Saturday, January 15, 2011

I Have Some Intemperate Rhetoric For Iowa State Sen. Brian Schoenjahn

. . . and my rhetoric is not “how the fuck do you pronounce that?”

It’s “why can’t you mind your own damn business, you nasty, officious, grasping little nanny-state twit?”

See, Brian Schoenjahn wants to jump on the moronic anti-Four-Loko-panic bandwagon and pass a law that would make it a misdemeanor in Iowa for any business with a liquor license to sell nearly any drink that includes both caffeine and alcohol. Irish coffee? Illegal. Kahlua? Illegal. Black Russian? Illegal. Pour one, and your Iowan bartender is looking at up to 30 days in jail.

Available press reports do not make it clear whether Brian Schoenjahn (1) only wanted to ban caffeine-enhanced canned drinks marketed to younger people like Four Loko, but was too stupid to draft a bill tailored to that end without outlawing a vast swath of traditional alcoholic beverages and cocktails, or (2) genuinely believes that it’s the rightful place of state government to ban Irish Coffee and Kahlua because Iowans are too stupid to drink it responsibly.

Meanwhile, please remember that thoughtful and important people want you to know that libertarianism is a fringe belief and that legislators are just regular folks whose service ought to be respected.

States To Make Drastic Budget Cuts

Are Gold Pool Accounts Safe?

One of the cheapest ways to buy and store physical gold and silver is with unallocated (or pool) storage. With unallocated storage, a dealer holds metal that is owned by its customers, but without identifying any particular piece of metal belonging to any particular customer.

The advantages of this method are considerable: you avoid the risks inherent in storing the metal yourself (transport loss, fire, and theft); you can buy or sell just a few ounces of gold and silver at a time; you escape the big bid-ask spreads associated with coins and small bars; and perhaps best of all, storage is usually free.

To provide those benefits, a precious metals dealer buys and sells small quantities of gold and silver to and from its customers throughout the business day. When it needs more metal, it will buy it in the wholesale market. Or when the dealer has more metal than it wants to carry for its own account (because its customers have been net sellers), it will unload the excess in the wholesale market
Many dealers that offer unallocated storage will accommodate customers who want to convert their metal into bars or coins and take delivery. The dealer will charge a so-called "fabrication fee" for this service. The dealer won't actually pick up a hammer and manufacture the bars or coins the customer wants; instead, the fee represents the price difference between buying 100-ounce or larger bars and buying small bars or coins.

Unallocated storage is an attractive option, which is why we have recommended it to Casey subscribers for a portion of their gold and silver holdings. Of course, there's no such thing as a free lunch, so we wouldn't want anyone to rely too heavily on unallocated storage or on any one dealer that offers it. Here are some of the things that might go wrong.
  • Wholesale fraud. A dealer might be a 100% hoax. It may not actually have the metal that customers have paid for, in which case the customers would get hurt. The proprietor would be committing a go-to-jail-forever crime, but it would be easier to pull off, perhaps for many years, with unallocated storage than with allocated storage. A customer who's bought metal in allocated storage can visit his gold or silver and check the serial numbers on the bars. A customer who's bought metal in unallocated storage may be allowed a tour of the vault, but all he's going to see is a whole lotta gold and a whole lotta silver.
  • Employee embezzlement. An honest dealer might have a dishonest employee. If the dealer's financial controls were lax, the employee could siphon off metal for himself or a confederate. Or if the dealer's physical controls were lax, the employee could swap bogus bars for real ones. If the embezzlement exceeded the dealer's net worth plus its insurance, customers would get hurt.
  • Bad bookkeeping. Gold and silver held in unallocated storage is legally the property of the dealer's customers, not of the dealer itself. So if the dealer goes bankrupt, the metal should not be available to the dealer's creditors. Customers of a bankrupt dealer should be able to collect their metal and walk away uninjured. That's how it should work. But if there are problems with the dealer's bookkeeping, the metal that the dealer and its customers thought was in unallocated storage could be up for grabs. The customers would have to fight the dealer's creditors to protect themselves – and they might lose.
  • Fabrication delays. When retail interest in gold heats up, much of the demand is for small bars and coins. This can lead to a temporary shortage of small bars and coins that makes it impossible for a dealer to accommodate customers who want to convert their unallocated gold into small pieces and take delivery. If such a thing happens when you want to convert and take delivery, you'll have to wait. It would be a small problem compared with losing part of your gold, but it would be a problem.

We offer these cautions not because unallocated storage is a bad choice, but because you will be better off if you understand what might go wrong. It's like the warning of possible side effects that is now standard with any medicine. The warning isn't a reason not to use the medicine; it is a reason to use the proper dose and to be alert to signs of trouble.

We can't say exactly how much metal in unallocated storage would be too much. The proper dose is up to you. But here's a starting point. If you have more than 20% of your gold or silver in unallocated storage with any one dealer, consider moving some of it. It could go to another dealer, or you could convert part of it to coins and take delivery.

This might be a chore, but we suggest that you go to the trouble even if the dealer has come highly recommended, even if your experience with the dealer has been entirely satisfactory, and even if you see no sign of trouble. There is a difference between an event being highly unlikely and an event being impossible. Sooner or later, an investor who neglects that difference gets hurt. Runs Out Of Silver In Germany

With the US Mint selling silver at an unprecedented pace, it was only a matter of time before the silver shortage would be spotted across the Atlantic, where distributors ran out of both gold and silver on a daily basis during the first time Europe became insolvent some time in early May 2010. Sure enough, has announced that it has run out of silver in Germany "due to high demand." In the meantime, the CFTC's actions have succeeded in allowing the JPM's suppression of precious metals markets to continue indefinitely, yet all its actions have really done is to provide a short-lived lower cost basis for the precious metals as there is no indication demand is subsiding. At some point the margin calls will come. Then not even Gary Gensler will be able to bail out JPM (we wish we could say the same about Ben Bernanke to whom JPM's role as head of the tri-party repo clearing market is irreplaceable in maintaining an orderly shadow liquidity market).


Due to high demand our own silver stocks are exhausted right now.

As BullionVault is only dealing with physical bars which are already in our possession, we are currently unable to offer, silver on our own market. Of course, our market is still open to all our clients act with each other and set their own prices. This situation could lead to buyers and sellers at higher prices. Buyers are asked to check the price again before they confirm their order.

On Tuesday, 18 January 2011, we expect the next delivery for silver.

h/t Oldeurope

S&P, Moody's Warn AGAIN On US Credit Rating - But I Thought Geithner Swore Passionately On National TV That 'It Would NEVER Happen' - Busted! - Video

Brand new story from the WSJ...

Extreme sense of deja vu with the fresh warning - don't Moody's and S&P realize that no one is paying attention in Washington.

Moody's last warned just 28 days ago, after the irresponsible Obama tax bill was not offset by any spending cuts, and S&P warned in August...


There will of course be very little mention of this latest warning in the financial media, but this is how sovereign bond routs begin. We already borrow 43 cents of every Federal dollar to make our bloated budget, and apparently Congress thinks that's not enough. They're aiming for 50 cents this time, suckers.

