STOCK MARKET WATCH - Tuesday, 10 January 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 10 January 2012[/font]

SMW for 9 January 2012

AT THE CLOSING BELL ON 9 January 2012
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Dow Jones 12,392.69 +32.77 (0.27%)
S&P 500 1,280.70 +2.89 (0.23%)
Nasdaq 2,676.56 +2.34 (0.09%)
[font color=red]10 Year 1.95% -0.02 (-1.02%)
30 Year 3.02% -0.02 (-0.66%)



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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
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Yahoo Finance
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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
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
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William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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Financial Sector Officials Convicted since 1/20/09 = [/font][font color=red]12[/font]


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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]

[Fuddnik]

1. Recco numbrero uno!

I never could speak Arizonian.

[Tansy_Gold]

9. That's okay

I don't speak Floridish.

[Demeter]

2. Cities Hit as Funds From Bonds Pay Other Bills FROM NOVEMBER

http://online.wsj.com/article/SB10001424052970203503204577035931801712666.html?mod=WSJ_hp_LEFTWhatsNewsCollection

When the recession squeezed Miami's budget in recent years, officials reached into funds raised for road repairs and other projects to plug the shortfall...Now, the city is paying a price. The moves triggered lawsuits and a federal investigation, in a brouhaha that holds ramifications for how municipalities nationwide maneuver around unprecedented money problems.Cities and states across the country are using money designated for specific purposes—such as fixing roads or sewers—in order to fill financial holes elsewhere, according to public officials and records. The moves are exposing municipalities to controversy, as federal regulators and local auditors are more heavily scrutinizing their finances to protect bond buyers and taxpayers...In Miami, the Securities and Exchange Commission is wrapping up an investigation into whether the city used funds intended for roads and other purposes to fill budget gaps elsewhere, according to people close to the probe. Bondholders are suing, saying the moves obscured the city's true finances.

The city's former budget director is also suing, claiming he was fired for cooperating with the SEC and the Federal Bureau of Investigation. Then, in late October, the city's former auditor sued, alleging in the suit that he lost his job because he flagged problems then "participated, at the request of the Securities and Exchange Commission, in an investigation into whether the City of Miami was engaging in behavior tantamount to stock fraud in the marketing of its municipal bonds." Both so-called whistleblower cases are filed in a circuit court in Miami-Dade County. "If I had looked the other way, I'd still have my job," said Victor Igwe, who had worked as Miami's internal auditor for 12 years until late June, after his contract wasn't renewed. City officials declined to comment on the departure of the two officials.

"The city is cooperating fully with the investigation," said Ivan Harris, an attorney at Morgan Lewis & Bockius LLP who is representing Miami in the SEC matter. He said the city "stands by the accounting for the transfers" because some of the funds had been unused for their designated purposes and other funds were replaced...The SEC declined to comment.

For municipalities, the legality and potential penalties of moving money around range widely. Misusing money raised by publicly sold infrastructure bonds, for example, could violate civil laws protecting bond buyers. Other cases could violate federal or state public-finance disclosure laws, accounting rules, or regulations governing how agencies spend federal funds...Elaine Greenberg, who runs the SEC municipal unit, said the agency is looking for cases where governments might use money from a bond offering for purposes not specified in the offering documents. "You can't float a bond for one thing and use the money for another," she said. The agency also is on the hunt for governments moving money reserved for specific purposes.

[dixiegrrrrl]

52. Wonder how many other cities are doing the same???

[Demeter]

54. All the stupid ones

[Demeter]

3. America Beyond Capitalism: Is It Possible?

http://www.alternet.org/story/153646/america_beyond_capitalism%3A_is_it_possible?page=entire

Thousands of co-ops, worker-owned businesses, land trusts, and municipal enterprises are quietly beginning to democratize the deep substructure of the American economic system.


The following article is adapted from "America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy," a new paperback edition of which will be published this month by The Democracy Collaborative and Dollars & Sense.

“Black Monday,” September 19, 1977, was the day 34 years ago when the shuttering of the Youngstown Sheet and Tube steel mill threw 5,000 steelworkers onto the streets of their decaying Midwestern hometown. No local, state or federal programs offered significant help. Steelworkers called training programs “funeral insurance”: they led nowhere since there were no other jobs available. Inspired by a young steelworker, an ecumenical religious coalition put forward a plan for community-worker ownership of the giant mill. The plan captured widespread media attention, the support of numerous Democrats and Republicans (including the conservative governor of the state at the time), and an initial $200 million in loan guarantees from the Carter administration.

Corporate and other political maneuvering in the end undercut the Youngstown initiative. Nonetheless, the effort had ongoing impact, especially in Ohio, where the idea of worker-ownership became widespread in significant part as the result of publicity and educational efforts traceable to the Youngstown effort—and because of the depth of policy failures and the continuing pain of deindustrialization throughout the state. In the more than three decades since that effott, numerous employee-owned companies—inspired directly and indirectly by the effort to save the Youngstown mill—have been developed in Ohio. Individual lives were also changed, among them that of the late John Logue, a professor at Kent State University who established the Ohio Employee Ownership Center, an organization that provides technical and other assistance to help firms across the state become worker-owned.

There has also been an evolution in the position of the United Steelworkers union. In the late 1970s the union saw worker-ownership as a threat to organizing, and it opposed efforts by local steelworkers to explore employee-owned institution-building in cities like Youngstown. Over the decades, however, the union changed its position as its leaders saw the need to supplement traditional forms of labor organizing with other strategies. The union has now become a strong advocate of worker ownership, and is actively working to develop new models based upon the Mondragón Cooperative Corporation in the Basque country of Spain. This highly successful grouping of worker-owned cooperatives employs 85,000 people in fields ranging from sophisticated medical technology and the production of appliances to large supermarkets and a credit union with over 21 billion euros in assets.

The developmental trajectory from Youngstown to today illustrates what might be called “forced institutional innovation”—a process that, once underway, also suggests further possibilities for larger-scale and more refined development both within Ohio and elsewhere—especially as many other parts of the nation now experience the massive job losses and community decay that hit Ohio and other rustbelt states three decades ago. Critically, all involve new ways to give concrete meaning to the idea of democratizing capital.

MORE

**********************************************************************************
Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative, is the author of America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy, a new paperback edition of which will be published this month by The Democracy Collaborative and Dollars & Sense. He is working on a new book on long-term institutional and systemic change.

[Demeter]

4. Record Heat Floods America With Temperatures 40 Degrees Above Normal

http://www.alternet.org/newsandviews/article/760102/record_heat_floods_america_with_temperatures_40_degrees_above_normal/#paragraph2

Fueled by billions of tons of greenhouse pollution, a surge of record warmth has flooded the United States, shattering records from southern California to North Dakota. “Temperatures have reached up to 40 degrees above early January averages in North Dakota,” the Weather Channel reports. Cities are seeing late-April temperatures at the start of January — Minot, ND hit 61 degrees, Aberdeen, SD hit 63 degrees, and Williston, ND hit 58 degrees, all-time record highs for the month of January.

Daily record highs have been set in Des Moines, Iowa (65 degrees), Rapid City, S.D. (73 degrees), International Falls, Minn. (46 degrees), St. Louis, Mo. (66 degrees) and Fargo, N.D. (55 degrees), to name a few locations. Although the record warmth subsides on Friday for the Plains, the mild air mass will bully its way eastward. We’re talking temperatures in cities such as Minneapolis, Milwaukee, Chicago, St. Louis, Indianapolis, Detroit and Cincinnati enjoying highs on the order of 10-to-20 degrees above average. High temperatures around 5-to-15 degrees above average will make it all the way to the East Coast including New York City, Washington, D.C. and Charlotte, N.C.

“There has never been a 60 degree temperature recorded during the first week of January in Minnesota’s modern climate record.” Southwestern Minnesota reached the lower 60s.

In Southern California, decades-old records were snapped with 80- and even 90-degree weather, sending surfers to the beaches. Long Beach hit 88 degrees, UCLA hit 89 degrees, San Diego hit 83 degrees, and San Gabriel reached 91.
Although this heat is welcome to schoolchildren, this breakdown of normal seasons threatens serious economic disruption. The total lack of snowcover in the Dakotas means that wildland fires are much more likely. The seasonally cold air following this surge of heat will severely damage the winter crops that are usually protected by at least 3 inches of snow at this time of year.

