Friday, July 26, 2013

Stocks suffer as China seeks to reform industry

Stock markets flounder on concerns that Chinese reforms of industry will weaken growth


LONDON (AP) -- Stocks mostly dropped on Friday on concerns that a brusque overhaul of China's industrial sector could cause a sharp slowdown in the world's second-largest economy.
Beijing has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.
Communist leaders are trying to reduce reliance on investment and trade. But a slowdown that pushed China's economic growth to a two-decade low of 7.5 percent last quarter had earlier prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest.
China's Shanghai Composite dropped 0.5 percent to 2,010.85.
Japan's Nikkei 225 index fell even further, closing 3 percent lower at 14,129.98, due to a big rise in the yen, which risks making the country's exports less competitive on international markets.
Japan on Friday said consumer prices rose in June for the first time in more than a year, an early sign Prime Minister Shinzo Abe's stimulus policies are working. While that is a promising sign in the long-term, the signs of inflation suggest interest rates could eventually also increase — higher rates tend to strengthen a national currency. The dollar was down 0.6 percent against the yen, at 98.67 yen.
In Europe, Britain's FTSE 100 index was down 0.3 percent to 6,571.71 while Germany's DAX was 0.5 percent lower at 8,258.18. France's CAC-40 bucked the trend, rising 0.4 percent to 3,973.45, thanks to a 5.7 percent rise in the shares of LVMH, the luxury goods maker, after it reported higher earnings.
Wall Street was expected to drop slightly on the open, with S&P 500 futures down 0.3 percent and Dow futures 0.2 percent lower.
Overall, trading has been quiet in recent days as a lot of people wait for next week's meeting of the Federal Open Market Committee in the U.S. for guidance on the tapering of U.S. government bond purchases, he said.
Since late last year, the U.S. Federal Reserve has been buying $85 billion in Treasury and mortgage bonds a month — a move that has kept long-term rates near record lows and supported economic recovery.
Elsewhere in the region, Australia's S&P/ASX 200 rose 0.1 percent to 5,042. Stocks in South Korea and New Zealand finished slightly higher while benchmarks in the Philippines, Malaysia, Indonesia and Taiwan fell. Hong Kong's Hang Seng was up 0.3 percent to 21,968.95
In energy trading, benchmark crude was down 75 cents at $104.74 a barrel in electronic trading on the New York Mercantile Exchange. It rose 10 cents to close at $105.49 on Thursday.
The euro was little changed at $1.3275 from $1.3277 late Thursday.
Teresa Cerojano in Manila, Philippines, contributed to this report.

It Is Happening Again: 18 Similarities Between The Last Financial Crisis And Today

If our leaders could have recognized the signs ahead of time, do you think that they could have prevented the financial crisis of 2008?  That is a very timely question, because so many of the warning signs that we saw just before and during the last financial crisis are popping up again.  Many of the things that are happening right now in the stock market, the bond market, the real estate market and in the overall economic data are eerily similar to what we witnessed back in 2008 and 2009.  It is almost as if we are being forced to watch some kind of a perverse replay of previous events, only this time our economy and our financial system are much weaker than they were the last time around.  So will we be able to handle a financial crash as bad as we experienced back in 2008?  What if it is even worse this time?  Considering the fact that we have been through this kind of thing before, you would think that our leaders would be feverishly trying to keep it from happening again and the American people would be rapidly preparing to weather the coming storm.  Sadly, none of that is happening.  It is almost as if they cannot even see the disaster that is staring them right in the face.  But without a doubt, disaster is coming. The following are 18 similarities between the last financial crisis and today…
#1 According to the Bank of America Merrill Lynch equity strategy team, their big institutional clients are selling stock at a rate not seen “since 2008“.
#2 In 2008, stock prices had wildly diverged from where the economic fundamentals said that they should be.  Now it has happened again.
#3 In early 2008, the average price of a gallon of gasoline rose substantially.  It is starting to happen again.  And remember, whenever the average price of a gallon of gasoline in the U.S. has risen above $3.80 during the past three years, a stock market decline has always followed.
#4 New home prices just experienced their largest two month drop since Lehman Brothers collapsed.
#5 During the last financial crisis, the mortgage delinquency rate rose dramatically.  It is starting to happen again.
#6 Prior to the financial crisis of 2008, there was a spike in the number of adjustable rate mortgages.  It is happening again.
#7 Just before the last financial crisis, unemployment claims started skyrocketing.  Well, initial claims for unemployment benefits are rising again.  Once we hit the 400,000 level, we will officially be in the danger zone.
#8 Continuing claims for unemployment benefits just spiked to the highest level since early 2009.
#9 The yield on 10 year Treasuries is now up to 2.60 percent.  We also saw the yield on 10 year U.S. Treasuries rise significantly during the first half of 2008.
#10 According to Zero Hedge, “whenever the annual change in core capex, also known as Non-Defense Capital Goods excluding Aircraft shipments goes negative, the US has traditionally entered a recession”.  Guess what?  It is rapidly heading toward negative territory again.
#11 Average hourly compensation in the United States experienced its largest drop since 2009 during the first quarter of 2013.
#12 In the month of June, spending at restaurants fell by the most that we have seen since February 2008.
#13 Just before the last financial crisis, corporate earnings were very disappointing.  Now it is happening again.
#14 Margin debt spiked just before the bubble burst, it spiked just before the financial crash of 2008, and now it is spiking again.
#15 During 2008, the price of gold fell substantially.  Now it is happening again.
#16 Global business confidence is now the lowest that it has been since the last recession.
#17 Back in 2008, the U.S. national debt was rapidly rising to unsustainable levels.  We are in much, much worse shape today.
#18 Prior to the last financial crisis, Federal Reserve Chairman Ben Bernanke assured the American people that home prices would not decline and that there would not be a recession.  We all know what happened.  Now he is once again promising that everything is going to be just fine.
Are the American people going to fall for it again?
It doesn’t take a genius to see how vulnerable the global economy is right now.  Much of Europe is already experiencing an economic depression, debt levels in Asia are higher than ever before, and the U.S. economy has been steadily declining for most of the past decade.  If you doubt that the U.S. economy has been declining, please see my previous article entitled “40 Stats That Prove The U.S. Economy Has Already Been Collapsing Over The Past Decade“.
And the truth is that most Americans already know that we are in deep trouble.  Today, 61 percent of all Americans believe that the country is on the wrong track.
It isn’t that so many people are choosing to be pessimistic.  It is just that an increasing number of Americans are waking up to the cold, hard reality that we are facing.
Decades of incredibly foolish decisions have brought us to this point.  We allowed our economic infrastructure to be gutted, we consumed far more wealth than we produced, our politicians kept doing incredibly stupid things but we kept voting the same jokers back into office again and again, and over the past 40 years we have blown up the biggest debt bubble in all of human history.
We have been living so far above our means for so long that most of us actually think that our current economic situation is “normal”.
But no, there is nothing normal about what we are experiencing.  We are entering the terminal phase of a colossal debt spiral, and when it flames out the economic devastation is going to be absolutely spectacular.
When the next major wave of the economic collapse comes and unemployment soars well up into the double digits, millions of businesses close and millions of American families lose their homes, I hope that those that are assuring all of us that there will not be an economic collapse will come back and apologize.
There are tens of millions of people out there right now that are not making any preparations at all because they have been promised that everything is going to be okay.  When the next financial crash happens, most of them will be absolutely blindsided by it and many of them will totally give in to despair.
Don’t let that happen to you.
Republished from: The Economic Collapse