And Moody's and S&P, thankfully, are throwing up a roadblock, though Congress won't see it of course, until it's far too late.


Now let's start the Tim Geithner show - His emphatic promise...

Video: Tim Geithner with Jake Tapper -- February 7, 2010

  • “Absolutely not. And that will never happen to this country.”
  • “When people were most worried about the stability of the world, they still found safety in the Treasuries and the dollar. That is a very, very important sign of basic confidence in our capacity as a country to work together to fix these problems.”


Now, Ratigan nails him on his prediction...

Tim Geithner Making Predictions - U.S. Will Never Lose It's AAA Credit Rating!

Start watching at the 3:20 mark...


Reaction to the warnings...

Shrugging Off U.S. Ratings Risks — For Now


U.S. Downgrade Chatter: Bond Watchers Shrug


While we face downgrades...

China is being upgraded...


Excerpt from a story I wrote last Fall...

The U.S. Bails Out Failed Industries, While China Buys The Rare Earth

Why not use a trillion of the Fed's QE to buy some global natural resources instead of treasuries. But that's not our style. We run deficits to bail and stimulate a deleveraging economy that will not revive, while China buys the globe.

We borrow money from our grandchildren to bailout banks, insurers, hedge funds, private-equity shops, car companies, states, unions, houseowners, new car buyers, new house buyers. Meanwhile China is using its surplus to buy every natural resource that's for sale, anywhere.

And not one word from Obama or anyone in Washington. We are so supremely fubar in the long run, exhibiting the mass insanity of all empires in decline. Fighting wars, spending massively, encouraging consumer debt, monetizing the national debt and destroying the greatest currency history has ever known - the once mighty U.S. Dollar.


This fund manager thinks it's already a done deal...


2011 Worker Adjustment and Retraining Notification Notices

Healthcare Uniform Company, Inc.
4601 W. Comanche Avenue
Tampa, FL 33614
95Retail Trade
5500 Grandview Parkway
Posner Commons
Davenport, FL 32771
25Retail Trade
151 Southhall Lane
Suite 110
Maitland, FL 32751
10Real Estate and Rental and Leasing
Del-Jen, Inc. (DJI)
Building 266, Suite 1
Louisiana Avenue
Tyndall Air Force Base, FL 32403
1/11/20113/31/2011124Administrative and Support and Waste Management and Remediation Services
BJ's Wholesale Club, Inc.
3469 N. University Drive
Sunrise, FL 33351
99Retail Trade
Boston Scientific Corporation
8600 N. W. 41st Street
Miami, FL 33166
76Wholesale Trade
Ivory International, Inc.
15400 N. W. 34th Avenue
Miami, FL 33054

FL Agency for Workforce Innovation
Office of Workforce Services - REACT Unit
Copyright © 2001, All Rights Reserved.

This page was last updated 01/15/2011 17:43:37

« GRAND THEFT BANK: $10 Billion for Bonuses At JPM »

We will never pass up an opportunity to talk TARP truth. Dean Baker destroys the grand illusion that the TARP was good for you.

There was no financial system save.

TARP kept Wall Street in the business of paying bonuses - Blankfein got $125 million - aided by a captured media elite happy to spew nonsense.

Now onto the story...


J.P. Morgan’s profit jumps 47%

SAN FRANCISCO (MarketWatch) — J.P. Morgan Chase & Co. reported quarterly results Friday that were buoyed by a recovery in mergers and acquisitions and other investment-banking businesses like underwriting equity and debt offerings.

J.P. Morgan said its fourth-quarter net income rose to $4.8 billion, or $1.12 a share, from $3.3 billion, or 74 cents a share, in the year-earlier period. Net revenue increased 13% to $26.1 billion, the company said.

“Credit trends in our credit-card and wholesale businesses continued to improve,” said Chief Executive Jamie Dimon in the earnings release. “In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns.”

J.P. Morgan was expected to earn $1 a share on revenue of $24.2 billion, according to the average estimate of analysts surveyed by FactSet Research.

J.P. Morgan’s investment bank generated net revenue of $6.2 billion, up from $4.9 billion a year earlier. Net income was $1.5 billion, down from $1.9 billion a year earlier as the company paid more performance-based compensation to bankers and traders.

Investment banking fees were $1.8 billion, down 3% from the prior year but up 22% from the previous quarter.

Fixed Income Markets and Equity Markets revenue totaled $4 billion, compared with $3.7 billion a year earlier and $4.3 billion in the prior quarter.

“Although we continue to face challenges, there are signs of stability and growth returning to both the global capital markets and the U.S. economy,” Dimon said.

The provision for credit losses in the fourth quarter fell to $3 billion from $3.2 billion in the third quarter and from $7.3 billion in the year-ago quarter.

J.P. Morgan experienced “continued overall improvement in credit trends, where most loan categories saw declines in both net charge-offs and in nonperforming assets,” said Miller Tabak analyst Thomas Mitchell in a note.

“The 2010 credit metrics have been very ‘lumpy’ by quarter, with a breakout improvement in [the second quarter], followed by some deterioration — for most banks — in [the third quarter],” the analyst wrote. “J.P. Morgan’s report may keep the anxiety levels unchanged, with a constructive but not exceptional improvement in fourth-quarter credit metrics.”

Tier 1 common capital ratio, a measure of financial strength, rose to 9.8% from 9.5% at the end of the third quarter, J.P. Morgan said.

Total noninterest expense increased to $16 billion from $12 billion in the fourth quarter of 2009. J.P. Morgan boosted its litigation reserves by $1.5 billion, related to “mortgage-related matters.”

Continue reading at Marketwatch...


$10 Billion for Bonuses at JPMorgan...

Funds set aside to reward traders, deal makers and the unit’s other personnel increased 4 percent to $9.73 billion, or an average of $369,651 for each of the 26,314 workers, the company said today in an earnings supplement. That’s 2.4 percent less than the average of $378,600 a year earlier, when 24,654 people worked there. Compensation amounted to 37 percent of revenue last year, up from 33 percent in 2009.

Continue reading at Bloomberg...


Mortgage Putback Pain For JP Morgan

While Dimon called the U.S. housing market still “terrible,” he said it’s better than it was a year ago. The bank put $1.5 billion in litigation reserves to cover costs related to buying back faulty mortgages. It also set aside $2.1 billion more against soured loans from Washington Mutual, the lender JPMorgan bought in 2008.

Private Label

Dimon said most of the new litigation reserves are intended for so-called private-label mortgages, which are not insured by the federal government or federally controlled mortgage companies Fannie Mae and Freddie Mac. He said it will take years to resolve those disputes and to determine the ultimate cost to JPMorgan.

“It’s going to be a long ugly mess, but it won’t be life- threatening to JPMorgan,” he told analysts on a separate call. “We will be talking about this for every quarter over the next three years.”


"The largest theft and coverup ever...."

Video - Brilliant piece from Ratigan on JPMorgan's profits last year...

Don't skip this!


