STOCK MARKET WATCH -- Tuesday, 15 May 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 15 May 2012[font color=black][/font]

SMW for 14 May 2012

AT THE CLOSING BELL ON 14 May 2012
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Dow Jones 12,695.35 -125.25 (-0.98%)
S&P 500 1,338.35 -15.04 (-1.11%)
Nasdaq 2,902.58 -31.24 (-1.06%)


[font color=green]10 Year 1.73% -0.02 (-1.14%)
30 Year 2.92% -0.03 (-1.02%) [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
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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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Financial Sector Officials Convicted since 1/20/09 = [/font][font color=red]12[/font]
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



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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. Third rec, first post?

Had a little committee meeting (half hour) and a long trip to the airport (it was a nice day, and the air conditioning works). And the Kid is driving me crazy with her weird medical issues, which was 1.25 hours at the doctor's office....

Still not back to "normal" but I can see it coming...

[Demeter]

2. It's a Whale of a Tale: JPMorgan, Jamie Dimon and Eternity

WHAT DO YOU GET WHEN YOU PUT A DIMON UNDER HEAT AND PRESSURE?

(SMELLY GAS AND COAL DUST)

[Demeter]

3. JPMorgan’s $2 Billion Loss Shows Impotence of the Volcker Rule By: David Dayen

OH, I DON'T KNOW. I DON'T THINK ANY PART OF IT HAS BEEN ACTUALLY IMPLEMENTED YET....IF YOU MEAN THIS SHOWS THAT EVEN IF IT WERE IMPLEMENTED, IT WOULD HAVE NO REGULATORY EFFECT...THAT I'LL AGREE TO.

http://news.firedoglake.com/2012/05/11/jpmorgans-2-billion-loss-shows-impotence-of-the-volcker-rule/

I spent most of yesterday afternoon laughing my ass off about Jamie Dimon’s London Whale loss, but it’s actually not all that funny. JPMorgan Chase revealed a $2 billion loss on a bad bet they made on a credit default swap index trade. They described it as an egregious, self-inflicted mistake. I think Felix Salmon has the best explanation of just what happened here.

The basis trade is an arbitrage, basically. There are two different ways the market measures credit risk: by looking at credit spreads — the yield on a certain issuer’s bonds, relative to the risk-free rate — or by looking at CDS spreads, which are basically the same thing but set in the derivatives market rather than the cash bond market. Most of the time, CDS spreads and cash spreads are tightly coupled. But sometimes they’re not. And at Merrill, a huge part of that $16 billion loss was reportedly due to a bad basis bet: the basis on many credits became very large and very negative during the financial crisis.

This time around, the basis-trade disaster has happened at JP Morgan, where the famous London Whale seems to have contrived to lose $2 billion on what was meant to be a hedging operation. And once again, although the details are still very murky, the culprit seems to be the CDS-cash basis.

The type of trade exploits very small movements in indexes that are meant to track a certain market. But in this case, the spread got a little too large, and JPMorgan Chase was left on the bad side of the bet.

Notice the presence of the word “bet.” Dimon insisted in his hastily arranged press call yesterday that the trades were compliant with the Volcker rule, which was supposed to ban proprietary trading. Dimon claims that the CDS index trades were for the purposes of hedging. But the initial Volcker rule, the one that passed out of Congress, prevented this type of portfolio hedging. On pages 29-30 on this letter, from the writers of the Volcker rule, Jeff Merkley and Carl Levin, they lay that out specifically.

One major weakness in this part of the Proposed Rule is allowing hedging
on a portfolio basis. Hedging on a portfolio basis essentially allows banks to view an investment portfolio as a whole and take actions to offset a particular type of risk that appears in the portfolio. This contrasts sharply to professional traders who have told us that hedges are, by far, most effectively utilized as actual hedges when matched on a position by position basis, and not on a portfolio basis [...]

There is no statutory basis to support the proposed portfolio hedging language, nor is there
anything in the legislative history to suggest that it should be allowed. To the contrary, the
legislative history of this provision clearly rebuts any assertion that such a broad allowance
should be made. We introduced the first draft of what later became the Merkley-Levin
Provisions as S.3098 on March 10, 2010. In that legislation, the permitted activity was worded only as risk-mitigating hedging activities. During the legislative process, this language was significantly revised to remove the possibility for portfolio hedging.

But the Volcker rule that passed Congress bears little resemblance to the Volcker rule that is slowly taking effect. All kinds of loopholes, particularly for hedging, have been blown into it. And the JPM case is a textbook example of why that, for this reason, the Volcker rule has been rendered useless. If you allow loopholes like this, hedges and actual bets for the purposes of speculation tend to look pretty much the same. Maybe at this point JPM can cover the $2 billion loss. But there’s going to be a time where somebody can’t, and they’re going to come hat in hand to the government looking for help. Basically nothing has changed on Wall Street as far as mindset, and now we learn that very little has constrained them after Dodd-Frank. The casino remains open.

The other darkly amusing part of this is that Dimon has spent the past several months saying that Dodd-Frank forces his bank to hold too much capital and limits his bank on making risky trades. Because if we were in a situation where JPM had less capital and more credit risk right now, things would be dandy.

[Demeter]

4. Huge Loss at JP Morgan Proves Even The Risk-Management Experts Can't Regulate Themselves

http://www.alternet.org/newsandviews/article/928445/huge_loss_at_jp_morgan_proves_even_the_risk-management_experts_can%27t_regulate_themselves/#paragraph3

Felix Salmon explains what happened with JP Morgan yesterday and it's frankly kind of scary. Nobody seems to think this has indications for the greater financial system at the moment but then we've heard that before. In any case, he ends with this:

This loss only goes to show how weak the Volcker Rule is: Dimon is adamant, and probably correct, in saying that Iksil’s bets were Volcker-compliant, despite the fact that they clearly violate the spirit of the rule. Now that we’ve entered election season, Congress isn’t going to step in to tighten things up — but maybe the SEC will pay more attention to Occupy’s letter, now. JP Morgan more or less invented risk management. If they can’t do it, no bank can. And no sensible regulator can ever trust the banks to self-regulate.

The Wall Street Journal live-blogged the call today, which featured this little exchange right out of the gate:

Dimon is done speaking, will take a few questions.

2:09 pmby David Benoit

Dimon: "Obviously we should have acted sooner."

2:10 pm$2 billion trade came in 2Qby Paul Vigna

Question: When did you catch it? When did you update regulators?

Dimon says there were "small" losses in the first quarter, and the $2 billion loss came in second quarter. "Obviously, that got our attention."

2:11 pmby David Benoit

Dimon personally apologizes for meetings he had this week with analysts where he wasn't allowed to say anything.

2:16 pm

Dimon says that CIO has done a great job for a long while, but obviously this was a big mistake.

2:17 pmby David Benoit

Dimon officially apologizes to Guy Moszkowski of BofA. "I feel terrible" about meeting. Apparently the two had a chat this week.

Gosh that sounded familiar. Oh right:

JPMorgan this week finalised a $US153.6 million ($145m) settlement with the SEC over claims it misled investors about collateralised debt obligations created before the global crisis.

Dimon admits banks -- including his -- made mistakes.

Ever the salesman, though, he is confident JPMorgan has righted the wrongs and says it is disappointing that Wall Street's reputation is so tarnished.

"It's so unfair to talk about Wall Street and ethics," he says.

"The people that we deal with a lot on Wall Street are some of the most ethical people I know.

"There are some bad apples on Wall Street. I think the military is the most extraordinary organisation but there are some bad apples in the military.

"I think universities are unbelievable but there are some bad apples in universities. I think reporters for most part are smart and hard-working people, but there are some bad apples as reporters."

Yes, that was so unfair.

I don't know if any of that talk about misleading people this week is going to turn out to be relevant to be honest. But you would think that Dimon, of all people, would have been careful about such things. On the other hand, what's the difference? They apparently didn't violate the Volcker Rule even with 2 billion in losses and the SEC probably won't do much.

JP Morgan Chase was known for being the best in the business at risk management --- rare entity that didn't get caught up in the speculative fever that characterized the business before the crash. And as a result Dimon took the lead in making lugubrious pleas to leave the poor banks alone, insisting that regulations like Dodd-Frank were destroying the very foundation of the financial system which was well able to regulate itself. Well, how'd that work out?

Let's all pray that nobody's bonus is affected by all this. I couldn't take the weeping.

[Demeter]

5. JP Morgan Scandal Raises Tough Questions For Obama Administration

http://tpmdc.talkingpointsmemo.com/2012/05/jp-morgan-obama-volcker.php

Mitt Romney will probably have a harder time defending his intent to repeal the 2010 Dodd-Frank Wall Street reform law in the wake of JP Morgan’s stunning disclosure that it lost at least $2 billion betting on the economy. But it also raises important substantive questions about the effectiveness of the new financial reforms themselves, particularly the one provision specifically intended to end just this sort of trading.

On a Friday conference call with reporters, Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR) criticized regulators for writing a major loophole into the so-called Volcker Rule — meant to prevent banks from betting with depositor funds — at the behest of financial interests.

“It is inconsistent to create this kind of a major loophole,” Levin said, noting that it goes against the intent of the reforms Congress passed.

The law was designed to restrict banks from gambling with customer funds under the guise of “hedging,” while still allowing banks to make proprietary trades as hedges against specific investments. But it tasked Obama administration regulators with writing the restrictions, and as drafted those regulations would allow banks to hedge against broad losses by placing bets, such as JP Morgan’s, on things like economic growth and inflation This exception, Merkley noted, will allow banks to hide a “vast amount of proprietary trading... The draft rules at this point are way too lax,” Merkley added. “They do not have the bright lines that are needed." This came as no surprise to either senator, both of whom identified this and similar loopholes in early versions of the rule months ago. “Banks could easily use portfolio-based hedging to mask proprietary trading,” they wrote in a February letter to regulators.

This is exactly what happened at JP Morgan — and is likely the reason why the company’s CEO Jamie Dimon claimed that the losing bets wouldn’t have run afoul of the Volcker Rule if it had been operational. The rule is intended to take effect in July, though Wall Street execs, including Dimon, have been pushing hard to delay implementation. Merkley and Levin, along with outside reform advocates are seizing on the episode to strengthen the rule and bring greater scrutiny to Wall Street...

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

Brian Beutler is TPM's senior congressional reporter. Since 2009, he's led coverage of health care reform, Wall Street reform, taxes, the GOP budget, the government shutdown fight, and the debt limit fight. He can be reached at [e-mail].

[girl gone mad]

12. I guess Merkley and Levin didn't get the memo.

Obama believes to his core that tough financial regulation is needed, but he's totally powerless to ensure that his regulatory agencies create, implement, or enforce it and he was likewise completely unable to stop his COS from running interference for the banks on Dodd-Frank... because of Republican obstructionism and such.

[Tansy_Gold]

72. Oh, puh-lease

". . . he was completely unable to stop his COS. . . "

Who was in charge, Obama or Rahm?

Seriously, if a person "believes to his core" in something, then he works damn hard to see it happens. And if he's the fucking POTUS, he has a lot of options. As far as I can see, Obama has used few if any of those options.

Going back to my infamous post in November '08, just a few short weeks after the election, Obama appointed a financial transition team composed almost entirely of people who were and have been most of their professional lives OPPOSED to "tough financial regulation." The voices of Volcker, Stiglitz, Reich, and even the occasionally-in-touch-with-reality Krugman have been studiously ignored. Elizabeth Warren was used and tossed aside with the equivalent of a handful of Kleenex.

I'm tired -- and I've been tired since that 11/24/08 DU post -- of this bullshit that Obama is "powerless." He roared into DC with an enormous mandate, not necessarily just of votes but of INTERNATIONAL sentiment. And if the major accomplishment of his first term is the Lily Ledbetter Act, then he's pretty much not done a whole helluva lot. The affordable health care act still leaves the insurance corporations in charge, gouging people and making sure profits come before health care. DADT applies to the military but not much else. He had to be blackmailed by his own VP into supporting marriage equality and he kept his silence until AFTER a crucial vote in NC. His stance on women's equality is pathetic.

Obama defeated Hillary Clinton in the '08 primaries because of his personal charm, his oratory capabilities, and the fact that he was a relative outsider. There were those who disliked some of the economic policies of Bill Clinton -- NAFTA and the repeal of Glass-Steagall being two of the chief sins -- and wanted someone not connected to those policies. But it was Obama's charm that won over a lot of people, especially young people. But he has followed through on virtually none of the hopey changey promises of that primary campaign, the promises that distinguished him from Hillary. Most of the military is out of Iraq, but we're still fucking up Afghanistan. The DJIA is up but the gains have all gone to the .001%. Jobs continue to disappear, women's rights continue to erode, blah blah blah, and all I ever hear to excuse the President of the United States is "he's powerless."

He is not fucking powerless. He's spineless. Where is the stirring, headline-grabbing speech about marriage equality? Who tore down the bully pulpit on the right to health CARE (not the obligation to pay for expensive health insurance that might or might not provide health care)? Where are the administration op-eds about contraception and Wall Street responsibility?