By Brad Johnson | Sourced from ThinkProgress

[Demeter]

5. Where have all the assets gone? by David Atkins SHAMELESSLY STOLEN

http://digbysblog.blogspot.com/2012/01/where-have-all-assets-gone-by.html



I've written at length before about ideological battle between those who want to increase asset values, and those who want to see wage growth. To make a long story short, a variety of forces, the strongest of which are globalization and increased access to an endless supply of cheap labor, have conspired to depress wages. Rather than do the hard work of fixing the system to help a globally connected world synchronize in harmony with broad-based wage growth, policy makers chose to disguise the lack of wage growth by maximizing asset growth, and attempted to push as many people as possible away from wage orientation and into asset orientation, specifically stock investments and housing....All of American policy was designed to cheapen the price of goods, to extend credit, and to maximize the prices of assets in attempt to create more Capitalists and hide the fact that wages were declining against inflation, and that non-bubble-related jobs were disappearing. The problem, of course, is that asset prices are volatile and prone to speculative bubbles. When the bubbles inevitably burst, it wasn't just speculators who got hurt this time: it was everybody who had been suckered into the asset-based con. When the recoveries from the speculative bubbles did belatedly show up, they tended to be increasingly jobless recoveries--just as one might have expected from a society where both boom and bust depend on quick-buck speculation rather than productive long-term investment.

But the problem doesn't end there. There's also the fact that regular Americans don't have remotely enough wealth to buy into the asset-based ponzi scheme in the first place...The attempt to disguise wage stagnation and decline with asset growth has been a marked failure on many levels, not least of which is the obvious fact that not enough Americans have access to enough wealth to make the model work. Cheap, easy access to homeownership was supposed to be the main fix for that. But that blew up just a few years ago, taking the entire economy with it. 401Ks were supposed to be another fix, but people have lost confidence in those too, as those who own substantial enough 401Ks to retire never know just how big their nest egg will be from year to year, while those without significant 401Ks or union pensions don't have much retirement at all beyond Social Security....Whether they can articulate it or not, what has most progressives most incensed about the Obama Administration's domestic policy is that it has ultimately hewed to the same asset-based economic model. When the Administration could be progressive on cutting costs or ensuring equality without negatively impacting assets, it did so. That's what the ACA, the Ledbetter Act, the repeal of Don't Ask Don't Tell and numerous other left-leaning Administration moves were designed to do. But the Administration has been very reticent to take any actions that would negatively impact the value of assets.

That's not meant to be a knock on the Obama Administration alone. Almost no one in government is really talking much about this problem, which lies at the root of so many others. Certainly not Republicans who are just fine with the system and would like to slash the safety net while expanding asset inflating policies, and scarcely any Democrats, either. Certainly not the pundits who, when they can be bothered to talk about it at all, either celebrate the trend (Thomas Friedman) or figure that a simple combination of infrastructure spending and redistributive taxation can solve it (Paul Krugman.) Not even much of the progressive movement, which is stuck either in issue silos or railing against "corruption" and the influence of the one percent, as if all the country's greedy villains had somehow gotten the people's votes and assembled into Washington D.C. solely for the purpose of self-enrichment while pretending to fight one another.

The problem is systemic and broad-based. The entire country--and, indeed much of the rest of the industrialized world--looked at the threat posed by global labor competition and decided to jump into a razor blade-filled pool of asset speculation. The Right celebrated its victory, and the Left went neoliberal and decided to roll with it while the bubbles inflated, creating a fleeting mirage of universal prosperity. When the bubbles popped, the Right went off an ideological cliff to defend its position, and the Left was sent scrambling to find its soul again. Neither side has quite regained control of its senses or its moral center....But whoever the scapegoat is, they won't get their assets back to bubble highs unless they're part of the elite rich. And given legislators' priorities of the last 30 years and more, they're certainly not going to get their wages back, either.

[Demeter]

6. Supreme Court Upholds Ban on Foreigner Spending in US Campaigns

http://www.alternet.org/newsandviews/article/760831/supreme_court_upholds_ban_on_foreigner_spending_in_us_campaigns/#paragraph3

The Supreme Court... upheld a lower federal court decision that said foreigners legally living in the U.S. cannot spend money on U.S. elections.

The case was Bluman v. FEC and involved a First Amendment challenge of a federal law barring foreigners living in the U.S., but not permanent residents, from spending in U.S. elections. The question of whether this ruling consistent with Citizens United has been bouncing around the blogosphere, because in that case the court held that corporations may not be barred from spending independently in campaigns--saying that form of political speech must not be impeded.

The Court gave no explanation because it issued a summary judgment. But it appears that there is a hierarchy for who has political speech rights under the Roberts Court. Corporations and individual citizens have them--and are at one level--but not so with legal residents who are not citizens. The Court did not explain this inconsistency, although it underscores that it finds 'speech' by certain sectors of society desirable and others not.

[Demeter]

7. Wall Street Incomes Plummet (Sort Of)

http://www.alternet.org/newsandviews/article/760514/wall_street_incomes_plummet_%28sort_of%29/#paragraph5

Today's big Wall Street Journal story is that, because of 2011's bad year, fourth-quarter incomes on Wall Street hit the lowest since 2008, when the financial crisis hit. And while the top executives will still be taking home huge amounts of income compared to the rest of us, they are getting their due in the form of hefty chunks now gone:


[DIV CLASS="excerpt] At Goldman Sachs Group Inc., many of the roughly 400 partners can expect to see their 2011 pay cut at least in half from 2010, according to people familiar with the situation. Pay for some employees in the New York company's fixed-income trading business will shrink by 60%, with some workers getting no bonus, these people said.

Morgan Stanley is expected to shrink bonuses for some investment bankers and traders by 30% to 40% from 2010, said people familiar with the matter.

Pay worries have been mounting up and down Wall Street for months amid lower trading revenue, languid deal-making, new regulations and anxiety about the global economy. Other pressures include weak financial-company stock prices and sour public sentiment that culminated in the Occupy Wall Street encampment in New York.



That last line seems to indicate that the WSJ perceives Occupy as having an impact on extremely disproportionate executive pay? Say it ain't so! But as the WSJ's own graph illustrates, even with a 50% cut, Wall Street employees are still taking home amounts that would keep an average four-person family in relative luxury—even in New York. It notes that in 2007, the average Goldman Sachs employee—not executive, but average employee—was raking in $661,000 per year. In 2011? Down to $385,000. So, with much of the country struggling to keep out of poverty, you'll excuse us if we withhold our sympathy vote...



By Julianne Escobedo Shepherd | Sourced from AlterNet

[Demeter]

8. I'm putting my sinuses to bed

I feel delirious enough even before reading this stuff.

[Demeter]

10. Looks like flight to $ and Gold

That can't be good for the casinos...

[Po_d Mainiac]

19. Multiple exchange margin increases in PM's to commense in 5-4-3 n/t

[Demeter]

11. Why Are Conservatives Rooting for Job Losses?

http://www.alternet.org/newsandviews/article/760513/why_are_conservatives_rooting_for_job_losses/#paragraph4

Brenda Buttner, a senior business correspondent at Fox News, reflected yesterday on the latest jobs report, and made a curious comment when asked about which areas of the economy aren’t faring well.

“Well, government is a little bit losing jobs. That’s something we see as a positive because we want government to lose jobs to get more in line with the private sector.”

This is not an uncommon sentiment on the right. Two months ago, George Will argued it’s “good” that the “public sector happily shrank by 24,000 jobs” in October.

When conservatives, during a jobs crisis, are cheering public-sector layoffs, insisting that thousands of additional unemployed workers is “a positive,” there’s a problem with the state of the debate...

I'LL SAY THERE IS...ESPECIALLY THE DEAD SILENCE ON THE OTHER SIDE....

[Demeter]

12. Tea Party Mayor Rejects Federally Funded, Job-Creating Amtrak Line

http://www.alternet.org/newsandviews/article/752910/absurd%3A_tea_party_mayor_rejects_federally_funded%2C_job-creating_amtrak_line/#paragraph6

Um, I thought it was evil freedom-hating liberals who wanted to sabotage business:

... In what could be a new high water mark of anti-Washington sentiment, the city of Troy, Mich., is rejecting a long-planned transportation center whose construction would have been fully financed with federal stimulus money.

The terminal, which would help Troy become a transportation node on an upgraded Detroit-to-Chicago Amtrak line, was hailed by supporters as a way to create jobs and to spur economic development. But federal money is federal money, so with the urging of the new mayor, who helped found the local Tea Party chapter, the City Council cast a 4-to-3 vote this week against granting a crucial contract, sending the project into limbo.

"There's nothing free about government money," Mayor Janice Daniels said in an interview. "It's never free, and it's crippling our way of life."

... The Troy transit center's construction ... required no local contribution, and its predicted annual maintenance cost of $31,000 was, in the context of the city's $50 million budget, "de minimis," said Mark Miller, the assistant city manager....

Look who's upset:

Taking Tea Party reasoning to the local level has outraged supporters of the transit center, which has been in the works for a decade. Michele Hodges, the president of the Troy Chamber of Commerce, which supports the transit project, said that her organization "will be a pit bull for what's best for this community."

