Category: Finance

Not Enough Bullets

No Comments

What a surprise, Peabody Energy, the biggest coal company in the country, has been bankrolling pretty much every nutty climate change denier they can find.

Who cares about the destruction of the world, we have profits to make:

Peabody Energy, America’s biggest coalmining company, has funded at least two dozen groups that cast doubt on manmade climate change and oppose environment regulations, analysis by the Guardian reveals.

The funding spanned trade associations, corporate lobby groups, and industry front groups as well as conservative thinktanks and was exposed in court filings last month.

The coal company also gave to political organisations, funding twice as many Republican groups as Democratic ones.

Peabody, the world’s biggest private sector publicly traded coal company, was long known as an outlier even among fossil fuel companies for its public rejection of climate science and action. But its funding of climate denial groups was only exposed in disclosures after the coal titan was forced to seek bankruptcy protection in April, under competition from cheap natural gas.

Environmental campaigners said they had not known for certain that the company was funding an array of climate denial groups – and that the breadth of that funding took them by surprise.

………

“The breadth of the groups with financial ties to Peabody is extraordinary. Thinktanks, litigation groups, climate scientists, political organisations, dozens of organisations blocking action on climate all receiving funding from the coal industry,” said Nick Surgey, director of research for the Center for Media and Democracy.

“We expected to see some denial money, but it looks like Peabody is the treasury for a very substantial part of the climate denial movement.”

Peabody’s filings revealed funding for the American Legislative Exchange Council, the corporate lobby group which opposes clean energy standards and tried to impose financial penalties on homeowners with solar panels, as well as a constellation of conservative thinktanks and organisations.

I really hope that someone can find a way to send their executives to a federal PMITA prison.

They deserve it.

So Now Clippy will Be In Charge of My Online Job Search

No Comments

Microsoft is buying LinkedIn:

Microsoft is buying LinkedIn for $26.2 billion, a deal in which one of the world’s biggest social networks will join a software and computing giant as it tries to broaden its reach in online services.

Under the agreement the two companies announced Monday, LinkedIn will continue to operate independently, and LinkedIn chief executive Jeff Weiner will report to Microsoft chief executive Satya Nadella. The deal with Microsoft values each of LinkedIn’s shares at $196; LinkedIn’s stock was up nearly 47 percent at the end of Monday trading.

The two companies cater to similar customers. Under Nadella’s tenure, Microsoft has sought to become a cloud-computing powerhouse that largely serves businesses. LinkedIn also primarily targets professionals and is the United States’ 11th-largest website by traffic and visitors, according to the online index Alexa. In a sign of LinkedIn’s importance to corporations, executives have been known to publish blog posts on the platform that act as corporate statements.

Monday’s deal will allow Microsoft to infuse its professional software and services with LinkedIn’s technology, a move that could give users of Windows, Microsoft Office and even the company’s personal assistant, Cortana, access to new features and elevate Microsoft’s suite of enterprise products. Meanwhile, by tapping into Microsoft Office’s user base of 1.2 billion people, LinkedIn hopes to become a central player in many companies’ day-to-day business, increasing engagement with the platform.

LinkedIn is kind of a roach motel, and deleting your account difficult, but thanks to Kevin Drum, here is the primer on how to deactivate your account.

Considering what Microflaccid tid to Skype, expect the crapification of LinkedIn to commence.

H/t DC at the Stellar Parthenon BBS

Thanks Duncan.

2 Comments

Ever since the Reagan administration, the “Very Serious People” VSPs in Washington, DC have tried to find a way to cut/privatize Social Security.

For the first time in recent political memory, expansion of Social Security has become a top of serious discussion, and the impetus for this came from one person, Duncan “Atrios” Black:

In May 2012, ABC broke into its daytime coverage to show President Obama endorsing same-sex marriage, the culmination of years of activist work to take the idea from the radical fringe into the mainstream. We saw an economic version of that this week, and while none of the networks fired up their “Breaking News” graphics for it, the impact on society could be just as large, and the people who helped make it happen should be just as lauded.

