STOCK MARKET WATCH -- Wednesday, 7 May 2014

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Wednesday, 7 May 2014[font color=black][/font]

SMW for 6 May 2014

AT THE CLOSING BELL ON 6 May 2014
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Dow Jones 16,401.02 -129.53 (-0.78%)
S&P 500 1,867.72 -16.94 (-0.90%)
Nasdaq 4,080.76 -58.00 (0.00%)


[font color=black]10 Year 2.59% 0.00 (0.00%)
30 Year 3.38% 0.00 (0.00%) [font color=black]


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

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


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








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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]

[Demeter]

1. Bill Black: NYT DealBook Praises Steve Jobs’ Serial Felonies

http://www.nakedcapitalism.com/2014/05/bill-black-nyt-dealbook-praises-steve-jobs-serial-felonies.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

I have been attempting the vain act of trying to embarrass the New York Times’ DealBook feature into dropping its ethics-free reportage of elite financial crimes. I have had so little success that today’s James Stewart column reached the pinnacle of unintentional self-parody of DealBook’s zealous efforts to remove any concept of ethics from its reportage of elite white-collar crime. The substance of piece is reporting that Steve Jobs “was a walking antitrust violation.” Stewart focuses on the cartel Jobs formed with other giant firms to fix (and suppress) employees’ salaries.

But the title of the piece takes the fact that Jobs was a serial felon who caused great harm to employees and preforms a remarkable transformation in which he is praised as “Steve Jobs, a Genius at Pushing Boundaries.” “Pushing boundaries” is DealBook’s euphemism for Jobs’ crimes that he committed in order to make the already spectacularly wealthy CEO even wealthier – at the direct expense of his employees. And, this being DealBook, and James Stewart being what Stewart has descended to, we have the inevitable claim that Jobs was a “genius” at crime. But it turns out that if you consider the facts reported; he wasn’t a genius. His violations of anti-trust law were obvious crimes. Instead, his key characteristic was the one we always emphasize is critical about the most fraudulent CEOs – audacity. Jobs had gotten away with committing so many crimes that he came to believe he was immune from prosecution.

At this stage in the story, Stewart obviously had to explore at least four ethical issues to explain to readers the significance of Jobs’ crimes. The first issue was the unique danger created by the fact that greed is insatiable. It did not matter how much a plutocrat Jobs became – he always wanted more and was happy to engage in brazen crimes to make him wealthier. The second issue is that he was willing to commit crimes that made him wealthier at the direct expense of his employees. Third, CEOs set the ethical “tone at the top” and when the CEO is a crook he sets a corrupt tone at the top that encourages the employees to commit other crimes and unethical acts that would boost their pay. Fourth, the CEOs of Apple’s top rivals agreed to commit the same cartel felonies as Jobs. This created a “Gresham’s” dynamic that helps other ethical firms (or potential entrants) out of the markets... the first sentence of Stewart’s column. “If Steve Jobs were alive today, should he be in jail?” Answering the question “should” inherently requires a discussion of ethics. Stewart, however, is simply being coy – his article never discusses or answers the question he describes as “the provocative question being debated in antitrust circles….” Nor does Stewart ask why that question is being debated “in antitrust circles” rather than in the high tech industry.

But it gets worse, for DealBook states that Jobs “was deeply revered in Silicon Valley.” The fact that Silicon Valley “deeply reveres]” a serial felon who targeted workers (globally, see my prior columns on China) and shareholders (he secretly backdated stock options in an effort to make himself even wealthier) should be deeply disturbing, even to Deal Book. (I joke: if DealBook had appeared as a character in The Wizard of Oz it would have simultaneously represented “no brain, no heart, no ethics, and no courage.”) Jobs’ CEO counterparts knew about his serial crimes because they were conspiring with him to form the cartel suppressing workers’ wages and because his backdating scam was made public.

We should also stress that Microsoft was found to have violated the antitrust laws (the Bush administration deliberately gutted the remedy for those violations of the law) and that Robert Tillman’s (a prominent white-collar criminologist) empirical work has found that high tech firms were particularly likely to have engaged in accounting and securities fraud. That requires a hard look at Silicon Valley’s culture. While Ayn Rand, von Mises, and von Hayek all stressed the evil of elite fraud and the legitimate, and vital role of the government in acting to deter and punish such frauds, the culture of Silicon Valley is increasingly dominated by wealthy libertarians who are far more radical in their hostility to democratic government, their disdain for ethics, and their opposition to the government preventing fraud. The “Kristallnacht” lunacy is a perfect example of the depraved culture that can emerge when you mix the worst strands of Silicon Valley’s and finance’s contempt for ethics into a single package....

MORE

[Demeter]

2. Don Quijones: Mutiny of the Lab Rats – Europeans Grow Weary of EU Experiment

http://www.nakedcapitalism.com/2014/05/don-quijones.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The people of Europe are finally pushing back against the European Super State, if recent polls are anything to go by. Having grown weary of being treated as lab rats in an increasingly dysfunctional economic and political experiment, a large minority of Europeans seem intent on voting for euroskeptic parties in the upcoming European elections.

The prospect is causing jitters not only among the big wigs in Brussels but also among many of Europe’s mainstream political parties, whose oligopoly on political power faces a serious threat for the first time in decades. Calculations by the Open Europe think tank suggest that hardline sceptics could take as many as 218 of the 751 seats available in the European Parliament.

In the UK, poll research shows that the most pro-European Westminster grouping – the Liberal Democrats – is about to have its European Parliamentary representation completely decimated. Indeed, so threatened do the three establishment parties in the UK feel by Nigel Farage’s UK Independence Party (UKip) that they hit back this week with a cross-party campaign to condemn it as “Euracist”, an ingenious combination of the two words “Europe” and “Racist”.

The episode serves as a timely reminder of just how dumbed down the inhabitants of Westminster have become. For not only does their latest sound bite imply that Europeans are now a common, unified race – anthropology clearly not being the UK political caste’s strong point – but it also suggests that Farage’s party is actually “racist” towards all members of this new race, including, one would assume, Britons themselves...

[xchrom]

3. 4 Burning Questions for Janet Yellen as She Testifies Before Congress on the Economy

http://www.alternet.org/economy/4-burning-questions-janet-yellen-she-testifies-congress-economy



***SNIP

In advance of these hearings, here are some pertinent questions that could lead to some very interesting and enlightening responses:

Since Shinzo Abe took over as prime minister in Japan, it has pursued a policy of aggressive fiscal stimulus, coupled with a central bank commitment to raising the inflation rate to 2.0 percent. This is in spite of the fact that its debt to GDP is more than twice as high as in the United States. Since then the economy has picked up and the employment to population ratio has increased by 1.6 percentage points. This would be the equivalent of more than 4 million new jobs in the United States. Do you think Japan's experience offers any lessons for the United States?

