Don’t get too excited, it is only a little, but it is good news.
In a recent ruling by British regulators, the top executives and managers at banks operating there (which is practically all the major banks) could have their bonuses clawed back for up to ten years after any finding of misconduct. It will also prohibit bonuses for nonexecutive directors and for the managers of companies that are receiving financial support from the government.
The move, which is long, long overdue and still does not go far enough, extends a seven-year clawback period that one regulator, the Prudential Regulation Authority, (part of the Bank of England), introduced for so-called variable pay (read ‘bonuses’) last year as part of tougher accountability rules.
The new rules announced by the authority, which is part of the Bank of England, and by another regulator, the Financial Conduct Authority, are the latest effort by financial regulators in Europe to hold the banksters accountable for improper actions that could play a role in precipitating future financial upheavals.
The regulators say they are trying to “embed an accountable culture” in the City of London, which actually means that the authorities realize that the banksters have learned nothing from their previous catastrophic frauds and thefts. They know when the chance arrives these greedy and immoral people will try to do it all again.
The new British rules, which apply to banks, building societies and investment firms regulated by the Prudential Regulation Authority, including British units of United States banks and other financial firms based outside Europe, mean that senior managers, risk managers and others at banks will also be asked to defer more of their variable pay for a longer period, making it easier for regulators and financial institutions to recover bonuses if misconduct is uncovered.
Other countries in Europe are also enacting new regulations for their banksters. Dutch lawmakers, for example, capped bonuses this year for employees in the banking, insurance and other finance sectors that limits variable pay to 20 percent of their fixed salaries. The Dutch have also banned bonuses for executives at bailed-out banks.
European rules already limit bankers’ bonuses to the equivalent of their annual salaries, or to two times their base salaries if the company’s shareholders approve it. But they know they are so greedy that they will try to find ways round that.
Already some banks are making moves to get round the limits by introducing role-based remuneration and other payments, so the regulators have their work cut out for them keeping a step ahead of the thieves.
What they really need to do is confiscate ALL their ill-gotten gains, impose severe additional financial penalties AND throw these criminals in jail – for a long time.
America, which always likes to consider itself as the leader of the world, should lead in this regard too. It would be better than starting another war in some far off God forsaken country.
Unfortunately I think it will be an equally long time, and a lot more frauds, before they get to that much needed stage.
I used to love listening to George W Bush when he talked about the ‘Grecians’. He was an idiot, but unlike some holders of his post I think he secretly knew it.
But, enough of that, let’s concentrate on the Grecians.
Their financial crisis is deepening and they’ve shut down all their banks. They’ve also imposed what are called ‘capital controls’, in other words what you can and cannot do with your own money – assuming you could get to it in the first place.
Several Western countries, including the US and Britain, have issued travel warnings for Greece. Not a warning about the place being very dangerous, just a warning to have enough cash to be able to pay for things now that the banks are shut and presumably their ATMs as well.
This recent activity by the Greek government is because of the breakdown of talks between Athens and the European Union concerning the Grecians’ enormous debt that they clearly can’t afford to pay back. EU finance ministers rejected Athens’ request to prolong a financial assistance program.
It is also about a bit of timely government blackmail.
The Greek government has so far been unable to formulate any meaningful plans to curtail their spending significantly. The Greek people likewise have become used to living beyond their means and are reluctant to tighten their belts. The people are blaming the government and the government is blaming the people and nothing is really getting resolved.
So Greek Prime Minister, Alexis Tsipras, shut the banks and said they would stay shut until July 6, conveniently the day after a nationwide referendum on whether to accept the bailout terms proposed to Greece by its creditors.
Some commentators also think that the banks may have been shut because they don’t have enough cash left. The Greek people think the same and are panicking to get their money out of the banks. Runs on banks inevitably lead to disaster.
As Greece is part of the Euro zone it does not have control of its own monetary system. In other words, unlike America which can simply print more money if and when it needs it, the Grecians have to rely on the European Central Bank giving them cash. and it has refused to give them any more Euros.
That decision could prompt Greece to default which would probably lead to it being kicked out of the Euro zone and possibly out of the EU itself, which would be an historic first and something that would be done very reluctantly.