Commodity Scams: Barclays, Goldman & JP Morgan Under Fire

JP Morgan Chase is expected to announce over $600 million in penalties and repayments for allegedly cheating customers in energy markets in California and Michigan. This just after Barclays bank paid out $470 million for manipulating electricity rates. Now Goldman Sachs is under scrutiny for possibly manipulating aluminum prices.
Commodity market scams – from energy to metals – are notoriously hard to track partly because they involve huge players dealing with each other with little outside oversight. For example, consumers are outraged when they get hefty electricity bills but it often take a lot of time for regulators to prove that they deliberately manipulated the markets.
Here’s a simple illustration how some of these scams work. Buying or hoarding large quantities of commodities is not illegal but it has the effect of driving prices up while dumping purchases has the opposite effect. Combine the two practices skilfully, it becomes easy to make a quick profit when prices are manipulated to change suddenly. (Say you buy a million shares of something at $10 and then another million at $20. Prices soar as others assume you are on to something, then you dump all of them at $16. Profit $2 million)
Investigators at the U.S. Federal Energy Regulatory Commission (FERC) give the real life example of Ryan Smith, a Barclays trader who exchanged instant messages with another trader on February 8, 2007, about a large position in electricity indices which he dumped at a loss to make a profit with a different investment.
FERC has published excerpts of their chats such as this one:
setcjake: you blow your index load yet?
smittybarcap: not yet. why?
setcjake: watching to see how low the hr’s can get
setcjake: its like that battle sceen from Braveheart: hold…hold…unleash hell!
smittybarcap: ha.
setcjake: with no load/low volume, a hvy handed index dump really moves it 

“Respondents not only engaged in this manipulative scheme at four trading nodes in the western United States during the Manipulation Months, but that they did so with the intent to commit fraud,” FERC officials wrote in a judgement handed down last week, six years after the trading took place.
Smith, together with his colleagues Daniel Brin and Karen Levine, were each fined $1 million, while Scott Connelly, managing director of North American power at Barclays, was fined $15 million.
Barclay denies the charges. “We believe the penalty assessed by the FERC is without basis, and we strongly disagree with the allegations made by FERC against Barclays and its former traders,” Barclays spokesman Marc Hazelton wrote in an email. “We intend to vigorously defend this matter.”
A couple of years later, traders at JP Morgan Chase in Houston came up with a plan to profit out of the rights to sell electricity from several inefficient power plants that they acquired from Bear Stearns, a former Wall Street investment bank. The traders createdeight distinct “schemes” between September 2010 and June 2011 that were “calculated to falsely appear attractive” to government officials in California and Michigan. The buyers paid out $83 million in “excessive” payments, say FERC investigators.
Blythe Masters, the head of global commodities for the bank, “kept close tabs on the California and Michigan power plants” instructing them to inform her of the “many of the bidding schemes under investigation,” say FERC documents seen by the New York Times. Masters then “personally participated in JPMorgan’s efforts to block” government officials “from understanding the reasons behind JPMorgan’s bidding schemes.”
“We intend to vigorously defend the firm and the employees in this matter,” said Kristin Lemkau, a spokeswoman for the JP Morgan Chase told the newspaper back in May. “We strongly dispute that Blythe Masters or any employee lied or acted inappropriately in this matter.”
The bank is now expected to announce a $410 million settlement as well as to give up $200 million in “unpaid claims.” Masters will not face any punishment.
Observers say that the fine amounts to a slap on the wrist. “Going to jail or even being criminally indicted is about as likely for a Wall Street master of the universe as Edward Snowden getting a free ride on Air Force One and joining the Obama family on a Christmas vacation trip to Disney World,” writes Mark Karlin at Truth Out.
The latest fines will push JP Morgan’s fines in the last few years to roughly $16 billion in the last three years, according to financial analyst Josh Rosner of Graham Fisher.
(See below for a useful cheat sheet on some of the major fines, prepared by Matt Taibbi of Rolling Stone)
Sudden changes in electricity prices tend to get noticed through by angry consumers. It’s much easier to get away with subtly raising prices on commodities like aluminum which consumers don’t buy directly. But anybody who buys canned fizzy drinks like Coke or Pepsi pays a fraction of a penny more without realizing it.
Here’s how that works: In 2010 Goldman Sachs, another Wall Street bank, has allegedly worked out a way to manipulate the prices of the metal by buying up the major warehouses where national stocks of the refined metal are stored in Detroit. The bank then deliberately moves the physical metal from one building to the next to delay their sale and push up prices as well as the cost of storing the aluminum. Experts estimate that the hidden cost to the consumer at $5 billion over the last three years.
“It’s a totally artificial cost,” Jorge Vazquez, managing director at Harbor Aluminum Intelligence, a commodities consulting firm, told the New York Times. “It’s a drag on the economy. Everyone pays for it.”
“Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets,” write reporter David Kocieniewski. “The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone.”
Last week, the U.S. Commodity Futures Trading Commission (CFTC) announced that it would investigate the practice of commodity warehousing.
Goldman is not the only bank to do this. A mystery buyer recently started buying large quantities of copper till it had as much as half of the copper available in the market stockpiled, causing prices to spike. The buyer was eventually identified: JP Morgan Chase.
Recent JP Morgan Chase Fines and Settlements (compiled by Rolling Stone)
• Chase was one of 13 banks asked by the U.S. Federal Reserve and the U.S. Comptroller of the Currency (OCC) to pay up in this year’s $9.3 billion robosigning settlement;
• Chase was one of four banks last year to settle for a total of $394 million with the OCC for improper mortgage servicing practices;
• Chase paid $297 million to the U.S. Securities & Exchange Commission (SEC) last November for fraud involving mortgage-backed securities;
• Chase paid $228 million to the SEC for its role in a egregious municipal bond bid-rigging case;
• Chase was fined $153.6 million by the SEC for the “Magnetar” fund case in which the bank allowed a hedge fund to create a “born-to-lose” mortgage portfolio to bet against;
• Chase was convicted in Europe in 2012 along with several other banks for fraudulent sales of derivatives to the city of Milan. A total of about $120 million was seized from Chase and three other banks;
• Chase paid $75 million in cash to the SEC and agreed to forego $647 million in fines in Jefferson County, Alabama where a local politician was bribed into green-lighting a series of deadly swap deals;
• Chase paid a $45 million settlement to the federal government for improperly racking up fees for veterans in mortgage refinancings in 2012;
• Chase paid $25 million to the state of Florida in 2010 for selling unregistered bonds to a state-run municipal money-market fund;
• Chase was ordered by the CFTC to pay $20 million last year for improper segregation of customer funds (this was part of the Lehman investigation). The CFTC also fined Chase $600,000 last year for violating position limits in the cotton markets;
• Chase was reprimanded by the OCC and the Federal Reserve for money-laundering behaviors similar to the infamous HSBC case, and also for regulatory failures and fraud in the London Whale episode. There was a separate U.S. Federal Bureau of Investigation (FBI) inquiry into the London Whale probe in which they allegedly lied to customers and investors about the loss;
•  Chase is under investigation by the FBI for allegedly failing to disclose Bernie Madoff’s trading activities to authorities.
Republished from: Global Research

Detroit taxpayers to fund 60 percent of Red Wings arena, plan shows

Plans call for the new Red Wings arena to be built in this largely vacant area north of downtown and bracketed by Woodward Avenue (left), Cass Avenue (right) and Temple Street (foreground).
The public will pay nearly 60 percent of the cost of the proposed $450 million Detroit Red Wings arena in downtown Detroit under a plan disclosed Wednesday.

