three years, according to the Bloomberg Billionaires Index. Because the drops represent a loss of paper value based on market conditions that affect assets in their closely held Koch Industries, they are not likely to alter the Kochs' plans to spend $900 million to elect a Republican president in next year's election.



The brothers each own 42 percent of Koch Industries, the second-largest closely held company in the U.S. The company owns Georgia-Pacific as well as oil refineries, fertilizer makers, financial services firms, and dozens of other businesses. Overall, the brothers, each worth $50.5 billion, have added about $190 million to their fortunes in 2015.

Research for the post is derived from Bloomberg Billionaires Index data. Get the latest intelligence about the world's biggest fortunes on Twitter @bbgbillionaires.

[tclambert]

12. They added about $190 million to their fortunes this year? They must work really hard.

I'll bet they sometimes work right through lunch. Of course, working so hard they probably get really sweaty and have to change shirts by mid-afternoon. Their hands must be really calloused, too. Then late in the evenings, they have to rub liniment on each other's sore, aching muscles. They never really have time to enjoy their money. So sad.

[Demeter]

9. Millennials Are Ditching College and Heading Back to the Workplace

NOT EN MASSE, I'LL WARRANT

http://www.bloomberg.com/news/articles/2015-05-14/millennials-are-ditching-college-and-heading-back-to-workplace





In a sign of a stronger economy, more young adults are skipping college and heading back to work.

College enrollment in the spring semester dropped 2 percent from the year before, to 18.6 million, according to a report being released Thursday by the nonprofit National Student Clearinghouse Research Center. The steepest drop was among students in their mid-20s and older who are re-entering the workforce. The report doesn’t examine whether students are dropping out or declining to enroll in the first place.

Hardest hit are community colleges, as well as for-profit institutions, which are shutting down amid government accusations that they inflated the job prospects of graduates. While more working adults are shunning higher education, enrollment of traditional students who go to college fresh out of high school was unchanged.

Those students “are staying enrolled, even at the most expensive four-year institutions,” said Doug Shapiro, executive research director of the group, based in Herndon, Virginia, which collects figures directly from colleges.

Declining enrollment presents a challenge to President Barack Obama’s goal of boosting the college attainment rate to enhance U.S. economic competitiveness. In January, he proposed making community college entirely free. Even though studies show a college degree tends to pay off over a lifetime of earnings, many students are worried about their higher education debt, which now tops $1.2 trillion.

More potential college students are favoring the short-term benefits of a job, rather than the long-term returns of college, said Jason DeWitt, the center’s manager of research services. “If someone has bills to pay, they may not have a choice in the matter,” he said.


D'UH!

[Demeter]

10. For Anyone Concerned at Bond Rout, Don’t Say You Weren’t Warned

http://www.bloomberg.com/news/articles/2015-05-14/for-anyone-concerned-at-bond-rout-don-t-say-you-weren-t-warned

VIDEO CLIP AT LINK

[Demeter]

11. Five Reasons Chicago Is in Worse Shape Than Detroit

http://www.bloomberg.com/news/articles/2015-05-13/how-chicago-city-of-junk-just-moved-a-little-closer-to-detroit

...When Moody’s Investors Service downgraded Chicago’s debt on Tuesday to junk status, it deepened the city’s financial crisis and elevated comparisons to the industrial ruin 280 miles to the east.

Chicago partisans, starting with Mayor Rahm Emanuel, argue vehemently that their city isn’t Detroit. They cite population growth, a diverse economy bolstered by an abundance of Fortune 500 companies, vibrant neighborhoods and a booming tourist trade.

Yet here are five reasons, now more than ever, that suggest Chicago is akin to Detroit -- or, by some measures, even worse. Or, as Illinois Republican Governor Bruce Rauner put it last month: “Chicago is in deep, deep yogurt.”