Start the slideshow - 33 pics:

Ken Lewis, Vikram Pandit, Jamie Dimon, Lloyd Blankfein and John Mack in all their failed-out, bailed-out, busted-out, bonused-out, arrogance.


Have you seen this one...

We will never pass up an opportunity to talk TARP truth. Dean Baker destroys the grand illusion that the TARP was good for you.

There was no financial system save.

TARP kept Wall Street in the business of paying bonuses - Blankfein got $125 million - aided by a captured media elite happy to spew nonsense.


Background reading on TARP...

Tale Of The TARP Two Years Later: How The Elite Media Perpetuated The Lies

Meet Herb Allison: Minister Of Bailout Propaganda

Geithner's Magical Mystery Tour Of TARP Propaganda Has Little Use For Truth


Watch this clip...

Video - TARP CEOs Strike It Rich On Taxpayers


New Slideshow - From Time Magazine - See a pic of Bernanke at age 13, hair slicked back, playing the saxophone - This is a True Must See


Brookwood Place Borders to close

Borders is closing its Brookwood Place store on Peachtree Street NE.

The store was not meeting the company's business needs, spokesperson Mary Davis said. Its last day of sales is Feb. 11.

The store, as 1745 Peachtree St. NE, is just over four miles away from a Peachtree Road store in Buckhead.

Borders is also closing a Perimeter Village store at 4745 Ashford-Dunwoody Road Jan. 31. The company will have 12 Borders, Borders Express and Waldenbooks stores in metro Atlanta after the closings.

"We have a really strong footprint in the Atlanta area," Davis said.

The closing Peachtree Street store has 26 employees. Davis said the company will try to place many of them at other locations.

Pepin Restaurant in St. Petersburg to close Jan. 30, replaced by a Hooters

Pepin Restaurant in St. Petersburg, which opened in 1974, has been sold to Hooters and will close its doors Jan. 30.
Pepin Restaurant in St. Petersburg, which opened in 1974, has been sold to Hooters and will close its doors Jan. 30.

ST. PETERSBURG — The stories about Pepin Restaurant are legendary.

Since 1974, the restaurant at 4125 Fourth St. N has been one of the area's landmark Mediterranean-style Spanish spots.

It was there when Fourth Street was still just a four-lane road. It was a mainstay even as downtown began to flourish.

Families go there. Newspaper publishers go there. More than once, baseball Hall of Famer Stan "The Man" Musial ate there.

On Jan. 30, Pepin will close. It has been bought by Hooters.

"It's hard," said Monique Massaro, who runs the restaurant her parents Jose and Delia Cortes started when she was 9. "I grew up here. It's very much a family atmosphere. … This city has meant a great deal to us."

She said the restaurant is closing largely because of the economy. She and her family haven't decided what's next for them.

"It's been a real pleasure for us to be here … but times are what they are and a deal was struck," she said. "There's a lot of emotional ties, but in the end I think this is the best way for everybody.

Neil Kiefer, Hooters' chief executive, said the company plans to renovate the Pepin building and relocate an existing Hooters that is currently on Roosevelt Boulevard.

"We're hoping to be open sometime in fall," he said, adding that the Roosevelt building is set to be sold to a bank.

News of the closing spread fast.

A popular spot for anniversaries, banquets and business lunches, Pepin is known for its pompano, encased in salt, baked and filleted tableside. Another trademark is its house salad with green olives, tomatoes and grated Parmesan cheese.

St. Petersburg native Linda Larivee, 50, was craving that salad when she and her husband stopped Friday for lunch.

When waitress Carol Jensen, one of the restaurant's 25 employees, told the couple of the closing, Larivee's face fell.

"I always felt something special when I walked in and ate here," Larivee said, adding that she can remember coming every week with her family as a young adult. "There's not many places left that you can go and have fine dining. Everything's turned into fast food."

Massaro said that family atmosphere is what her parents strove to preserve through the years.

Recipes were original, she said. The bread is homemade, as is the sangria. People came for the beans and rice, and they loved the piano bar.

The restaurant also became a regular meeting spot for many in the community. One of those, a men's lunch group called the Dirty Dozen, continues to meet in the restaurant each Friday.

"My father had a T-shirt years ago, and it said, 'Nowhere else but Pepin,' " said Cynthia Lake, executive director of the Children's Dream Fund in St. Petersburg.

Lake's late father Jack, a former publisher of the St. Petersburg Times, was a frequent visitor to Pepin and an original member of the Dirty Dozen, which included community leaders Dick Winning, Raleigh Greene, Bill Mills Sr., Jim Healey and Joe Porter.

Local real estate agent Cary Bond Thomas, who ate at the restaurant earlier this week, called the closing "an end to an era."

"The family has been part of our community for so long," she said. "They went out of their way to help the customers."

In a story that's become famous, the owners once shut down the restaurant for several days to take the staff to Spain.

They went to Catalonia and to Zaragoza, Jose Cortes' hometown.

"He wanted his whole staff to see how the food was prepared and how lovingly it was presented," said Eugene Patterson, editor emeritus of the Times. "Early after I arrived here, roughly 40 years ago, Pepin's was just the landmark restaurant around town. I'll miss it so much."

Although Massaro and her husband Jim have run the day-to-day operations at the restaurant since 2003, it wasn't unusual for her father to pop in from time to time.

He was there on Friday as longtime regulars ate lunch and digested the news of the closing.

"We have been blessed," he said, adding that everything changes in time. "This is a beautiful place. It's a little nostalgic and heartbreaking at the same time."

Times staff writer Mary Jane Park contributed to this report.

Collapse Can't Be Hidden Any Longer

Albertsons will close more Texas stores, including 5 in Dallas-Fort Worth

Albertsons LLC plans to close seven unprofitable Texas stores next month, including five locations in the Dallas area as the North Texas grocery market continues to be one of the most competitive in the nation.

Liquidation sales start Wednesday, and the company expects the stores in Carrollton, Garland, Richardson , Plano and Southlake to close around Feb. 20.

"Over the last several years, we have put our best efforts into repositioning these stores to better compete in the market place. Unfortunately, we haven't been able to do so," said Albertsons spokeswoman Christine Wilcox

North Texas has more Walmart Supercenters and Neighborhood Market stores than any major market and last year Aldi entered the region with 29 stores. The no-frills, small store grocer plans to add 12 additional stores this year and has inspired 99 cents milk wars in recent months.

Kroger has been aggressive, opening three of its 123,000-square-foot Marketplace stores and has several other stores in the works including one near downtown Dallas. Last year Tom Thumb opened its first new store in some time in Rockwall and built a new store in Dallas on the site of its former Simon David store.

Target, which was already a major grocer here with its SuperTarget stores, has remodeled 15 of its local Target stores to include more food aisles.

Still, the area continues to attract new entrants in recent years including Lubbock based Market Street, Arizona-based Sprouts Farmers Market, and two chains from Colorado, Natural Grocers and Sunflower Farmers Market.

San Antonio-based H.E. Butt Grocers, which operates Central Market stores here, has circled the area for several years. It opened an H-E-B store in Burleson last year.

