Friday
Dec122014

My Holiday Book Recommendations, December 2014.

Here are some of my picks for 2014's thought-provoking books from a political, financial, economic and environmental standpoint. They are available at Indiebound, Amazon, and Barnes and Noble. I’m sure you all have great additions of your own. Enjoy and happy reading!

1) The Death of Money: The Coming Collapse of the International Monetary System by James Rickards, Portfolio Hardcover; 1st edition (April, 2014)

In clear, accessible prose, Jim Rickards dissects the precarious state of money at the hands of the world’s governments, multinational institutions, and central banks.  He reveals the extent of damage prevailing polices have already done to the global economy, what will happen if we continue on this path, and what ordinary citizens and small investors can do to protect themselves from the economic onslaught.

2) Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State by Ralph Nader Nation Books; First Edition (April, 2014)                  

Unstoppable is even-handed, erudite, practical and necessary. Ralph Nader harnesses his lifelong crusade on behalf of the public interest over the corporatist agenda into a treatise that is optimistic and patriotic. He shows that effective Left-Right political alliances aren’t pipe dreams, but historic realities in need of strategic cultivation, for the sake of all of our futures.

3) The Fight for the Four Freedoms: What Made FDR and the Greatest Generation Truly Great by Harvey J. Kaye (Simon & Schuster; First Edition (April, 2014))

In The Fight for the Four Freedoms, professor, historian and patriot, Harvey J. Kaye pens an inspiring account of a critical time in American history, inspired by the FDR’s premise that: “Freedom from want and from fear; Freedom of speech and religion” were crucial principals for all Americans. Comparing the strides that FDR made for the country with the anti-visionary maneuvers of more recent presidents Kaye shows that the way out and upward for the population lays in our past.

4) How America was Lost: From 9/11 to the Police/Warfare State by Paul Craig Roberts (Clarity Press (March, 2014))

In How America Was Lost, Paul Craig Roberts focuses his keen eye and sharp mind on the deterioration of government accountability and morality amidst the rise of hypocrisy and recklessness in the wake of 9/11. Through the tangle of wars, aggression, decimation of privacy, Wall Street protectionism and debt creation since, Roberts is relentless in his well-reasoned criticisms of US leadership from an economic and military standpoint.

5) Bad Paper: Chasing Debt from Wall Street to the Underworld by Jake Halpern (Farrar, Straus and Giroux (October, 2014))

Check out my CSPAN BookTV Interview with Jake:

In colorful prose and through the real life stories about an eclectic collection of characters ranging from felonious thug perpetrators to US veteran victims, Bad Paper exposes the murky world of consumer debt collection. From shiny Wall Street offices through the courtrooms of Georgia to the gritty pit of Buffalo, New York., Jake Halpern traces the movements of a “package” of debt from coast to coast, and reveals the human ramifications of criminal collection practices along the way.

6) The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi (Author) Molly Crabapple (illustrator) (Spiegel & Grau; First Edition (April, 2014))

Matt Taibbi once again combines punching prose, on-the-ground reporting, and a sharp cynical eye for the absurd.In The Divide, he examines the two worlds that define our times – the one of the privileged elite that can dodge legal ramifications for mega-crimes, and the other citizens on the losing side of the economic and legislative system that are most impacted by financial wrongdoings yet liable to be arrested for not being wealthy enough to commit really large crimes,

7) Too Big to Jail: How Prosecutors Compromise with Corporations by Brandon L. Garrett (Belknap Press (November, 2014))

Garrett has compiled the most extensive database of corporate settlement information available today to shine a light not only on the manner in which corporations skirt the law, but also on what must be done to curb them. Too Big to Jail is a cogent, exhaustively researched plea for more equitable legal oversight. Here is the rest of my review in the National Memo.

8) Unveiled Threat: A Personal Experience of Fundamentalist Islam and the Roots of Terrorism by Janet Tavakoli  (Lyons McNamara LLC (November, 2014))

Janet Tavakoli, primarily known for works on Credit Derivatives and for her thriller about finance and the Vatican, shows her versatility as a writer and thinker in Unveiled Threat. Drawn from her personal experiences during Iran's Islamic revolution of 1978-79 and a plethora of research collected since, Tavakoli reveals the extent to which Fundamentalist Islam is at odds with basic freedoms and rights.