I'm fucking tired of Obama's tacit approval of all the evils that have been done on his watch. He needs to take some lessons from

[AnneD]

79. ITA....

We need a Truman or a FDR. Actions talk, BS walks....

[girl gone mad]

96. Hey, I don't write the memos..

I don't even read them. I just get ed at by people who treat those talking points as gospel.

[Demeter]

9. JP Morgan: When basis trades blow up Felix Salmon

GO TO THE SOURCE, I ALWAYS SAY...EVERYBODY'S TALKING ABOUT FELIX

http://blogs.reuters.com/felix-salmon/2012/05/10/jp-morgan-when-basis-trades-blow-up/

I’m not sure if it was the biggest quarterly loss of all time, but Merrill Lynch’s $16 billion loss in the fourth quarter of 2008 certainly ranks very high up there in the annals of investment-bank blowups. It happened after the bank had already been taken over by Bank of America, and it was in the middle of the financial crisis, so it didn’t get nearly the amount of attention it deserved. But it was not simply a case of assets plunging in value. Instead, it was, in very large part, a basis trade blowup. The basis trade is an arbitrage, basically. There are two different ways the market measures credit risk: by looking at credit spreads — the yield on a certain issuer’s bonds, relative to the risk-free rate — or by looking at CDS spreads, which are basically the same thing but set in the derivatives market rather than the cash bond market. Most of the time, CDS spreads and cash spreads are tightly coupled. But sometimes they’re not. And at Merrill, a huge part of that $16 billion loss was reportedly due to a bad basis bet: the basis on many credits became very large and very negative during the financial crisis.

This time around, the basis-trade disaster has happened at JP Morgan, where the famous London Whale seems to have contrived to lose $2 billion on what was meant to be a hedging operation. And once again, although the details are still very murky, the culprit seems to be the CDS-cash basis. I’ve been meaning to write a post about the CDS-cash basis for a few days now, which is why I happen to have this chart handy, showing the basis for various European banks as of Tuesday May 8:



These are very big numbers, for very big banks: UBS is at 75bp, Deutsche is at 83bp, Natixis is at 116bp, and IKB is at a whopping 392bp. And this is just the banks — other corporates have seen similar price action. The cost of protection has gone up sharply, while the cash bonds are still trading at very low spreads. Bruno Iksil, the London Whale, had a massive long position on corporate CDS in general, and the CDX.NA.IG.9 index in particular. He was selling protection, betting that credit spreads would go down, rather than up. The position was meant to be a hedge, although it’s a bit unclear how JP Morgan could have some massive short position in corporate debt that it was hedging against. In any case, CDS spreads went up — and credit spreads, in the cash market, didn’t.

Cue a $2 billion loss.

Rarely has a position been as widely publicized as Iksil’s, and I wouldn’t be at all surprised to learn that the credits with the highest basis were precisely the credits CDX.NA.IG.9 index. Whenever a trader has a large and known position, the market is almost certain to move violently against that trader — and that seems to be exactly what happened here. On the conference call, when asked what he should have been watching more closely, Dimon said “trading losses — and newspapers”. It wasn’t a joke. Once your positions become public knowledge, the market will smell blood...Of course, this loss only goes to show how weak the Volcker Rule is: Dimon is adamant, and probably correct, in saying that Iksil’s bets were Volcker-compliant, despite the fact that they clearly violate the spirit of the rule. Now that we’ve entered election season, Congress isn’t going to step in to tighten things up — but maybe the SEC will pay more attention to Occupy’s letter, now. JP Morgan more or less invented risk management. If they can’t do it, no bank can. And no sensible regulator can ever trust the banks to self-regulate.

[Demeter]

16. Occupy the SEC to Jamie Dimon: We Told You So! By Occupy the SEC

http://www.nakedcapitalism.com/2012/05/occupy-the-sec-to-jamie-dimon-we-told-you-so.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Jamie Dimon’s plan to enfeeble the Dodd-Frank reforms, specifically the Volcker rule, has blown up spectacularly. Apparently JPM was so confident that their interpretation of the hedging exemption would prevail, that they got ahead of themselves and operated as if this loophople were in effect. But then things went horribly wrong for them. And the losses are even more damaging since the blowup is the result of activity the law was meant to curtail. Double trouble now for JPM, since it’s inconceivable that the hedging exemption they designed will make it into the final rulemaking. If it does survive, then we’ve got bigger issues with our regulators than we imagined.

In today’s New York Times, James Wyatt provides an under the radar view of how laws are gutted when the regulators involved in rule-making are heavily lobbied by the regulated. One objective of Occupy the SEC was to inject a non industry perspective in this process as a counterweight to the overwhelming industry influence. By looking for loopholes we intended to shed light on the self-serving interests of the bankers and the vulnerability of the regulators to concerted industry pressure. Wyatt describes the lobbying efforts:

Several visits over months by the bank’s well-connected chief executive, Jamie Dimon, and his top aides were aimed at persuading regulators to create a loophole in the law, known as the Volcker Rule. The rule was designed by Congress to limit the very kind of proprietary trading that JPMorgan was seeking.

“JPMorgan was the one that made the strongest arguments to allow hedging, and specifically to allow this type of portfolio hedging,” said a former Treasury official who was present during the Dodd-Frank debates.

Portfolio hedging is at the heart of the London Whale debacle.

The loophole is known as portfolio hedging, a strategy that essentially allows banks to view an investment portfolio as a whole and take actions to offset the risks of the entire portfolio. That contrasts with the traditional definition of hedging, which matches an individual security or trading position with an inversely related investment — so when one goes up, the other goes down.

Portfolio hedging “is a license to do pretty much anything,” Mr. Levin said. He and Senator Jeff Merkley, an Oregon Democrat who worked on the law with Mr.Levin, sent a letter to regulators in February, making clear that hedging on that scale was not their intention.

“There is no statutory basis to support the proposed portfolio hedging language,” they wrote, “nor is there anything in the legislative history to suggest that it should be allowed.”

We were extremely concerned about this loophole and argued against it in our comment letter to the regulators.

We are alarmed by the focus on .“portfolio hedging.” throughout the risk-mitigating hedging exemption. We interpret the intent of this exemption as relating to Delta One or central execution desks that have become ubiquitous across banking entities in recent years. Certainly these central hedging operations pose significant risks, as famously exemplified in the rogue trading scandal that caused a $2.3 billion loss in 2011.84 While it is clear that such practices necessitate increased oversight and significantly improved risk-management procedures, there are other instances of aggregated hedging that will be inappropriately included within .“portfolio hedging.” that require consideration. Even outside of central execution desks, many risks a recurrently managed on an aggregated basis, due to the numerous, and often compounding, proprietary portfolios that exist on every market making desk of every covered banking entity. With so many independent strategies at play, it is not uncommon for large exposures across a variety of assets to result when they are combined in the view of a manager. Management will often make use of a .“back book.” or .“management book.” for the dual purposes of conducting broad-line hedges against lumpy trading-desk exposures, and taking proprietary positions that fall outside of the mandate or risk-limits of an individual trader. While it is expected that such obvious proprietary exposures will diminish with the implementation of this Rule, we fail to understand the continued relevance of most management hedging operations once individual trading books pare their component exposures. We are troubled by the potential for such .“back books.” to become havens of prohibited proprietary activity after the implementation of this Rule.

A specific requirement that each type of exposure be designated as one that is hedged exclusively on an Individual or an Aggregate basis is essential. Risks should never be hedged on both an individual and aggregate basis, and most risk types are appropriately mitigated in only one of the categories. For instance, counterparty risk should always be (and in practice, typically always is) mitigated on a portfolio basis, and individual traders should not be able to make use of the hedging exemption by claiming mitigation of such a risk. These risks can be managed by a level of organization that is out of touch with the day-to-day operations of a trading desk. We propose that the Agencies consider requiring banking entities to create central .“Risk Management.” groups to perform aggregated hedges, to the extent that such groups are not already in place.

The broad allowance for aggregated hedging is troubling and its exemption is inconsistent with the intentions of this Rule. This rule mandates strict risk mitigation at a micro level, and should remove all Implicit or explicit allowances for the dangerous practice of management hedging. More generally, a banking entity.’s need for substantive aggregated hedging is indicative of a failure to appropriately mitigate risks at lower levels within an entity, and is therefore in violation of the spirit of the Rule. We acknowledge that the statute allows for aggregated hedging in Section 619(d)(1)(C),85 and we hope that the Agencies are prepared to be diligent in monitoring this activity closely to discourage abuses, which we see as a serious risk.

It’s way past time for ordinary citizens to have there voices heard in this process. We were encouraged that over 15,000 letters in support of a strong Volcker Rule were submitted to the regulators during the comment period. That was a clear signal that ordinary citizens want some checks on the power of the banks. Additionally , its encouraging that another 1,800 people petitioned the regulators to do the same.

Thanks to Jamie Dimon, perhaps the regulators will finally lend and ear to the clear message the citizens of this country are trying to get them to hear.

[Demeter]

18. Michael Olenick: WhaleMu – JP Morgan’s Next Surprise?

http://www.nakedcapitalism.com/2012/05/michael-olenick-whalemu-jp-morgans-next-surprise.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Michael Olenick, creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick or read his blog, Seeing Through Data

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

In an admittedly strange twist of timing JP Morgan, the same JP Morgan that just announced a surprise $2 billion loss caused by the “London Whale,” became the first and only of 26 banks disclosing subprime investor data to flip me the digital bird, refusing access to the public loan-level performance data for their Washington Mutual loans. WaMu, one of the most reckless subprime lenders, was swallowed whole by JPM and they’re having serious indigestion. Nelson D. Schwartz and Jessica Silver-Greenberg of the New York Times verify that the purpose of the Chief Investment Office — the London Whale — is to offset risk caused by the Washington Mutual loans:

Under Mr. Dimon’s leadership, the chief investment office — which was responsible for the outsize credit bet — was retooled to make larger bets with the bank’s money, a former employee said. Bank executives said the chief investment office expanded after JPMorgan Chase’s 2008 acquisition of Washington Mutual, which added riskier securities to the company’s portfolio. The idea behind the strategy was to offset that risk.

It isn’t hard to figure out why JP Morgan doesn’t want anybody looking into and through their garbage. I have not been able to ascertain whether these reports are required under disclosure requirement Regulation AB (the law itself seems to say yes, but the experts I spoke to gave divergent readings). Whether they are or aren’t, JPM’s refusal — when everybody else cooperated-- speaks for itself. As those loans sour, and they continue to rot like a dead skunk on a hot July day, the bets needed to offset the losses are increasing. It looks like the bank, peering into that portfolio they refuse to share, is becoming more than a little bit desperate. Like a compulsive gambler after a multi-day bender resulting in crippling losses they decided to double down rather than walk away, leading to their current whale of a surprise and likely a mirror-image follow-up for the WaMu losses this was supposed to offset. For anybody who believes that JPM’s position is normal .. it isn’t. Twenty-six other banks quickly popped open the doors to their repositories, as they’re required to do. Perennial bad-boy Aurora Loan Services is the only other one that’s ignored my requests, though since it looks like they’ve sold their servicing operations the jury’s out whether their silence is purposeful or whether there’s nobody home on the other side of those requests....

I’ve spent the past couple months holed away downloading MBS data in bulk to enable investors, analysts, academics, government agencies, or whoever else wants to inspect performance information and project losses for every subprime loan trust. When finished, this week hopefully, I’ll have a veritable ABS MRI machine that can peer into the true health of the housing and housing finance market. It’s harder than it sounds: one of those projects where software engineers emerge from their digital caves after months, bleary eyed and long past due for a haircut but holding game-changing technology. My database, which includes everything except WaMu loans thanks to Jamie, is finally almost finished. But even in preliminary form it is clear that the AAA-rated senior tranches — the ones that really were never supposed to take losses — are toast that’s burning worse by the day. Servicers, trustees, government officials have been doing anything to delay the inevitable losses but when people don’t pay their mortgages, and housing has declined by over 50% in many of their markets, there’s only so much accounting chicanery they can do: the money just isn’t there....My suspicious are more grounded than tin-hat delusions we’ve been hearing from the housing is hot again crowd. R&R Consulting, a well-regarded structured valuation expert I work closely with conducted a portfolio-wide analysis of undisclosed (“limbo”) losses on RMBS. In a special in-depth report dated February 2012, long before JPM told me piss-off when asking for access to the more granular WaMu loan-level data, they reported that WAMU had the highest limbo loss level–about $810 million—in just one transaction. Repeat: experienced analysts dug this out even without loan level data. It sounds likely that it won’t be long until Dimon reports another ten-figure surprise that I’m sure he’ll apologetically pawn off on the US taxpayer.

