STOCK MARKET WATCH -- Tuesday, 12 May 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 12 May 2015[font color=black][/font]

SMW for 11 May 2015

AT THE CLOSING BELL ON 11 May 2015
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Dow Jones 18,105.17 -85.94 (-0.47%)
S&P 500 2,105.33 -10.77 (-0.51%)
Nasdaq 4,993.57 -9.98 (-0.20%)


[font color=red]10 Year 2.28% +0.10 (4.59%)
30 Year 3.04% +0.10 (3.40%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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(click on link for latest updates)
Market Updates
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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
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Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
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Brad DeLong
Bonddad
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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







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

[Demeter]

1. The tornado watch has been lifted

and rain pours down from above. It's supposed to drop to freezing by dawn on Wednesday, after a week of 80F. Everything is blooming: crabs and fruit trees, lilacs, redbud; an instant Spring, and short-lived.

My tooth is not bothering me, and the virus is going away. So things could be worse.

[Demeter]

2. The End of Fannie and Freddie

http://news.morningstar.com/articlenet/article.aspx?id=697329&SR=Yahoo


Winding down Fannie and Freddie would be the biggest change to the financial system in half a century, and some banks are better positioned to succeed...Mortgage origination, servicing, and investment activities account for a significant portion of assets and revenue at U.S. banks, and residential mortgages dwarf all other consumer loan categories. Yet the mortgage market has been in limbo for more than five years, and government involvement is at an all-time high. Virtually no politicians, regulators, or market participants are happy with Fannie Mae or Freddie Mac--now operating in conservatorship--but the two organizations dominate the mortgage industry.

Several proposals for reform are in progress, but each option is an experiment that would have uncertain outcomes for the U.S. economy and homeownership. Winding down Fannie and Freddie would be the biggest change to the financial system in half a century. Within five years, we expect that banks with scale and low-cost operations--such as Wells Fargo (WFC), U.S. Bancorp (USB), and PNC Financial (PNC)--will dominate the industry at the expense of numerous middling players like SunTrust (STI) and Huntington Bancshares (HBAN).

The Mortgage Value Chain

The U.S. mortgage market is split into three parts: (1) the conforming market, made up of loans that meet the standards of government-sponsored enterprises, or GSEs, (2) the nonconforming market for loans that do not meet GSE standards, and (3) loans that are eligible for government guarantees through other entities such as the Federal Housing Administration or the Department of Veterans Affairs...While banks once originated, serviced, and financed mortgages, these roles are now usually split among several parties...

Evolution of the GSEs

The modern U.S. mortgage market dates back to the Great Depression. Five years after the crash of 1929, the Federal Housing Administration was created, expanding the availability of mortgages, increasing loan/value ratios, and extending loan repayment terms from less than 5 years to as long as 30 years. Government involvement was expanded further in 1938 with the creation of the Federal National Mortgage Association, or Fannie Mae. Fannie Mae was able to borrow from both the government and private sources to purchase mortgages from the country's savings institutions. By the late 1960s, Fannie Mae was divided into two entities--the Government National Mortgage Association (Ginnie Mae), which purchased FHA and VA loans, and Fannie Mae, which was privatized. The Federal Home Loan Mortgage Corporation (Freddie Mac) was created soon after as a competitor to Fannie Mae.

As securitization grew in the 1980s, Fannie and Freddie were heavy issuers of mortgage-backed securities, making money on the guarantee fees they charged in exchange for their assumption of credit risk. The savings and loan crisis eliminated many competitors from the market, leaving the GSEs to pick up share. Mortgage-backed securities also became more complex over time, and the GSEs became more aggressive in their business practices, using their low-cost funding and minimal capital requirements to add assets to their balance sheets.

By 2008, the GSEs did not have the capital strength required to maintain solvency as home prices fell. Fannie Mae and Freddie Mac eventually experienced charge-offs exceeding their precrisis equity balances. The companies were placed into conservatorship by their regulator, the Federal Housing Finance Agency, with the federal government providing at least $188 billion in support. Fannie and Freddie have operated under this arrangement ever since.

Proposals for Change

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed more than four years ago, while other ideas are still in the early stages of legislative discussion...The Dodd-Frank Act sought to improve mortgage origination and servicing procedures. One of the first provisions was a requirement for originators to be qualified and registered. The law also resulted in a complex "ability to repay" standard, forcing lenders to make an effort to verify that borrowers would be able to repay mortgage loans under reasonable interest rate and amortization assumptions. Furthermore, it restricted prepayment penalties, which is an important consideration for managing interest rate risk.