Hey, way to go, Chamber of Commerce geniuses. At the national level, you got on board the tea party crazy train in 2010, and look what happened: when your proteges aren't putting the full faith and credit of the U.S. at risk in D.C. or endeavoring to reduce the take-home pay of 160 million Americans in a recession, at the local level they're doing the likes of this. You get what you pay for.

"I am drafting a memo to all Magna group presidents and our Magna corporate executives strongly recommending that Magna International no longer consider the City of Troy for future site considerations, expansions or new job creation," wrote Frank W. Ervin III, the company's manager of government affairs. "I have also recommended that where ever and when ever possible we reduce our footprint and employment level in Troy" in favor of communities that act in the best interests of residents and business and that do "not simply use their public position to advance their own private agenda."
Yes, but the dirty hippie Democrats are the ones who hate business.

And yes, the mayor has made the national news before:

The transit fight is not Mayor Daniels's first brush with controversy. Earlier this month, it was revealed that she posted a message to her Facebook page last June, after New York State approved same-sex marriage, stating, "I think I am going to throw away my I Love New York carrying bag now that queers can get married there."

Look, I have seriously mixed feelings about the old-school chumminess between business and government. But I'm just asking the good burghers of the business establishment to recognize what they were doing to themselves when they threw in with the Ayn Rand Fan Club. Maybe they should ask themselves who's helping them more, the president who insults them occasionally but hasn't thrown a single one of them in jail, or people like Janice Daniels who love capitalism the way a stalker loves a celebrity.

[Hugin]

15. For the same reason they are rooting for high oil prices.

It's all to get what they see as the wrong sort out of his job.

IMHO, the silence from the other side is also the RW's doing... Their screeching and caterwhalling is intended to squeltch out any reasonable discussion. However, the Dems can't say they were not warned this was going to happen.

[Demeter]

13. Why 'Corporate Psychopaths' May Really be to Blame for the Recession

http://www.alternet.org/newsandviews/article/758428/why_%27corporate_psychopaths%27_may_really_be_to_blame_for_the_recession/#paragraph5


Looks like the soulless SOBs who wrecked our economy may really be "corporate psychopaths," and yep, they are still in control of our financial institutions.

According to Bloomberg News:

Clive R. Boddy, most recently a professor at the Nottingham Business School at Nottingham Trent University, says psychopaths are the 1 percent of "people who, perhaps due to physical factors to do with abnormal brain connectivity and chemistry" lack a "conscience, have few emotions and display an inability to have any feelings, sympathy or empathy for other people."

As a result, Boddy argues in a recent issue of the Journal of Business Ethics, such people are "extraordinarily cold, much more calculating and ruthless towards others than most people are and therefore a menace to the companies they work for and to society."

How do people with such obvious personality flaws make it to the top of seemingly successful corporations? Boddy says psychopaths take advantage of the "relative chaotic nature of the modern corporation," including "rapid change, constant renewal" and high turnover of "key personnel." Such circumstances allow them to ascend through a combination of "charm" and "charisma," which makes "their behaviour invisible" and "makes them appear normal and even to be ideal leaders."

According to Bloomberg News, Boddy says their personalities also helped them destroy the economy: Until the end of the 20th Century, everything was going smoothly -- companies were "stable and slow to change" -- until these guys elbowed their way in.

For Wall Street -- a rapidly changing and highly dynamic corporate environment if there ever was one, especially when the firms transformed themselves from private partnerships into public companies with quarterly reporting requirements -- the trouble started when these charmers made their way to corner offices of important financial institutions.

Then, according to Boddy’s “Corporate Psychopaths Theory of the Global Financial Crisis,” these men were “able to influence the moral climate of the whole organization” to wield “considerable power.”

They “largely caused the crisis” because their “single- minded pursuit of their own self-enrichment and self- aggrandizement to the exclusion of all other considerations has led to an abandonment of the old-fashioned concept of noblesse oblige, equality, fairness, or of any real notion of corporate social responsibility.”

According to Bloomberg News, Boddy said his article has been "warmly received" and downloaded 9,440 times in the past 90 days. “Apparently this is a lot for an academic article and it is more than the next four most-downloaded papers combined,” he wrote to Bloomberg. But his research is not all bad news:

He also has a prescription for how to prevent psychopaths from getting into positions of power on Wall Street and elsewhere.

“Anyone who makes decisions that affect significant numbers of other people, concerning issues of corporate social responsibility or toxic waste, for example, or concerning mass financial markets or mass employment, should be screened to make sure that they are, at the very least, not psychopaths and at most are actually people who care about others,” he wrote.

Wouldn't that be nice -- screening our leaders to cut out the wacko narcissists and sociopathic evil-doers, making sure they are empathic or, at least, have the capacity to experience compassion? What a world that would be.

[Tansy_Gold]

35. It'd be nice if Boddy's book weren't priced at $72.

People might actually read it if they could afford it.

http://www.amazon.com/Corporate-Psychopaths-Organizational-Clive-Boddy/dp/0230284728/ref=sr_1_1?ie=UTF8&qid=1326207736&sr=8-1

Used copies run $285 and up.

[dixiegrrrrl]

53. Plus it does not ship for up to 3 months after you order..

I have noticed quite a few books are insanely priced way beyond the reach of most people, and those are books that most people need to read.
Makes one wonder who the market is targeted to.

[Demeter]

14. 7 Ways to Really Take the Ax to Wall Street

http://www.alternet.org/story/153653/7_ways_to_really_take_the_ax_to_wall_street?page=entire


We're talking about how to save democracy from the plutocratic rule of elite financiers. It's time to think big...As we’ve learned the hard way, the core of our modern capitalist economy is finance, and finance is run entirely by a few large Wall Street firms. But here’s the ultimate irony: while modern capitalism depends on Wall Street, Wall Street no longer depends on capitalist principles. In finance a new system has emerged that makes a mockery of the idea that entrepreneurs should be rewarded for their successes and suffer losses when they fail.

Capitalist Values Vanish from Wall Street

...The big boys are raking it in again even while the economy suffers through the highest sustained level of unemployment since the Great Depression. More to the point, these very bank executives were complicit up to their eyeballs in helping to crash the economy in the first place! Chase CEO Jamie Dimon hauled in $41.9 million in 2011 while its bank stock lost roughly 23 percent of its value. Lloyd “I’m doing God’s work” Blankfein, CEO of Goldman Sachs, walked off with $22 million while his bank lost more than 46 percent of its value. But, at this point, why should we be surprised? Before the crash, the heads of too-big-to-fail banks made billions in packaging, selling and then betting against toxic mortgage-backed securities that directly puffed up the housing bubble. When they couldn’t escape the crash they helped to foster, they went down on their knees begging for government help. At the same time they publicly claimed all was well, while privately taking in more than $7 trillion in secret government loans. And then after sucking up all these enormous bailouts, they used these nearly interest-free government loans to buy up other banks and lobby to prevent rules that might constrain their gambling activities. Meanwhile, they paid not a dime in personal restitution for killing 8 million jobs in a matter of months, most of which have not returned.

Financial Plutocracy is Real

That’s not capitalism. Rather, it’s the very definition of a plutocracy. These banks and those who run them are living off the rest of us and have no intention, ever, of suffering through the ups and downs of capitalist rewards and losses. When you run the casino, it’s always payday for the house. We’ve got a choice. Either we learn to live under their thumbs or we do something dramatic about it. The porous Frank-Dodd bill has no chance of ending the plutocracy. Instead, we’re going to need some bold thinking and even bolder, more massive mobilizations a la Occupy Wall Street. But first, we need to have a better notion of what the democratizing of Wall Street might look like.

How to Really Overhaul Wall Street

I put this question to Marshall Auerback, global portfolio strategist for Madison Street Partners, a Denver-based fund management group, and a fellow for the Economists for Peace and Security (and an AlterNet contributor). With those titles, he should have an insider's grasp on what needs to be done. In fact, Brother Auerback is more than willing to take an axe to Wall Street as we know it. Here’s his brilliant wish list:

1. Banks should only be allowed to lend directly to borrowers and then service and keep those loans on their own balance sheets. There is no further public purpose served by selling loans or other financial assets to third parties, but there are substantial real costs to government regarding the regulation and supervision of those activities. Goodbye CDOs, synthetic CDOs and the slew of profitable but dangerous financial casino games banks so love.

2. Banks should not be allowed to have subsidiaries of any kind. No public purpose is served by allowing bank to hold any assets "off balance sheet." A bank should be a bank and not a hodgepodge of hidden accounts designed to fool investors, build up leverage and gamble away with impunity.

3. Banks should not be allowed to accept financial assets as collateral for loans. No public purpose is served by financial leverage. This should put an end to highly leveraged, Ponzi-like financing schemes that have become commonplace within the banking community

4. Banks should not be allowed to lend off shore. No public purpose is served by allowing any banks to lend for foreign purposes. The Cayman Islands should be a resort for people, not bank slush funds.

