STOCK MARKET WATCH -- Monday, 13 April 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Monday, 13 April 2015[font color=black][/font]

SMW for 10 April 2015

AT THE CLOSING BELL ON 10 April 2015
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Dow Jones 18,057.65 +98.92 (0.55%)
S&P 500 2,102.06 +10.88 (0.52%)
Nasdaq 4,995.98 +21.41 (0.43%)


[font color=red]10 Year 1.95% +0.02 (1.04%)
30 Year 2.58% +0.03 (1.18%)[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
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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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[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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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts







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

[Tansy_Gold]

1. We didn't need a "new study" to tell us that. n/t

[Ghost Dog]

2. Euro zone governments must decide whether to expand their risk exposure to Athens

... Since outright debt forgiveness is politically impossible, the next best solution would be for Greece to pay off its expensive IMF loans early, redeem bonds held by the European Central Bank and extend the maturity of loans from euro zone governments to secure lower interest rates for years to come.

"This step would save Greece's budget billions of euros, while reforming the Troika arrangement, eliminating the IMF's and the ECB's financial exposure to Greece," said Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economics, who advocates such an arrangement.

It would lower the effective interest rate on Greek debt to less than 2 percent, far less than Athens was paying before the euro zone debt crisis began in 2009, and radically reduce the principal amount to be repaid over the next decade, giving Greece fiscal breathing space to revive its economy. And unlike ideas floated by Greek Finance Minister Yanis Varoufakis to swap euro zone loans for GDP-linked bonds and ECB holdings with perpetual bonds, paying out the IMF and the ECB early would be legal and supported by precedent.

But if the economics make sense for Greece, the politics no longer add up for its partners... "Now it's a political non-starter," said a euro zone official. "There's just no appetite in the euro zone for a grand bargain to take over Greece's debt to the IMF and the ECB." ...

/... http://uk.reuters.com/article/2015/04/12/uk-eurozone-greece-deal-analysis-idUKKBN0N306Y20150412

[Demeter]

3. German intransigence

The German desire to punish will destroy their economy as well as the rest of the Eurozone.

The Peterson Institute is suspect, IMO, because of its founder, Peter Peterson, but this sounds like a plan, which is more than I can say for other stuff floating out there.

[Demeter]

4. It's Depressing But True: The Bankers Run the Show By Ellen Brown / Web of Debt blog

http://www.alternet.org/economy/its-depressing-true-bankers-run-show?akid=12984.227380.Hn4v19&rd=1&src=newsletter1034502&t=6

According to a new study from Princeton University, American democracy no longer exists. Using data from over 1,800 policy initiatives from 1981 to 2002, researchers Martin Gilens and Benjamin Page concluded that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of – or even against – the will of the majority of voters. America's political system has transformed from a democracy into an oligarchy, where power is wielded by wealthy elites...“Making the world safe for democracy” was President Woodrow Wilson’s rationale for World War I, and it has been used to justify American military intervention ever since. Can we justify sending troops into other countries to spread a political system we cannot maintain at home? (ACTUALLY, WE ARE SPREADING THE OLIGARCHY, GLOBALISM: THE NEW WORLD ORDER! DEMETER)

The Magna Carta, considered the first Bill of Rights in the Western world, established the rights of nobles as against the king. But the doctrine that “all men are created equal” – that all people have “certain inalienable rights,” including “life, liberty and the pursuit of happiness” – is an American original. And those rights, supposedly insured by the Bill of Rights, have the right to vote at their core. We have the right to vote but the voters’ collective will no longer prevails...In Greece, the left-wing populist Syriza Party came out of nowhere to take the presidential election by storm; and in Spain, the populist Podemos Party appears poised to do the same. But for over a century, no third-party candidate has had any chance of winning a US presidential election. We have a two-party winner-take-all system, in which our choice is between two candidates, both of whom necessarily cater to big money. It takes big money just to put on the mass media campaigns required to win an election involving 240 million people of voting age...In state and local elections, third party candidates have sometimes won. In a modest-sized city, candidates can actually influence the vote by going door to door, passing out flyers and bumper stickers, giving local presentations, and getting on local radio and TV. But in a national election, those efforts are easily trumped by the mass media. And local governments too are beholden to big money.

When governments of any size need to borrow money, the megabanks in a position to supply it can generally dictate the terms. Even in Greece, where the populist Syriza Party managed to prevail in January, the anti-austerity platform of the new government is being throttled by the moneylenders who have the government in a chokehold.