For anybody asking “um — isn’t this over — didn’t all this fall apart back in 2008?” the answer is not really. That mega-meltdown was really a mini tremor caused by the lower and smaller tiers of these securities; last time junior visited to stir things up but this time papa’s walking down the street carrying a mean look and a big stick. That’s because the mezzanine level tranches of most bubble-era MBA are either gone or guaranteed to be gone — finally eaten up by current or pending losses — leaving the lower AAA tranches to take their place as the bearer of losses. This was never supposed to happen. Everybody knew that CDOs created from the lower tranches were risky, even if the ratings agencies said otherwise, but nobody thought the meltdown would last this long that the actual top tranches would be nicked. But the data couldn’t be clearer: those bottom level A-class tranches of yesterday are the new bottom level M-class tranches of yesterday....My mountain of data that shows loss severity in excess of 100-percent is not uncommon. When we look at the loans, compare similar loans from those who report them more honestly, multiply the average severity by pending reported and, um, overlooked foreclosures, then it becomes clear that the lowest rated AAA’s are toast. This reaffirms the report by R&R Consulting report that $175 billion of loan level losses had not been allocated to the trusts. Whoops!

MORE DIRT AT LINK

[Demeter]

21. Will J.P. Morgan Pay Up for the Ina Drew Mystery?

http://online.wsj.com/article/SB10001424052702303505504577402383167306686.html

Get ready to have a whale of a time.

On Tuesday, J.P. Morgan Chase holds its annual shareholders meeting, only days after news of its $2 billion trading stumble and Friday's loss of about $14 billion in stock-market value. Some shareholders may be galled by the prospect of blessing chief James Dimon's $23 million pay packet for 2011 and a $15.5 million 2011 payout for Ina Drew, the bank's chief investment officer.

MORE

[Demeter]

22. Pressure Builds on Dimon

http://online.wsj.com/article/SB10001424052702303505504577402552606502184.html

...On Friday, the bank suffered more than $150 million in new paper losses in the trading of its chief investment office unit, which made the complex bets tied to the value of corporate debt, a person familiar with the matter said. The firm is prepared for a total loss of more than $4 billion over the next year, though the positions could rebound, reducing any loss, the person said....

[Demeter]

23. JPMorgan made some $5bn on Friday using accounting magic called DVA

http://soberlook.com/2012/05/jpmorgan-made-some-5bn-on-friday-using.html

With all the talk about JPMorgan's losses out of the CIO's office, nobody is discussing the money the firm made on Friday due to the accounting magic called DVA. After all, CIO's positions were (at least in principle) meant to act as an offset to this earnings volatility....As an example the chart below shows the price action for JPM's newly minted bond (issued just last month). It's a 4% coupon bond maturing in 20 years:



With roughly $12bn of this bond outstanding, JPMorgan will record a gain of some $350MM based on Friday's price move just for this bond. It's important to note that this bond represents only a fraction of the $2.3 trillion balance sheet funding. Since the firm's long-term debt is some 12% of total liabilities, one can do a quick back of the envelope estimate. A two point drop (which is lower than the bonds above moved on Friday) in JPMorgan's long term bonds results in roughly $5bn in DVA gains. This more than offsets the reported losses on the CIO's portfolio. Welcome to accounting magic.

[Demeter]

30. At JPMorgan, the Ghost of Dinner Parties Past By GRETCHEN MORGENSON

http://www.nytimes.com/2012/05/13/business/jpmorgan-shooting-itself-in-the-foot-fair-game.html?ref=business

WHAT goes around comes around. Sometimes it happens sooner than you’d think.

That round wheel turned on JPMorgan Chase last week, which disclosed that it had suffered a $2 billion trading loss in credit derivatives. That such a hit had befallen the mightiest of banks was perhaps more stunning than the size of the loss. So where does the karma come in? The loss, and the embarrassment it held for Jamie Dimon, the bank’s imperious chief executive, came just one month after a private dinner party in Dallas at which he assailed two respected public figures who have pushed for policies that would make banks like JPMorgan smaller and less risky. One was Paul Volcker, the former Federal Reserve chairman, whose remedy for risky trading by too-big-to-fail banks is known as the Volcker Rule. The other was Richard W. Fisher, president of the Federal Reserve Bank of Dallas, who has also argued that large institutions should be slimmed down or limited in their risky trading practices.

The party, sponsored by JPMorgan for a group of its wealthy private clients, took place at the sumptuous Mansion on Turtle Creek hotel. Mr. Dimon was on hand to thank the guests for their patronage and their trust. During the party, Mr. Dimon took questions from the crowd, according to an attendee who spoke on condition of anonymity for fear of alienating the bank. One guest asked about the problem of too-big-to-fail banks and the arguments made by Mr. Volcker and Mr. Fisher. Mr. Dimon responded that he had just two words to describe them: “infantile” and “nonfactual.” He went on to lambaste Mr. Fisher further, according to the attendee. Some in the room were taken aback by the comments. Neither Mr. Fisher nor Mr. Volcker would comment on the remarks. But it appears to have been a classic performance from Mr. Dimon. In-your-face. Pugnacious. My way or the highway.

Mr. Dimon declined to comment.

MUCH WONKY HISTORY AND DATA

The hypocrisy is that our nation’s big financial institutions, protected by implied taxpayer guarantees, oppose regulation on the grounds that it would increase their costs and reduce their profit. Such rules are unfair, they contend. But in discussing fairness, they never talk about how fair it is to require taxpayers to bail out reckless institutions when their trades imperil them. That’s a question for another day. AND the fact that large institutions arguing against transparency in derivatives trading won’t acknowledge that such rules could also save them from themselves is quite the paradox.

“These regulations are not just protecting the United States taxpayer,” Mr. Greenberger said. “They protect the banks themselves. The best friend of these banks would be laws that prevent them from shooting themselves in the foot. The fact is, they can’t do it themselves.”

[Demeter]

6. Paul Krugman Goes Doom on Economy: End of the Euro?

http://www.alternet.org/newsandviews/article/928885/paul_krugman_goes_doom_on_economy%3A_end_of_the_euro/#paragraph2

Today, Paul Krugman posted something on his blog that knocked me right out of my chair. I have disagreed with Dr. Krugman several times in the past only to find myself proven wrong. He has given a scenario for what he calls an "end game" for the problems in Europe. If he is correct, I don't see how it doesn't impact the entire worlds economy, and the elections here in the U.S. It could very well determine who the next president is, and it will certainly change the game plans for both campaigns.

This is speculation on Krugman's part, and not a prediction, but if it plays out like the speculation, it could be 2008 all over again.

Below is his post in its entirety.

Some of us have been talking it over, and here’s what we think the end game looks like:

1. Greek euro exit, very possibly next month.

2. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals.

3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing.

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

And we’re talking about months, not years, for this to play out.

European Crises

I have to ask myself, why would Dr. Krugman post something like this? He is such a prominent economist, he could actually trigger some problems in the markets tomorrow by talking about this. But on the other hand, this may be the ultimate warning to Europe, especially Germany, that they have to take action now to avoid this scenario. And it just might work. The elections in France and Greece have sent waves of horror through the austerity crowd, so maybe this will push them to try something else.

Keep in mind there are $trillions of dollars of Credit Default Swaps (bets), and other toys the geniuses on Wall Street created, piled on the worlds economies and ready to tumble like the proverbial stacked cards. Also, in 2008 the Federal Reserve committed to supplying over $7 trillion to banks in the U.S. and Europe. They probably can't do that today.

The Republicans have fought tooth and nail against any type of bank reform over the last several years. They watered down Dodd-Frank, and they're gutting The Volcker rule. And the Dems did their compromise until we have nothing so we can try and get one Republican so we can call it "bipartisan" approach. The Geithner plan that Obama bought into may very well get tested over the next several months. We need to keep a close eye on this and cross our fingers and hope like hell that Dr. Krugman's scenario doesn't get the chance to play out.

[Demeter]

34. Is Europe on a Cross of Gold?

http://www.project-syndicate.org/commentary/is-europe-on-a-cross-of-gold-

Increasingly, one hears predictions that the euro will go the way of the gold standard in the 1930’s. And, increasingly, the reasoning behind such forecasts seems persuasive. But does that mean that the euro doomsayers are right?

Following the 1929 stock market crash, Europe was hit by a massive deflationary shock. Output collapsed and unemployment soared. Unable to agree on coordinated reflationary action, governments opted to move unilaterally. One after another, they abandoned the gold standard, depreciating their currencies. By loosening credit in this way, they recovered, one after another, from the Great Depression....Today, Europe has been hit again by a massive deflationary shock. This time, the constraint on reflationary action is the euro. Governments lack a national currency to depreciate, and lack the power to relax credit, having delegated monetary policy to the European Central Bank. As unemployment again rises to catastrophic heights, they will have no alternative, it is said, but to abandon the euro unilaterally.

I wrote the book on Europe and the gold standard. Literally. In Golden Fetters: The Gold Standard and the Great Depression, published in 1992, I argued that the deflationary engine that was the gold standard was a key cause of the 1930’s depression, and that abandoning it opened the door to recovery. Yet I am reluctant to believe that things will turn out the same way this time. Four differences lead me to believe that maybe – just maybe – the euro will survive.

SEE LINK FOR THOSE CONDITIONS...

[Demeter]

35. EU central bankers ponder Greece euro exit

http://www.bbc.co.uk/news/world-europe-18046280

European central bankers have been openly expressing views on the possibility of Greece leaving the eurozone as its leaders struggle to form a government.

Germany's top banker said it was up to the Greeks to decide, but if they did not keep to their bailout commitments, they would receive no new aid.

His counterpart in the Irish Republic said a Greek exit would be damaging but not necessarily fatal to the euro.

Greece is to make a final attempt at forming a government on Sunday....

AND WE ALL KNOW HOW THAT TURNED OUT.

[Demeter]

37. The Momentum of Lies (LTRO, SPAIN, AND EUROPE IN GENERAL)

http://www.golemxiv.co.uk/2012/05/the-momentum-of-lies/?utm_source=rss&utm_medium=rss&utm_campaign=the-momentum-of-lies

YOU HAVE TO READ IT...I CANNOT DO IT JUSTICE.

[Demeter]

38. AP Interview: Greece shouldn't quit euro, just austerity measures

LIKE ANGELA AND GOLDMAN WILL GO FOR THAT....IT'S TOO SENSIBLE, AND NOT PUNITIVE ENOUGH!

http://www.syracuse.com/news/index.ssf/2012/05/ap_interview_greece_shouldnt_q.html

A Greek euro exit would damage both the country and Europe as a whole, the head of the Radical Left Coalition head said Thursday, but insisted the austerity measures imposed as part of Greece’s international bailout are too harsh and must be changed...Tsipras’ insistence that a new government denounce the bailout deal with the International Monetary Fund and other European countries provoked a backlash from the other two main parties, who argued the move would see Greece leave the common European currency and endure years of poverty and isolation.

But Tsipras said it was a position he couldn’t change. “Our red line is for the public mandate not to be ignored,” he told The Associated Press in an interview. “The Greek people gave a clear mandate to cancel these harsh austerity measures that for the past two-and-a-half years have led us to catastrophe. If this basic condition that we are setting in this negotiation isn’t accepted, it is clear that we at least can’t participate in a government.”

The political uncertainty has alarmed Greece’s international creditors, who insist the country stick to the fiscal targets laid out in the agreement...The method of austerity is also causing problems in Spain, Italy, Portugal and Ireland, four other financially troubled eurozone countries, Tsipras said. “Very soon (German Chancellor Angela) Merkel will be faced with the reality. She will be in the difficult position of having to face the disintegration of the eurozone if she insists on these austerity policies.”

If Greece doesn’t fulfill the terms of its bailout, it would also stop receiving the rescue loans on which it has been relying since May 2010. Tsipras, however, said his party would try to “persuade the European partners that they are not (just) hurting Greece by canceling any effort of financial support for Greece, they are putting in great danger the eurozone itself and the social cohesion of Europe.”

[Demeter]

7. 200,000+Americans Will Lose Unemployment Benefits This Weekend (Even Though There Are Still No Jobs)

http://www.alternet.org/newsandviews/article/928441/more_than_200%2C000_americans_will_lose_unemployment_benefits_this_weekend_%28even_though_there_are_still_no_jobs%29/#paragraph4

According to a new report from the National Employment Law Project, 230,000 Americans will see their unemployment benefits vanish this weekend, even as the jobless rate remains stubbornly high. Nearly half of those losing their benefits live in California, where the unemployment rate is 11 percent:

Long-term unemployed workers in a growing list of states are being abruptly cut from federal unemployment insurance, a new analysis from the National Employment Law Project shows. Due to reductions Congress enacted earlier this year, more than 400,000 workers in 27 states will have lost between 13 to 20 weeks of federal unemployment insurance under the Extended Benefits program by Saturday, May 12th. The cuts come even though long-term unemployment remains near record highs. [...]

The latest round of cuts that take effect in eight states this Saturday will affect more than 200,000 long-term unemployed workers and account for the biggest number of workers to be hit so far, as states like California, Illinois, Florida, Pennsylvania and Texas are all being phased out at the same time. In California, nearly 100,000 workers are being cut from the extended benefits this week.

