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- Uncivilized Investing
- Investing in Gold as World Economies Falter
- Bracing for a Greek Exit
- Currencies Try to Rebound Today
- Superior Biotechnology Leads to Superior Drugs
- The Delusion of Regulating Risk
- Talk of a Greek Exit Gets Louder
- Doug Casey on Taxes and Freedom, Part II
- Is Facebook the Rusty Hinge of the Stock Market?
What They Got Away With
Chief executives at big banks take on big risks, and for that, they are paid millions. But what happens when the risks don’t pay off? Should CEOs still get to walk away from the wreckage with gilded severance packages while employees lumber off with boxes and broken dreams? Don’t taxpayers deserve a refund of multi-million-dollar payouts for paying billions to bail out these firms? Almost all these CEOs say no, but lately, Congress and federal regulators seems to be saying yes. Some compensation has been cut, and some could be capped under proposed regulations. Some ex-CEOs may face fraud charges, and a few have been hauled before Congress–such as those at AIG, which was lambasted by lawmakers for sending executives to a $440,000 junket after getting an $85 billion government bailout. Despite all this scrutiny, plenty of chiefs are still walking away with mountains of money. A look at some of these golden parachuters.
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The Chicago Way: Justice for Sale at Holder’s DOJ
In an explosive Newsweek article set to rock official Washington, reporter Peter Boyer and Breitbart contributing editor and Government Accountability Institute President Peter Schweizer reveal how Attorney General Eric Holder and the Department of Justice are operating under a “justice for sale” strategy by forgoing criminal prosecution of Wall Street executives at big financial institutions who just so happen to be clients of the white-shoe law firms where Holder and his top DOJ lieutenants worked.
There’s more.
Even as President Barack Obama and Holder co-opt the Occupy Wall Street rhetoric of getting “tough” on the Big Banks and Big Finance, the Newsweek investigative report reveals that Eric Holder has not criminally charged or prosecuted a single top executive from any of the elite financial institutions thought responsible for the financial crash. And why would they? As Boyer and Schweizer report, “through last fall, Obama had collected more donations from Wall Street than any of the Republican candidates; employees of Bain Capital donated more than twice as much to Obama as they did to Romney, who founded the firm.”
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What is America’s Economic Breaking Point?
If there exists a single factor that can put enough pressure on the whole of the American economy and force it to crumble under its own weight, it’s the price the average American pays for gas. Extreme up-side gas price swings have preceded seven of the last eight American recessions, most recently in the summer of 2008 when drivers were forced to pay an all time high in excess of $4.50 per gallon at the pumps. What followed this spike – caused in part by tightening supplies, rising demand, easy money and a health dose of financial propaganda – was nothing short of the most severe financial and economic crisis since the Great Depression.
Nearly four years on the country finds itself in the midst of difficult times that have taken their toll on millions of Americans through job losses, home foreclosures, un-servicable debt, and ever dwindling retirement savings. By all accounts, Americans are worse off today than they were ten years ago, and the state of our nation, despite what Washington’s media masters report, is fiscally, economically, and socially dire.
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Banks Seen Dangerous Defying Obama’s Too-Big-to-Fail Move
Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the nation’s credit markets seized up and required unprecedented bailouts by the government.
Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.
Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2008 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.
“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.
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Couple says Goldman misused shares to assist short-sellers
Silicon Valley entrepreneurs say they were mistreated by Goldman, joining other critics of the firm.
FORTUNE — Two Silicon Valley entrepreneurs suing Goldman Sachs say the Wall Street firm mislabeled shares in the couple’s brokerage account in order to be able to assist short-sellers who were betting against the company the couple founded.
A lawyer for the couple, Sehat Sutardja and Weili Dai, co-founders and executives of the semiconductor company Marvell Technologies (MRVL), said the claim will be added Tuesday to a complaint the the couple filed with the Financial Industry Regulation Authority earlier this month. The couple sued Goldman a year ago in a San Francisco court. That case was thrown out and lead the couple to resurface their suit as a FINRA complaint set to go to arbitration. Sutardja is the CEO of Marvell. Dai is the company’s manager of communications.
The suit claims that Goldman cost the married couple $100 million by duping them into selling a portion of their Marvell shares to cover a margin loan at the height of the financial crisis. “Goldman had no legal right to lend out shares that didn’t belong to the firm,” says Phil Gregory of Cotchett, Pitre & McCarthy, who is representing Sutardja and Dai. “This whole case is about Goldman trying to make Goldman look better, and my clients suffering for it.”
In the amendment, the couple allege that in January 2008 Goldman (GS) removed Sutardja and Dai from the ownership records of more than 20 million shares of Marvell stock the couple held in a Goldman brokerage account. The couple say they agreed to allow Goldman to add the firm’s name to the stock ownership records, but that the shares were supposed to classified as held for the benefit of either Sutardja or Dai. Instead, the couple says their names were removed completely.
At the time, interest from investors wanting to bet against Marvell’s stock was soaring. The number of Marvell shares borrowed by short-sellers more than doubled from 16 million in mid-September 2007 to nearly 37 million by the end of January. The couple allege that by putting their shares in Goldman’s name, the firm was able to lend those shares to short-sellers, allowing them to increase their bets against Marvell. Goldman also collected fees from the hedge funds and other investors who borrowed the shares. Short-sellers are restricted from betting against stocks in which they have not secured the rights to borrow the shares. Sutardja and Dai say they would have objected to lending out their shares to investors who were betting against their company’s stock. The couple say they do not know how many shares Goldman lent to short-sellers, or if the firm did at all. Sutardja and Dai have reclaimed the shares, which were never sold from their account.
Grant Williams On The Simplicity Of Owning Gold
As we enter a week in which the expectations are high for yet another large expansion of central bank balance sheets, and ever more extreme monetary policy (thanks to the LTRO 2), we thought it appropos to listen to Grant Williams, of the famous “Things That Make You Go Hhhhm” newsletter, explain in its simplest terms, why it is still a good time to own gold. In two excellent and succinct presentations, Williams discusses the ‘simplicity’ of investing through the last four decades but ends by focusing specifically on the rotation to Gold at the start of the last decade (2000) and why the reason for rotating out of the precious metal has not occurred yet. Seeing the world of Gold as a battle between Too Much and Not Enough (and drawing on global supply, demand, and holdings flow) Williams lays out the reasons for owning gold, and how to know when to cover – as he narrows the five reasons to reconsider Buffett-and-Roubini’s Barbarous Relic down to one simple rule – Central Bank Monetary Policy Changes.