How did we lose our democracy? Were the Founding Fathers remiss in leaving something out of the Constitution? Or have we simply gotten too big to be governed by majority vote? The stages of the capture of democracy by big money are traced in a paper called “The Collapse of Democratic Nation States” by theologian and environmentalist Dr. John Cobb. Going back several centuries, he points to the rise of private banking, which usurped the power to create money from governments:

A HISTORY OF US AND BANKS AND DEMOCRACY FOLLOWS: SEE LINK

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including the bestselling Web of Debt. In her latest book, The Public Bank Solution, she explores successful public banking models historically and globally. She is currently running for California State Treasurer on a state bank platform.

[Demeter]

5. Someone Crunched the Numbers on What the Bankers Did to the Greeks, & the Results Will Blow You Away

http://www.alternet.org/world/someone-crunched-numbers-what-bankers-did-greeks-and-results-will-blow-you-away?akid=12989.227380.c8OjiC&rd=1&src=newsletter1034559&t=20

If there's one country in the Western World that is a poster child for what austerity can do to an entire society, it's Greece. The country has been subject to strict austerity programs imposed on it by the rest of Europe, at the behest of finance kingpins who caused the financial crisis in the first place. The blog Keep Talking Greece looks at a report put out by the Germany Institute for Macroeconomic Research that tallies up the damage from the austerity regime between 2008 and 2012. Here are some of the key findings:

Greek Poor Lost Almost All Of Their Income, The Rich Fared Better: Although sloganeering for austerity often invokes the need to tighten belts, not everyone in Greece had to tighten quite so much. The poor lost 86 percent of their income, but the richest Greek households lost closer to 17 to 20 percent.

The Poor Were Hit With A Huge Tax Hike, The Rich Only A Tiny One: The poorest Greeks were hit with a 337 percent increase in taxes, while the richest saw their taxes increase by only nine percent.

Public Employees Were Hit Particularly Hard: Private sector employees saw a wage and salary decrease of around 19 percent, but public employees were hit the hardest, losing about a quarter of their income. Early retirement in the private sector increased by 14 percent, while early retirement in the public sector increased by 48 percent.

These findings and others seem to show what activists have been pointing to for years: that the supposedly shared sacrifice of austerity isn't shared at all – the poor and the public servants were hurt the worst, while rich tax evaders were mostly spared.

[mother earth]

22. These are the facts that don't get enough attention, there are still people here who somehow believe

that shock doctrine tactics are not being played out. They just don't look at the big picture.

http://www.theguardian.com/business/2015/jan/19/global-wealth-oxfam-inequality-davos-economic-summit-switzerland
New Oxfam report says half of global wealth held by the 1%

https://www.oxfam.org/sites/www.oxfam.org/files/bp-working-for-few-political-capture-economic-inequality-200114-en.pdf


Almost half of the world’s wealth is now owned by just one percent of the population.
• The wealth of the one percent richest people in the world amounts to $110 trillion. That’s 65 times the total wealth of the bottom half of the world’s population.
• The bottom half of the world’s population owns the same as the richest 85 people in the world.
• Seven out of ten people live in countries where economic inequality has increased in the last 30 years.
• The richest one percent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
• In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.
This massive concentration of economic resources in the hands of fewer people presents a significant threat to inclusive political and economic systems. Instead of moving forward together, people are increasingly separated by economic and political power, inevitably heightening social tensions and increasing the risk of societal breakdown.

[Demeter]

6. Fed Heeds Wall Street’s Warning on Where Next Crisis May Come From

THEY'VE GOT IT ALL PLANNED OUT, SEE?

http://www.bloomberg.com/news/articles/2015-04-10/fed-digs-into-clearinghouse-risks-after-jpmorgan-raises-alarms?cmpid=yhoo

JPMorgan Chase & Co. and BlackRock Inc. have argued for years that a key response to the last financial crisis could help fuel the next one. Global regulators are starting to heed their warnings. At issue is the role of clearinghouses -- platforms that regulators turned to following the 2008 meltdown to shed more light on the $700 trillion swaps market. A pivotal goal was ensuring that losses at one bank don’t imperil a wide swath of companies, and the broader economy. Now, Federal Reserve Governor Daniel Tarullo is quizzing Wall Street after big lenders and asset managers said clearinghouses pose their own threats, said three people with knowledge of the discussions who weren’t authorized to speak publicly. Among the concerns raised by financial firms: Relying on clearinghouses shifts risk to just a handful of entities, and the collapse of one could lead to uncapped losses for banks.