The rulers of the EU are in what is known as a ‘tight spot’. If they don’t take a tough line on the Grecians they can be sure other poor countries in the EU will follow suit. If they do take a tough line, then the upheaval will undoubted have an impact on the Euro currency.
A Greek default would also be another kick in the greedy teeth of the big financial institutions who own a good part of the massive €300 billion debt – you see there are positives in every situation if you look hard enough.
So it looks like emergency meetings and frantic discussions all over the place in Europe.
Despite the fact that Dubya is long gone from the political scene, I don’t think we’ve heard the last about the Grecians just yet.
By the way, Happy Independence Day to all my American visitors, bet you’re glad you’re not part of Europe these days.
Around this time last month I wrote a post about the explosion of sub-prime credit for people seeking automobile loans they couldn’t afford. Here’s a link if you missed it – click here.
They say that if you don’t learn from what happened in the past you are doomed to repeat it. And it is clear the banksters have learned nothing, mainly because the government was not man enough to teach them a lesson when they almost brought the country to its knees. Their greed was excused and rewarded, not punished in any meaningful and lasting way.
So now we have the auto loans credit explosion, which is another mini sub-prime disaster in the making. And again it is being egged on by the stupidity and greed of Wall Street who just can’t pass on the chance to reap big profits from those people silly enough to take their high interest loans.
This time, however, it turns out some of the people in positions of power are beginning to recognize that this is becoming a big problem.
The regulators and prosecutors are starting to worry about the level of lending abuses. Not only that but they are also recognizing the similarities with the home loans fiasco that eventually resulted in the financial crisis.
The Consumer Financial Protection Bureau has recently fined subprime auto lender First Investors Financial Services Group Inc. $2.75 million for knowingly providing inaccurate information to credit reporting agencies for at least three years. It was a “computer error” don’t you know, and, of course, they paid the fine but without admitting any liability – perish the thought!
It should come as no surprise that First Investors Financial Services Group is owned by a prominent New York private equity firm.
And like the mortgage sub-prime fraud, the banksters and other money men are not only screwing the people who take out the loans, but once again they are re-packaging them up as “good investments” for their richer clients too.
A United States attorney in Manhattan, has already begun an investigation into whether lenders have sold questionable auto-loan investments to investors, and has sent subpoenas to General Motors Financial and Santander Consumer USA, to try to find out whether the lenders fully disclosed to investors the creditworthiness of borrowers whose loans made up the complicated securities.
Last time they got away with it. Will this time be any different? You have a lot more faith in the system than me if you think it will. All that is happening so far is tokenism. They need a lot more than a slap on the wrist.
In China or Vietnam and some other locations banksters committing fraud are stood up against a wall a shot. That’s maybe a little harsh, but at the very least some serious jail time is in order.
The fact is the banksters are doing it again because they think that they can get away with it again. And if they get away with it this time, then they’ll do it yet again in the future. All the time racking up fortunes for themselves and leaving the other poor sods, who didn’t know any better than to take out their loans or buy their toxic investments, a lot poorer.
We had it with the real estate market. Billions of dollars being lent to people who obviously couldn’t afford it.
We saw the trouble, hardship, misery and financial woes that were caused as credit dried up, real estate prices began to tumble, and bankruptcies and foreclosures increased.
And we know the damage it did to the economy when irresponsible banks and other lenders went bust and almost brought down the entire financial system.
Smart people would learn from such a situation.
Smart people would never contemplate doing such a thing again.
But despite what they would like to have you believe, bankers are not smart people. They’re dumb and they are greedy, a deadly combination.
As a result of the financial crisis millions of Americans (and people in other countries too) have been left with poor credit scores. Yet remarkably they are now able to easily obtain auto loans from used-car dealers, including some who fabricate or ignore borrowers’ abilities to repay. Even if you are bankrupt or living only on social security, banks like Wells Fargo will lend you thousands of dollars to buy a used car.
It’s called the new sub-prime boom, because the lack of caution resembles the frenzied sub-prime mortgage market before its collapse. And it is already bringing misery to many people who have been suckered into taking out loans that they clearly could not afford.
Worse than that, these sub-prime auto loans often come with terms that take advantage of the most desperate, least financially sophisticated customers, with interest rates that can exceed 20 percent. And many of the loans can be at least twice the value of the second hand cars they are being used to purchase!