Lastly, Dodd-Frank created the Consumer Financial Protection Bureau, which codified the "qualified mortgage" standard in addition to creating servicing standards. Qualified mortgages must (1) have a term less than 30 years, (2) cannot have points and fees greater than 3% of the loan amount, (3) cannot have interest-only, negative amortization, or balloon features, (4) must have a debt/income ratio under 43%, and (5) must meet GSE standards or be held in the portfolio of a small bank. The bureau's servicing rules cover nine topics: periodic billing statements, interest rate adjustment notices, prompt payment crediting, force-placed insurance, error resolution, general procedures, early intervention, continuity of contact, and loss mitigation...A variety of other bills to reform the mortgage market have been working their way through Congress. Most seek to replace Fannie Mae and Freddie Mac, for example with (1) a nonprofit securitization platform that would set standards for mortgage origination and servicing activities and collect fees, (2) a standardized securitization infrastructure owned by its members--mortgage aggregators, guarantors, originators, and other market participants--with the government insuring mortgages (in exchange for fees) through an organization modeled after the Federal Deposit Insurance Corporation, or (3) expanding the role of Ginnie Mae, which would take over responsibility for the securitization process for all qualified mortgages. All of these proposals envision the private sector taking on exposure to first losses--generally around 5%–10% of credit risk--but with some form of government involvement to insure the remaining credit risk.

Winners and Losers

No matter which proposal wins out, we think the mortgage market is likely to be significantly different five years from now. Government involvement will continue, but with lower risk to taxpayers. This will be accomplished by setting conservative standards for government-backed loans and increasing the fees paid for guarantees, whether provided by the government or in the private market. We also expect greater standardization of mortgage-related operations, leading to an increasingly commodified market. In our view, banks with scale, high-quality underwriting, funding cost advantages, revenue-generation ability, and operating efficiency will be best positioned to succeed in this environment.

Massive scale is Wells Fargo's primary advantage in the mortgage business. The company maintains a leading market share in both origination and servicing and is also a top deposit gatherer in the vast majority of markets in which it operates. Wells Fargo has only expanded its scale advantage in recent years as competitors were forced to retreat. JPMorgan Chase (JPM) is in second place, also expanding its presence in the wake of the financial crisis. These two banks now control more than 25% of origination and servicing activities in the country. The next tier includes Bank of America (BAC), which has reduced its activity in mortgages in recent years, along with superregionals like U.S. Bancorp and PNC Financial. We think it will be difficult for smaller banks to match the scale advantages of these originators as mortgage products become even more standardized. Scale alone does not lead to value creation, though. Countrywide was a huge originator, yet its failure to control underwriting led to disastrous outcomes for both its shareholders and those of Bank of America when it acquired Countrywide. Wells Fargo has often touted the high quality of its servicing portfolio, and indeed the bank suffered far less from repurchases and delinquencies than many of its peers. Other traditionally conservative firms are also well positioned, in our view. U.S. Bancorp has demonstrated superior mortgage underwriting, as have other regionals such as Regions Financial (RF) and SunTrust.

The ability to make loans at a low cost is another area in which mortgage banks can distinguish themselves. Wells Fargo enjoys an extremely low cost of funds, along with M&T Bank (MTB), PNC, and Huntington Bancshares. Bank of America, despite its massive deposit base, is not a standout in the funding cost arena and will need to make up significant ground to match Wells Fargo's cost advantage.

The falling profitability of mortgages makes the ability to cross-sell and generate additional revenue from customers even more important. Here again, Wells Fargo is outstanding, producing more revenue per dollar of assets than nearly every other bank we cover. We think this will not only make each mortgage customer more profitable for Wells but also may allow it to win mortgage business from customers who come to the bank for other services. In this area, regionals like Huntington and Regions Financial fall behind the best-performing banks.

Finally, operating efficiency is critical. This is the only area where Wells Fargo demonstrated subpar performance in 2013; however, its sales-driven business model also produces more revenue. JPMorgan, though middling in other areas, has actually performed very well in keeping expenses low in relation to assets.

[Demeter]

3. Wall Street Vampires PAUL KRUGMAN

http://www.nytimes.com/2015/05/11/opinion/paul-krugman-wall-street-vampires.html

Last year the vampires of finance bought themselves a Congress. I know it’s not nice to call them that, but I have my reasons, which I’ll explain in a bit. For now, however, let’s just note that these days Wall Street, which used to split its support between the parties, overwhelmingly favors the G.O.P. And the Republicans who came to power this year are returning the favor by trying to kill Dodd-Frank, the financial reform enacted in 2010.

And why must Dodd-Frank die? Because it’s working.

This statement may surprise progressives who believe that nothing significant has been done to rein in runaway bankers. And it’s true both that reform fell well short of what we really should have done and that it hasn’t yielded obvious, measurable triumphs like the gains in insurance thanks to Obamacare. But Wall Street hates reform for a reason, and a closer look shows why. For one thing, the Consumer Financial Protection Bureau — the brainchild of Senator Elizabeth Warren — is, by all accounts, having a major chilling effect on abusive lending practices. And early indications are that enhanced regulation of financial derivatives — which played a major role in the 2008 crisis — is having similar effects, increasing transparency and reducing the profits of middlemen. What about the problem of financial industry structure, sometimes oversimplified with the phrase “too big to fail”? There, too, Dodd-Frank seems to be yielding real results, in fact, more than many supporters expected.