5. Banks should not be allowed to buy (or sell) credit default insurance. Credit default swaps are financial insurance on bonds that might go bust – think Greece. Auerback wants to eliminate banks from this highly profitable game. Banks that rely on government insurance to protect depositors have no business playing in the markets that buy and sell risk.

6. Banks should not be allowed to engage in proprietary trading or any profit-making ventures beyond basic lending. Unfortunately, the big banks are addicted to proprietary trading. That’s because the big money comes from trading for their own accounts – which is the plushest of all their casinos. MF Global, under Jon Corzine’s reckless leadership, was so addicted to proprietary trading that it seems to have used its clients' money as a piggy bank to cover its losses. More regulation will never end these games. But what would work is Auerback’s call for simply banning any and all proprietary trading by banks.

(Hot off the wire: Reuters reports that in the last days before MF Global went under, it sold hundreds of millions in assets to Goldman Sachs, the investment bank that Corzine once headed. But apparently, MF Global did not receive payment from Goldman Sachs, when the transaction was cleared through JPMorgan Chase. We don’t know as yet which bank pocketed that money. But this transaction might help explain what happened to the missing client money.)

7. Abandon “too-big-to-fail” and “systemically important” doctrine in favor of a “too-big-to-save” and “systemically dangerous” approach. They should be broken up, so that they are not "too big to fail." Guarantee the deposits and punish the shareholders. Break the power of finance once and for all. Amen!

Even if you don’t agree with every point, you’ve got to admit that Auerback pushes us to think really big, and rightfully so. After all we’re talking about how to save democracy from the plutocratic rule of elite financiers....


************************************************************************************

Les Leopold is the executive director of the Labor Institute and Public Health Institute in New York, and author of The Looting of America: How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions, and Prosperity—and What We Can Do About It (Chelsea Green, 2009).

[tclambert]

16. This sounds like a plan.

I especially like number 7. For capitalism to work, we need competition, not monopolies and cartels. We MUST break up the "too-big-to-fails.”

[Hotler]

36. If we only had a leader with a spine to take on Wall ST.

I wonder where we could find one?????

[Po_d Mainiac]

17. A reply to the toon

http://www.shtfplan.com/headline-news/santurom-wolf-in-sheeple-clothing-people-have-this-idea-that-they-should-be-left-alone_01092012

[Po_d Mainiac]

18. Got Twinkies?

Hostess Brands Inc. is preparing to file for Chapter 11 bankruptcy protection as soon as this week, said people familiar with the matter, a move that would mark the second significant court restructuring for the Twinkies and Wonder Bread baker in the past several years.

http://online.wsj.com/article/SB10001424052970204124204577151211961572458.html

[DemReadingDU]

20. Taibbi: Credit Card Firms: They Don't Just Steal From Cardholders

1/9/12 Credit Card Firms: They Don't Just Steal From Cardholders

Great story out this morning by Bloomberg reporter Thom Weidlich, detailing yet another devious and dirty scheme in the consumer credit industry. (link below)

The story outlines the misfortunes of a successful Park City, Utah restaurant called Cisero's that is best known for serving the movie stars and film glitterati attending the nearby Sundance film festival. The restaurant is engaged in a legal battle with its bank, but the larger struggle is between the restaurant and major credit cards like Visa and MasterCard.

It's a complex tale, but the gist of it is that the credit-card companies invoked arcane provisions of operating contracts with the merchant, and unilaterally "fined" the restaurant for enormous sums of money without proving any of the charges. Some of that money was actually debited from the merchants' account before they managed to close it.

When a restaurant opens for business, it signs service contracts with middleman firms that allow them to accept charges from Visa and MasterCards. These middleman firms process the charges on behalf of the issuing cards, and also debit the accounts of merchants for things like debit fees.

The problem is that when merchants like these restaurant owners in Utah sign their service contracts, they also have to agree to a series of draconian security rules, under which they are automatically liable to the card companies if the card companies suspect fraud or lax security procedures.

In the case of the Utah restaurant, Visa and Mastercard both claimed that the restaurant allowed charges from fraudulently used cards, and also violated security rules by keeping the data for too many customer accounts on their company computer.

more...
http://www.rollingstone.com/politics/blogs/taibblog/credit-card-firms-they-dont-just-steal-from-cardholders-20120109


and here is the link to the Bloomberg article

1/9/12 Park City Eatery Balks at Credit Card Fines in Rare Court Fight
Stephen and Cissy McComb say they managed their Italian eatery in Park City, Utah, for more than two decades without running afoul of security rules of Visa Inc. (V) and MasterCard Inc. (MA) -- until they were accused of mishandling data and opening the door to $1.26 million in fraud.

The McCombs, who opened Cisero’s in 1985, are now in a legal fight with the bank that processed their credit charges and, indirectly, with what they say are card networks that change rules without notice, impose unfair one-sided contracts and allow the taking of money from merchants’ accounts with no proof of fault.

The couple sued, saying they didn’t break MasterCard and Visa rules, that there was no security lapse and that no acts of fraud were specifically claimed. The fraud was conjured from unexplained and unsupported data, they said in court papers filed in state court in Park City. Their suit may be the first court challenge to penalties under the card networks’ security procedures, said one of their lawyers, W. Stephen Cannon.

It’s rare for banks and their processors to file a lawsuit against a merchant, lawyers said.

more...
http://www.bloomberg.com/news/2012-01-09/park-city-eatery-balks-at-credit-card-fines-in-rare-court-fight.html

[Demeter]

21. The days of cash only, backed by gold, can't come too soon to stop this travesty

The details are amazing, frustrating, well worth suing. One has to ask why a credit card processor wants to put its customers out of business...

[Hotler]

39. I have been using cash since I heard the Bankers call

people that pay off their cards and carry no balance "Dead-beats". And they said that to a congress sub-committee on C-SPAN. Fuckers! Once and awhile I use the card for really large purchases. I have had merchants give me discounts for paying with cash.

[Demeter]

22. Futures way up 118 at 9 AM

[xchrom]

23. morning!

[xchrom]

24. Banks deposit record amount overnight at ECB

http://hosted.ap.org/dynamic/stories/E/EU_EUROPEAN_CENTRAL_BANK?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-01-10-06-29-00

FRANKFURT, Germany (AP) -- Banks in the countries that use the euro held a record amount of money overnight at the European Central Bank in a sign of stress in the financial system from the eurozone debt crisis.

The region's central bank said Tuesday that overnight deposits from Monday hit euro481.93 billion ($613.4 billion) - beating the previous record of euro463.56 billion from the day before.

The high deposits mean banks are keeping spare cash in a safe place at a low interest rate rather than lending it one another on a short-term basis. This move has sparked fears of a further credit crunch across Europe as banks become wary about lending funds for fear they will not be paid back.

The deposits also reflect large amounts of cash put into the banking system by the ECB in its efforts to steady the system. An ECB offer of emergency three-year loans resulted in euro489 billion being taken up by more than 500 banks in late December.

[Demeter]

25. The Dirty Secret of World Trade: One Super Container Ship SO2 Greater Than 50 million Cars

http://www.alternet.org/newsandviews/article/757162/the_dirty_secret_of_world_trade%3A_one_super_container_ship_so2_greater_than_50_million_cars/#paragraph3

...Super Container Ships are dosing the ocean with SO4 as they go.

There are no air pollution regulations in International Waters, so the super ships have been set up to burn the leftover fraction from the refining process, asphalt so thick that when it is a room temperature it can be walked upon.

The ships have massive diesel engines, burning tons of fuel an hour (that would be happier with a fuel with less sulphur content and can be fitted with filters to remove the micro-particulates, but they just let them spew.)

The particulates from shipping sources are estimated to cause 60,000 additional deaths in the US per year from exacerbation of asthma and heart disease.
http://www.newscientist.com/...

The EPA is supposed to have regulated shipping sourced pollution in a band around the US starting in 2010. Does not look like the EPA ever was able to publish those regulations. When I look them up, a cursory search does not turn anything from 2010 or 2011 up.

[Demeter]

26. China trade surplus falls to six year low

China’s overall trade surplus last year fell to $155bn, its lowest level since 2005, underscoring how slowing global growth and rising Chinese demand are reshaping the country’s economy.

The falling trade surplus could ease pressure on China to accelerate the appreciation of the renminbi, in a year when US election politics have turned up the rhetoric over Chinese trade policies.


Read more >>
http://link.ft.com/r/3JFELL/30D6OD/IEP5S/NJP74Y/KQT34R/ID/t?a1=2012&a2=1&a3=10


ANYBODY SEEN ANY CHRISTMAS SALES DATA UPDATES?

