STOCK MARKET WATCH -- Wednesday, 12 August 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Wednesday, 12 August 2015[font color=black][/font]

SMW for 11 August 2015

AT THE CLOSING BELL ON 11 August 2015
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Dow Jones 17,402.84 -212.33 (-1.21%)
S&P 500 2,084.07 -20.11 (-0.96%)
Nasdaq 5,036.79 -65.01 (-1.27%)


[font color=green]10 Year 2.14% -0.02 (-0.93%)
30 Year 2.81% -0.04 (-1.40%) [font color=black]


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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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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
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[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
08/03/15 Former City (London) trader Tom Hayes found guilty of rigging global Libor interest rates. Each fo eight counts carries up to 10 yr. sentence.







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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. Frack Now, Pay Later: A New Era In U.S. Oil?

http://www.nakedcapitalism.com/2015/08/frack-now-pay-later-a-new-era-in-u-s-oil.html

Yves here. This is a sign of real desperation. From the Reuters story linked to in this post:

At Halliburton, some of the capital to finance the sales will come from $500 million in backing from asset manager BlackRock, part of a wave of alternative finance pouring into the energy industry that one Houston lawyer said on Thursday allows companies to “keep the engine running.”

When its second-quarter net profit tumbled by more than half a billion dollars to just $54 million, Halliburton’s Chief Executive Dave Lesar told analysts the company needed to find new revenue. The BlackRock money, he said, would allow Halliburton to “look at additional ways of doing business with our customers, different business models, push beyond where we have been today.”

So Halliburton is using its presumably better balance sheet to borrow from BlackRock and then extend credit to frackers. And remember, most fracking companies are already levered. Where exactly would the Halliburton loans sit in the capital structure? What happens in the event of bankruptcy (as in what is their preference in liquidation)?

By Nick Cunningham, a Vermont-based writer on energy and environmental issues. You can follow him on twitter at @nickcunningham1. Originally published at OilPrice

With oil prices now dipping close to six-year lows, the energy sector is getting thumped across the board. The double-dip will likely cause fresh cuts to spending, drilling, and staff. Last week, Baker Hughes reported a surprise uptick in the number of rigs drilling in North America, which jumped by 10 to 884 for the week ending on August 7. Oil prices fell even further on the news, with both WTI and Brent dropping by 2 percent to close out the week. Even though the additional rigs are a rounding error when compared to the 1,000 rigs that disappeared over the past year, the markets took the data as evidence that the supply overhang may not balance out in the near term, as new drilling could be taking place before oil production has appreciably declined.

Over the course of the last year, the companies that arguably suffered the worst were those whose business relies on drilling activity. Oilfield service companies offer rigs, drilling completions, equipment, and other services that actually allow drilling to happen. When drilling slows down, their business dries up. They bear the brunt of a market downturn. The unprecedented crash in the rig count North America, notwithstanding minor gains in recent weeks, inflicted damage most acutely on these oilfield service companies. With exploration facing a prolonged period of lower activity, a few service companies have come up with a novel, if desperate, approach to keep business alive. Schlumberger and Halliburton, the two largest service firms, have offered operators the option to “frack now and pay later.” According to Reuters, the new offer amounts to the service firms acting as lenders to oil companies.

Halliburton saw its profit for the second quarter fall by more than a half billion dollars from a year before, and backed by $500 million in cash from asset manager BlackRock, Halliburton is looking “at additional ways of doing business with our customers,” Halliburton’s CEO Dave Lesar said recently. The “frack now pay later” model that Reuters described consists of companies like Halliburton or Schlumberger covering the cost of drilling a well in exchange for a portion of the well’s production. That is not always a preferred option for operators, who may not want to give up a share in the project and would simply opt for a conventional service contract. However, for companies that are running low on cash and may start to see their credit lines shrink, paying later for drilling today sounds like a pretty good option.

“It’s just a reflection of do they want to capture more of the value themselves or would they like to outsource all the risk and potentially much more of the upside to us?” Schlumberger Chief Executive Paal Kibsgaard said when reporting second quarter results in July.

Interestingly, much of the focus is on “refracking,” in which wells that have already been fracked once are simply fracked again. Refracking old wells is less expensive than fracking new ones, and while the volume of recoverable oil varies, some of the best refracking examples produce an impressive return. The reason that the “frack now, pay later” model may be concentrated on refracking operations is because the technique is not well known throughout the industry and is still relatively new. That has wary operators unwilling to shell out the capital for something they are unsure of, especially now that they are safeguarding a shrinking pile of cash. But Schlumberger is confident in the approach. While reporting first quarter earnings on a conference call with investors, Schlumberger’s CEO Paal Kibsgaard extolled the market potential for refracking. “I think you’re talking billions, in terms of revenue opportunities, over an extended period of time,” he said. “And I think the key here is that we’re so confident in our ability to identify the right candidates and execute the refracturing work that we’re prepared to take significant risks, in terms of how we go about doing this work. In many cases, if we can select the candidates, prepare to foot the entire bill for the refracturing work and then get paid back in production.”

With “lower for longer” suddenly becoming the new prevailing mantra in the oil markets, the oilfield service giants may have to increasingly cover the costs of fracking and refracking as operators scale back.

[Demeter]

6. OPEC just kicked oil into the $30s

http://finance.yahoo.com/news/opec-just-kicked-oil-30s-162320244.html

Increased pumping by OPEC as Chinese demand appears to be slackening could drive oil to the lowest prices since the peak of the financial crisis.