BIG, SCARY NUMBERS: Chicago’s unfunded liability from four pension funds is $20 billion and growing, hitting every city resident with an obligation of about $7,400. Detroit’s, whose population of about 689,000 is roughly a quarter of Chicago’s, had a retirement funding gap of $3.5 billion, meaning each resident was liable for $5,100. A January 2014 report from Morningstar Municipal Credit Research showed that among the 25 largest cities and Puerto Rico, Chicago had the highest per-capita pension liability.

HOSTILE COURT: When Detroit filed for Chapter 9 in July 2013, a federal bankruptcy judge exerted his considerable powers and decreed that everyone -- taxpayers, employees, bondholders and creditors alike -- would get a haircut to settle the crisis. When the Illinois Supreme Court ruled on May 8, it said the state couldn’t cut pension benefits as part of a solution to restructure the state retirement system.

That decision sent a clear signal to Chicago, which was trying to follow the state’s benefit-cutting lead. Where the Detroit judge acted, the Illinois justices told elected officials to clean up the mess of their own making....

VIDEO AND MORE AT LINK...RAHMBO IS THE POINT MAN (POINT AT HIM!)

[Demeter]

14. Mr. Market Says Dodd-Frank Isn’t Working

http://www.nakedcapitalism.com/2015/05/mr-market-says-dodd-frank-isnt-working.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves here. While I am not convinced that breaking up big banks solves the “too big to fail” problem. Hedge fund LTCM nearly brought down the financial system in 1998. The comparatively small and simple by modern standards #4 bank in 1984, Continental Illinois, took seven years to resolve. Nevertheless, it would be a big step in the right direction. One of the advantages isn’t just reducing the size of firms but increasing their diversity. Andrew Haldane of the Bank of England warned that one of the big sources of instability in our modern financial system is a monoculture, in which the biggest firms are pursuing virtually identical strategies and using similar risk models (not just VaR, but FICO in their retail businesses) and trading approaches. Similarly, having more specialized players also means more contested regulatory demands as players with different customers and products jockey for regulatory advantage.

By Alexander Arapoglou, a professor of finance at the University of North Carolina’s Kenan-Flagler Business School, who has been a derivatives trader and head of risk management worldwide for various global financial institutions, and Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader

The objective of the 2010 Dodd-Frank legislation and other post-financial crisis regulatory reforms was to make the too big to fail banks so safe that they could not fail. Has this goal been achieved? The rating agencies answer no. If these agencies were convinced that the plethora of new rules– including increased capital requirements– had led big banks to achieve unquestioned credit standing, their bonds would be rated AAA. Instead, bond ratings for the top 5 US financial institutions now hover around single A. These ratings scream to anyone who’s listening that the too big to fail institutions may indeed, fail. Mr. Market agrees: debt issued by too big to fail banks currently trades at prices consistent with their credit ratings.

Reforms undertaken since the demise of Bear Stearns and Lehman Brothers have failed on several fronts. The too big too fail banks are not fail-safe. They are more brittle and unable to act as shock absorbers than they were before. Holders of their shares are not deploying capital efficiently and small business is starved of financing. Where did regulatory policy take a wrong turn? The missteps began during the financial crisis, when regulators were faced with two choices. The first would have turned back the clock on deregulation and re-erected walls between securities sales and trading, asset management, and commercial and retail banking. After such restructuring, smaller, more specialized financial firms would pose little risk to the rest of the economy if any failed...The alternative approach– the one that was followed– was to accept that there were institutions that were too big to fail. Making these giant institutions safer became the regulatory priority. New rules were enacted and more aggressive and intrusive regulatory scrutiny mandated so, it was hoped, to prevent financial institutions from shooting themselves in the foot.

As a result, bank examiners have moved into the offices of many financial firms full time. They attend board meetings and drive business priorities by asking questions. Decisions are scrutinized lest they encourage untoward risk taking. The list of good intentioned ideas goes on and on. But to what end? This matters because since 2008, too big to fail institutions have become much larger, posing an even greater risk to the economy than they did before. Bigger banks continue to increase their market share, the number of community banks has declined by 40%, and since June 2010, 500 of these have failed outright.