 “It’s time we finally made Social Security more generous,” said the president in Elkhart, Indiana, to applause, “and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.” This was totally unexpected: We knew the Elkhart speech was about the economy, but we didn’t know Obama would concur with a rallying cry on the left for several years now: Expand Social Security.

 This movement crystallized from research into the looming retirement crisis. Too many Americans are headed into their golden years without nearly the kind of savings needed to maintain their standard of living. And their defined-benefit pensions have gradually transitioned into defined-contribution plans like 401(k)s, which have rewarded Wall Street with hidden and excessive fees while eating away at individual gains. The change also shifted market risks from employers onto employees, who must hope to avoid a drop in stocks as they hit retirement age.

 ………

 Despite all this, the initial impulse from the Obama administration was to use Social Security cuts as a bargaining chip in a larger deal with Republicans. Grand bargain talks from 2011 to 2013 repeatedly invoked a different way to calculate the consumer price index (known as “chained CPI”), which would have resulted in $1,000 less a year for the average 85-year-old. Obama put chained CPI in his fiscal year 2014 budget.

 Contrary to some after-the-fact snickering, this was a very credible threat, and it allowed Republicans to point to a Democratic president favoring entitlement cuts. Only the Tea Party’s unwillingness to consider anything resembling a compromise saved retirees from cuts.

 At first, liberal groups played defense on chained CPI, accustomed to mobilizing in opposition rather than staking out a bolder claim. But the expansion movement can really be traced back to one blogger: Duncan Black, popularly known as “Atrios,” who waged an initially lonely crusade in a series of 2012 columns in USA Today, explaining why the retirement crisis was coming and how expanding Social Security represented the cleanest solution.

………

 Lawmakers followed the rank and file consensus. Elizabeth Warren jumped aboard the Harkin bill in late 2013. A House bill quickly got dozens of co-sponsors. Sen. Joe Manchin of West Virginia, who holds down the conservative wing of the Democratic Party, endorsed an expansion amendment. Bernie Sanders made it a campaign plank, one that Hillary Clinton eventually had to endorse, albeit in a more targeted fashion.

 Now President Obama, who started this all by embracing the opposite position years ago, has explicitly endorsed the expansion of Social Security. This victory is a great credit to Duncan Black and everyone who moved a minority opinion in the corridors of power in the Democratic Party into the mainstream.

(emphasis mine)

Obama was dragged kicking and screaming into this.  So is Hillary Clinton.

He has seen cutting Social Security as a major legacy goal since he entered office in 2009: He thought could show himself reaching across the aisle if he could ground the proverbial “3rd rail” of American politics.

Thankfully, he was foiled by the Teabaggers in Congress, just as Bill Clinton effort to privatize Social Security was foiled by Gingrich’s impeachment efforts in the late 1990s.

Duncan Black has done this country a service by short-circuiting the efforts of the Wall Street wing of the Democratic Party to divert money from retirees unto the the pockets of the banksters.

Your Daily Schadenfreude

No Comments

Elizabeth Holmes, CEO of Theranos has just had her personal wealth recomputed by Fortune. Yesterday,   it was $4,500,000,000.00 today it is $0.00:

Last year, Elizabeth Holmes topped the FORBES list of America’s Richest Self-Made Women with a net worth of $4.5 billion. Today, FORBES is lowering our estimate of her net worth to nothing. Theranos had no comment.

Our estimate of Holmes’ wealth is based entirely on her 50% stake in Theranos, the blood-testing company she founded in 2003 with plans of revolutionizing the diagnostic test market. Theranos shares are not traded on any stock market; private investors purchased stakes in 2014 at a price that implied a $9 billion valuation for the company.

Since then, Theranos has been hit with allegations that its tests are inaccurate and is being investigated by an alphabet soup of federal agencies. That, plus new information indicating Theranos’ annual revenues are less than $100 million, has led FORBES to come up with a new, lower estimate of Theranos’ value.

FORBES spoke to a dozen venture capitalists, analysts and industry experts and concluded that a more realistic value for Theranos is $800 million, rather than $9 billion. That gives the company credit for its intellectual property and the $724 million that it has raised, according to VC Experts, a venture capital research firm. It also represents a generous multiple of the company’s sales, which FORBES learned about from a person familiar with Theranos’ finances.