West Texas Intermediate crude futures skidded through the year's lows and looked set to break into the $30s-per-barrel range after the Organization of the Petroleum Exporting Countries admitted to more pumping and China devalued its currency, sending ripples through global markets.

"The familiar theme of oversupply and shaky demand is getting punctuated today," said Again Capital partner John Kilduff, who has expected WTI to aim for $30 per barrel. WTI futures for September fell more than 4 percent Tuesday and traded below $43.26 per barrel, the March 17 low.

Kilduff said, "$42.03 is going to be key. Then we'll be back to extrapolating back down to the low 30s from the financial crisis." The intraday low in 2015 was $42.03, also reached in March. Brent futures, meanwhile, were just below $49 per barrel.

MORE

[Hugin]

11. Yet gasoline prices remain at the highest rate since the price fell.

Go figure.

[Demeter]

20. GUNDLACH: If oil goes to $40 a barrel something is 'very, very wrong with the world'

http://finance.yahoo.com/news/gundlach-oil-goes-40-barrel-222059421.html

West Texas Intermediate crude oil is at a 6-year low of $43 a barrel.

And back in December 2014, "Bond King" Jeff Gundlach had a serious warning for the world if oil prices got to $40 a barrel.

"I hope it does not go to $40," Gundlach said in a presentation, "because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be — to put it bluntly — terrifying."

Writing in The Telegraph last week, Ambrose Evans-Pritchard noted that with Brent crude oil prices — the international benchmark — below $50 a barrel, only Norway's government is bringing in enough revenue to balance their budget this year.

And so in addition to the potential global instability created by low oil prices, Gundlach added that, "If oil falls to around $40 a barrel then I think the yield on ten year Treasury note is going to 1%." The 10-year note, for its part, closed near 2.14% on Tuesday.

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LET'S THINK ABOUT THIS FOR A MINUTE....IN THE CONTEXT OF FIGHTING GLOBAL WARMING

EXTRACTIVE NATIONS ARE SCREWED ANYWAY

WE ARE ON THE VERGE OF ECONOMIC REVOLUTION

[Warpy]

25. Cheaper oil isn't translating into cheaper pump prices here

which is really puzzling. Without the rock bottom pump prices, people are not returning to the gas guzzling behemoths they used to drive and weekly bus ridership is still very high, left over from the last period of $4/gallon gas. I suppose no one trusts low prices any more, which is a very good thing when it comes to climate change.

The people this is hitting the hardest are in ISIS. Their oil funding has been cut by 2/3 and other funding sources can't make up for that. We know the low prices are having an effect because of the reports of power struggles and other infighting. They are still dangerous.

Governments are learning that they can't rely 100% on oil revenue, and that's a good thing also since oil is not a renewable resource and will run dry one day.

And yes, we are on the verge of economic revolution.

[Demeter]

2. McDonald's quietly changes its Quarter Pounder size

http://www.cnbc.com/2015/08/11/mcdonalds-quietly-changes-its-burger-sizing.html



Fast food giant McDonald's has quietly made a change to one its most popular items: the Quarter Pounder. The sandwich now defies burger math and includes 4.25 ounces of beef, slightly more than its former size of 4 ounces before cooking. No word on how much the beef shrinks after hitting the grill, but the former 4-ounce patty cooked down to just 2.8 ounces after heating. McDonald's was not immediately available for comment about the change.

The bigger burger follows an uptick in beef prices from normal levels at the chain during the last quarter. On its most recent earnings call, the chain noted domestic commodity costs rose about 1 percent, mostly due to climbing beef prices. It will be up to the chain's operators to decide whether to raise prices for the bigger burgers, one source told CNBC.

Citing an internal document, CNBC first reported in late June the switch was going to occur though the company declined at the time to elaborate on the burger's expansion. The move comes as McDonald's seeks to improve its core menu as part of an ongoing turnaround led by CEO Steve Easterbrook. The initiatives include different cooking methods, such as changing how it sears and grills its beef to deliver hotter and juicier sandwiches, and a new drive-through ordering process to improve accuracy.

[Demeter]

3. Why Did China Devalue Its Currency? Two Big Reasons

http://www.nytimes.com/2015/08/12/upshot/why-did-china-devalue-its-currency-two-big-reasons.html?abt=0002&abg=0

Here are two things that China’s government wants very badly: first, for its economy to remain on an even keel, keeping growth and employment high. Second, for its currency, the renminbi, to become a pre-eminent global currency that helps promote the country’s diplomatic goals and solidify the country’s centrality to the global economy. Frequently those goals are in conflict. But Tuesday, China did something it thinks will advance both at once. That’s how to make sense of some blockbuster news out of Beijing that the country will adjust how it manages the renminbi to make the currency’s value respond a bit more closely to market forces.

The immediate result was a de facto devaluation, with the Chinese currency falling 1.8 percent versus the dollar and 2.2 percent versus the euro Tuesday. Those are big moves for the renminbi, considering that the government had a policy of maintaining a strict trading band — enforced with both legal restrictions on the transfer of capital and the government’s trillions in reserves. Usually, the renminbi will move only a few hundredths of a percent against the dollar in a given day; the largest move this year was 0.16 percent. But a roughly 2 percent shift in the value of a currency, even a major one, is not that big a deal, and certainly not the kind of thing that would earn blaring headlines about a devaluation. The dollar has risen 22 percent against the euro in the last year; the Japanese yen plummeted 24 percent against the dollar in late 2012 and early 2013. What makes the Chinese move fascinating is what it says about China’s approach to its currency and economy, and about the country’s role in the global financial system in the future.