As banks have got bigger, many market participants— including at least one bank CEO– have conceded that these behemoths have become too big to manage. Goldman Sachs has reported that even JP Morgan Chase, one of the most profitable big banks, would be worth more broken into parts than kept whole– as is true with many conglomerates. The profitability of smaller, more narrowly-focused financial institutions usually exceeds that of institutions that follow a universal banking model, partly due to requirements that systemically important institutions maintain extra capital and overhead.

So how are we left? Dodd-Frank has sidestepped dealing with the central problem – a concentration of systemic risk that hangs over the real economy. Bank shareholders are worse off. Excessive capital requirements have burdened the economy without any offsetting increase in safety. The benefits to the broader economy of greater competition and better distribution have been forfeited without any offsetting gain. The corporate bond market has lost liquidity, adding costs and risk to the overall system for financing jobs, pensions, university endowments and insurance. And the decline of community banks has fallen hardest on small businesses, America’s biggest employer. If regulators continue to to stumble down the wrong regulatory road, their next step might be to limit competition further, raising prices to guarantee bank profitability. This approach would certainly be safe, yet it would be costly, not only in terms of the cost of bank services, but it would also stymie new business formation.

There is an alternative: not to turn the clock back blindly, but to examine first what it was that made the Depression-era Glass-Steagall financial structure so robust. The regulators of that time quite rightly focused on preventing conflicts of interest and financial contagion. Their solution was to prevent the otherwise inevitable consolidation and oligopoly that follows when single firms are allowed to offer universal banking services by instead splitting up the largest financial firms and confining them to separate lines of business. More modern experts on regulation, such as Senator Elizabeth Warren, just last week again endorsed the general Glass-Steagall approach. That framework wasn’t perfect; while it separated the domestic securities business from domestic banking, large banks continued to have securities operations in London and Tokyo. Yet while such regulations were firmly in place, the broader economy was insulated from boom-bust financial cycles generated by bank failures...A modern version would be more far reaching. The most important banking function is the clearing function. If the financial system crashes, paychecks and payments for industrial and other supplies are “lost” and the entire economy would grind to a halt. Thus, as a first step, clearing and custody functions should be separated from everything else. They must be protected and restructured so as to best survive any future systemic shock.

But reform must go further. Trading of derivatives, securities and foreign exchange involves significantly more risk than the rest of banking. These operations should also be segregated — and more completely than in the watered-down Volcker rule that the Federal Reserve has more or less indefinitely deferred. Likewise, asset management activities should be conducted in distinct companies to avoid self-dealing. Brokerage functions should be spun off to avoid conflicts. Here, Eliot Spitzer well understood more than a dozen years ago that allowing one firm to undertake investment banking and sell securities sparked practices that inflated the firm’s bottom line at the expense of its brokerage customers. Many current regulators still have failed to absorb this lesson. Mergers and acquisitions activity should be made apart from lending decisions.

Breaking up the biggest banks would eliminate the too big to fail problem. Yet that wouldn’t be the only gain. If Goldman is right, this approach would benefit bank shareholders as well. A better plan where everyone benefits…. What’s not to like?

[Demeter]

15. U.S. May Rip Up Accord Not to Prosecute UBS Over Libor Rigging

http://finance.yahoo.com/news/u-set-rip-ubs-libor-220439564.html

The U.S. Justice Department is set to rip up its agreement not to prosecute UBS Group AG for rigging benchmark interest rates, according to a person familiar with the matter, taking a new step to hold banks accountable for repeat offenses. The move by the U.S. would be a first for the industry, making good on a March threat by a senior Justice Department official to revoke such agreements and putting banks on notice that these accords can be unwound if misconduct continues.