This creates a vicious circle for some borrowers, who still owe money on a car that they are trading in when they purchase another one, meaning that the former debt is rolled over into the new loan and they end up, not just paying too much for their current car, but also continue to pay off the loan on their previous car that they don’t even have!
This is the way loan sharks operate. Eventually you end up borrowing your own money and paying them interest for the privilege!
This surge in sub-prime auto lending is being driven by some of the same dynamics that were at work in sub-prime mortgages. There is a veritable deluge of money pouring into sub-prime autos, as the high rates and steady profits of the loans attract investors.
And just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are now feeding the growth in sub-prime auto loans by investing in lenders and making money available for loans.
To quote some of the figures, auto loans to people with bad credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered sub-prime, that is, people with credit scores at or below 640. Wells Fargo, mentioned earlier, made $7.8 billion in auto loans in the second quarter of this year, up 9 percent from a year earlier, and has at least $50 billion in auto loans on its books.
Even worse, as was the case with sub-prime mortgages before the financial crisis, many sub-prime auto loans are being bundled up into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds. They are all scrambling for these, which in turn creates ever-greater demand for loans, and leads to the banks issuing more and more sub-prime credit.
Unbelievably it’s the same crooks doing exactly the same thing, including using incorrect information about borrowers’ income and employment, so that people who had lost their jobs, or were bankrupt, or living on Social Security, could qualify for loans that they could never afford.
Admittedly, the size of the sub-prime auto loan market is only a tiny fraction of the sub-prime mortgage market at its peak, and its implosion would not have the same far-reaching consequences.
For the banks the investors silly enough to buy their bonds, that is.
But the misery is just as great for the people who are suckered into accepting credit they cannot afford.
Illegal it may not be, but immoral it certainly is.
Political leaders who sit astride high horses and purport to be working on behalf of the ordinary people should be doing something about it.
But worry not, I am not going to try to sell you an insurance policy nor even recommend one.
Quite the reverse in fact.
Many people have some kind of life insurance for the financial protection of their families if they should be unfortunate to pass away unexpectedly.
It is usually for enough money to pay off the mortgage with a little left over to provide some kind of income for the wife and kids.
At least that’s how it should be.
But there is a growing trend for employers to insure their employees. A nice gesture you might think at first. Until you find out that the beneficiary of the insurance would not be the survivors or estate of the insured employee, but the corporate pension plan!
It is unofficially known as “dead peasant” insurance, and hundreds of corporations have already taken out policies worth hundreds of billions of dollars, on thousands of employees, providing companies with a steady stream of income as current and former employees die – even decades after they have retired or left the company.
And new “dead peasant”policies worth at least $1 billion are being put in place every year!
Unsurprisingly the greedy money-grabbing banksters are especially fond of the practice. Bank of America’s policies have a cash surrender value of at least $17.6 billion; Wells Fargo’s at least $12.7 billion; and JPMorgan Chase at least $5 billion, according to filings with the Federal Financial Institutions Examination Council.
Of course the tax-men are to blame too – aren’t they always? – because so-called company-owned life insurance offers employers generous tax breaks. For example, company-paid premiums are tax-free, as are any investment returns on the policies and the death benefits eventually received. Although having said that it has to be admitted (grudgingly) that the I.R.S. has taken companies including Winn-Dixie and Camelot Music to court for using such policies as tax avoidance schemes.
Many people faced with a request from an employer to consent to such a policy are too afraid not to comply in case it affects their job or promotion prospects. They shouldn’t be because that would probably be illegal as well as unethical. Class-action lawsuits against several companies with such policies are already underway or have been settled. Several companies, including Walmart, settled the suits, paying millions to low-ranking employees who had been covered.
So if you are uncomfortable with the thought that your company might profit from your death, don’t sign up.
And as for the corporations? I’m as fond of making a few bucks as the next man, but you have to draw a line somewhere and I think corporations should be content with the contribution their employees make to their company profits when they are alive, instead of conniving to profit from their deaths also.
Today started off as just another quiet Sunday. I was going to write a short sermon, but decided against it since you’d already had one of those from me on Wednesday.