At such a low valuation, Holmes’ stake is essentially worth nothing. Theranos investors own preferred shares, which means they get paid back before Holmes, who owns common stock. According to VC Experts, investors in Theranos own a particular kind of preferred equity, called participating preferred shares, which take precedence to common stock in the event of a liquidation. FORBES is not aware of any plans to liquidate. If that were to happen, participating preferred investors would get their money back and more before Holmes gets a cent.

We now know the difference between a typical Silicon Valley company and one that actually has to produce a real physical product:  The emperor’s new clothes are revealed far sooner for the companies who make actuall “stuff”.

It appears that the medical testing industry does not lend itself to the “long con.”

I So Hope that the Banksters Lose This One

No Comments

Puerto Rico is in debt, and, as befitting their colonial status, they have very few options to renegotiate their debt. This is a fact of life for colonial societies: Debt peonage to your imperial masters.

That being said, and audit of Puerto Rico’s debt seems to indicate that many of the debts were issued illegally, and so the contracts under which the debt was issued, and hence the debt itself, may be unenforceable:

An audit report published on Thursday suggests that debt-laden Puerto Rico may be able to void some of its borrowing because politicians exceeded constitutional debt limits and their own authority. 

 The report, shared with MarketWatch, states that some of Puerto Rico’s debt may have been issued illegally, allowing the government to potentially declare the bonds invalid and courts to then decide that creditors’ claims are unenforceable. The scope of the audit report, issued by the island’s Public Credit Comprehensive Audit Commission, covers the two most recent full-faith-and-credit debt issues of the commonwealth: Puerto Rico’s 2014 $3.5 billion general-obligation bond offering and a $900 million issuance in 2015 of Tax Refund Anticipation Notes to a syndicate of banks led by J.P Morgan.

Money for those debt payments is not in the commonwealth’s proposed budget, either. On Tuesday Puerto Rico’s governor, Alejandro García Padilla, sent a proposed 2016-17 budget to the island’s legislature that provides for only $209 million of the $ 1.4 billion of current debt-service cost. As García Padilla told reporters at a news conference: “This is simple: either we pay Wall Street or we pay Puerto Ricans. If the legislature decides we pay Wall Street more, well, each has his responsibility. I will continue defending Puerto Ricans. Money I send to Wall Street, I do not have to provide services here.”  

………

The Puerto Rican constitution contains a balanced-budget clause that explicitly prohibits borrowing to finance operating deficits, but its politicians borrowed to cover deficit financing in its 2014 General Obligation Bond Offering, according to the commission’s initial review. The March 2014 General Obligation Bond states that the proceeds would be used in part to cover deficits that had accumulated and that were expected to occur in the year of the offering. The documents include a chart showing deficits financed with borrowing during the past and that were expected to recur.

In addition, Puerto Rico did not inform bondholders that its constitution forbids it from using debt to finance deficits. That, the commission’s report says suggests “substantive” noncompliance with the letter of the constitution.

The U.S. Supreme Court has said in the Litchfield v. Ballou case and, more recently, in litigation related to Detroit’s bankruptcy that borrowing above a debt ceiling may allow the issuer to declare debt invalid and, therefore, unpayable. Detroit went to court to invalidate $1.45 billion in certificates of participation, debt issued by two shell companies called “service corporations.” The parties settled before the case went to trial, but, while refusing two initial proposed settlements, the judge stated that Detroit’s argument had “substantial merit” and that the suit would have had a “reasonable likelihood of success.”

I really hope that the people of Puerto Rico win, and the bond holders lose.

Yes, I Know that it’s Boris Johnson………

No Comments

But when he says that, “The only continent with weaker economic growth than Europe is Antarctica,” he’s right.

Unfortunately, the Germans run the EU, and they are dead set on repeating the mistakes of the Reichsbank during the great depression, where mindless monetary tightening made the impact of the Depression unusually brutal, and led to the rise of the Nazis.

Now we have an EU dominated by the Germans and by their fetish for austerity continues, and the rise of the right wing throughout Europe.