Property taxes would pay for $261.5 million (58 percent) of the building's construction cost while the team's ownership would provide $188.4 million (42 percent), according to details provided by the state.

Those are July 2013 dollars based on bonds with a 5.91 percent interest rate.

Those are some of the details that emerged Wednesday during a presentation provided to the Michigan Strategic Fund board, which approved the sale of $450 million in 30-year tax-exempt private activity bonds for the project.

Olympia Development of Michigan gave the fund board data that showed a breakdown of the project's costs.

Olympia, which will operate the arena under a 35-year concession agreement with Detroit's Downtown Development Authority, is the property development arm of Mike and Marian Ilitch's $2 billion Detroit business empire that includes the Red Wings, Detroit Tigers and the Little Caesars pizza chain.

The hockey arena, which would be finished by 2017 and replace city-owned Joe Louis Arena, is part of a wider $650 million plan to create a 45-acre district that includes retail, residential, office and restaurant space on the venue site, located west of Woodward Avenue and I-75.

The 18,000-seat arena would have 1,200 premium seats, an attached 500-space parking garage and 10,000 square feet of retail space anchored by a Red Wings merchandise store, restaurants and other retail, according to the project plan.

Possible ancillary developments and infrastructure work the DDA and Olympia said are possible on the site include:
• An elevated pedestrian bridge over the Fisher Freeway, at Park or Clifford avenues.
• Widening the Woodward Avenue bridge over the Fisher Freeway.
• A 140,000-square-foot office and retail development at Woodward Avenue and Sproat Street.
• 25,000-square-foot office and retail project along Woodward.
• A hotel with 20,000 square feet of retail space.
• Several parking structures that would have ground-floor retail space.
• Renovation of the Detroit Life Building, Blenheim Building and 1922 Cass for retail, residential and office space.
• Surface parking lots.
• Streetscape projects.
Bond repayment sources
The DDA intends to use $284.5 million in property taxes already captured within its 615-acre downtown district to pay off the bonds issued by the state to build the arena. The remainder of the district costs, or $365.5 million, will be picked up by Olympia.

The DDA district will be expanded under the proposal to encompass the arena and additional adjacent land.

A nonbinding memorandum of understanding involving the DDA, Olympia and Wayne County that outlines the entire project and its financing was approved in a unanimous voice vote by the DDA board in June.

Approvals still are needed from the Detroit City Council, Wayne County Commission, Detroit Economic Growth Corp. and Olympia's board. The DDA must also approve expansion of its tax-capture district.

The planned bond repayment sources are:
• Approximately $12.8 million annually (not to exceed $15 million) from the DDA's property tax capture.
• Approximately $2.15 million in average annual payments made by the DDA from other annual property tax collection, including Wayne County's property taxes within the expanded DDA district.
• $11.5 million annually from Olympia.

The Ilitches and private entities are estimated to pay $177 million for the ancillary development, with another $23 million coming from property taxes in the DDA district or other public funds, according to the plans.

Under the deal, Olympia keeps all revenue generated by the arena, including concessions and parking, and all money from any naming rights deal. There will be 12 five-year renewal options for its 35-year management deal.

In its presentation, Olympia told the Strategic Fund that the number of jobs at the new arena will reach 1,100 versus the 660 now at Joe Louis.

The organization also said the annual economic impact of the venue will be $210 million compared to $125 million for Joe Louis, but it did not provide the formula used to arrive at those figures.
Stadium Authority could own arena
Olympia touted sports venue projects in Los Angeles, San Diego, Indianapolis and Columbus as examples of public-private spending that rehabilitated blighted or downtrodden city areas.

The new hockey arena would be owned by the DDA, but if Wayne County contributes money toward the project, it would be instead owned by the Detroit-Wayne County Stadium Authority, according to a July 11 letter from Brian Holdwick, executive vice president of business development of the DEGC (which staffs the DDA for the city under a contract), to Michael Finney, who heads the Michigan Strategic Fund in his role as CEO of the Michigan Economic Development Corp.

"In the event that Wayne County provides a funding commitment for the construction of the Events Center, subject to the approval of the Board of Directors of the Authority, the Authority may transfer its ownership interest in all or a part of the Events Center to the Detroit/Wayne County Stadium Authority or other building authority formed under Act 31 of 1948, or other public entity, as determined by the Authority," Holdwick's letter states.

However, it doesn't appear Wayne County plans to attribute any money beyond the $4.75 million from county property taxes captured in the expanded DDA district.

"That would be the county's only commitment," said Ray Byers, Wayne County's chief development officer.

Wayne County Executive Robert Ficano has previously told Crain's he's had talks with Olympia about financially aiding the stadium project, but no details had ever been disclosed.
Unnecessary subsidies?
Critics have blasted the arena deal as unnecessary subsidies for a billionaire pro sports team owner in a city in municipal bankruptcy.

Detroit's state-appointed emergency manager, Kevyn Orr, has said the city's recent Chapter 9 bankruptcy protection filing won't affect the arena project.

He has said the city's long-term debt is as much as $20 billion, and he's halted all debt service payments on city liabilities not secured by dedicated revenue sources.

Backers say the project will create new tax revenue for the city and jobs, and it won't use general fund tax dollars or create any new taxes.
Ballparks' financing
Comerica Park and Ford Field are owned by the six-member stadium authority and subleased to the DDA, which in turn has operating contracts with the teams to run the ballparks.

The Detroit Lions paid $420 million of Ford Field's $500 million cost, with the rest coming from the city, Wayne County, DDA and the Michigan Strategic Fund.

Comerica Park, built for $310.3 million, involved the stadium authority issuing $85.8 million in 30-year tax-exempt bonds issued in 1997 to pay for a portion of construction.

Instead of general fund tax dollars, the stadium bonds are paid off by a 2 percent rental car tax and 1 percent hotel room tax approved by Wayne County voters for the stadium in 1996.

Tigers owner Mike Ilitch financed $145 million for his portion of the ballpark's construction, and some of the cost was shared with adjacent Ford Field's price.
Future of Joe Louis
No decision has been made on the fate of Joe Louis Arena.

It was built by the city for $30.3 million in 1979 and financed with municipal bonds. The team, then owned by Bruce Norris, signed a deal in 1979 to move into brand-new Joe Louis that season, leaving behind Olympia Stadium, its home since 1927. Norris also owned Olympia.

Mike and Marian Ilitch bought the Wings from Norris for $8 million in 1982.

Joe Louis falls under the Detroit Building Authority, specifically the authority's Municipal Parking Department.

