Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.
The Scam Wall Street Learned From the Mafia
Rolling Stone's Matt Taibbi exposes a nationwide bid rigging conspiracy, ran by our largest banks. One obscure financial corruption buried legal case has exposed a Wall Street world that rips off small towns by rigging municipal bond bids.
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated.
Bill Moyers Interviews Yves Smith & Matt Taibbi
Bill Moyers covered the Jamie Dimon testimony about JPMorgan's derivatives trades and interviewed Yves Smith and Matt Taibbi. This must watch interview hits upon the role of banks in the European and Greek crisis and all of the lies, scams and rotten dealings banks have been up to.
Dear Mr. Dimon, You're Getting $14 Billion in Corporate Welfare
Bloomberg exposes how JPMorgan Chase is getting $14 billion in government subsidies.
PMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.
Romney's Tax Plan Doesn't Add Up
The Tax Policy Center analyzed Romney's yet to be fleshed out tax plan. Surprise, there are more tax cuts for the rich.
Governor Romney would permanently extend all the 2001 and 2003 tax cuts now scheduled to expire in 2013, repeal the AMT and certain tax provisions in the 2010 health reform legislation, and cut individual income tax rates by an additional 20 percent. He would also expand the tax base by cutting back tax preferences, but has supplied no information on which preferences would be reduced. Tax provisions in the 2009 stimulus act and subsequently extended through 2012 would expire. These include the American Opportunity tax credit for higher education, the expanded refundability of the child credit, and the expansion of the earned income tax credit (EITC). The plan would also eliminate tax on long-term capital gains, dividends, and interest income for married couples filing jointly with income under $200,000 ($100,000 for single filers and $150,000 for heads of household) and repeal the federal estate tax, while continuing the gift tax with a maximum tax rate of 35 percent.
The plan would reduce the six current income tax rates by one-fifth, bringing the top rate down from 35 percent to 28 percent and the bottom rate from 10 percent to 8 percent. The accompanying repeal of the AMT would increase the tax savings from the rate cuts—without that repeal, the AMT would reclaim much of the tax savings.
Romney's Budget Plans Don't Add Up
Don't ya hate it when people with a little mathematics skill look at policy proposals. Rex Nutting:
Mitt Romney says he wants to balance the federal budget within eight to 10 years, but he doesn’t have a credible way to get there.
Indeed, Romney doesn’t have a specific proposal at all. But based on the best analysis of what it includes and about what he leaves out, his plan doesn’t add up.
Romney’s budget wouldn’t balance because he’d cut taxes even more than he’d cut spending.
Almost 200,000 people who were foreclosed on have filed for a review. MarketWatch:
Nearly 200,000 borrowers have requested a review of their mortgage foreclosures to see if they are eligible to receive compensation or other remedies because of errors, federal regulators said Thursday.
The Federal Reserve and the Office of the Comptroller of the Currency also extended until September 30 the deadline for borrowers to submit their request for a foreclosure review to bank regulators. The previous deadline was July 31.
This is a very limited time window too, just two years, 2009 and 2010.
America's Long Slope Down
David Cay Johnston outlines the latest evidence of the U.S. going down the tubes economically.
Wages per capita in 2010 were 4.3 percent less than in 2000, effectively reducing to 50 weeks the pay for 52 weeks of work. The median wage in 2010 fell back to the level of 1999, with half of workers grossing less than $507 a week, half more, Social Security tax data show. The bottom third, 50 million workers, averaged just $116 a week in 2010.
Households are doubling up, meaning people cannot afford to live on their own. The Census just released a study with yet more dire statistics.
In 2010, there were 22.0 million shared households in the United States, an 11.4 percent increase from 2007, according to a new U.S. Census Bureau report. This total of shared households accounted for 18.7 percent of all households, up from 17.0 percent in 2007.
In spring 2007, there were 19.7 million shared households — defined as a household with at least one “additional” adult. An additional adult is a person 18 or older who is not enrolled in school and is neither the householder, the spouse nor the cohabiting partner of the householder. By spring 2010, the number of shared households had increased to 22.0 million while all households increased by only 1.3 percent.
Check this out, 31.1% of all adults lived in shared households in 2010. For 2007 this number was 27.7%. Did you know that many adults in the U.S., are living with Mom & Dad, have roommates or being saved by friends? Wow.
Eurozone Math Quite Fuzzy
Surprise, Spain and Italy will need €1.6 trillion in bail out funds when what's currently available in the bail out coffers are €400 billion.
Overall, the remaining €400bn firepower in the EFSF/ESM is probably inadequate to finance a bail-out programme for Spain, and would of course be dwarfed by the €1,600 bn needed for both Spain and Italy. In the near term, what this means is that there is very little spare money in the EFSF/ESM to initiate a bond buying programme in the secondary market, which was the favoured option in the G20 summit discussions this week.
Europe's "Growth" Plan?
The press releases fluttering around Europe are usually confusing. This latest just adds to the pile. Is this just another throw money at it? What's missing from this latest announcement is how do they intend to increase economic growth? A quoted billion euro figure is not a direct jobs program, as an example.
At a four-way summit meeting in Rome yesterday, Merkel, Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy said they would lobby their European Union partners to accept a growth plan of as much as 130 billion euros ($163 billion), or about 1 percent of the euro-region’s economic output.
Medical Bill Blizzard and Snow Job
Anyone who has received any medical services knows the billing is absolutely a bureaucratic paper work snow job. Now the New York Times outlines how bad it really is.
Ask Jean Poole, a medical billing advocate, about her work helping people navigate the bewildering world of medical bills and insurance claims, and the stories pour out. There’s the client who was billed almost $11,000 for an 11-minute hand surgery. The cancer patient who was charged $9,550.40 for a round of chemotherapy he never received.
What makes matters worse is these same Medical services, from Doctors to Hospitals try to charge loan shark interest rates on bills and hand them over, verified or not, to unscrupulous bill collectors. These scum sucking collection agencies turn around and ruin your credit report when you do not even owe the money! Try to get it off your credit report is a rats maze exercise in are you kiddin' me? Can you imagine buying a defective product and have the same treatment? Of course not. Our Health care sector is getting away with murder, and we might say that's literally.
Good Friggin' God, Losing Customer Money is now a Loophole?
The loophole that allowed MF Global to convert more than $1 billion in customer property to its own reckless bet on European debt is still in effect — although the Commodity Futures Trading Commission, which regulates futures and commodities brokers, said it had since pressured other firms to stop using it.
The CME Group, which is both the largest commodities and futures exchange and also regulates many brokers, told me this week that when MF Global collapsed last year, four of the 40 firms it oversees were still using an “alternative” calculation of customer assets that vastly understates what firms actually owe.
Classifying this criminal theft as a loophole is bogus and implies those customers are never going to get their money back.
Top Five Mortgage Derivatives Civil Suits to Watch
Ritholz outlines the top RMBS lawsuits for their implications:
After a week-long build-up (I’m sure the suspense is killing you), we’ve reached the No. 1 case in our countdown of RMBS Cases to Watch this Summer. You may wish to catch up with parts I, II, III, and IV, if you haven’t already. Though Case No. 2, Bank of New York’s Article 77 settlement, may have garnered more media attention thus far, another case gets my vote for No. 1 because it represents a true adversarial process, the best and only way, as far as I know, to establish any semblance of “proof” as to who is to blame for the massive losses associated with mortgage derivatives.
This is kinda interesting
MIT is tracking online prices to measure inflation.
Our data are collected every day from online retailers using a software that scans the underlying code in public webpages and stores the relevant price information in a database. The resulting dataset contains daily prices on the full array of products sold by these retailers.