If I were in Britain, I would vote to leave for two reasons:

  • It would cripple the UK’s financial industry, which is a good thing.
  • It would show the rest of the EU that there are alternatives to German hegemony.

3 “Democrats” Who Think That Your Financial Advisor Should Be Allowed to Cheat You

1 Comment

The Senate voted to prohibit regulators from requiring financial advisors to work in their own client’s best interest:

The Senate voted Tuesday to strike down a controversial Obama administration rule for financial advisers, setting up a showdown with the White House.

Senators voted 56-41 to overturn the Labor Department’s fiduciary rule, which requires financial advisers to act in the best interest of retirement savers.

The Senate’s vote paves the way for a battle with the White House, which has pledged that President Obama will veto the legislation once it reaches his desk.

“The final rule reflects extensive feedback from industry, advocates, and Members of Congress, and has been streamlined to reduce the compliance burden and ensure continued access to advice, while maintaining an enforceable best-interest standard that protects consumers,” the Office of Management and Budget said in a statement.

………

Americans for Financial Reform, an advocacy group, defended the regulation.

The rule “simply says that financial professionals who claim to offer honest, unbiased advice on retirement savings should actually have to do that,” the group said.

“The motive for this resolution is not a genuine concern about the wellbeing of retirement savers. Instead, some Wall Street salespeople and their firms are worried about losing out on the billions of dollars in excess profits they have been making by recommending investment products that serve their own interests.”

If you look at the vote you will find 3 “Democratic” senators who voted to allow grandma to be cheated out of her retirement, former Congressional “Blue Dog” Joe Donnelly (D-IN), Heidi Heitkamp (D-ND), and Jon Tester (D-MT).

They need to be primaried, big time.

They are all up for reelection in 2018

Yep. This is a Woman of the People

No Comments

If Hillary were serious about inequality, she wouldn’t be hosting $100,000.00 a head fundraisers:

Democratic presidential front-runner Hillary Clinton is ramping up her fundraising schedule, attending a number of fundraisers this week that cost donors six-figures to attend.

The former secretary of state attended a pair of small, intimate gatherings in New York City on Thursday evening that cost donors a minimum of $100,000 to attend, according to a campaign official. On Wednesday, she attended two $100,000-a-head events in Englewood, N.J., and New York City.

Maureen White and Steven Rattner, two prominent Democratic fundraisers, hosted one of the Thursday fundraisers at their home in Manhattan. Mr. Rattner also was a prominent businessman and served in the Obama administration. The second Thursday event was at the home of Lynn Forester de Rothschild, a prominent New York businesswoman and supporter of Mrs. Clinton and Democratic candidates. On Wednesday, architect Jon Stryker and hedge fund manager Orin Kramer played host.

Rattner settled with the SEC and the New York State Attorney General over kickbacks.

Lynn Forester de Rothschild is one of Those Rothschilds, the original multinational banksters.

And $100,000.00 a head for the contributors.

Does this sound like a woman who has the slightest interest in addressing the parasitic finance that is at the heart of Wall Street?

Does the former board member for Walmart sound like someone who would support labor unions?

Win or lose, this little foray into dynastic politics will not end well.

Thanks, Liz

1 Comment

The CFPB just moved to end arbitration on consumer loans and credit cards:

Richard Cordray, director of the Consumer Financial Protection Bureau, pointed out what a major change his agency was poised to bring about. “Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them,” he said in a statement.

The rule would apply only to the consumer financial companies that the agency regulates. It would not apply to arbitration clauses tucked into contracts for cellphone service, car rentals, nursing homes or employment.

“It is a good start,” said Berle M. Schiller, a federal judge in Philadelphia who has been critical of arbitration clauses that dismantle class actions and tip the scales in favor of companies. “Class actions are the only way that companies can be brought to heel.”

The agency’s proposed rule would be the first significant check on arbitration since a pair of Supreme Court decisions in 2011 and 2013 blessed its widespread use. Those decisions signaled the culmination of an effort by a coalition of credit card companies to stop the tide of class-action lawsuits.

Elizabeth Warren’s vision for the CFPB, which she brought into existence despite opposition from many in the Obama administration is bearing some significant fruit.

H/t Naked Capitalism.