“You’ve concentrated the point of failure,” Thomas Hoenig, the vice chairman of the Federal Deposit Insurance Corp., said in an April 1 interview. His agency is responsible for winding down failed financial firms.

‘Sufficient Safeguards’

Swaps trading -- when it was largely unregulated -- amplified the meltdown seven years ago and prompted a $182 billion U.S. rescue of American International Group Inc. The recent government scrutiny comes as more derivatives trades than ever are guaranteed at central clearinghouses...Banks deposit collateral at clearinghouses to protect against defaults, while clearinghouses also contribute some of their own capital. If both of those funding sources are exhausted in a time of stress, a clearinghouse could then require banks and other members to pick up the tab. After the crisis, U.S., European and Asian authorities required that most derivatives be guaranteed at clearinghouses instead of allowing risks to mount directly -- and unseen -- between traders. That move increased the role of platforms owned by CME Group Inc., Intercontinental Exchange Inc. and LCH.Clearnet Group Ltd., where traders clear swaps tied to interest rates, bonds and other assets. While it’s unlikely that global regulators will back away from mandating the use of clearinghouses, the current review could lead to new policies.

JPMorgan published a September paper calling on clearinghouses to put more of their own capital aside as a cushion against massive losses. The bank also said the entities shouldn’t rely so heavily on levies from members. The Clearing House Association, which represents Wall Street banks, not derivatives clearinghouses, has led an intense lobbying effort in Washington. For more than two years, the trade group has been pressuring regulators -- including during visits in recent weeks to the Office of the Comptroller of the Currency and the Treasury Department, according to public records and people with knowledge of the matter. JPMorgan, Goldman Sachs Group Inc. and HSBC Holdings Plc executives attended at least one of the meetings...Clearinghouses counter that many of the issues raised by lenders are self-serving. In a March 9 letter to Treasury Secretary Jacob J. Lew, CME and ICE wrote that banks are pushing “narrow topics of interest.” Unlike banks, clearinghouses aren’t “risk-taking institutions,” so it’s unnecessary to dictate how much capital they should set aside for a potential default, according to the letter, which also was signed by the Depository Trust and Clearing Corp. and the Options Clearing Corp. The companies sent the note to Lew because he leads the Financial Stability Oversight Council, a panel of U.S. regulators set up to sniff out threats to the economy.

The concerns cited by banks aren’t completely abstract. Two years ago, the default of a South Korean securities firm forced the local exchange to tap an emergency fund. The situation led to the surviving clearing members losing some of their default-fund contributions, Mark Wetjen, a commissioner at the U.S. Commodity Futures Trading Commission, said in a 2014 speech.


THE CLEARING HOUSES ARE DELUSIONAL. THEIR ENTIRE REASON FOR EXISTENCE IS TO SHIFT THE RISK OFF THE BANKSTERS...THEIR BUSINESS MODEL IS RISK TO THE NTH DEGREE.

[Demeter]

7. The $9 Trillion Short That May Send the Dollar Even Higher

http://www.bloomberg.com/news/articles/2015-04-12/the-9-trillion-short-that-s-seen-sending-the-dollar-even-higher

Investors speculating the dollar rally is fizzling out may be overlooking trillions of reasons why it will keep on going. There’s pent-up demand for the U.S. currency that will underpin years of appreciation because the world is “structurally short” the dollar, according to investor and former International Monetary Fund economist Stephen Jen. Sovereign and corporate borrowers outside America owe a record $9 trillion in the U.S. currency, much of which will need repaying in coming years, data from the Bank for International Settlements show. In addition, central banks that had reduced their holdings of the greenback are starting to reverse course, creating more demand. The dollar’s share of global foreign reserves shrank to a record 60 percent in 2011 from 73 percent a decade earlier, though it’s since climbed back to 63 percent. So, the short-term ebbs and flows caused by changes in Federal Reserve policy or economic data releases may be overwhelmed by these larger forces combining to fuel more appreciation, according to Jen, the London-based co-founder of SLJ Macro Partners LLP and the former head of currency research at Morgan Stanley.