The Fed's preferred measure of inflation, the core personal consumption expenditure deflator, has risen at just a 1.2 percent annual rate, well below the Fed's 2.0 percent target. With inflation running below target would you view an uptick in inflation as a positive development rather than cause for alarm?

One of the main factors that led to the financial crisis is that the investment banks issuing mortgage backed securities (MBS) faced little downside risk if these assets went bad. Are you concerned that giving the investment banks the option to issue MBS that would carry a 90 percent guarantee, as envisioned on Johnson-Crapo, will create an even worse problem of moral hazard?

It appears that a core group of countries in the euro zone stand to move ahead with a financial transactions tax. This will lead to a modest increase in the cost of individual transactions and presumably a reduction in the volume of trading. If the United States were to impose a similar tax, would you be worried that the resulting decline in liquidity would obstruct the smooth working of financial markets?

[xchrom]

4. TECH JITTERS, UKRAINE WEIGH ON WORLD STOCKS

http://hosted.ap.org/dynamic/stories/W/WORLD_MARKETS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-07-05-15-52

TOKYO (AP) -- Jitters over the valuations of technology companies pulled stock prices lower from Tokyo to London on Wednesday.

European shares got off to lackluster start, with Britain's FTSE 100 down 0.3 percent to 6,776.65. Germany's DAX edged down 0.1 percent to 9,458.63 and the CAC-40 in France slipped 0.1 percent to 4,422.77.

U.S. markets were poised for a slow start after sharp declines the day before, with both Dow Jones and S&P 500 futures little changed.

Sinking Internet company shares, led by an 18 percent plunge in Twitter's share price Tuesday, added to negative sentiment from tensions in Ukraine, where pro-Russian militants are clashing with military forces in the country's unstable east.

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5. GERMAN FACTORY ORDERS DROP UNEXPECTEDLY

http://bigstory.ap.org/article/german-factory-orders-drop-unexpectedly

BERLIN (AP) — German factory orders plunged unexpectedly in March as demand slumped both at home and abroad, particularly from other nations using the euro, and the government cautioned the crisis in Ukraine could contribute to further weakness.

The economy ministry said Wednesday that industrial orders dropped 2.8 percent over February, the largest month-on-month fall since November 2012. Economists had predicted a 0.3 percent rise, following an upwardly revised 0.9 percent gain in February.

Domestic orders fell 0.6 percent, while foreign orders were down 4.6 percent, led by a 9.4 percent drop from other countries in the 18-nation eurozone.

After bottoming out in early 2009, industrial orders in Germany — Europe's largest economy — have been showing an upward trend.

[xchrom]

6. COURT FORCES OUT THAI LEADER, PART OF HER CABINET

http://bigstory.ap.org/article/thai-pm-forced-resign-over-abuse-power

BANGKOK (AP) — Thailand's prime minister was ordered by a court to step down Wednesday in a divisive ruling that handed a victory to anti-government protesters who have staged six months of street protests — but does little to resolve the country's political crisis.

The Constitutional Court found Prime Minister Yingluck Shinawatra guilty of abusing her power by transferring a senior civil servant in 2011 to another position. It ruled that the transfer was carried out to benefit her politically powerful family and, therefore, violated the constitution — an accusation she has denied.

The ruling also forced out nine Cabinet members but left nearly two dozen other ministers in their posts, including Deputy Prime Minister Niwatthamrong Boonsongpaisan, who was quickly appointed the new acting leader.

The judgment marks the latest dramatic twist in Thailand's long-running political crisis. It was a victory for Yingluck's opponents, mostly from the urban elite and those in the south, who have been engaged in vociferous and sometimes violent street protests demanding she step down to make way for an interim unelected leader.

[xchrom]

7. SLOWING CHINESE ECONOMY LIKELY TO PINCH US, TOO

http://hosted.ap.org/dynamic/stories/U/US_CHINA_US_ECONOMY_INTERTWINED?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-06-13-40-53

WASHINGTON (AP) -- After watching China narrow the U.S. lead as the world's largest economy, Americans might be tempted to cheer signs that the Chinese economy might be stumbling.

Any schadenfreude would be short-sighted.

In an interconnected global economy, bad news for one economic superpower is typically bad news for another - even a fierce rival.

"It hurts," says Mark Zandi, chief economist at Moody's Analytics. "China is the second-largest economy on the planet. If growth slows there, it affects everybody."

Zandi estimates that each 1 percentage point drop in China's economic growth causes as much damage to the U.S. economy as a $20-a-barrel increase in oil prices: It shaves 0.2 percentage point off annual U.S. growth.

[xchrom]

8. labor plans fast food protests for US, overseas

labor plans fast food protests for US, overseas

http://hosted.ap.org/dynamic/stories/U/US_FAST_FOOD_PROTESTS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-06-19-06-14

NEW YORK (AP) -- Labor organizers say they're planning another day of fast-food protests next week, with coordinated actions expected in the U.S. and more than 30 countries this time around.

Union representatives from countries including Argentina, Hong Kong, Italy, New Zealand and Panama gathered in New York this week to share tips and strategize for the demonstrations slated to take place on May 15. Organizers plan to announce the global actions at a news conference outside a McDonald's in New York on Wednesday afternoon.

The protests calling for pay of $15 an hour in the U.S. have gained national media attention since they began in New York in late 2012. The push is getting financial and organizational support from the Service Employees International Union - which has more than 2 million members - and has served as an important backdrop as President Barack Obama and Democratic lawmakers seek to raise the federal minimum wage in an election year.

Although the effort to raise the federal minimum wage in Congress seems unlikely to succeed, several states and localities have raised their minimum wages over the past year or so.

[xchrom]

9. CHINA'S ALIBABA SEEKS BLOCKBUSTER IPO IN US

http://hosted.ap.org/dynamic/stories/U/US_ALIBABA_IPO?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-07-04-16-43

SAN FRANCISCO (AP) -- Alibaba Group, the king of e-commerce in China, is dangling a deal that could turn into one of the biggest IPOs in history.

In a long-awaited move Tuesday, Alibaba filed for an initial public offering of stock in the U.S. that could surpass the $16 billion that Facebook and its early investors raised in the social networking company's IPO two years ago.