Then I got a life changing opportunity from the most unlikely of sources. On offer was a cool $5 million!
How good is that!!
I just had to tell you about it.
The opportunity came from my good friend General Abdul Aziz Jassem al-Shallal, one of the generals who have defected from the Syrian Army.
It turns out that the office of General Abdul Aziz Jassem al-Shallal monitors and controls the affairs of sensitive institutions in Syria that takes to do with foreign contract payments.
It also turns out that General Abdul Aziz Jassem al-Shallal thinks that I am a respected and honest person suitable for handling this project/transaction with sincerity, trust and confidentiality. Perhaps he had read some of my posts about the folly of getting involved in the Syrian conflict.
Luckily – for him – before he defected, the General was able to get his hands on all the paperwork necessary to retrieve unclaimed deposits and over invoiced sums to do with foreign contracts.
And luckily – for me – he can arrange it so that it appears that all this unclaimed money is owed to me. All I have to do is agree to give him 70 percent of the proceeds, and for my trouble I can keep 25 percent, with the remainder going on expenses.
That’s a cool 25 percent of $20 million for me!
Have I ever been this lucky?
Well, no I haven’t. Never. Not once. And sadly I’m not lucky this time either.
You see I know that the General Abdul Aziz Jassem al-Shallal who emailed me isn’t the real one, this one only exists in the mind of a Nigerian crook.
I also know that this is the latest variation of the infamous Nigerian 419 scam, designed to con greedy and gullible people out of money, not give them the opportunity to make money.
And I know that if I was foolish enough to reply to General Abdul Aziz Jassem al-Shallal all that would happen is that eventually the fictitious money transfer would run into problems that would either require me to pay some cash upfront to clear the way for the transfer (known as Advance Fee Fraud) or hand over bank account or other personal details that would allow these criminals to try to steal my money.
So will I be taking advantage of this great life-changing opportunity?
The only reason I am mentioning this at all is to highlight the scam for those who maybe have not yet fallen victim to it, and as a warning to ignore all such “opportunities”. And there are a lot of them.
So why do scams like these keep happening?
Sadly the answer is, because a lot of the time they work, and they continue to work because people are so bloody stupid!
It has been estimated that there are a quarter of a million active scammers and that they cause $1.5 billion in losses each year, an average of $20,000 per victim. Some of the victims are just greedy idiots who think they are on to an illegal windfall, but others (also idiots) think they are contributing to things like charities and orphanages. On occasion some of these hapless victims have suffered more than financial losses, having been beaten, tortured, and even murdered.
There are two rules in life that you should apply to everything.
Rule # 1, believe none of what you hear and only half of what you see, and
Rule # 2, if it sounds too good to be true then it usually is.
No matter how great the temptation always try to remember these.
It was either a title with a pun in it or just call today’s post “The Sunday Sermon”, but as you can see the pun got the better of me as usual.
If you hadn’t guessed, this one is my take on the goings on in North Korea.
Here we go….
Before the sermon starts I should preface it by saying we are in the current mess because politicians faffed about instead of stopping the proliferation of nuclear weapons when they had the opportunity. It’s their mess, but unfortunately we are all in it with them.
JFK had Cuba and now BHO has North Korea, both countries run by dictators and both in their time posing a nuclear threat.
Why do the Democrats always get the best crises? Poor old Dubya and his greedy and power hungry ally in Britain, Tony Blair (often deliberately spelled Bliar for good reason), had to make up an excuse to start a war with Saddam Hussein. Remember the Weapons Of Mass Destruction that never actually existed?
Of course, when JFK was doing his statesman like thing, during his brief breaks between his girlfriends, I was far too young to know or care about nuclear threats or more world wars.I had other more important things to be getting on with like battling invaders from Mars or trying to pluck up the courage to explore that eerie wood just a short distance from the bottom of our garden.
So what I know about the Cuban crisis of the early 1960s is all gleaned from books and reports from that period which are now a matter of history. (We’ll leave the debate about just how accurate and reliable that is for another time.)
The truth seems to be that the Cuban nuclear crisis had very little to do with Cuba or Castro. It was a posturing competition between the United States of America and the Soviet Union, and to a lesser degree a pissing contest between Kennedy and Khrushchev.