What a Lovely Family

No Comments

Chelsea Clinton’s husband, Marc Mezvinsky, just shuttered a hedge fund after losing 90% of his investor’s money:

Despite having Goldman Sachs CEO Lloyd Blankfein as an investor and being Bill and Hillary Clinton’s son-in-law, Marc Mezvinsky (and two former colleagues from Goldman Sachs who manage Eaglevale Partners hedge fund) told investors in a letter last February they had been “incorrect” on Greece, generating staggering losses for the firm’s main Eaglevale Hellenic Opportunity, a/k/a the “Greek recovery” fund during most of its life. By ‘incorrect’ the Clinton heir apparent meant the $25 million Eaglevale Greek fund had lost a stunning 48% in 2014.

Which is not to say the larger fund it was part of is doing any better: as of last February, Eaglevale had spent 27 of its 34 months in operation below its high-water mark. We are confident that 13 months later the numbers are 40 out of 47, respectively.

………

Meanwhile, things went from terrible to abysmal for both the clueless hedge fund manager and his LPs, and as the NYT reports, Hillary Clinton’s son-in-law is finally shutting down the Greece-focused fund, after losing nearly 90% of its value.  Investors were told last month that Eaglevale Hellenic Opportunity would finally be put out of its misery and would shutter.

The closure comes as the worst possible time: we are confident that Donald Trump will be quick to work it into his political attack routine.

While there is no indication of legal or ethical wrong doing, I guarantee that Mezvinsky made his millions in various fees out of this fiasco.

This might be ONE reason why Clinton is so dedicated to preserving the, “Heads I win, tails you lose,” ethos of  Wall Street.

Not Enough Bullets

No Comments
The pay of hedge fund managers, who have underperformed the market forever, and lost money last year, is simply obscene:

The world’s top 25 hedge fund managers earned $13bn last year – more than the entire economies of Namibia, the Bahamas or Nicaragua.

Kenneth Griffin, founder and chief executive of Citadel, and James Simons, founder and chairman of Renaissance Technologies, shared the top spot, taking home $1.7bn each – equivalent to the annual salaries of 112,000 people taking home the US federal minimum wage of $15,080.

The earnings of the best-performing hedge fund managers, published by Institutional Investor’s Alpha magazine on Tuesday, dwarfs the pay of top Wall Street executives who have been under fire for their multimillion-dollar pay deals. The best paid banker last year was JPMorgan Chase CEO Jamie Dimon, who collected $27m.

The huge pay at the top comes despite a tumultuous year on Wall Street that has led many well-known hedge funds to lose billions of dollars and others to close down. Daniel Loeb, CEO of Third Point, a hedge fund that manages $17.5bn, has described market conditions as a “hedge fund killing field”.

The, “Heads I win, tails you lose,” system of remuneration in Wall Street is wrong, and creates a lot of evil in our society.

It Would Be My Concern Too

No Comments

The anonymous source behind the huge leak of documents known as the Panama Papers has offered to aid law enforcement officials in prosecutions related to offshore money laundering and tax evasion, but only if assured of protection from punishment.

“Legitimate whistle-blowers who expose unquestionable wrongdoing, whether insiders or outsiders, deserve immunity from government retribution,” the source, who has still not revealed a name or nationality, said in a statement issued Thursday night.

The documents, which list the true owners of thousands of companies created to hide the people behind them, expose the holdings of current and former world leaders and other prominent figures. The source, who uses the pseudonym John Doe but whose gender is not known, said that the papers could spur thousands of prosecutions, “if only law enforcement could access and evaluate the actual documents.”

John Doe noted that journalists who have viewed the papers have said they will not turn over the full archive of 11.5 million documents. “I, however, would be willing to cooperate with law enforcement to the extent that I am able,” the source wrote.

The statement, which was issued Thursday night under the condition that it not be reported until Friday morning, gave some hints about John Doe’s political views and concerns. They include income inequality, the American campaign finance system and the “revolving door” of United States officials who take jobs at banks or other companies they once regulated.

………

In the statement, the source denied being a government official or contractor, now or in the past. The confidential source was also extremely critical of the news media, suggesting that certain unnamed news organizations had declined initial offers to take and report on the documents.