Alibaba's paperwork says it will raise at least $1 billion, but finance professionals believe that is a notional figure to get the IPO process rolling and say that the Chinese company's ambitions for the share sale are much richer.

"This is going to be the granddaddy of all IPOs," predicted Sam Hamedah, CEO of PrivCo, which researches privately held corporations.

[xchrom]

10. HSBC FIRST QUARTER PROFITS FALL 19 PERCENT

http://hosted.ap.org/dynamic/stories/E/EU_BRITAIN_EARNS_HSBC?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-07-05-51-12

LONDON (AP) -- London-based bank HSBC has suffered a 19 percent fall in first-quarter net profit that it blamed in part on declines in the retail banking and wealth management businesses.

For the three months that ended March 31, HSBC reported Wednesday a net profit of $5.2 billion, down from $6.4 billion a year earlier. Operating expenses dropped slightly compared with the first quarter last year.

HSBC Holdings PLC said its costs were under control but revenue dropped because of a weaker result in its retail banking and wealth management units.

Group Chief Executive Stuart Gulliver said revenues in those sectors were "impacted by changes in incentive plans and product pricing."

[xchrom]

11. VIETNAM TRIES TO STOP CHINA OIL RIG DEPLOYMENT

http://hosted.ap.org/dynamic/stories/A/AS_VIETNAM_CHINA_OIL_RIG?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-05-07-04-37-32

HANOI, Vietnam (AP) -- Vietnamese naval vessels and Chinese ships collided Wednesday in the South China Sea as Hanoi sought to prevent Beijing from setting up an oil rig in an area claimed by both nations, a Vietnamese government official said.

The official said no shots were fired and there were no reports of injuries in the incident, the most serious in years between the two countries at sea. If neither side steps down, clashes could break out between the two navies in what has long been regarded as a possible global flashpoint.

China's stationing of the oil rig over the weekend has been seen as one of its most provocative steps in a gradual campaign of asserting its sovereignty in the South China Sea, parts of which are also claimed by Vietnam, the Philippines and other Southeast Asian nations.

Two foreign diplomats said Vietnam dispatched up to 29 armed naval and coast guard ships to areas near the oil rig when it became aware of China's intentions. Citing a Chinese diplomat, one said the Vietnamese deployment was meant to be a "show of force" to get Beijing to withdraw the rig.

[Demeter]

12. Banksters Pretend that Prosecuting Wall Street Crime Will Blow Up the Economy

http://www.washingtonsblog.com/2014/05/banks.html

Wall Street Criminals Threaten that Economy Will Blow Up If They’re Prosecuted

The Department of Justice is “considering” initiating criminal charges against 2 banks. In response, the normal cast of characters is saying – as they have for years – that prosecuting banks will cause a meltdown of the economy.

The U.S. attorney for the Southern District of New York recently mocked the silly claims of gloom and doom:

“Companies, especially financial institutions, will do almost anything to avoid a tough enforcement action and therefore have a natural and powerful incentive to make prosecutors believe that death or dire consequences await,” he said. “I have heard assertions made with great force and passion that if we take any criminal action, the skies will darken; the oceans will rise; nuclear winter will be upon us; and the world as we know it will end.”

As we’ve repeatedly noted, this is wholly untrue. Indeed, prosecuting the individual Wall Street executives who knowingly committed criminal fraud won’t harm the economy. After all, the main driver of economic growth is a strong rule of law. And numerous Nobel prize winning economists have said that prosecuting Wall Street white collar is necessary for a prosperous economy. Proof that prosecuting criminal fraud doesn’t hurt the economy comes from Iceland:

(The U.S. and Europe have thwarted white collar fraud investigations ... let alone prosecutions.} On the other hand, Iceland has prosecuted the fraudster bank heads and their former prime minister, and their economy is recovering nicely … because trust is being restored in the financial system.

In response to the sky-is-falling spouting banking apologists, professor of law and economics – and chief S&L prosecutor – William Black explains:

First, no banker is “too big to jail.” They are easily replaceable and removing a fraudulent bank CEO from power is the single most productive act that regulators and prosecutors can accomplish. The Department of Justice's chief of criminal prosecutions] Breuer and Attorney General Eric Holder were involved in a con when they claimed that their failure to prosecute the senior bank officers leading the frauds was in any way related to “too big to fail.” Hilariously, they even applied the “rationale” for non-prosecution to former bank officers – as if a bank would fail “because” its former officers were prosecuted. It is a testament to the weakness of the reportage that this claim was not treated with ridicule.

Second, valid fraud prosecutions do not “cause” a business to fail. The fraud causes them to fail. They should fail when their “profits” arise from fraud. In particular, they should fail in the case of accounting control fraud because their “profits” are the fictional product of accounting fraud. The markets and the economy are greatly improved when fraudulent enterprises are destroyed. ***

Third, very little is actually “destroyed,” when we place a fraudulent bank in receivership, fire the crooked CEO, and sell the bank to an acquirer of integrity and competence. The new bank will, net, be greatly improved because it has been freed from control by the fraudulent leadership that was “looting” the bank (George Akerlof and Paul Romer, 1993, “Looting: The Economic Underworld of Bankruptcy for Profit”).

Fourth, there is rarely a need to prosecute a bank. In virtually every case in which the bank’s frauds cause serious harm senior officers of the bank will have led the fraud and profited from it. Everyone in law enforcement realizes that any effective deterrence will come from prosecuting those officers and not only removing their fraud proceeds but also imposing fines that will leave the officers bankrupt.

Fifth, the bank’s controlling officers are in an immense conflict of interest when their frauds are detected. They control the bank and its resources. Their first priority is to prevent their own prosecution. Their second priority is to prevent any substantial “claw back” of their compensation. Their third and fourth priorities are to do the same for less senior officers. This isn’t altruism (though it certainly has an aspect of class-based affinity). Fraudulent CEOs realize that it is risky to allow the prosecutors to gain any leverage over more junior officers who may “flip” and testify against the CEO. The fraudulent officers controlling the bank, therefore, will gladly trade seemingly huge fines in exchange for obtaining their top four priorities.

Finally, the government's policy of not prosecuting Wall Street criminals] produces what Akerlof and Romer warned was the “sure thing” of CEO “looting” through accounting control fraud plus the assurance that the CEO will not be prosecuted, forced to surrender his fraud proceeds, or forced to pay fines that bankrupt him.Unsurprisingly, the result has been unprecedented accounting control fraud by elite banksters.***

None of this explains why they don’t prosecute bankers (much less ex bankers)

Indeed, the whole if-you-prosecute-the-economy-dies scam is like the 2008 bailouts. As we wrote at the time:

Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed.