These cuts are occurring because the formula under which states receive federal funds for extended unemployment benefits stipulates that those funds disappear if the state’s unemployment rate stops increasing. So because California and other states have seen some improvement in their labor situations, their funds vanish. “The Extended Benefits program is being phased out because state unemployment rates have stopped climbing, but unemployment is still exceedingly high in many places,” said NELP Executive Director Christine Owens.

There are still more than three job seekers for every available opening, according to the Economic Policy Institute, and more than 30 percent of the unemployed have been out of work for a year or more. Considering those numbers, it makes no sense to cut people off from unemployment benefits, which have ensured that millions of Americans don’t slip below the poverty line. According to the Government Accountability Office,20 percent of those cut off from unemployment benefits by early 2010 fell into poverty.

[Demeter]

8. Here's Over One Hundred Products Made From Child Or Slave Labor

http://www.huffingtonpost.com/2012/05/10/worldwide-products-slave-labor_n_1505811.html

It's hard to believe, but true: Still today, many everyday products from around the globe are the result of child and slave labor, according to a 2011 report from the U.S. Department of Labor.

Now thanks to an infographic from the National Post, we can more clearly see the effects: All together, the infographic counts 130 product-types from 71 countries -- each the result of forced labor, child labor or some combination of the two.

Indeed, slave labor still exists within economic powerhouses like India, China and Brazil, for example. It's not just these two forms of labor that have come under fire lately. China has faced more wide-ranging criticism over its labor practices, especially after reports of poor working conditions and labor law violations at Foxconn, a factory that manufactures electronics for companies such as Apple and Microsoft.

[Demeter]

10. NEWS FROM THE 99%

YOU'D NEVER KNOW IT, BUT THERE IS STILL AN OCCUPATION GOING ON...AND HERE'S THE LATEST TIDBITS I'VE SEEN...

[Demeter]

11. Occupy’s amazing Volcker Rule letter By Felix Salmon

http://blogs.reuters.com/felix-salmon/2012/02/14/occupys-amazing-volcker-rule-letter/

One of the saddest aspects of the financialization of the US economy is the way in which America’s best and brightest found themselves working on Wall Street, rather than in jobs which improved the state of the world. Proof of this comes from the absolutely astonishing 325-page comment letter on the Volcker Rule which has been put together by Occupy the SEC; it’s pretty clear, from reading the letter, that the people who wrote it are whip-smart and extremely talented. Occupy the SEC is the wonky finreg arm of Occupy Wall Street, and its main authors are worth naming and celebrating: Akshat Tewary, Alexis Goldstein, Corley Miller, George Bailey, Caitlin Kline, Elizabeth Friedrich, and Eric Taylor. If you can’t read the whole thing, at least read the introductory comments, on pages 3-6, both for their substance and for the panache of their delivery. A taster:

During the legislative process, the Volcker Rule was woefully enfeebled by the addition of numerous loopholes and exceptions. The banking lobby exerted inordinate influence on Congress and succeeded in diluting the statute, despite the catastrophic failures that bank policies have produced and continue to produce…

The Proposed Rule also evinces a remarkable solicitude for the interests of banking corporations over those of investors, consumers, taxpayers and other human beings. In their Overview of the Proposed Rule, “the Agencies request comment on the potential impacts the proposed approach may have on banking entities and the businesses in which they engage,” but curiously fail to solicit comment on the potential impact on consumers, depositors, or taxpayers. The Administrative Procedure Act requires that, prior to the enactment of a substantive regulation, an agency must give “interested persons” an opportunity to comment. The Agencies seem to have lost sight of the fact that “interested persons” could include human beings, and not just banking corporations.

There’s lots more where that comes from, including the indelible vision of how “the Volcker Rule simply removes the government’s all-too-visible hand from underneath the pampered haunches of banking conglomerates”. But the real substance is in the following hundreds of pages, where the authors go through the Volcker Rule line by line, explaining where it’s useless and where it can and should be improved.

For instance, there’s a massive repo loophole in the proposed rule, which basically allows banks to move all their prop trading to their repo desks.

And then there’s the even bigger market-making loophole, which, unlike the repo loophole, actually exists in the original statute. Still, Occupy the SEC does a great job in glossing why it’s a bad idea:

Market making is an indispensable component of liquid, efficient markets. This service, however, simply does not belong in banks…

The bank lobbying effort is certainly understandable: market making is a profitable business and one that banking entities certainly do not want to lose. It is well-known that the major dealers have always fiercely guarded their dominance of market making, particularly in the less regulated OTC markets. Firms that attempt to enter this business are regularly strong-armed through anti-competitive arrangements with inter-broker dealers… Despite the banks’ desire to continue reaping such profits, their contention— that banking entities alone are able and willing to provide this valuable service to the market, and that regulation will cause irreparable damage to the financial system at large—is unfounded and nonsensical.

In the proposed rule, banks can claim to be “making a market” in illiquid instruments when they’re only on one side: buying and not selling, or selling and not bying. They’re even allowed to claim to be making a market when they’re unwilling to provide executable bids or offers at all. (After all, if such situations never occurred, then the market wouldn’t be illiquid in the first place.) It’s pretty easy to see how a market-maker’s inventory can morph into a proprietary trade, under such circumstances.

As the letter says,

“an unfortunate consequence of the generalized language throughout the Proposed Rule may be the shift of risky practices out of liquid and transparent markets into the less regulated illiquid and OTC products” — there’s a real risk, here, that the Volcker rule could actually make bank trading more risky, rather than less.

The letter also picks up on the Volcker Rule’s proposed treatment of carried interest. As we all know from following the Romney campaign, carried interest is treated as capital gains for income tax purposes. But in the Volcker Rule, it’s treated as fee earnings. As the letter says, “carried interest should not provide loopholes to banking entities and to covered funds in both the realm of taxation and the realm of regulation”. Carried interest is income, yes, but it’s also an ownership stake — but under the proposed rule, it’s exempt from the definition of “ownership interest”. Which seems silly.

Very well done, then, to Occupy the SEC — a clear example of how the Occupy movement is making incredibly detailed and substantive demands of our legislators and regulators. This letter is many things, but inchoate it is not. Let’s hope that the SEC gives it the full attention it deserves.

[Demeter]

13. Occupy Keeps Up the Momentum With an Anti-Austerity Week of Actions in NYC

http://www.alternet.org/newsandviews/article/928188/occupy_keeps_up_the_momentum_with_an_anti-austerity_week_of_actions_in_nyc/#paragraph3

Occupy Wall Street isn't wasting any time post- Spring Awakening and May Day. It is geared up for a full week of actions addressing different issues each day from May 10 to May 15. It is clear that Occupy is working very hard not to lose its spring momentum. The week of action, which has the theme "Another City is Possible, Another World is Possible," arose to combat the ongoing budget cuts in New York City. With the 2013 city budget having come out the first week of May, the week of action is timely, focusing on austerity and measures directly relate to the struggles of the 99 percent. In addition, the week will be punctuated by two global days of action, on May 12 and 15, to tie the local actions into a broader international context.

An organizer of the week of action, Yotam Marom, says he wants the week to be about "creating a framework for a lot of groups and individuals to work collectively on issues they are already working on individually. We need to connect everyone because all the issues are interconnected. There are a lot of different groups with different tactics and goals, but it's a way for these groups to work together - to have autonomy while still having solidarity." Additionally, organizers want to connect Occupy to other social change initiatives. As Marom says, "Occupy is at its best when it's part of everything else." The week of action is meant to side-step questions of affiliation and coalition building. The planners of the week are not a coalition, but rather, individuals working together on relevant issues because they care about them - not because of their affiliation.

The issues for each day were chosen based on a look at where budget cuts have been made in recent years, and also what was important to people involved in the planning process. Organizers wanted to focus on real issues that individuals can connect to, with the hope of using these issues to create radical change over the long-term.

The week kickED off on Thursday, May 10, with an opening assembly at 6pm in Union Square. This assembly will allow participants to speak out about issues that affect their lives and will offer details on each day of action.

Friday, May 11, WAS all about homes, jobs, and services. Actions start at 11:30am with an anti-budget cuts action at the lighthouse at South Street Seaport, continuing with a rally on the southeast corner of Murray and West Streets at 1pm calling for good jobs, not giveaways, from big banks. Next there will be a celebration and speak-out at Rockefeller Park near Battery Park City from 2 to 6pm, and finally an action at 7pm demanding respect for workers' right to organize at Capital Grille (155 E 42nd St.). Caroline Leader, one of the organizers helping plan actions on the 11th, discussed why she got involved. "So often the 1 percent and corporations blame lower-income people for their struggles, but we need to realize that many people start at a disadvantage," she said. "Even more encounter serious life changes - loss of a job, illness, family member's deportation, etc. - and have trouble picking themselves back up again. We live in a connected world and we all need to help each other. Basically, the 1 percent get what they want while too many of the 99 percent struggle to get what they need. We are showing up on May 11 to fight for a city where housing is a human right, for a country with good jobs for all, for a world where our basic needs are met."

Saturday, May 12, a global day of action, focuseD on food, the environment, and health issues. Many individuals will be attending the Brooklyn Food Conferencebeing held at Brooklyn Tech High School (20 Fort Greene Pl.) from 9am to 6pm. The purpose of this free conference is to discuss the global economy and how to make a sustainable food system a reality. Some activists will leave the conference early to join the No Pipeline Bike Ride starting on the south side of Union Square at 2pm. People will bike around the city dressed in colors of toxic chemicals to raise awareness about the Spectra Pipeline. For those who cannot make the 2pm ride, a second meet-up will be help for pedestrians at 3pm at Pier 54. At 5pm, there will be a Making Change at Walmart truck tour about workers' rights, starting outside Brooklyn Tech High School. The tour will declare New York City a Walmart-free zone. At 5:30pm, all actions will converge with a rally to end the day at City Hall.

Sunday, May 13, WAS the Mother's Day of Action, with mothers taking a stand against the injustices of police brutality, mass incarceration, war, immigrant repression, and other issues that gravely affect their children and families. Of course, non-mothers are also encouraged to attend these actions and show their support. That day, OWS decided to support the many actions already being held across the city. Instead of reinventing the wheel, the movement is collaborating with other organizations that are working on the same issues, and giving them the support and the audience they need. So OWS will participate in the following actions being planned by other groups: At 11:30am, the Granny Peace Brigade will hold its sixth annual Mother's Day Peace Stroll in Central Park, at the Columbus Circle entrance. There will be music by the Rude Mechanical Orchestra and songs from the Raging Grannies. The main action of the day is Mothers Resisting Racist Policing, being held by Mothers Against Racist Policing, an ad hoc group of Black and brown mothers organizing against police violence, stop and frisk, and racist policing in their communities. That action will take place at 1pm at te corner of E. 158th St. and 3rd Ave. in the South Bronx. Thisanjali Gangoda, an organizer for the day, says, "Participating in this march is vital to growing our movement because we must work with impacted communities in a way that supports their autonomous organizing efforts. It's also a way to build relationships and trust amongst each other so that we can continue doing awesome work together in the future." The latter half of the day will feature a citywide movement assembly - a follow-up to the Spring Awakening event Occupy held last month. The assembly will begin at 5pm at Judson Memorial Church (55 Washington Sq. South) with a speak-out on how the issues of the week affect mothers, children, and families. The assembly will continue with strategic discussion at 6pm and end with a potluck and dance party at 8:30pm.

On Monday, May 14, actions focusED on education and students - fostering a city with quality public schools, a country without student debt, and a world with free education for all. Teachers from the United Federation of Teachers, along with other supporters, will be leafleting and picketing at Bloomberg L.P. I731 Lexington Ave.), starting as early as 7am, all day until 4pm. The highlight of the day will be a family event from 5 to 7pm at Manhattan's Grand Army Plaza (59th St. and 5th Ave.), including a stroller march, games, and a kids' + brigade against childcare cuts. With federal student loan interest rates expected to double by July 1, education and student debt is an issue on many New Yorkers' minds.

The week ends with another global day of action on Tuesday, May 15, tying together all the issues of the week. This last day will include a financial crime walking tour, starting at 4pm at Bryant Park. The day, and week, will end with a convergence at Times Square at 6pm. This is expected to be a mass gathering and a culmination of the week's actions.

[Demeter]

14. 'Global May Manifesto': Statement from International Activists with Occupy, Other Groups

http://www.alternet.org/newsandviews/article/928183/%27global_may_manifesto%27%3A_statement_from_international_activists_with_occupy%2C_other_groups/#paragraph3

An international assembly made up of individuals from Occupy groups in London and New York, as well as Take the Square and social movements in the Middle East, Latin America, Africa and Asia--a total of six continents--has released a statement ahead of a global weekend of action. The assembly, held online between hundreds of activists and then including thousands more via email, worked on the statement for several months and endorsed it by consensus on May 4.

They stress that the statement is a work in progress, and is being released to the public for further suggestion and input. It calls for, among other things, a global financial transaction tax, an end to bank bailouts and "too big to fail," food sovereignty, and universal healthcare and education.