The Chinese economy is unquestionably in a rough patch, and maybe something worse. Growth is downshifting from the double-digit rate of a few years ago, and the country’s investment-and-exports-driven growth model is looking exhausted after driving a generation of prosperity. A stock market crash in the last few months hasn’t helped. But a hidden cost of the Chinese government’s strategy of keeping the renminbi within a narrow trading band versus the dollar has been that China has been unable to use one of the crucial tools most countries use when they’re in an economic slowdown. The renminbi on Monday was at about the same exchange rate versus the dollar that it was in mid-December. But in that span, the dollar index was up 8.7 percent, meaning the dollar — and by extension the renminbi — were up that much against the currencies of other advanced nations like the euro, the Japanese yen and the British pound.

Linking the value of its currency to the dollar has had benefits, but in the last year has come at a big cost: It has resulted in the renminbi’s rise against competitors and trading partners at a time the economic fundamentals of China would argue for it to fall...

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[williamedstrom]

12. China

So, exports from the USA will become more expensive, then, there will be even less exports from the USA, then fewer jobs at factories in the USA, hence, hurting the economy in the USA (many people do not realize the significance to Americans of the Chinese devaluation of their currency), Vietnam doubled the currency trading band for the Dong and the Indian Rupee is at a 3-year low as Asian countries are in a race for the bottom to devalue their currencies so that they can export more (and have more jobs for their people) while the USA and an overvalued US dollar will be able to export less (and will have fewer jobs for the American people) ... China also sold $130 billion or so in US Treasury bonds this year (net). China has been the number 1 foreign lender to Uncle Sam. Since China has stopped lending to Uncle Sam, who will lend to Uncle Sam now?

[Demeter]

13. The Federal Reserve, of course

They have been putting Treasuries on their balance sheet for almost a year, now.

This could take down the Fed, eventually...

[Demeter]

21. China's Yuan Move Could Reignite Asian Currency Wars

http://www.bloomberg.com/news/articles/2015-08-11/china-s-devaluation-shock-seen-reigniting-currency-wars-in-asia

China’s surprise devaluation of the yuan couldn’t have come at a worse time for some Asian currencies.

A measure of the region’s 10 most-traded currencies excluding the yen is set to decline for a third year, its longest losing streak since 1997, amid signs the U.S. will raise interest rates for the first time in a decade. The People’s Bank of China’s cut its reference rate by a record 1.9 percent on Tuesday, triggering a global rout, and lowered it by 1.6 percent on Wednesday. Vietnam widened the dong’s daily trading band.

“This is like a double whammy with China allowing its currency to weaken,” said Wee-Ming Ting, the head of Asian fixed income in Singapore at Pictet Asset Management Ltd., which oversees $19 billion of emerging-market debt. “It will start a vicious cycle by different countries trying to depreciate their currencies.”

The yuan has been a source of currency stability in Asia during past crises and Chinese authorities propped it up earlier this year to deter capital outflows and make a case for official reserve status at the International Monetary Fund. China’s policy shift to support exporters and stem the deepest economic slowdown since 1990 heightens the risk of competitive currency devaluations as global demand wanes...

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[Demeter]

22. Global stocks, yields tumble after China pushes yuan lower again

ANOTHER DEVALUATION!

http://www.reuters.com/article/2015/08/12/us-markets-global-idUSKCN0QH01P20150812

Markets around the world fell for a second day on Wednesday, with stocks, the dollar and emerging market currencies all under pressure after China pushed the yuan lower again overnight, boosting the appeal of top-rated government bonds.

Germany's 2-year yield fell to a fresh record low of -0.29 percent as investors feared the deflationary pressures of a slowdown in China - which devalued its currency on Tuesday - would sap growth around the rest of the world.

The price of industrial commodities such as oil and copper fell further - copper hit a 6-year low - after the yuan's slump and reported sub-forecast industrial production and retail sales figures for July.

The prospect of a U.S. interest rate hike next month dimmed too, which dragged the dollar and U.S. Treasury yields lower. The flip side of that was the fifth consecutive rise in gold prices to a three-week high...MORE

A LOT OF OTHER PEOPLE'S EGGS ARE GETTING SCRAMBLED--AND ABOUT TIME, TOO!

[Demeter]

4. How The Obama Administration Is Helping Big Bank Felons

http://www.huffingtonpost.com/entry/obama-hud-big-banks_55c4f2f2e4b0923c12bcc4b1?ir=Business&section=business&utm_hp_ref=business&kvcommref=mostpopular

With the blessing of the White House and the Justice Department, the Department of Housing and Urban Development is attempting to sneak through a major policy change that would enable big banks convicted of felonies to continue lending through a federal mortgage program, according to federal records and government officials.

The housing agency wants to quietly delete a requirement for lenders to certify they haven’t been convicted of violating federal antitrust laws or committing other serious crimes. HUD proposed the move on May 15, without detailing the reasoning behind the change. It’s now considering public comment, with an eye towards finalizing the proposal.

Five years after lawmakers and the Obama administration said the Dodd-Frank financial reform law would end the problems caused by banks perceived to be “too big to fail,” HUD's move could represent yet another capitulation from federal officials who want to appear to be tough on Wall Street’s crimes, but don’t want big banks to suffer the consequences typically associated with felony convictions.

The main beneficiaries of the proposal would be JPMorgan Chase, the nation's largest bank with more than $2.4 trillion in assets, and Citigroup, the third-largest U.S. bank with $1.8 trillion in assets, according to Federal Reserve data...