***

As Karl Denninger wrote yesterday:

S]ounds like “Bail me out or I will crash everything.”

Isn’t that analogous to walking into a bank, opening one’s coat to reveal an explosives-laced belt, and saying “gimme all the money or everyone dies!”

I noted in November:

In the 1974 comedy Blazing Saddles, Cleavon Little plays the new sheriff in an old Western town. The sheriff is African-American, and when he rides into town for the first time, the racist] townspeople pull out their guns and are about to shoot him.

But he quickly puts a gun to his own head, pretends he’s scared of his own gun, and says “BACK OFF OR THE AFRICAN-AMERICAN GUY GETS IT!!!” The townspeople are dumb and fall for it, suddenly terrified that he’ll kill himself. Here’s the scene.

That’s what Wall Street is doing with the bailout.

The fat cats on Wall Street are saying “give us a lot of money, and buy all of our bad debt for a lot more than its worth, or Wall Street will get it and we’ll go into a depression!”

Are Americans stupid enough to fall for it?

In a recent interview, William K. Black uses the exact same Blazing Saddles sheriff-bank analogy.

***

Any way you look at it, the too big to fails are not needed and they are dragging our economy into a black hole. Like the sheriff in Blazing Saddles … they are playing us for fools.

Yves Smith] shared another analogy with me: a man with 15lbs. of Semtex strapped to his waist. She says “any surprise people in the vicinity are very attentive to his desires?”

Indeed, it’s the old protection racket.


COMMENTARY:

Jay Black • 3 days ago

Iceland did it and their economy has improved since. The rats who didn't leave Reykjavik quickly enough are now in jail. The globalist banksters are using fear to keep the American people from pressuring their elected representatives to prosecute. But it won't be enough to simply prosecute them. The Federal Reserve fractional banking system must be dismantled and abolished.

Let the investment bankers do their business apart from the commercial banking sector. Re-enacting the original Glass-Steagall act would separate the two and wipe all of the accumulated trillions in bailout debt off the books in one fell swoop. You want to see a bankster sweat? Push hard as hell for Glass-Steagall re-enactment. The US Constitution permits the establishment of a credit issuing national bank for large and medium scale infrastructure, science or other economic driver projects, leaving personal and business loans, mortgages, car loans, chequing, savings and credit card accounts, etc., to serve customers as they had without interference from Wall Street.

3xaparent • 4 days ago

Suicide Bankster? If American's were actual patriots and loved their country, they'd take the banksters out of their homes and march them to the gallows. If you love your country, protect it from all enemies....foreign or domestic. And by that I mean I'd love to see the CEO's of the big banks murdered in the streets as a warning to other con artists that "We The People" won't stand for it any longer.


Prophesying economic disaster if banksters don't get their way is the third oldest profession.


Rich • 4 days ago

they didn't pay all that money to the campaign coffers of Barack and Joe "The Senator from MNBA" Biden for nothing.


goingnowherefast • 4 days ago

Iceland puts the lie to the banksters' claim. Criminal behavior is always bad for the noncriminals. How hard is that to comprehend?

[Demeter]

19. Bill Black: Since When Does Refusing to Put Fraudulent Banks into Receivership Help the Economy?

http://www.nakedcapitalism.com/2014/05/bill-black-since-refusing-put-fraudulent-banks-receivership-help-economy.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



Conservative economists love “creative destruction.” They can’t wait to “get their Schumpeter on” when a business fails and thousands of workers lose their jobs.

There is no more “creative destruction” conceivable than when we put a bank that has become a fraudulent enterprise into receivership, remove the controlling officers leading the fraud, and sell the bank through an FDIC-assisted acquisition. Indeed, the pinnacle of creative destruction would be doing this with a systemically dangerous institution (SDI) through a process that split the supposedly “too big to fail” bank into smaller components that (1) were no longer large enough to pose a systemic risk, (2) were more efficient than the bloated SDI, (3) no longer extorted a large (implicit) government subsidy that made real competition impossible, and (4) no longer had dominant political power via crony capitalism. Unlike the situation in which an SDI collapses suddenly in the midst of causing a global crisis when its frauds cause a liquidity crisis, it is vastly easier to put fraudulent SDIs in receivership in today’s circumstances. Unlike Arthur Anderson, the receivership power allows us to keep the enterprise alive and create more competitors rather than fewer. As I often remarked, it is a testament to the financial and moral sophistication of our successors as financial regulators relative to our primitive era that they have realized that keeping fraudulent CEOs in charge of our largest banks – and virtually never putting such banks into receivership however massive and damaging their serial felonies – is the key to achieving financial stability. Their system, it must be admitted, has proven far superior. GDP losses are merely far more than 100X greater in the current crisis than in the savings and loan debacle. The jihad against effective regulation and prosecution of elite control frauds has been an enormous success. The primary question is whether to classify the resultant epidemics of accounting control fraud as “unintended consequences” of the three “de’s” (deregulation, desupervision, and de facto decriminalization) or as a very “intended consequences.”

I am deliberately violating the fundamental guild rules of theoclassical economists by using the “f” word, by noting that negative “unintended consequences” are the norm when we employ the three “de’s,” and that elite CEOs who use corporate power to produce the three “de’s” frequently intend to use the resultant criminogenic environment to defraud with impunity. It is verboten under guild rules to use the “f” word, to point out that the key to understanding our financial crises is that it is the CEO’s perverse incentives rather than “the bank’s incentives” that matter, to discuss the role of power, to point out that elite class status is important, and to point out that fraudulent CEOs often intend the negative consequences of the three “de’s.” In sum, theoclassical economics is a faith-based creed devoted to the worship of (and service to) the wealthy, particularly elite frauds. They are, of course, well compensated for championing the causes, and puffing the fragile egos, of the fraudulent plutocrats. I mean this literally. George Benston, Daniel Fischel, and Alan Greenspan were three of Charles Keating’s most valuable fraud allies. Lanny Breuer’s infamous “lamentations” speech (while head of DOJ’s Criminal Division) underscored how he fell hook, line, and sinker for the absurd claims of economists hired by today’s most elite fraudulent banksters that banks (and bankers!) should be “too big to prosecute.” By Breuer’s own bumbling admission, he lay awake at night for fear that his (always hypothetical) prosecutions of the major banks might “cause” a fraudulent bank to “fail.” This is, of course, heresy under the Schumpeterian creed of “creative destruction,” but theoclassical economists are very forgiving of their co-religionists who get rich by spreading heresy in the service of fraudulent elites.

