Sunday, January 27, 2013
Attention shoppers: Another credit card fee is here
It could soon cost you more to shop with a credit card at some
stores. As of this Sunday, Jan. 27, merchants who accept credit cards
issued by Visa and MasterCard will be allowed to add a service charge to
the purchase price.
Visa and MasterCard had always prohibited merchants from doing this. They agreed to change the rules and allow the surcharge as part of the settlement of an antitrust suit brought by retailers.
The surcharge is supposed to equal the actual cost of processing the credit card transaction, which is typically 1.5 to 3 percent. Under the agreement, the fee is capped at 4 percent. The surcharge can vary based on the type of card. For example, it could be higher for a rewards card or premier card.
Merchants still cannot add a surcharge to debit card transactions.
The big question is: Will any stores do this? Should you worry about paying a credit card surcharge?
“We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge,” Craig Shearman, spokesman for the National Retail Federation (NRF), said in a statement. The NRF was not involved in the class action lawsuit.
NBC News contacted some of the country’s largest retailers. Wal-Mart, Target, Sears and Home Depot said they have no plans to add a credit card surcharge.
Credit card surcharges are banned by law in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Visa and MasterCard have rules that require retailers to handle credit cards the same way in all of their stores across the country. That means a chain with stores in any of the 10 states where a surcharge is banned would not be able to have a surcharge at any of its stores.
The National Retail Federation points out that under terms of the settlement, a merchant who adds a surcharge to purchases on a Visa or MasterCard would have to do the same with American Express cards. But AMEX prohibits surcharge fees. So a merchant who accepts American Express as well as Visa/MasterCard would not be able to surcharge any of those cards.
“The bottom line is that very few retailers would be able to surcharge under the settlement, and that the vast majority don’t want to surcharge even if they could,” the NRF’s Shearman said.
Ed Mierzwinski, Director of Consumer Programs at U.S. PIRG agrees.
“In the brick-and-mortar world, no one who does any sort of volume business is going to want to surcharge because it will drive their customer crazy and slow down transactions,” Mierzwinski said.
In fact, most consumer advocates believe that except for some small retailers, a credit card surcharge is a non-issue in the short-term.
But Edgar Dworsky, founder of ConsumerWorld.org, worries that over time surcharges will gain traction.
”It’s predictable what’s going to happen,” he said. “We’re at the top of the hill and we’re going to start going down that slippery slope.”
Dworsky points out that stores factor in the cost of processing credit cards when they price their merchandise. Charging for that again, he said, would be double-dipping, unless stores rolled back their prices – which no one expects them to do.
“We shouldn’t have gotten to the point, but unfortunately because of the court settlement we have,” Dworsky told me. “There’s no one standing up for consumers and saying that this is really bad.”
Dworsky points to Australia, where surcharging credit card use began in 2003. At first, few merchants charged the fee. His research shows that approximately one-third of the sellers there – including some hotels, supermarkets, department stores and utilities – now charge extra to use a credit card.
What about disclosures?
The advocacy group Consumer Action has published a booklet on credit card checkout fees. It warns shoppers to be on the lookout for these fees and advises them to express their dissatisfaction.“Customers shouldn’t stand for it,” said Ruth Susswein Consumer Action’s deputy director of national priorities. “Our advice is to tell them you don’t like the fee and this makes you want to take your business elsewhere.”
The new rules from Visa and MasterCard require retailers who apply a credit card surcharge to post a notice at the store’s entrance. The exact percentage of the surcharge does not need to be disclosed until the point of sale. The customer receipt must list the amount of the surcharge.
Online stores with a surcharge will not be required to have a notice on the home page. They only need to alert shoppers about this when they reach the page where credit cards are first mentioned. In most cases, that means the final step of checkout when the purchase is being completed.
Not the end of this story The settlement that allows merchants to impose a surcharge is only preliminary. The court has yet to issue its final ruling in this case. That’s expected later this year.
Once that happens, various retailers and business groups plan to challenge the settlement. That could drag into late 2014.
For now, the possibility that the settlement could be modified will probably keep most businesses of any size from instituting credit card fees.
“We’re not convinced this is going to be an issue,” Consumer Action’s Susswein told me. “They may never do it, but as individual consumers we need to be aware.”
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitteror visit The ConsumerMan website.
Visa and MasterCard had always prohibited merchants from doing this. They agreed to change the rules and allow the surcharge as part of the settlement of an antitrust suit brought by retailers.
The surcharge is supposed to equal the actual cost of processing the credit card transaction, which is typically 1.5 to 3 percent. Under the agreement, the fee is capped at 4 percent. The surcharge can vary based on the type of card. For example, it could be higher for a rewards card or premier card.
Merchants still cannot add a surcharge to debit card transactions.
The big question is: Will any stores do this? Should you worry about paying a credit card surcharge?
“We have discussed the settlement with many, many merchants, and not a single merchant we have spoken to plans to surcharge,” Craig Shearman, spokesman for the National Retail Federation (NRF), said in a statement. The NRF was not involved in the class action lawsuit.
NBC News contacted some of the country’s largest retailers. Wal-Mart, Target, Sears and Home Depot said they have no plans to add a credit card surcharge.
Credit card surcharges are banned by law in 10 states: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
Visa and MasterCard have rules that require retailers to handle credit cards the same way in all of their stores across the country. That means a chain with stores in any of the 10 states where a surcharge is banned would not be able to have a surcharge at any of its stores.
The National Retail Federation points out that under terms of the settlement, a merchant who adds a surcharge to purchases on a Visa or MasterCard would have to do the same with American Express cards. But AMEX prohibits surcharge fees. So a merchant who accepts American Express as well as Visa/MasterCard would not be able to surcharge any of those cards.
“The bottom line is that very few retailers would be able to surcharge under the settlement, and that the vast majority don’t want to surcharge even if they could,” the NRF’s Shearman said.
Ed Mierzwinski, Director of Consumer Programs at U.S. PIRG agrees.
“In the brick-and-mortar world, no one who does any sort of volume business is going to want to surcharge because it will drive their customer crazy and slow down transactions,” Mierzwinski said.
In fact, most consumer advocates believe that except for some small retailers, a credit card surcharge is a non-issue in the short-term.
But Edgar Dworsky, founder of ConsumerWorld.org, worries that over time surcharges will gain traction.
”It’s predictable what’s going to happen,” he said. “We’re at the top of the hill and we’re going to start going down that slippery slope.”
Dworsky points out that stores factor in the cost of processing credit cards when they price their merchandise. Charging for that again, he said, would be double-dipping, unless stores rolled back their prices – which no one expects them to do.
“We shouldn’t have gotten to the point, but unfortunately because of the court settlement we have,” Dworsky told me. “There’s no one standing up for consumers and saying that this is really bad.”
Dworsky points to Australia, where surcharging credit card use began in 2003. At first, few merchants charged the fee. His research shows that approximately one-third of the sellers there – including some hotels, supermarkets, department stores and utilities – now charge extra to use a credit card.
What about disclosures?
The advocacy group Consumer Action has published a booklet on credit card checkout fees. It warns shoppers to be on the lookout for these fees and advises them to express their dissatisfaction.“Customers shouldn’t stand for it,” said Ruth Susswein Consumer Action’s deputy director of national priorities. “Our advice is to tell them you don’t like the fee and this makes you want to take your business elsewhere.”
The new rules from Visa and MasterCard require retailers who apply a credit card surcharge to post a notice at the store’s entrance. The exact percentage of the surcharge does not need to be disclosed until the point of sale. The customer receipt must list the amount of the surcharge.
Online stores with a surcharge will not be required to have a notice on the home page. They only need to alert shoppers about this when they reach the page where credit cards are first mentioned. In most cases, that means the final step of checkout when the purchase is being completed.
Not the end of this story The settlement that allows merchants to impose a surcharge is only preliminary. The court has yet to issue its final ruling in this case. That’s expected later this year.
Once that happens, various retailers and business groups plan to challenge the settlement. That could drag into late 2014.
For now, the possibility that the settlement could be modified will probably keep most businesses of any size from instituting credit card fees.
“We’re not convinced this is going to be an issue,” Consumer Action’s Susswein told me. “They may never do it, but as individual consumers we need to be aware.”
Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitteror visit The ConsumerMan website.
CHART SHOCK: The REAL Inflation Rate Is 10%
UPDATE - The chart above has been updated to include data for December, showing the true CPI at just under 10%.
---
If the CPI were still calculated as it was in the 1980s under Paul Volcker, it would show a very different picture of inflation than what is promulgated by Chairman Bernanke.
Source - Shadow Stats
The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. Further definition is provided in our CPI Glossary.
---
History of the CPI
By John Melloy
Executive Producer, CNBC's Fast Money
After former Federal Reserve Chairman Paul Volcker was appointed in 1979, the consumer price index surged into the double digits, causing the now revered Fed Chief to double the benchmark interest rate in order to break the back of inflation. Using the methodology in place at that time puts the CPI back near those levels.
Inflation, using the reporting methodologies in
place before 1980, hit an annual rate of 9.6 percent in February,
according to the Shadow Government Statistics newsletter.
Since 1980, the Bureau of Labor Statistics has
changed the way it calculates the CPI in order to account for the
substitution of products, improvements in quality (i.e. iPad 2 costing
the same as original iPad) and other things. Backing out more methods
implemented in 1990 by the BLS still puts inflation at a 5.5 percent
rate and getting worse, according to the calculations by the
newsletter’s web site, Shadowstats.com.