Wonga: the real cost of a payday loan

The payday loan company, says its PR man, is like taking a black cab rather than a bus – the price difference is worth it. We talk to Wonga users about whether they regret their journeys

Payday loans: tell us your stories in confidence

One the biggest payday loan firms, charges a representative 4,214% APR. Photograph: David Levene for the Guardian's corporate style is unremittingly cheerful. Apply for one of their online loans and, provided your application is successful, you'll get a series of happy messages, dotted with upbeat exclamation marks, giving an account of the progress of the loan. "Great news! The money will be with you in a jiffy." And a little later: "Great news! We can confirm £100.00 has just left Wonga and is winging its way to your bank account at the speed of light (well, extremely fast anyway)." Pay it back, and you'll receive a grateful text that tells you: "Thanks! We've just collected our Wonga repayment without a hitch and we're all smiles."
The company's TV and radio ads have a similarly light-hearted feel. On television, a trio of gurning puppet pensioners dance to house music and explain the attractions of the Wonga model. The company's other key advertising message is transparency, but these advertisements make no mention of the "representative" 4,214% APR applied to loans.
In the four years since the company launched, the business has soared and a total of around 3.5m short-term online loans have been made; the average loan is £260 and the maximum is £1,000, initially for a maximum of 30 days. Wonga's advertising spend has grown from approximately £22,000 in 2009 to £16m in 2011, according to the analysts AC Nielson MMS, and the brand is currently plastered over London's buses and the shirts of Blackpool and Heart of Midlothian football teams.
Wonga describes its concept as a convenient service for an internet-savvy group of consumers, the Facebook generation, people who are used to getting things fast, who feel "disenfranchised" from the traditional banking system. Loans can be made quickly on most smartphones and the money is often delivered to bank accounts in minutes. Staff believe that in time their services will have the same revolutionary impact on banking as Amazon had on the book industry.
Wonga argues that its success stems from a fast, hi-tech service, not previously available. Critics says it is down to extending expensive credit – at an interest rate of 1% a day – to people who are unable to get money through conventional, cheaper avenues. There is a huge disconnect between the Wonga management's view of these services and the view from beyond its headquarters, where campaigners against the rapidly growing payday loan industry describe them as "immoral and unjust" and "legal loan sharks".
There is an equally big gulf between the way it portrays its average customer ("young professionals who are web-savvy, fully-banked, have access to mainstream credit and a regular income"), 95% of whom, according to its customer surveys, feel "satisfied" with the service, and the characterisation offered by debt counsellors and MPs, who are seeing increasing numbers of customers winding up in financial trouble as a result of taking out payday loans. Citizens Advice reports a fourfold increase over two years in the number of people with payday-loan-related problems.
Last week, the Office of Fair Trading launched a review of the payday lending sector, looking at all the companies offering these short-term unsecured loans, which are usually repaid on the customer's next payday, in response to concerns that "some payday lenders are taking advantage of people in financial difficulty" and not meeting "guidance on irresponsible lending". The OFT said it aimed to drive out companies that are not fit to hold consumer credit licences.
Wonga does not expect to be one of the companies driven out of the market, and the company's advertising strategy tries to set Wonga aside from the myriad of evocatively named rival online companies that offer money if you Google payday loans: Kwikcash, Loans for Women, QuickQuid, Toothfairy, Payday UK, Payday Express, and Peachy (which has a "representative" APR of 16,381%).

Controversial services

"Part of our job is to get people to understand that Wonga are the good guys," Darryl Bowman, the company's head of marketing, says, explaining why the company is investing "substantial amounts of money" on advertising.
It's not difficult to find people who have had bad experiences with, and when I explain that I've spoken at length to several very unhappy customers, the company's PR manager is sanguine, remarks that debt is an emotional subject, and says the company accepts that its services will be controversial.
But he suggests it would be a good idea if, for balance, I talk to some people who have used the service and have positive things to say. He emails over four names and numbers of customers who he's plucked from the website's feedback forum and who are willing to talk.
Unexpectedly, of the two who return my calls, neither turn out to be the web-savvy young professionals that the company believes it's catering to. Instead, both closely fit the image of vulnerable customers in real financial difficulty that the campaign groups are trying to protect.
One is a 47-year-old nurse, who was forced to borrow money when he had to go down to half pay because he was recovering from a work injury, and he had no other source of credit.
The other, Susan, is 53, unemployed and dependent on disability benefits. She finds that with the cost of living rising, her benefits sometimes don't stretch to the end of the month, and has taken out loans with Wonga to buy food, if she's caught short. She's a bit vague, but thinks she's taken out half a dozen loans with Wonga over the past few months.
"I think they're brilliant. I pat them on the back," she says. She has had problems with credit cards before, and doesn't have an overdraft, but Wonga gave her credit very swiftly.
Wonga's website talks in a typically breezy way of people having "Wonga moments", as if taking out the loan is a happy lifestyle choice. Perhaps, it suggests "you've just remembered your wedding anniversary with hours to spare … Don't worry, Wonga it!"
There's no mention of unwell, unemployed people borrowing money for food because the value of their benefits payments has depreciated as the cost of living rises.
Susan gets around £600 a month in benefits, and recently when she was struggling to pay back a large, overdue bill, she took out £400 with Wonga. She can't remember the term, but if she'd kept it for a month, Wonga would have charged her £130 for the service (£61 for a fortnight) – a huge extra chunk out of the £600 she has to live on. "You are going to have to pay a higher level of interest when it's quick money," she says, happy to accept the cost because no one else will lend to her. Anyone with a reasonable credit rating, and regular income, could get that money for a month for free on a credit card or interest-free overdraft.
It's an unfortunate choice of customer to have put forward. Part of Wonga's reputation rests on only lending to people in steady employment. "Sometimes we will make loans to people on significant benefits, but it is not something we do very frequently. It is very infrequent. I'm not going to say it doesn't happen," John Morwood, the company spokesman, says.