Breuer was so bad that he obscured what we primitive regulators and white-collar criminologists had emphasized for decades.

First, no banker is “too big to jail.” They are easily replaceable and removing a fraudulent bank CEO from power is the single most productive act that regulators and prosecutors can accomplish. Breuer and Attorney General Eric Holder were involved in a con when they claimed that their failure to prosecute the senior bank officers leading the frauds was in any way related to “too big to fail.” Hilariously, they even applied the “rationale” for non-prosecution to former bank officers – as if a bank would fail “because” its former officers were prosecuted. It is a testament to the weakness of the reportage that this claim was not treated with ridicule.

Second, valid fraud prosecutions do not “cause” a business to fail. The fraud causes them to fail. They should fail when their “profits” arise from fraud. In particular, they should fail in the case of accounting control fraud because their “profits” are the fictional product of accounting fraud. The markets and the economy are greatly improved when fraudulent enterprises are destroyed. There is no more creative form of destruction than removing the frauds that drive the Gresham’s dynamics that cause markets to become so perverse that “bad ethics drive good ethics out of the markets” (and professions).

Third, very little is actually “destroyed,” when we place a fraudulent bank in receivership, fire the crooked CEO, and sell the bank to an acquirer of integrity and competence. The new bank will, net, be greatly improved because it has been freed from control by the fraudulent leadership that was “looting” the bank (George Akerlof and Paul Romer, 1993, “Looting: The Economic Underworld of Bankruptcy for Profit”).

Fourth, there is rarely a need to prosecute a bank. In virtually every case in which the bank’s frauds cause serious harm senior officers of the bank will have led the fraud and profited from it. Everyone in law enforcement realizes that any effective deterrence will come from prosecuting those officers and not only removing their fraud proceeds but also imposing fines that will leave the officers bankrupt.

Fifth, the bank’s controlling officers are in an immense conflict of interest when their frauds are detected. They control the bank and its resources. Their first priority is to prevent their own prosecution. Their second priority is to prevent any substantial “claw back” of their compensation. Their third and fourth priorities are to do the same for less senior officers. This isn’t altruism (though it certainly has an aspect of class-based affinity). Fraudulent CEOs realize that it is risky to allow the prosecutors to gain any leverage over more junior officers who may “flip” and testify against the CEO. The fraudulent officers controlling the bank, therefore, will gladly trade seemingly huge fines in exchange for obtaining their top four priorities.

Sixth, Holder and Breuer were delighted by that trade. They got to report record fines without having to try a single major criminal case against the fraudulent bankers who led the fraud epidemics that caused the financial crisis. Breuer “declared victory and went home” (to Covington & Burling).

Seventh, under the Geithner-Breuer-Holder (GBH) doctrine the fines sought against the SDIs were guaranteed to be large in absolute dollar terms – and non-threatening in real terms. The GBH doctrine compels that result because the rationale is that we must take no regulatory or prosecutorial action that poses any conceivable risk of imperiling an SDI lest we trigger the next global financial crisis. This means that DOJ (non) prosecutors had very little negotiating leverage because they could not credibly threaten to enforce the rule of law against SDIs (particularly with a boss like Lanny Breuer lying awake at night in fear that he would be blamed for the next global crisis). Fortunately for DOJ, the SDIs are so enormous (as are the bailouts they received) that their officers can agree to fines that sound large but represent merely a (none-too-high) price of doing fraudulent business. The GBH doctrine is intensely criminogenic. It produces what Akerlof and Romer warned was the “sure thing” of CEO “looting” through accounting control fraud plus the assurance that the CEO will not be prosecuted, forced to surrender his fraud proceeds, or forced to pay fines that bankrupt him. Unsurprisingly, the result has been unprecedented accounting control fraud by elite banksters.

DOJ’s New Strategy of Aggressive Press Leaks

To review the bidding, the appraisers warned three administrations (Clinton, Bush, and Obama) that there was an epidemic of appraisal/mortgage fraud led by the lenders. That warning began, in writing, in 2000 – before Enron failed! The Financial Crisis Inquiry Commission (FCIC) Report emphasizes the point.

From 2000 to 2007, a coalition of appraisal organizations … delivered to Washington officials a public petition; signed by 11,000 appraisers…. I]t charged that lenders were pressuring appraisers to place artificially high prices on properties [and] ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets. (FCIC 2011:18).

It took two years to form this “coalition of appraisal organization,” agree on a common strategy, agree on a common text of the petition, and create the web site for the petition. That means that one of the three great epidemics of accounting control fraud that drove the crisis was already sufficiently severe by 1998 that it had been identified as a severe threat 16 years ago. During the 14 years since the appraisers began issuing their public warnings to the (non) regulators and the mortgage industry there have been zero prosecutions of any of the elite bankers for leading the three epidemics of accounting control fraud that drove the financial crisis and the Great Recession. During the decade 1998-2008, the banking regulatory agencies have not publicly identified a single criminal referral they made in response to the three most destructive financial fraud epidemics in history. The anti-regulators literally destroyed the criminal referral process that had once been so effective in prosecuting frauds by senior bank officers. A Pulitzer Prize awaits the investigative journalist who researches who ordered that destruction and when, why, and how it was accomplished. A second prize awaits the reporter who investigates why the Obama administration failed to make its resurrection a major policy initiative that it would tout.

The Bush and Obama administration have already allowed the statute of limitations to run out on vast numbers of frauds led by the CEOs of mortgage bankers and the 10 year statute of limitations applicable to federally insured banks (which we obtained in response to the S&L debacle) is rapidly running. The recent DOJ IG report documented the hollow nature of the FBI investigations related to the crisis. Even when the statute of limitations has not run it becomes very difficult to try “old” cases because of the loss of documents and memory and the feeling of judges and juries that the matter cannot have been terribly grave if the FBI ignored it for eight years. Even if Holder had a “Road to Damascus” conversion today and tried to prosecute the elite bank frauds that drove the crisis he would be far too late. The DOJ will commit its greatest strategic failure to uphold the rule of law. That does not mean that it could not bring a dozen prosecutions against the most destructive and fraudulent bank CEOs during the waning years of the Obama administration, but there is no evidence that the FBI is even investigating those frauds.