In a press release, Alvaro Rodriguez, 31, of the Indignados movement in Spain, who participated in the process of writing the statement, said: "This is the beginning of a new global process of bringing the opinions of many people around the world together. It represents the beginnings of a form of global democracy in its infancy which is direct and participatory - of the people, by the people and for the people. While the statement does not represent the position of local and city assemblies, the next step is to present it to assemblies around the world for consideration, discussion and revisions, as part of a dialogue of the 'Global Spring' movements taking place across six continents."

FULL STATEMENT AT LINK--IT'S COMPREHENSIVE!

[Egalitarian Thug]

15. And China has bought a U.S. bank... n/t

[Demeter]

20. A link would be very useful.

So glad you are sticking around! Welcome to the family!

[Egalitarian Thug]

41. Thank you and sorry.

Here ya go;
http://www.allgov.com/Top_Stories/ViewNews/Federal_Reserve_Allows_First_Chinese_Government_Takeover_of_US_Bank_120514

[Eugene]

17. Italian banks have credit ratings cut by Moody's

Source: BBC

14 May 2012 Last updated at 22:33 GMT

Italian banks have credit ratings cut by Moody's

Ratings agency Moody's has cut the credit ratings on 26 Italian banks, including Italy's largest lenders Unicredit and Intesa Sanpaolo.

Italy's economy is contracting while the government also tries to reform the nation's public sector.

The agency said the banks were increasingly vulnerable to Italy's recession and the effects of government austerity measures.

Ten banks were cut from investment grade to so-called junk status.

[font size=1]-snip-[/font]

Read more: http://www.bbc.co.uk/news/business-18067581

[girl gone mad]

19. The Sun Rises Once More

On May 12, 2012, hundreds of thousands of people took back the squares in over 60 Spanish cities and 50 countries across the world. As the Old World crumbles, we proved once more that our movement is not only still alive -- but stronger than ever before.

[Demeter]

24. NIKKEI MAKING UP FOR MONDAY'S LOST TIME ON TUESDAY

Down 90+ at open...

[Demeter]

25. US inequality is getting worse by Linda Beale

http://ataxingmatter.blogs.com/tax/2012/05/us-inequality-is-getting-worse.html

The Congressional REsearch Service released a report in March showing that US inequality is getting worse...Here's an excerpt from the summary provided in the report itself:

Approaching three years into the recovery from the 2007-2009 recession, the unemployment rate remains over 8%. The persistent difficulty of many of the workers who lost jobs to find reemployment has meant reduced incomes for them and their families. A historically slow rebound in the labor market appears to be partly responsible for some groups’ focus on the distribution of the benefits of economic growth and for some policymakers’ interest in redistributing income through the tax code, for example.

Varying perceptions about a trade-off between economic growth and income equality appear to underlie longstanding congressional deliberations about such policy issues as the progressivity of income tax rates, the tax treatment of capital gains, and the adjustment of the federal minimum wage.

If income were equally divided across households, each quintile (fifth) would account for 20% of total income. The Congressional Budget Office and others have documented that the bottom fifth has long accounted for much less than 20% of total income. The bottom quintile’s share of income has remained little changed for the past few decades at less than 4%, according to U.S. Census Bureau data.

In contrast, the income shares of the top fifth and the top 5% of households appear to have trended upward. The top fifth’s share of total household income rose from 42.6% in 1968 to 50.2% in 2010; the top 5%’s share, from 16.3% to 21.3%. (Estimates derived from federal income tax data suggest that those at the very top of the income distribution have experienced greater gains.) The middle class, defined as the middle 60%, received a disproportionately smaller share of the total economic pie in 2010 (46.5%) than in 1968 (53.2%).

***

Based on the limited data that are comparable across nations, the U.S. income distribution appears to be among the most uneven of all major industrialized countries and the United States appears to be among the nations experiencing the greatest increases in measures of inequality. Three leading explanations are put forth for these cross-country differences: (1) other advanced economies devote a larger share of national output to transfers, which tends to equalize income across households; (2) the progressivity of tax rates varies by country and thus has different effects on the distribution of after-tax income; and (3) equality in the distribution of earnings, which account for most household income, varies substantially across countries.

So Inequality is increasing and mobility in the US economy is diminishing, as the rich get richer and the middle class gets poorer and the poor stay poor.

Because so many Americans have believed the hype about "free markets" pushed by the right and the Chicago School economic perspective, they don't understand the failures of the "free market" theory --for example, that it cannot accurately predict much of anything about the economy,and that its policy dictates are likely to be total failures since they are based on assumptions that simply don't hold for actual societies (like infinite lifetimes, 100% consumption of incomes, a unitary preference and other nonsense).

They echo the radical right's rhetoric antagonistic to redistribution in favor of those who are disadvantaged by the growing inequality, and blithely miss the way tax policy and spending policy redistributes upwards in ways that contributes to the increase in inequality.

Americans are also lulled into complacency about the harm of increasing inequality by the American myth that everybody that has the will to take the risks can be a self-made millionaire. Thus, they miss any opportunities to force Congress to bring the oligarchy under control through wiser tax policy and legislative initiatives focused on addressing genuine public needs through democratic egalitarianism.

[Demeter]

26. The Inflation of Life - Cost of Raising a Child Has Soared

http://finance.yahoo.com/news/inflation-life-cost-raising-child-145736881.html

Your little bundle of joy is going to require a wad of cash.

The cost of raising a child from birth to age 17 has surged 25 percent over the last 10 years, due largely to the rising cost of groceries and medical care, according to the Department of Agriculture, which tracks annual expenditures on children by families.

The government's most recent annual report reveals a middle-income family with a child born in 2010 can expect to spend roughly $227,000 for food, shelter and other expenses necessary to raise that child - $287,000 when you factor in projected inflation.

And, no, the bill does not include the cost of college or anything related to the pregnancy and delivery. "If you sat down to tally up the total cost of having children, you'd never have them," says Timothy Knotts, a father of four and a certified financial planner with The Hogan-Knotts Financial Group in Red Bank N.J. "It's a very expensive adventure."

[Demeter]

27. Tuition is too damn high

http://www.salon.com/2012/05/11/tuition_is_too_damn_high/singleton/

Government is to blame for rising higher education costs -- but not for the reasons the GOP tells you...For three decades the cost of attending college anywhere — public, private nonprofit, or for-profit, Ivy League school or community college — has risen significantly faster than the rate of inflation. But the sharp acceleration over the last 10 years — and particularly since the onset of the Great Recession — has stoked a new wave of widespread anxiety over an impending “crisis” in higher education. The unrelenting cost hikes also explain why government aid for college students has become such a hot topic in this presidential campaign year. Even as the government continues to print money and throw it into the breach, the hole just seems to gets bigger. Total student debt is now over $1 trillion and rising.

In fact, for some critics, access to “easy government money” is the real problem, not the solution. No less an authority than House Budget Committee Chairman Paul Ryan, explaining why he wants to cut Pell Grants and reduce the availability of government-backed student loans, claims “there is evidence that subsidized lending contributes to tuition inflation.” Just last month, Moody’s Analytics chief economist Mark Zandi told the Associated Press that government loans and subsidies don’t work because “universities and colleges just raise their tuition. It doesn’t improve affordability and it doesn’t make it easier to go to college.’’

For some of these critics, the solution to higher tuition costs is to take government out of the education equation altogether; to allow the market to provide “innovative,” cost-effective alternatives to old-school brick-and-mortar-style higher education. Online learning, for example, could theoretically provide students with a cheap end-around to the existing establishment. There’s an intuitive attraction to this approach that crosses party lines. We’ve already seen the Internet wreak havoc on the music business and publishing industry by fundamentally changing the economics of content delivery. Why can’t it do the same for education?...But before signaling a full-scale retreat of government from the higher education fray, it’s important to look a little more closely at the simplistic claim that “easy government money” is fueling higher costs. While there are certainly some sectors of higher education in which there is a clear relationship between student loans and higher tuitions, for the great majority of college students the problem isn’t that the government is giving them too much money. Quite the opposite: It’s the collapse of direct government support for higher education that is the main driver of higher tuition costs.

“The reality is that student debt is not rising because the government is putting more money into higher education,” says Kevin Carey, policy director at Education Sector, a Washington-based nonpartisan think tank. “It’s rising because the government is putting less money into higher education.”

MORE AT LINK

[Demeter]

31. Colleges as Merchants of Debt

http://www.nakedcapitalism.com/2012/05/new-york-times-on-student-loan-debt-slavery.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Student loan debt slavery is even worse than you probably thought. The Grey Lady tonight has a long, informative story, “A Generation Hobbled by the Soaring Cost of College“, that early on presents the stunning tidbit that 94% of the recipients of bachelor’s degrees borrowed in order to pay for it. The Times doesn’t report what average debt levels are in this cohort, but the average across all borrowers, per the New York Fed, is $23,000. Remember, this total includes graduates who have have been paying down debt, meaning they’ve amortized principal and almost certainly had borrowed less on average to complete school.

Contrast this “certain to be higher on average than $23,000″ for new graduates with their earning power, or more accurately, lack thereof. The Times article also mentions a Rutgers survey which seems to have some sample bias or underreporting of borrowing (of 2006-2011 graduates, only 55% of the respondents said they had borrowed to help fund college, and the median reported debt level was $20,000). The 2009-2011 graduates’ income averaged $27,000. In addition, only half said that their job required a college degree.

This juxtaposition confirms that colleges, like the financial services industry, have become increasingly extractive: whatever financial benefits accrue to getting an undergraduate education, they are more and more captured by the schools, though their ability to persuade students to go into hock to get a degree. And like late housing bubble borrowers, more are defaulting early on, meaning the loans were badly underwritten (ie, many should probably have never been made because it the odds of default were high):

Nearly one in 10 borrowers who started repayment in 2009 defaulted within two years, the latest data available — about double the rate in 2005.

MORE...

I’ve never understood when (once in a while) someone (clearly young) shows up in comments and rails against Social Security and Medicare because of the burden it imposes on him. Now I get it. The student debt issue is deepening social fractures. If young people are asked to stand on their own, and given only unpalatable choices (forego a college degree, the entrance ticket to middle class life, or accept debt slavery at a tender age), no wonder they adopt a “devil take the hindmost” attitude. I hope some of these people who so cavalierly argue for loading up the next generation with debt realize that the young may not want to take care of them either, and they are far more at risk. The outcome of cutting social safety nets to the elderly ultimately means that old people will die faster.



THE NYT ARTICLE SHE REFERENCED: http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?pagewanted=6&ref=business&gwh=4986711F725D5577302F451CD8EA5397

[Demeter]

28. Verizon refused to help police locate unconscious man unless they paid his phone bill

http://boingboing.net/2012/05/12/verizon-refused-to-help-police.html

Nancy Schaar at the Times Reporter:

A 62-year-old Carrollton area man was found unconscious and unresponsive Thursday morning during an intense search overnight by Carroll County sheriff deputies, an Ohio State Highway Patrol trooper and the patrol’s airplane. [Sheriff] Williams said he attempted to use the man’s cell phone signal to locate him, but the man was behind on his phone bill and the Verizon operator refused to connect the signal unless the sheriff’s department agreed to pay the overdue bill. After some disagreement, Williams agreed to pay $20 on the phone bill in order to find the man.

Though this case is from a while ago—operators are now made available to assist emergency services—it got me thinking about what makes carriers and telcos such horrible companies to deal with once you're a customer. It's because accepting a long term cellular contract is a lot like going a couple of grand in debt.

As a result, their corporate culture gravitates toward that of a collection agency. It's inevitable, even if they try to avoid it, because that's the economic bottom line of the customer-facing part of their business. If an operator is actually having to talk to you, you must be a deadbeat or some other kind of problem.

Verizon, when asked by police to find a cellphone, suffered from a perverse blind spot: it could not see beyond the fact that the cellphone's owner owed it money.

[Demeter]

36. Senator Seeks More Info On DOJ Location Tracking Practices

http://threatpost.com/en_us/blogs/senator-seeks-more-info-doj-location-tracking-practices-051112

Senator Al Franken (D-MN) is demanding answers to questions about the U.S. Department of Justice (DOJ) practice of gathering data from wireless providers in order to monitor individuals’ movements using mobile phone location data.

Franken released a copy of a letter to Attorney General Eric Holder on Thursday (PDF). In it, he outlined his concern that local law enforcement is circumventing a recent Supreme Court ruling that found certain types of monitoring a violation of Fourth Amendment protections against unlawful search and seizure. Franken worries that law enforcement's reliance on data provided directly by wireless providers, without a warrant, violates both the spirit and letter of the recent ruling.

The January Supreme Court ruling in the case of United States vs. Jones stemmed from a case in which the FBI attached a GPS device to the car of a suspect, Antoine Jones, in a drug trafficking case. In their ruling, the Justices determined that attaching a GPS to a vehicle and then using it to monitor that vehicles movement constitutes a search under the Fourth Amendment. Jones’s conviction was reversed.

In his letter, Franken said he wants to know how frequently the DoJ makes such requests to wireless carriers, and what legal standard it must meet to obtain such information. Specifically, Franken asks how many such requests have been made in the last five years, and how many individuals were affected by them. Franken also asked for information on the information that is being asked for and whether the DoJ’s practices changed at all since the Jones decision.