Dollar ‘Power’

“Short-covering will continue to power the dollar higher,” said Jen, who predicts a 9 percent advance in the next three months to 96 cents per euro. “The dollar’s strength is not just about cyclical factors such as growth. The recent consolidation will likely prove to be temporary.”

The U.S. currency strengthened 0.5 percent to $1.0548 per euro as of 10:24 a.m. in London. The last time it traded at 96 cents was June 2002. Most strategists and investors agree on the reasons for the dollar’s advance versus each of its major counterparts during the past year: the prospect of higher U.S. interest rates while other nations are loosening policy. Bloomberg’s Dollar Spot Index, which tracks the U.S. currency against 10 major peers including the euro and yen, has surged 20 percent since the middle of 2014. The gains stalled recently, sending the index down more than 3 percent in the three weeks through April 3, as Fed officials tempered investors’ expectations about the pace of rate increases.
Top Forecaster

Jen isn’t the only one who thinks short-dollar positions will cause the rally to extend. Chris Turner, head of foreign-exchange strategy at ING Groep NV, sees the dollar surging through parity with the European currency by mid-year. He said gains will be spurred by bonds from Germany to Ireland yielding below zero.

“Central banks are re-accumulating their dollar reserves and low, or negative, bond yields in the euro zone will probably speed up that trend,” said London-based Turner, whose bank topped Bloomberg’s rankings for the most accurate currency forecasts in the past two quarters.

Not everyone thinks the dollar will keep on climbing. Billionaire Bill Gross of Janus Capital Group Inc. called his contrarian bet against the greenback “the trade of the year.” His short is premised on the spread between U.S. and European interest rates narrowing...Adrian Lee, whose eponymous investment company oversees more than $5 billion, disagrees. He points to monetary policy as the biggest driver of dollar strength as the tightening bias of the Fed contrasts with a European Central Bank that’s expanding the money supply.

Rate Outlook

“The dichotomy between Europe and the U.S. is most interesting,” said Lee, chief investment officer at Adrian Lee & Partners, which has offices in London and Dublin. “If you ask where our strategy would be in a year’s time, we can easily have a forecast of the euro well below $1.” He also sees another structural factor that’s underpinning the dollar: the U.S.’s shrinking current-account deficit. The decline in oil prices -- even with the shale-gas revolution, the nation is still an importer -- has helped the U.S. reduce its trade shortfall to 2.3 percent of gross domestic product, according to data compiled by Bloomberg. That’s down from a record 5.9 percent in 2006.

For Jen, the rise in dollar-denominated debt across the globe is key. The $9 trillion owed by borrowers outside the U.S. has surged from $6 trillion at the end of 2008 -- when the Fed cut its benchmark interest rate to near zero, making it cheaper to issue in the currency...

[Demeter]

10. Dollar’s Rise Reshuffles Global Economy Into Winners and Losers

http://www.bloomberg.com/news/articles/2015-04-12/dollar-s-rise-reshuffles-global-economy-into-winners-and-losers



The rising U.S. dollar is redistributing growth throughout the global economy.

The greenback’s ascent to the highest in a dozen years on a trade-weighted basis is eroding the competitiveness of the U.S. and countries whose exchange rates track the dollar, including China. It’s also pushing down commodity prices, hurting producers such as Brazil, and threatening other emerging markets where companies borrowed in the U.S. currency when it was cheaper.

On the flip side, the euro area and Japan are cashing in as their companies gain the edge in world markets that economies need to boost growth. The likes of India are benefiting, too, by paying less for their energy imports.

“The dollar’s rise is sorting the world into winners and losers,” said Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York and a former Federal Reserve official.

FIND OUT HOW AND WHO AT LINK

[Demeter]

8. Saudi Arabia’s Plan to Extend the Age of Oil

A LONG AND WORTHY ARTICLE ON OIL POLICY, DEMAND DESTRUCTION, AND MORE

http://www.bloomberg.com/news/articles/2015-04-12/saudi-arabia-s-plan-to-extend-the-age-of-oil

[Demeter]

9. Iran, Secret Gold and the Mystery Trade Boosting Turkish Exports

http://www.bloomberg.com/news/articles/2015-04-12/iran-secret-gold-and-the-mystery-trade-boosting-turkish-exports

Turkey’s trade balance, one of the few points for solace in this year’s worst performing bond market, might not be improving as much as the data appears to show.