UBS is among the five banks that are poised to reach settlements with U.S. regulators over allegations that they manipulated currency markets, people familiar with the situation have said. Four of them -- Citigroup Inc., JPMorgan Chase & Co., Barclays Plc and Royal Bank of Scotland Group Plc -- will likely enter pleas related to antitrust violations, people familiar with the talks have said. UBS’s cooperation in the currency probe may help shield it from antitrust charges in that matter. However, the bank is still exposed to fraud charges in that case, and any admission of wrongdoing could also put it in violation of an earlier deal the Zurich-based bank struck with the Justice Department.

In a December 2012 non-prosecution agreement with the U.S. to resolve a worldwide investigation into the manipulation of the London interbank offered rate, or Libor, UBS promised not to commit crimes for two years. That agreement, which was set to expire last year, was extended through December as the Justice Department investigated currency rigging. As part of the currency settlements, which are set to be announced in coming days, UBS is expected to plead guilty to a charge stemming from the Libor agreement, said the person, who asked not to be named because the settlement hasn’t been announced...Leslie Caldwell, the head of the Justice Department’s criminal division, said in March she wouldn’t hesitate to tear up non- or deferred-prosecution agreements in exchange for banks’ cooperation in other probes.

The Justice Department has relied on these deals to resolve investigations into wrongdoing in the financial industry including money laundering and interest-rate rigging.

[Demeter]

16. UPDATE: THIS AGREEMENT HAS BEEN VOIDED

http://www.reuters.com/article/2015/05/14/us-forex-ubs-justice-idUSKBN0NZ2M720150514?feedType=RSS&feedName=businessNews

The U.S. Justice Department has voided a 2012 settlement with UBS AG related to interest-rate rigging, the Wall Street Journal reported on Thursday.

The newspaper, citing current and former government officials, said the move came after more than a year of talks between the Swiss bank and the U.S. government.

It added that the negotiations were expected next week to result in UBS paying a fine of about $200 million and pleading guilty to allegations that UBS traders manipulated the London interbank offered rate, or Libor, before 2012.

[Demeter]

17. Lehman Sues Federal Home Loan Bank Over $150 Million Payout

http://www.bloomberg.com/news/articles/2015-05-14/lehman-sues-federal-home-loan-bank-of-n-y-seeking-swaps-payout-i9oj35w6?cmpid=yhoo

Lehman Brothers Holdings Inc. sued the Federal Home Loan Bank of New York, claiming it failed to pay out more than $150 million when it terminated swaps in 2008 as the remnants of Lehman’s estate seek cash to pay creditors more than six years after its collapse.

The Federal Home Loan Bank terminated 356 mostly interest-rate swaps for Lehman Brothers Special Financing Inc. three days after the parent’s bankruptcy filing on Sept. 15, 2008, according to a complaint filed in U.S. Bankruptcy Court in Manhattan Wednesday. The lender allegedly complicated the matter by filing a $130 million claim in the bankruptcy case.

The government-backed bank’s valuation of the swaps “was commercially unreasonable and inconsistent,” Lehman said.

Lehman and its brokerage unit began separate bankruptcies in September 2008. The New York-based parent’s reorganization plan was approved in December 2011 and implemented in March 2012.

Brian Finnegan, a spokesman for the home loan bank, declined to comment on the lawsuit.

[Demeter]

18. Economist: We're on Pace for Full Employment in Less Than a Year

WHAT IS HE DRINKING? ABSINTHE?

IT'S FAR MORE LIKELY WE WILL BE AT FULL UNEMPLOYMENT IN A YEAR.

http://www.bloomberg.com/news/articles/2015-05-14/economist-we-re-on-pace-for-full-employment-in-less-than-a-year

David Doyle, an analyst with Macquarie Capital Markets, thinks the U.S. economy could be at full employment within a year. First, he estimates the amount of people who are likely to return to the labour force and adds that to the number of people currently looking for work but cannot find it. That group consists of about 21.1-million Americans. He then factors in that 55,000 jobs per month need to be added just to keep up with the growth of the population. Under Doyle’s calculations, if non-farm payrolls rise by 250,000, labour slack will be reduced by 195,000. After 11 months, that would bring the unemployment rate down to 4.9 percent.

