Archive | Banksters

Snake oil bonds sold to school boards by banksters

trust me i'm a banker

That nice man from the Big Bank explained to us at the school board meeting how their nifty new bonds will save us a bunch of money. True, the bonds are a little hard to understand. But as long as something (I’m not sure what) goes up, our borrowing costs go down! So that means we can load up on debt for new construction because they’re practically giving the money away. We won’t have to impose new taxes which means avoiding all those tedious public hearings and screaming members of the public.

This magic is achieved by the wonderfulness of Capital Appreciation Bonds. California school districts loaded up the truck with them, because really, what could go wrong?

Unlike conventional bonds that have to be paid off on a regular basis, the bonds approved in AB1388 relaxed regulatory safeguards and allowed them to be paid back 25 to 40 years in the future. The problem is that from the time the bonds are issued until payment is due, interest accrues and compounds at exorbitant rates, requiring a balloon payment in the millions of dollars. . . .

Oh wait, maybe CABs aren’t so wonderful after all.

High cost, high risk, overly complex, and sold to the school boards as a way to finance capital projects without breaking the “no new taxes” pledges. The thought of paying out at 15:1 when the debt costs should have been no more than 3:1 is possibly worse than the ranting of Fauntleroy’s mother after the 5th grade play cast was announced.

The average functional life of a school building is 40 years. So, a capital appreciation bond could be issued for 40 years – go back to the unfortunate example of the Poway School District, wherein borrowing $150 million ended up costing $1 billion.

The Placentia School District in California has essentially bankrupted itself with CABs.

With no public discussion, the school board had hired George K. Baum & Co. and its staff of political strategists to help push the measure through so the district could continue an ambitious building spree.

After the election, the board allowed the bank to sell some of the costliest bonds ever issued by a California public agency. Just one $22 million borrowing from 2011 will cost taxpayers nearly 13 times that amount – $280 million – to repay.

Ouch. Gosh, didn’t Mafia loan sharks go to prison for things like that?

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Tesla, and extraordinary delusions and the madness of crowds

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Sorry, but Tesla just isn’t different or revolutionary. There is nothing new or startling about Tesla electric vehicles, which after all, use a technology that has been around since the 1890’s. Ditto for Telsa’s announcement it will build batteries to store solar power for homes. Again, this has already been done by many other companies, and Tesla has no new ideas here. Further, Tesla is not profitable and will not be until at least 2020, if ever.

However, that one-man hype machine Elon Musk spins an alluring tale of a wondrous EV future with solar panels everywhere. In reality, his company is heavily supported by subsidies. Wall Street traders love the hype because they use it to manipulate the stock and make a profit out of air – hot air, to be precise.

Much of the hot air is uncritically accepted by publications that should know better. In May 2014, Quartz published this gem of deliberate confusion, pretending Tesla made money, if you just exclude a bunch of money-losing stuff from the balance sheet, that is.

Tesla just posted a quarterly profit of $17 million.

Actually, using generally accepted accounting principles, it lost $49.8 million, or $0.40 per share, in the quarter that ended in March. A similar thing happened a year ago, when the company posted a surprising profit, if you exclude certain items.

Non-GAAP accounting, simply put, is snake oil. It says, well, if we hadn’t lost a bunch of money in this area or didn’t have to pay unexpected amounts of money over there, then we would have made money. It is junk accounting. Wall Street cheers these delusions because it basically stopped caring about rational stock valuations long ago. If Telsa says they made a non-GAAP profit, then the stock will pop.Wall Street algos will trade and profit from it before you can blink, much less react to the news.

The speculative mania on Wall Street has reached such absurd lengths that Telsa is being heralded and valued as the second coming of Apple and its circus barker CEO, Elon Musk, as the next Henry Ford. Indeed, so raptured were the day traders and gamblers that in the short span of 33 months between early 2012 and September 2014 they ramped up Tesla’s market cap from $2.5 billion to a peak of $35 billion.