******************
It is not our job as regulators to “keep a bank in business.” It is our paramount job as regulators to place banks that commit serious felonies led by the controlling officers in receivership. DOJ does not have to worry about creating some new means “to criminally punish banks without putting them out of business and damaging the economy.” A receivership does not have to “put[a bank] out of business.” What it does do is put the corrupt controlling officers out the business of looting the bank. That helps the economy. Indeed, it is the single most important thing we do as regulators that helps the economy.

MORE RANT AT LINK

[Demeter]

27. Washington delays big banks from writing wills before a collapse

https://news.yahoo.com/washington-delays-big-banks-writing-wills-collapse-050420286--sector.html

Almost six years after Lehman Brothers collapsed, U.S. regulators still haven't given Wall Street banks individual feedback on how to improve so-called "living wills" that detail how to go bankrupt without spending taxpayer dollars or causing a market panic. The banks have already had to submit two versions of the documents, neither of which were up to the standards of the Federal Deposit Insurance Corp and the Federal Reserve. With the next draft of the documents due in July, banks say they can do little to improve the plans if there are no detailed instructions from the government, sources familiar with the process say.

Some regulators say that the plans submitted so far by the banks wouldn't provide much of a roadmap if a new crisis were to threaten a large bank today.

"I don't think they'd function very well at all," FDIC Vice Chairman Thomas Hoenig told Reuters last week. "What's different today than in 2008? ... We still have major exposures from a systemic consequence point of view, and if I were to say otherwise I wouldn't be doing my duty."

Banks may not hear back from the government in time for the July deadline. Regulators haven't decided whether they will give feedback by that time, though they hop to get something to banks "soon," said Arthur Murton, the FDIC official who heads the living wills process.

"It's all moving in the right direction," Murton told Reuters in an interview. "A year from now we'll be even better positioned."

The 2010 Dodd-Frank law requires banks with more than $50 billion of assets, including JPMorgan Chase & Co and Goldman Sachs Group Inc, to submit annual living wills that describe how they could be unwound in a bankruptcy process. Under the law, regulators could eventually tell banks to shrink or spin off parts of their business if they are not convinced the living wills would do their job. However, they won't likely give such orders until after they have advised the banks individually about shortcomings in the living wills...

MORE

[xchrom]

13. In California, Robbing Main Street to Prop Up Wall Street

https://www.commondreams.org/view/2014/05/06-4

Governor Jerry Brown is aggressively pushing a California state constitutional amendment requiring budget surpluses to be used to pay down municipal debt and create an emergency “rainy day” fund, in anticipation of the next economic crisis.

On the face of it, it is a sensible idea. As long as Wall Street controls America’s finances and our economy, another catastrophic bust is a good bet.

But a rainy day fund takes money off the table, setting aside funds we need now to reverse the damage done by Wall Street’s last collapse. The brutal cuts of 2008 and 2009 shrank the middle class and gave California the highest poverty rate in the country.

The costs of Wall Street gambling are being thrust on its primary victims. We are given the choice of restoring much-needed services or maintaining austerity conditions in order to pay Wall Street the next time it brings down the economy.

There is another alternative – one that California got very close to implementing in 2011, before Jerry Brown vetoed the bill. AB750, a bill for a feasibility study for a state-owned bank, passed both houses of the state legislature but the governor refused to sign it. He said the study could be done by the Assembly and Senate Banking Committees in-house; but 2-1/2 years later, no further action has been taken on it.

[xchrom]

14. Cancer Doctors Join Insurers in Revolt Against Drug Costs

http://www.bloomberg.com/news/2014-05-07/cancer-doctors-join-insurers-in-revolt-against-drug-costs.html

The backlash over surging drug prices is starting to take hold.

With the average cost of branded cancer drugs doubling over the past decade to about $10,000 per month in the U.S., doctors, insurers and politicians are all moving in different ways to pressure drugmakers on pricing.


Cancer doctors are in the process of creating a way to measure the value of the drugs they prescribe, the first step in a drive to give patients affordable options. Insurers are increasingly paying only a percentage of the cost of high-priced drugs, forcing drugmakers to step into the breach for consumers who can’t afford their products. Politicians, meanwhile, have begun asking drugmakers to explain the cost of their products.

“This is a moral imperative,” said Clifford Hudis, president of the American Society of Clinical Oncology, the nation’s largest group of cancer doctors. “I don’t think any of us want to look back and say we turned away and didn’t lead while this was happening.”

[xchrom]

15. European Stocks Drop a Fourth Day on Earnings, Ukraine

http://www.bloomberg.com/news/2014-05-07/european-stock-index-futures-drop-amid-ukraine-standoff.html

European stocks fell for a fourth day as companies from Fiat SpA to Societe Generale SA posted profit that missed estimates, and the U.S. said Ukraine should ignore Russia’s calls to postpone a presidential election this month. U.S. futures were little changed, while Asian shares slid.

Fiat tumbled 8.3 percent and Societe Generale slipped 1.6 percent. Cie. de Saint-Gobain SA lost 3.2 percent after investor Wendel SA said it will cut its stake in Europe’s biggest building-materials supplier. Credit Agricole (ACA) SA gained 3.6 percent after saying first-quarter profit surged 85 percent.

The Stoxx Europe 600 Index retreated 0.2 percent to 335.25 at 10:45 a.m. in London for its longest losing streak this year. The gauge has fallen 1.2 percent from a six-year high on April 4 as violence between Ukrainian troops and pro-Russian separatists escalated. Standard & Poor’s 500 Index futures fell less than 0.1 percent, and the MSCI Asia Pacific Index slid 1.5 percent.

“The consequences of more Russian aggression can be a big geopolitical problem that might damage investor sentiment more than we’ve already seen,” said Espen Furnes, who helps oversee about $75 billion at Storebrand Asset Management in Oslo. “There doesn’t seem to be any quick solution to this, so financial markets need to prepare for a prolonged period of unrest in Ukraine. On stock performance after earnings, it seems we’re now entering a phase with bigger differences between companies delivering good numbers and bad ones.”

[xchrom]

16. Draghi’s Euro Angst Rising as Rally to $1.40 Pummels: Currencies

http://www.bloomberg.com/news/2014-05-07/draghi-s-euro-angst-rising-as-rally-to-1-40-pummels-currencies.html

The case for European Central Bank action to curb the euro’s gains is getting stronger after the 18-nation currency jumped to within a half-cent of $1.40.