“Near-term circumstances generally have
continued to deteriorate,” said John Williams, creator of the site, in a
new note out Tuesday. “Though not yet commonly recognized, there is
both an intensifying double-dip recession and a rapidly escalating
inflation problem. Until such time as financial-market expectations
catch up with underlying reality, reporting generally will continue to
show higher-than-expected inflation and weaker-than-expected economic
results in the month and months ahead.”
Continue reading at CNBC...---
UPDATE - Congress is discussing changing CPI calculation again, this time to save as much as $220 billion over ten years...
100s hold demo in Athens to say no to privatization of state banks
Hundreds
of Hellenic Postbank employees march toward the Finance Ministry in
Athens to protest against the privatization of the bank on December 17,
2012.
Hundreds of people have held a demonstration in Athens to protest against the Greek government’s plan to privatize a Greek bank.
Employees of the Hellenic Post Bank (HPB) staged a walkout outside the Finance Ministry on Monday.
The new Greek coalition government initially announced plans to sell off national banks, such as HPB, in early September.
HPB is a state-controlled lender and currently has over 2,000 employees.
The protesters are united in their opposition to the government’s plan to privatize state banks and have urged Finance Minister Yannis Stournara to change his decision on the sale.
HPB bank employees are likely to lose their jobs if the government sticks to the harsh strategy it has adopted to manage the economic crisis.
Workers are afraid “because jobs are being lost. Because this bank is for the poor, for the low-income earners, and from the moment this bank was created in 1900, it always helped the common depositor, the common man,” said a Hellenic employee.
Athens has introduced austerity measures and other debt cutting methods to meet the conditions set by the European Union for receiving a 34.3-billion-euro aid package.
With the rest of the package of almost 50 billion euros in financial assistance coming in March 2013, the government is pushing even harder to cut back debt in order to satisfy the eurozone's requirements.
Greece has been at the epicenter of the eurozone debt crisis and is experiencing its sixth year of recession, while harsh austerity measures have left about half a million people without jobs.
One in every five Greek workers is currently unemployed, banks are in a shaky position, and pensions and salaries have been slashed by up to 40 percent.
Greek youths have also been badly affected, and more than half of them are unemployed.
GVN/HGL
Sheila Bair Takes on Tim Geithner, Gets Tough on Wall Street
'The two banks that were clearly insolvent were Citigroup and Merrill.'
Sheila Bair PBS Newshour interview.
This portion was not broadcast, and is perhaps the better of the 2 clips.
Here's what we've learned so far from Bair's book:
- John Thain's only concern was getting paid.
- Robert Rubin was secretly in charge of TARP.
- Citigroup and Merrill were both insolvent.
- Bair wanted Volcker for Treasury Secretary.
- Geithner really loves Citigroup.
- Blankfein wasn't playing team ball until Bair called Buffet to complain.
Too Big To Fail
The Austin Lounge Lizards with a satirical ode to bank bailouts...
Song begins at the 30-second mark.
Oh No! Not Another Osama!
PARIS – The
bloody attack on an Algerian gas installation and France’s invasion
of Mali are the result of troubles that have been brewing for years
– we simply have not been paying attention.
Jihadist guerilla leader Mokhtar Belmokhtar, headlined as a new Great Islamic Satan by French media, has been making trouble in the Sahara for a long time, kidnapping westerners, robbing caravans, smuggling cigarettes.
Belmokhtar was known as a "man of honor," one of the western-financed jihadists who went to battle the Soviets and their communist allies in Afghanistan in the 1980’s and 90’s. He returned to his native Algeria, minus an eye lost in combat, and, with his fellow "Afghani," sought to overthrow Algeria’s western-backed military regime, a major oil and gas supplier to France.
In 1991, Algeria’s junta, bankrupt of ideas, allowed a free election. Big mistake. Algeria’s Islamists won the first round parliamentary vote. The military panicked. Backed by France and the US, Algeria’s military crushed the Islamic movement and arrested its leaders.
As a result, one of our era’s bloodiest civil wars erupted as Islamists and other insurgents battled the brutal Algerian military and intelligence forces, who called themselves, "the Eradicators."
During a decade of savagery, over 200,000 Algerians died. Entire villages were massacred. Both sides committed frightful atrocities. The Algiers government used special forces disguised as rebels to stage mass murders. Pickup trucks with guillotines were used to chop off people’s heads.
After the uprising was crushed, one particularly violent Islamist guerilla group, formerly GIC, reformed itself into AQIM – al-Qaida in the Islamic Maghreb. This caused a frenzied reaction in the West. But AIMQ had next to nothing to do with Osama bin Laden’s Afghan-Pakistan group. But the al-Qaida name brought instant media attention – a primary goal of radical groups.
After Mali’s soldiers overthrew its feeble, corrupt government last March, the vast north went into chaos. Nomadic Tuareg tribesmen declared the independent state of Azawad. Assorted jihadists, including some of Belmokhtar’s men, imposed draconian sharia law on the north. Mali’s southerners called on former colonial master France for help.
Two months ago, President Francois Hollande declared France would not again intervene in Africa. Since granting nominal independence in 1960 to the states that comprised former French West Africa, France has intervened militarily 50 times. French technicians, bankers and intelligence agents run most of West Africa from behind the scenes. There are 60,000 French in Algeria and west Africa, seen by Paris as its sphere of influence.
Mali is a major supplier of uranium to France’s nuclear industry which provides 80% of the nation’s power. French mining interests cover West Africa, which is also a key export market for French goods and arms.
After jihadists proclaimed they would nationalize Mali’s mines, Hollande turned from dove to hawk. French forces went into action behind a barrage of media propaganda about brutalities committed by the Islamists – just as French forces in Afghanistan were being driven out by Taliban fighters.
Hollande’s popularity ratings, driven down to 32% by France’s dire economic problems, tax hikes, and plant closings, soared to over 80%. Military adventures and patriotic flag-waving are always surefire remedies for politicians in trouble at home. Belmokhtar was declared the Osama bin Laden of the Sahara. Mali became a humanitarian mission lauded in the West. The US began quietly tiptoeing into the conflict.
Though a tempest in a teapot involving only a few thousand French troops, the Mali fracas threatens the unsteady French and US-backed regimes of resource-rich West Africa. Most particularly so Ivory Coast, Chad and Central African Republic, where 5,000 French soldiers and aircraft are based. An Islamist uprising in oil-rich Nigeria is growing fast, a major worry for Washington, whose regional energy resources are under threat.
Getting into little wars is always easy. Getting out is not, as Afghanistan has shown. Even French generals are now saying their troops will be in Mali, which has no real government, for a long time.
Patriotic euphoria in France is already abating. France’s belligerent unions are back on the war path over plant closings. Efforts to cut France’s huge deficit will hardly be helped by the little crusade in Mali.
Jihadist guerilla leader Mokhtar Belmokhtar, headlined as a new Great Islamic Satan by French media, has been making trouble in the Sahara for a long time, kidnapping westerners, robbing caravans, smuggling cigarettes.
Belmokhtar was known as a "man of honor," one of the western-financed jihadists who went to battle the Soviets and their communist allies in Afghanistan in the 1980’s and 90’s. He returned to his native Algeria, minus an eye lost in combat, and, with his fellow "Afghani," sought to overthrow Algeria’s western-backed military regime, a major oil and gas supplier to France.
In 1991, Algeria’s junta, bankrupt of ideas, allowed a free election. Big mistake. Algeria’s Islamists won the first round parliamentary vote. The military panicked. Backed by France and the US, Algeria’s military crushed the Islamic movement and arrested its leaders.
As a result, one of our era’s bloodiest civil wars erupted as Islamists and other insurgents battled the brutal Algerian military and intelligence forces, who called themselves, "the Eradicators."
During a decade of savagery, over 200,000 Algerians died. Entire villages were massacred. Both sides committed frightful atrocities. The Algiers government used special forces disguised as rebels to stage mass murders. Pickup trucks with guillotines were used to chop off people’s heads.
After the uprising was crushed, one particularly violent Islamist guerilla group, formerly GIC, reformed itself into AQIM – al-Qaida in the Islamic Maghreb. This caused a frenzied reaction in the West. But AIMQ had next to nothing to do with Osama bin Laden’s Afghan-Pakistan group. But the al-Qaida name brought instant media attention – a primary goal of radical groups.
After Mali’s soldiers overthrew its feeble, corrupt government last March, the vast north went into chaos. Nomadic Tuareg tribesmen declared the independent state of Azawad. Assorted jihadists, including some of Belmokhtar’s men, imposed draconian sharia law on the north. Mali’s southerners called on former colonial master France for help.
Two months ago, President Francois Hollande declared France would not again intervene in Africa. Since granting nominal independence in 1960 to the states that comprised former French West Africa, France has intervened militarily 50 times. French technicians, bankers and intelligence agents run most of West Africa from behind the scenes. There are 60,000 French in Algeria and west Africa, seen by Paris as its sphere of influence.
Mali is a major supplier of uranium to France’s nuclear industry which provides 80% of the nation’s power. French mining interests cover West Africa, which is also a key export market for French goods and arms.
After jihadists proclaimed they would nationalize Mali’s mines, Hollande turned from dove to hawk. French forces went into action behind a barrage of media propaganda about brutalities committed by the Islamists – just as French forces in Afghanistan were being driven out by Taliban fighters.