I can understand “John Doe’s” concern.  There have been numerous cases where whistle blowers have been typically been sentenced to more jail time than the folks actually breaking the laws.
What’s more, when one looks at those prosecutions, and the the sentences, it becomes pretty clear that this is a feature of the American criminal justice system, and not a bug.
Prosecutors seem intent on punishing people who whistle blow on members of our plutocracy.

Same as it Ever Was………

No Comments

It looks like GSE Freddie Mac may need another baliout:

Freddie Mac is expected to report a loss when it announces first-quarter earnings before the bell on Tuesday. That’s bad news for any public company, but especially critical for the mortgage provider because of its tangled history with the federal government.

Freddie and its counterpart, Fannie Mae were put into conservatorship in 2008 as the mortgage meltdown ensnared the financial system. They have lingered as wards of the state ever since. The Treasury Department modified the deal in 2012, requiring Fannie and Freddie to send all quarterly profits to the government — and shrink their reserves to zero by 2018.

As Mel Watt, the chairman of Fannie and Freddie’s regulator, put it in a speech in February, Fannie and Freddie are quickly approaching the point where they won’t be able to weather quarterly losses without going back to the Treasury for taxpayer dollars.

………

Bank analyst Richard Bove speculated about the possibility of a first-quarter loss in a recent note. “It is impossible for an outsider to predict what this will do to Freddie Mac earnings but it is not unrealistic to assume a loss of $2 billion plus in derivatives (it could be as high as $4 billion or more). At the $2 billion plus level, Freddie Mac’s pretax earnings would be negative $749 million,” Bove, vice president of equity research at Rafferty Capital Markets, wrote.

Spokeswomen for Freddie and its regulator, the Federal Housing Finance Agency, declined to comment.

A Treasury draw is a possibility, Moody’s Analytics Chief Economist Mark Zandi told MarketWatch, although he thinks the chance of one is “less than 50-50.”

The 10-year Treasury declined 49 basis points in the first quarter, far more than the 29-basis point drop that caused Freddie’s loss last year, noted Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute. (A basis point is one one-hundredth of a percentage point.)

Time to party like it’s late 2008, I guess.

Seriously, has there been a financial “Innovation” since the Automatic Teller Machine that has been about anything but ripping the rest of us off?

We are now in a never ending bust and bust cycle where the banksters get richer, and the rest of us get poorer.

Not Enough Bullets

1 Comment

It appears that the banks are asserting that they have a constitutional right to dividends from the Federal Reserve:

A trade group for the nation’s largest banks has asserted a constitutional right to risk-free profit from the Federal Reserve.

Rob Nichols, the chief lobbyist for the American Bankers Association, argued in a comment letter Thursday that a recent federal law reducing the dividend on the stock that banks purchase as part of membership in the Federal Reserve system, violates the Fifth Amendment clause banning the uncompensated seizure of property.

Congress reduced the dividend as part of a deal to pay for transportation projects. Dividends for the stock, which cannot be bought or sold, had been set at 6 percent since the Federal Reserve’s inception in 1913. Banks cannot ever lose money on the stock; they’re even paid out if their regional Fed bank disbands. So the dividend represented a risk-free profit, earning back its investment in full every 17 years.

………

Given those facts, [American Bankers Association chief lobbyist Rob] Nichols’s argument amounts to saying that the 6 percent dividend rate itself is constitutionally protected, because it’s been around for a long time. Nichols effectively asserts that the risk-free dividend is bank property.

Seriously?

I cannot see how a government subsidy can be considered property, particularly not a dividend which, as anyone who knows anything about investments, knows is subject to change without warning.

So Not a Surprise

No Comments
In all the commotion about the Panama Papers, we tend to ignore the fact that most of the dodgy finance that is used to hide wealth from the tax man occurs right here in the good old US of A, most notably in Wyoming and Delaware.