As I’ve just suggested, too big to fail doesn’t quite get at the problem here. What was really lethal was the interaction between size and complexity. Financial institutions had become chimeras: part bank, part hedge fund, part insurance company, and so on. This complexity let them evade regulation, yet be rescued from the consequences when their bets went bad. And bankers’ ability to have it both ways helped set America up for disaster. Dodd-Frank addressed this problem by letting regulators subject “systemically important” financial institutions to extra regulation, and seize control of such institutions at times of crisis, as opposed to simply bailing them out. And it required that financial institutions in general put up more capital, reducing both their incentive to take excessive risks and the chance that risk-taking would lead to bankruptcy.

All of this seems to be working: “Shadow banking,” which created bank-type risks while evading bank-type regulation, is in retreat. You can see this in cases like that of General Electric, a manufacturing firm that turned itself into a financial wheeler-dealer, but is now trying to return to its roots. You can also see it in the overall numbers, where conventional banking — which is to say, banking subject to relatively strong regulation — has made a comeback. Evading the rules, it seems, isn’t as appealing as it used to be.

But the vampires are fighting back.

O.K., why do I call them that? Not because they drain the economy of its lifeblood, although they do: there’s a lot of evidence that oversize, overpaid financial industries — like ours — hurt economic growth and stability. Even the International Monetary Fund agrees. But what really makes the word apt in this context is that the enemies of reform can’t withstand sunlight. Open defenses of Wall Street’s right to go back to its old ways are hard to find. When right-wing think tanks do try to claim that regulation is a bad thing that will hurt the economy, their hearts don’t seem to be in it. For example, the latest such “study,” from the American Action Forum, runs to all of four pages, and even its author, the economist Douglas Holtz-Eakin, sounds embarrassed about his work. What you mostly get, instead, is slavery-is-freedom claims that reform actually empowers the bad guys: for example, that regulating too-big-and-complex-to-fail institutions is somehow doing wheeler-dealers a favor, claims belied by the desperate efforts of such institutions to avoid the “systemically important” designation. The point is that almost nobody wants to be seen as a bought and paid-for servant of the financial industry, least of all those who really are exactly that.

And this in turn means that so far, at least, the vampires are getting a lot less than they expected for their money. Republicans would love to undo Dodd-Frank, but they are, rightly, afraid of the glare of publicity that defenders of reform like Senator Warren — who inspires a remarkable amount of fear in the unrighteous — would shine on their efforts. Does this mean that all is well on the financial front? Of course not. Dodd-Frank is much better than nothing, but far from being all we need. And the vampires are still lurking in their coffins, waiting to strike again. But things could be worse.

[Demeter]

4. Google Acknowledges 11 Accidents With Its Self-Driving Cars

http://detroit.cbslocal.com/2015/05/11/google-acknowledges-11-accidents-with-its-self-driving-cars/

Google Inc. revealed Monday that its self-driving cars have been in 11 minor traffic accidents since it began experimenting with the technology six years ago.

The company released the number after The Associated Press reported that Google had notified California of three collisions involving its self-driving cars since September, when reporting all accidents became a legal requirement as part of the permits for the tests on public roads.

The leader of Google’s self-driving car project wrote in a web post all the accidents have been minor – “light damage, no injuries” -and happened over 1.7 million miles in which either the car or a person required to be behind the wheel was driving.

“Not once was the self-driving car the cause of the accident,” wrote Google’s Chris Urmson.

“Cause” is a key word: Like Delphi Automotive, a parts supplier which suffered an accident in October with one of its two test cars, Google says it was not at fault.

Delphi sent AP an accident report showing its car was hit, but Google has not made public any records, so both enthusiasts and critics of the emerging technology have only the company’s word on what happened. The California Department of Motor Vehicles said it could not release details from accident reports.

This lack of transparency troubles critics who want the public to be able to monitor the rollout of a technology that its own developers acknowledge remains imperfect...

MORE--SURPRISE, SURPRISE

[tclambert]

11. Do not worry about technology, foolish human. Nothing can go wrnog.

[Demeter]

13. Except for that typing error in your post headline

WestWorld? I think we are past that point, already.

[tclambert]

17. Intentional.

C'mon, when have you ever known me to make a serious post?

Although the WestWorld reference is semi-serious. Whenever we think technology is infallible, something melts down. I gave up on humans ever driving flying cars. (I mean, have you seen how they drive on two-dimensional roads? Add that third dimension and lousy braking capability and we'd all have to live in underground bunkers to avoid the debris.) For a short time, I thought maybe computers could drive flying cars for us. Then my PC locked up. During the few minutes it took to re-boot, I wondered how much trouble my flying car would get into during such a lapse. And then there are hackers . . .

Oh, and HBO has plans to do a series based on WestWorld, with Ed Harris as the Man in Black.

