Thursday, October 27, 2011

Money for Nothing, Risk for Free

Our insanely disgusting banking system:
Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn't fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system -- and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government's credit rating.

This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can’t trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.

In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it's relatively safe to lend to them -- which means it's now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn't jack its debt-to-equity levels above 35-1 before the crash and didn't dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on freecreditscore.com to see if you got the same deal.

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's they're own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want “something for nothing.”

This is ironic because, as one of the Rolling Stone editors put it last week, “something for nothing is Wall Street’s official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

Tuesday, October 25, 2011

BOA Tries to Hook US Taxpayers for $75 TRILLION of Their Gambling Debts

SEVENTY-FIVE TRILLION.

The combined wealth of the US is less than that.

Fucking insanity, is what it is.
Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position. (snip)

Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.

Tuesday, October 18, 2011

More Police Brutality at OWS




More thuggery here:
By now, my cell phone video of two Citibank costumers being forcibly arrested outside the LaGuardia Place branch in New York City on October 15th 2011 has been seen by almost a million people.

As the person who unwittingly shot the video of the incident, I though it might be useful to respond to some of the media attention it has been getting.

A few friends and I attended a rally of college students, high school students, teachers, professors in Washington Square Park, which was connected to the ongoing Occupy Wall Street protests in lower Manhattan – and now around the country and around the world.

After the rally, I went into a nearby coffee shop and when I returned to the park I heard that a few dozen people had decided to head over to the local Citibank branch to talk about their student debt and close their accounts. I thought one of my friends might be among them so I walked the few blocks to the bank.

As I arrived I saw Citi Bank security guards locking the doors to the bank.

Contrary to the City Bank PR statement, the cops were not yet on the scene when Citi Bank officials chose to lock the doors to the branch– effectively kidnapping those inside.

Since I could see my friends were still inside the bank, I took out my blackberry and began recording through the window.

As I filmed an undercover, plain clothes police officer approached a women standing next to me outside the window. He accused her of having been inside the bank and said she had to come with him. As you can see on the video she repeats over and over, “I’m a customer,” and she holds up her Citibank check book. Though it’s not audible on the video, she also told him that she was just trying to close her account.

As my voice in the video will testify I was shocked and shaken by what happened next. The women, and the man standing next to her, were dragged inside the bank through a side door and arrested allow with 22 other people who were locked inside.

I watched in horror from the sidewalk as police dragged each person out one by one and loaded them into a line of paddy wagons. I could see that a few people were bleeding from their wrists where the police zip ties were cutting them.

I did not know the woman or man being arrested by the undercover cop in my video, but I desperately wanted to find them to give them the video to help with their court cases.

Today, I went down to Central Booking in Manhattan for the arraignments of the 24 people arrested. They were in jail for almost 30 hours. Most were charged with disorderly conduct, but a few have more serious charges–including trespassing and resisting arrest.

After waiting four hours in the courtroom they were finally released, along with my other friends. Their hands and wrists were cut up from the roughness of the police and zip ties. Everyone who was in jail was tired, hungry, and mentally and emotionally exhausted from spending the night in a cell–but no one was deterred from participating in the Occupy movement.

I asked my friends what had happened inside and they told me that they had all agreed they would leave the bank when asked. That no one had had any interest in being arrested that day. They all had thought, as citizens and as Citibank customers, they would be given a chance to leave the branch before action was taken against them. Sadly they were wrong.

I’m an underemployed recent college graduate with a degree in economics (of all things) and like many in my generation I have over $50,000 in student loans. I’m currently working as a babysitter to try and pay the bills.

This is why I organize with Occupy Wall Street. Because I am part of the 99%–and if you’re reading this, there’s a 99% chance that you are too! The most beautiful thing about the Occupy Movement is that we can create, on a small scale, a version of the society in which we would like to live. A society with free education and health care–where democracy is participatory and real and our social relationships are founded on community, mutual aid, equality, respect, and solidarity.

