Especially of CEOs who parachute into the executive office. Wall Street’s knee-jerk reaction can be phenomenal. Citigroup’s massacre of 11,000 souls caused its stock to jump. But the same day, we learn that wages adjusted for inflation dropped 1.4% in the third quarter—a continuation of 12 years of declines that has hollowed out the middle class, pushed people into the lower classes, and devastated the poor.
During the off-hours on Sunday, when few people were willing to ruin whatever remained of their weekend and when even astute observers weren’t supposed to pay attention, the National Association of Insurance Commissioners approved new rules that would allow life insurance companies to lower their reserves for future claims—at the worst possible time—having already forgotten all about the financial crisis.
A Lehman Brothers kerfuffle erupted, this time in Germany, in broad daylight. With a stunning amount: up to €800 million ($1.04 billion) in fees for the insolvency administrator. It blows away the German record of €70 million. Hedge funds are raising a ruckus, on the surface to shame the insolvency administrator into backing off. It worked. Almost. But suddenly, there are new allegations—against the hedge funds.
Career Education, when it reported its quarterly results, shed light on an industry that had ruthlessly taken advantage of the American way of funding higher education, and that had preyed on gullible prospective students who were trying to better their lives. Then it handed the tab to the taxpayer. A perfect scam. Now the industry is in a vise between government crack-downs and reluctant students.
Two thermometers into the brains of corporate America plunged to depth not seen since the trough of the Great Recession when the US was losing hundreds of thousands of jobs a month. One was based on responses from CEOs of America’s largest corporations; the other was based on responses from analysts who’d listened to their industry contacts. Just before Lehman, these people had exactly zero predictive capabilities. So, could they now have ulterior motives?
CEOs believe the next six months are going to be tough; and they’re reacting to it by slashing capital expenditures and jobs. These ugly trends “reflect global demand flattening out, particularly in Europe and China,” said Boeing CEO Jim McNerney. The numbers are evoking the dark days of 2009 and double-digit unemployment. It’s been a steep and bumpy slide.
It must have been a nightmare for Neil Barofsky, former Inspector General overseeing TARP during the financial crisis. He was on CNBC this morning to hawk his new book, when all heck broke loose. An argument about TARP, the most despised law in the US … how it prevented the collapse of Wall Street or something. But they failed to mention that by the time TARP was handing out money, it had already become irrelevant. A much greater power had taken control.
Contributed by Chriss Street. According to a SEC regulatory filing, Berkshire Hathaway Inc. managed by world famous investor Warren Buffett, dumped half of its $16.5 billion investment in the municipal bond market. The Wall Street Journal described the huge secretive sale of munis by such a dominant investor as a “red flag.” The quick sale – and willingness to take a big loss – just before negative news was disclosed is highly suspicious.
They only bubble up rarely, these scandals at the Federal Reserve System, but when they do, they’re doozies, involving huge amounts of money, massive conflicts of interest, all-out manipulation, collusion, favoritism, dizzying cronyism…. Over the 100 years the Fed has existed, it has done an excellent job in one of its other functions, maintaining the dollar, which has lost only 96% of its value—instead of 100%. Yet, it just doesn’t want to be audited.
Normally we see the gory details only after a firm collapses, like Enron or Lehman, when vultures tear open its guts to fight over shriveled assets that had appeared fat and healthy on paper, and some of them had been written up repeatedly to create—which our accounting system encourages us to do—paper income. Other outfits get bailed out. JPMorgan among them. Yet, they still hollow out their balance sheets. And JPMorgan’s soon-to-be $7 billion trading loss shows how.