Despite having no significant gold deposits, exports of the precious metal made up 70 percent of the narrowing in the current account gap, according to government data published Friday. A gold importer for 28 of last 30 years, Turkey became an exporter in 2012 when it started paying for Iranian gas in precious metals as a way of circumventing international sanctions that may soon be lifted...

MORE

[Demeter]

11. GE’s Immelt shows how to break up a big bank By Philip van Doorn

http://www.marketwatch.com/story/ges-immelt-shows-how-to-break-up-a-big-bank-2015-04-10?siteid=YAHOOB

General Electric Co. just became a much safer stock for long-term investors, as CEO Jeff Immelt has finally delivered on his promise of turning the company back into an industrial powerhouse. General Electric Co. said on Friday that it would sell most of the assets of GE Capital Real Estate for roughly $26.5 billion to investment funds managed by Blackstone Group LP with a portion of the loans going to Wells Fargo & Co. The asset sale will result in $16 billion in first-quarter after-tax charges, of which $12 billion will be noncash charges.
This move follows the initial public offering of Synchrony Financial, GE Capital’s consumer finance unit, in August. GE holds 85% of Synchrony’s stock, but plans to complete its full exit from the business through a tax-free spinoff by the end of 2015. GE Capital had $494 billion in total assets as of Dec. 31. Excluding liquidity, the financial arm’s “net ending investment,” or ENI, was $363 billion. as of Dec. 31, down from $538 billion at the end of 2008. Following the completion of the sale of the real-estate assets and the spinoff of Synchrony Financial, the company expects GE Capital’s remaining ENI to total about $90 billion. GE Capital’s remaining activity will be limited to providing financing for the parent company’s industrial customers, as GE made plain in this chart, sent out by Immelt via Twitter early Friday:



The importance of lowering liquidity risk

GE’s news release announcing its latest and greatest reduction of GE Capital summed up the move beautifully, saying “the business model for large wholesale-funded financial companies has changed, making it increasingly difficult to generate acceptable returns going forward.” “Wholesale-funded” refers to GE Capital’s traditional reliance on the commercial paper market for liquidity. The problem with this short-term funding model for a balance sheet with long-term assets is that during a financial crisis, overnight liquidity tends to dry up as it did for GE late in 2008. When the company had difficulty finding buyers for its paper, the Federal Deposit Insurance Corp. stepped in and through its Temporary Liquidity Guarantee Program (TLGP) was covering $21.8 billion of GE commercial paper. GE Capital registered for up to $126 billion in commercial-paper guarantees under the TLGP.

General Electric obviously wishes to avoid ever needing another government bailout. When GE Capital’s ending net investment declines to roughly $90 billion at the end of 2015, the company estimates needing just $40 billion in funding, which is a relatively small amount. GE Capital will also “work with regulators” to end the unit’s designation by the Financial Stability Oversight Council as a “systemically important financial institution.” This means it will no longer be subject to the Federal Reserve’s annual stress tests or the regulator’s heightened level of scrutiny for major lenders.

Capital return is icing on the cake

GE’s stock was up as much as 9% Friday, which wasn't a surprise, considering that the company is making such a big move to end its liquidity problem. The company also said it was expecting “approximately $35 billion in dividends from GE Capital under this plan,” and that the windfall would be used to fund most of a new stock buyback program totaling up to $50 billion through 2018. It can be a bad sign for a company to make such huge buybacks, possibly implying that it doesn’t have better use for the cash. But GE already had $16 billion in cash and equivalents (excluding GE Capital’s $122.1 billion in cash and equivalents) as of Dec. 31. The company has plenty of cash and made it clear that its capital deployment plan would still “allow room for opportunistic ‘bolt-on acquisitions in GE’s core markets.” The company also said it expects to maintain its current dividend through 2016, “and grow it thereafter.” GE pays a quarterly dividend of 23 cents, for an attractive yield of 3.58%, based on Thursday’s closing price of $25.73. The combination of the vast liquidity improvement, the dividend and the share-count reduction and boost to earnings-per-share from the buybacks, should place a floor under the shares, cementing GE’s stock as a core conservative portfolio holding.

Back in January, after the company reported a 10% increase in annual profit from its industrial businesses, Jeff Reeves called GE “a boring stock everyone should own.” Well, the stock just got a bit more boring, but boring is a very good thing, when it means lower risk, reducing the regulatory burden, lowering the share count and boosting earnings per share.