24/7 loans

The boom in the payday loan industry has come at a time when traditional forms of credit have become harder to access, and when the downturn has shrunk incomes. In the past few years, technological advances have made it possible for a growing range of lenders to supply money 24/7 to customers quickly, without any need for human contact – no phone calls, no demands for utility bills or proof of address; some organisations allow customers to make a request simply by texting over the amount they want and the number of days they want it for.
Because there's no need to talk to anyone or to explain what you want the money for, or why you're short of cash, much stigma and embarrassment has been removed from the exchange, and the service is becoming increasingly popular, despite the very high interest rates.
Wonga's staff are keen to position its service as more akin to bank overdrafts, than to rival payday lenders. "We believe that we are in sector on our own," Bowman says, in a basement boardroom at the company's headquarters in a grand house on the edge of Regent's Park in central London, its white stucco gleaming in the spring sunshine. Among a number of awards on display is one naming as last year's fastest-growing digital media company in Europe. "We see ourselves as an internet technology business first, and a finance business second," Bowman says.
Staff say 1 million people visit the site and "hundreds of thousands" of loans are made each month. The company's turnover trebled between 2009 and 2010, to £73m turnover, and Errol Damelin, the co-founder and chief executive of Wonga, is reported to have taken home £1.6m last year.
The company refuses two-thirds of all applications because it doesn't think the applicant will be able to pay back the loan. "The reason why we decline them is that we are a responsible lender and we make money when people pay us back. We want people to pay us back. Our model is not built around people not paying us back. Our objective and our need to be responsible are perfectly aligned," Bowman says.
The company says it does not do aggressive marketing and discourages people from rolling over their loans. The phrase "responsible lending" trips off Bowman's tongue repeatedly. "When people come to our website they have all the information presented to them in a very transparent, upfront way, and they are able to make a sensible decision about whether this product is right for them. We charge 1% interest per day, which is £1 per £100 borrowed. With us we tell you exactly what you're getting into, there is no small print, no surprises."
When asked if Wonga preys on the vulnerable, Bowman says: "If I was a Wonga customer, I would be insulted by that."
We only really get towards an answer in a roundabout way, when he says he opposes the idea of fixing a cap on the amount of interest companies can charge, because it would risk putting "responsible, regulated" organisations like his out of business, leaving the market open to illegal lenders. "What we don't want is for people to have to go to non-regulated lenders … illegal other options," he says. Here, for the first time is half an admission that this is a service for people who have nowhere else to go.
Asked if there's an uncomfortable dissonance between the breeziness of the brand and the desperation felt by their clients who accept their high interest rates because they have limited alternatives, Bowman laughs. "Maybe I've been brainwashed, but I just don't see it like that."
Staff appear frustrated by what they see as the paternalistic concerns of debt campaigners, and argue that their customers "aren't stupid", and are quite able to understand the interest rates they're signing up to.
Stella Creasy, MP for Walthamstow, north-east London, who has mounted a robust campaign against the payday lending industry, says she believes, on the basis of conversations with Wonga's management, that it is trying to be responsible, in good faith, but somehow hasn't understood the fundamental nature of the market it is dealing with.
"The mistake they are making is to assume that people, when faced with a financial penalty, have the option to avoid it. In their mind they have the option of choosing not to extend a loan, when they see the costs. What they don't understand is that they are dealing with a clientele who doesn't have that choice." she says.
She dismisses the argument that Wonga's success comes from its frontier-breaking technology. "They need to think again about the idea that it is the technology that people are attracted to, rather than the credit. It is not about a future form of finance. The technology should not blind you to the rates these people are charged and the impact that has on people's financial stability. Once they've paid back the loan and interest and charges, their money runs out even quicker," she says.
The company has already attracted formal censure over its cheerfully casual approach to taking on debt; in January it was forced to remove a page from its website that suggested its loans had advantages over student loans (neglecting to mention its APR of 4,214% and the current student loan rate of 1.5%), and inviting students to borrow money from them for things such as holiday flights to the Canaries. The proposal was condemned variously as "cynical", "predatory" and "irresponsible". The Advertising Standards Authority took an earlier, equally jaunty ad off the air, ruling that the "light-hearted presentation of the ad was likely to mislead about the nature and implications of the product". Transport for London was criticised for a sponsorship deal it agreed with Wonga.
"The reasons Wonga exists are not funny reasons. People don't go to Wonga happy and cheerful. When you haven't got any money you haven't got any choice," a 29-year-old man, who works in recruitment, says. He asked not to be named, worried his parents might find out that he owes around £2,000 to half a dozen different online lenders, and is borrowing more each month to pay off the interest.
The company offices are filled with around 60 mostly young employees, dressed down in internet startup style. There's a personal trainer, employed to take staff running in the park for twice-weekly fitness sessions. A senior team dealing with people who can't pay back their loans are in another basement room ("Don't ask me why Moira has got a Barbie on her desk") but there are a further 100 people in a callcentre in South Africa, charged with ringing people to urge them to repay their loans.Staff say this is a fun place to work. Damelin's office has a starkly minimalist white office, with white leather sofas, without any papers (everything is digital) or really anything except a bottle of Evian, a bottle of Carex hand sanitising gel, and a huge print of Che Guevara.
These offices feel very far removed from the homes of the clients who are taking the loans.

Customers' stories

Four customers who gave detailed accounts of the severe difficulties that taking out a Wonga loan had caused them, all said they had turned to Wonga because they had no other way to get credit.
Yomi, 55, a council worker, saw his salary drop two years ago (after 23 years in the sector) from £46,000 to £28,000, when he switched from temping to a more secure post, anxious to ensure he had steady work at a time of rising redundancies. He took out a Wonga loan in October 2010, when the eldest of his six children began university and needed £900 to pay for his accommodation. Although his wife is also working, both have long, expensive commutes, and there was little left from his £1,700 monthly take-home pay after the £650 rent and £600 petrol had been paid. He had defaulted on his mortgage a few years earlier, and is unable to get a credit card or an overdraft from his bank. He went to Lloyds, Barclays, Nationwide and none of them were able to lend him the money he needed, so he tried Wonga.
"I started seeing these advertisements on television, for Wonga, on the buses. The idea that you could get a loan within minutes. The temptation was there to see what they could do for me. I wasn't looking too much at the small print," he says, talking in a side room in his office during a lunch hour, out of earshot of colleagues, who he thinks would be amazed to know about his payday loan problems. "I was surprised they didn't refuse me. The way I saw it at the time, I thought I am in financial turmoil and they are able to help me."
If you borrow £400 for 35 days, you accrue £145.48 in interest and fees, and £545.48 is taken out of your account automatically the next month. But Yomi was already having problems making ends meet before he took the loan, and there was no chance of his salary increasing the next month. So he had to take out a second loan to make ends meet until payday.
"When they take the money out of the account, that reduces your disposable income for the month; halfway through the month I had no money so I took out another loan with Wonga. Once you start it, you don't stop. Unless something happens, you have to go back to bridge the gap," he says.
Occasionally he would go to other online payday lenders to get new money to pay off Wonga and over the course of a year he deferred paying the Wonga loan back on several occasions. In the end he told Wonga he couldn't pay back, and they have entered into a debt repayment plan with him, freezing his interest. He calculates he has paid back around £1,500 in interest to a variety of different online and mobile phone lenders, because of his initial decision to take out the £400 loan.
The experience has been a profoundly unhappy one. "I worry about it all the time. Especially when we come to payday. I have sleepless nights. It made me start drinking for a stage until I realised that drinking was costing me more money. I haven't told my son. I'm trying not to push my anger on to my kids. I go into my shell, into my room," he says.
He is unsure about what he feels about Wonga, and blames himself as much as them; he's grateful they helped him pay his son's accommodation fees. "They are providing a service, you should give credit to them, but it is exploitative," he says.
When he sees the logo on buses and football shirts he thinks: "Yes, they are doing that because they are getting so much money from me." He recommends that people needing short-term cash should find a local credit union, such as the Waltham Forest Community Credit Union, which helped him out.
On the morning I meet him, an email has popped into his inbox, with the subject: "Yomi, does payday seem a long way off?" There's a picture of Wonga's three pensioner puppets, and a Wonga promo code offering him a £5.50 discount on fees if he takes out a new loan.
"Obviously that's not ideal," Bowman, Wonga's head of marketing, says when I show him a printout of the email. He says he can't comment on individual cases, but admits that it is never going to be possible to get all lending decisions right and he adds that the promotional email hasn't actually come from the Wonga, but has been sent out by an affiliate.
On the broader question of whether it's right to lend to people who have defaulted on their mortgages and have such a bad credit rating, he says the company's 7% arrears rate is "market-leading".
These cases represent lending that hasn't gone right. Working on a 7% arrears rate, around 245,000 of the total loans made by Wonga so far have resulted in the kinds of situations described by customers here. Bowman says: "Hands up, sometimes people slip through a net which we're constantly trying to tighten. In the vast majority of cases we do get it right."
Unlike some rival organisations, Wonga doesn't use bailiffs to force people to pay money, and has developed a "hardship team" to deal with clients who are unable to pay, but some clients have had difficulties persuading Wonga to stop taking payments out of their account.
Anthony Morgan, 33, a hospital cleaner, contacted Wonga last summer when he found himself unable to pay back around £560, a sum that had ballooned from a smaller loan taken out to buy presents for his three children. Staff explained said they would begin a debt repayment scheme, allowing him to pay back gradually, but the next day he found £800 had been wrongly taken from his account, leaving him with no money for the rest of month.
The company has subsequently wiped the debts, but Morgan remains angry at the experience. "They don't care that you are left with no money as long as they get theirs; that's the way [it] came across to me," he says. "They are a rip-off."
The company argues that these cases of people forced to come to Wonga because they have no option are unrepresentative and state that its internal research suggests that that 70% of people who use the product do have access to other forms of credit. It argues that people come to Wonga because they are happy to pay a premium for the "speed and convenience offered by an online service".