Well there is a an address in Delaware that is the “Headquarters” of the tax avoidance activities of Donald Trump, the Clintons, and 285,000 other shell corporations:

There aren’t many things upon which Hillary Clinton and Donald Trump agree, especially as they court very different Delaware voters ahead of a primary on Tuesday. But the candidates for president share an affinity for the same nondescript two-storey office building in Wilmington. A building that has become famous for helping tens of thousands of companies avoid hundreds of millions of dollars in tax through the so-called “Delaware loophole”.

The receptionist at 1209 North Orange Street isn’t surprised that a journalist has turned up unannounced on a sunny weekday afternoon.

“You know I can’t speak to you,” she says. A yellow post-it note on her computer screen reads “MEDIA: Chuck Miller” with the phone number of the company’s director of corporate communications. Miller can’t answer many questions either, except to say that the company does not advise clients on their tax affairs.

The Guardian is not the first media organisation to turn up at the offices of Corporation Trust Centre, and it’s unlikely to be the last.

The term tax haven may evoke images of exotic locales, but Panama actually ranks as the 13th most attractive spot for hiding assets, while the US lies third.

This squat, yellow brick office building just north of Wilmington’s rundown downtown is the registered address of more than 285,000 companies. That’s more than any other known address in the world, and 15 times more than the 18,000 registered in Ugland House, a five-storey building in the Cayman Islands that Barack Obama called “either the biggest building in the world, or the biggest tax scam on record”.

Officially, 1209 North Orange is home to Apple, American Airlines, Coca-Cola, Walmart and dozens of other companies in the Fortune 500 list of America’s biggest companies. Being registered in Delaware lets companies take advantage of strict corporate secrecy rules, business-friendly courts and the “Delaware loophole”, which can allow companies to legally shift earnings from other states to Delaware, where they are not taxed on non-physical incomes generated outside of the state.

………

Both the leading candidates for president – Hillary Clinton and Donald Trump – have companies registered at 1209 North Orange, and have refused to explain why.

Clinton, who has repeatedly promised that as president she will crack down on “outrageous tax havens and loopholes that super-rich people across the world are exploiting in Panama and elsewhere”, collected more than $16m in public speaking fees and book royalties in 2014 through the doors of 1209, according to the Clintons’ tax return.

The routine corruption in the United States is mind buggering.

How Utterly Proper

No Comments

George Osborne, the UK’s Chancellor of the Exchequer, has decided to exempt people that he sees as significant from money laundering regulations:

………

George Osborne this afternoon accepted an amendment to the Financial Services Bill which will see some Politically Exposed Persons and their families exempted from these anti-money laundering rules. Ministers will now “exclude… specified categories of persons” from the list of so-called PEPs, as Osborne says it is “disproportionate” for banks to include MPs and relatives on the watch list. Mossack Fonseca will be able to whisk MPs and their families through the account opening process…

(emphasis original)

And once again, I have to note that this is not The Onion, it is reality ……… reality completely indistinguishable from the the pages of a parody magazine.

I am beginning to wish that Guy Fawkes had succeeded in the Gunpowder Plot.

H/t Naked Capitalism

Good Point, But Wrong

No Comments

Over at The New Republic, David Dayen observes that observes that that transcripts from Hillary Clinton’s speeches to the Vampire Squid are irrelevant, because she has always been in Wall Street’s pocket anyway:

I don’t want to see the transcripts from Hillary Clinton’s Goldman Sachs speeches.

 ………

 The actual transcript is unnecessary because we already have enough in the public domain to know the real issue with these speeches: the rapport and camaraderie between political leaders and financial institutions, which results in a frame of mind that accepts their arguments and privileges their views. In fact, the best example of this comes from a speech that Clinton habitually touts as an example of her get-tough approach to Wall Street.

 On the stump and in debates, including last week’s in Brooklyn, Clinton highlights a speech she made at Nasdaq in December 2007, in the thick of the foreclosure crisis. “When I was serving as the senator from New York, I did stand up to the banks,” Clinton said last week. “I did make it clear that their behavior would not be excused.”

 In the speech, available here, she castigated Wall Street for “playing a significant role in the current problems,” for fueling irresponsible mortgage lending through securitization, and for having “shifted risk away from people who knew what was going on onto the people who did not.” Clinton has been criticized for this speech, however, because of a few lines where she said “there’s plenty of blame to go around” for the housing bubble, and that “homebuyers who paid extra fees to avoid documenting their income should have known they were getting in over their heads.”