In November, Albertsons reopened a store in Watauga after other grocers also closed in the area.

But mostly the chain has been contracting. Even after the closings, the Idaho-based supermarket chain will operate 80 supermarkets in Texas, including 54 in the Dallas-Fort Worth.

Wal-Mart Stores Inc. has the largest market share in the area and Kroger is No. 2.

Albertsons is identifying positions for as many store staffers as possible.

"Those we are not able to place may be eligible for severance benefits," Wilcox said. The seven stores employ a total of 550 people.

Albertsons will be marketing the leases to prospective tenants, Wilcox said. The Tyler and San Angelo store leases expire soon.

« BUSTED: Obama Lied About No More Wall St. Bailouts »

Video: Obama pats himself on the back for the passage of the Dodd-Frank Financial "Reform" bill, saying there will be no more Wall St. bailouts (clip starts automatically at 3:40).

  • "Because of Financial Reform, the American people will never again be asked to foot the bill for Wall St's mistakes."1
  • "There will be no more taxpayer-funded bailouts. Period."
  • "If a large financial institution should ever fail, we will have the tools to wind it down without endangering the broader economy."


By Dr. Pitchfork

This sounds great, but it's complete baloney. How do we know? Because in SIGTARP's recent report on Extraordinary Financial Assistance Provided to Citi, Geithner admits, in no uncertain terms, that the fabled "resolution authority" will never actually be used and that taxpayer-funded bailouts are still on the table. The report notes:

  • "As Secretary Geithner told SIGTARP, while the Dodd-Frank Act gives the Government 'better tools,' and reduced the risk of failures, '[i]n the future we may have to do exceptional things again' if the shock to the financial system is sufficiently large. Secretary Geithner's candor about the prospect of having to 'do exceptional things again' in such an unknowable future crisis is comendable. At the same time, it underscores a TARP legacy, the moral hazard associated with the continued existence of institutions that remain 'too big to fail.'"

In other words, in spite of Obama's claims, and in spite of the very specific language within the bill itself, Geithner reserves the right to break the law ("do exceptional things") in order to save the big banks the next time they get into trouble. Moreover, we have every expectation that the government will do exactly that. We still have Too Big To Fail, and according to Geithner, Too Big To Fail means there WILL be more bailouts the next time around.

Sorry, Mr. President, you've been BUSTED!

Hat tip to Shahien Nasiripour for first bringing the SIGTARP report to my attention.


1. Say what?! I thought the bailout was going to turn a profit, not stick the American people with "the bill." Moreover, the American people were never "asked" in the first place. In fact, we made it very clear what we thought of the bailout.

New Slideshow - Time Magazine Looks Inside the Private Offices of Fed Chairman Bernanke - Including Photos of Bernanke Growing Up in South Carolina - These are a Must See


« France & Germany say 'no increase' for EU bailout fund »

Latest columns from Ambrose Evans - updates on Portugal and everyone else in bankrupt Europe, not unlike the broke and busted U.S...


Germany and France have rejected calls by Brussels for a rapid increase in the size and powers of the EU's rescue machinery, once again exposing serious differences at the heart of monetary union.

Jose Barroso, head of the European Commission, called on EU leaders to boost the firepower of the EU's €440bn (£366bn) bail-out fund and beef up its role, allowing it to intervene with pre-emptive bond purchases to help states under threat.

"It is important for the markets to know that Eurozone leaders are committed to do whatever is necessary," he said, hoping for action as soon as early February.

He also proposed a "new phase of European integration" with far-reaching oversight of the budgets, pensions, labour markets, and trade flows of EU states to prevent a recurrence of the imbalances that led to the EMU debt crisis.

Mr Barroso said the fund boost was a "precautionary" move, not directed at any one country. The gambit is risky since it may be taken by investors as a sign that Brussels fears imminent contagion to Spain, deemed too big for the current fund.

  • The response in Paris and Berlin was chilly. "We think the fund is big enough," said Francois Baroin, France's budget minister. German Chancellor Angela Merkel said the bail-out mechanism was "nowhere near exhaustion", adding curtly that she did not wish to debate the matter "any further".

Continue reading at the UK Telegraph...


More recent columns from Ambrose...

EMU debt crisis edges ever closer to the core

The eurozone's debt crisis is once again in danger of spiralling out of control after yields on Portuguese debt spiked to a post-EMU high and contagion hit Spain and Belgium.


Portugal defiant as pressure builds for rescue

Portugal's leaders vowed yesterday to overcome the country's debt woes without the need for an EU-IMF loan package, despite dissent within its own central bank and pressure from northern Europe for a fast resolution of the crisis.


Portugal succeeds in selling bonds amid bailout pressure

Portugal, facing pressure to follow Greece and Ireland and agree to a financial bailout, succeeded in selling €1.25bn (£1bn) of bonds in an auction seen as a key test of investor confidence.

The country managed to sell €650m of bonds due in 2014 and €599m of bonds due in 2020.

The yield, or the price investors charge Portugal to hold its debt, on the shorter-term debt was 5.396pc, higher than the 4pc investors looked for in an October bond sale.


Eurozone rates held but Jean-Claude Trichet turns more hawkish

The European Central Bank has signalled that the growing threat of inflation could prompt it to raise interest rates across the eurozone sooner than expected.


The dam breaks in Portugal


« Could The Federal Reserve Go Broke? - Bernanke Grilled By Senators Over Balance Sheet Losses »

New Slideshow - From Time Magazine - See a pic of Bernanke at age 13, hair slicked back, playing the saxophone - This is a True Must See


The Fed can't really go broke of course, not with the power of printing press, but this balance sheet is unlike any other before in the ignominious history of global central banking.

Related stories...


Could the U.S. central bank go broke?

Source - Reuters

(Reuters) - The U.S. Federal Reserve's journey to the outer limits of monetary policy is raising concerns about how hard it will be to withdraw trillions of dollars in stimulus from the banking system when the time is right.

While that day seems distant now, some economists and market analysts have even begun pondering the unthinkable: could the vaunted Fed, the world's most powerful central bank, become insolvent?

Almost by definition, the answer is no.

As the monetary authority, the central bank is the master of the printing press. It can literally conjure up money at will, and arguably did exactly that when it bought about $2 trillion of mortgage-backed securities and U.S. Treasuries to push down borrowing costs and boost the economy.

The Fed's unorthodox steps helped it generate record profits in 2010, allowing it to send $78.4 billion to the U.S. Treasury Department. But its swollen balance sheet leaves the central bank unusually exposed to possible credit losses that could create a major headache at a time of increasing political encroachment on the Fed's independence.

  • Asked about the issue of potential losses during congressional testimony on Friday, Fed Chairman Ben Bernanke suggested the risks were minimal. If liabilities on the Fed's balance sheet were to exceed its assets, it would only be so because of rising interest rates in the context of a thriving economy, he suggested.
  • "Under a scenario in which short-term interest rates rise very significantly, it's possible that there might come a period where we don't remit anything to the Treasury for a couple of years. That would be I think a worst-case scenario," Bernanke said. Customarily, the Fed submits surplus profits from its operations back to the Treasury's coffers.