Why take the bus?

Asked why anyone would take out a loan like this if they had any other choice, Morwood, Wonga's head of PR, replies patiently: "It's a bit like me saying why would you take a black cab, when you can take a tube or a bus for the 10th of the price? It's not about price ... There are times when jumping in a black cab and paying whatever the difference in price is worth it. It's not something you do every day." It's an awkward analogy because it seems to be missing the point that a great number of their customers are jumping into the taxi on the never-never, because they cannot afford the upfront cost of taking a bus.
John (not his real name), a 29-year-old who works in recruitment and earns £17,300, is probably more the kind of customer that Wonga thinks is typical. He borrowed money from them on several occasions to go out with his friends, most of whom earn more than him. Because of a previous bad debt, he has no overdraft or credit card.
"I couldn't get money any other way. I didn't want to borrow £80 off my parents just to go out and drink beer with my mates," he says. He saw Wonga advertised on television and laughed when he saw the APR, but he liked it when he tried it. "It didn't feel expensive. I know it is expensive, but when no one else it able to help you out, you have no leeway. If a company is able to lend you that money and they take £25 or £39 off you for it then that is absolutely superb," he says. He began taking out loans on his iPhone, as he walked into town to meet friends; the money would be in his account before he reached the cash machine.
"I would say I am bored this weekend, I have no money. I will take out £100, and see my friends and worry about paying on payday," he says. His Wonga limit quickly built up, allowing him to borrow more and more, to a total of £1,000. "It is hard to explain, thinking about it. I am not sure how it went from a few loans to a lot. It is weird. They are so easy to take out. When you are doing it, you don't realise the impact. You think, my friends are going out, I could go out too, and a few taps on the laptop ... I would go to Wonga, max that out and then get £750 from another one. "
He liked the way there was no need to talk to anyone, no paper bills that his parents might see. "Because it's done online, there's no human interaction, it is a lot less difficult ... it means that I can hide it. The online is a huge aspect of it. I wouldn't want to talk to somebody about it. The web doesn't ask questions. The website wouldn't judge me.
"I first noticed that I was getting into trouble when I had to get another payday loan to survive to the end of the month, rather than it being a bit of extra cash in my pocket. At the moment I am in dire straits. Since I have taken out one to help me survive the month, I haven't cleared them off. I've always had one or two a month rolling over."
When we talk he has no idea how much he owes. "I'd like to be able to say this much, but I honestly don't know. I could guestimate, £1,800-£1,900. I am under no illusion that I am the victim. I know I'm not a victim. I'm know I'm the idiot in the scenario." He no longer goes out with his friends, as he can't afford it.
"By the middle of the month, just before I go to sleep I will have a worry about it. By payday it is all I think about. It is all consuming. People notice that I get grumpy and miserable. It affects all of my life."

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Blessed Are the Rich

Information Clearinghouse – by Jim Hightower
Even though Koch was raised rich and has now amassed a personal fortune of about $34 billion, he recently gave us a deeper sense of his true worth, measured not in dollars, but in values.
“We want to do a better job of raising up the disadvantaged and the poorest in this country,” he declared. Excellent thought — FDR couldn’t have put it better! Noting that a big problem for the poor is that the Powers That Be “keep throwing obstacles in their way,” Koch cut to the chase, saying, “We’ve got to clear those out.”  
Yes, Charlie, I’m with you! Clear out such barriers as the offshoring of middle class jobs, union busting, poorly funded schools and the lack of affordable health care, housing and child care.
But, alas, that’s not at all what Koch had in mind as obstacles to be cleared out. Rather, he proposes to “help” poor people by eliminating — ready? — “the minimum wage.” Why? Because, explains this clueless son-of-the-rich, having a wage floor “reduces the mobility of labor.”
In case you don’t dwell in the plutocratic, narcissistic, Ayn Randian fantasyland where the Kochs hang out, “labor mobility” is right-wing psychobabble for social Darwinism. Remove all remnants of America’s economic safety net, they coldly theorize (while wallowing in their nests of luxury), and the poor will be “freed” to become billionaires.
As Charles puts it, if the disadvantaged had no protections in the workplace and no government programs to ameliorate their poverty, they would then have to scramble just to live, thus freeing them from reliance on society’s helping hand. Freeing them to do what? Well, Koch says, they could then “start a business … drive a taxicab … become a hairdresser.”
What a visionary he is! Where you and I might see people trapped in debilitating poverty, Charles sees a Brave New World of billionaire hairdressers!
But he’s not the only 1-percenter having utopian visions for hard-hit Americans.
For example, I can’t begin to tell you how grateful America’s homeless people are going to be once they hear about Andy Kessler, who has been thinking long and hard about their plight, selflessly seeking ways to eradicate intractable poverty.
Kessler is a former hedge-fund whiz, which means he was in the business of making … well, money. Beaucoup bundles of it. But having seen his 16-year-old son volunteer at a homeless center, he was motivated to develop a plan to solve homelessness — and here it is: Stop dishing out soup to those people, and shut down all those damn shelters!
The homeless problem, he recently wrote in an op-ed piece for The Wall Street Journal, stems from “all this volunteering and charitable giving” by do-gooders like his son. Homeless folks ought to be working, he lectured, but they’re not, “because someone is feeding, clothing and, in effect, bathing them.”
Golly, Andy, I recall that Jesus said something about our Godly duty to feed and clothe the needy — and even to wash the feet of the poor.
But apparently, Jesus just didn’t grasp the essence of true morality. “Blessed are the rich!” is Kessler’s spiritual mantra. “Where does money come from … to help the unfortunate?” he asked. And yea, I say unto thee, the Holy Hedge-Funder answered his own deep question: It comes from “someone (who) worked productively and created wealth.”
Thus, he sagely concluded, the answer to poverty, to truly helping the poor, is not to pamper the takers, but to provide more tax breaks for the makers of wealth (like him) — the ones who produce “good old-fashioned economic growth.”
Wow, what a role model this guy is for America’s youth — including that misguided boy of his! Wouldn’t you like to buy Andy and Charles for what they’re worth … and sell them for what they think they’re worth? That would fund a whole lot of homeless programs.
To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators webpage at

China’s Yuan Set To Become Global Reserve Currency With Gold Backing?

Gold Core – by Mark O’Byrne
Today’s AM fix was USD 1,312.00, EUR 994.92 and GBP 857.63 per ounce.
Yesterday’s AM fix was USD 1,340.00, EUR 1,012.31 and GBP 872.40 per ounce.
Gold fell $22.50 or 1.68% yesterday and closed at $1,319.90/oz.
Silver slid $0.30 or 1.47% and closed at $20.16.
Gold is trading down after falling nearly 2% yesterday after challenging resistance at $1,350/oz.  