If you believe that what is happening in this country is wrong, if you believe that as a society we can do better than this, then find an Occupy event in your city or town! And remember to bring your cell phone or video camera – you might just need it!

– Meaghan Linick, Brooklyn NY

One Month of Occupy Wall Street

Olbermann on 10/17/11:


Global protests:


Matt Taibbi: Why Occupy Wall Street Is Bigger Than Left vs. Right
The reality is that Occupy Wall Street and the millions of middle Americans who make up the Tea Party are natural allies and should be on the same page about most of the key issues, and that's a story our media won't want to or know how to handle.

Take, for instance, the matter of the Too-Big-To-Fail banks, which people like me and Barry Ritholz have focused on as something that could be a key issue for OWS. These gigantic institutions have put millions of ordinary people out of their homes thanks to a massive fraud scheme for which they were not punished, owing to their enormous influence with government and their capture of the regulators.

This is an issue for the traditional "left" because it's a classic instance of overweening corporate power -- but it's an issue for the traditional "right" because these same institutions are also the biggest welfare bums of all time, de facto wards of the state who sucked trillions of dollars of public treasure from the pockets of patriotic taxpayers from coast to coast.

Both traditional constituencies want these companies off the public teat and back swimming on their own in the cruel seas of the free market, where they will inevitably be drowned in their corruption and greed, if they don't reform immediately. This is a major implicit complaint of the OWS protests and it should absolutely strike a nerve with Tea Partiers, many of whom were talking about some of the same things when they burst onto the scene a few years ago.

The banks know this. They know they have no "natural" constituency among voters, which is why they spend such fantastic amounts of energy courting the mainstream press and such huge sums lobbying politicians on both sides of the aisle.

The only way the Goldmans and Citis and Bank of Americas can survive is if they can suck up popular political support indirectly, either by latching onto such vague right-populist concepts as "limited government" and "free-market capitalism" (ironic, because none of them would survive ten minutes without the federal government's bailouts and other protections) or, alternatively, by presenting themselves as society's bulwark against communism, lefty extremism, Noam Chomsky, etc.

All of which is a roundabout way of saying one thing: beware of provocateurs on both sides of the aisle. This movement is going to attract many Breitbarts, of both the left and right variety. They're going to try to identify fake leaders, draw phony battle lines, and then herd everybody back into the same left-right cage matches of old. Whenever that happens, we just have to remember not to fall for the trap. When someone says this or that person speaks for OWS, don't believe it. This thing is bigger than one or two or a few people, and it isn't part of the same old story.


Bank of America earned billions of dollars in profits last quarter, even as banking officials expressed concern recently about the effects of new regulations on their bottom line.

The largest bank by assets reported third quarter gains of $6.2 billion, compared to a $7.3 billion loss during the same quarter last year. The boost in profits came largely from an accounting gain and the pre-tax benefits from the sale of its stake in a Chinese bank.

The increase in profits comes after Bank of America roiled customers by announcing that it will start charging customers $5 per month to use their debit cards for purchases in 2012. Shortly after the bank announced the fee, Bank of America CEO Brian Moynihan defended it, saying that the bank "has a right to make a profit."


Jeffrey Sachs:
The Wall Street elite seems completely befuddled by the Occupy Wall Street movement. The demonstrators are called "unsophisticated," or misguided, or much worse (mobs, communists, and more). Here's a short note to the titans of Wall Street to help them understand what's happening.

Let me start with the Wall Street Journal, which seems to be the most confused of all. In its Friday edition, the Journal editorial board couldn't understand why the protestors would want to protest JP Morgan and hedge fund manager John Paulson. The Journal also couldn't understand why the protesters were failing to champion something as wonderful as the Keystone Pipeline, which the Journal assures us would create many jobs.

The Journal can be forgiven for this basic confusion. It must be hard work to channel Rupert Murdoch's cynicism, greed, and ideology every day, so here are some answers so that the editorial board doesn't have to knock itself out with fresh research.