MORE

[Demeter]

16. GE Plan Opens Escape Path From Fed Too-Big-To-Fail Label

http://www.bloomberg.com/news/articles/2015-04-10/ge-plan-opens-escape-path-from-fed-too-big-to-fail-label

General Electric Co.’s plan to exit most lending operations could make its finance arm the first entity to escape the grip of the Federal Reserve’s too-big-to-fail oversight, a move that would free the company from strict capital requirements and reduce government monitoring.

As part of a broad restructuring announced Friday, GE General Counsel Brackett Denniston said the finance unit will apply to lose its systemically important label sometime next year. GE has already discussed its overhaul, which includes the sale of $26 billion of real estate, with U.S. regulators who will decide whether the company can go free.

“We think we’ve come a long way and you can argue we’re not systemic right now,” Denniston said an in interview. “When the plan is further advanced, when we think the argument is even stronger and more compelling, that’s the right way to do it.”

GE Capital is one of four non-banks hit with the tighter scrutiny, which applies to firms that regulators believe could threaten the U.S. economy if they failed. Companies have sought to avoid the capital, liquidity and leverage constraints that can come with being selected, with insurer Metlife Inc. suing the U.S. government to try to escape...To get out, GE Capital will have to convince the FSOC that its collapse wouldn’t hurt the broader financial system.

MORE

[Demeter]

12. The Peter Principle Never Died

[Demeter]

13. The Expensive Lesson Jamie Dimon “Will Not Forget”

http://www.fool.com/investing/general/2015/04/12/the-expensive-lesson-jamie-dimon-will-not-forget.aspx

Jamie Dimon, the chairman and CEO of JPMorgan Chase, is mad at the U.S. government. And he's threatening to exact revenge. During the past 150 years, JPMorgan has supported the federal government in almost every financial crisis since the Civil War -- the Panic of 1873 being one of the few notable exceptions.

• During the Panic of 1893, JPMorgan led a syndicate of bankers that allowed the government to avoid devaluing the U.S. dollar.
  
  
• In the Panic of 1907, JPMorgan organized the bailout of multiple trust companies and a leading brokerage house, saved New York City from insolvency, and rescued the New York Stock Exchange.
  
  
• When Continental Illinois, the nation's first too-big-to-fail bank, was on the brink of illiquidity in 1984, JPMorgan played a central role in allowing it to head-off bankruptcy.
  
  
• JPMorgan was there to help pick up the pieces following the 1998 failure of Long-Term Capital Management.
  
  
• And in the latest crisis, the nation's biggest bank by assets rescued not one, but two, major financial firms, Bear Stearns and Washington Mutual, at the explicit behest of the U.S. government.

Despite all of these things, JPMorgan has found itself squarely within the crosshairs of the federal and state governments. It was fined more than a billion dollars for the 2012 trading debacle known as the London Whale. It's been, or is in the process of being, sanctioned by authorities for manipulating interest rates, foreign exchange rates, and energy markets. And, accounting for the lion's share of monetary and reputational damage, JPMorgan has amassed close to $19 billion worth of legal costs stemming from the meltdown of the subprime mortgage market.

This is unnerving from Dimon's perspective, because "virtually 70%" of the largest source of costs -- mortgage litigation -- was inherited from Bear Stearns and Washington Mutual. On top of this, when JPMorgan acquired these firms as they gasped for breath, it seems to have done so under the impression that the government had agreed to indemnify it from losses in exchange for JPMorgan's assistance. Here's how Dimon explains it in his latest shareholder letter:

While we certainly have made our share of costly mistakes, a large portion of our legal expense over the last few years has come from issues that we acquired with Bear Stearns and WaMu. These problems were far in excess of our expectations. ... In the Bear Stearns case, we did not anticipate that we would have to pay the penalties we ultimately were required to pay. And in the WaMu case, we thought we had robust indemnities from the Federal Deposit Insurance Corporation and the WaMu receivership, but as part of our negotiations with the Department of Justice that led to our big mortgage settlement, we had to give those up.