Gold in USD, 1 Year – (GoldCore)

Resistance is at $1,350/oz and $1,400/oz and the first level of support is at $1,300/oz which may be tested today. Below that support is at $1,200/oz and the recent multi year low on June 28  at $1,180/oz.
Some positive economic data from the U.S. and the EU was cited as a reason for the move lower but the data was mixed and all the data is suggesting that major economies are very vulnerable to recessions which will support gold.
Goldman Sachs is leaving its estimate of $1,413/oz for gold this year unchanged as they do not see sharp reductions in the U.S. Fed’s stimulus program.
Newcrest Mining, the world’s number three producer, is forecasting no changes in its gold output from last year but said it has to cut operating costs.
Major gold miner Agnico Eagle Mines Ltd reported a net loss on Wednesday, hurt in part by a maintenance shutdown, and said it was “reviewing all aspects” of its business in light of the recent drop in gold prices.
The gold industry and people  in India are braced for a fall in supply and higher premiums ahead of festivals. The Indian Central Bank’s steps to restrict imports are expected to cut supplies for domestic consumption which is leading to huge black market activity and importation.
There have been numerous reports in recent days of Indians being arrested in airports carrying gold coins and bars.
Recent media reports in China and Russia suggest that China is continuing to consider backing the yuan with gold. Since 2005, we have said that such a move by China was likely as China seeks to become a superpower and lessen and undermine U.S political dominance. We have in the past discussed the possibility of the Chinese pegging their currency to gold bullion.

World Currency Ranker – G10 Currencies and Gold (10 Years)

This decision, if taken, may lead to huge volatility in foreign exchange markets, a depreciating dollar and ultimately an international monetary crisis.
John Butler in his book ‘Golden Revolution’ and Jim Rickards in his book ‘Currency Wars’ have warned that China and or Russia could move to back their currencies with gold which would then lead to the U.S. and EU having to follow suit in order to prevent currency crises thereby leading to a new gold standard.
According to media reports, the People’s Bank of China is considering phasing out the dollar as the reference currency or peg for the yuan, and to start using gold as the reference point.
The reports have not been confirmed officially, but there has been official comments to that effect in recent years and Chinese academics have advocated backing the renminbi or yuan with gold.
Beijing’s possible move to back the yuan with gold would be a strategic move in order to, lessen the risk of inflation, increase the yuan’s attractiveness as an investment medium and  create faith in the yuan as a reserve currency.

Cross Currency Table – (Bloomberg)

Besides being an important financial and geopolitical move it would also be a symbolic act intended to show the U.S. and the world that they are capable of taking the risks associated with a departure from the dollar standard.
It would be a strategic gamble and while it would cause much short term economic pain for China and indeed the world – it could lead to long term benefits. The Chinese tend to think long term rather than quarter to quarter.
The move could in time lead to more stable long term economic growth rather than the boom and bust cycles of recent years.
The Chinese authorities have been pushing for a more international role for their currency and as an alternate reserve currency to the embattled dollar and euro. Indeed the Bundesbank recently admitted that the yuan was becoming a global reserve currency.
With gold now traded in yuan, it appears to be only a matter of time before oil is traded in yuan thereby positioning the yuan as ‘petro yuan’ and a rival to the petrodollar as the global reserve currency.

China’s Gold Backed Yuan to COLLAPSE US DOLLAR? – David Morgan, Part 2

Irish bank Permanent TSB tells customer in arrears of €200 to sell her house

A customer with Permanent TSB has been advised to sell her house despite the fact that she has been keeping up with an agreed payment plan has an arrears balance of less than €200.
Speaking to, Helen said that she “went into panic mode” when she was first told by the bank that she should sell her house, which she has been paying the mortgage on for ten years.
The mother of three has been on an interest-only payment plan with PTSB for about three years, as her retail business suffered in the recession. She is now only taking in a third of what she used to before the economic downturn but said that her landlord has been reasonable and though she struggled with bills, she has never missed a payment.
Source and full story: The Journal, 25 July 2013

Goldman Sachs leeching money from American soul

Exclusive: DOJ starts probe into Wall St. metals warehousing - sources

(Reuters) - The U.S. Department of Justice has started a preliminary probe into the metals warehousing industry following complaints that storage firms owned by Wall Street banks and major traders have inflated prices, sources familiar with the matter said.
The DOJ has sent letters to at least two companies that own warehouses seeking more information about practices that industrial users allege have led to supply shortages and billions of dollars in extra costs, two sources familiar with the letter said on Wednesday.
A third source said the DOJ had informed at least one metal consumer of the probe.
The move is a further sign that U.S. regulators are increasing their scrutiny of the controversial and lucrative industry after years of complaints from aluminum users such as Coca-Cola Co (KO.N) and its sheet supplier Novelis Inc. Goldman Sachs (GS.N) this week said its warehousing subsidiary was not driving up prices or violating any laws.
The industry is also facing a possible investigation by the U.S. Commodity Futures Trading Commission, which last week told warehousing firms not to destroy any documents related to their business.
"The DOJ has opened a line of questioning to assess whether it needs to take further action," one of the sources said.
The exact nature of the letters was not immediately clear and there has been no public allegation of any illegal activity. It is not clear how advanced or broad the DOJ probe is, nor any certainty that it will result in formal charges.
The DOJ declined to comment on the preliminary investigation and letter.
Goldman Sachs, JPMorgan Chase & Co (JPM.N), Glencore Xstrata Plc (GLEN.L) and Trafigura AG TRAFGF.UL - all of whom have purchased major metals warehouses in the past three years - also declined to comment.
Anti-trust lawyers said the department would only launch an official investigation into the lucrative and controversial industry if it found evidence that warehousing firms had broken anti-trust laws. There has been no such indication.
"I would further expect that it would be a two-pronged inquiry aimed at determining whether there has been collusion and whether there has been monopolistic behavior in geographic markets," said U.S. anti-trust lawyer Robert Bernstein, a partner at New York-based Eaton & Van Winkle LLP, who works on behalf of U.S. copper fabricators.
The initial investigation comes as banks' multibillion-dollar commodity trading operations have come under the political spotlight.
The powerful U.S. Senate banking committee held its first hearing on the issue on Tuesday, when aluminum users represented by MillerCoors LLC said high physical prices have cost the consumers an extra $3 billion a year in expenses.
The Beer Institute, which represents the $250 billion beer industry and over 2,800 breweries, has met with the DOJ and urged them to take action, said a source familiar with the meeting.
On Tuesday, Goldman Sachs rebutted allegations that its warehousing company Metro Trade International has violated laws by shunting metal from warehouse to warehouse.
The warehouses and the London Metal Exchange, which oversees the storage outlets in its network, say the big stockpiles and high physical prices are the result of low interest rates and a market structure known as contango that make it profitable to sell metal forward and store it for months or years at a time.
It is also the byproduct of LME rules which mean warehousing companies only have to deliver out a small tonnages of metal each day. According to current rules, facilities with 900,000 metric tons or more metal have to load out 3,500 metric tons
Under fire from irate users, the LME has proposed a massive overhaul of its warehousing policy that would come into effect next April.
(Reporting by Josephine Mason; Additional reporting by Diane Bartz and David Ingram in Washington; Editing by Jonathan Leff and Ryan Woo)

Green Tree Financial Illegally Seizes Home Of Indiana Family Despite All Payments Being Up-To-Date?