In both Washington and the Kremlin, although there were the warmongers, there were more people who were sensible enough to realize that devastating each other’s countries would leave them both weaker and achieve very little.They were able to reach that conclusion simply because they were people who were not completely insane or delusional.
It probably seemed difficult at the time, but for JFK it was a relatively easy crisis to manage.
The ‘nuclear crisis’ facing Obama, if indeed it is that, is a different kettle of fish because Kim Jong-un shows all the signs of being both delusional and ever so slightly insane.
He can’t be held entirely to blame for this. He is the son of a long time dictator, who himself suffered from multiple delusions. And he was brought up in a militaristic and jingoistic regime, which is what dictators like to create for themselves simply because it makes their own people easier to control. North Korean propaganda has taught the public that military goals and economic goals are intertwined and therefore that Kim Jong-un’s actions are for the good of his people.
In the latest moves to up the ante, the North Koreans have told Britain and Russia that they should consider the evacuation of their embassies in Pyongyang. They have also moved another missile to their east coast as a further threat to US Pacific bases.
This in itself is just the latest response to UN sanctions and South Korea-US military drills, both of which have done nothing to ease tensions and in fact have annoyed the North Koreans immensely.
Now the North Korean army is saying that it has received final approval for military action, possibly involving nuclear weapons, against the threat posed by US B-52 and B-2 stealth bombers taking part in the joint drills.And all this has been accompanied by a series of apocalyptic threats of nuclear war in recent weeks.
The trouble with all this posturing is that Washington, which always gets a ‘F’ for ‘FAIL’ in Foreign Policy, very seldom, if ever, gets it right at the right time.
Washington doesn’t seem to understand that the macho culture in many other countries makes it extremely difficult for them to be seen by their own people as the one who blinked first. Losing face has a terrible stigma for them.
Further military ‘exercises’ and posturing will probably have the result of leaving the Jong-un regime with little alternative (in their eyes) but to act aggressively.
How that aggression will manifest itself is anybody’s guess. Least likely would be an attack on America – it’s too far away for the type of missiles North Korea currently has.
An attack of some kind on the US base at Guam is possible, as is an attack on neighboring South Korea. The latter, depending on the scale and the number of casualties, could spark of retaliatory strikes by the US-backed South Koreans and from there it is a short step into a conventional and probably very bloody war.
And we should remember that the Korean war during the 1950s was a spectacular waste of human lives. Generals sacrificed their men for years and ended back at the 38th parallel, more or less the same place they started.
Admittedly things might be a lot different this time if China decides that the North Korean regime is too out of control to support militarily.I doubt very much if it is in China’s long term interest to have a whacky dictatorship armed with nuclear weapons on their doorstep. After all it’s only 1,000Km to Beijing and more than 5,000Km to Hawaii, the closest state of the US to North Korea. At the same time would China want an economically united and strong US dominated state on its borders?
The jury is still out on that one.
Another thing that Washington gets badly wrong is that it thinks that because it is the most powerful military nation on earth – and it is by a long way – that therefore other countries will be afraid to take it on.
Rather than a comparison with the Cuban Crisis that everyone is concentrating on, I see parallels between North Korea today and Imperial Japan in the 1930s.Both are/were jingoistic regimes with an ’emperor’ having complete control, and both created a military style regime more as a way to suppress and control their own people, and therefore to cling to power, than to attack another nation.
But things being what they are, and people being so bloody stupid it’s unbelievable at times, there comes a time when those in power in such regimes lose their sense of reality and get carried away believing their own propaganda.
Hence Pearl Harbor when Imperial Japan forgot that when something big and powerful is asleep you should never poke it with a sharp stick, coz when it wakens up it will kick the crap right out of you!
And hence, the North Koreans are not afraid of taking on America. They should be, but they aren’t, which again makes some kind of attack more possible the more they are backed into a corner.
Thankfully there are some signs that Washington might be getting the message and preparing to step back from the rapidly approaching brink.American officials have reportedly decided to “pause” the recent show of US force in Korea because
– wait for it, it’s a good one –
they are surprised at the intensity of the North’s response.
I mean who could have seen that coming? Well the answer is just about everyone except for the cretins in Washington!