Here's his math:



AND IF PIGS HAD WINGS, THEY'D BE PIG-EONS.

[Demeter]

19. Franchise Loans Keep Blowing Up, and the Government Keeps Backing Them

http://www.bloomberg.com/news/articles/2015-05-14/franchise-loans-keep-blowing-up-and-the-government-keeps-backing-them

Buying a franchise is a risky business. Seventeen percent of franchise loans guaranteed by the U.S. Small Business Administration failed from 1991 to 2010, new data show. At the end of the period, almost one in five franchise owners went splat.

The loans, made by private lenders, weren’t merely delinquent. Failed loans are those charged off by the SBA, which guarantees as much as 85 percent of the value of working-capital loans through its 7(a) program. Even after liquidating collateral, which can include franchise owners’ homes, the government had to use taxpayer dollars to make the lenders whole.

Some franchises are worse bets than others. Meineke (22 percent), Quiznos (25 percent), and Huntington Learning Center (31 percent) had some of the highest failure rates among well-known brands....


MORE JOY AT LINK

[Demeter]

20. U.S. charges Perella Weinberg banker, father for insider trading

http://news.yahoo.com/u-charges-banker-father-insider-trading-scheme-144147216--finance.html

U.S. authorities brought criminal charges on Thursday against an investment banker at Perella Weinberg Partners and his father for allegedly engaging in insider trading ahead of five healthcare mergers. Sean Stewart, who previously worked at JPMorgan Chase & Co, tipped off Robert Stewart, his father, about the mergers, enabling him and a business associate to make $1.16 million, according to a criminal complaint filed in Manhattan federal court. Robert Stewart, 60, was arrested on Thursday morning in New York, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan said. Sean Stewart, 34, is not in custody, she said. Lawyers for the Stewarts did not immediately respond to requests for comment.

The case marked the latest in a string of insider prosecutions under Bharara since he took office in 2009 resulting in convictions against more than 80 people.

The criminal complaint did not identify Perella Weinberg or JPMorgan by name, but they could be ascertained from Sean Stewart's LinkedIn biography and in records maintained by the Financial Industry Regulatory Authority. Representatives for Perella Weinberg, which he joined as a managing director in 2011, and JPMorgan, where he was previously a vice president, did not immediately respond to requests for comment.

According to the complaint, Sean Stewart routinely tipped his father about mergers that the two banks were advising on in exchange for benefits including $10,000 for his 2011 wedding. At JPMorgan, those mergers included INC Research's [INCRR.UL] 2011 acquisition of Kendle International Inc, and Apax Partners' buyout that year of KCI Concepts Inc. At Perella Weinberg, the deals included Hologic Inc's acquisition of Gen-Probe Inc in 2012, Linde AG's purchase of Lincare Holdings Inc that year, and Becton, Dickinson & Co's deal for CareFusion Corp in October.

Robert Stewart traded ahead of those healthcare deals being made public, as did one of his friends and business associates, the complaint said. The friend, who is not named in the court papers, pleaded guilty on May 12 and is cooperating with authorities, according to complaint. The complaint charges the Stewarts with nine counts including conspiracy to commit securities fraud, conspiracy to commit wire fraud, securities fraud and securities fraud in connection with a tender offer.

[Demeter]

21. THE HUMOR ISIN THE DESPAIR

[Demeter]

24. Wolf Richter: Why the Heck Is the Trucking Business Slowing Down?

LACK OF DEMAND, WOLF, LACK OF DEMAND DUE TO LACK OF THE DO-RE-ME

http://www.nakedcapitalism.com/2015/05/wolf-richter-why-the-heck-is-the-trucking-business-slowing-down.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.