That’s a 14X gain in virtually no time—-and its not due to the invention of a revolutionary new product like the i-Pad. Instead, we’re talking about 4,600 pounds of sheet metal, plastic, rubber and glass equipped with an electric battery power pack that has been around for decades, and which is not remotely economic without deep government subsidies.

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HSBC. Banker of choice for laundering drug money?

drug map

A consortium of India journalists detail meticulously how HSBC is at the center of laundering money from drugs. Oh, there is lots of dirty money in other high places, to be sure. From the opium wars of the 1800’s, to prominent American families profiting from illegal opium trade, to the west invading Afghanistan which curiously caused opium production to soar, far too many of our supposedly respectable elites are awash in drug money. It’s important to note they were not somehow recently corrupted but rather have always profited from the drug trade.

The edifice of international banking is very dirty and very corrupt indeed.

Drug money saved banks in in 2008, says the UN.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

Little or nothing has been done about this except for fining banks, which essentially is  a protection racket by governments. Governments pretend to enforce the law, dirty banks pay fines and pretend they will sin no more. Nothing changes. Government officials leave office and are then amply rewarded in any number of ways for their refusal to enforce Rule of Law.

Currently HSBC is smack in the middle of the drug trade, say the India journalists. Emphasis added.

For years, when banks have been caught laundering drug money, they have claimed that they did not know, that they were but victims of sneaky drug dealers and a few corrupt employees. Nothing could be further from the truth. The truth is that a considerable portion of the global banking system is explicitly dedicated to handling the enormous volume of cash produced daily by dope traffickers.

Contrary to popular opinion, it is not “demand” from the world’s population which creates the mind destroying drug trade. Rather, it is the world financial oligarchy, looking for massive profits and the destruction of the minds of the population it is determined to dominate, which organized the drug trade. The case of HSBC underscores that point. Serving as the central bank of this global apparatus, is HSBC.

CBS News on the charming dealings of HSBC with all manner of slime, criminals, and thugs.

A 37-year-old computer security specialist named Hervé Falciani stole the huge cache of data in 2007 and gave it to the French government. It’s now being used to go after tax cheats all over the world. 60 Minutes, working with a group called the International Consortium of Investigative Journalists, obtained the leaked files. They show the bank did business with a collection of international outlaws: tax dodgers, arms dealers and drug smugglers — offering a rare glimpse into the highly secretive world of Swiss banking.

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HSBC illegally sheltered cash for wealthy and corrupt.

money laundering

Leaked documents show HSBC laundered and hid upwards of $100 billion, some of which was very dirty money indeed. HSBC is of course shocked it could have done such a thing. Brit politicians blame scalliwags in the other party for not enforcing laws but really it’s pot, kettle, black. Both parties are equally at fault for allowing it. Oh, your favorite pop star or celeb might be among those who hid money from the tax man, along with drug cartels and other assorted low life.

In a world where laws were actually enforced and corruption not permitted, HSBC would be shattered into pieces and those responsible for money-laundering would be imprisoned.

Secret documents reveal that global banking giant HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws.

In marvelously weasel-worded legalese, HSBC neither fully admits to previous wrongdoing nor says it has completely stopped doing so.

“We acknowledge that the compliance culture and standards of due diligence in HSBC’s Swiss private bank, as well as the industry in general, were significantly lower than they are today.”

The written statement said the bank had “taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards, including those where we had concerns in relation to tax compliance.

When it comes to defending class interests of the wealthy, both parties act in lockstep. The same is of course true here in the States too.

Labour leader Ed Miliband said the government had “some serious questions to answer” and accused HM Revenue & Customs of failing to act on details it was given in 2010 about the claims.

But the government has hit back at Labour, accusing it of failing to act on tax evasion when it was in power.

You will note neither party is demanding existing laws be enforced. Instead we have the usual circus of blaming the other side for something both are doing.

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Debt restructuring terrifies central banks because it exposes insolvency

crater closeup

Often, if an entity can’t make bond payments, the payments are restructured. Not so with the Eurozone. Banksters their want their pound of flesh, even if it hurts the economy at large and pauperizes countries. Greece is a perfect example of bankster greed and selfishness. Big banks and central banks have loaned money to Greece to pay back previous loans. Most of the money flows back to banksters who are terrified their corrupt house of cards will come crashing down on them. Little if any of the money helps Greece.