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[Demeter]

5. Hackers Made $100 Million With Info From Stolen Press Releases: FBI

http://www.huffingtonpost.com/entry/hackers-made-100-million-on-stolen-press-releases-fbi_55ca63bde4b0f1cbf1e69f04?ir=Business&section=business&utm_hp_ref=business&kvcommref=mostpopular

An international web of hackers and traders made $100 million on Wall Street by stealing a look at corporate press releases before they went out and then trading on that information ahead of the pack, federal authorities charged Tuesday.

Authorities said it was the biggest scheme of its kind ever prosecuted, and one that demonstrated yet another way in which the financial world is vulnerable to cybercrime.

In an insider-trading scandal with a 21st-century twist, the hackers pulled it off by breaking into the computers of some of the biggest business newswire services, which put out earnings announcements and other press releases for a multitude of corporations.

Nine people in the U.S. and Ukraine were indicted on federal criminal charges, including securities fraud, computer fraud and conspiracy. And the Securities and Exchange Commission brought civil charges against the nine plus 23 other people and companies in the U.S. and Europe.

The case "illustrates the risks posed for our global markets by today's sophisticated hackers," SEC chief Mary Jo White said. "Today's international case is unprecedented in terms of the scope of the hacking at issue, the number of traders involved, the number of securities unlawfully traded and the amount of profits generated."

The nine indicted include two people described as Ukrainian computer hackers and six stock traders. Prosecutors said the defendants made $30 million from their part of the scheme...

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UKRAINE, EH?

[Demeter]

7. ‘B Is for Buffett’ in Page’s Plan to Mold Google After Berkshire

http://www.bloomberg.com/news/articles/2015-08-11/-b-is-for-buffett-in-page-s-plan-to-mold-google-after-berkshire

Google Inc. Chief Executive Officer Larry Page speaks affectionately of fellow billionaire Warren Buffett’s approach to business. With the decision to restructure the Internet-search giant, Page is putting Buffett’s influence into practice.

Page on Monday said he’s restructuring Google so that all units outside its main Web businesses like search, advertising, YouTube and mobile software will be broken off and run independently. Page will be CEO of the new holding company, called Alphabet Inc., while longtime deputy Sundar Pichai will become CEO of Google. Google Ventures, research lab Google X, thermostat maker Nest and life sciences company Calico are among those to be owned by Alphabet and managed separately.

The new structure takes a page from Buffett, 84, whose Berkshire Hathaway Inc. is a holding company for disparate businesses ranging from insurance and railroads to running shoes and ice cream. In the past five decades, he’s built one of the largest businesses in the world by eschewing fads, buying when others sell, and taking a long-term approach to investing. Through 2014, Berkshire averaged annual returns of almost 22 percent, more than double the Standard & Poor’s 500 Index.

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THAT'S A BUSINESS PLAN?

[Demeter]

8. Warren Seeks Review of New Bank Message System After Fines

http://www.bloomberg.com/news/articles/2015-08-10/senate-s-warren-seeks-review-of-bank-message-system-after-fines

U.S. Senator Elizabeth Warren wants financial regulators to examine whether a group of banks’ new messaging system can be used to circumvent compliance.

Warren, a Massachusetts Democrat, sent a letter to six agencies Monday asking whether the service will make it harder to obtain instant messages that can be used in investigations. The system was created by Symphony Communications LLC with funding from 14 financial firms, including Goldman Sachs Group Inc.

“My concerns are exacerbated by Symphony’s publicly available descriptions of the new communications system, which appear to put companies on notice - with a wink and a nod - that they can use Symphony to reduce compliance and enforcement concerns,” Warren wrote.

Warren questioned the purpose of the communications system and noted that instant messages have been used as evidence in past enforcement actions against banks, including the manipulation of benchmark interest rates. She implied that the new tool could be used to hide future illegal behavior.

“Symphony does not change regulators’ ability to obtain messages from our clients,” Katherine Kilpatrick, a company spokeswoman, said in an e-mailed statement. “Symphony delivers messages to its clients to download, decrypt, and archive, and they are able to provide those messages to regulators just as they would with other compliant messaging systems.”

Symphony, based in Palo Alto, California, is backed by a consortium of banks and hedge funds, including Goldman Sachs, Deutsche Bank AG, Credit Suisse Group AG and Bank of New York Mellon Corp. The firms spent $66 million on the service with a goal of creating a secure and efficient communications system with reach across the financial industry, according to an October 2014 statement.

The Warren letter follows a probe into Symphony’s system for retaining messages that was initiated in July by New York’s banking regulator. Warren asked the regulators to detail rules that police the retention of communications, any enforcement and compliance concerns raised by Symphony, and any internal reviews of the tool. She asked the regulators to provide her office a briefing no later than September 6. Agencies that received Warren’s letter include the Securities and Exchange Commission, the Department of Justice, the Commodity Futures Trading Commission and the Consumer Financial Protection Bureau.

Symphony’s system will compete with Bloomberg LP, the parent of Bloomberg News, which has its own electronic messaging for financial firms.

[Demeter]

9. Ravaged by Oil’s Collapse, Venezuela Now Has a Big Gold Problem

http://www.bloomberg.com/news/articles/2015-08-10/ravaged-by-oil-s-collapse-venezuela-now-has-a-big-gold-problem

Venezuela now has a gold problem.

The South American country, which is trying to stave off a bond default in the wake of oil’s swoon, had 68 percent of its international reserves in bullion as of August, according to the World Gold Council. That’s a big worry because the price of the precious metal has tumbled 15 percent from this year’s high in January as the global slump in commodities deepened.