To be fair, JPMorgan doesn't make for a sympathetic victim. There's no doubt, for instance, that its executives have enriched themselves at the unwitting expense of consumers and institutional clients for years -- though, this isn't to say that Jamie Dimon isn't an exceptional banker, because he is. But these otherwise distasteful facts have no bearing on the sanctity of a contract -- or, in this case, on the validity of some type of verbal agreement or unstated understanding between JPMorgan and the government's negotiators. In short, if the U.S. government gave the impression that it would indemnify JPMorgan for Bear Stearns and Washington Mutual's legal liabilities, then it should have done so. The reason for this goes beyond the philosophical importance of the executive branch violating a multibillion contract with impunity. From the perspective of the financial industry, it could cause our leading banks to hesitate in a future crisis to form a private sector alliance and response, akin to JPMorgan's roles in 1893, 1907, 1984, 1998, and 2008, among other times. This isn't desirable. But that appears to be where we are. According to Dimon:

In case you were wondering: No, we would not do something like Bear Stearns again -- in fact, I don't think our Board would let me take the call. The WaMu deal might still make sense but at a much lower price to make up for the ongoing legal uncertainty (including the government's ability to take away our bargained-for indemnities). I did not, and perhaps could not, have anticipated such a turn of events. These are expensive lessons that I will not forget.

The point here is that the U.S. government isn't doing itself, or American taxpayers, any favors. It shouldn't allow itself to be blackmailed, of course, but one has to believe that there's a more amenable way to bridge this divide than having the CEO of the nation's biggest bank venting and issuing veiled threats in his publicly released letter to shareholders -- which, no less, has been anointed required reading by Warren Buffett.

John Maxfield has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

IT WOULD HAVE BEEN BETTER FOR ALL OF US IF BEAR STERNS HAD BEEN LIQUIDATED...MAYBE NOW THAT KIND OF STRONG MEDICINE WILL BE ADMINISTERED, IN THE NEXT (UPCOMING) MARKET CORRECTION....

[Demeter]

14. US market is 'broadly insane' so party on: Strategist

http://www.cnbc.com/id/102580267



Lofty valuations in global asset markets have caused a "wall of worry" for professional investors, but a lack of alternatives will mean equities will continue to climb in 2015, one strategist warned.

"Any correction will be met with a wall of buying, it's one of those moments," Peter Toogood, investment director at London-based independent fund manager City Financial Investment, told CNBC Monday.

"Take the U.S., there's nowhere to hide...the market in the U.S. is broadly insane."

He urged investors to "be nervous," but added that this nervousness and weak fundamentals weren't enough to stop the global rally in stocks and global fixed income. He predicted that the former would rally throughout the rest of the year.

"If you're about speculation, party on down," he said.

MORE INSANITY AT LINK

[Fuddnik]

15. What a coincidence.

Days after "Bush in a Skirt" announces her candidacy.


Letter from Bernie Sanders.


I have some bad news.

This week, a bill to give the president Fast Track authority -- designed to push through the Trans-Pacific Partnership with little public debate -- will be introduced in the Senate.

The TPP is a disastrous trade agreement designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy. It will also negatively impact some of the poorest people in the world.

Big corporations wrote the TPP behind closed doors. Incredibly, while Wall Street, the pharmaceutical industry, and major media companies have full knowledge as to what is in this treaty, the American people and members of Congress do not. They have been locked out of the process.

All Americans, regardless of political ideology, should be opposed to the "Fast Track" process which would deny Congress the right to amend the treaty and represent their constituents' interests.

I will help lead the fight in the Senate to stop the Fast Track bill. Will you stand with me? Sign my petition and tell the Senate: Reject Fast Track authority for the TPP.

Let's be clear: the TPP is much more than a "free trade" agreement. It is part of a global race to the bottom to boost the profits of large corporations and Wall Street. Here are just a few of the ways the TPP is going to destroy the American economy. The TPP will:

Outsource jobs
Undercut workers' rights
Dismantle labor, environmental, health, food safety, and financial laws
Allow corporations to challenge our laws in international tribunals rather than our own court system

If the TPP was such a good deal for America, the administration should have the courage to show the American people exactly what is in this deal, instead of keeping the content of the TPP a secret.

We can stop Fast Track authority for the TPP in the Senate. Opposition from both parties is growing and momentum is building. With your support we can show Senators that the American people do not want them to give up their power to fix a bad deal.

Will you stand with me and DFA to stop the TPP? Sign our petition today and tell the Senate: Say NO to Fast Track!

Thank you for standing up against the TPP.