Hollande’s popularity ratings, driven down to 32% by France’s dire economic problems, tax hikes, and plant closings, soared to over 80%. Military adventures and patriotic flag-waving are always surefire remedies for politicians in trouble at home. Belmokhtar was declared the Osama bin Laden of the Sahara. Mali became a humanitarian mission lauded in the West. The US began quietly tiptoeing into the conflict.
Though a tempest in a teapot involving only a few thousand French troops, the Mali fracas threatens the unsteady French and US-backed regimes of resource-rich West Africa. Most particularly so Ivory Coast, Chad and Central African Republic, where 5,000 French soldiers and aircraft are based. An Islamist uprising in oil-rich Nigeria is growing fast, a major worry for Washington, whose regional energy resources are under threat.
Getting into little wars is always easy. Getting out is not, as Afghanistan has shown. Even French generals are now saying their troops will be in Mali, which has no real government, for a long time.
Patriotic euphoria in France is already abating. France’s belligerent unions are back on the war path over plant closings. Efforts to cut France’s huge deficit will hardly be helped by the little crusade in Mali.
Banks charge us £9bn a year for current accounts through complex fees
US banks shaken by biggest deposit withdrawals since 9/11
Joe Raedle / Getty Images / AFP
The first week of January 2013 has seen $114 billion withdrawn from 25 of the US’ biggest banks, pushing deposits down to $5.37 trillion, according to the US Fed. Financial analysts suggest it could be down to the Transaction Account Guarantee insurance program coming to an end on December 31 last year and clients moving their money that is no longer insured by the government.
The program was introduced in the wake of the 2008 crisis in order to support the banking system. It provided insurance for around $1.5 trillion in non-interest-bearing accounts with a limit of $250,000. It was aimed at medium and small banks as the creators of the program believed bigger banks would cope with the crisis themselves.
So the current “fast pace” of withdrawal comes as a surprise to financial analysts because the deposits are slipping away from those banks which supposedly were safe. Experts expected savers in small and medium banks would turn to bigger players come December 31.
There are a number of reasons behind this unpredicted fund outflow. Some experts believe it has to do with the beginning of the year when the money is randomly needed here and there. Others have concluded the funds are getting down to business and being invested.
Another set of data from the US Federal Reserve shows some deposits may have moved within the banking system from one type of account to another.
China’s Xi Agrees to Consider Summit, Japan Envoy Says
Shinzo
Abe, Japan's prime minister, pauses during a news conference in
Bangkok, Thailand. Photographer: Dario Pignatelli/Bloomberg
China’s Communist Party General
Secretary Xi Jinping has agreed to consider holding a summit
with Japan’s Prime Minister Shinzo Abe aimed at easing tensions
over a territorial dispute, a Japanese government envoy said.
Natsuo Yamaguchi, leader of Abe’s junior coalition partner,
told reporters after meeting Xi in Beijing yesterday he
suggested both sides make efforts to hold a summit and Xi told
him that “high-level talks were important and he would
seriously consider this.” The comments signal both sides may be seeking to reduce a conflict that has intensified in the past month, with each country dispatching fighter jets and patrol boats near islands at the heart of the territorial claims. The dispute has damaged the two countries’ trade relationship and drawn in the U.S., which warned last week against any disruption to Japan’s administration of the area.
“Dialogue is very welcome but they’re doing one thing with one hand and another thing with the other hand,” Stephanie Kleine-Ahlbrandt, the Beijing-based North East Asia project director for the International Crisis Group, said of China’s actions. “If we start to see a change in the deployment of Chinese law enforcement vessels then we’ll see that there really has been a change in the Chinese position.”
Yesterday’s meeting was the highest-level bilateral encounter since Abe took office last month pledging to boost defense spending in response to China’s claims to the islands, called Diaoyu in Chinese and Senkaku in Japanese.
Overcome Difficulties
Xi told Yamaguchi that China and Japan’s leaders must “overcome the difficulties in bilateral relations,” Foreign Ministry spokesman Hong Lei said at a briefing yesterday. “Xi stressed that in order to maintain the long-term steady and healthy development of bilateral relations we must look at the larger picture.”Japanese military planes were dispatched to head off approaching Chinese aircraft 91 times in the last three months of 2012, compared with 15 times in the April-June period, according to figures released by Japan’s Defense Ministry on Jan. 24.
The last summit was held between Japanese Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing last May. Noda in September authorized the purchase of three of the islands, sparking violent protests in China that damaged Japanese businesses.
“About the Senkaku isles, he said there are differences and that it is important to resolve them through talks and discussion,” Yamaguchi, head of the New Komeito party, told reporters about his conversation with Xi. “He said he wanted to move ahead with a strategic, mutually beneficial relationship, taking a broad view.”
‘Secret Whispers’
In a Jan. 24 editorial, the Chinese state-run Global Times newspaper said it was doubtful that “the secret whispers brought by Yamaguchi are valuable.”Secretary of State Hillary Clinton last week reiterated that while the U.S. takes no position on the sovereignty issue, the islands “are under the administration of Japan and we oppose any unilateral actions that would seek to undermine” that. Chinese officials denounced the comments, with Foreign Ministry spokesman Qin Gang calling them “ignorant of facts.”
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net; Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
6,000 lbs of food on 1/10th acre - Urban Farm - Urban Homestead - Growin...
please support our site. donate any amount into our TIP Jar
——————————————————————————-
Over 6,000 pounds of food per year, on 1/10 acre located just 15 minutes from downtown Los Angeles. The Dervaes family grows over 400 species of plants, 4,300 pounds of vegetable food, 900 chicken and 1,000 duck eggs, 25 lbs of honey, plus seasonal fruits throughout the year.
From 1/10th of an acre, four people manage to get over 90% of their daily food and the family reports earnings of $20,000 per year (AFTER they eat from what is produced). This is done without the use of the expensive & destructive synthetic chemicals associated with industrial mono-cropping, while simultaneously improving the fertility and overall condition of the land being used to grow this food on. Scaled up to an acre, that would equal $200,000 per year!
Banking - the Greatest Scam on Earth
The Greatest Scam on Earth – The Money Scam! The Money Scam is hidden right out in the open, yet buried in complication and confusion. A retired banker describes simply, the world’s Money Scam and the reason every country is now going bankrupt. Private bankers have stolen the money creation process, and whereas once our money was created by the governments, debt-free, it is now created out of thin air and issued as debt with interest charges. In today’s banker controlled world, money = debt, debt = slavery and therefore money = slavery — our monetary systems have become systems of enslavement. Money is created out of nothing, issued as debt, not enough money is created for the future interest payments and inflation steals our savings. The money creation process should be taken away from the banks and given to the governments who can create money debt-free, interest-free. This is how it used to be done and we needed no income taxes. Finally, it is explained what we should do to stop supporting the money scam.
Apple onshores jobs and announces Silicon Valley factory
The addition to Apple’s list of final assembly plants came less than two months after chief executive Tim Cook vowed to shift some computer manufacturing from China to the United States to catalyze domestic high-tech production.
A Quanta Computer Inc. operation in Fremont, California, not far from where Apple got its start, joined a roster of “final assembly facilities” heavily weighted with plants in China.
Taiwan-based Quanta was listed as operating Macintosh computer and iPod MP3 player assembly plants in China.
Cook, in a pair of interviews given in December, said one line of Mac computers will be made exclusively in the United States, but did not say which one.
Asked why Apple would not move out of China entirely and manufacture everything in the United States, Cook told NBC, “It’s not so much about price, it’s about the skills.”
Cook also told the broadcaster that he hopes the new project will help spur other US firms to bring manufacturing back home.
“The consumer electronics world was really never here,” he said. “It’s a matter of starting it here.”
The U.S. Has An Even Larger Gap Between The Rich And The Poor Than Downton Abbey Does
Activist Post
There are two very different Americas today. In one, the stock market is soaring, high-end homes are selling briskly, big banks and hedge funds are rolling in money as if the last financial crisis never even happened, and life is really, really good. In the other America, good jobs are incredibly scarce, incomes are declining, and poverty is skyrocketing to levels that we have never seen before.
The gap between the wealthy and the poor in America is getting wider with each passing day. In fact, it is my contention that the U.S. has an even larger gap between the rich and the poor than Downton Abbey does. If you have never seen Downton Abbey, you really should. It is one of the most extraordinary shows to appear on television in years. It is a drama set in the UK which follows the lives of the aristocratic Crawley family and their servants throughout the early part of the 20th Century. It can be a bit jarring to watch servants wait on their masters hand and foot and refer to them by such titles as "Lord" and "Lady", but the truth is that in many ways there is more inequality today than there was back then. As far as people living in the worst areas of cities such as Detroit and Cleveland are concerned, the socialites that live on Fifth Avenue in New York City or in multi-million dollar homes out in the Hamptons might as well be from another planet. If you have lots of money, America is still a really great place to live. If you barely have any money, America can be really cold and cruel.
Sadly, our politicians continue to pursue policies that make things even better for those working for the establishment in places such as Washington D.C. and Manhattan, and worse for all the rest of us. This has especially been true over the course of the past four years. If nothing is done, the gaping chasm between the rich and the poor will continue to get even worse, and in the end that will have some really severe consequences for our society.
So is the answer to raise taxes and "redistribute" more money to the poor? Of course not. Today, we are already paying dozens of different kinds of taxes every year and the government is handing out more money to people than ever before. But poverty just continues to explode.