[Demeter]

27. Clock ticking as Greece races to avoid default IN MARCH

Athens is under pressure to reach an agreement on a second bail-out if the country is to avoid a disorderly default in March

Read more >>
http://link.ft.com/r/3JFELL/30D6OD/IEP5S/NJP74Y/979D8S/ID/t?a1=2012&a2=1&a3=10

[Demeter]

28. UAE strategic oil pipeline delayed

The UAE says a strategic pipeline project that would allow oil exports to bypass the Strait of Hormuz will not be ready for four months

Read more >>
http://link.ft.com/r/3JFELL/30D6OD/IEP5S/NJP74Y/EXN90H/ID/t?a1=2012&a2=1&a3=10



SO, GREECE EXPLODES IN MARCH, IRAN IN FLAMES IN APRIL...THE CALENDAR IS FILLING UP!

[Demeter]

29. Machine to read individual’s DNA for $1,000

Landmark development will greatly increase knowledge about the links between genes and disease, while guiding patients on suitable treatments

Read more >>
http://link.ft.com/r/P75VYY/VLAPRP/A5Q0X/JERVY9/TUV8YD/OS/t?a1=2012&a2=1&a3=10


WHAT COULD POSSIBLY GO WRONG?

[xchrom]

30. India loosens rules on some foreign retailers

http://hosted.ap.org/dynamic/stories/A/AS_INDIA_RETAIL?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-01-10-08-40-35

NEW DELHI (AP) -- The Indian government formally agreed Tuesday to allow foreign companies to own 100 percent of stores here dedicated to selling products under a single brand name.

The decision was part of a package of investment reforms announced in November to bring more foreign investment into Indian retailing and strengthen India's creaky food distribution system.

Furious opposition from small shopowners and political allies pushed the government to backtrack on the part of the plan that would allow foreign companies, such as Wal-Mart, to own 51 percent of supermarket chains.

However, the Commerce Ministry formally announced Tuesday it had gone ahead with the plan to allow foreign companies that sell products under a single-brand name, such as IKEA, to own 100 percent of their stores here.

[Demeter]

31. Chris Cook: Naked Oil TODAY'S MUST READ--IT'S A LONG ONE, BRING SANDWICHES

former compliance and market supervision director of the International Petroleum Exchange...

http://www.nakedcapitalism.com/2012/01/chris-cook-naked-oil.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


All is not as it appears in the global oil markets, which in my view have become entirely dysfunctional and no longer fit for its purpose. I believe that the market price is about to collapse as it did in 2008 and that this will mark the end of an era in which the market has been run by and on behalf of trading and financial intermediaries.

In this post I forecast the imminent death of the crude oil market, and I identify the killers; the re-birth of the global market in crude oil in new form will be the subject of another post....

***********************************************************

A Meme is Born

In the early 1990?s Goldman Sachs created a new way of investing in commodities. The Goldman Sachs Commodity Index (GSCI) enabled investment in a basket of commodities – of which oil and oil products was the greatest component – and the new GSCI fund invested by buying futures contracts in the relevant commodity markets which were ‘rolled over’ from month to month. The genius dash of marketing fairy dust which was sprinkled on this concept was to call investment in the fund a ‘hedge against inflation’. Investors in the fund were able to offload the perceived risk of holding dollars and instead take on the risk of holding commodities. The smartest kids on the block were not slow to realise that the GSCI – which was structurally ‘long’ of commodity markets – was taking a long term position which was precisely the opposite of a commodity producer who is structurally ‘short’ of commodities because they routinely sell futures contracts in order to insure themselves against a fall in the dollar price. ie commodity producers are offloading the risk of owning commodities, and taking on the risk of holding dollars.

So in 1995 a marriage was arranged.

BP and Goldman Sachs get Married AHA!

From 1995 to 2007 BP and Goldman Sachs were joined at the head, having the same chairman – the Irish former head of the World Trade Organisation, Peter Sutherland. From 1999, until he fell from grace in 2007 through revelations about his private life, BP’s CEO Lord Browne was also on the Goldman Sachs board. The outcome of the relationship was that BP were in a position, if they were so minded, to obtain interest-free funding via Goldman Sachs, from GSCI investors through the simple expedient of a sale and repurchase agreement: ie BP could sell title to oil with an agreement to buy back the oil later at an agreed price...The outcome would be a financial ‘lease’ of oil by BP to GSCI investors and the monetisation of part of BP’s oil inventory. Such agreements in relation to bilateral physical oil transactions are typically concluded privately, and are invisible to the organised markets. However, any risk management contracts which an intermediary such as Goldman Sachs may enter into as a counter-party to both a fund and a producer are visible on the futures exchanges.

Due to the invisibility of the change of ownership of inventory ‘information asymmetry’ is created where some market participants are in possession of key market information which others do not have. This ownership by investors of inventory in the custody of a producer has been termed ‘Dark Inventory’

I must make quite clear at this point that only BP and Goldman Sachs know whether they actually did create Dark Inventory by leasing oil in this way, and readers must make up their own minds on that. But I do know that in their shoes, I would have done, particularly bearing in mind that such commodity leasing is a perfectly legitimate financing stratagem which has been in routine use in the precious metals and base metal markets for a very long time indeed...

[Demeter]

32. Stone Age Logic: Preserving US Global Leadership By Gwynne Dyer

http://www.informationclearinghouse.info/article30193.htm

If you’re not allowed to enslave people any more, or even loot their resources, then what is the point of being a traditional great power?

The United States kept an army of over 100,000 soldiers in Iraq for eight years, at a cost that will probably end up around a trillion dollars. Yet it didn’t enslave a single Iraqi (though it killed quite a lot), and throughout the occupation it paid full market price for Iraqi oil. So what American purpose did the entire enterprise serve?

Oh, silly me. I forgot. It was about “security”. And here it comes again, on an even bigger scale...

I'D TAKE ISSUE WITH THE ENSLAVEMENT PART. THERE ARE TOO MANY IRAQI WOMEN AND YOUNG GIRLS FORCED INTO PROSTITUTION TO SURVIVE THE "LIBERATION" BY AMERICAN GI'S AND MERCENARIES...AND AS FOR THE LOOTING, WE DID TRY...

[Demeter]

33. New Reserve currency to challenge $ – What’s really going on in Straits of Hormuz. By David Malone

http://www.golemxiv.co.uk/2012/01/a-new-reserve-currency-to-challenge-the-dollar-whats-really-going-on-in-the-straits-of-hormuz/

A little over a year ago on 1st November 2010 I wrote what I called “…a little bit of scurrilous speculation.” In it I speculated that an unintended consequence of QE had been to spur several countries to think very seriously of how they could replace the dollar as their settlement currency for international deals. The Settlement Currency just means the currency both parties agree is stable, internationally trusted and accepted, and in plentiful supply. Which may not be the case for their own currencies. I wondered if doubts about the longer term stability of the dollar and of US debt levels, was combining with a political desire in China and perhaps other countries as well to challenge the US via the dollar with the eventual goal of creating an alternative reserve currency backed by gold rather than, as the dollar now is, by debt.
Various countries have been buying gold. Russia, China, India have all bought a lot….Which brings me to my speculation. The list of countries accumulating gold is similar to the list of countries that were reported to be talking about the need for a new reserve currency to replace the dollar.

I wonder if those who are seriously thinking of trying to unseat the dollar and create a currency which is backed by something other than debt and is not under the control of America’s corrupt banks and even more corrupt government, are investing in gold as a precursor to making a real bid for a new currency.

Being a ‘Settlement’ currency is not quite the same as being a ‘Reserve Currency’ like the dollar, but it a major step in that direction. It is, in fact, a very large step. Which currency large international trades are done in matters. It is a fact that in 2000, Iraq signed an agreement to sell its oil, all its oil, in Euros. Iran was contemplating doing the same at around the same time. The Iraq decision involved the large French bank PNB-Paribas. France was not one of those who supported the war and Washington led a hate campaign vilifying the French. The worry was that a switch from dollar to Euro settlement might gain momentum. Any major move away from dollar settlement would cripple the US.

In January of this year the India Times reported that India was talking to Iran about moving out of dollar settlements so as to be able to buy Iranian oil despite a US embargo. India said it was discussing settling in Gold. Remember, India has just signed a settlement agreement with China to use the Yuan.

A very good summary of recent news by ZeroHedge suggests I may have been on the right track. And recently the pace has picked up. http://www.zerohedge.com/news/russia-iran-proceed-bilateral-trade-drop-dollar-russian-warships-park-syria

MORE DETAILS AT LINK

***********************************************************************

David Malone is author of the "The Debt Generation". David has a career spanning nearly twenty years producing and directing documentaries for both the BBC and Channel4. His series Testing God was shortlisted for the Royal Television Society best documentary series and was described by The Times as "moving and startling - as close to poetry as television gets." For the last three years David has focused considerable attention on the financial system. His BBC documentary High Anxieties- The Mathematics of Chaos, first broadcast in September 2008, was one of the first films to be made about the financial crisis accurately anticipating the problems that were to unfold in the economy. The Debt Generation was published in November 2010.