Sen. Bernie Sanders

http://act.democracyforamerica.com/sign/sanders_stop_tpp/?t=1&akid=6099.592245.KGK4BB

[Demeter]

17. You need to add the petition link, Fuddnik

No coincidence at all, it's an orchestration!

[Fuddnik]

20. Done.

Thanks for pointing out the oversight.

[antigop]

23. perfect timing, eh?

Ram it through before anyone will pin it to her.

Probably why Elizabeth Warren made the comment last week that HRC needs to state her position on the TPP:

http://www.democraticunderground.com/10026482528

[Hotler]

18. The American dream is dead.

I have no hope. I see no future.

[Demeter]

21. We will always have housework

death, and maybe taxes, if we are poor enough, as our future.

Speaking of which, I've got to go get busy!

[Demeter]

19. Debunking the Causes of the Eurozone Crisis

http://www.nakedcapitalism.com/2015/04/debunking-causes-eurozone-crisis.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves here. One of the major focuses of the INET conference in Paris was the Eurozone crisis. The live broadcast of Nobel prize winner Joe Stiglitz’s interview of Yanis Varoufakis attracted over 50 million viewers.

Another event widely anticipated among conference attendees was a panel on the last day of the conference, Saturday, featuring Hans Werner Sinn, a well-known and particularly vocal defender of the orthodox German view of the Greek crisis, that Greece had been a profligate borrower that needed to take a big dose of austerity medicine. The other panelists contested various aspects of Sinn’s thesis, but the most striking and effective contrast came from Servass Storm of Delft University, who summarized a devastating paper that shredded conventional wisdom on the roots of the Eurozone crisis. I’ll present a post on the paper proper later this week.

Lee Sheppard was gracious enough to recap the panel, which was notable also by virtue of Sinn toning down his normally forceful views, although in the Q&A section, he became more heated. It is worth noting that Sinn advocated the idea of a temporary exit from the Eurozone for Greece (how does that work, exactly?) with Greece getting relief (aka subsidies) for essential imports like pharmaceuticals.

By Lee Sheppard, contributing editor of Tax Notes International

The purpose of the euro was to push down labor costs in Europe by making prices transparent using a single currency. Germans were especially keen about this “benefit” of the single currency. Hans Werner Sinn of Munich University is arguably correct that the Club Med countries did not do what they were supposed to do in getting their acts together by reducing costs to become competitive. However, an unexpected thing happened when the euro was created. Yields on sovereign and private debt went lower, enabling more borrowing by Club Med countries. Some countries had too much private borrowing and some countries had too much public borrowing. To Sinn, who appeared before a skeptical audience at INET, it doesn’t matter how the capital flowed into the country. Excessive foreign borrowing pushed up wages and had a detrimental effect on competitiveness. He argued that the Club Med countries should act like Ireland and take the pain in exchange for bailouts. Wrong relative prices explain the euro crisis, in Sinn’s view.

Veal Milanese is really Wiener schnitzel. Yes, northern Italy is very productive. Italy’s tradable sector is roughly the same size as its non-tradable sector. But Italy on the whole has low productivity, low education attainment, a bad business environment and high labor costs. Italy has low R&D spending and low levels of tertiary educational attainment. Italy is not good at enforcement of contracts or tax collection. Things are getting better, but they are still not good, according to Dominic Lombardi of CIGI. Lombardi defended Italy’s reputation for profligacy and not getting it together. He argued that Italy did not spend or borrow too much. There were capital account surpluses every year except 2009 and 2010. Italian sovereign debt only increased when Italian GDP collapsed. If growth in the European Union had been average, Italian sovereign debt would be only a hundred and fifteen percent of GDP rather than a hundred and thirty percent. Roughly 30 percent of Italian sovereign debt is held by foreign holders. So he argued that it was contagion and risk aversion that pushed up sovereign yields in Club Med.

Will Greece ever become competitive? Sinn insisted that every country can become competitive. But it is hard to see what areas Greece can become competitive in or indeed what tradable sectors it has. “Greece will never make it in the eurozone,” Sinn said. It would be best for them to temporarily exit, according to Sinn...Even if Greek labor costs were to be reduced to rock bottom, non-cost competitiveness would still be more important, according to Storm. Direct labor costs are just not that large a component of final goods costs. The truth is that Club Med is not technologically intensive. Storm argued that non-price competitiveness, like technological innovation, is more important than cost competitiveness.

MORE SUMMARY AT LINK