What the poor in the U.S. desperately need are good jobs, but we continue to ship millions of good jobs out of the country and Barack Obama continues to pursue policies that are killing the U.S. economy.
There is not much help on the horizon for the poor or the middle class in America, and that should be distressing for all of us.
But things in the wealthy parts of America are going absolutely wonderfully right now. Let's take a few moments and contrast what life is like in the two Americas right now...
In the "good America", stocks are absolutely soaring. In fact, the S&P 500 closed above 1,500 on Friday for the very first time in more than five years.
In the "bad America", poverty statistics just continue to get worse. According to a newly released report, 60 percent of all children in the city of Detroit are living in poverty.
In the "good America", hedge funds are rolling in the profits. The Dow just had its best January since January of 1994, and many analysts are projecting that 2013 will be a banner year for the markets.
In the "bad America", median household income has fallen for four years in a row, and millions of families are really struggling to find a way to pay the bills each month.
In the "good America", expensive homes are selling at a pace that we have not seen in years. Just check out what is happening in the Hamptons. According to the National Association of Realtors, sales of homes worth at least a million dollars were 51 percent higher in November 2012 than they were in November 2011.
In the "bad America", there are hordes of young adults that cannot find jobs and cannot take care of themselves. Shockingly, U.S. families that have a head of household that is under the age of 30 have a poverty rate of 37 percent.
In the "good America", the "too big to fail" banks are partying like it was 2005 again. For example, revenues at Goldman Sachs increased by about 30 percent in 2012 and Goldman stock has soared by more than 40 percent over the past 12 months.
In the "bad America", poverty is exploding and government dependence has become a way of life. If you can believe it, the number of Americans on food stamps has grown from about 17 million in the year 2000 to more than 47 million today.
In the "good America", those working for the establishment will do just about anything to make a buck. For instance, Goldman Sachs made 400 million dollars driving up food prices in 2012 while hundreds of millions around the world existed on the edge of starvation.
In the "bad America", millions of families are wondering how they will make it until next month. If you can believe it, more than a million public school students in the United States are homeless. This is the first time that has ever happened in our history.
In the "good America", everyone has a good ride. In fact, sales of luxury German-made vehicles set new all-time records in 2012.
In the "bad America", those that have lost everything are shunned and ostracized. In fact, many communities all over America are actually making feeding the homeless illegal.
The fact that there is poverty in America should not alarm you. Every country in the world has poverty. What should alarm you is how rapidly it is growing. Even though the Obama administration tells us that we are in an "economic recovery", things just continue to get worse. The wealthy elitists in Washington D.C. and New York City may be doing wonderfully, but the truth is that the middle class continues to shrink and just about every poverty statistic that you can think of continues to rise.
If you are convinced that we do not have a "wealth gap" problem in the United States today, just check out the following statistics. Most of them are from one of my previous articles entitled "The Middle Class In America Is Being Wiped Out – Here Are 60 Facts That Prove It"...
-According to the Economic Policy Institute, the wealthiest one percent of all Americans households on average have 288 times the amount of wealth that the average middle class American family does.
-In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.
-According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.
-The six heirs of Wal-Mart founder Sam Walton have as much wealth as the bottom one-third of all Americans combined.
-At this point, the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.
-The United States now ranks 93rd in the world in income inequality.
-The average CEO now makes approximately 350 times as much as the average American worker makes.
-Today, corporate profits as a percentage of U.S. GDP are at an all-time high, but wages as a percentage of U.S. GDP are near an all-time low.Sometimes, when the "good America" and the "bad America" collide, the results are quite humorous.
For example, a 23-year-old homeless Brazilian man and his friends recently decided to "move in" to a 7,522 square foot house down in Florida that is valued at $2.1 million. The following is from a recent article in the Orlando Sentinel...
Bank of America has filed to evict nine squatters from a $2.5-million mansion in a posh Boca Raton neighborhood.
In a filing in Palm Beach County court that names 23-year-old Andre De Palma Barbosa and eight other unknown people, the bank claims rightful ownership of the home – despite Barbosa's attempt to stake his claim on the foreclosed waterside property by using an obscure Florida real estate law.
Barbosa has been invoking a state law called "adverse possession," which allows someone to move into a property and claim the title – if they can stay there seven years.
A signed copy of that note is also posted in the home's front window.Yeah, they will be able to get him and his friends out of there eventually, but in future years I fear that the conflicts between the rich and the poor will not be so nice.
Already, a very ominous "Robin Hood mentality" is building among the poor in this country. Many wealthy people don't even realize that it is happening. But someday when desperate "flash mobs" are roaming through their neighborhoods looking to do a little "creative redistribution", then they will get it.
Our society is starting to come apart at the seams, and there is an incredible amount of tension between the rich and the poor. This is unfortunate, but instead of calming things down many of our politicians are actually exploiting this tension.
When our economy crashes, the class warfare of today may actually turn into real war in the streets. Desperate people do desperate things, and when people are hungry and they can't feed their families, many of them will not be afraid to go over to the wealthy neighborhoods and take what they want.
A lot of people don't want to see them, but dark clouds are building. According to a recent Gallup poll, Americans are more negative about where America will be five years from now than they have ever been before. Most people know that we are on the edge of something really bad, even if they can't really explain it.
It is time to get ready for what is coming. Even though the stock market is soaring right now, that could change at any moment. All of the long-term economic and societal trends are pointing to some really bad things in the years ahead, and sticking our heads in the sand and pretending that everything is going to be okay somehow is not going to help.
So what do you think about all of this?
Do you think that the U.S. has an even larger gap between the rich and the poor than Downton Abbey does?
Please feel free to post a comment with your thoughts below...
This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.
World ‘Plunges Into Currency War’
Many government officials around the world are concerned that massive monetary easing in numerous nations is sparking a global currency war.
Governments from Germany, to Russia, to Brazil, to Thailand have expressed worry that the world is plunging into a currency war, Bloomberg Businessweek reports.
The current focus is on Japan, where the central bank this week announced it would increase its quantitative easing and also set a target of 2 percent for inflation.
Before the Bank of Japan even revealed its policy, Bundesbank President Jens Weidmann warned Japan against politicization of monetary policy that would lead to a weaker yen.”A consequence [of government pressure to ease], whether intended or not, could lead to an increasingly politicized exchange rate. Until now, the international monetary system has come through the crisis without a race to devaluation, and I really hope that it stays that way.” Loosening monetary policy often depresses a currency by lowering interest rates and boosting inflation, thus making the currency less attractive to global investors.
Governments frequently pursue a weaker currency in times of economic stress to boost exports. But one country’s devaluation often begets another, raising fears of a currency war.
History gives reason for concern. A “beggar-thy-neighbor” policy of global currency devaluations helped spark the Great Depression that began in 1929.
Hedge fund icon George Soros, chairman of Soros Fund Management, certainly is worried. “I think the biggest danger is … a currency war,” he tells CNBC.
However, not everyone objects to the global central banks’ easing moves, seeing them as necessary to spur growth. “If these are currency wars, we need more of it,” Barry Eichengreen, an economist at the University of California, Berkeley, tells Businessweek.
In the United States, the Federal Reserve’s accommodative policy has a staunch defender in Soros. “You need to re-establish growth for shrinking the debt,” he says. “And so, I think the policy pioneered by [Fed Chairman Ben] Bernanke is actually the right policy.”
In Japan, some say that monetary policy still isn’t stimulative enough to boost the moribund economy.
“The best of all worlds would be if all central banks agreed to give more support for growth,” Eichengreen says. “But uncoordinated action is better than no action at all.”
Interestingly enough, when it comes to currencies, they haven’t fallen in most of the biggest nations that are easing. The Dollar Index, which measures the greenback against six other major currencies, has actually risen a bit since shortly after the Fed began its quantitative easing in November 2008.
The British pound is little changed against the dollar since the Bank of England began its QE2 October 2011. QE hasn’t hurt the euro either, according to The Wall Street Journal.
With so many central banks easing at once, the currency effect of each country’s easing has been nullified. And economies have been weak enough to keep inflation from rearing its ugly head.
To be sure, the yen has plunged to a 2 ½-year low this week, but some experts don’t think the decline will last.
The Single Chart That Should Force The Fed Out Of Business
Source: Daily Bail
Inflation is Fed's 100 year legacy.
Behold the chart that, in a more just and sane world, would force Bernanke and Krugman to retire
and drive the Fed out of business. Consumer prices are now 30 times higher than when the Fed was created in 1913.--
Link to video at Bloomberg in case Youtube clip gets pulled...
Jan. 17 (Bloomberg) -- In today's "Single Best Chart," Bloomberg's Scarlet Fu displays how inflation has increased in the 100 years since the creation of the Federal Reserve.
Here's the truth:
What’s Inside America’s Banks?
Some four years after the 2008 financial crisis, public trust in banks
is as low as ever. Sophisticated investors describe big banks as “black
boxes” that may still be concealing enormous risks—the sort that could
again take down the economy. A close investigation of a supposedly
conservative bank’s financial records uncovers the reason for these
fears—and points the way toward urgent reforms.
The financial crisis had many causes—too much borrowing, foolish investments, misguided regulation—but at its core, the panic resulted from a lack of transparency. The reason no one wanted to lend to or trade with the banks during the fall of 2008, when Lehman Brothers collapsed, was that no one could understand the banks’ risks. It was impossible to tell, from looking at a particular bank’s disclosures, whether it might suddenly implode.