9) Carbon Shock: A Tale of Risk and Calculus on the Front Lines of the Disrupted Global Economy by Mark Schapiro (Chelsea Green Publishing (August, 2014))

In Carbon Shock, Mark Schapiro transcends standard discussions about the culprits and ramifications of climate change and takes us on a harrowing, international exploration of the economic costs of carbon emissions. He exposes the multinational corporate obfuscation of these costs and outlines his long-term solutions.

10) This Changes Everything: Capitalism vs. the Climate by Naomi Klein  (Simon & Schuster (September, 2014)

In This Changes Everything, Naomi Klein examines climate change in the context of rapacious capitalism accelerating its destruction of the planet, enhancing inequality and pulverizing economies. She evenly examines climate-change by detailing its deniers and overzealous activists, concluding  that the market isn't going to stop the crisis that must be stopped nonetheless for all of our sakes. Klein details the efforts of those doing something about it leaving us with hope.

11) The 2001 Anthrax Deception:  The Case for a Domestic Conspiracy by Professor Graeme MacQueen.

Graeme MacQueen’s well-researched book analyzes the October 2001 Anthrax attacks. He examines how the media and Bush administration spin about the threat of bio-terror was used to pass the Patriot Act and to establish a connection between Saddam Hussein and 9/11. Whatever one’s thinks about 9/11; he provokes the question of whether the attacks were created or leveraged to rally Iraq War support.

12) Social Insecurity: 401(k)’s and the Retirement Crisis by James W. Russell (Beacon Press, April, 2014)

James Russell’s book, Social Insecurity, will enrage citizens of all ages and political persuasions, illuminate them about the pillaging of their economic futures by the financial industry, and incite them to action. More than a description of a retirement system coopted by predatory bankers and fund managers, Social Insecurity is also a passionate account of the complicity of the global political elite and a plan of change.

13) In the Shadow of Saint Death: The Gulf Cartel and the Price of America's Drug War in Mexico by Michael Deibert (Lyons Press, June 2014)

Michael Deibert is one of those rare journalists that plunges himself into the most bloody and tumultous conflicts in the world, having written two prior books on his experiences in Haiti and the Congo. His latest book, In the Shaodw of Saint Death, takes him to the bowels of the Mexican drug wars, from which he chronicles the devastating consequences of cartel battles and the impact of US drug policy. An eye-opening, harrowing read.

Friday
Dec052014

Steaming Mad about a Big Bank Con: Email from a Concerned Senior

Everyday I receive anguished emails from concerned citizens regarding the state of the economy, Wall Street, the political-financial system, and how their future stability is impacted by the powers that be. This one stood out for its clarity, as well as being indicative of one of the many ways in which the banking system regularly undermines people’s economic stability by targetting their savings accounts (which thanks to the Fed's zero-interest-rate policy receive no interest, and thus, no relatively risk-free returns) for high-fee asset management services.

The Clinton administration’s 1999 repeal of Glass-Steagall, plus the two prior decades of various measures that weakened the intent of this 1933 Act that separated banks’ speculation activities from deposit and lending ones, has enabled big banks to engage in all manners of trading, leverage, and ill-concocted investment schemes, while holding trillions of dollars of individuals’ deposits.

It was Charles Mitchell, head of National City Bank (now Citigroup) back in the 1920s that realized if his bank could corner the deposits of ‘the Everyman’, it would be better positioned to engage in the bigger transactions that would catapult it to a financial superpower, as well as use the accounts for additive domestic gain. Nearly a century later, this aspect of converting depositor/savers to commission-providing risk-takers, provides fees to bankers, absent true responsibility for any related downside (as in the ‘past behavior is not indicative of future results’ small print.)  

But people should not act upon the “guidance” of the investment advisors resident at the very big banks where they keep their savings and other money – this leaves too much room for manipulation of their trust and money. And if legislation and politicians won’t divide these two financial items, people must do so for themselves.

For the evolution of institutionalized, government and central bank supported speculation has left populations footing the bill for bets taken beyond their knowledge and certainly, control. Even those people that believe they are taking the prudent steps with respect to their own financial situations as they approach old-age, are victims of a churn-and-burn mentality that incurs unnecessary fees and bonuses for the perpetuators, at their expense.