[Demeter]

34. MONEY QUOTE (if you will pardon the expression)

At the moment when America is seen as being no longer the pre-eminant reserve currency and its debt load is re-considered accordingly, China and its debt load will go the other way. America and its currency risk being seen as too rotted by debt to be trusted and it’s claims of economic growth seen as fake, empty, paper-based, accountancy-conjured growth. The Dollar and America itself risk being seen as the fiat currency and fiat nation par excellence, while China and the Yuan will be seen as backed by sold gold and real growth.

One more question to ask in all this is – how far have the big banks and brokerages managed to turn even gold and silver (at least gold and silver held in the West) in to another fiat currency? Gold and bullion bugs amoung you might argue the question makes no sense. But consider re-hypothecation. How much gold and silver has been pledged and re-pledged, hypothecated and re-hypothecated? How many more paper contracts for and claims upon gold and silver exist above and beyond the amount of actual physical gold and silver? After all gold and silver are the ultimate in ‘good’ assets which counterparties will happily accept. So it seems likely to me that gold and silver (or contracts for them) will have been in demand in those repo and hypothecation markets. If so then I wonder how many conflicting and contesting claims will surround every ounce of gold and silver in the West when investors start demanding to see their ‘investment’.

I think the big old sterling silver coin may already have dropped for some investors. That is why prices for physical silver are surging above the price for paper claims on silver. I think some traders are getting nervous about buying paper claims on silver and now want only the metal itself. They suspect that in the end, if you have only a paper claim or contract for, silver that is exaclty all you will ever have – the paper. Only those with the actual metal in their hands, will get what they paid for. I think there is a fiat, paper currency version of gold and silver floating around and parasitising the metals themselves. Those who own that paper stuff may get…well … stuffed.

[Demeter]

37. Geithner in China to Discuss Yuan, Iran

AS YVES SMITH NOTES: WTF? This would traditionally be a State Department issue. And it’s not as if the US and China have much common ground on this issue. HILLARY CLINTON, DO YOU KNOW ( OR CARE) WHERE YOUR PORTFOLIO IS?

http://www.bloomberg.com/news/2012-01-10/geithner-to-seek-china-s-support-on-iran-sanctions-while-pressing-on-yuan.html

U.S. Treasury Secretary Timothy F. Geithner will urge Asia’s two biggest economies to cut Iranian oil imports and seek to narrow differences with China on trade and currency disputes on a visit to Beijing and Tokyo this week. Geithner arrived in Beijing today to meet with Chinese Vice Premier Wang Qishan and will hold talks with Premier Wen Jiabao, Vice President Xi Jinping and Vice Premier Li Keqiang tomorrow. In Japan, he is due to meet with Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi on Jan. 12.

“I am here of course because we value our relationship with China so much,” Geithner said today after being greeted by Wang. “We are always looking for ways to expand trade and investment with China to strengthen our economic ties and we’re looking for ways to build on the progress our two presidents have achieved over the last three years.” Wang, appearing with Geithner, said the two countries “have a lot of issues to talk about in the areas of economy, finance, trade and investment...Apart from the bilateral aspect, we are also having important cooperation in the multilateral and global arena in the areas of economy, finance, trade policies and also G-20 related affairs,” Wang said.
Geithner is likely to encounter resistance in China, which disagrees with U.S. assertions that its currency is undervalued and is sparring with the Obama administration over trade in goods from chicken to steel. At the same time, he may seek to avert a public split at a time when a likely European slide to recession is already clouding the global economic outlook.

Iranian Oil
The two countries are the largest importers of Iranian oil, with China accounting for 22 percent and Japan buying 14 percent of Tehran’s crude oil exports during the first half of last year, according to the U.S. Energy Information Administration. As a group, the European Union buys 18 percent of Iran’s oil exports. Geithner may also tell Chinese officials that they need to follow through on pledges to shift the world’s second-largest economy more toward domestic demand and away from exports, William Cline, a senior fellow at the Peterson Institute for International Economics in Washington, said in an interview yesterday. The real value of the yuan “needs to rise by 10 to 20 percent,” he said.

President Barack Obama plans to form a government task force to monitor China’s compliance with U.S. trade rules, the Wall Street Journal reported today, citing unnamed people familiar with the matter. The panel will include officials from the Treasury, Commerce and Energy departments, and the U.S. Trade Representative’s office, it said. An announcement of the enforcement task force is expected later this month, the newspaper said in its online edition.

[Demeter]

38. Jack Lew: Obama's OMB Pick Oversaw Citigroup Unit That Shorted Housing Market

http://www.huffingtonpost.com/2010/07/14/jack-lew-obamas-omb-pick_n_645093.html

President Barack Obama's choice to lead the White House budget office oversaw a Citigroup unit that profited off the housing collapse and financial crisis by investing in a hedge fund king who correctly predicted the eventual subprime meltdown and now finds himself involved in the center of the U.S. government's fraud case against Goldman Sachs.

Jacob Lew, named Tuesday as Obama's nominee to lead the Office of Management and Budget to replace departing OMB chief Peter Orszag, served as chief operating officer of Citigroup Alternative Investments in 2008. He has served as a top aide to Secretary of State Hillary Clinton since the administration came into office.

Though Lew is a longtime public servant who's spent nearly 30 years in various positions throughout government, it is his few years at Citi -- in particular the one year he spent at its then-$54 billion proprietary trading, hedge fund and private equity unit -- that's likely to raise the most eyebrows in the coming weeks as Lew faces a Senate confirmation hearing.

Especially his unit's investments in a hedge fund that bet on the housing market to collapse -- a reality suffered by millions of American homeowners....At the time, Citi's Alternative Investments unit was a $54.3 billion behemoth that participated in the kinds of activities that would be largely limited under the coming financial reform bill. The bill, which is expected to pass the Senate as soon as this week, contains the "Volcker Rules," named after their champion, former Federal Reserve Chairman Paul Volcker, which limits the amount of money banks can invest in hedge funds, private equity funds, and use to either invest or speculate in the financial markets. About 20 percent of the unit's available funds, or $11 billion, came from Citi itself (rather than clients), according to the bank's April 18, 2008, presentation to investors....

[Demeter]

40. B of A building faces foreclosure

The irony surrounding the Atlanta skyscraper is pretty tall, even if the company doesn't own it...

http://money.msn.com/top-stocks/post.aspx?post=c184c1d1-032f-489d-8b1a-48d8875e9026

Atlanta’s Bank of America Plaza is one of the 10 tallest structures in the U.S. And thanks to troubles at its namesake Bank of America Corp. and other tenants, the skyscraper could be one of the tallest foreclosure tales of the financial crisis.

News came out recently that the company that owns the office building is struggling to meet its debt service as offices remain empty and the real estate crash continues to take a toll.

The Altanta Journal Constitution newspaper writes that, ”a company that specializes in troubled loans is making preparations for a possible foreclosure of Bank of America Plaza while negotiations continue on a deal to try to prevent the property from being seized by the lender, according to a report by Trepp, a real estate research firm.”

To be clear, the tower is owned by California-based commercial real estate firm BentleyForbes — not Bank of America. BentleyForbes bought the 55-story tower at the height of the nationwide real estate boom under the premise that it could get big rents for tenants clamoring for office space...

NO WORD ON WHO THE LENDER IS

[xchrom]

41. Small Companies, Big Credit Problems

http://www.slate.com/articles/business/small_business/2012/01/small_businesses_in_the_economic_recovery_the_disproportionate_impact_of_the_credit_crunch.html

Nobody will be surprised to learn that the past few years have been tough for small business. They’ve been tough for everyone, after all. But interesting research finalized in December from economists Burcu Duygan-Bump, Alexey Levkov, and Judit Montoriol-Garriga published by the Federal Reserve Bank of Boston indicates that the interplay of small business and the banking crisis may have played a special role in the recession. In particular, a tightening of credit standards during the high point of the fiscal crunch seems to have disproportionately impacted small firms and is continuing to hold them back during the recession.

Politicians gushing over small businesses is such a cliché that it’s easy to tune out talk of the importance of small firms. According to the Census Bureau, as of 2008-09 about one-half of all jobs were with firms with fewer than 500 employees, and one-half of those were with firms with fewer than 100 workers. Fully 10 percent of workers were employed by tiny business with fewer than 10 employees. And small-scale operations are unusual in several respects. Most notably, they don’t have access to the conventional financial-market tools of a big company. For aggressively growing startups, that means gaining the financing they need from the special world of venture capital. But for the hum-drum small businesses that make up such a large share of American economic life—the kind of firms that are trying to get by and earn a profit, but don’t necessarily aspire to world domination—that means relying on bank loans for funding needs.