For the past four years, the nation’s political leaders and bankers have made enormous—in some cases unprecedented—efforts to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system. This hasn’t worked. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the crash.
Consider JPMorgan’s widely scrutinized trading loss last year. Before the episode, investors considered JPMorgan one of the safest and best-managed corporations in America. Jamie Dimon, the firm’s charismatic CEO, had kept his institution upright throughout the financial crisis, and by early 2012, it appeared as stable and healthy as ever.
One reason was that the firm’s huge commercial bank—the unit responsible for the old-line business of lending—looked safe, sound, and solidly profitable. But then, in May, JPMorgan announced the financial equivalent of sudden cardiac arrest: a stunning loss initially estimated at $2 billion and later revised to $6 billion. It may yet grow larger; as of this writing, investigators are still struggling to comprehend the bank’s condition.
The loss emanated from a little-known corner of the bank called the Chief Investment Office. This unit had been considered boring and unremarkable; it was designed to reduce the bank’s risks and manage its spare cash. According to JPMorgan, the division invested in conservative, low-risk securities, such as U.S. government bonds. And the bank reported that in 95 percent of likely scenarios, the maximum amount the Chief Investment Office’s positions would lose in one day was just $67 million. (This widely used statistical measure is known as “value at risk.”) When analysts questioned Dimon in the spring about reports that the group had lost much more than that—before the size of the loss became publicly known—he dismissed the issue as a “tempest in a teapot.”
Six billion dollars is not the kind of sum that can take down JPMorgan, but it’s a lot to lose. The bank’s stock lost a third of its value in two months, as investors processed reports of the trading debacle. On May 11, 2012, alone, the day after JPMorgan first confirmed the losses, its stock plunged roughly 9 percent.
The incident was about much more than money, however. Here was a bank generally considered to have the best risk-management operation in the business, and it had badly managed its risk. As the bank was coming clean, it revealed that it had fiddled with the way it measured its value at risk, without providing a clear reason. Moreover, in acknowledging the losses, JPMorgan had to admit that its reported numbers were false. A major source of its supposedly reliable profits had in fact come from high-risk, poorly disclosed speculation.
It gets worse. Federal prosecutors are now investigating whether traders lied about the value of the Chief Investment Office’s trading positions as they were deteriorating. JPMorgan shareholders have filed numerous lawsuits alleging that the bank misled them in its financial statements; the bank itself is suing one of its former traders over the losses. It appears that Jamie Dimon, once among the most trusted leaders on Wall Street, didn’t understand and couldn’t adequately manage his behemoth. Investors are now left to doubt whether the bank is as stable as it seemed and whether any of its other disclosures are inaccurate.
The JPMorgan scandal isn’t the only one in recent months to call into question whether the big banks are safe and trustworthy. Many of the biggest banks now stand accused of manipulating the world’s most popular benchmark interest rate, the London Interbank Offered Rate (LIBOR), which is used as a baseline to set interest rates for trillions of dollars of loans and investments. Barclays paid a large fine in June to avoid civil and criminal charges that could have been brought by U.S. and U.K. authorities. The Swiss giant UBS was reportedly close to a similar settlement as of this writing. Other major banks, including JPMorgan, Bank of America, and Deutsche Bank, are under civil or criminal investigation (or both), though no charges have yet been filed.
Libor reflects how much banks charge when they lend to each other; it is a measure of their confidence in each other. Now the rate has become synonymous with manipulation and collusion. In other words, one can’t even trust the gauge that is meant to show how much trust exists within the financial system.
Accusations of illegal, clandestine bank activities are also proliferating. Large global banks have been accused by U.S. government officials of helping Mexican drug dealers launder money (HSBC), and of funneling cash to Iran (Standard Chartered). Prosecutors have charged American banks with falsifying mortgage records by “robo-signing” papers to rush the process along, and with improperly foreclosing on borrowers. Only after the financial crisis did people learn that banks routinely misled clients, sold them securities known to be garbage, and even, in some cases, secretly bet against them to profit from their ignorance.
Together, these incidents have pushed public confidence ever lower. According to Gallup, back in the late 1970s, three out of five Americans said they trusted big banks “a great deal” or “quite a lot.” During the following decades, that trust eroded. Since the financial crisis of 2008, it has collapsed. In June 2012, fewer than one in four respondents told Gallup they had faith in big banks—a record low. And in October, Luis Aguilar, a commissioner at the Securities and Exchange Commission, cited separate data showing that “79 percent of investors have no trust in the financial system.”
When we asked Dane Holmes, the head of investor relations at Goldman Sachs, why so few people trust big banks, he told us, “People don’t understand the banks,” because “there is a lack of transparency.” (Holmes later clarified that he was talking about average people, not the sophisticated investors with whom he interacts on an almost hourly basis.) He is certainly right that few students or plumbers or grandparents truly understand what big banks do anymore. Ordinary people have lost faith in financial institutions. That is a big enough problem on its own.
But an even bigger problem has developed—one that more fundamentally threatens the safety of the financial system—and it more squarely involves the sort of big investors with whom Holmes spends much of his time. More and more, the people in the know don’t trust big banks either.
After all the purported “cleansing effects” of the panic, one might have expected big, sophisticated investors to grab up bank stocks, exploiting the timidity of the average investor by buying low. Banks wrote down bad loans; Treasury certified the banks’ health after its “stress tests”; Congress passed the Dodd-Frank reforms to regulate previously unfettered corners of the financial markets and to minimize the impact of future crises. During the 2008 crisis, many leading investors had gotten out of bank stocks; these reforms were designed to bring them back.
And indeed, they did come back—at first. Many investors, including Warren Buffett, say bank stocks were underpriced after the crisis, and remain so today. Most large institutional investors, such as mutual funds, pension funds, and insurance companies, continue to hold substantial stakes in major banks. The Federal Reserve has tried to help banks make profitable loans and trades, by keeping interest rates low and pumping trillions of dollars into the economy. For investors, the combination of low stock prices, an accommodative Fed, and possibly limited downside (the federal government, needless to say, has shown a willingness to assist banks in bad times) can be a powerful incentive.
Yet the limits to big investors’ enthusiasm are clearly reflected in the data. Some four years after the crisis, big banks’ shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below “book value,” which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don’t believe the stated value, or don’t believe the banks will be profitable in the future—or both. Several financial executives told us that they see the large banks as “complete black boxes,” and have no interest in investing in their stocks. A chief executive of one of the nation’s largest financial institutions told us that he regularly hears from investors that the banks are “uninvestable,” a Wall Street neologism for “untouchable.”
That’s an increasingly widespread view among the most sophisticated leaders in investing circles. Paul Singer, who runs the influential investment fund Elliott Associates, wrote to his partners this summer, “There is no major financial institution today whose financial statements provide a meaningful clue” about its risks. Arthur Levitt, the former chairman of the SEC, lamented to us in November that none of the post-2008 remedies has “significantly diminished the likelihood of financial crises.” In a recent conversation, a prominent former regulator expressed concerns about the hidden risks that banks might still be carrying, comparing the big banks to Enron.
A recent survey by Barclays Capital found that more than half of institutional investors did not trust how banks measure the riskiness of their assets. When hedge-fund managers were asked how trustworthy they find “risk weightings”—the numbers that banks use to calculate how much capital they should set aside as a safety cushion in case of a business downturn—about 60 percent of those managers answered 1 or 2 on a five-point scale, with 1 being “not trustworthy at all.” None of them gave banks a 5.
A disturbing number of former bankers have recently declared that the banking industry is broken (this newfound clarity typically follows their passage from financial titan to rich retiree). Herbert Allison, the ex-president of Merrill Lynch and former head of the Obama administration’s Troubled Asset Relief Program, wrote a scathing e-book about the failures of the large banks, stopping just short of labeling them all vampire squids. A parade of former high-ranking executives has called for bank breakups, tighter regulation, or a return to the Depression-era Glass-Steagall law, which separated commercial banking from investment banking. Among them: Philip Purcell (ex-CEO of Morgan Stanley Dean Witter), Sallie Krawcheck (ex-CFO of Citigroup), David Komansky (ex-CEO of Merrill Lynch), and John Reed (former co‑CEO of Citigroup). Sandy Weill, another ex-CEO of Citigroup, who built a career on financial megamergers, did a stunning about-face this summer, advising, with breathtaking chutzpah, that the banks should now be broken up.
Bill Ackman’s journey is particularly telling. One of the nation’s highest-profile and most successful investors, Ackman went from being a skeptic of investing in big banks, to being a believer, and then back again—with a loss of hundreds of millions along the way. In 2010, Ackman bought an almost $1 billion stake in Citigroup for Pershing Square, the $11 billion fund he runs. He reasoned that in the aftermath of the crisis, the big banks had written down their bad loans and become more conservative; they were also facing less competition. That should have been a great environment for investment, he says. He had avoided investing in big banks for most of his career. But “for once,” he told us, “I thought you could trust the carrying values on bank books.”
Last spring, Pershing Square sold its entire stake in Citigroup, as the bank’s strategy drifted, at a loss approaching $400 million. Ackman says, “For the first seven years of Pershing Square, I believed that an investor couldn’t invest in a giant bank. Then I felt I could invest in a bank, and I did—and I lost a lot of money doing it.”