Here’s why they are terrified. Sovereign debt bonds are used as collateral for big banks to do highly leveraged trades. If these bonds tank in value, which is what would happen in a restructuring, then their balance sheets and pretend solvency vaporizes.

Draghi won’t let this happen because he, like all Central Bankers in the world, is concerned about one thing: the bond bubble.

Globally, the bond bubble is $100 trillion in size. And sovereign bonds (the ones the EU doesn’t want to restructure) are used as the senior most collateral backstopping the big Eurozone banks’ derivatives portfolios.

Thus ANY debt restructuring in the EU would almost immediately blow up the large Eurozone banks because you’re talking about tens of trillions of Euros’ worth of trades having requiring margin calls/ new collateral arrangements.

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Yanis Varoufakis, new Greeek Finance Minister, is genuine radical. Good

yanis

May Greece and Varoufakis now do what Iceland did, repudiate the debt and jail some banksters. The purpose of the forced austerity in Greece is to bail out German banks and has nothing to do with helping Greece. Renegotiating bond debt is common when borrowers can’t msake payments – except when mostly insolvent banks knowingly bought garbage debt and need to pretend the bonds will still be repaid.

Varoufakis says:

“Europe in its infinite wisdom decided to deal with this bankruptcy by loading the largest loan in human history on the weakest of shoulders, the Greek taxpayer. What we’ve been having ever since is a kind of fiscal waterboarding that have turned this nation into a debt colony.”

From his blog.

Today, the people of Greece gave a vote of confidence to hope. They used the ballot box, in this splendid celebration of democracy, to put an end to a self-reinforcing crisis that produces indignity in Greece and feeds Europe’s darkest forces.

The people of Greece today sent a message of solidarity to the North, to the South, to the East and to the West of our continent. The simple message is that the time for crisis-denial, retribution and finger-pointing is over. That the time for the reinvigoration of the ideals of freedom, rationality, democratic process and justice has come in the continent that invented them.

Greek democracy today chose to stop going gently into the night.

Greek democracy resolved to rage against the dying of the light.

The Guardian:

Greece’s new leftist prime minister, Alexis Tsipras, is set to announce his anti-bailout government, with the post of economics minister – chief negotiator with the country’s international creditors – going to a radical economist who has described austerity programmes as “fiscal waterboarding”.

With Greece set on a collision course with Europe over the Syriza-led government’s plans to reverse draconian belt-tightening and renegotiate the country’s massive debts, Yanis Varoufakis, who calls himself an “accidental economist”, confirmed in a radio interview that he would take up the key position.

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Venezuela nears default. Maduro spouts useless platitudes

Venezuela food line

Venezuela food line

Venezuelans hoping for concrete plans from Maduro about their escalating financial crisis instead got mindless blather. He said “God will provide” after a ten day worldwide trip begging for money and higher oil prices. He got neither. Venezuela faces $11 billion in bond payments this year it cannot possibly make. An economy mismanaged for years has been devastated by low oil prices. There are huge lines everywhere for basic supplies and food.

Banksters and other bottom dwellers will be happy to feast on whatever carrion they can find. As for Venezuelans, they face increasingly desperate times.

The Venezuelan economy is in tatters with higher than 64 percent inflation and dwindling foreign reserves. Protests like those that paralyzed the country last February are beginning to sprout up again. Maduro’s decision to essentially maintain business as usual – in his speech last night he accused opposition politicians of planning a coup and avoided an explicit devaluation of the currency – signaled to Venezuelans and the world that he’s not willing to face the country’s ailing economy head on.

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Banksters hover while Venezuela starts circling the drain

lines

When Venezuela runs of of money to pay debt and import goods, which will happen soon, it becomes prey for banksters across the planet. Venezuela’s sovereign debt default is coming. Ominously, there are huge lines everywhere there now for food and basic supplies, if they can even be found. Inflation is soaring. The economy is imploding. Financiers and other countries will be looking to scavenge, looking for pennies on the dollars deals. And Venezuela will be in no position to say no.