But the Fed's newfangled policy steps and the potential for credit losses raises, for some experts, the prospect that the Treasury may actually be forced to "recapitalize" the Fed -- economist-speak for what others might call a bail-out.

That would be a strange role reversal given the Fed's efforts to ease monetary policy by buying the Treasury's debt, and it could raise a political firestorm from lawmakers who believed all along the Fed was putting taxpayer money at risk.


Varadarajan Chari, an economics professor at the University of Minnesota and a consultant to the Minneapolis Fed, says that at some point during its exit from easy monetary policies, the Fed actually may go broke -- at least on paper.

"The most obvious exit strategy is, when inflation starts to pick up, to stop and reverse asset purchases," he said. "That's likely to include requiring the Fed in an accounting sense to see a significant accounting loss."

The Fed now holds just over $1 trillion in Treasuries, Chari noted, and if inflation rose by a couple of percentage points, it would dent the value of those holdings by about 10 percent, leaving the Fed with a $100 billion loss.

"I'm sure it will have some negative political fallout," Chari said. "But not economic consequences. Their ability to print money means it (insolvency) doesn't mean anything."

Continue reading at Reuters...


Tim Geithner Says The United States Is Insolvent

Flashback: Obama Tells C-Span 'We've Run Out Of Money'

Bernanke On 60 Minutes: "We're NOT Printing Money"


Obamacare Packs Crushing New Taxes

By Grover Norquist

From the ATR website.

Next week, the U.S. House of Representatives will be voting on a historic repeal of the Obamacare law.

While there are many reasons to oppose this flawed government health insurance law, it is important to remember that Obamacare is also one of the largest tax increases in American history.

Below is a comprehensive list of the two dozen new or higher taxes that pay for Obamcare’s expansion of government spending and interference between doctors and patients.

Individual Mandate Excise Tax (January 2014): anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following.

1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016+ 2.5% AGI/$695 2.5% AGI/$1,390 2.5% AGI/$2,085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS).

Employer Mandate Tax (January 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2,000 for all full-time employees. This provision applies to all employers with 50 or more employees.

If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3,000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).

Combined score of individual and employer mandate tax penalty: $65 billion/10 years.

Surtax on Investment Income ($123 Billion/January 2013): This increase involves the creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income.

Capital Gains Dividends Other*
2010 15% 15% 35%
2011-2012 (now) 20% 39.6% 39.6%
2011-2012 (budget) 20% 20% 39.6%
2013+ (now) 23.8% 43.4% 43.4%
2013+ (budget) 23.8% 23.8% 43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8 percent surtax does not apply to non-resident aliens.

Excise Tax on Comprehensive Health Insurance Plans ($32 Billion /January 2018): New 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). For early retirees and high-risk professions exists a higher threshold ($11,500 single/$29,450 family). CPI +1 percentage point indexed.

Hike in Medicare Payroll Tax ($86.8 Billion/January 2013): Current law and changes:

First $200,000
($250,000 Married)
All Remaining Wages
Current Law 1.45%/1.45%
2.9% self-employed
2.9% self-employed
Obama Tax Hike 1.45%/1.45%
2.9% self-employed
3.8% self-employed

Medicine Cabinet Tax ($5 Billion/January 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

HSA Withdrawal Tax Hike ($1.4 Billion/January 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Flexible Spending Account Cap — “Special Needs Kids Tax” ($13 Billion/January 2013): Imposes cap of $2,500 (indexed to inflation after 2013) on FSAs (now unlimited). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.

There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

Tax on Medical Device Manufacturers ($20 Billion/January 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3 percent excise tax. Exemptions include items retailing for less than $100.

Raise "Haircut" for Medical Itemized Deduction From 7.5 percent to 10 Percent of AGI ($15.2 Billion/January 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).

The new provision imposes a threshold of 10 percent of AGI; it is waived for taxpayers 65 or older in 2013-2016 only.

Tax on Indoor Tanning Services ($2.7 Billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons.

Elimination of Tax Deduction for Employer-Provided Retirement Rx Drug Coverage in Coordination With Medicare Part D ($4.5 Billion/January 2013)

Blue Cross/Blue Shield Tax Hike ($0.4 Billion/January 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services.

Excise Tax on Charitable Hospitals (Min./Immediate): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS.

Tax on Innovator Drug Companies ($22.2 Billion/January 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.

Tax on Health Insurers ($60.1 Billion/January 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. The stipulation phases in gradually until 2018, and is fully-imposed on firms with $50 million in profits.

$500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 billion/January 2013)

Employer Reporting of Insurance on W-2 (Min./January 2011): Preamble to taxing health benefits on individual tax returns.

Corporate 1099-MISC Information Reporting ($17.1 Billion/January 2012): Requires businesses to send 1099-MISC information tax forms to corporations (currently limited to individuals), a huge compliance burden for small employers.

“Black Liquor”($23.6 Billion): This is a tax increase on a type of bio-fuel.

Codification of the “Economic Substance Doctrine” ($4.5 Billion): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.

Read more on Obamacare Packs Crushing New Taxes
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« EU wants bondholders to share bank bailout costs »

And Sheila Bair is pushing for the same in the U.S...

We write so much about this issue because it really is the cornerstone of the bank bailout debate - who pays for the losses? You the taxpayer vs. the investors (shareholders and bondholders) that funded the bank. It would seem an obvious choice, but it has not played out that way, anywhere except Iceland.


Bank bondholders in the crossfire

Source - AP

BRUSSELS – The European Union is moving ahead with plans to shield taxpayers from having to bail out big banks in the future, but there are substantial obstacles to making bondholders share losses.

The EU's executive Commission on Thursday presented plans that could give national regulators the power to force the owners of bank bonds to accept so-called haircuts — a reduction in the amount of money they are owed.

But the Commission stressed that any new bond rules would not affect existing debts — an issue that is closely watched in Ireland, where the government's commitment to guarantee struggling banks' debts pushed the country to the brink of default.

The EU proposal forms part of a larger package designed to give regulators the tools to deal with banking crises and keep institutions from becoming too big to fail.

"Although our first objective is better prevention, banks will fail in the future and must be able to do so without bringing down the whole of the financial system," Internal Market Commissioner Michel Barnier said in a statement. "That is why we must put in place a system which ensures that Europe is well prepared to deal with bank failures in an orderly manner — without taxpayers being called on again to pay the costs."

Any new rules for bondholders are unlikely to become law before 2013 and would then be phased in over time, EU officials said. They also have to be approved by EU governments and the European Parliament.

The plans, which are now open for discussion ahead of a legislative proposal in early summer, follow a similar initiative to make private creditors take losses when governments, rather than banks, are being bailed out. That decision triggered turmoil on government bond markets in the fall and has been blamed for worsening Dublin's troubles to the point where it had to seek a euro67.5 billion rescue loan.