By exploiting what they describe as a “triple difference-in-differences methodology which exploits variation across time, firm size, and external financing needs,” the researchers were able to highlight the importance of this bank-funding channel to the recession.

[Demeter]

42. More Firms Enjoy Tax-Free Status

http://online.wsj.com/article/SB10001424052970203733504577026361246836488.html?mod=WSJ_hp_LEFTTopStories


StoneMor Partners LP, the publicly traded firm that specializes in running cemeteries, expects to see handsome profits in coming years as baby boomers age and die. But unlike its largest rivals, its corporate tax bill from the federal government will be zero.

StoneMor is among the many businesses organized so they don't pay a penny in federal corporate income tax. And yet such firms don't employ an army of accountants to shield profits in complex tax shelters. Their enviable tax position is perfectly legal and has been encouraged by Congress and state governments. Known as pass-throughs, these firms pass along ...

[Po_d Mainiac]

56. and?

[Demeter]

57. I couldn't get more of it

See what you come up with

[Demeter]

43. ITALY: UniCredit’s Weak Share Offering a Poor Omen in Europe

http://dealbook.nytimes.com/2012/01/09/unicredits-weak-stock-offering-is-poor-omen-in-europe/?ref=business

UniCredit, Italy’s largest bank, is undergoing a trial by fire in the stock market, underscoring the challenges that European banks face in trying to right themselves. Shares of UniCredit have been in free fall as investors have balked at a new stock offering meant to bolster the bank’s capital. Since last week, UniCredit’s market value has plunged by more than 40 percent.

It is a bad omen for struggling European banks. At the behest of regulators, the region’s financial institutions must raise a combined $145 billion by June. But banks may have a tough time convincing investors to plow more money into the beleaguered industry if UniCredit’s experience is any indication.

“I think this should scare policy makers,” said Nicolas Véron, a senior fellow at Bruegel, a research institute in Brussels. “Banks have been saying for some time that it’s impossible for them to raise money collectively in this market.”

[xchrom]

48. Fitch: Italy likely to be downgraded by end of January

http://www.bbc.co.uk/news/business-16491762

There is a "significant" chance that Italy will have its credit rating downgraded this month, an executive at the ratings agency Fitch has said.

David Riley, Fitch's head of global sovereign ratings, cited the lack of a plan to halt the eurozone crisis, coupled with Italy's high debts.

Fitch warned last month that Italy and five other eurozone countries were all at risk of downgrade.

Another Fitch spokesman said he did not foresee a downgrade of France in 2012.

[Demeter]

44. Are BofA and JP Morgan Really Blocking the Return of MF Global Customer Money? FROM NOVEMBER

http://jessescrossroadscafe.blogspot.com/2011/11/are-bofa-and-jp-morgan-major-impediment.html


"Once you have their money, never give it back." Ferengi, First Rule of Acquisition


Here is a white paper that suggests that JP Morgan and Bank of America are trying to subordinate the customers' claims to their stolen funds and keep them in a pool of money to be distributed to the creditors by the Trustee, without any representation for the customers. This is said to be the cause of the confusion and delay in the return of the funds.

There are also claims, not substantiated as far as I can tell, that the positions and assets that were taken from customers were liquidated in a manner so as to maximize the gains to other market participants with advantageous knowledge of those positions. That is a serious charge that I don't quite understand. I hope the regulators will look into the transfer of customers assets and exactly how they were treated.

I hope that the regulators and the Justice Department can sort this out quickly, and prevent any further loss of confidence in the exchanges and financial system on the part of their customers. I think it is fair to say that this entire situation has been handled badly. Some of the early suggestions that customers would have to take haircuts to 'share' the loss with each other, that the funds would be frozen for years, and the general secrecy that has blanketed this has contributed greatly to the anxiety felt by the more aware among investing public at large. This is of concern even to those who have no funds involved in this, and have nothing to gain or lose from it personally. It should give a chill feeling to all customers, as it seems to be a shocking breach of fiduciary responsibility. It is not wise to wait until one's own funds and assets are confiscated before asking questions and demanding answers. As someone else has said, if a brokerage can take customer funds and assets at will, and use them for their own undisclosed speculation, and defy all guarantees, and neither they nor their accomplices are held accountable, then nothing is safe.

This white paper is obviously being told from the perspective of the customers and their attorneys. SEE WHITE PAPER AT LINK...I would be interested to hear the story or the party who received the customer assets. But as far as I know, they are silent, and their very identity remains a carefully guarded secret.

[Demeter]

45. Social Security and the Big Lie by Roger Erickson, a letter to The WaPo SAVE THIS FOR REFERENCE!

http://econintersect.com/b2evolution/blog2.php/2011/11/13/social-security-and-the-big-lie

..two recent articles did indeed go too far, in deliberately misleading readers on what is actually a very simple point. SEE LINK FOR ORIGINAL ARTICLES In contrast to the digressions propagated in the Post's two articles, Social Security is a simple policy decision made by the electorate of the USA, to help efficiently care for it's aging and infirm citizens. Despite the added artifices of pretending to have workers pay into and receive payouts from a segregated sub-account purporting to separate some of our fiat currency from the rest, the program known as Social Security is no different from any other public policy decision. Social Security can no more go bankrupt than the DoD or Congress itself can.

Follow up:
This was thoroughly examined by Robert Eisner in the 1990s and earlier. See References, end of article. The entire fabric of public discussion about fiat budgets, including sub-components like Social Security, all reduce to narrow policy tactics masquerading as national goals. As simultaneously discussed in another article from your paper, propagating Big Lies only hastens systemic degradation, rather than helping our nation. If you are really serious about talking to credible "Social Security experts" you couldn't honestly avoid re-reading Robert Eisners comments. May I suggest three excerpts from his writing?

1) 'The notion that Social Security faces bankruptcy begins with a fundamental misconception, that payment of benefits somehow depends upon the OASDI (Old Age and Survivors and Disability Insurance) trust funds. The trust funds are merely accounting entities....
...Our payroll taxes or "contributions" go directly to the United States Treasury. Our benefit checks come from the Treasury-and those receiving them can verify on those checks that the payer is the Treasury of the United States, and not any trust fund. Social Security payments are an obligation under law of the U.S. government. Our government and its Treasury will not,indeed cannot, go bankrupt. As Federal Reserve Chairman Alan Greenspan has recently put it, "[A] government cannot become insolvent with respect to obligations in its own currency." ' http://www.jstor.org/pss/4538614

2) "Almost everybody talks about budget deficits. Almost everybody seems in principle to be against them. And almost no one, literally, knows what [they are] talking about."
Robert Eisner, The Misunderstood Economy, p.90;
http://books.google.com/books?id=jTSddYcGA6gC&printsec=frontcover&dq=Robert+Eisner,+The+Misunderstood+Economy&source=bl&ots=nz6wJ-sCnK&sig=6Vli8JdSQLSwlg9K1rVcdnW2SIc&hl=en&ei=KeQxTJ3JBoGclgePgaXACw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBIQ6AEwAA#v=onepage&q&f=false

3) The Great Deficit Scare: The Federal Budget, Trade, and Social Security
http://www.amazon.com/Great-Deficit-Scare-Federal-Security/dp/0870784110
"American politics often seems to be focused on three deficits, real and potential: the federal budget, the Social Security Trust Fund, and the trade balance. Robert Eisner, past president of the American Economic Association, explains why this is an unhealthy situation as well as a source of much misunderstanding. He argues that simply looking at the raw numbers creates misimpressions about the country's real economic situation, as well as provoking potentially damaging ideas for " remedies." Eisner points out that Social Security Trust Fund deficits can be " fixed" by simple changes in accounting procedures or funding requirements. And America's trade deficit will not bankrupt the country--servicing America's foreign obligations will take only a tiny share of its national wealth. As with any other loan, Eisner reminds us, it is what deficits are spent on that counts: tax cuts or investments in education, research, or the nation's capital stock. Eisner maintains that the economic dragons the American nation should be attempting to slay do not entail mythically measured budget or current account deficits. The real economic troubles that America faces are those of poverty, income inequality, and a failure to invest in human capital and public infrastructure."

Patrick, if you would spend just a moment reflecting on the logic of Robert Eisner's advice, you would question the utility of advising US citizens to try to save "fiat", instead of investing in real national capabilities via education, training and output. With that re-orientation firmly in hand, perhaps you'd be willing to revisit the topic of Social Security, this time talking with experts who really DO know what they are talking about? Anything less than that step, sadly, falls into the category of aiding and abetting treason to country, by innocent fraud if nothing else.