Give a thought to the people there who are just trying to get by and didn’t ask for any of this.

Venezuela-CDS

Credit Default Swaps are essentially insurance on bonds, big money deals between private parties, done to hedge risk or speculate. The CDS spread is the premium paid by the buyer to the seller for guaranteeing the bonds, and is measured in hundredths of a percent. US bonds have a spread of 18 or 0.18. Venezuela has a spread of 5714 or 5.314%, the highest of any country, by far.

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Subprime auto loan defaults rising sharply

subprime

Financial vultures are making dicey subprime auto loans and default rates are rising sharply. Combine this with student loan defaults and plunging oil prices putting people out of work and we could be heading towards another financial crisis no one could ever possibly have predicted.

Over 8.4% of subprime auto loans taken out in the first quarter of 2014 were already delinquent by November, according to an analysis of Equifax data by Moody’s Analytics for the Wall Street Journal. That’s the highest rate of early subprime delinquencies since Financial-Crisis year 2008.

Auto sales have been a big force in boosting retail sales, consumer spending, manufacturing, transportation (trucking, railroads), and service activity. So when the auto subprime bubble pops, it won’t take down the financial system; but it will hit the broader economy.

Let’s hope – knowing that hope is not a strategy – that it doesn’t pop in synch with another debt-fueled economic miracle, now imploding, the shale oil and gas boom. Because that would knock down in one fell swoop the two major growth industries that have largely been responsible for whatever “recovery” we’ve had in the US.

And if you’re fortunate enough to own your car, the title loan industry will be happy to gouge you with interest rates from 80-500%. One would think governments would regulate such gouging, charging rates that loan sharks used to go to prison for but no such luck. Title loan companies finance what they can sell the car for and don’t care if you default. They just sell the car and make money in the process.

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Why Jeb will beat Hillary

JebVHillaryDailyDiscord

Leftist Donkey Mountain thinks Republican soft cop Jeb Bush will beat Democratic ice queen Hillary Clinton in 2016, mainly because Democrats are hugely overconfident and Hillary has such high negatives. The right will rally hard around Bush. The left will not rally around Clinton because she has done nothing for them.

This is certainly in the realm of possibility. However, if it’s Bush vs Clinton, there will be multiple third party and independent runs on both sides, which will greatly complicate the horse race. A presidential race now has to be all about the horse race. What would CNN do if a campaign actually covered substantive issues and their talking heads actually had to analyze issues? However CNN is safe, neither major party candidate will talk about issues. Both are beholden to and members of the plutocrat bankster class, whose interests they defend and protect to the detriment of the rest of us.

Democrat narrative for 21016 presidential campaign.

Will Hillary Clinton still be the most admired women in America six months deep into the campaign? Will wall-to- wall coverage of her robotically calculating, condescending, transparently cynical politicking still warm the hearts of Americans? It won’t, and half the country will view her just like they viewed Ann Romney: an arrogant and entitled aristocrat who thinks the little people smell.

Republican narrative for 2016.

That bullshit narrative might look something like this: Jeb Bush, A New Kind of Conservative, Nobly Fighting to Redeem His Family’s Name.

From then on, it will be Nurse Ratched Hillary (Is she too old to be president? Does she have health problems she’s not disclosing?) versus the Smart Bush, who’s wife is Hispanic and who ain’t his big brother’s kind of conservative. Come home, normal Americans, it’s safe to vote Republican again.

The bullshit outcome.

In the battle of the bullshit media narratives, Noble Son will beat Inevitable Queen Hillary, regardless of what the polls say right now. But Hillary and the Democrats will go on believing their own hype. They’ll seek out every poll result and focus group that reinforces the notion that Hillary is unstoppable, conclude she has it sown up, and then play prevent defense and lose.

Let’s hope there are significant third party and independent runs, since this will force discussion of issues, such as endless war and not enforcing rule of law against banksters – something Jeb and Hillary both support.

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