 You can read this as a throwaway nod to personal responsibility, a typical politician’s remark, when the thrust of the speech indicts Wall Street. I would argue that spreading around responsibility for something that was a demonstrably criminal action by lenders fits with Wall Street’s moralizing about deadbeat borrowers who should have known the risks. It’s a form of public shaming. And it arguably led to the lack of accountability we saw for the financial crisis—after all, if everybody is responsible, then ultimately nobody is responsible

 ………

 When something could have been done to pressure mortgage servicers, Hillary Clinton, like many politicians, adopted their argument that they were prevented from helping homeowners. She believed their claims that they were hamstrung, when they weren’t. And I have to believe that’s attributable to proximity, access, and whose arguments get priority of place.

 Wall Street purchases that priority of place simply by donating to campaigns, bringing politicians in for chats, marinating them in its worldview. Finance executives can make very compelling arguments about the complex intricacies of the financial system. They can sound charming and smart and logical. And in a moment of truth, they can get the payoff, when a powerful politician like Hillary Clinton makes a reasonable-sounding statement about mortgage servicers needing legal immunity.

On a strictly factual level, DDay is right:  We do not have to read her transcripts in order to know that she is, always has been, and likely always will be be Wall Street’s stooge.

The only question is whether Hillary and her Evil Minions™ or not she will be a bigger stooge than Barack and his Evil Minions™.

Needless to say, this sucks like 1000 Hoovers all going at once.

That being said, her the fact that she is a suck up to Wall Street means nothing without sound bites for the press to make it a real issue for most of the voting public.

That is the reality of our culture, media, and political system,

So Not a Surprise

No Comments

And in what might be the last chapter of the lack of investor due diligence that is the blood testing firm Theranos, the Centers for Medicare & Medicaid Services (CMS) has announced that it will ban the top three executives at the firm from the test business:

Theranos, the high-profile clinical laboratory company, had a day of reckoning yesterday. That’s when The Wall Street Journal (WSJ) published a story revealing that Theranos was sent a letter by the federal Centers for Medicare & Medicaid Services (CMS) providing notice of sanctions.

In a letter to Theranos executives, CMS said it is prepared to:

  • revoke the company’s CLIA certificate;
  • impose a fine of $10,000 per day;
  • suspend and cancel the lab’s approval to receive Medicare payments; and
  • impose a two-year ban on the owner, operator, and laboratory director for owning or operating a clinical laboratory.

Pathologists and medical laboratory professionals will recognize that these are among the most severe sanctions that CMS can impose on a laboratory under the Clinical Laboratory Improvement Amendments (CLIA). Further, clinical pathologists who currently serve as medical directors of CLIA laboratories will find it useful to read the entire letter sent to Theranos on March 18, as it describes how CMS viewed the responses that Theranos provided following a January 25, 2016, letter from CMS describing deficiencies identified during an inspection of the Theranos CLIA lab facility in Newark, California.

………

“After careful review, we have determined that the laboratory’s submission does not constitute a credible allegation of compliance and acceptable evidence of correction for the deficiencies cited during the CLIA recertification and complaint survey completed December 23, 2015, and does not demonstrate that the laboratory has come into Condition-level compliance and abated immediate jeopardy. In general, we find that the statements made in the allegation of compliance and evidence of correction: 1) failed to adequately address the deficient practice cited; 2) are incomplete and failed to meet the criteria of acceptable evidence of correction; 3) do not ensure sustained compliance; and 4) show a lack of understanding of the CLIA requirements.

Less than a year ago, Theranos had a valuation in the billions, because it was promising a new technology that would allow for inexpensive blood tests on just a drop of blood. (A little finger stick)

The technology has never worked, even under the most controlled conditions, like demonstrations to investors, but it was treated like the next big thing for reasons that have never made sense to me.

My guess is that the founder of the company, Elizabeth Holmes, dazzled people with a rather spot on impersonation of Steve Jobs (she only wears black turtle necks), which convinced people who knew better that the nothing-burger business model of dot-coms could be applied to healthcare.