[Demeter]

46. The right's smoke and mirrors scam about Social Security--it ain't broke (unless China is too)

http://www.angrybearblog.com/2011/11/right-smoke-and-mirrors-scam-about.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+blogspot/Hzoh+%28Angry+Bear%29

We've noted in these postings the growing inequality between rich and the rest of us in America, and that is the appropriate backdrop against which to investigate further the right's smoke-and-mirrors scams about tax policy and earned benefits. Let me remind you with Kevin Drum's Mother Jones article on The Price of Plutocracy: "For all practical purposes, every year about $700 billion in income is being sucked directly out of the hands of the poor and the middle class and shoveled into the hands of the rich." (That sentence is illustrated with a great chart, with data drawn from Joseph Hacker of Yale and Paul Pierson of Berkeley, the authors of Winner-Take-All Politics, a book I highly recommend.)

The national debate about deficits has been part of a relentless push by the right to reduce as much as possible the New Deal earned benefit programs of Social Security and Medicare. The right twists the facts to suit the arguments it wants to make. Krugman hones in on this issue, noting Dean Baker's similar anger at the Washington Post's inconsistency in considering Social Security in a recent article by Post writer Lori Montgomery, who seems to be miming for the hard right, anti-New Deal crowd in Washington . See Krugman, Social Security, Bait and Switch, a Continuing Series, New York Times (Oct. 30, 2011).

Social Security is a program that is part of the federal budget, but is by law supported by a dedicated source of revenue. This means that there are two ways to look at the program’s finances: in legal terms, or as part of the broader budget picture.

In legal terms, the program is funded not just by today’s payroll taxes, but by accumulated past surpluses — the trust fund. If there’s a year when payroll receipts fall short of benefits, but there are still trillions of dollars in the trust fund, what happens is, precisely, nothing — the program has the funds it needs to operate, without need for any Congressional action.

Alternatively, you can think about Social Security as just part of the federal budget. But in that case, it’s just part of the federal budget; it doesn’t have either surpluses or deficits, no more than the defense budget.

Both views are valid, depending on what questions you’re trying to answer.

What you can’t do is insist that the trust fund is meaningless, because SS is just part of the budget, then claim that some crisis arises when receipts fall short of payments, because SS is a standalone program. Id. (emphasis added).

Further, the right refers to these programs as "entitlements", a term that is meant to dredge up resentments against those who have some rights to benefits from these programs. The right uses "personal responsibility" and "entitlements" as though they refer to two non-intersecting worlds, whereas in fact the opposite is true....Workers pay into Social Security to support current workers who paid into it in the past. The trust fund was established, and amended with a good deal of actuarial research under Reagan in 1983, with the knowledge that the baby boom generation would be passing through and create a bulge of benefit needs and that US birth rates tended to be smaller now than they were a century ago. In other words. what is happening now in terms of the baby boomer population reaching retirement age and the decline in US birthrates was exactly the information on which the Social Security changes made in the 1980s were predicated. Either we believe that these kinds of predictions are reasonable (in which case it is utterly silly to raise nightmare scenarioes about bankruptcy, because there is nothing of the sort) or we believe that it is impossible to predict for sure what will happen (in which case it is utterly silly to raise nightmare scenarios about Social Security bankruptcy, because GDP could grow just a little faster than predicted, easing all future problems, or boomer needs could grow just a little less than predicted, easing all future problems). Either way, the crisis-bell ringing being done by the right as a way to attribute deficits to Social Security is a smoke and mirrors scam.

It is even more so since the Social Security trust fund is invested in US Treasuries and those Treasuries plus new tax funds coming in pay all the benefit costs. Is the US going to default on Treasuries. Well, if so, we have a bigger problem with Japan and China not liking that--not just the Social Security trust fund. The hard right seems to think it is okay to play political games with US debt, but American citizens should be aware that this is what they are doing...

[Roger Erickson]

59. and don't forget Beardsley Ruml & Luther Gulick

And don't forget Luther Gulick and Beardsly Ruml too!

Taxes for revenue are obsolete in a fiat currency system.
http://www.constitution.org/tax/us-ic/cmt/ruml_obsolete.pdf

So Social Security FICA taxes were unnecessary from day one. They're just a viciously cruel way to wage class war, and keep the serfs down, by stealing from them. How? By over-taxing and underfunding working class and the Middle Class.
http://www.ssa.gov/history/Gulick.html

[xchrom]

47. Consumer borrowing surged 10% in November

http://www.latimes.com/business/money/la-fi-mo-consumer-credit-20120109,0,1664932.story

Consumer borrowing increased at an annual rate of 10% in November, the largest jump in a decade, as Americans became more comfortable using their credit cards heading into the holiday season, as well as taking out auto and student loans, the Federal Reserve reported Monday.

Overall consumer credit surged $20.4 billion in November from the previous month to $2.48 trillion. The percentage increase as the largest since an 18.4% jump in November 2001.

The figures include most short- and medium-term credit, but not mortgages or home-equity loans.

Outstanding credit card debt increased 8.5% in November, while non-revolving debt such as car loans increased 10.7%, the Federal Reserve said.

[xchrom]

49. Websites offering loans flout EU credit rules

http://www.bbc.co.uk/news/business-16487823

A sweep of websites across the EU that offer credit cards, loans and finance found that 70% were flouting the rules.

Authorities across 29 member countries checked 562 websites, including some they were already worried about, and found that 393 failed the checks.

The most common issue was the absence of an annual percentage rate (APR) that would allow consumers to compare the costs of credit.

All websites checked in Spain, Cyprus and Slovakia failed the test.

[Demeter]

50. Europe set to block DB-NYSE tie-up

European competition officials have recommended blocking the tie-up between Deutsche Börse and NYSE Euronext, the German and US exchange operators, setting in motion three weeks of frantic lobbying to salvage the deal

Read more >>
http://link.ft.com/r/5F39HH/MSGS0Y/CWSVD/TUBI13/GDPNZL/MQ/t?a1=2012&a2=1&a3=10



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[xchrom]

51. One in five Spanish homes may be vacant, experts say

http://www.elpais.com/articulo/english/One/in/five/Spanish/homes/may/be/vacant/experts/say/elpepueng/20120109elpeng_7/Ten

There could be between five and six million empty homes in Spain, or over 20 percent of the total, some experts believe. To get a better picture of the state of Spain's property sector following the crash, over 5,000 agents from the National Statistics Institute (INE) have taken to the streets to try to draw a precise map of the houses and apartments that are lived in and those that stand empty.

Ten years ago, a similar exercise yielded 3.1 million empty homes, or 15 percent of the total, but the figure is likely to be much higher now, experts warn. Between 1998 and 2007, the housing stock grew by 5.7 million, or nearly 30 percent.

"Knowing whether a dwelling is occupied or not is relatively easy, but knowing whether it is empty on a temporary basis is much harder. How do you know if it is a holiday home, if there is nobody there to tell you?" asks Antonio J. Argüeso, deputy director general of sociodemographic statistics at INE. The field work aims to count only those homes that are permanently shuttered, not second homes or those that are rented out to third parties.

When the work is done a few months from now, it should also confirm that 4.6 million housing units were built during the property bubble, while fewer than three million were sold.

[xchrom]

55. A New Theory of Financial Innovation: The Ticker

http://www.bloomberg.com/news/2012-01-10/a-new-theory-of-financial-innovation-the-ticker.html



Financial innovators on Wall Street, take notice: The justification for much of what you do may be crumbling.

The dominant paradigm in financial economics has long given the creators of new derivatives and other exotic products comfort that, whatever their immediate motivations, they are ultimately contributing to the greater good. Anything that allows people to diversify their investments and share risks, the logic goes, will inevitably make the global economy more stable.

Lately, though, the central role that credit-default swaps, collateralized debt obligations and other innovations played in the financial disasters of 2007 and 2008 has inspired some economists to question the accepted wisdom. In the vanguard is a 29-year-old assistant professor at Harvard named Alp Simsek, who is combining macroeconomics and finance in a way that few did before the crisis. Bloomberg View caught up with Simsek this week for a brief interview.

BV: You've chosen a topic that could make you unpopular in the financial industry. What motivated you to do this?

AS: It was a coincidence. As a graduate student, I was interested in economic growth -- why some countries are poorer than others. But as I was thinking of what I wanted to do for my thesis, the financial crisis hit. It was clear to me that the crisis originated in these new assets. According to the traditional view in economics, new assets are supposed to bring stability. I saw that the dominant paradigm was possibly wrong, and that’s very interesting for a graduate student.

I wasn't worried at all about what the financial industry would say. I have no interest in working in the financial industry.




*** i know next to nothing about financial theory -- and i have no idea if this guy is onto something -- BUT -- we need more who say and do things like this: 'I wasn't worried at all about what the financial industry would say. I have no interest in working in the financial industry.'

[Demeter]

58. Missed it by that much!

Didn't quite get to the old 12,500. Better luck tomorrow!