I was forewarned. On April 25, Julian the trucker posted this comment on WOLF STREET:

Have been trapped on the West Coast for the last week. Freight has slowed to a crawl, with way too much time on the loads, and the truck stops are filling up too early in the day. I had to pay for a parking place in Castaic, CA, night before last because the Pilot was full at 4:30 in the afternoon. Finally got a load to Little Rock. But it doesn’t load till late tonight and has more time on it than usual. We usually experience slowdowns before the rest of the country becomes aware of them.

On May 2, he wrote:

I have lost 5 days either waiting for a load or waiting to load or deliver, since leaving on the 12th of April. I have seen this pattern before in my 34 years of trucking – we always get hit first in any downturn, just as we always feel the upturn first. As you regulars know, my company has done several strategic things since the crash in 08 and work has been steady since then. My warning is anecdotal but you all are well of the inventory overshoot in Q1.

And on May 4, he wrote:

Freight is still slow. I barely have 7,000 miles on the clock since the 12th of April. A normal month is 10,000 + miles.

As Julian said, it’s anecdotal. Maybe he was just unlucky. Maybe he got tangled up in some kind of snafu somewhere. A sample size of n =1 doesn’t represent the vast US trucking industry. But rumblings have been coming from other ends of the industry, triggering some, let’s say, intriguing explanations.

Rates for intermodal containers by rail, as reported by the Cass Intermodal Price Index, dropped on a year over year basis in January, February, and March. April hasn’t been released yet. When the surprising March decline came out, Cass tried to make some sense of it:

With diesel prices continuing to fall, loads are shifting (to the extent capacity is available) from domestic intermodal back to over-the-road truck, which is challenging demand and pricing power for intermodal.

So railroads were facing weaker demand and losing pricing power as shippers were shifting loads to trucks because diesel has gotten cheaper? That’s the theory. In reality, as Julian experienced, and as it turns out other truckers experienced, shipping volumes by truck fell in March from prior year. It seemed like a fluke, something that would bounce back in April, but in April, according to the just released Cass Freight Index, shipping volumes by truck fell again. These two months in a row of year-over-year declines came as a particular surprise because 2014 had been a banner year, according to the American Trucking Association. On Monday, it reported that revenues by trucking companies jumped to an all-time record of $700.4 billion, finally beating the prior record set before the Financial Crisis. You could practically hear the exuberance in the report:

Increases in freight, combined with continued tight capacity helped drive revenues and coupled with lower fuel prices, we saw motor carriers go on a buying spree for new trucks as they replaced older equipment.

This vast $700-billion machinery with its 3.4 million drivers that hauled nearly 10 billion tons last year – 69% of the nation’s freight – is an excellent early warning system for the overall economy. So when the spot rates for tractor-trailers started dropping in April, it triggered all kinds of explanations at the time, for example, in the Journal of Commerce:

Rather than a sign of underlying economic weakness, the softening spot market may indicate shippers are finding the trucking capacity they need, for now, with contractual partners. Shippers, carriers, and logistics operations at a recent transportation industry event said the US trucking market shifted back toward a rough equilibrium in capacity in the first quarter.

Given the exuberance of 2014, carriers have added lots of new trucks to replace older equipment and to add capacity, but by mid-April, the phrase “excess capacity” started cropping up. And the idea that the spot market was suffering as shippers were relying more on their contractual partners made sense. But turns out, overall shipping volumes and money spent on shipments have been dropping for two months...

[Demeter]

27. I've got a theme...we are going on another Carribean Vacation

which will combine the following story lines:

[Fuddnik]

31. I want to go to Cuba.

But, I can't find any worthwhile information.

[Demeter]

33. We did Cuba February 16th (El diez y seis de febrero)

http://www.democraticunderground.com/111664703

Oh, you mean, "go" go? I don't think Obama has loosened the borders enough yet for cruise ships (unless you get on one in a different country) and you probably still need the visa stuff.