Should the EU indeed manage to push through the new banking regulation, it could fundamentally transform the way banks fund their operations, as buying their debt would become much riskier.

During the financial crisis that followed the collapse of Lehman Brothers, private creditors were spared in all bailouts of European banks.

Bondholders usually lose money only when a bank declares insolvency, a move that European regulators skirted in fear of the consequences a failure might have on financial stability at a time when markets were already panicking. Instead, governments pumped billions of euros into struggling firms, shouldering taxpayers with massive burdens while bondholders walked away unharmed.

Although Commissioner Barnier has stressed many times that making taxpayers take on the cost of banks' risky bets in the future is unacceptable, EU officials said that they haven't yet decided on how best to substitute bailouts with so-called bail-ins.

"In this respect, the consultation is particularly open," an EU official said. "We're aware of the legal and practical challenges." The official didn't want to be quoted by name in line with department policy.

The Commission is considering either giving regulators the power to impose haircuts, or requiring banks to include clauses in a certain proportion of their bonds that would allow them to be converted into equity. In contrast to bondholders, shareholders took substantial losses in bank bailouts, as firms' market valuation sank and government stakes diluted the value of their shares.

"Being able to convert even a small fraction of bank bonds to equity can double or even treble the capital of a troubled bank overnight," said Sony Kapoor, director of Re-Define, a think tank that lobbies for banking reform. "The proposals may increase the cost of funding for financial institutions, but that may be no bad thing since banks have enjoyed implicitly subsidized borrowing costs that encouraged excessive leverage."

The Commission emphasized that a bail-in of private creditors would go hand in hand with a fundamental restructuring of a bank, including selling or winding down certain businesses.

The EU's executive also wants to give regulators the power to intervene early once they decide that a bank might become too big to fail, allowing them to change the management or ruling out certain business practices. It also hopes to improve coordination between national regulators when a bank that operates in several countries runs into trouble.

During the credit crunch, authorities struggled to come up with coherent measures when cross-border banks such as Fortis or Dexia threatened to collapse.

Reprinted with permission.


CNBC Video - E.D. Rothschild with Maria Bartiromo

Our earlier story on the IMF bailout for billionaire bondholders uncovered that the Rothschild Group is one of the Anglo-Irish bank creditors getting paid 100 cents on the dollar by U.S. taxpayers (thru the IMF) for their failed investments. So let's hear some bank-loving nonsense from E.D. Rothschild himself. Notice the date on both clips. This one came after Congress passed TARP, and Rothschild seems quite relieved that bank bondholders were not asked to take any losses.

  • "Let's get back to capitalism for the good of all..."
  • At 1:35 - "You have to face up to the fact that you couldn't let these people (banks) collapse..."

Really? Why is that E.D.? Of course we could have and should have let them collapse. Every single one of them. Then prosecute for fraud. Then jail time. Bust some bank-bondholder ass. Then we should have used the $700 billion allocated for TARP to create 7 new banks with $100 billion in capital each. I wasn't alone in making this suggestion. Nobel winner Joseph Stiglitz said the same thing as did others.

'Capitalism for the good of all' my ass, E.D. It was crony communism for the good of you, your family, and the global banking elite. Go sell your lies somewhere else, because the righteous economic blogoshpere is not buying this steaming pile of shite.


Further reading and viewing...

VIDEO - Banking Troglodytes Cowen & Lenihan Show Respect For BillionaireBondholders

May God Protect Global Bankers: Irish Leaders Castigated As Greatest Traitors Of All Time

Sheila Bair Proposes New Rules for Failed Banks Requiring Bondholders To Suffer Losses (Finally!)

William Buiter Says Bank Bondholders Must Be Held Accountable

VIDEO - Sir Evelyn de Rothschild On The Global Financial Crisis And The Absolute Necessity Of Protecting Billionaire Bank Bondholders

UK Lord Norman Lamont On Ireland's IMF Bailout For BillionaireBondholders (VIDEO)

New Slideshow - Time Magazine Looks Inside the Private Offices of Fed Chairman Bernanke - Including Photos of Bernanke Growing Up in South Carolina - These are a Must See


Foreclosure Filings in U.S. May Jump 20% From Record 2010 as Crisis Peaks

The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.

“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said in an interview at Bloomberg headquarters in New York. “But it’s probably not going to feel good in the process.”

A record 2.87 million properties got notices of default, auction or repossession in 2010, a 2 percent gain from a year earlier, the Irvine, California-based data seller said today in a report. The number climbed even after a plunge in filings in the last part of the year -- including a 26 percent drop in December -- as lenders came under scrutiny for their practices.

Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent. Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. They have fallen as much as 33 percent since peaking in 2006, based on the S&P/Case-Shiller Index of 20 cities.

Banks seized more than 1 million homes in 2010, according to RealtyTrac. That was up 14 percent from a year earlier and the most since the company began reports in 2005.

About 3 million homes have been repossessed since the housing boom ended in 2006, Sharga said. That number could balloon to about 6 million by 2013, when the housing market may “absorb the bulk of distressed properties,” he said.

Foreclosure Pipeline

“What makes this almost inevitable is the fact there are 5 million seriously delinquent loans not yet in foreclosure,” Sharga said. “They’ve got to eventually get in the pipeline unless the homeowners cure the defaults.”

The foreclosure crisis is the biggest threat to U.S. economic growth, according to Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Pennsylvania. Lender delays in processing defaults may prolong a decline in home prices, he said in an interview this week.

As many as 250,000 foreclosure filings that would have occurred at the end of 2010 were delayed by the ongoing probe into lender practices, according to RealtyTrac. Those proceedings will be pushed into this year, resulting in an “ugly” first quarter, Sharga said.

Attorney General Probe

Attorneys general in all 50 states are investigating whether banks and loan servicers used faulty documents and signatures on loan documents, a process that has come to be known as robo-signing. Companies including JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. halted some repossessions as they reviewed their procedures.

Foreclosure filings in December totaled 257,747, the lowest monthly tally since June 2008. The number fell 2 percent from November and 26 percent from a year earlier, the biggest annual decline in RealtyTrac records.

In Florida, among the states most affected by delays because the courts oversee foreclosures, filings plunged 54 percent from a year earlier to the lowest level since July 2007.

Total U.S. filings in the fourth quarter fell 8 percent from a year earlier to 799,064. The tally for the three-month period was the lowest since the fourth quarter of 2008.

Nevada had the highest U.S. foreclosure rate in 2010 for the fourth consecutive year, with more than 9 percent of the state’s households receiving a filing. Arizona was second at 5.7 percent and Florida third at 5.5 percent.

California’s rate was 4.1 percent, Utah’s was 3.4 percent and Georgia’s was 3.3 percent. Michigan, Idaho, Illinois and Colorado rounded out the top 10.

Five States

Five states accounted for 51 percent of the U.S. filing total, with almost 1.5 million. California led with 546,669, down almost 14 percent; Florida was second at 485,286, down 6 percent; and Arizona was third at 155,878, down 4 percent.

Illinois ranked fourth at 151,304 and Michigan was fifth at 135,874, both down about 15 percent from 2009.