“A print of $1.40 is a psychologically important level which may set off some alarm bells to officials,” Neil Jones, the head of hedge-fund sales at Mizuho Bank Ltd. in London, said in a May 2 phone interview.

ECB President Mario Draghi stepped up his war of words against the euro’s gains in recent months, culminating in an April 24 pledge to start asset purchases if a stronger currency keeps inflation depressed. While the appreciation may be seen as a referendum on Draghi’s role in the euro area’s recovery from its sovereign-debt crisis, evidence is building that exporters are suffering.

Amsterdam-based Royal Philips NV, the world’s largest lighting company, last month blamed the euro in part for first-quarter earnings that fell short of analysts’ forecasts. Firms from Royal Bank of Scotland Group Plc to Amundi Asset Management say $1.40 may test policy markers’ resolve, and Bank of New York Mellon says a breach of that level may send the currency even higher.

[xchrom]

17. EU Covered Bond Talks Intensify as Bank Liquidity Rules in Play

http://www.bloomberg.com/news/2014-05-06/eu-covered-bond-talks-intensify-as-bank-liquidity-rules-in-play.html

European talks on how to treat covered bonds in banks’ liquidity buffers intensified this week as nations with the most at stake fought to ensure Basel III rules don’t hobble their markets.

Denmark, home to the world’s biggest covered-bond market per capita, is moving closer to winning some concessions from the European Union that would help avert a sell-off of the nation’s mortgage-backed securities, Karsten Beltoft, head of the Mortgage Bankers’ Federation in Copenhagen, said yesterday.

Covered bond issuers are now waiting for the European Commission to decide whether it will follow a recommendation by the European Banking Authority to cap use of the securities in banks’ liquidity buffers at 40 percent. According to Beltoft, there are already indications the cap may be raised to about 60 percent. Danish banks currently use covered bonds to meet about 70 percent of their liquidity needs. The commission is due to announce its decision by next month.

“We’re still in the process of finding a solution,” Danish Economy Minister Margrethe Vestager said yesterday in Brussels. “Of course, just as well as we feel they understand our concerns, of course we understand theirs as well. And that is of course important in order to find a solution. It’s not there yet, but it’s a work in progress.”

[xchrom]

18. Asia Economic Growth to Drive Demand for Infrastructure Projects

http://www.bloomberg.com/news/2014-05-07/asia-economic-growth-to-drive-demand-for-infrastructure-projects.html

The economic growth in Southeast Asia, China and India will provide opportunities for companies to invest in infrastructure infrastructure projects such as airports, said Ram Charan, an independent business adviser.

China will have a minimum of 400 airports and India will add at least another 100, said Dallas-based Charan, who has advised companies including General Electric Co., Tata Group and Verizon Communications Inc. Health-care and consumer industries, especially for luxury goods, also provide opportunities, he said in an interview in Singapore yesterday.

“The long-term unstoppable trend is clear, that the largest amount of growth is going to be in this part of the world,” said Charan, who is in Singapore for an event organized by the Australian High Commission and Westpac Banking Corp. (WBC) “There will be volatility. Keep your eyes on the prize and select where you want to focus.”

Economic growth in Indonesia, Vietnam and Thailand has stoked consumption in Southeast Asia. Most of the region’s 600 million people -- the combined population of the U.S., Germany and Brazil -- will be middle class by 2020, boosting demand for food, beverages and other goods, according to Bain & Co.

[xchrom]

20. Welfare Photos Shame Holders as States Target Abuses

http://www.bloomberg.com/news/2014-05-07/welfare-photos-shame-holders-as-states-target-abuses.html


Diane Sullivan says that when she pulls out her food-stamp card to buy groceries, she keeps the side with her photo cupped in her hand so people can’t see.

While Massachusetts requires her to have the identification to prevent fraud, the 40-year-old mother of five from Medford calls it “a card of shame.”

Maine and Georgia joined Massachusetts and New York last month in putting photos on welfare cards to stop misuse of taxpayer money, and similar proposals have been offered in a dozen other U.S. states. Opponents question whether it saves more than it costs. They also say it dissuades residents from getting benefits, much as critics of requiring identification to vote argue it keeps some from casting ballots.

“People sometimes make these snap judgments,” said Sullivan, who works part-time as policy director at the nonprofit Homes for Families in Boston. “As soon as they see that I’ve got this photo card, they’re like, ‘Oh, there’s a poor woman who’s lazy. To see it gain steam in other states is extremely concerning to me.”

[xchrom]

21. U.S. Said to Seek Guilty Plea From Credit Suisse Parent

http://www.bloomberg.com/news/2014-05-07/u-s-said-to-seek-guilty-plea-from-credit-suisse-parent.html

The U.S. is pressing for guilty pleas from the parent companies of banks under investigation, including Credit Suisse Group AG (CSGN), in a marked departure from the past, according to a person familiar with the negotiations.

Whether prosecutors would be willing to accept a guilty plea from a smaller unit rather than insisting on the bank holding company has been debated since authorities started speaking this year about imminent criminal actions in speeches, tweets and even a video this week from the U.S. Attorney General.

Credit Suisse is trying to settle a U.S. tax evasion probe that could include a penalty of more than $1 billion, according to another person familiar with the talks. Discussions could lead to a penalty of $1.6 billion or more, according to a third person. All the people asked not to be identified because the talks are confidential.

A guilty plea by the bank’s holding company or a unit isn’t a foregone conclusion, said the person who described the government’s focus on the parent company. While prosecutors have won guilty pleas from subsidiaries of large banks, they haven’t gone after holding companies since the financial crisis. Such an action against Credit Suisse could alarm customers and other banks that do business with it, said Bryan Skarlatos, an attorney at Kostelanetz & Fink LLP in New York who teaches on subjects including tax prosecutions at New York University School of Law.

[Demeter]

22. Messing with Minds...it's the national pass-time

[xchrom]

23. Breedlove Says NATO May Need Permanent Troops in East Europe

http://www.bloomberg.com/news/2014-05-06/breedlove-says-nato-may-need-permanent-troops-in-east-europe.html

Air Force General Philip Breedlove, NATO’s top military commander, said Russia’s actions in Ukraine have created a “new paradigm” in Europe that may require a revaluation of how the military alliance operates on the continent.

Options include positioning permanently troops in eastern Europe, Breedlove said at a press conference in Ottawa.

“We will look at some of those tougher questions about are we positioned correctly in Europe,” Breedlove said. “I think we need to look at our responsiveness, our readiness and then our positioning of forces to be able to address this new paradigm that we have seen demonstrated in Crimea and now on the eastern border of Ukraine.”