[Demeter]

5. Fed said to have emergency plan to intervene if U.S. defaulted on debt

PRIVATIZING THE GOVERNMENT AT LAST, FOREVER

http://www.reuters.com/article/2015/05/11/us-usa-debt-idUSKBN0NW1YS20150511?feedType=RSS&feedName=businessNews

The Federal Reserve drew up extensive plans for handling a U.S. debt default that included scheduling deferred payments and lending cash to investors, according to a lawmaker who cited Fed documents.

America courted disaster in 2011 and 2013 when political fights over the national debt nearly left the federal government unable to pay its bills. Analysts and officials warned that missing payments could lead to economic calamity, and details have only slowly emerged over how financial officials braced for the unthinkable. In a June 2014 letter to Treasury Secretary Jack Lew seen by Reuters on Monday, Republican Representative Jeb Hensarling of Texas said his staff had reviewed the Fed's unclassified plans for how to handle a default. (bit.ly/1GZDmKo)

The plans included scheduling new payment dates for defaulted securities, Hensarling said in the letter which was also signed by Republican Representative Patrick McHenry of North Carolina. The New York Fed, which carries out the will of the Fed in financial markets, would also conduct "business as usual" with regard to accepting Treasury securities as collateral, according to the letter. The New York Fed declined to comment.

The plans continue to be relevant to investors because debt ceiling debates have become a perennial danger from Washington. The Treasury is currently scraping up against an $18.1 trillion borrowing cap, and the Congressional Budget Office estimates the government could struggle to pay bills by October or November if Congress and the White House do not agree to lift the cap. Debt defaults in other countries have triggered financial crises. In an effort to try to maintain calm on Wall Street, the U.S. central bank could lend investors money after taking Treasuries as collateral under so-called repo transactions, Hensarling said. The Fed also proposed "compensatory payments" for investors who were paid late.

In the letter, Hensarling said the documents also showed that the Treasury had the ability to pick which obligations it can pay, which would allow it to favor bond investors over its many other obligations. The Treasury has maintained that picking which bills to pay would be experimental and dangerous. Earlier on Monday, Hensarling subpoenaed documents from the Treasury and New York Fed regarding debt ceiling contingency plans. The Treasury had no comment on Hensarling's letter, but an official at the department said it was willing to work with the committee to "get it the information it needs."

[Demeter]

6. Robert Reich: Step No. 1 to Fixing the Economy is a $15 Minimum Wage -- Now

http://www.alternet.org/robert-reich-step-no-1-fixing-economy-15-minimum-wage-now-video?akid=13091.227380.tBf96E&rd=1&src=newsletter1036146&t=6

[Demeter]

7. Inside the Billion-Dollar Brain: 3 Attitudes That Explain Their Selfish Behavior By Paul Buchheit

Why the rich don't care about jobs for the rest of us. Many of us wonder what possible reason could exist for the failure to invest in American infrastructure, to create millions of jobs as a result, and to help everyone in the long run. Analysis reveals personality traits and beliefs and misconceptions that might account for such behavior. Here's a look inside the billion-dollar brain:

1. It's All About Me Several studies by Paul Piff and his colleagues have revealed that upper-class individuals tend to be narcissistic, with a clear sense of entitlement. Worse yet, they believe their talents and attributes - genius, even - have earned them a rightful position of status over everyone else. Scarier yet, according to one study, the American sense of entitlement has been growing over the past 30 years, despite the fact that most of us have lost ground to the super-rich. And most disturbing is that 'upper-class' individuals tend to behave more unethically than average citizens. This "all about me" attitude means that the wealthy don’t have to depend on others, and that they have less need to understand the feelings of others. This directly impacts our daily lives. The greater the concentration of wealth, the less a society invests in infrastructure. Our investment in infrastructure as a percent of GDP dropped by 60 percent from 1968 to 2011. As the super-rich take their helicopters to and from work, they're having multi-million-dollarbunkers built under their houses to sustain them when the middle-class revolution comes.
   
   
2. It's All About Lazy People Who Refuse to Work Congressmen and CEOs don't normally see the people affected by their actions. This leads to a resentment of the poor, and imagined abuses in the minds of people like Paul Ryan and Scott Walker, both of whom likened the safety net to a "hammock," and Texas Republican Louie Gohmert, who decried the purchase of crab legs by people on a $5-a-day food stamp budget. John Boehner daydreamed: "This idea that has been born...that, you know, 'I really don't have to work...I think I'd rather just sit around.'" Almost all healthy adult Americans, of course, want to work. But in 2011 Senate Republicans killed a proposed $447 billion jobs bill that would have added about two million jobs to the economy. Members of Congress filibustered Nancy Pelosi's "Prevention of Outsourcing Act," even as a million jobs were being outsourced, and they temporarily blocked the "Small Business Jobs Act." In April, 2013 only one member of Congress bothered to show up for a hearing on unemployment. When asked what he would do to bring jobs to Kentucky, Mitch McConnell responded, "That is not my job. It is the primary responsibility of the state Commerce Cabinet." The lazy people who refuse to work are, in reality, the tax avoiders who are getting $2.2 trillion without having to work for it. The Safety Net costs us $370 Billion. But Tax Avoidance costs us $2,200 Billion (tax expenditures, tax underpayments, tax havens, and corporate nonpayment). That's $2.2 trillion, six times more than the safety net, most of it benefiting the wealthiest Americans.
   