A crisis of trust among investors is insidious. It is far less obvious than a sudden panic, but over time, its damage compounds. It is not a tsunami; it is dry rot. It creeps in, noticed occasionally and then forgotten. Soon it is a daily fact of life. Even as the economy begins to come back, the trust crisis saps the recovery’s strength. Banks can’t attract capital. They lose customers, who fear being tricked and cheated. Their executives are, by turns, traumatized and enervated. Lacking confidence in themselves as they grapple with the toxic legacies of their previous excesses and mistakes, they don’t lend as much as they should. Without trust in banks, the economy wheezes and stutters.
And, of course, as trust diminishes, the likelihood of another crisis grows larger. The next big storm might blow the weakened house down. Elite investors—those who move markets and control the flow of money—will flee, out of worry that the roof will collapse. The less they trust the banks, the faster and more decisively they will beat that path—disinvesting, freezing bank credit, and weakening the structure even more. In this way, fear becomes reality, and troubles that might once have been weathered become existential.
By
Jamie Dimon, JPMorgan’s CEO, testifying last summer before the
House Financial Services Committee about his bank’s sudden $6 billion
loss. (Jacqueline Martin/AP)
The financial crisis had many causes—too much borrowing, foolish investments, misguided regulation—but at its core, the panic resulted from a lack of transparency. The reason no one wanted to lend to or trade with the banks during the fall of 2008, when Lehman Brothers collapsed, was that no one could understand the banks’ risks. It was impossible to tell, from looking at a particular bank’s disclosures, whether it might suddenly implode.
For the past four years, the nation’s political leaders and bankers have made enormous—in some cases unprecedented—efforts to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system. This hasn’t worked. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the crash.
Consider JPMorgan’s widely scrutinized trading loss last year. Before the episode, investors considered JPMorgan one of the safest and best-managed corporations in America. Jamie Dimon, the firm’s charismatic CEO, had kept his institution upright throughout the financial crisis, and by early 2012, it appeared as stable and healthy as ever.
One reason was that the firm’s huge commercial bank—the unit responsible for the old-line business of lending—looked safe, sound, and solidly profitable. But then, in May, JPMorgan announced the financial equivalent of sudden cardiac arrest: a stunning loss initially estimated at $2 billion and later revised to $6 billion. It may yet grow larger; as of this writing, investigators are still struggling to comprehend the bank’s condition.
The loss emanated from a little-known corner of the bank called the Chief Investment Office. This unit had been considered boring and unremarkable; it was designed to reduce the bank’s risks and manage its spare cash. According to JPMorgan, the division invested in conservative, low-risk securities, such as U.S. government bonds. And the bank reported that in 95 percent of likely scenarios, the maximum amount the Chief Investment Office’s positions would lose in one day was just $67 million. (This widely used statistical measure is known as “value at risk.”) When analysts questioned Dimon in the spring about reports that the group had lost much more than that—before the size of the loss became publicly known—he dismissed the issue as a “tempest in a teapot.”
Six billion dollars is not the kind of sum that can take down JPMorgan, but it’s a lot to lose. The bank’s stock lost a third of its value in two months, as investors processed reports of the trading debacle. On May 11, 2012, alone, the day after JPMorgan first confirmed the losses, its stock plunged roughly 9 percent.
The incident was about much more than money, however. Here was a bank generally considered to have the best risk-management operation in the business, and it had badly managed its risk. As the bank was coming clean, it revealed that it had fiddled with the way it measured its value at risk, without providing a clear reason. Moreover, in acknowledging the losses, JPMorgan had to admit that its reported numbers were false. A major source of its supposedly reliable profits had in fact come from high-risk, poorly disclosed speculation.
It gets worse. Federal prosecutors are now investigating whether traders lied about the value of the Chief Investment Office’s trading positions as they were deteriorating. JPMorgan shareholders have filed numerous lawsuits alleging that the bank misled them in its financial statements; the bank itself is suing one of its former traders over the losses. It appears that Jamie Dimon, once among the most trusted leaders on Wall Street, didn’t understand and couldn’t adequately manage his behemoth. Investors are now left to doubt whether the bank is as stable as it seemed and whether any of its other disclosures are inaccurate.
The JPMorgan scandal isn’t the only one in recent months to call into question whether the big banks are safe and trustworthy. Many of the biggest banks now stand accused of manipulating the world’s most popular benchmark interest rate, the London Interbank Offered Rate (LIBOR), which is used as a baseline to set interest rates for trillions of dollars of loans and investments. Barclays paid a large fine in June to avoid civil and criminal charges that could have been brought by U.S. and U.K. authorities. The Swiss giant UBS was reportedly close to a similar settlement as of this writing. Other major banks, including JPMorgan, Bank of America, and Deutsche Bank, are under civil or criminal investigation (or both), though no charges have yet been filed.
Libor reflects how much banks charge when they lend to each other; it is a measure of their confidence in each other. Now the rate has become synonymous with manipulation and collusion. In other words, one can’t even trust the gauge that is meant to show how much trust exists within the financial system.
Accusations of illegal, clandestine bank activities are also proliferating. Large global banks have been accused by U.S. government officials of helping Mexican drug dealers launder money (HSBC), and of funneling cash to Iran (Standard Chartered). Prosecutors have charged American banks with falsifying mortgage records by “robo-signing” papers to rush the process along, and with improperly foreclosing on borrowers. Only after the financial crisis did people learn that banks routinely misled clients, sold them securities known to be garbage, and even, in some cases, secretly bet against them to profit from their ignorance.
Together, these incidents have pushed public confidence ever lower. According to Gallup, back in the late 1970s, three out of five Americans said they trusted big banks “a great deal” or “quite a lot.” During the following decades, that trust eroded. Since the financial crisis of 2008, it has collapsed. In June 2012, fewer than one in four respondents told Gallup they had faith in big banks—a record low. And in October, Luis Aguilar, a commissioner at the Securities and Exchange Commission, cited separate data showing that “79 percent of investors have no trust in the financial system.”
When we asked Dane Holmes, the head of investor relations at Goldman Sachs, why so few people trust big banks, he told us, “People don’t understand the banks,” because “there is a lack of transparency.” (Holmes later clarified that he was talking about average people, not the sophisticated investors with whom he interacts on an almost hourly basis.) He is certainly right that few students or plumbers or grandparents truly understand what big banks do anymore. Ordinary people have lost faith in financial institutions. That is a big enough problem on its own.
But an even bigger problem has developed—one that more fundamentally threatens the safety of the financial system—and it more squarely involves the sort of big investors with whom Holmes spends much of his time. More and more, the people in the know don’t trust big banks either.
After all the purported “cleansing effects” of the panic, one might have expected big, sophisticated investors to grab up bank stocks, exploiting the timidity of the average investor by buying low. Banks wrote down bad loans; Treasury certified the banks’ health after its “stress tests”; Congress passed the Dodd-Frank reforms to regulate previously unfettered corners of the financial markets and to minimize the impact of future crises. During the 2008 crisis, many leading investors had gotten out of bank stocks; these reforms were designed to bring them back.
And indeed, they did come back—at first. Many investors, including Warren Buffett, say bank stocks were underpriced after the crisis, and remain so today. Most large institutional investors, such as mutual funds, pension funds, and insurance companies, continue to hold substantial stakes in major banks. The Federal Reserve has tried to help banks make profitable loans and trades, by keeping interest rates low and pumping trillions of dollars into the economy. For investors, the combination of low stock prices, an accommodative Fed, and possibly limited downside (the federal government, needless to say, has shown a willingness to assist banks in bad times) can be a powerful incentive.
Yet the limits to big investors’ enthusiasm are clearly reflected in the data. Some four years after the crisis, big banks’ shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below “book value,” which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don’t believe the stated value, or don’t believe the banks will be profitable in the future—or both. Several financial executives told us that they see the large banks as “complete black boxes,” and have no interest in investing in their stocks. A chief executive of one of the nation’s largest financial institutions told us that he regularly hears from investors that the banks are “uninvestable,” a Wall Street neologism for “untouchable.”
That’s an increasingly widespread view among the most sophisticated leaders in investing circles. Paul Singer, who runs the influential investment fund Elliott Associates, wrote to his partners this summer, “There is no major financial institution today whose financial statements provide a meaningful clue” about its risks. Arthur Levitt, the former chairman of the SEC, lamented to us in November that none of the post-2008 remedies has “significantly diminished the likelihood of financial crises.” In a recent conversation, a prominent former regulator expressed concerns about the hidden risks that banks might still be carrying, comparing the big banks to Enron.
A recent survey by Barclays Capital found that more than half of institutional investors did not trust how banks measure the riskiness of their assets. When hedge-fund managers were asked how trustworthy they find “risk weightings”—the numbers that banks use to calculate how much capital they should set aside as a safety cushion in case of a business downturn—about 60 percent of those managers answered 1 or 2 on a five-point scale, with 1 being “not trustworthy at all.” None of them gave banks a 5.
A disturbing number of former bankers have recently declared that the banking industry is broken (this newfound clarity typically follows their passage from financial titan to rich retiree). Herbert Allison, the ex-president of Merrill Lynch and former head of the Obama administration’s Troubled Asset Relief Program, wrote a scathing e-book about the failures of the large banks, stopping just short of labeling them all vampire squids. A parade of former high-ranking executives has called for bank breakups, tighter regulation, or a return to the Depression-era Glass-Steagall law, which separated commercial banking from investment banking. Among them: Philip Purcell (ex-CEO of Morgan Stanley Dean Witter), Sallie Krawcheck (ex-CFO of Citigroup), David Komansky (ex-CEO of Merrill Lynch), and John Reed (former co‑CEO of Citigroup). Sandy Weill, another ex-CEO of Citigroup, who built a career on financial megamergers, did a stunning about-face this summer, advising, with breathtaking chutzpah, that the banks should now be broken up.