The protesters are annoyed with JP Morgan because it, like its fellow institutions on the street, helped to bring the world economy to its knees through unprincipled and illegal actions. The Journal editorial board apparently missed the news carried in the Journal's own business pages that JP Morgan recently paid $153.6 million in fines for violating securities laws in the lead-up to the 2008 financial collapse. JP Morgan, like other Wall Street institutions, connived with hedge funds to peddle toxic assets to unsuspecting investors, allowing the hedge funds to make a killing at the expense of their "mark," and the world economy.

The protestors are not enamored of Mr. Paulson either, since he played this role together with Goldman Sachs. Paulson made a fortune by teaming up with Goldman to bundle failed mortgages, which Goldman then peddled to its customers, in this case some unsuspecting German banks. Paulson shorted these assets and thereby profited as the bank's investments collapsed. For this little maneuver, Goldman paid $560 million to the SEC in fines. Of course this is a small amount compared to the profits that Goldman reaped for years playing in toxic assets. On Wall Street, misbehavior pays, at least up until now.

Mr. Paulson actually made some extraordinary statements in the New York Times on Friday (hard even to believe the nonsensical quotations are correct, but there they are, in the paper of record). He too expressed befuddlement about the protests against his business dealings. Didn't the protestors know that he had created 100 high-paying jobs in NYC? 100?

What the protestors do know is that Mr. Paulson's success in shorting toxic assets bundled for gullible investors has netted him billions. In 2007, he reportedly took home $3.7 billion by betting against the U.S. mortgage market. And the protestors can also do their arithmetic. Paulson's take home pay was enough to cover not just 100 jobs at $50,000 per year but rather approximately 70,000 jobs at $50,000 per year. Nice try, Mr. Paulson, but the people in Liberty Plaza don't think your hedge-fund play is really worth the compensation of 70,000 people. Nor do they understand why hedge fund managers pay a top tax rate of 15% on their hedge-fund earnings.

The Journal, Paulson, and others who accuse the protestors of being "unsophisticated," somehow have forgotten a basic point. It's not just Paulson, or Goldman, or JP Morgan that parlayed their unethical behavior into vast fortunes at the expense of hapless investors. Just name a big name on Wall Street in the past decade, scratch the surface, and uncover a financial scandal. Bank of America, Goldman, JP Morgan, AIG, Merrill Lynch, Countrywide Financial, Lehman Brothers are only the start of the list.

Maybe the Journal forgot to mention this because it itself is enmeshed in a series of scandals, ranging from hacking phones in the U.K. that has created a full-fledged crisis for its parent News Corporation, to last week's resignation of the European publisher. Murdoch is not just running an organization of corporate propaganda, but a criminal enterprise, at least in the U.K.

The protestors are not envious of wealth, but sick of corporate lies, cheating, and unethical behavior. They are sick of corporate lobbying that led to the reckless deregulation of financial markets; they are sick of Wall Street and the Wall Street Journal asking for trillions of dollars of near-zero-interest loans and bailout money for the banks, but then fighting against unemployment insurance and health coverage for those drowning in the wake of the financial crisis; they are sick of absurdly low tax rates for hedge-fund managers; they are sick of Rupert Murdoch and his henchman David Koch trying to peddle the Canada-to-Gulf Keystone oil pipeline as an honest and environmentally sound business deal, when in fact it would unleash one of the world's dirtiest and most destructive energy sources, Canada's oil sands, so that Koch can profit while the world suffers. And they are sick of learning how many Republican politicians - the most recent news is about Herman Cain - are doing the bidding of the Koch brothers.

Here, then, Wall Street and Big Oil, is what it comes down to. The protesters are no longer giving you a free ride, in which you can set the regulations, set your mega-pay, hide your money in tax havens, enjoy sweet tax rates at the hands of ever-willing politicians, and await your bailouts as needed. The days of lawlessness and greed are coming to an end. Just as the Gilded Age turned into the Progressive Era, just as the Roaring Twenties and its excesses turned into the New Deal, be sure that the era of mega-greed is going to turn into an era of renewed accountability, lawfulness, modest compensation, honest taxation, and government by the people rather than by the banks.