3. It's All About Waiting for the Free Market to Work Its Magic Conservative analyst Michael Barone said, "Markets work. But sometimes they take time." Thirty-five years, so far. Beneficiaries of low taxes and deregulation desperately want to believe that "trickle-down" works, or at least to convince middle America that it works. They want to believe, against all logic, that lower taxes mean more tax revenue. All this in the face of mountains of data disproving their supply-side ideas. As far back as1984 the Treasury Department concluded that most tax cuts lose revenue. More recent studies by Saez et al. and by the Economic Policy Institute found no connection between tax rates and economic growth, and Piketty, Saez, and Stantcheva determined that the optimal tax rate could be over 80 percent. There is also hard evidence that cutting taxes on the rich fails to stimulate job creation, and that raising taxes on the rich has the opposite, beneficial effect. The facts come from Kansas and Minnesota. Despite early optimism by trickle-down adherents, tax cuts in Kansas have been disastrous, leading to revenue losses, cutbacks in education and health care, and sluggish job growth. In Minnesota, on the other hand, tax increases on the rich have led to higher wages, low unemployment, and rapid business growth.

The rich don't care about creating jobs. They don't care about Robert Reich's insight about more and more jobs being lost to smart technologies, leading to a society in which "those who create or invest in blockbuster ideas will earn unprecedented sums and returns," leaving much less for the rest of us. The solution, says Chris Hedges, is to take on corporate power by instituting "a nationwide public works program, especially for those under the age of 25, to create conditions for full employment." Every American, of course, deserves the opportunity to earn a living wage. It will take a revolution against narcissism to make it happen.

Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at [e-mail].

http://www.alternet.org/inside-billion-dollar-brain-3-attitudes-explain-their-selfish-behavior?akid=13091.227380.tBf96E&rd=1&src=newsletter1036146&t=2

[Demeter]

8. Soros says ready to invest $1 billion in Ukraine if West helps March 30, 2015

THINK SOROS HAS CHANGED HIS MIND SINCE MARCH 30?

http://news.yahoo.com/soros-says-ready-invest-1-billion-ukraine-west-063855795--sector.html

George Soros is ready to invest $1 billion in Ukraine if Western countries help private investment there, and sees a 1 in 3 chance Greece will leave the euro, the billionaire financier told Austrian newspaper Der Standard. Soros has previously urged the West to step up aid to Ukraine, outlining steps toward a $50 billion financing package that he said should be viewed as a bulwark against an increasingly aggressive Russia.

"The West can help Ukraine by increasing attractiveness for investors. A political risk insurance is necessary. This could take the form of mezzanine financing at EU interest rates - very close to zero," he said in an interview published on Monday.

"I stand ready. There are concrete investment ideas, for example in agriculture and infrastructure projects. I would put in $1 billion. This must generate a profit. My foundation would benefit from this ... Private engagement needs strong political leadership."

The Hungarian-born hedge fund magnate, who made his name betting against the pound in 1992, also put the chance of Greece leaving the euro zone at a third. Last week he put it at 50:50.

Michael Vachon, spokesman for Soros, said on Monday in a statement: "Soros said he would consider investments in Ukraine if Western leaders demonstrated that they were prepared to 'do whatever it takes' to save Ukraine, including providing adequate budgetary support and political risk insurance.

"Under those conditions, Soros said he would review investments in the energy, agriculture and information technology sectors."

[Demeter]

9. Ukraine lost five Indian airplanes MARCH 29

http://fortruss.blogspot.co.uk/2015/03/ukraine-lost-five-indian-airplanes.html


Five Indian transport airplanes from 40 shipped to Ukraine for modernization under the contract signed in 2009 have disappeared, according to the publication Defense News with reference to the official from Indian Air force. According to the agreement from 2009, which was signed by India and UkrSpetsExport about modernization and repair of 104 transport aircraft An-32, purchased at Ukrainian "Antonov", 40 airplanes were to be upgraded on the territory of Ukraine, and 64 others - at the repair facilities of the Indian air force in Kanpur using technology provided by Ukraine. The total value of the contract is $400 million, reports RIA "Novosti".

However, the Defense Ministry of India reported that out of forty planes Ukraine returned only 35, the other five had disappeared without a trace. After the appeal of Indian military officials to the Embassy of Ukraine, Ukrainian diplomats said that this issue should be solved by the "Antonov", and the state can not help.

The contract is valid until 2017, however, because of fighting in the East of Ukraine, the implementation became difficult, as if they are bombing Kiev, instead of Donetsk.