Having checked with the writer, who prefers to remain anonymous, I am leaving the contents of this email intact. The writer wanted others to know “how the nation’s banks target senior citizens and steal their life savings.“  These are the warning words I received from one of America’s seniors:

“Unlike many of the banks’ other schemes, this con is entirely avoidable if seniors and their families knew what to watch out for.

Here is how it works:

1. You are a conservative saver, and you have a large amount of money in the bank.  Since you are a “valued customer”, the bank gives you your own personal financial representative, with whom you build a relationship over time.  But this person is not on your side.  He will prod, coax, and sweet-talk you into moving your savings over to the bank’s investment arm.

2. If you do move your money over to the investment bank, your financial advisor will charge you high management fees (upwards of 1% of assets per year).  Moreover, you will pay big commissions on top of that.  But these won’t be disclosed as commissions – they will be incentives disguised in various ways that are buried deep within the fine print.  Since you don’t know about these, and since you trust the paid professional you’ve hired, you will be an easy victim.

3. Because of these incentives, your advisor will dump investments into your portfolio that may include: funds of funds (which charge layers upon layers of fees), IPO offerings that the bank can’t manage to sell off, complex structured products, variable annuities, and the like.  Anything the bank wants to get rid of, wishes to hawk, or gets a kickback to sell will be dumped into your account.  All the while, your advisor will be assuring you that these are excellent investments.

4. The result will be that you will almost certainly do worse than the market overall – at the very least, by the fees and commissions you pay (commissions that have been taken  –  stolen! – without your consent), and at worst, by scorching losses obtained via inappropriate investments.

5. If you figure out what has happened (and most people don’t, they will think that the market just did badly), you will have little recourse.  The bank will have forced you to sign a mandatory binding arbitration agreement that shuts you out of the court system.  Even if the bank has committed fraud, forgery, etc., it doesn’t matter.  The courts are closed to you.

6. If you manage to obtain a settlement or get a judgment from the arbitration forum, the results will almost certainly be kept confidential.  Therefore, the goings-on are kept quiet, and the banks can continue their practices unabated.

The victims of this fraud are not doing anything wrong or unreasonable.  They are working with large national banks.  They are hiring certified financial planners.  They are paying high management fees, so there is no expectation of anything “free”.  They are asking good questions and being reassured that their financial advisor is looking out for their best interest.  But they are being swindled nonetheless – because they don’t know about the hidden incentives, because they are unable to differentiate good investments from bad ones, and because they are being reassured by their advisor about how well they are doing compared to the market, even if the opposite is really true.

These are professional con men that are swindling millions of seniors, every day, all over the country -- decimating their life savings in their final years. 

I know, because I have seen it happen.  And I am mad.  Steaming mad.”

 

This writer is not the only one that is steaming mad. So are millions of people - retirees that don’t have the luxury of ‘making it back’ and workers that aren’t getting paid enough to leave unnecessary money ‘on the table’ of brokers and advisors whose best interests are institutionally and legislatively their own. Heeding the warning in here, and separating one’s bank deposits from the bank’s asset management arm that views them as fee-fodder, would be one way to protect against the damage that this regulatory fusion of bank practices causes.

Monday
Nov102014

QE isn’t dying, it’s morphing

A funny thing happened on the way to the ‘end’ of the multi-trillion dollar bond buying program known as QE - the Fed chronicles. Aside from the shift to a globalization of QE via the European Central Bank (ECB) and Bank of Japan (BOJ) as I wrote about earlier, what lingers in the air of “post-taper” time is an absence of absence. For QE is not over. Instead, in the United States, the process has simply morphed from being predominantly executed by the Federal Reserve (Fed) to being executed by its major private bank members. Fed Chair, Janet Yellen, has failed to point this out in any of her speeches about the labor force, inflation, or inequality. 