It's like pulling pennies out of Scrooge trying to get anything done in this Administration...unless you ARE Scrooge or the equivalent.

[Demeter]

28. Insurance holding firm Assurant Inc. to exit health care marketplace by 2016

http://www.livewellnebraska.com/health/insurance-holding-firm-assurant-inc-to-exit-health-care-marketplace/article_07dd14b5-3a77-5429-b641-85f5dc5e422c.html



Insurance holding company Assurant Inc. has announced its intention to exit the health insurance marketplace by 2016 and has retained investment banking firm Barclays Capital to locate a potential buyer for its health insurance and employee benefits subsidiaries.

Like the legions of health insurers that have exited the market before and after passage of the Affordable Care Act, or ACA, the reason is simple — quarterly losses in the millions with seemingly no end in sight.

During the 2015 open enrollment season, Assurant Health provided insurance options through public health insurance exchanges in 16 states, including Nebraska. And at the close of 2014, Assurant insured 8,436 Nebraskans through both individual and group health insurance policy types; and thousands more at any given time through their temporary/short-term major medical policies, which provide gap protection for a specified period of time.

In the case of Assurant Health (and its more recognizable subsidiary insurers in the health insurance market, including Time, John Alden Life and Union Security Life), it appears that the ACA was the proverbial “straw that broke the camel’s back.” Here’s what we know, based on a number of media outlets and an Assurant press release:

Despite the fact that Assurant Health insures nearly 1 million people in the U.S. and had premium income of $2 billion in 2014, it is hemorrhaging cash. In fact, 2014’s reported $64 million in losses pales in comparison to the projected loss of upward of $90 million in the first quarter of 2015. Much like the factors precipitating the recent demise of Iowa-based insurer CoOportunity Health, Assurant blamed its recent spate of losses on a variety of ACA-related factors, including:

» A reduction in the amount of funds expected from the ACA’s reinsurance programs, which were designed to assist insurers who suffered losses on the public exchanges.

» Plan offerings that attracted sicker-than-average people.

» Higher-than-anticipated claims from ACA-compliant policies sold both on and off public exchanges.

» The various ACA delays that disrupted the marketplace by allowing some policyholders to maintain non-ACA-compliant plans, while moving others to full compliance.

Adding to Assurant’s challenges was its inability to compete “toe to toe” with the much larger insurers having their own Preferred Provider Organization networks, such as United Healthcare, Aetna, Cigna and the various Blues plans. Such networks are able to negotiate lower health care pricing on behalf of their customers, which directly affects premium rate setting and risk management.

One need look no further than Assurant’s reported 2014 medical loss ratio of a whopping 104.3 percent to see the overall effect of the ACA and relatively higher claims costs. In other words, for every $1 of premium revenue Assurant collected, it paid $1.043 in claims. In 2012 Assurant inked a deal with Aetna to offer its network to Assurant’s nearly 1 million policyholders, but it appears to be a case of too little, too late.

Sadly, Assurant Health’s anticipated departure from the health insurance industry will only worsen the existing problem of a decided lack of competition in this market sector. A 2014 American Medical Association report found that 72 percent of the U.S. health insurance market lacked competition. Worse yet, Nebraska was ranked No. 9 on a list of the least competitive markets. According to the study, our health insurance market in Nebraska is dominated by two insurers: Blue Cross Blue Shield of Nebraska, with 56 percent of the market, and United Healthcare, 21 percent.

As we know from other virtual monopolies (water/waste management, high-speed broadband Internet connectivity, airlines and satellite radio, to name a few), fewer competitors can lead to higher prices, innovation stagnation and lower value for the dollar. Of course, there are some who think health care in the U.S. should be managed by a single provider — the federal government. Even if that were to happen, there would be a need for third-party administrators (like Medicare uses today) to facilitate the health care financing process...MORE

SO? THERE IS NO DOWNSIDE THAT I CAN SEE....