Bill Ackman’s journey is particularly telling. One of the nation’s highest-profile and most successful investors, Ackman went from being a skeptic of investing in big banks, to being a believer, and then back again—with a loss of hundreds of millions along the way. In 2010, Ackman bought an almost $1 billion stake in Citigroup for Pershing Square, the $11 billion fund he runs. He reasoned that in the aftermath of the crisis, the big banks had written down their bad loans and become more conservative; they were also facing less competition. That should have been a great environment for investment, he says. He had avoided investing in big banks for most of his career. But “for once,” he told us, “I thought you could trust the carrying values on bank books.”
Last spring, Pershing Square sold its entire stake in Citigroup, as the bank’s strategy drifted, at a loss approaching $400 million. Ackman says, “For the first seven years of Pershing Square, I believed that an investor couldn’t invest in a giant bank. Then I felt I could invest in a bank, and I did—and I lost a lot of money doing it.”
A crisis of trust among investors is insidious. It is far less obvious than a sudden panic, but over time, its damage compounds. It is not a tsunami; it is dry rot. It creeps in, noticed occasionally and then forgotten. Soon it is a daily fact of life. Even as the economy begins to come back, the trust crisis saps the recovery’s strength. Banks can’t attract capital. They lose customers, who fear being tricked and cheated. Their executives are, by turns, traumatized and enervated. Lacking confidence in themselves as they grapple with the toxic legacies of their previous excesses and mistakes, they don’t lend as much as they should. Without trust in banks, the economy wheezes and stutters.
And, of course, as trust diminishes, the likelihood of another crisis grows larger. The next big storm might blow the weakened house down. Elite investors—those who move markets and control the flow of money—will flee, out of worry that the roof will collapse. The less they trust the banks, the faster and more decisively they will beat that path—disinvesting, freezing bank credit, and weakening the structure even more. In this way, fear becomes reality, and troubles that might once have been weathered become existential.
Frenzy in the Gold Market: The Repatriation of Germany’s Post World War II Gold Reserves
German news sources suggest that a large portion of the German gold stored in the vaults of the New York Fed and the Banque de France is to be moved back to Germany.
According to analysts, this move could potentially “trigger a chain reaction, prompting other countries to start repatriating the gold stored in London, New York or Paris…. “
If gold repatriation becomes a worldwide trend, it will be obvious that both the US and UK have lost their credibility as gold custodians. For gold markets worldwide, this move may mark a switch from “financial gold” to “physical gold”, but the process is definitely in its early stages.While the issue is actively debated in Germany, US financial reports have downplayed the significance of this historic decision, approved by the German government last September.
The decision to repatriate the German gold is a big victory for a part of the German press that first forced the Bundesbank to admit that 69% of its gold is stored outside Germany. Almost certainly both the German press and at least several German lawmakers will demand a verification procedure for the gold bars returned from New York, just to make sure that Germany doesn’t receive gold-plated tungsten instead of gold. It seems that German decision makers no longer trust their American partners. (Voice of Russia, January 15, 2013, emphasis added)
Meanwhile, a “Repatriate our Gold” campaign has been launched by several German economists, business executives and lawyers. The initiative does not apply solely to Germany. It calls upon countries to initiate the homeland repatriation of ALL gold holdings held in foreign central banks.
While national sovereignty and custody over Germany’s gold assets is part of the debate, several observers –including politicians– have begged the question: “can we trust the foreign central banks” (namely the US, Britain and France) which are holding Germany’s gold bars “in safe keeping”:
…Several German politicians have … voiced unease. Philipp Missfelder, a leading lawmaker from Chancellor Angela Merkel’s center-right party, has asked the Bundesbank for the right to view the gold bars in Paris and London, but the central bank has denied the request, citing the lack of visitor rooms in those facilities, German daily Bild reported.A full and complete repatriation of gold assets, however, is not envisaged:
Given the growing political unease about the issue and the pressure from auditors, the central bank decided last month [September] to repatriate some 50 tons of gold in each of the three coming years from New York to its headquarters in Frankfurt for ‘‘thorough examinations’’ regarding weight and quality, the report revealed.
…Several passages of the auditors’ report were blackened out in the copy shared with lawmakers, citing the Bundesbank’s concerns that they could compromise secrets involving the central banks storing the gold.
The report said that the gold pile in London has fallen ‘‘below 500 tons’’ due to recent sales and repatriations, but it did not specify how much gold was held in the U.S. and in France. German media have widely reported that some 1,500 tons — almost half of the total reserves — are stored in New York.
( Associated Press, Oct 22, 2012, emphasis added )
“The Bundesbank plans to transfer 300 tonnes of gold from the Federal Reserve in New York and all of its gold stored at the Banque de France in Paris, 374 tonnes, to Frankfurt. beginning this year,The German Federal Court of Auditors has called for an official inspection of German gold reserves stored at foreign central banks, “because they have never been fully checked“.
By 2020, it wants to hold half of the nearly 3,400 tonnes of gold valued at almost 138 billion euros – only the United States holds more – in Frankfurt, where it stores about a third of its reserves. The rest is kept at the Federal Reserve, the Banque de France and the Bank of England. (Reuters, January 16, 2012)
Are these German bullion reserves held at the Federal Reserve “separate” or are they part of the Federal Reserve’s fungible “big pot” of gold assets.
Does the New York Federal Reserve Bank have “Fungible Gold Assets to the Degree Claimed”? Could it reasonably meet a process of homeland repatriation of gold assets initiated by several countries simultaneously?
According to the NY Federal Reserve, 98% of its gold bullion reserves is in custody, i.e. it belongs to foreign countries. The remaining 2% belongs to the IMF and the NY Federal Reserve Bank. In a bitter irony the actual gold reserves of the NY Federal Reserve Bank are minimal.
Why is German Gold held outside Germany?
“Why is our gold in Paris, London and New York” and not in Frankfurt ?
The official explanation –which borders on the absurd– is that West Germany at the outset of the Cold War decided to store its central bank gold assets in London, Paris, and New York to “put them out of reach of the Soviet empire” which was allegedly intent upon looting West Germany’s gold treasures.
According to Reuters:
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.According to the Western media, in chorus, the threats of the “evil empire” in the course of the Cold War era had so to speak encouraged the “looking after” and “safe-keeping” of billions of dollars of German gold bullion in the secure central bank vaults of France, England and America. This was a “responsible” initiative undertaken by these three countries –”friends of West Germany”– with a view to allegedly assisting the Bundesbank located in Frankfurt am Main against an imminent attack by The Red Army.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
With the end of the Cold War it was no longer necessary to keep Germany’s gold reserves “as far to the west and as far from the Iron Curtain as possible”, Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
The Bundesbank gained more space in its vaults after the transition to the euro from the deutschmark. Reuters, January 16, 2013)
But now more than 21 years after the official end of the Cold War (1991), the Bundesbank “plans to bring home some of its gold reserves stored in the United States’ and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.”
What was the objective of the US, in the wake of the World War II in pressuring countries to deposit their gold bullion in the custody of the US Federal Reserve?
Historically, the accumulation of gold bullion in the vaults of the US Federal Reserve (on behalf of foreign countries) has indelibly served to strengthen the global dollar system, both during the period of the (Bretton Woods) post-war “gold exchange standard” (1946-1971) as well as in its aftermath (1971-).
History: In the Wake of World War II
The gold bullion storage arrangement has nothing to do with the Soviet threat, as conveyed in official statements.
It has a lot to do with the history of World War II and its immediate aftermath.
The early postwar central banking arrangement was dictated by the Victors of World War II, namely America, France and Britain.
The military occupation governments of these three countries directly controlled the post-war monetary reforms implemented in West Germany starting in 1945.
West Germany had been split up into three zones, respectively under the jurisdiction of the US, Britain and France (see map below). From 1945 to 1947, The Reichmark continued to circulate with new paper money printed in the US.
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Post-Nazi German occupation borders and territories. Areas in beige indicate territories east of the Oder-Neisse line that were attached to Poland and the USSR. The Saar Protectorate, on the lefthand side of the map, is also shown in beige. Berlin is the multinational area shown within the red Soviet zone. (source: Wikipedia)
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In 1947, the US and UK controlled occupation zones merged into an Anglo-American “BiZone”. In 1948, under a so-called “First Law on Currency Reform”, the occupation military government set up the Bank deutscher Länder (Bank of the German States) in liaison with the US Federal Reserve and the Bank of England. The currency reforms were implemented in parallel with the Marshall Plan, launched in June 1947.
The Bank deutscher Länder (BdL) was to manage the monetary system of the Länder (equivalent to states in a federal structure) in the Bizone under the jurisdiction of the US-UK military government, leading to the establishment of the Deutsche Mark in June 1948, which replaced the Reichsmark.
Ludwig Erhard –who became Finance Minister under the FGR government of Conrad Adenauer and then German Chancellor (1963-1966)– played a central role in the process of monetary reform. He started his political career as an economic consultant to the US military Government (USMG). In 1947, he was appointed chairman of the currency reform commission. From January 1947 to May 1949, the US military governor of the US zone (USMG) who supervised the setting up the new currency arrangement was General Lucius D. Clay, nicknamed “Der Kaiser”.