That, in short, is why Wall Street is filled with protesters and why you should wake up, respect the law rather than try to write it, and pay your taxes to a government that is ruled by people rather than by corporate power.


Jon Stewart joins in the comentary.

Tuesday, October 4, 2011

Top Ten Reasons to Protest Wall Street:

10) they drank champagne while they watched people protest that they crashed the economy
9) they got record bonuses after they crashed the economy
8) they made record profits after crashing of the economy
7) they got bailed out after they crashed the economy
6) they supported planet-raping industries, while they crashed the economy
5) they didn't care about American jobs while they crashed the economy
4) all they cared about was making money, and they crashed the economy
3) they BOUGHT OFF our politicians, and they crashed the economy
2) no one has gone to jail, after they crashed the economy
1) they freaking crashed the economy

And I would include the Federal Reserve as part of this indictment.

Are the Wall Street Protests the Start of a Revolution?


Something seems to be happening that is beyond the normal script-- something real. I've no idea where this is headed but it seems to have some promise. I had hoped for a major protest against the disgusting wars of the American empire, but the anti-banker protests have some of that effect-- they are against the evil status quo, and the bankers promote the wars as much as anyone. I find it interesting that people ARE finally getting upset about the "banksters", and how that the idea of a banking system out of control has some real resonance among lots of people willing to get off their butt and protest...

I am curious how much Anonymous has to do with this, and how much influence they actually have.



But certainly, there is something happening here...

Total Global Economic Meltdown Still on Schedule

Not clear if this guy really meant to spill the beans, but there it is:


More on Rastani:
London (CNN) -- Alessio Rastani went on a UK news channel on Monday to discuss where stock markets were heading. By Tuesday he was an Internet sensation.

Was it that he said, as someone who bets against markets rising, that he "goes to bed every night dreaming of a recession?" Was it that he said investment bank Goldman Sachs ruled the world and not governments? Or was it that bloggers started to ask if he was just a "fake trader" who duped the media?

Take your pick. But Rastani caused a stir by saying what many people think those in the markets think anyway -- it's OK to make money out of falling markets and there is no reason not to prepare for that.

He certainly thinks the markets will crash again and people should be prepared for that, and that the average person should take steps now to protect their assets, or be prepared to lose their investments.

There is nothing wrong with giving that kind of advice, if that is what you think will happen. It's just unlikely you would hear that from an established player from a bank that is looking for clients.

Still, it was worth hearing more from Rastani and to find out if he really believes what he said, if he understood the stir around him and whether he is in fact a trader.

CNN brought him in, and I asked him all that.

Firstly, Rastani is an amateur trader using his own money (as a "hobby", he has told other media) and he's not registered with the Financial Services Authority to trade other people's money. He doesn't claim otherwise, but there was a feeling after his first interview that he was some sort of suit from the City or Wall Street giving sage advice to his clients.

He does or can have other clients though. His website calls him a speaker and trainer of others who want to trade.

In my interview, Rastani said he does trade being prepared for a recession, but that as a "human being you don't want it. As a trader you think differently. You're going to have volatile... conditions to make money in that market."

He also said he was a religious man. He was also clearly nervous about the whole affair and was undecided for an hour to whether he should actually sit on our set for the interview. He said no a few times, before we sat down.

"The question is, why are they paying attention to this?" he asked. "In my opinion somebody out there doesn't want my voice to be heard and they want to attack me and damage me."

He talked of the 'Big Boys' being desperate to keep people like him from talking about the coming economic storm.

He admits there may be a book in the works, but one that focuses on traders whom he admires.

When I asked him if he was for real, he said he would not say things about the markets he did not truly believe. When I asked him if he is a member of the so-called "Yes-Men" who have faked TV interviews in the past, he would not say yes or no. "Let people believe what they want to," he said.

To my mind, he should have been touted up front as a guy who has strong opinions on the markets, but certainly not as a 'trader' or "investment adviser" in the classic sense. That does not make his view any more or less valid but, with that preamble, I don't think it would have gone viral.