Georgia, Texas, Ohio, Nevada and New Jersey also ranked among the top 10, said RealtyTrac, which sells data from counties representing 90 percent of the U.S. population.

Too Big to Fail? Homelessness Increases as Help Decreases

A report released yesterday confirmed startling increases in homelessness nationally. It's the second report to do so in the past month. These findings should come as a wake-up call to anyone who cares about the fundamental values on which our country is founded.

The report, "The State of Homelessness in America," issued by the National Alliance to End Homelessness, assembles data that show that from 2008 to 2009, homelessness in general increased by 3 percent, and homelessness among families increased by 4 percent. Given that the economic recession and foreclosure crises were already in full swing by then, this may not seem like an unexpected increase.

But here's the catch: The Alliance numbers capture only a very narrowly defined slice of homelessness: People in shelters or other emergency housing, or in public places. In addition to these increases, the number of families living doubled-up with others due to economic necessity increased by 12 percent to more than 6 million. The increases documented in the Alliance report parallel those reported by the U.S. Conference of Mayors in December 2010, which found a 9 percent increase in family homelessness over the past year in the 27 cities it surveyed across the country.

The report doesn't classify this group as homeless, but many organizations, including the National Law Center on Homelessness & Poverty, do. So does the U.S. Department of Education as it determines when children are homeless. For the people affected, the difference between a spot on a friend's couch or floor and a shelter or park bench is significant -- albeit short-lived. As the report notes, doubling up is a typical route to so-called "literal" homelessness: The report estimates that one in 10 of those who are doubled-up will eventually find themselves in shelters or on the streets.

Regardless of what we call it, the increase in doubling up makes a couple of things clear: First, homelessness is part of a larger continuum, and it is affecting an increasingly broader part of the U.S. population. Both new reports pointed to job loss and the foreclosure crisis as major causes of the recent dramatic increases, a trend that the Law Center has been tracking. As both trends continue to sweep across the country, the numbers of people affected will almost certainly increase, and the suffering of those already affected deepen.

The other clear and even more disturbing point is this: Despite the enormity of the current crisis, there is virtually no safety net in place to help those affected. According to federal government data, some 40 percent of all homeless people are unsheltered due to lack of resources. The U.S. Conference of Mayors' report states that in the cities they surveyed an average of 27 percent of requests for emergency shelter went unmet. In some communities, there are now waiting lists for emergency shelter.

What's more, the already enormous gap is likely to worsen, as need increases and funding cuts at all levels of government continue to decimate safety net programs, from food assistance, to housing, to legal aid, to shelter. It's no exaggeration to say that the depth of need, in a country that has the resources to meet it, is a human rights crisis right here at home.

It's a crisis that touches on the basic values on which the nation stands. Anyone can lose their job, especially during a recession. What happens after unemployment benefits run out? What happens when the rent or mortgage is overdue and there's no money to pay it? What happens when there are no family or friends who can help? Do we really want to say that no help will be forthcoming?

Last year, our country spent hundreds of billions of dollars to save banks that were considered "too big to fail." Now the conventional wisdom in Washington is that there's "no money" to help ordinary people who are suffering in poverty and homelessness. But providing massive government intervention to protect big business while slashing government supports meant to mitigate the impacts of the economy's vicissitudes truly turns basic principles of a "free market" economy on their head. Why does anyone accept this?

Homelessness can and must be ended. But to do so requires a paradigm shift that says that American ideals of basic economic and social justice are too big to fail. It requires saying that we will not tolerate homelessness in America. It requires a commitment to the principle that in a country as wealthy as ours, everyone should have a place to call home.

Want to read more? Take a look at today's (1/13/11) top Huffington Post story: "The New Face of Homelessness,"and "Unemployment, Housing Prices Forced More Families To 'Double Up' in 2009" in the business section.

Anger as JP Morgan bankers get $10bn pay and bonus pot

• Second-largest US bank JP Morgan beats Wall Street forecasts
• Improved performance in retail banking and credit card arm

JP Morgan
JP Morgan bankers are to share $10bn. Photograph: Chris Hondros/Getty Images

Anti-poverty campaigners renewed their call for new taxes on the financial sector after JP Morgan Chase set aside almost $10bn for basic pay and bonuses in its investment banking division.

The Robin Hood Tax campaign said it was "outrageous" that JP Morgan's investment bankers are to receive an average payout of $369,651 (£233,000) for 2010. The group, which supports a global tax on banks' financial transactions, said the size of the payments was "a slap in the face to ordinary people".

David Hillman, spokesman for the campaign, said: "If banks can afford to pay billions in bonuses, they can clearly afford to be taxed a great deal more. A £20bn Robin Hood tax in the UK would help avoid the worst of the cuts and show we are all in this together. While bankers wallow in cash, the general public are suffering unemployment and cuts to public services."

The remuneration figures were released after JP Morgan Chase kicked off the US banking reporting season by declaring a 47% jump in profits for the last quarter of 2010. America's second largest bank beat Wall Street forecasts, through improved performance from its retail banking and credit card operations.

JP Morgan said it had allocated $9.73bn (£6.2bn) as "compensation" for its investment bankers, up from $9.33bn in 2009. The average total pay packet fell slightly, though, to $369,651 from $379,986, as the number of employees rose to just over 26,300. The bank, which last month committed to keeping its European headquarters in London, declined to respond to Hillman's comments.

Staff members will not be told their individual bonuses for several weeks. It is likely that most employees will receive substantially less than the average of nearly $370,000, while some bankers will be very generously rewarded.

Compass, the centre-left think tank, also attacked the size of the bonus pot.

"It is absolutely disrespectful to the public mood and to the taxpayers who bailed out the banking sector only a few years ago," said Gavin Hayes, general secretary of Compass. "It shows how utterly incompetent this government is at putting pressure on the banks to self-regulate. It is the role of government to stop these obscene bonuses."

JP Morgan increased the percentage of turnover set aside for salary and bonuses to 37%, from 33% last year. This meant the total pay and bonus pot increased despite JP Morgan's investment arm making less profit, on lower revenue, than in 2009. For 2010 as a whole, the investment banking arm saw a 4% drop in profits, to $6.64bn, on turnover down 7% to $26.2bn.

Last year JP Morgan handed $550m to the UK Treasury on top of its other taxation payments, under Alistair Darling's one-off bonus tax. Hayes argued that this levy should be reintroduced and made permanent, but the present government has rejected this in favour of a levy on bank balance sheets.

Overall, JP Morgan made net earnings of $4.8bn for the final three months of last year, up 47%. For 2010 as a whole JP Morgan reported a net income of $17.4bn on revenues of $104.8bn, about 48% higher than a year ago. The increased profits were fuelled by a sharp decline in bad debts. Provisions for credit losses almost halved, to $16.6bn in 2010 from $32bn in 2009. The firm also released some funds which it had set aside to cover losses from the credit crisis.

The bank's retail financial services division and its credit card arm were both profitable in the last quarter, having made losses a year ago.