The Deutsche Mark initiative was then extended to the occupation zone controlled by France in November 1948 (“TriZone” arrangement), with the inclusion and participation of the Banque de France.
While the Federal Republic of Germany (FRG) (Bundesrepublik Deutschland), was created in May 1949, the Bundesbank only came into existence 8 years later, in 1957.
Germany’s gold reserves were under the jurisdiction of the Bank deutscher Länder (and subsequently of the Bundesbank). But the BdL was an initiative of the US-UK-France military occupation governments.
Of significance, under the Bretton Woods gold exchange standard (1946-1971), the dollar denominated export revenues accruing to West Germany were converted into gold at 32 dollars an ounce. In other words, the export earnings resulting from the sale of German commodities in the US market were, in a sense, “returned” to America in the form of gold bullion which was deposited for “safe-keeping” at the New York Federal Reserve Bank.
The important question is the following:
Did the procedures and agreements determined by the occupation military governments in 1947-48 envisage a framework whereby part of West Germany’s gold bullion was to be held in the victors’ central banks, namely the Bank of England, the US Federal Reserve and the Banque de France?
Gold Reserves from the Third Reich
The issue of the gold reserves of the Third Reich is a subject matter in itself, beyond the scope of this article.
A couple of observations: As of 1945, large amounts of gold from the Third Reich were transferred into custody of the military governments. Part of this gold was used to finance war reparations:
In September 1946, the United States, Britain, and France established the Tripartite Commission for the Restitution of Monetary Gold (TGC). The commission has its roots in Part III of the Paris Agreement on Reparation, signed on January 14, 1946 concerning German war reparations. Under the 1946 Paris Agreement, the three Allies were charged with recovering monetary gold looted by Nazi Germany from banks in occupied Europe and placing it in a “gold pool.”A Foreign Exchange Depositary (FED) had been established at the Reichbank in Frankfurt. Referred to as “the Fort Knox of Germany”, a process of collection had been established `by the FED on behalf of the Allied Occupation Council.
Claims against the gold pool and subsequent redistribution of the gold to claimant countries were to be adjudicated and executed by the three Allies. ” ( for further details see US State Department, Tripartie Gold Commission, February 24, 1997,
Gold was collected by the FED, both in monetary and non-monetary form. By October 1947 –coinciding with the establishment of the Bank deutscher Laender– the FED, had accumulated 260 million dollars of monetary gold (at the 1947 price of gold, this represented a colossal amount of bullion).
A large part of this gold was restituted to different claimant countries, organizations and individuals. In 1950, the remaining assets of the FED –which were minimal, according to the US State Department– were transferred to the Bank deutscher Laender. (William Z. Slany, US Efforts to Restore Gold and Other Assets Stolen or Hidden by Germany During World War II, US State Department, Washington, 1997, p. 150-59).
Note:
Germany´s 3,400 tons of gold reserves does not pertain to gold from the pre-1945-era. Moreover, while the procedures of West Germany’s monetary reform under allied military occupation (1947-48) were instrumental in setting the foundations of German central banking in the post-war era, the initial amounts of gold bullion deposited in the early days of the Bank Deutscher Laender were minimal and of little significance.
It is understood that outside the realm of central banking and monetary reform, the allied forces of World War II including the US, Britain, France and the USSR did appropriate part of the gold of the Third Reich. This in itself is an entirely separate and complex issue which is beyond the scope of this article.
Squatter Occupies Bank Of America-Owned $2.5 Million Boca Raton Mansion, Hilarity Ensues
Zero Hedge – by Tyler Durden The robosigning/fraudclosure fiasco came, saw, and eventually left following a comprehensive slap-on-the-wrist settlement with all mortgage originating banks. In the process, it gave an inadvertent hint to the banks how they can boost house property values: by keeping homes from exiting the foreclosure pipeline, and off the market due to a legal mandate forcing them to do just that, it created a shortage of homes available for sale and thus provided an explicit subsidy funded by the banks themselves. The resulting “foreclosure stuffing” remains with us to this day.
Yet while it did manage to artificially boost prices, the process succeeded in one thing: making a mockery out of property rights, as it became quite clear that nobody knows who owns what, hence demanding a global settlement release from the very top. But not even the 10th incarnation of Linda Green could possibly conceive of the following episode showing just how surreal U.S. housing reality can be, when one mixes combustible and outright idiotic property laws, with a real estate market that, when one pulls away the facade of “made for TV pundtiry”, is in absolute shambles.
From the Orlando Sentinel:
Squatting in style: 23-year-old occupies empty $2.5 million Boca homeMeet the squatter: Loki Boy humself:
The 23-year-old has moved into an empty $2.5 million mansion in a posh Boca Raton neighborhood, using an obscure Florida real estate law to stake his claim on the foreclosed waterside property.
The police can’t move him. No one saw him breaking into the 5-bedroom house, so it’s a civil matter. And representatives for the real owner, Bank of America, said they are aware of the situation and are following a legal process.
But the situation is driving his wealthy neighbors crazy.
“This is a very upsetting thing,” said next door neighbor Lyn Houston. “Last week, I went to the Bank of America and asked to see the person in charge of mortgages. I told them, ‘I am prepared to buy this house.’ They haven’t even called me back.”
Barbosa, according to records, is a Brazilian national who refers to himself as “Loki Boy,” presumably after the Norse god of mischief. He did not return calls.
Someone with his name has been boasting about his new home on Facebook, even calling it Templo de Kamisamar.
Barbosa also posted a notice in the front window naming him as a “living beneficiary to the Divine Estate being superior of commerce and usury.”
A spokeswoman for Bank of America said her company has sent overnight a complaint and an eviction notice to a clerk in Palm Beach County.
“The bank is taking this situation seriously and we will work diligently to resolve this matter,” said Jumana Bauwens for Bank of America.
Sunrise real estate lawyer Gary Singer said Barbosa is invoking a state law called “adverse possession,” which allows someone to move into a property and claim the title — if they can stay there seven years.
A signed copy of that note is also posted in the home’s front window.
It’s the most valuable grab since the adverse possession law started being used in a handful of cases that have popped up in the Palm Beach County Property Appraiser’s Office over the past three years. Soon after Bank of America foreclosed on the property in July, Barbosa notified the Palm Beach County Property Appraiser’s Office that he was moving in.
Police were called the day after Christmas to the home at 580 Golden Harbour Drive, but did not remove him. He presented cops with the “adverse possession” paperwork, according to the police report.
Houston said that the home had been empty for about 18 months. Property records show it was sold to a family in 2005 for $3.1 million. The deed is currently valued at $2.5 million, according to county records. The county appraiser’s office lists the total market value of the 7,522-square-foot house at $2.1 million.
Real estate websites show canal views from sumptuous interiors including pillars, a curved staircase, marbled bath, second-floor balconies and a pool.
Singer says the adverse possession rule stems from the days when most people lived on farms. He said whoever tries to use the rule has to occupy the property in an “open and notorious manner.”
“They can’t be boarding up the windows and hiding in there,” he said.
After relatively few instances of the rule being invoked over the previous 10 years, 13 cases of adverse possession were filed in 2011, according to John Enck, a manager of ownership services at the appraiser’s office. It spiked even more in 2012: 19 cases, but so far, since Oct. 1, only six cases have been filed, he said.
Officials in Broward County did not respond to several requests for similar data.
And finally:Andre Barbosa can safely say that he has one of the nicest homes on the block in Boca Raton, Florida.
But the 23-year-old Brazilian national does not own or even rent the palatial $2.5million estate legally – he is a squatter.
Barbosa, originally from the neighboring Pompano Beach, moved into 580 Golden Harbour Drive in July
…
Speaking to ABCNews.com Thursday, a homeowner who asked not to be identified said that he entered the house around the same time and found four people inside, Barbosa among them.
One of the people said that the group is ‘establishing an embassy for their mission,’ and that families would be moving in and out of the property.
The neighbor said he believes that the 23-year-old is a ‘patsy’ who got caught up in something bigger.
According to his Facebook page, the 23-year-old, who refers to himself as ‘Loki Boy’ after the Norse god of mischief, attended South Technical Education Center in Boynton Beach and South Tech Academy in West Palm Beach.
In a brazen move, he also created a page for the Boca Raton mansion where he has been living and entertaining friends, which he calls Templo de Kamisamar.
Meanwhile, neighbors around Golden Harbour Drive who spoke to the station WPEC had a clear message for the unwanted resident: Leave now!
‘You’re walking into a house, it’s crazy. And the point of not being able to get him out is even crazier,’ one unidentified neighbor said.
HOW TO TAKE OVER SOMEONE’S PROPERTY AND GET AWAY WITH IT* * *
Adverse possession is a principle of real estate law that gives anyone who possesses the land of another for an extended period of time in an ‘actual, open, hostile and continuous’ manner the right to claim legal title to that land.
The exact elements of an adverse possession claim may be different in each state. In Florida, the law prescribes continuous possession of at least seven years. In New Jersey, a squatter must be in possession of the property for 30 years, while in New York it’s 10 years.
In some states, the trespasser must have paid taxes on the property during this time period. Other states don’t require payment of property taxes, but will apply a shorter time requirement for occupying the land if the trespasser has paid taxes.
Just like that lightbulbs went over the heads of millions of Americans, especially when one considers that for the vast majority of banks there is virtually no imperative to pursue squatters out of houses to which the banks themselves most likely don’t have the original “wet title” to.
That, and all the other allergies the US seems to developing with respect to “private” property slowly but surely.
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