Asked specifically about permanent troops in eastern Europe, Breedlove said: “I think this is something we have to consider and we will tee this up for discussion through the leaderships of our nations.”


***on another note -- Breedlove? isn't that redundant?

[Demeter]

24. It's Strangelove's new alias

I bet he'd love a permanent occupation of the Russian border...the bastard.

[xchrom]

25. New Zealand Jobs Growth Beats Estimates as More Enter Workforce

http://www.bloomberg.com/news/2014-05-06/new-zealand-jobs-growth-beats-estimates-as-more-enter-workforce.html

New Zealand employers hired workers at a faster pace than economists forecast in the three months through March and more people entered the workforce, adding to the case for the central bank to raise interest rates again.

Employment increased 0.9 percent, or by 22,000 jobs, from the fourth quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of 10 economists was for a 0.6 percent gain. The jobless rate was unchanged at 6 percent as labor force participation rose to a record. Economists expected 5.8 percent unemployment.

Jobs growth and a lift in business confidence suggest pressure will build on wages and inflation in coming quarters, adding to signs Reserve Bank Governor Graeme Wheeler will raise the official cash rate at his next review on June 12. Last month, he increased borrowing costs to 3 percent, his second quarter-point rise in two months.

“The improvement in the unemployment rate over 2014 is likely to be gradual,” Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland, said ahead of the report. “While there should be good job gains, the supply of labor will also be growing strongly.”

[xchrom]

26. Korea Won Strengthens to Highest Since 2008 as Markets Reopen

http://www.bloomberg.com/news/2014-05-07/korea-won-strengthens-to-highest-since-2008-as-markets-reopen.html

South Korea’s won rose to the strongest level since 2008 amid a decline in the dollar and as local financial markets resumed trading after a two-day holiday.

The currency appreciated 0.8 percent from May 2 to 1,022.65 against the U.S. currency at the close in Seoul, prices from local banks compiled by Bloomberg show. It touched 1,022.55, the highest since August 2008. South Korea was closed May 5-6 for public holidays.

The authorities will move to stabilize the markets if there is too much volatility, Bank of Korea Director General Ryoo Sang Dai told Bloomberg News over the telephone today. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 of its major peers, dropped to the lowest level since October yesterday on concern weakness persists in the U.S. jobs market. South Korea’s exports rose 9 percent in April, according to official figures released May 1, more than the 5.5 percent gain estimated in a Bloomberg survey.

“With April export figures good, exporters that couldn’t convert proceeds during the holidays will sell dollars today,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “This, combined with the globally weak dollar, will support the won. Still, the authorities will be reluctant to let the won strengthen beyond 1,020 per dollar.”

[xchrom]

28. In Greece, Austerity Kills

http://truth-out.org/opinion/item/23510-in-greece-austerity-kills

A string of academic reports documenting in detail the impacts of austerity on health care and health outcomes in Greece have recently been released [1]. They show how European authorities, IMF and Greek government policies implemented in response to the economic crisis have led to deaths and attacks on the health of ordinary people. But there was nothing inevitable about those consequences. As the medical journal the Lancet stated: "Experience elsewhere in Europe shows that those countries which prioritise social protection (including health) in the midst of austerity, and favour fiscal stimulation, secure better outcomes for their populations."

Austerity implies a combination of government spending cuts and tax hikes to shrink public deficits to revive economies facing the current downturn. But it doesn't work, as Europe's ongoing economic stagnation makes clear. Moreover, whatever government savings result from expenditure reductions, it is important to point out that they are built on "blood money," as argued recently by Yanis Varoufakis, the well-known Greek economist.

The Greek economy shrank by 20 percent, between 2008 and 2012, due to austerity measures that cut public spending drastically, capping health expenditures at 6 percent of GDP, so that they are now lower than any other European Union members that joined prior to 2004. The public hospital budget was cut by 26 percent between 2009 and 2011.

But it is not as if the Greek government was trying to resist troika pressure - it is also pro-austerity. (The troika is the European Commission (EC), the International Monetary Fund (IMF) and the ECB, European Central Bank.) Varoufakis wrote recently that "the government is not interested in the slightest in playing tough with the troika," but "only with its own people, trying to impress the troika with its ruthlessness." For example, in 2012, Greece went beyond the troika's demands for spending reductions in pharmaceutical expenditures and hospital operating costs. The then-minister of health, Andreas Loverdos, conceded that "the Greek public administration . . . uses butchers' knives" to cut spending. The Lancet described the government's attitude to the multiple health problems for which it is responsible as one of "denial."

[xchrom]

29. Government announces record fall in unemployed for April{SPAIN}

http://elpais.com/elpais/2014/05/06/inenglish/1399366131_792242.html

The number of people registered as unemployed in Spain fell by 111,565 last month, making April the best on record, and the second-best monthly result in Spain’s democratic history, according to figures released on Tuesday by the Labor Ministry.

After this fall in the ranks of the jobless, there are 4,684,301 individuals still on the unemployment rolls.

The month saw more positive news, with 133,765 new workers signing up to the Social Security system, thanks chiefly to seasonal hirings in the tourism sector for the Easter vacation.

[xchrom]

30. Singapore and US reach tax evasion deal

http://www.bbc.com/news/business-27289312


Singapore has agreed to share information with the US under a new law aimed at preventing offshore tax evasion by American citizens.

The city-state is one of Asia's biggest financial centres and is forecast to overtake Switzerland as the world's largest wealth management centre.

It will participate in the Foreign Account Tax Compliance Act (FATCA), which takes effect on 1 July.

The move provides a boost to US efforts to clamp down on tax-dodgers.

[xchrom]

31. US trade deficit falls in March on strong exports

http://www.bbc.com/news/business-27297296

The US trade deficit fell in March, as exports surged to the second highest level on record.

The Department of Commerce reported a deficit of $40.4bn in March, a 3.6% decline from February's $41.9bn.

Strong exports of aircraft, automobiles and food and drink helped boost exports to $193.9bn. Exports to Canada, South Korea and Germany hit record levels.

Imports rose 1.1% thanks in part to growing demand for mobile phones, clothes and machinery.

[Fuddnik]

32. Two words that should never be allowed in the same sentence.

Student, Loan.

I seriously doubt we'll ever join the civilized world and provide free education, through graduate school, and universal health care.

Just another failed state.

[Demeter]

33. An Inglorious Failure, to Boot

of a country that prided itself on glory....