Chairman and chief executive Jamie Dimon said that the bank had a "solid" year, but admitted that the crisis in the US housing market was causing problems.

"Credit trends in our credit card and wholesale businesses continued to improve. In our mortgage business, while charge-offs and delinquencies have improved, credit costs still remain at abnormally high levels and continue to be a significant drag on our returns," said Dimon. "Although we continue to face challenges, there are signs of stability and growth returning to both the global capital markets and the US economy."

Goldman Sachs, Morgan Stanley and Citigroup will report results next week, and are also likely to face scrutiny over remuneration levels.

Energy companies accused of 'profiteering'

Energy companies were last night accused of "profiteering" after new figures revealed the price of average household bills has soared by 37 per cent over the last three years - as wholesale prices for energy has fallen substantially.

Politicians and watchdogs called on the Government to force energy companies to open their books and explain what price they were paying for their gas and electricity and what price they were charging customers.

The figures were published just a day after the fifth of the big six energy companies, E.on, announced it was increasing its customers' bills, adding £63 to average annual bill.

It became the latest bill increase to hit families after the rise in VAT to 20 per cent at the start of the year, along with petrol climbing towards £6 a gallon and stubbornly high food prices.

In total, 24.6 million customers across the five companies have been hit by price rises.

E.on, along with its rivals, blamed rising wholesale energy prices, which have climbed by 35 per cent since last Spring.

However, experts pointed out that this was a selective use of data and that over a longer period it appeared that customer bills had risen much faster than prices on the wholesale market, from companies buy their energy.

Figures, supplied to The Daily Telegraph by ICIS Heren, the leading energy research company, showed that exactly three years ago, the wholesale price for gas was 58p a therm. Since then it has fluctuated, going up, down and then slowly rising since the summer of last year, to reach 55p a therm at the start of this week. So, gas prices are 5 per cent lower.

A similar pattern has occurred in the wholesale electricity market with prices three years ago £77 a Megawatt hour. This week it was £58, a full 25 per cent lower.

In this period the average household has had to find an extra £338 a year to pay their annual energy bills. According to uSwitch, the price comparison site, the average bill for dual fuel – gas and electricity – has gone from £912 a year to £1,250.

Consumer Focus, the official watchdog, said it was imperative that the Government made use of powers, coming into force as part of European legislation in March, to insist energy companies opened their books for inspection.

Audrey Gallacher, head of energy at Consumer Focus, said: "Consumers will feel they haven’t received the benefits of low wholesale prices for the last two years but suppliers have been quick to up prices as wholesale costs have begun to rise.

"The big profits firms are set to achieve from higher use over the cold winter, and their healthy margins on pricing, will also raise burning questions from customers.

"Customers need to have confidence in the price they’re being asked to pay and this simply isn’t the case. The Government must use new EU legislation to get more information on the prices the big six pay for energy and require detailed breakdowns of profits and margins from all firms."

Ann Robinson, the head of consumer policy at uSwitch, said: "The problem is we just don't know what energy companies are paying for their gas and electricity. I was really quite surprised by all the bill increases this winter, I thought we could have been due for some bill cuts."

The only company not to have raised customer bills is EDF, which late last year made a promise not to increase its tariffs until at least March 2011.

Michael Meacher, the Labour MP, said: "What happens is utility companies, understandably, put up their customer bills when wholesale prices are rising, but are very 'sticky' about lowering bills when wholesale prices fall.

"My impression is the gap between and wholesale and retail has got far too wide. And frankly, it is a scam; it is profiteering. I'd like to see Ofgem be far tougher and sharper with the companies."

Ofgem, the industry regulator, at the end of last year announced an investigation into the major gas and electricity suppliers, after it calculated that companies were making £90 per profit from each customer on an annual basis, a jump of 38 per cent over the previous three months. It said it wanted to check if firms were "being straight" with its customers. It is due to report in a few months' time.

The energy industry has disputed Ofgem's figures, adding that the price of wholesale energy makes up less than half a customer's bill, with transport, distribution, metering costs and VAT contributing a large chunk. Also, green taxes, which the energy companies have to pay and pass on to customers – a levy that did not exist a few years ago – make up 9 per cent of electricity and 5 per cent of gas bills.

Christine McGourty, Director of Energy UK said: “On top of that are a range of other costs which have been rising year after year. These include the cost of getting the energy to customer, providing meters, and paying for social and environmental programmes."

Some energy companies, notably British Gas, have put aside far more money to help vulnerable customers pay their bills compared with three years ago.

However, according the most recent figures from the Department for Energy and Climate Change there were 4.5 million households in fuel poverty, meaning they had to spend 10 per cent or more of their income to heat and light their homes.

BP in $16bn share swap with Rosneft

Click this link .......

Virginia Creates Subcommittee To Study Monetary Alternatives In Case Of Terminal Fed "Breakdown", Considers Gold As Option

In what may one day be heralded as the formal proposal that proverbially started it all, the Commonwealth of Virginia introduced House Resolution No. 557 to establish a joint subcommittee to "to study whether the Commonwealth should adopt a currency to serve as an alternative to the currency distributed by the Federal Reserve System in the event of a major breakdown of the Federal Reserve System." In other words, Virginia will study the fallback plan of a "timely adoption of an alternative sound currency that the Commonwealth's government and citizens may employ without delay in the event of the destruction of the Federal Reserve System's currency" and avoid or "at least mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System." Most importantly as pertain to the currency in question, "Americans may employ whatever currency they choose to stipulate as the medium for payment of their private debts, including gold or silver, or both, to the exclusion of a currency not redeemable in gold or silver that Congress may have designated 'legal tender'." Whether this resolution will ever get off the ground, and actually find that the world is at great risk should gold not be instituted as a backstop currency, is irrelevant. The mere fact that it is out there, should provide sufficient impetus to other states to consider the ultimate Plan B.

We urge all legislators to carefully read this resolution.

Full proposal (pdf):

h/t infocyde

Government Says No to Helping States and Main Street, While Continuing to Throw Trillions at the Giant Banks

Dees Illustration
Washington's Blog

The Wall Street Journal noted last week:
Federal Reserve Chairman Ben Bernanke on Friday ruled out a central bank bailout of state and local governments strapped with big municipal debt burdens, saying the Fed had limited legal authority to help and little will to use that authority.
“We have no expectation or intention to get involved in state and local finance,” Mr. Bernanke said in testimony before the Senate Budget Committee. The states, he said later, “should not expect loans from the Fed.”
Congress has also discontinued the Build American Bond program, which was significant in temporarily financing California and other states’ budgets. See this, this, this and this.

That’s unfortunate, given that many states and big cities are in a dire financial situation, and given that Keynesian economists say that aid to the states is one of the best forms of stimulus.

In any event, as Steve Keen points out, giving money to the debtors is much better for stimulating the economy than giving it to the lenders.

Unfortunately, as I will demonstrate below, virtually the entire government economic policy is to throw trillions of dollars at the biggest banks.

Because there are so many rivers and streams of bailout money going to the big banks, I will start with the specifics and end with broader monetary policies.

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