The decline threatens to erode reserves the cash-strapped country relies on to pay its foreign debt. Venezuela, which gets more than 95 percent of its export revenue from oil, will see its hoard plunge by $1 billion if bullion prices don’t rebound, said Alejandro Arreaza, an analyst at Barclays Plc.

“Obviously, it’s the worst of both worlds,” he said.

Venezuela’s dollar-denominated bonds have lost 19.2 percent in the past three months, the most in emerging markets, as the collapse in oil exacerbates concern the nation will run out of money to pay debt. Yields on its benchmark notes climbed past 26 percent on Aug. 6, the highest since February.

Crude sank 4 percent Tuesday to $43.17 a barrel as of 12:19 p.m. in New York, extending its decline since this year’s peak in June to 30 percent.

Venezuela’s central bank uses a six-month moving average to value its gold, which means the 5 percent drop in the metal over the past month isn’t immediately reflected in official statistics, according to Barclays’s Arreaza.

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[Demeter]

10. With Greece’s healthcare system in ruins, people are turning to illegal free clinics

http://qz.com/473818/with-greeces-healthcare-system-in-ruins-people-are-turning-to-illegal-free-clinics/

”I prefer to find a job, but this is a dream right now in Greece,” said Eva Vaveloua, as she rolled a cigarette in an outdoor cafe in this northern Greek city. She is 38 years old, with a PhD in chemical engineering. “And I don’t want to leave my country. Life here is not easy anymore. It’s ugly. The threat of fascism increases. But I love this place, I fight for this place, and I cannot just leave.”

Vaveloua, who lives off of her father’s pension in her family home, has donated all of her time to organizing and helping run the Social Solidarity Clinic in Thessaloniki, which serves city residents who don’t have free healthcare— including immigrants and the unemployed, as well as their children. Today, the clinic has 90,000 patients and almost 300 volunteers.

In the years since the current Greek debt crisis began, questions remain about effectiveness of austerity. For the health sector, things have only gotten worse: the spending cuts imposed by Greece’s creditors broke a healthcare system that was already poorly organized and mismanaged. As people live on less money, private hospitals lose patients while public hospitals—free for those with healthcare—overflow. And then there are the 2.5 million people who, for the first time, have no options—the 2011 austerity measures cut health insurance for people who have been unemployed for more than a year. That’s a quarter of the population.

To help these people, a third option was born: free clinics like Vaveloua’s, of which there are more than 40 around Greece. Nobody takes money, nobody gives money; they run off of private donations. Although some belong to churches and towns, most are autonomous and politically motivated. Vaveloua’s clinic has been organized under a leftist, anti-fascist disobedience movement. It has chosen to not formally register with the state. “It’s an obligation of the Greek state, over any new laws, to take care of all people, independently of whether they have papers,” she said—and indeed, Article 21 of the constitution says so (pdf). “We refuse to ask a state that doesn’t recognize that law to legalize us.”

Volunteers do much of their work in-house—that means check-ups, dental work, vaccines—but if there’s something more complex, they match patients with one of over 200 doctors in the area willing to donate their time. They’ve also created a network with over 500 pharmacies in the city, which collect non-expired medications from customers who would otherwise throw them out. This gives the clinic access to most of the medication they need.

In turn, much of what the clinic does is officially illegal.

MORE

[Demeter]

14. GE to sell healthcare finance business to Capital One for $9 billion

http://finance.yahoo.com/news/ge-sell-healthcare-finance-business-220239474.html

General Electric Co (GE.N) said it would sell its U.S. healthcare finance unit to credit card lender Capital One Financial Corp (COF.N) for about $9 billion as it winds down its finance arm and returns to its industrial roots. The deal, which includes the sale of healthcare-related loans worth $8.5 billion, brings GE one step closer to achieving its target of shedding about $100 billion worth of finance assets by the end of this year. The latest sale, expected to close in the fourth quarter, will take GE's announced divestitures of finance assets to about $78 billion.

Reuters reported last week that Capital One was in exclusive talks to acquire GE's healthcare finance unit and that it had outbid other potential buyers in an auction for the unit. The size of GE's finance arm — GE Capital — and the potential risk stemming from its lending portfolio has made it subject to government oversight. GE plans to apply next year to escape its designation as a systematically important financial institution following the sale of finance assets.

For Capital One, the deal will bolster its healthcare lending operations. "This addition will catapult us to a leading market position in providing financial services to the healthcare sector," said Michael Slocum, president of Capital One's Commercial Bank. GE's healthcare finance unit offers direct loans to healthcare product and services companies as well as real estate loans to operators of assisted living facilities, nursing homes and medical practices. GE also said on Tuesday it agreed to sell about $600 million of the unit's real estate equity investments to another buyer, which it did not name.

In April, GE agreed to sell about $26 billion of real estate assets to Wells Fargo & Co (WFC.N) and Blackstone Group LP (BX.N). Subsequently, GE agreed to sell its private equity lending portfolio to Canada Pension Plan Investment Board for $12 billion.


FINANCE--A BUSINESS TOO DIRTY (AND TOO REGULATED?) FOR GENERAL ELECTRIC!

[Demeter]

15. Cut the working week to a maximum of 20 hours, urge top economists

http://www.theguardian.com/society/2012/jan/08/cut-working-week-urges-thinktank

Britain is struggling to shrug off the credit crisis; overworked parents are stricken with guilt about barely seeing their offspring; carbon dioxide is belching into the atmosphere from our power-hungry offices and homes. In London on Wednesday, experts will gather to offer a novel solution to all of these problems at once: a shorter working week.