The financial system has failed and remains a threat to us all. Only cheap money and the artificial inflation of asset values can make it appear temporarily healthy. Yet, the Fed (and the Obama Administration) continue to perpetuate the illusion that making the cost of (printed) money zero by any means has had a positive effect on the population at large, when in fact, all that has occurred is a pass-the-debt-ponzi-scheme co-engineered by the Fed and big US bank beneficiaries. That debt, caught in the crossfires of this central-private bank arrangement, is still doing nothing for American citizens or the broader national or global economy. 

The Fed is already the largest hedge fund in the world, with a book of $4.5 trillion of assets. These will plummet in value if rates rise.  Cue the banks that are gearing up their own (still small in comparison, but give them time) role in this big bamboozle. By doing so, they too are amassing additional risk with respect to interest rates rising, on top of all their other risk that counts on leveraging cheap money.

Only the naïve could possibly believe that the Fed and its key banks haven’t been in regular communication about this US Treasury security shell game.  Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion. 

Adding more fuel to the central-private bank collusion fire, is the fact that the Fed is a paying client of the JPM Chase. The banking behemoth is bagging fees for holding and executing transactions on the $1.7 trillion New York Fed’s QE mortgage portfolio, as brilliantly exposed by Pam Martens and Russ Martens.

 Wouldn’t it be convenient if JPM Chase was also trading this massive mortgage book for its own profits? Or rather - why wouldn’t they be?  Who’s going to stop them – the Fed? Besides, they hold more trading assets than any other US bank, so why not trade the Fed’s securities ostensibly purchased to help the public - recover?

According to call report data compiled by the extremely thorough website www.BankRegData.com, nearly 97% of all bank trading assets (including US Treasuries) are held by just 10 banks, led by JPM Chase with 43.80% and followed by Citigroup at 24.51% of all bank trading assets.

Last quarter, US Treasuries were the fastest growing form of security bought by banks, increasing by 26.3% or $72 billion over the prior quarter. As the Fed tapered, banks stepped in to do their part in the coordinated Fed-private bank QE game. In the past year, banks have added $185.8 billion of US Treasuries to their books, more than doubling their share of government debt.

Just seven banks comprised nearly all ($70.5 billion) of this quarterly increase: State Street Bank, Capital One, JPM Chase, Wells Fargo, Bank of America, Bank of NY Mellon and Citigroup. By the end of the third quarter of 2014, Citigroup, with $95 billion, was the largest holder of US Treasuries, followed by Bank of America at $54.8 billion and Wells Fargo at $37.8 billion from nearly zero at the start of 2014. Bank of NY Mellon holds $25.3 billion and JPM Chase holds $15 billion US Treasuries.

This increase in US Treasury holdings reflects another easy money element of our federally subsidized banking system. Banks take deposits from individuals for which they pay close to zero in interest, in fact, charge customers fees for keeping their money  (courtesy of the Fed’s Zero-Interest-Rate policy.) They can turn that around to make a cool risk-free 2.3% by parking the money in 10-year US Treasuries. Why lend to Joe the Plumber, when the US government is providing such a great deal?

But, the recent timing here is key. Banks only started buying US Treasuries in earnest when the Fed announced its tapering plans. Thus, not only are they participants in the ZIRP game as recipients of cheap money, they are complicit in effecting monetary policy. As the data analyzed so expertly by Bill Moreland at www.BankRegData.com makes clear, there has been no taper.  Thus, the publicized reason for tapering – better job and economic growth – is also bogus.

During the third quarter, Wells Fargo and Bank of America matched Fed purchases of US Treasuries, keeping the total amount of US Treasuries in QE land neutral. With such orchestration to keep rates down and the prices of US Treasury securities up, all the talk about whether the labor force is strengthening or inflation exists or not is mere show. Banks haven’t even propped up the labor market in their own industry. They chopped 11,400 jobs last quarter. In the past two years, they cut 57,236 jobs.  

No sucessful candidate in either political party mentioned any of this during the mid-term elections. Yet, our political-financial system has gone from the dysfunctional to the failed to the surreal. Speculation, once left to individuals and investors, is now federally sponsored, subsidized and institutionalized.  When this sham finally buckles and the next shoe falls and rates do eventually rise, the stock market will tank, liquidity will die, and the broader economy will plunge into a worse Depression than before. We are not there yet because of these coordinated moves and the political force behind them. But we are on a precarious path to that inevitability.