What is surprising, however, is that the most sense talked about the whole affair recently has been from the world’s number one cigar salesman, Fidel Castro. In fact, make that doubly surprising, in that he has said some things that I am in agreement with and that he is still around to say it!
He said “If a war breaks out there, there would be a terrible slaughter of people” in both North and South Korea “with no benefit for either of them.” And also that the “duty” to avoid the conflict is in the hands of Washington “and of the people of the United States.”
Castro hasn’t quite figured out that once elected US Presidents do whatever THEY want, not whatever the PEOPLE want.
But what he must have figured out is that politicians like to be liked because he also warns President Obama that his second term, “would be buried in a deluge of images that would portray him as the most sinister personality in the history of the United States.”
Equally, he cautions the North Koreans that now they have, demonstrated their “technical and scientific advances, we remind them of their duties with those countries that have been their great friends.” And he urged them to remember that “such a war would affect … more than 70 per cent of the planet’s population,” and decried “the gravity of such an incredible and absurd event” in such a densely populated region.
Do you think he is hankering after one of those Nobel Peace Prizes, like the one Obama got for not being George W Bush?
And who knows what is going to happen in the Koreas?
Launched at the ridiculous price of $38 a share, or about 100 times the company’s earnings, the price momentarily made it to $45, but then quickly plummeted to $34.
In my post in May I suggested that the shares were worth more like $18 a share rather than $38. As of yesterday (August 16th) the price had fallen below $20.
I’m not saying this by way of blowing my trumpet, because I now think that my $18 peg may have been rather optimistic too. Investors have by and large turned against Facebook.
Apart from the odd blip, the stock has been on a downward trend pressured by disappointing earnings and by the fact that from today the so-called “lockups” that have prevented some early Facebook backers from unloading their stakes begin to expire. This simply means they will be able to sell shares into the market and with around two billion shares eligible for a sell off between now and May 2013, with a big one coming in November, the signs for a price recovery are ominous.
In fact further falls are more than likely.
Those who can are shorting the stock like crazy. (Shorting is where your broker borrows shares which you sell immediately in the hope that you can buy them back later at a lower price.)
The number of Facebook shares on loan to short sellers has risen from 63 million a month ago to more than 93 million.
So is it a good buy now at $18? I think not. Not for a while anyhow, until these locked shares find their way into the market and the price stabilizes and that will probably be well into 2013.
In the short term the status quo is probably down down deeper and down.
Forget Facebook and enjoy some music from the 70s instead.
Fasab disclaimer: this blog post does not constitute professional advice as regards investments on the stock exchange, such advice would only be given and indicated thus if an outrageous fee were being charged and this blog is being given to you for free. Also any investor should always be aware that shares can fall as well as plummet and should act accordingly by not investing any money they can not afford to lose.
Today is the anniversary of the day in 1776 when Americans became Americans upon declaring their Independence from British rule. I’m sure everybody knows that. If you are an American you will no doubt have studied the Declaration Of Independence at school.
This document provided a sound foundation upon which to build a new and a great nation. And a great nation is what America became, the richest and most powerful in the world, attracting people from all other countries because of the freedoms it upheld and the opportunities it provided for personal advancement, financial and otherwise.
For a while, at least.
What has happened over the past few decades has regrettably left the original Declaration and the aspirations of those who drafted it, in tatters. Successive power hungry, short-sighted and greedy politicians, with no integrity whatsoever, have been allowed to ride rough-shod over the principles set out in this great historic document. Today its words have come to mean little or nothing to those who are in positions of power and influence.
For example, all men are far from equal when it comes to how they are treated by government. Those who are rich and those who have crooked politicians in their pockets are treated a lot differently than the ordinary people.
Our unalienable Rights, among them Life, Liberty and the pursuit of Happiness are being steadily curtailed in the hallowed name of security but actually because the government continues to appease, and fears to upset, the minorities from whence the security threat comes.
Such a list could turn into a long one, however those examples will suffice for the moment.
But the Declaration also says that governments derive their just powers from the consent of the governed, which means YOU!
And although it is seldom referred to or even noticed nowadays, there is a further paragraph that states:
That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
Sadly we are getting uncomfortably closer and closer to that stage.