[Demeter]

10. 4 Ways Corporations Owe Us, Big Time—And How They Can Pay Us Back By Paul Buchheit

Corporate greed has reached its limit. It does not have to be this way.

http://www.informationclearinghouse.info/article41403.htm

The distorted belief that wealthy individuals and corporations are job creators has led to sizeable business subsidies and tax breaks. The biggest giveaway is often overlooked: corporations use our nation's plentiful resources, largely at no cost, to build their profits. There are several factual and well-established reasons why corporations owe a great debt to the nation that has made them rich.

Our Tax Money Pays for Much of the Research

The majority (57 percent) of basic research, the essential startup work for products that don't yet yield profits, is paid for by our tax dollars. When ALL forms of research are included -- basic, applied, and developmental -- approximately 30 percentcomes from public money. In 2009 universities were still receiving ten times more science & engineering funding from government than from industry. All of our technology, securities trading, medicine, infrastructure, and national security have their roots in public research and development. For a pageful of details look here. Even the business-minded The Economist, with reference to Mariana Mazzucato's book The Entrepreneurial State, admits that "Ms Mazzucato is right to argue that the state has played a central role in producing game-changing breakthroughs, and that its contribution to the success of technology-based businesses should not be underestimated."

Fewer and Fewer People are Reaping the Benefits of Our National Productivity

Corporate profits are at their highest level in 85 years, doubling in the last ten years, and growing by 171 percent in the first half of the Obama presidency. Despite a continuing growth in productivity in the last 35 years, wages have fallen dramatically, and technology has begun to diminish the need for warehouse workers, bank tellers, cashiers, travel agents, and a host of other middle-income positions. The driverless car and robot delivery devices are on the horizon. The Economist opines again, this time in worker-unfriendly terms: "Robots don’t complain, or demand higher wages, or kill themselves." Robert Reich notes that much of the photo processing once done by Kodak with 145,000 employees is now done by Instagram with 13 employees. The messaging application WhatsApp, recently purchased by Facebook, has 55 employees serving 450 million customers.

Profit-taking has another insidious and predatory side to it. Big firms use intellectual property law (another gift from the taxpayers) to snatch up patents on any new money-making products, no matter how much government- and university-funded research went into it. An example is genetically engineered insulin, which due to patent protection cannot be made generically, and as a result can cost a patient up to $5,000 a year, about ten times more than a patent-expired version. Another example, as detailed by Sam Pizzigati, is the cost of new cancer drugs, which can reach $120,000 per year for many patients. Following the lead of the pharmaceutical industry, Big Tech is now getting into the act. By 2011 Apple and Google were spending more on patent purchases and patent lawsuits than on research and development.

Corporations Use Our Resources but Avoid Their Taxes

Stunningly, over half of U.S. corporate foreign profits are now being held in tax havens, double the share of just twenty years ago. Yet for some of our largest corporations, according to the Wall Street Journal, over 75 percent of the cash owned by their foreign subsidiaries remains in U.S. banks, "held in U.S. dollars or parked in U.S. government and corporate securities."

The nature and degree of tax avoidance by some of our most resource-demanding companies is nearly beyond belief. Apple, which still does most of its product and research development in the United States, moved $30 billion in profits to an Irish subsidiary with no employees. Google, whose business is based on the Internet, the Digital Library Initiative, and the geographical database of the U.S. Census Bureau, has gained recognition as one of the world's biggest tax avoiders. Walgreens (which later backed down), Burger King, and Medtronic are the biggest names in the so-called inversions that allow companies to desert the country that made them successful. Microsoft and Pfizer owe a combined $50 billion in taxes on profits being held overseas. Much-admired Warren Buffett heads a company (Berkshire Hathaway) that made a $28 billion profit last year, yet claimed a $395 million tax refund.

Corporations Have Stopped Investing in America

An Apple executive recently said, "The U.S. has stopped producing people with the skills we need."

But corporations are spending most of their profits on themselves, rather than on job-creating research and innovation. An incredible 95 percent of S&P 500 profits were spent on investor-enriching stock buybacks and dividend payouts last year. In 1981, major corporations were spending less than 3 percent of their combined net income on buybacks. According to one estimate, public U.S. corporations have spent $6.9 trillion on stock buybacks in the past ten years, about six times more than the total student loan debt of $1.16 trillion. Buybacks are not only a reflection of corporate greed, but possibly also of criminal behavior. Buying back stock was considered a form of illegal stock manipulation until the Wall-Street-connected chairman of the SEC made it 'legal' during the Reagan administration.

A Progressive Solution: Dividends for All

In his book, With Liberty and Dividends For All, Peter Barnes argues for a system of dividends to all Americans for our co-owned national wealth. Because corporations have used our resources -- research, infrastructure, environment, educational and legal systems -- to develop technologies that are gradually reducing the need for human involvement, and because all of us have contributed to our national productivity, either directly or through our parents and grandparents, we all deserve to benefit.

As Barnes states, "The sum of wealth created by nature, our ancestors, and our economy as a whole is what I here call co-owned wealth. Some, including myself, have called it shared wealth, the commons, or common wealth. Whatever we call it, it's the goose that lays almost all the eggs of private wealth."