You can read Franken’s letter, which is hosted on the American Civil Liberties Website:

https://www.aclu.org/files/assets/sen__franken_letter_to_doj_on_cell_phone_tracking.pdf

[Demeter]

29. FBI Concerned About Bitcoin Usage Among Cybercriminals

YOU MEAN LIKE DICK CHENEY AND JAMIE DIMON? NO, I DIDN'T THINK SO EITHER...

http://threatpost.com/en_us/blogs/fbi-concerned-about-bitcoin-usage-among-cybercriminals-051012

The Federal Bureau of Investigation has become increasingly concerned over the usage of the mostly-anonymous payment network Bitcoin by hackers and cybercriminals, according to an unclassified report obtained by Wired this week. The report, “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity,” (.PDF) was published on April 24, but surfaced on the internet Wednesday.

In it, the FBI details how individuals use the service, stressing that its decentralized, peer-to-peer structure makes it an appealing payment option for criminals. The FBI also expresses concern that law enforcement could have a difficult time tracking user activity on the platform.

“Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records – problems that might attract malicious actors to Bitcoin,” the report reads.

The report cites several examples of such ‘malicious actors’, including a cyber criminal the FBI found last year who was selling a Zeus botnet Trojan and accepting Bitcoin as a payment and another incident in which a Lulzsec member used Bitcoin to purchase a botnet. The limitations of Bitcoin’s anonymity are covered as well, as a 2011 study by researchers from the University College of Dublin, Ireland is referenced that found that by examining transaction records and public-private keys, law enforcement could link some public information about actual Bitcoin users to their accounts.

This is the first time that the FBI has issued anything close to an assessment on the up and coming cash system that relies on users to exchange virtual 'Bitcoins,' along with digital signatures to conduct their transactions. According to the website Exchangerates24.com, one Bitcoin currently trades for $5.06. The theft of Bitcoins from other users’ Bitcoin accounts continues to be a problem as well. A compromise at Linode, a Linux-based cloud provider late last year opened the Bitcoin wallets of eight customers, yielding upwards to $14,000 to hackers.

POST A COMMENT AT LINK!

[Demeter]

32. AND NOW, FOR SOMETHING COMPLETELY DIFFERENT...

[Tansy_Gold]

40. Grieg is good.

Where is Van Johnson when we need him to rid not just the town but whole freakin' world of rats? (Guest starring our dear friend Capt. Renault, aka Claude Rains)

[DemReadingDU]

45. Very nice!

[westerebus]

67. That made my day.

Thanks D!

[Roland99]

81. Excellent

Oh how I wish everyone in the U.S. (esp. narrow-minded right-wingers) could live in Europe for at least a month and experience life outside of their cocoons.

[Demeter]

33. Origins of the Sicilian Mafia

http://www.voxeu.org/index.php?q=node/7982


The Italian Mafia can be seen as one of the largest and most successful businesses in Italy. In one of the latest reports from the Italian Minister of Home Affairs, it has been estimated that revenues from just the informal sector related to the Mafia amount to almost €180 billion. In terms of GDP, revenues from Mafia-related businesses represent almost 12% of the total Italian GDP and are equal to the sum of the GDPs of Estonia, Croatia, Romania, and Slovenia (Ruffolo et al. 2010). To date, the Italian Mafia is the most successful form of organised crime in Europe and comparable to the Chinese, Japanese, Russian, and South American crime organisations in terms of business.

Given the economic and social relevance of the issue, it is natural to wonder why these forms of organised crime develop and what factors explain the cross-regional variation of Mafia. Both institutional and historical explanations have been proposed in the literature. Fiorentini (1999), Grossman (1995), and Skaperdas (2001) focus on weak institutions, predation, and enforcement of property rights. On the other hand, with regard to the Sicilian Mafia, Villari (1875), Sonnino and Franchetti (1877) and Colajani (1885) focus on the legacy of feudalism, the development of latifundism and a loss of social capital and public trust.

Even though the above literature provides plausible explanations for the origin of organised crime, it is still difficult to understand why we observe a huge variation across regions experiencing very similar conditions. Organised forms of crime normally appear only in a small number of localities and then expand through the entire region. It is therefore important to understand what is specific to these few localities where the Mafia appears.

In a new paper (Dimico et al. 2012), we try to explain such a variation of the Mafia across villages in Sicily using a parliamentary inquiry about the economic, social and moral conditions of Sicilian peasants in 1886. Our hypothesis is that the regional variation in the presence of the Mafia depends on the development of the lemon industry in Sicily. We argue that Sicily had a dominant position in the international lemon market which was the result of barriers to entry related to the particular climatic requirements for lemon trees to vegetate. These particular climatic conditions required by the plant provided variation across countries and across villages that could produce lemons, resulting in a natural dominant position for countries on the Mediterranean, particularly for Sicily. The dominant position, together with a boost in the international demand after the 19th century (when Lind proved the beneficial effect of lemons in curing scurvy), provided huge profits associated with the sector which the Mafia systematically used to extort in exchange for protection which could not be provided by the state. We view such profits from imperfect market structures as a natural condition for the development of the Mafia...

MUCH MORE AT LINK

[Demeter]

39. I plead exhaustion

I wanted to get as much as possible up now, since Tuesday is a board meeting, and I'm far behind due to the massive JPMorgan's whale that washed up on the shores of the Internet...

if I survive, I'll see you later on Tues, if not, Weds. maybe....have a good one!

[xchrom]

42. bon jour, mes amis!

[Demeter]

46. I think somebody is on a mental vacation, this week

Can't say I blame you. Bon voyage!

[xchrom]

48. I am! & I just really love France.

I don't think there's any place more cool.

It has something for all the senses.

[xchrom]

43. Greek deadlock heightens fears of full European economic crisis

http://www.washingtonpost.com/business/economy/greek-deadlock-heightens-fears-of-full-euro-crisis/2012/05/14/gIQATggIPU_story.html

Political deadlock in Greece rattled world markets Monday, reviving fears that the fractious Mediterranean country could spurn an international bailout, abandon the common European currency and risk a fresh round of world economic turmoil.

European stock indexes fell, with Greece’s market now at a 20-year low, while the euro currency continued a recent decline against the dollar. U.S. stocks also fell.

Coming only days before the leaders of the world’s Group of Eight industrialized nations meet at Camp David, the standoff in Greece over its political direction has thrust Europe’s troubles to the top of the agenda. A downturn in Europe could stagger a fragile recovery in the United States and undermine growth around the world.

Fighting a new downturn would be a challenge for the major economies, many of which have not fully stabilized since the last big economic crisis.

[xchrom]

44. The fracturing of Big Law

http://www.washingtonpost.com/business/capitalbusiness/the-fracturing-of-big-law/2012/05/11/gIQAgkNvMU_story.html


Jeffrey MacMillan/Capital Business - Howrey grew from a Washington litigation firm to an international player with offices in 18 cities before it collapsed in 2011.

As recently as December, Dewey & LeBoeuf had more than 1,000 lawyers in 26 offices around the world, annual revenue close to $800 million, and attorneys who had a hand in some of the biggest headline-making deals of the last decade.¶ Now the law firm, the product of one of the largest legal industry mergers in history, is rapidly unraveling. Employees have been warned the firm could shut down this week, and remaining partners have been urged to seek other job opportunities, according to several published reports. The Manhattan District Attorney’s office is investigating accusations of wrongdoing by ex-Chairman Steven Davis — allegations his attorney denies. And last week, three of the firm’s four-member office of the chairman decamped to other law firms, as of Friday, the new firms confirmed.

A spokesperson for Dewey did not return requests for comment.

The downward spiral has come as a shock to many outside the legal industry, but in some ways the collapse follows a path taken by the Washington law firm Howrey 14 months earlier. Dewey partners departed in trickles at first, then increasingly in waves. There was the D.C. managing partner who left to join King & Spalding in February, followed by the three senior partners who moved to Sidley Austin in D.C. and Los Angeles, and the 12 who then landed at Willkie Farr & Gallagher in London, New York and D.C. Suddenly, partners were moving on at a near-daily rate. Between January and May, the Dewey partnership dwindled from 320 to around 160.

Howrey and Dewey are extreme examples of how rapid expansion during the recent economic boom is coming to haunt firms that sought fast growth.

[Demeter]

47. Now THAT'S an Interesting Report

The arrogance of constructing such a big firm, in a time of increasing lawlessness by governments, astounds me. Lawyers are being rendered obsolete by corruption and cronyism.

When they announce international lobbying firms are unraveling, then we will know that our tribulations are at an end.

[xchrom]

50. I thought it was pretty interesting.

And surprising.

[westerebus]

69. The consolidation of authority is completing the encirclement of society.

The 1% no longer choose to hide behind their "law firms".

Hubris is as Hubris does.

[DemReadingDU]

49. James Kwak: Regression to the Mean, JPMorgan Edition

5/14/12 Regression to the Mean, JPMorgan Edition
.
.
.
The performance of anyone doing anything will exhibit regression to the mean. If you do well at something, it’s because of some combination of skill and luck. If JPMorgan came through the financial crisis well, it was some combination of skill and luck. Remember, JPMorgan didn’t have as big a portfolio of toxic assets as its competitors because it was late to the party; only in retrospect do we ascribe this good fortune to the supposed skill of Jamie Dimon. JPMorgan was never as good as people (both supporters and critics) made it out to be, so we shouldn’t be so surprised that it just lost $2 billion (and counting).

The more disturbing thing isn’t that commentators fell for this statistical red herring. It’s that people inside JPMorgan seem to have fallen for it, too. This was Dimon’s response to a question about whether the Chief Investment Office was becoming more aggressive, as reported by Bloomberg:

“I wouldn’t call it ‘more aggressive,’ I would call it ‘better,’” Dimon told analysts yesterday. “We added different types of people, talented people and stuff like that.” Until recently, they were careful and successful, he said.

People don’t suddenly go from being good to bad overnight. What happens is they go from lucky to unlucky. They are the same people doing the same things.

“Inside JPMorgan, leadership is stunned by the situation, according to two senior executives,” also as reported by Bloomberg. If that’s true, that’s bad news for all of us. It’s one thing if, as many of us thought, JPMorgan was consciously trying to take on more risk (as has been amply documented, Dimon pushed the Chief Investment Office into profit-seeking trades) while denying it to regulators and the press. That’s what we expect.

It’s another thing if the bank didn’t realize it was taking on risks of this magnitude. That implies that JPMorgan executives had started believing their own hype—that is, they believed that they really were just good, not lucky. And that should make all of us very worried.

http://baselinescenario.com/2012/05/14/regression-to-the-mean-jpmorgan-edition/

[Demeter]

51. The bank lost $2 billion, the boss walks off with $32m

http://m.smh.com.au/business/the-bank-lost-2-billion-the-boss-walks-off-with-32m-20120515-1ynwx.html

Ina Drew, the executive who ran the department behind JP Morgan's $US2 billion trading loss, has left the bank and will walk away with about $US32 million. The 55-year-old chief investment officer oversaw the division that made bets that JP Morgan has warned could rack up a further $US1 billion in losses. She will be replaced by Matt Zames, head of fixed income at JP Morgan's investment bank and a former proprietary trader. One of the best-paid women on Wall Street, Ms Drew last year received a remuneration package worth $US15.5 million.

Corporate filings show that following her resignation she is entitled to $US400,000 in severance as well as a share award that was worth $US16 million yesterday. On top of this, she has unexercised options that were valued at the end of last year at $US3.44 million, a series of retirement benefits worth a further $US2.63 million, and a $US9.87 million deferred compensation pot built up over several years.

Ms Drew, who spent more than 30 years at the bank, is not expected to be the only executive to depart in the wake of a loss that has damaged JP Morgan's reputation for risk management. Achilles Macris, who ran the London division of JP Morgan's chief investment office (CIO), and Javier-Martin-Artajo, a trader who worked in the unit, are also reported to be leaving. (HOW MANY "DEPARTURES" CAN JPMORGAN AFFORD, AT THOSE PRICES?)

"Despite our recent losses, Ina's vast contributions to the company should not be overshadowed by these events," said Jamie Dimon, the bank's chairman and chief executive. The pressure on Mr Dimon will be increased on Tuesday at the bank's annual meeting in Tampa, Florida, where shareholders will want to hear a fuller account of what went wrong. The losses, disclosed on Thursday, have already wiped more than $15bn from the bank's market value...Meanwhile, JP Morgan's decision to move its European headquarters from the City to the Docklands development in July will help Canary Wharf overtake the City of London as the heart of the British financial services industry this year, according to figures produced by the Financial Times.

[Demeter]

52. Obama: JPMorgan Is 'One of the Best-Managed Banks'

YES, MR. PRESIDENT, THAT'S THE PROBLEM IN A NUTSHELL....

http://news.yahoo.com/obama-jpmorgan-one-best-managed-banks-214359921--abc-news-politics.html

Just hours after a top JPMorgan Chase executive retired in the wake of a stunning $2 billion trading loss, President Obama told the hosts of ABC's "The View" that the bank's risky bets exemplified the need for Wall Street reform.

"JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting," the president said. "We don't know all the details. It's going to be investigated, but this is why we passed Wall Street reform."..."This is one of the best managed banks. You could have a bank that isn't as strong, isn't as profitable managing those same bets and we might have had to step in," he said. "That's why Wall Street reform is so important."

THAT'S WHY WALL STREET PROSECUTION IS SO IMPORTANT.

[Demeter]

53. J.P. Morgan is too-big-to-regulate, critics say

http://www.marketwatch.com/story/jp-morgan-is-too-big-to-regulate-observers-2012-05-15?siteid=YAHOOB

...“They are too big to regulate,” Sheila Bair, chairwoman of the Federal Deposit Insurance Corp. between 2006 and 2011, told MarketWatch.

“Regulators would be better to focus on simple rules that rely on incentives like capital and risk retention and even with the Volcker rule focusing more on compensation incentives for trading,” said Bair.

Bair and other critics, noting that the losses stemmed from trading in credit derivatives, have also voiced concern whether such trades would contribute to systemic problems in a more volatile economic scenario.

But the trades also raise questions about the ability of U.S. regulators to effectively monitor and understand the systemic implications of trades taking place in jurisdictions outside the U.S...

[Demeter]

54. Make Banking Boring By JOE NOCERA

http://www.nytimes.com/2012/05/15/opinion/nocera-make-banking-boring.html

Let’s begin by stipulating the obvious: nobody outside of JPMorgan Chase knows for sure what really happened with those trades that have cost it so much money and done such severe damage to its once stellar reputation.

In his conference call last Thursday, Jamie Dimon, the bank’s chief executive, characterized the trades as “stupid,” but refused to get into any specifics. Even hedge fund managers on the other side of the JPMorgan trades have been able to cobble together only bits and pieces. Most of the emphasis has been on the credit derivative business managed by one Bruno Iksil in JPMorgan’s London office — a k a the “London whale.” Yet from what I hear, his losses probably won’t total more than $600 million — while the bank’s total losses have reached $2.3 billion, and could well hit $4 billion, according to The Wall Street Journal. Where are the rest of the losses coming from? As I say, nobody knows.

Still, we know enough to be able to make some informed judgments. We know that JPMorgan, awash in taxpayer-insured deposits, took some of that money — around $62 billion at last count — and decided to invest it in corporate debt, which had the potential to generate higher returns than, say, old-fashioned loans. Citigroup and Bank of America, chastened by the financial crisis in ways that JPMorgan was not, had far less invested in such securities.

We know that JPMorgan’s chief investment office, which had orchestrated the debt purchases, decided to hedge the entire portfolio by selling credit default swaps against a corporate bond index. You remember our old friends, credit default swaps, don’t you? Three years ago, they nearly brought down the financial world. Not content with its hedge, it then hedged against the hedge. It was all very complex, of course, and all done in the name of “risk management.” ..

GOD BLESS SHEILA BAIR:

“I just want all this garbage out of insured banks,” said Sheila Bair, the former head of the Federal Deposit Insurance Corporation. “A bank with insured deposits should be making loans. If they have excess they should put the money in safe government securities. If they want to trade, set up separate subsidiaries that have higher capital requirements.”

[Demeter]

55. Moody’s cuts ratings for 26 Italian banks

The move reflects a combination of adverse conditions, asset quality deterioration, as well as restricted access to market funding, the rating agency said

Read more >>
http://link.ft.com/r/VKY5JJ/QN47OU/RP6QL/XH79B7/B5BV0U/PJ/t?a1=2012&a2=5&a3=15

[Demeter]

56. Modern Business Practices: Information Management

[Demeter]

57. Yahoo axes $19m deal for ex-chief

The cancellation of stock options, bonuses and salary that Scott Thompson was likely to receive adds to the impression he was forced out of the company

Read more >>
http://link.ft.com/r/VKY5JJ/QN47OU/RP6QL/XH79B7/62U8H1/PJ/t?a1=2012&a2=5&a3=15

[Demeter]

58. Greece set for further coalition talks

President is set to resume coalition talks on Tuesday with the country’s political leaders in another attempt to avoid a fresh general election

Read more >>
http://link.ft.com/r/KC2844/IIC6IQ/SUO9T/16WFO7/8ZLOHT/D5/t?a1=2012&a2=5&a3=15

WHO'S AFRAID OF DEMOCRACY?

[Demeter]

59. Japanese town votes to restart reactors

Council approves restarting two reactors, potentially paving the way for a return to limited atomic electricity generation in the country

Read more >>
http://link.ft.com/r/KC2844/IIC6IQ/SUO9T/16WFO7/TUDJI5/D5/t?a1=2012&a2=5&a3=15

[xchrom]

60. It Would Appear That The European Economy Is Going To Get Worse

http://www.businessinsider.com/eurozone-gdp-vs-pmi-2012-5

Eurozone GDP for Q1 came in at a flat 0.0% today. That was actually a bit of relief, as there were expectations that the economy was going to go negative.
But there's very little reason to cheer.
For one thing, as Brown Brothers Harriman points out (as tweeted by Alice Ross) the strong German GDP numbers mean that there's very little inclination on their part for reforms.
Also, the flat GDP isn't going to last.
Nomura compares GDP to Eurozone PMI numbers, which almost certainly indicate more weakness to come.




Read more: http://www.businessinsider.com/eurozone-gdp-vs-pmi-2012-5#ixzz1uwDa1Wiu

[xchrom]

61. Sex, Money, Largesse And The Hidden American Economic Depression

http://www.businessinsider.com/government-handouts-are-leading-to-economic-depressions-2012-5



Sex" and "Money" are probably two of the most powerful words in the English language. First, those two words got you to look at this article. They also sell products, books and services from "How To Have Better Sex" to "How To Make More Money" — ostensibly so you can have more of the former. Unfortunately, they are also the two primary causes of divorce in the country today.

Behind the mainstream media's attention to the daily economic numbers there is a hidden economic depression running along the underbelly of the country. High levels of unemployment have kept pressures on wages even as work hours have lengthened. This, of course, is assuming full time employment. In reality many individuals are working but either part-time at one or more jobs to make ends meet or working full-time as a temporary hire at reduced wage levels. The declines in real income are evident. The burgeoning labor pool and demand for work is suppressing wages as companies opt for increasing productivity and streamlining employment to protect corporate profit margins. However, as the cost of living is affected by the rising food, energy and healthcare prices without a compensatory increase in incomes - more families are forced to turn to assistance in order to survive.



For a large portion of America the issue of unemployment and underemployment remains an everyday concern. Without government largesse many individuals would literally be living on the street. The chart shows all the government "welfare" programs and current levels to date. The black line represents the sum of the underlying sub-components. While unemployment insurance has tapered off after its sharp rise post the financial crisis, social security, Medicaid, Veterans' benefits and other social benefits have continued to rise. The government "safety net" is already under tremendous strain as the number of "workers" supporting the system has fallen markedly over the last 30 years. With more than 78 million "baby boomers" rolling into retirement the Social Security Administration has already warned they will begin paying out more than they take in by 2017 and will be insolvent not long thereafter without real reforms to the system.

For the average person these social benefits, however, are critical to their survival as they make up more than 22.5% of real disposable personal incomes. With 1/5 of incomes dependent on government transfers it is not surprising that the economy continues to struggle as recycled tax dollars used for consumption purposes have virtually no impact on the overall economy.

Read more: http://www.streettalklive.com/daily-x-change/898-sex-money-and-largesse-the-hidden-depression.html#ixzz1uwF8FY5y


Read more: http://www.streettalklive.com/daily-x-change/898-sex-money-and-largesse-the-hidden-depression.html#ixzz1uwEobyGD

[Demeter]

84. That second graph is especially damning

A lot of those recipients would rather be working; they have filed for whatever assistance they could possibly qualify for, just to stay in the economy.

[Demeter]

62. The worm in Apple (and the US tax code)--offshoring of US Profits

http://www.angrybearblog.com/2012/05/worm-in-apple-and-us-tax-code.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+blogspot/Hzoh+%28Angry+Bear%29

Citizens for Tax Justice has focused on Apple's ability to lower its US effective tax rate by offshoring its profits to tax havens...

Since Apple’s profits stem mainly from its U.S.-created technology, most, if not all, of these untaxed profits are almost certainly United States profits that Apple has artificially shifted offshore.
If we treat all of the untaxed portion of Apple’s offshore profits as really U.S. profits that were artificially shifted to offshore tax havens, then Apple’s U.S. tax rate is much lower than Apple reports. Under this approach, Apple’s 2008-10 effective federal tax rate comes to only 13.4%, and its effective federal tax rate over the last six years (2006-11) was only 12.1%. (Likewise, Apple’s revised effective state tax rate in 2008-10 was only 3.6%, instead of the 8.0% we reported in our state corporate tax study issued last December.) CTJ report.

How does CTJ know that Apple parks its profits offshore in tax havens where they are subject to minimal taxes?

Apple says that if it told its foreign subsidiaries to pay Apple the whole $54 billion offshore amount as a dividend, then Apple would owe $17 billion in U.S. federal income taxes. That reflects a $19 billion tax at 35 percent, less a $2 billion foreign tax credit (the sum of all the foreign income taxes that Apple has ever paid). Which means, with a little more arithmetic, that about 90 percent of the $54 billion in accumulated offshore profits has never been taxed by any government.

This is a genuine problem for the US in the age of digitized information. Companies easily "sell" their most important intellectual property to offshore affiliates, for prices that are set by modeling and that fail to capture the obvious--that no price would actually be sufficient to purchase the company's valuable intellectual property away from it, since the IP is in fact the basis for the company's business. So companies offshore their profits to post-office boxes in tax haven countries and claim that the US Is no longer the source of their profits, even though the IP was invented in the US, is still used in the US and still results in most of the sales actually in the US.

There are at least two possible solutions. One would be to deny companies the ability to treat the IP they use to create their products as sold for tax purposes, and to permit only licensing for royalties to actual factories in countries that are not tax havens. Another would be to end the deferral on "active business" profits offshore. It makes no sense because it incentivizes companies to offshore as much of their business as possible.

[Demeter]

63. What Apple Pays in Taxes, and Doesn’t

http://www.nytimes.com/2012/05/04/opinion/what-apple-pays-in-taxes-and-doesnt.html

LETTERS TO NYT

[xchrom]

64. Inequality led to poorest families taking on more debt, study finds {uk}

http://www.guardian.co.uk/money/2012/may/15/poorest-families-debt-spending-study

Britain's vulnerability to financial crisis was increased by a surge of borrowing by poor households driven by rising inequality, according to a study published on Tuesday.

The report, prepared for the Resolution Foundation thinktank by the National Institute of Economic and Social Research (NIESR), found that while the whole of the UK was living beyond its means in the boom years leading up to the crash, the tendency was most pronounced among those with the lowest incomes.

It noted that the bottom 10% of households bridged the gap between a 17% rise in incomes in the decade between 1997 and 2007 and a 43% rise in spending by taking on more debt. It added that there was evidence the "dramatic decline in saving" among Britain's poorest families was "consistent with the view that increasing demand for, and supply of, credit to these households may have reduced the sustainability of their debt burden and hence increased the risk of crisis."

Middle-income families also spent more than they earned, with incomes rising by 33% and spending by 46%. But the study found that those on the lowest incomes were particularly exposed because few were owner-occupiers and so did not have an asset rising in value to offset their increased debt. The highest income households also saw their incomes grow by less than their spending, but retained a positive – although declining – savings ratio.

[Demeter]

65. Your retirement health-care tab will run $240,000 Mistakes to avoid with your retirement health cost

http://www.marketwatch.com/story/your-retirement-health-care-tab-will-run-240000-2012-05-09?siteid=nwhwk

...Even with Medicare benefits, a 65-year-old couple retiring in 2012 will spend at least $240,000 in retirement, according to the latest estimate from Fidelity Investments. That doesn’t include long-term-care costs, over-the-counter medications and most dental costs. Plus, that $240,000 estimate is based on average life expectancy for a 65-year-old—the husband living until age 82 and the wife until 85—but “average” means half of people live longer than that...

Costs add up due in part to what’s not covered by Medicare, but Medicare premiums and copays are not insignificant. Some Medicare premiums are deducted directly from your Social Security checks. Medicare Part B alone currently costs a couple about $2,400 per year. Higher-income beneficiaries pay more. (Medicare Part B covers doctors and some other services not covered by Part A, which covers hospital services. Most beneficiaries don’t pay a premium for Part A.) You’ll probably want to buy Part D, too, for prescription drugs. Then there’s your Medigap policy, to cover expenses not covered by Medicare. Medigap premiums vary widely, but a couple might easily pay about $4,000 a year. Go to Medicare.gov for more information.

“Medicare covers 80% of your doctor’s bill and a good deal of your hospital bills,” Hebeler said. “The Medigap insurance only covers the last 20% of your doctors’ bills—but the premiums are much, much higher than Medicare.”