Yesterday, we told you about this Ohio woman who had her home wrongfully repossessed. Today, we have got a similar story developing in Indiana.
RTV-6, an Indiana ABC affiliate, broke the story of Michael, who wished to remain anonymous beyond his first name, and his family of four’s townhouse. The family lived in the house for 10 years, but recently decided to rent out the townhouse to move into a more spacious home. They found a tenant to rent the old townhouse but were forced to repay the rent the new tenant paid when, without warning, their mortgage company shut off utilities to the house and changed all the locks.
The locks were changed despite Michael being completely up-to-date on his mortgage payments on the home. Michael hired Indiana attorney Kathy Davis to handle their case. Davis said when she called the mortgage company, she received a response she had never heard before.
“The woman told me – this is something I’ll never forget, honestly – she told me that they were the mortgage company, and if they wanted to change your locks, they could,” Davis said.
Davis has handled more than 100 mortgage disputes before, but still insists she has never encountered a response like this.
“This is something I’ve never heard of, ever," she said. "It’s the first time I’ve seen something like this ... In this case, I don’t know if they don’t want to admit they made a mistake.”
The mortgage company, Green Tree Financial and Safeguard Properties, declines to comment to RTV-6 on the case.
Indiana State Deputy Attorney General Jenny Bellar assured Michael and his family that they “are not at the whim of the bank.”
Under Indiana law, a homeowner must get 30 days notice before a foreclosure claim is filed in court. After the claim is filed, a tenant has another 30 days to schedule a settlement conference. Only after a settlement conference and a foreclosure sale can the eviction process begin.
Source: RTV-6

10 Collecting Fads Worth Next To Nothing Now

Fads come and go. It's why they're called "fads" and not "zeitgeist." One thing gets popular, but in a few months or years time they're replaced by something else. And oftentimes, what's hip and hot can command high prices from fans. For example, I spent $45 on a "George Harrison" doll that turned out to be Jordan from New Kids on the Block.

But sometimes yesterday's hits don't wear so well. That $500 you spent on a valuable collector's item is now a distant memory, while you have a full set of Phantom Menace Dr. Pepper cans just sitting there begging to be recycled. Among a whole host of others, here's 10 of former collectible fads that can be had for mere pennies these days.

10) McDonald's Toys
The toys that come with Happy Meals are often advertised as "collectible," and to an extent they are; you can have more than one of them and there is a finite amount of them in this world (many in landfills). It's no surprise that McDonald's toys (and those from rival fast food chains) can occasionally hit the secondary market and score big. Usually as a tie in with a hit movie, like Star Wars or Willow, and completionists want the whole set. But when the buzz for that movie's over, it's off to the $1 Rubbermaid tubs underneath the skuzzy comic con dealer's table.

9) The First Batch of New Star Wars Figures
There was a big push for vintage Star Wars toys in the '90s as Gen-X got some money to spend reliving childhoods, so the Star Wars reissues and Episode 1 series got a lot of speculator attention. People fought to get complete sets, just like everybody else who fought to get the complete set, so the people who wanted them got them and... everybody else did too. Surprisingly, there's not a huge market for them now.

8) Baseball Cards
The first of multiple cards on this list. Make no mistake, baseball cards could mean you're financially set for years. Honus Wagner? One of his bad boys is worth a yacht's worth of moolah. I just saw a shitty condition one that sold for $227,500 (no joke, Heritage Auctions is awesome). And those dynamite old school dawgs from the '60s and '70s? Still valuable. But nothing lasts forever. With every major and minor team fielding cards for all players, the market is still flooded and will probably never pull itself out. Now the money's all in old cards, team sets sold to fans, and entire seasons sold as a set. The days of casually opening a pack for fun are over, now you have to be in it to win it.

7) Homies
Vending machine toys have next to no value. Flat-out, they don't. Homies, the little neighborhood folks commemorated in plastic, were a strange blip on the radar, garnering attention and line expansions, and odd collectability. But like so many other fads, people are selling and no one's buying. The larger sizes, riding on the vinyl toy high, are easily found, but aren't moving, according to eBay. And the little ones are literally a dime a dozen.

6) Magic Cards
Magic: The Gathering cards made newspaper headlines when they hit the market, and there is still a thriving Magic-playing and collecting community. It's still a big game. But the high prices and speculation days have passed. The secondary market now exists to sell graded cards at high prices (that aren't selling) or entire collections from players who are getting out of the game. If you like the game for its competitive aspects, now's your time to jump in. You can purchase entire sets of 1500 cards for the cost of three trade paperbacks. Also, ebay is selling Magic-related web domain names for $19,000. Sorry bro, this Gathering has ended.

5) '90s Comics
Some are kind of worth some money. Really. I can't buy the first appearance of Deadpool without parting with a bit of money. And it was a fun little run while it lasted. Most of us remember those days when you walked into a store and a holofoil double-gatefold cover sparked the "I can retire on this shit" thought. Stories abound about guys in suits buying a full case of X-Force #1 the day they came out, thinking they were sitting on a goldmine. Now those books are languishing in $1 bins, 50-cent bins, 25-cent bins, and getting used to pad out eBay lots.

4) Beanie Babies
The simple fact that a video exists called How to Spot Counterfeit Beanie Babies shows how out-of-control this fad was. And actually, that video is a pretty good collector's item, for fans of bizarre VHS cassettes. People thought this trend was going to go on forever, but manufactured scarcity and a flooded market was no match for the laws of supply and demand. What's sad is that the collectible trend ignored the best part of Beanie Babies: most of them were cute and really nice stuffed animals for kids. DAMN YOU, MONEY HUNGRY ADULTS!

3) Cabbage Patch Kids
Attending Cabbage Patch Kids.jpg
The must-have toys of the '80s, parents bought their kids piles of these things. 1983-86 were the gravy years, when parents absolutely needed to give these things to their offspring, girls and boys alike. The varieties spewed forth, with premature kids represented (underdeveloped lungs assumed), talking versions too, and a chewing version that was pulled off the market when it happily chomped down on kids' hair and wouldn't stop chewing. eBay has hundreds of the things, some even with huge prices. But is anyone buying? Nope. Deluded folks might think charging $500 for a Cabbage Patch kid is the path to financial gain, but not if no one opens their Paypal.

2) Comic Trading Cards
I got sucked into these from the moment a Marvel Universe "Ulik" card fell out of a library book in 7th grade. These things were churned out from every single comic producer from the late '80s to the late '90s. They were packed in polybags, sold by the box, and opened the door for comic geeks to attend sports card shows (they don't anymore). And don't get me started on the holograms and foils and glow-in-the-dark gimmicks. Now? They're nostalgia, nice to have around, but mostly taking up space.

1) POGs
Ha ha, this one felt like a joke even at the time. "What's the big deal?" we asked, "They're round pieces of cardboard with images slapped on them. We've seen better graphics on schoolyard acid tabs." But they sold, and you collecting them was a huge hobby. (Remember Batman: Knightfall pogs? The Tick? X-Men? Yeah, they're out there.) The bottom dropped out almost immediately and the value as well, as they're just cardboard. You can buy them by the thousands on eBay for less than the cost of a value meal.