Precedent exists in the successful and widely popular Alaska Permanent Fund. With a nationwide version of this Fund, all of us -- rich and poor alike -- would receive a share of our co-owned wealth, perhaps up to $5,000 per year, according to Barnes. The revenue would come from a carbon tax and/or a financial speculation tax and/or a redirection of corporate profits away from executive-enriching stock buybacks. The dividend concept is fair, manageable, and based on precedent. It's also good business. The shrinking middle class will have money to spend, and the money they spend will end up as a new source of income for the profit-hungry corporate world.


Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at [e-mail].

[Demeter]

12. It's going to be a good day for washing windows (finally)

cloudy and 50's and NO RAIN for once.

So, I have my afternoon planned. Sorry about yesterday's "drought" in the posting. There's not much of interest coming out of my usual sources, and the old newsletter file is stale and surpassed by recent events. And I had some real life to deal with...or maybe, it should be called unreal.

[Demeter]

14. European Banks vs. Greek Labour MICHAEL HUDSON INTERVIEW

[mother earth]

19. This is a must listen to interview. Hudson nails it. F**k the troika, evil banksters...predatory

thugs, SCUM. If they think they will sacrifice Greece to avoid the shake up with Podemos, etc. ....they are foolish & demented. This storm is going to grow, the working class has been squeezed to death & there is no alternative but change, furthering austerity is sick & evil & it simply will not be tolerated.

I'm wondering if they aren't looking for a revolution, Marie Antoinette style...didn't end well for her.

They (Syriza) are not just the hope of Europe, they are the hope of the world.

[Demeter]

15. Fire Sales" Could Trigger Another Financial Crisis: Still Broken 5 Years Later By Mike Whitney

FEBRUARY 22, 2014

http://www.informationclearinghouse.info/article37715.htm

“The repo market wasn’t just a part of the meltdown. It was the meltdown.”

– David Weidner, Wall Street Journal, May 29, 2013.

Ask your average guy-on-the-street ‘what caused the financial crisis’, and you’ll either get a blank stare followed by a shrug of the shoulders or a brusque, three-word answer: “The housing bubble”. Even people who follow the news closely are usually sketchy on the details. They might add something about subprime mortgages or Lehman Brothers, but not much more than that. Very few people seem to know that the crisis began in a shadowy part of the financial system called repo, which is short for repurchase agreement. In 2008, repo was ground zero, the epicenter of the meltdown. That’s where the bank run took place that froze the credit markets and sent the financial system into freefall. Unfortunately, nothing has been done to fix the problems in repo, which means that we’re just as vulnerable today as we were five (NOW 7) years ago when Lehman imploded and all hell broke loose. Repo is a critical part of today’s financial architecture. It allows the banks to fund their long-term securities cheaply while giving lenders, like money markets, a place where they can park their money overnight and get a small return. The entire repo market is roughly $4.5 trillion, although the more volatile tri-party repo market is around $1.6 trillion. (Note: That’s $1.6 trillion that’s rolled over every day.)

Repo works a lot like a pawn shop. You bring your rusty bike and your imitation Van Gogh “Starry Night” to Rosie’s E-Z-Pawn, and the guy with the gold earring behind the counter gives you 15 bucks in return. That’s how repo works too, the only difference is that repo is a loan. The banks post collateral –mostly pools of mortgages (MBS) or US Treasuries– and get overnight loans from a cash-heavy lenders, like money markets, insurance companies or pension funds. Borrowers repay the loan with interest added to the original sum. The problem that arose in 2008, and that will likely crop up in the future, was that the value of the underlying collateral (subprime MBS) was steadily downgraded forcing the banks to take steep haircuts. (which means they couldn’t borrow as much on their collateral) The bigger the haircuts, the less money the banks had to fund their securities which forced them to sell assets to make up the difference. When banks and other financial institutions deleverage quickly, asset prices plunge and capital is wiped out forcing the Fed to step in and backstop the system to prevent a full-blown meltdown. And that’s exactly what the Fed did in 2008. It slashed rates to zero, set up myriad lending facilities and provided unlimited backing for both regulated and unregulated financial institutions. It was the biggest financial rescue operation of all time and it cost somewhere in the neighborhood of 12 to 13 trillion dollars in loans and other guarantees. Under the provisions of the Dodd Frank financial reforms, the Fed is forbidden from carrying out a similar bailout in the future, although you can bet-your-bippy that Yellen and Co. will bend the rules if there’s another catastrophe.