A thinktank, the New Economics Foundation (NEF), which has organised the event with the Centre for Analysis of Social Exclusion at the London School of Economics, argues that if everyone worked fewer hours – say, 20 or so a week – there would be more jobs to go round, employees could spend more time with their families and energy-hungry excess consumption would be curbed. Anna Coote, of NEF, said: "There's a great disequilibrium between people who have got too much paid work, and those who have got too little or none."

She argued that we need to think again about what constitutes economic success, and whether aiming to boost Britain's GDP growth rate should be the government's first priority: "Are we just living to work, and working to earn, and earning to consume? There's no evidence that if you have shorter working hours as the norm, you have a less successful economy: quite the reverse." She cited Germany and the Netherlands.

Robert Skidelsky, the Keynesian economist, who has written a forthcoming book with his son, Edward, entitled How Much Is Enough?, argued that rapid technological change means that even when the downturn is over there will be fewer jobs to go around in the years ahead. "The civilised answer should be work-sharing. The government should legislate a maximum working week."

IF THEY WON'T PAY US FOR OUR PRODUCTIVITY, WE SHOULD A LEAST GET TIME OFF!

[Demeter]

16. Europe’s neo-liberal road began at Mont Pélerin

http://revolting-europe.com/2015/08/07/europes-neo-liberal-road-started-at-mont-pelerin/

When I open the windows in the morning these days, my gaze inevitably falls on Mont Pélerin, beyond the lake. It is a hill a few kilometres from Switzerland’s Montreux, known since the twenties for good hotels and a good climate. It is also the birthplace of the Mont Pélerin Society in 1947, when neoliberalism began the long march to a totalitarian hegemony over the economy and politics of Europe. Today we are experiencing the dramatic consequences. Gramsci would have been fascinated by the strategy adopted by the Mont Pelerin Society to win hegemony, which the father of Italian communism saw as a power exercised with the consent of those subject to it. Rather than being yet another foundation or a think tank specializing in promoting this or that branch of the economy, the Mont Pélerin Society chose to build a large-scale “collective intellectual”.

When Friedrich Hayek in 1947 called together a small group of economists and other intellectuals (including Maurice Allais, Walter Eucken, Ludwig von Mises, Milton Friedman and Karl Popper) to found the society, there were only 38 members, for the most part European. In the late ’90s they had become a thousand, scattered throughout the world, although the majority continued to come from Europe.

Rooted mostly in academia, this collective intellectual did not draft ambitious manifestos (the “intent” formulated in ’47 at the time of its foundation amounted to just one page, you can also read it today on the website of Mont Pélerin Society), or large projects of institutional reforms. Instead it produced thousands of essays and books, many to a remarkable level, which all revolve around the issues that members of the society saw as the essence of neo-liberalism: the free movement of capital; the unquestioned superiority of the free market; the brutal reduction of the role of the state to the builder and guardian of the conditions that allow the widest possible dissemination of both. Thanks to this vast and detailed work, around 1980 economic doctrines and neo-liberal policies became embedded in universities and governments. It was not of course only the Mont Pelerin Society which was responsible for this, but its role has been overwhelming. The neo-liberal historian Dieter Plehwe was not exaggerating when, years ago, he called society “one of the most powerful bodies of knowledge of our time.”

However, its members did not limit themselves to publishing articles and books. Many of them have come to occupy central positions in the apparatus of the governments of a number of countries. At the time of the Reagan presidency (1981-88), about more than a quarter of the eighty economic advisers of the President were members of the Mont Pélerin Society. The financial liberalization decided by the Thatcher government in the first half of the 1980s, which has changed the face of the British economy, were developed largely by the Institute of Economic Affairs, a subsidiary of the society founded and directed by two partners, Antony Fisher and Ralph Harris. The captains of industry in France and Germany have always been numerous among the ranks of the Mont Pélerin Society, entertaining close relationships with members in the world of politics...

MORE

[Demeter]

17. Who Are the Biggest Killers in America? The Numbers Will Shock You

http://www.alternet.org/news-amp-politics/who-are-biggest-killers-america-numbers-will-shock-you


The richest Americans not only steal more wealth through white-collar crime, but their crimes also lead to more deaths.

The criminal justice reform movement has shined a light on the inhumane conditions in our prisons, and the horrific killings of unarmed people by the police. This movement has done important work in demonstrating the needless brutality involved in our system, particularly as it is directed against marginalized groups: the poor and racial minorities.

Recently, I examined the economic backgrounds of those killed by police this year. I found that between January and May 2015, 95 percent of police killings occurred in neighborhoods with average incomes under $100,000. There were no killings in neighborhoods with incomes of $200,000 or above. I received many responses to this article, but one of the most common was that the wealthy simply don't commit as much street crime. In other words, the rich behave themselves, so the police don't bother them. There is truth to this argument in one dimension: street crime. It has long been consensus among sociologists and economists that high levels of poverty and inequality are associated with various street crimes such as homicide and assault.

However, this doesn't actually mean that the poor and middle class are harming more people, or stealing more of their property, or destroying more of their wealth. It is a little-known fact that the richest Americans not only steal more wealth through white-collar crime, but their crimes also lead to the deaths of more people. Yet despite the destructiveness of rich criminals, our criminal justice system does not respond in the same way it tackles crimes by poorer Americans.