MUCH MORE

[Demeter]

66. Unfairness to homeowners blocks recovery: Why we need to allow residential mortgage strip-downs

http://articles.marketwatch.com/2012-05-09/commentary/31627683_1_underwater-homeowners-mortgages-property-owners

Discrimination against homeowners is blocking economic recovery. Our legal system permits every kind of property owner to reduce their mortgages, with one exception; homeowners are given no way to reduce excess mortgages.

As a result, four years after the crash of real estate, homeowners are still buried in debt. This is why consumer demand has not recovered and a big reason why the recovery has been so weak.

We have had many prior cycles, in which real estate prices soared, tempting property owners to take on high mortgages, and prices then crashed, leaving owners “underwater” with real estate worth less than the debt against it.

When this happens to commercial property owners, our law gives them an escape route. They can file a Chapter 11 reorganization. While Chapter 11 filings are expensive, risky and uncertain, Chapter 11 gives commercial property owners the power of “strip down:” They can reduce the principal of their mortgages to the current fair market value of the property...

MORE

[Roland99]

68. US Futures looking at a dead cat bounce. Euro markets mixed

S&P 500 1,340.75 6.75 0.51%
DOW 12,705 50.00 0.40%
NASDAQ 2,602 16.75 0.65%

[font color="red"]FTSE 100 5,460 -5 -0.10%[/font]
CAC 40 3,075 +17 +0.54%
DAX 6,468 +16 +0.25%
[font color="red"]FTSE MIB 13,654 -7 -0.05%[/font]
IBEX 35 IDX 6,811 +2 +0.02%
[font color="red"]GlobalDow 1,823 -2 -0.12% [/font]

[Roland99]

70. Today's Economic Reports (April CPI...Empire Index) >>>>

* May Empire State reading above forecast of 9.5
* May Empire State index 17.1 vs. 6.6 in April

* April core prices rose 0.2%
* Forecasts: 0% CPI, 0.2% core prices
* April consumer prices were flat
* First time CPI flat since December

* U.S. retail sales inch up 0.1% in April
* Gasoline keeps consumer prices flat in April

(filled up today at $3.489/gal)

[Roland99]

80. Builder Sentiment >>>>

* April sentiment revised to 24 vs. 25
* May NAHB builder sentiment up 5 points to 29


sales still near all-time lows, though.

But, hey, we must surely have hit bottom and are turning that corner now!

[Po_d Mainiac]

82. Cramer called the bottom years ago n/t

[TalkingDog]

83. Does it count if the bottom lasts a few years/decades?

n/t

[Demeter]

85. Only if it stays still, and doesn't keep riding the down escalator

[xchrom]

71. Foreign investment in China falls for sixth month

http://www.bbc.co.uk/news/business-18068430


Foreign direct investment (FDI) in China fell for a sixth straight month in April.

Investment fell 0.7% from a year earlier to $8.4bn (£5.2bn), said the Ministry of Commerce in Beijing. In March investment dropped by 6.1%.

A ministry spokesman said the fall was partly because of the lacklustre global economy

Data released last week also indicated that China's economy is slowing.

[xchrom]

73. LIVE: No Deal In Greece, Euro And Markets Everywhere DIVE, Here Come Elections

http://www.businessinsider.com/live-another-big-day-in-greece-2012-5

***SNIP
UPDATE (8:58 AM ET): The anti-bailout Kammenos has announced that there is no deal on a new Greek unity government, according to Bloomberg. Venizelos has confirmed that Greece is heading for new elections.
The euro is tanking on that news, and has now fallen under $1.28. The Italian FTSE MIB has also fallen nearly 1 percent since Greek leaders came out with that news.
The failure to compromise on a government to lead Greece through the passage new austerity measures that will be necessary to secure the disbursement of the next round of international bailout highlights the political difficulties Greece is facing right now.
While a majority of Greeks still want to stay in the euro, they are no longer willing to submit to austerity measures imposed by their European counterparts.
Without a government, Greeks will have to return to the polls next month, likely on June 17. So far, it is unclear how their vote will change.


Read more: http://www.businessinsider.com/live-another-big-day-in-greece-2012-5#ixzz1uwZXtIyR

[xchrom]

74. Look How Fast The European Markets Tanked On News Of The Greek Government Failure

http://www.businessinsider.com/italy-instantly-tanks-on-news-of-greek-election-failure-2012-5

Look at that!
European markets instantly got crushed on news that Greece had failed to form a government.
This is Italy intraday down over 1.1% falling in just the last few minutes.



Read more: http://www.businessinsider.com/italy-instantly-tanks-on-news-of-greek-election-failure-2012-5#ixzz1uwaIawSS

[Roland99]

75. US Futures lose gains...running a tight range near flat.

Here Come The Greek (Re)Elections
http://www.zerohedge.com/news/here-come-greek-reelections#comment-2426461

Update: confirming what we already know:

GREEK PRESIDENCY SPOKESMAN SAYS NO DEAL ON GOVERNMENT, GOING TO ELECTIONS
GREEK CARETAKER GOVERNMENT WILL BE APPOINTED TOMORROW

Wonder why the EURUSD is suddenly sliding? Here's why:

GREEK ANTI-BAILOUT CONSERVATIVE KAMMENOS SAYS THERE IS NO DEAL ON GOVERNMENT -BBG
KAMMENOS SAYS "THEY PREFER CREDITORS TO NATIONAL SOLUTION"
KAMMENOS SAYS NEW ELECTIONS WILL BE HELD

Which means Syriza will win the June re-elections, likely with a strong majority, and what happens then is anyone's guess.

[Demeter]

86. I think Greece gets a new hero, and Europe a new leader and game plan

Angela will have to buy a moldy castle in Transylvania. And live there.

[Roland99]

76. EURUSD just blew below $1.28. USD index at 80.88 and set for 12th rise in a row

[Eugene]

77. April consumer prices flat as gasoline drops

Source: Reuters

April consumer prices flat as gasoline drops

WASHINGTON | Tue May 15, 2012 8:40am EDT

(Reuters) - Consumer prices were flat in April as households paid less for gasoline and natural gas, possibly giving the U.S. Federal Reserve more room to help economic growth should the recovery stumble.

The Labor Department said on Tuesday its Consumer Price Index was unchanged last month after rising 0.3 percent in March. April's increase was in line with economists' expectations.

Outside the volatile food and energy category, inflation pressures also appeared to be modest. Core CPI edged up 0.2 percent, matching the increase posted in March.

A number of officials at the Fed appear loath to take further action to help the economy, with some arguing the central bank needs to get ready to start removing monetary stimulus.

[font size=1]-snip-[/font]

Read more: http://www.reuters.com/article/2012/05/15/us-usa-economy-prices-idUSBRE84A0MJ20120515

[Eugene]

78. April retail sales edge up, building materials tumble

Source: Reuters

April retail sales edge up, building materials tumble

WASHINGTON | Tue May 15, 2012 8:43am EDT

(Reuters) - Sales at retailers barely rose in April as the boost from an unseasonably warm winter faded, pointing to some loss of momentum in consumer spending early in the second quarter.

Retail sales edged up 0.1 percent, held back by a decline in receipts from building materials and clothing stores, the Commerce Department said on Tuesday. That was the smallest gain since December when sales were flat.

March's sales were revised slightly down to show a 0.7 percent rise rather than the previously reported 0.8 percent increase. Economists polled by Reuters had expected retail sales to gain 0.2 percent last month.

In the 12 months to April, sales rose 6.4 percent.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

http://www.reuters.com/article/2012/05/15/us-usa-economy-retail-idUSBRE84E0MP20120515

[Demeter]

87. Notice how the fairies came out AFTER Europe closed

Maybe you can teach Uncle Ben new tricks.

[Roland99]

88. happens almost every day now

The Euro contagion gets forgotten for a bit, then reality sets in, then the post-3pm faeries do their best.

[TalkingDog]

89. Uh-oh We're goin' DOWN!!!

[Roland99]

90. AH-OOGA! AH-OOGA! AH-OOGA!

[font color="red"]Dow 12,610 -86 -0.68%
Nasdaq 2,890 -13 -0.45%
S&P 500 1,328 -10 -0.74%
GlobalDow 1,803 -22 -1.19%
Gold 1,545 -16 -.00%
Oil 93.32 -1.46 -1.54% [/font]

[Roland99]

91. and in come the 3:30pm Faeries

[TalkingDog]

92. Looks like we are closing in on a photo finish

[Roland99]

93. Markets close down about 0.5%. Oil nears $93/bbl. EURUSD near $1.27

what will Hump Day bring us?

[Fuddnik]

94. Faeries opted for early Happy Hour.

[Demeter]

95. Why the Occupy Movement Frightens the Corporate Elite

BECAUSE THE OCCUPY MOVEMENT CONSISTS OF THE PEOPLE THEY STEPPED ON, ON THE WAY UP THEIR GOLDEN LADDER. THEY WON BY PULL, NOT BY MERIT. AND WE KNOW IT.


http://truth-out.org/opinion/item/9112-why-the-occupy-movement-frightens-the-corporate-elite

In Robert E. Gamer's book "The Developing Nations" is a chapter called "Why Men Do Not Revolt." In it Gamer notes that although the oppressed often do revolt, the object of their hostility is misplaced. They vent their fury on a political puppet, someone who masks colonial power, a despised racial or ethnic group or an apostate within their own political class. The useless battles serve as an effective mask for what Gamer calls the "patron-client" networks that are responsible for the continuity of colonial oppression. The squabbles among the oppressed, the political campaigns between candidates who each are servants of colonial power, Gamer writes, absolve the actual centers of power from addressing the conditions that cause the frustrations of the people. Inequities, political disenfranchisement and injustices are never seriously addressed. "The government merely does the minimum necessary to prevent those few who are prone toward political action from organizing into politically effective groups," he writes.

Gamer and many others who study the nature of colonial rule offer the best insights into the functioning of our corporate state. We have been, like nations on the periphery of empire, colonized. We are controlled by tiny corporate entities that have no loyalty to the nation and indeed in the language of traditional patriotism are traitors. They strip us of our resources, keep us politically passive and enrich themselves at our expense. The mechanisms of control are familiar to those whom the Martinique-born French psychiatrist and writer Frantz Fanon called "the wretched of the earth," including African-Americans. The colonized are denied job security. Incomes are reduced to subsistence level. The poor are plunged into desperation. Mass movements, such as labor unions, are dismantled. The school system is degraded so only the elites have access to a superior education. Laws are written to legalize corporate plunder and abuse, as well as criminalize dissent. And the ensuing fear and instability—keenly felt this past weekend by the more than 200,000 Americans who lost their unemployment benefits—ensure political passivity by diverting all personal energy toward survival. It is an old, old game.

A change of power does not require the election of a Mitt Romney or a Barack Obama or a Democratic majority in Congress, or an attempt to reform the system or electing progressive candidates, but rather a destruction of corporate domination of the political process—Gamer's "patron-client" networks. It requires the establishment of new mechanisms of governance to distribute wealth and protect resources, to curtail corporate power, to cope with the destruction of the ecosystem and to foster the common good. But we must first recognize ourselves as colonial subjects. We must accept that we have no effective voice in the way we are governed. We must accept the hollowness of electoral politics, the futility of our political theater, and we must destroy the corporate structure itself.

The danger the corporate state faces does not come from the poor. The poor, those Karl Marx dismissed as the Lumpenproletariat, do not mount revolutions, although they join them and often become cannon fodder. The real danger to the elite comes from déclassé intellectuals, those educated middle-class men and women who are barred by a calcified system from advancement. Artists without studios or theaters, teachers without classrooms, lawyers without clients, doctors without patients and journalists without newspapers descend economically. They become, as they mingle with the underclass, a bridge between the worlds of the elite and the oppressed. And they are the dynamite that triggers revolt. This is why the Occupy movement frightens the corporate elite. What fosters revolution is not misery, but the gap between what people expect from their lives and what is offered. This is especially acute among the educated and the talented. They feel, with much justification, that they have been denied what they deserve. They set out to rectify this injustice. And the longer the injustice festers, the more radical they become.

MORE

[kickysnana]

97. Crosspost: A peek into the US military staffing

pasto76 said:

http://www.democraticunderground.com/1014121584#post4

I can tell you it's enlightenment

SECDEF gates did a hell of a job getting the priorities straight. This is some of it.

Females fought right alongside me in Iraq. They convoyed, they did security, they did everything I did except stand to pee. Opening these battalion level positions is a big thing.

I served under 4th BCT, they ran a tight AOR when I was there. attacks were down, everything was going in a positive direction. Then we all rotated and the replacement units didnt take heed of their advice, and had their own ideas how to run the area.

100% of all active duty army NCOs are being reviewed for retention this year. 50% of them will be forced out. We have an over abundance of manpower right now for the tasks at hand. We certainly dont need to force women in to fill anything.

==================
Women have been fighting for equality in the military for a long. long time. I have mixed feelings about this but I am OK with it as long as there is not a draft. Unless they do better getting people's heads back into civilized mode than they are doing it is a hell of a cost to pay for both our young men and women, but it puts the long fight into perspective.