Fixing repo is not a left-right issue. Among the people who follow these things, there is general agreement about what needs to be done to make the system safer. Even New York Fed President William C. Dudley –who’s no “liberal” by any stretch–admits that the system is broken. In October, 2013, at a bank conference Dudley opined, “Current reforms do not address the risk that a dealer’s loss of access to tri-party repo funding could precipitate destabilizing asset fire sales, whether by the dealer itself, or by the dealer’s creditors following a default.” In other words, the chances of another 5-alarm fire sometime in the future are pretty darn good. Dudley’s description of what happened during the acute phase of the crisis is also worth reviewing. He said:

“Higher margins on repo and increased collateral calls due to credit ratings downgrades reduced the quantity of assets that could be financed in repo markets and elsewhere, prompting further asset sales. As wholesale investors started to exit, this set in motion a bad dynamic—a fire sale of assets that cut into earnings and capital. This just increased the incentives of investors to run and for banks to hoard liquidity against the risk that they could themselves face a run. This downward spiral of fire sales and funding runs was a key feature of the financial crisis …”

And, that, dear reader, is a first-rate account of what happened in 2008 when panic gripped the markets and the dominoes started to tumble. Former Fed chairman Ben Bernanke’s version of events is also worth a look if only because he describes the crash in terms of what it really was, a modern day bank run. Here’s what he said:

“What was different about this crisis was that the institutional structure was different. It wasn’t banks and depositors. It was broker-dealers and repo markets. It was money market funds and commercial paper.”

While most analysts agree about the origins of the crisis and the type of changes that are needed to avoid a repeat, the banks have blocked all attempts at reforming the system.

But, why?

It’s because the reforms would cost the banks more money, and they don’t want that. They’d rather put the entire system at risk, then cough up a little more dough to make repo safer. Here’s how the New York Fed summed it up in a paper titled “Shadow Bank Monitoring”:

“One clear motivation for intermediation outside of the traditional banking system is for private actors to evade regulation and taxes. … Regulation typically forces private actors to do something which they would otherwise not do: pay taxes to the official sector, disclose additional information to investors, or hold more capital against financial exposures. Financial activity which has been re-structured to avoid taxes, disclosure, and/or capital requirements, is referred to as arbitrage activity.” (“Shadow Bank Monitoring”, Federal Reserve Bank of New York Staff Reports, September, 2013)

That says it all, doesn’t it? They don’t want to pay taxes, they don’t want to hold capital against their collateral, and they want to continue to run their businesses in the shadows so nosy shareholders and regulators can’t see what the heck they’re up to. So, what else is new? The banks are running a crooked, black box operation, and they aim to keep it that way come hell or high water. The banks can’t be reasoned with, that’s obvious from the position they’ve taken. They’ve put profits above everything, even the viability of the system. How can you reason with people like that? Just get a load of what the New York Fed said on the matter:

“Intermediaries create liquidity in the shadow banking system by levering up the collateral value of their assets. However, the liquidity creation comes at the cost of financial fragility as fluctuations in uncertainty cause a flight to quality from shadow liabilities to safe assets. The collapse of shadow banking liquidity has real effects via the pricing of credit and generates prolonged slumps after adverse shocks.”

This sounds more complicated than it is. What the Fed is saying is: “Hey, guys, you’re creating all this fake money (credit) by loading up on leverage (borrowing), and that’s pushing us closer to another crisis. Once the money markets figure out that all those nifty subprime CDOs you’ve been trading for overnight loans aren’t worth Jack-crap, then they’re going to cut you off at the knees and move into risk-free assets like US Treasuries. So why don’t you wise-the-hell-up, and start playing by the rules like everyone else so we don’t have to deal with another big, freaking meltdown. Okay?” (Of course, I’m paraphrasing here.)

The only way to fix repo is by backstopping collateral with more capital, forcing all trading onto central clearing platforms (where regulators can see what’s going on), and regulating shadow banks like traditional, commercial banks. The editors at Bloomberg said it best nearly a year ago. They said: ” If an entity engages in banking activity… it must register as a bank, with all the backstops and capital requirements that entails.”

Right on.

If we’re not going to nationalize the banks and turn them into public utilities, which is what we should have done in 2009 when we had the chance, then we need to put safeguards in place to keep them from crashing the system every few years. Regulate, Regulate, Regulate. That’s the ticket. Stricter regulations could have prevented the last crisis, and stricter regulations can prevent the next one. It’s just a matter of finding the political will to get the job done.

Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [e-mail].

[DemReadingDU]

16. Verizon To Buy AOL

5/12/15 Verizon To Buy AOL Marking Another Tech Bubble Top

The last time AOL was involved in a mega merger was January 2000, when AOL acquired Time Warner for $182 billion in what was the mega deal of the last tech bubble, creating a $350 billion behemoth. Fast forward 15 years and here is AOL again in yet another period-defining if far, far smaller transaction once again, when moments ago Verizon announced that it would acquire AOL for $50/share, a deal value of $4 .4billion. And with that the golden age of digital (and in many cases robotic) content, has now been top-ticked.

click to read press release...
http://www.zerohedge.com/news/2015-05-12/here-we-go-again-verizon-buy-aol

[Demeter]

18. Well, it Would Have Been a Good Day to Wash Windows

If it weren't blowing 20mph winds with gusts above that. I'm afraid to climb out on the garage roof in that kind of wind, not to mention what it would do to the washing part.

Sigh. So I cooked, instead.