How the Rich Commit Crime

Jeffrey Reiman is a criminologist, sociologist and philosopher based at American University. In 1979, Reiman published the first edition of the book, The Rich Get Richer, The Poor Get Prison. The book had a simple but counterintuitive thesis: the rich are actually committing society's most destructive crimes in terms of both financial damage and loss of human lives, but our criminal justice system is harshest toward the poorest Americans, whose crimes inflict the least damage. As time rolled on, and mass incarceration of mostly poor and working-class people skyrocketed while prosecution of white-collar crimes dialed down, Reiman's thesis has gained steam. With his co-researchers, he has released new editions of the book with updated statistics regularly, the most recent edition in 2013.

Although much of his statistical work is somewhat outdated in 2015, the wider narrative is as relevant today as it was when his book was originally published. He begins his explanation of the difference between deadly white-collar crime and far less deadly street crime in the second paragraph:

"If it takes you an hour to read this chapter, by the time you reach the last page, two of your fellow citizens will have been murdered. During that same time, more than six Americans will die as a result of unhealthy or unsafe conditions in the workplace. Although these work- related deaths were due to human actions, they are not called murders. Why not? Doesn't a crime by any other name still cause misery and suffering? What's in a name?"

That is the crux of the issue: we refer to street crime as crime, and tackle it with the most blunt police state instruments, but we don't respond the same way to the kinds of crimes elites commit through indifference or hunger for greater profits.

Using data ranging from 1992 to 2006, Reiman estimates there are 55,325 “occupation-related deaths” per year – this includes deaths caused by unsafe work conditions, needless exposure to disease and other forms of death that would be a direct result of employer negligence, but does not amount to the total number of negligent workplace deaths, which is difficult to compute. Compare this to deaths from common street crime, referred to as homicides; in 2006, this number was around 15,000. Reiman writes that the “risk to occupational disease and death falls only on members of the labor force, whereas the risk of crime falls on the whole population, from infants to the elderly. Because the civilian labor force is about half (50.8) percent of the total population...to get a true picture of the relative threat posed by occupational diseases compared with that posed by what we refer to as crimes, we should multiply the crime statistics by half.”

If you do that, even discounting bad luck and errors on the part of the employee, you'd be comparing tens of thousands of occupational deaths to around 7,500 homicides. That would mean your job — through the negligence of your employer — is seven times more likely to kill you than common street crime is. Reiman concludes that this means "workers are more likely to stay alive and healthy in the face of the danger from the underworld than from the workworld.”

MORE CRIME AND LACK OF PUNISHMENT...

Reiman notes that the FBI's 2007 estimate for the amount of wealth stolen in all property crimes topped out at $17.6 billion. That sounds like a lot, until you compare it to white-collar and financial crimes.

When you put together acts such as insurance fraud, telemarketing fraud, industrial espionage, credit card fraud, and other major financial crimes, you find that white collar-crimes cost the economy around $486 billion annually. That's about 28 times as much as what common street crime costs us.

Sometimes these white-collar crimes cost us more than other times. The crime spree on Wall Street that led to the global Great Recession was estimated to have thrown 64 million additional people into extreme poverty — meaning they were forced to live on less than $1.25 a day — by the World Bank. There were many collateral effects from this Wall Street crime wave, so many it would be difficult to list them all.

READ IT AND WEEP--THEN VOTE FOR BERNIE!

[Demeter]

18. Cyprus provides Greece with an object (and abject) lesson in bail-out politics

http://www.telegraph.co.uk/finance/economics/11793364/Cyprus-has-provided-Greece-with-an-object-and-abject-bail-out-lesson.html

There are many similarities between Cyprus' and Greece's economic crises – not least how they were treated by their creditors...

...Harris Georgiades, the Cypriot finance minister...His country speaks Greek, has at various times in its history actively sought enosis (political union with Greece) and each year pledges ersatz fealty to Athens by awarding a full douze points to Greece in the Eurovision Song Contest (regardless of how dire the dirge). But the Mediterranean island also has fresh memories of the damage a far-Left government can wreak on an economy, is in the middle of its own bail-out programme and is straining to implement the Troika’s memorandum of understanding to the letter. This tension was regularly apparent: Cyprus was the only eurozone member state that openly supported debt relief for Greece but Georgiades was also publicly critical of the Greek government’s belief that tax rises should take most of the strain in any austerity plan. And, as Greece makes its slow transition from belligerence to apparent acquiescence, there is much it can learn from Cyprus – even if the lesson is, like Lawrence Durrell’s description of the island’s lemons, bitter.


There are big differences between the Greek and Cypriot crises both in scale and scope. The proximate cause of the former was debt while for the latter it was a tumefied banking sector – the assets of Cypriot lenders equated to a staggering 703pc of GDP in 2012. But there are also instructive similarities. Both Cyprus and Greece have bloated and inefficient public sectors marred by nepotism and clientelism. Equally the countries’ problems were not entirely of their own making: Cyprus, like Greece, can point to the many exacerbating errors that emanated from Brussels: The European Banking Authority stress tests in 2010 and 2011, for example, came to the stupefying conclusion that Cypriot banks, which held great sheaves of Greek sovereign debt, had enough capital to withstand a financial crunch. Then, as part of Greece’s second bail-out in 2012, the EU, the European Central Bank and IMF helped spark a crisis by imposing a 53.5pc haircut on private holders of Greek debt, effectively holing Cypriot lenders below the waterline in the process. The worst could have been averted if Demetris Christofias, the dangerously incompetent Communist president of Cyprus, had had the nous to veto the haircut of Greek government bonds, as was his right, unless Brussels helped sort out the subsequent and inevitable Cypriot bank losses. At the time, this would have amounted to little more than a rounding error in the larger package. But the moment was lost and with it Cyprus’s bargaining power.

So, when in March 2013, a month after Nicos Anastasiades had replaced Christofias as president, Cyprus needed to go cap in hand for its own €10bn bail-out, Brussels was able to insist on a so-called bail-in of the country’s two main lenders with uninsured depositors having most of their savings above €100,000 forcibly converted into bank shares. Cypriot bondholders also suffered massive losses and the Troika imposed a tough austerity programme in return for loans. The warnings issued at the time of the Cyprus bail-out – it amounted to bullying, it undermined Western strategic interests and would push Cyprus into the arms of Russia and, most importantly, that it wouldn’t work – are among the same criticisms that have been levelled at the Greek deal. So, were the pessimists right? On the charge of bullying, absolutely. Eurozone apologists justified the haircut by saying most of the money belonged to rich Russians. Undoubtedly some did. But many ordinary Cypriots, who, in the absence of a proper pensions industry, have nowhere but the banks in which to place their retirement savings, were also hit.

Did it work? The last two years have undoubtedly been tough. The Cypriot economy shrank by 5.4pc in 2013 and by 2.3pc in 2014. Unemployment remains high and the banks still have too many dodgy loans on their books. However, there are signs of progress. A recent forecast for the Cypriot economy this year predicted growth of 0.5pc – meagre but far better than the contraction of 0.5pc that was predicted as recently as last spring. The Cypriot government still has a To Do list that must be implemented before the latest €500m tranche of bail-out money can be released. But these “prior actions” – including civil service reforms and the privatisation of state telecoms company CyTA – are already in train. They are also, in stark contrast to what is happening in Greece, being embraced by the Cypriot administration. Some of the bail-out provisions also helped to sever the financial links between Cyprus and Greece with Cypriot banks forced to sell off their Greek branches and Greek bond holdings. These divestments were controversial as they resulted in significantly losses but have helped insulate Cyprus from Greece’s latest paroxysms.

Michael Sarris, who was Georgiades’ predecessor as Cypriot finance minister during the 2013 banking crisis, was recently asked what lessons Greece could learn from the Cypriot experience. He said: “You implement as faithfully as you can your agreements, move on, and go easy on the blame game.” To some that will sound like good common sense – the current Cypriot government has taken a pragmatic approach that Athens might do well to adopt. But, to more cynical ears it might sound like the lesson for bailed out countries is to shut up and do what they are told.

[Demeter]

19. The countries that wanted Greece out of the eurozone

http://www.telegraph.co.uk/finance/economics/11734681/The-countries-happy-to-see-Greece-leave-the-eurozone.html

Which countries were desperate to keep Greece in the eurozone and which ones would have been happy if it left? We take you through the country's friends and foes...With 19 members in the eurozone to please, keeping all of them happy has been a challenge. A deal between Greece and its creditors was finally reached on Monday - the full details are yet to be revealed. But the breakdown of trust between Greece and the rest of the eurozone is clear. Some countries have taken a harder stance than others. Here’s a look at the position of the 19 nations, and some of their leaders’ words:

Hardliners: Germany, Estonia, Finland, Slovakia, Netherlands, Slovenia, Latvia, Belgium, Lithuania

Europe's northern states have always been sceptical about Greece's bail-outs, but the calls for the country's ejection from the eurozone are loudest in Germany. But it's not just the eurozone's most powerful member that is concerned. Its newest member, Lithuania, has also expressed anger. Dalia Grybauskaite, the country's president, has described the current government's attitude to reforms as "all the time mañana".

Wanted Greece to remain in eurozone: Luxembourg, Malta, Portugal, Spain, Austria, Ireland

Against Grexit: France, Italy, Cyprus


QUOTES FROM VARIOUS POLITICAL HACKS ON THESE POSITIONS AT LINK

[Demeter]

23. Greece poised to ratify accord with creditors

http://www.dw.com/en/greece-poised-to-ratify-accord-with-creditors/a-18642278

The Greek parliament is expected to take up a draft agreement with creditors. A vote has been scheduled for Thursday over the country's third bailout deal...The deal was the product of 23 hours of marathon talks and must be also ratified by some eurozone countries. Greece and its creditors - the EU, the European Central Bank, and the International Monetary Fund - are under pressure to finalize the deal by Aug. 20 when a 3.4 billion euro ($3.76 billion) payment to the ECB is due.

Syriza to face backlash

The deal has caused a rebellion within Prime Minister Alexis Tsipras's left-wing Syriza party, forcing him to rely on opposition votes. A Greek Finance Ministry official said the pact would be worth up to 85 billion euros in fresh loans over three years with Greek banks receiving 10 billion euros immediately. But doubts remain about whether the leftist Syriza government, elected on a pledge to reverse austerity, can implement the punishing terms of this latest deal that critics say compromises the party's principles and platform. That's because the proposed bailout would be in exchange for imposing fiscal and other policy measures including a gas market overhaul, the removal of most early retirement schemes, the elimination of fuel price benefits for farmers and an increase in some taxes, none of which will be popular with voters.

The government insists it has also gained concessions including greater control over labor reforms, avoiding a mass sell-off state assets and softer deficit targets....

IT'S THEATRE AT ITS BEST---BUT THEN, THE GREEKS INVENTED THEATRE....

[Demeter]

24. This is the high point, IMO

Arrivaderci!