TRY AGAIN ...

- Mark

READING BEFORE THE WEEKEND (May 29, 2014)

NSA monitored calls of 35 world leaders after U.S. official handed over contacts, which produces little intelligence (The Guardian).

These Lego "brick-by-brick" soccer recreations are pretty cool (The Guardian).

The 7 most corrupt countries in the world (Wall St CheatSheet).

Chatanooga's taxpayer owned public internet is the fastest and cheapest in the U.S. (Democracy Now).

Which exports makes each country the most money (The Week).


WATCHING THE SUPREME COURT
Justice Scalia: Some times right, often wrong, but never in doubt (The Week).

The Supreme Court often edits its opinions after delivering them (Gawker).


RACE IN AMERICA ... STILL AN ISSUE
The resegregation of America's education system (The Atlantic).

Sorry conservatives, America is not close to being a colorblind country (The Week).


FROM WASHINGTON'S BLOG
81.5% of money created through Quantitative Easing is just sitting there, gathering dust ... instead of helping the economy (Washington Blog).

Taxes around the world (Washington Blog).

Tim Geithner uses Voodoo Economics to try and rationalize choosing the banks over America's homeowners (Washington Blog).

I've covered this elsewhere, but here's another take on why QE doesn't work (Washington Blog).

Less than a tenth of Bank of America's assets come from traditional banking deposits (Washington Blog).

Do we need banks or can we just cut out the middleman (Washingtons Blog)?


EU ISSUES
Concerns in Europe after the far-right gains in European Union election (Time).

Why no one cares about the EU elections -- and why they should (Huffington Post).


MISCELLANEOUS
How Goldman Sachs can get paid to keep people out of jail (Bloomberg).

How the 19th century's 1 percent lived large (Ancestry).

Stark photos of inequality in Mexico City show a metropolis divided (Huffington Post).

Robert Gates: China, Russia are becoming more aggressive as they perceive U.S. pulling back (Huffington Post).

- Mark

WATCH "THE RAILWAY MAN" ...

If you're looking for an intense movie with a great message on Memorial Day "The Railway Man" is the one to watch ...

You won't be disappointed.

- Mark 

COLLEGE STUDENT LOANS SHOULD BE REFINANCED AT RATES THAT THE BANKS RECEIVE

As I've pointed out in the past (here, here and here) there are many things wrong with our student loan market. Senator Elizabeth Warren (D-MA) understands one aspect of this very well ...

- Mark 

JON STEWART SLAMS THE GOP's VETERANS ADMINISTRATION HYPOCRISY

Jon Stewart discusses the VA Fiasco hypocrisy from the GOP ...

The Daily Show

Get More: Daily Show Full Episodes,The Daily Show on Facebook,Daily Show Video Archive

- Mark 

BANKS HOARDING CHEAP FED MONEY ... STILL

According to the Federal Reserve of St. Louis, in spite of all the trillions of dollars in cheap money dumped into the financial institutions after they helped collapse the economy in 2008, the banks are not loaning the money out. They're sitting on it.

As a result the amount of excess reserves sitting with the banks has jumped from effectively zero in 2007 to about $2.5 trillion (play with the interactive chart here) ...

This is not a good sign. Not good at all.

- Mark 

READING (May 22, 2014)

Study confirms the U.S. is ruled by the rich, corporate news ignores it (Truth Out).

WWII widow searched 62 years for her husband. Then she found him (Liberal America).

A rant on technology and racketeering that deserves to be read (Zero Hedge).

Reince Priebus: Hilary's age and health are fair game (Liberal America).


SCIENCE IS AWESOME ... UNLESS YOU'RE A REPUBLICAN
Did scientists just solve the bee collapse mystery (Mother Jones)?

Denmark's Semso Island is the first island in the world with a 100 percent renewable energy-powered island (Nation of Change).

The no-nonsense guide to climate change science in 4 minutes (Liberal America).

The process of intellectual devolution may have reached the point of no return, for conservative Americans that is (NY Times / Paul Krugman).


MONEY / IGNORANCE TRUMPS THE LAW OF THE LAND?
Oil giant Citgo gets off easy in criminal case (Center for Public Integrity).

Tobacco giant Philllip Morris (of Switzerland) says that Uruguay's anti-smoking campaigns violates 1988 investment treaty, and demands compensation for millions of dollars in lost profits (El Pais).

North Carolina GOP pushes unprecedented bill to jail anyone who discloses fracking materials (Mother Jones).

Georgia lawmakers take pride in passing laws that hurt poor people (Truth Out).


COUNTY POWER
Santa Cruz becomes the first county in California to ban fracking (Eco Watch).

Two Oregon counties ban genetically engineered crops in landslide election (Eco Watch).


DID YOU KNOW ...
China, Russia outrank U.S. when it comes to corporate transparency (Center for Public Integrity).

America's Meritocracy is made up of poor people (Buzz Flash).

Ben Bernanke, former Fed Chair, is making out like a bandit in speaking fees to banks (Buzz Flash).

Greenland glacier melt is growing factor in rising sea levels (Al Jazeera).


MISCELLANEOUS
House GOP leaders block California Republican's immigration bill (McClatchyDC).

Top 10 instances of mob mentality (Listverse).

Texas family awarded $3 million in nation's first fracking trial (Nation of Change).

Are private banks unconstitutional (Truth Out).

The four biggest right-wing lies about inequality (Nation of Change).

Geosecurity 101: Washington and Moscow's military bases in Latin America (Council on Hemispheric Affairs).

- Mark 

THE MANY LIVES OF A MODERN FEDERAL RESERVE CHAIR

Federal Reserve humor. The post below says "Ben Bernanke" but it could have been "Alan Greenspan" or - if she follows the Greenspan/Bernanke path - "Janet Yellen" ...

- Mark 

JUST FUNNY

From yesterday's Sunday comics ...

- Mark 

GLOBAL INCOME DISTRIBUTION

Via Barry Rityoltz we get "the state of global income inequality" ...



Note: In the graph above, the area of each rectangle corresponds to the size of each country’s economy. The width of the rectangle represents the population, while the height represents the average income in that country. Which rectangle is larger, China’s or that of the United States? According to the new World Bank report from which this chart is taken, China’s is slightly smaller but will be larger by the end of this year. 

For more click here.

- Mark 

READING FOR THE WEEKEND (May 16, 2014)

Do you have pleasant memories of that ice cream truck coming down the road, playing that distinctive music? You might not after reading this (NPR).

Christopher Columbus' 500 year-old shipwreck discovered off Haiti coast (The Guardian).

Social Security at 62? Let's run the numbers (NY Times).

Top 5 reasons why immigration means more tax revenue (Center for American Progress).


FINANCIALS WE SHOULD KNOW ABOUT
Number of the week: Total world debt load at 313% of GDP (WSJ Blog).

Gross World Product for 2012 was about $72.6 trillion (World Bank).

Amount of daily currency trading done every day is over $5.3 trillion (Bank for International Settlements / Bloomberg).


WHEN NATURE CALLS
It's begun ... A large section of the mighty West Antarctica ice sheet has begun falling apart and its continued melting now appears to be unstoppable (NY Times / The Guardian).

Ground water depletion in California's central valley 'may be increasing chance of earthquakes' (The Guardian).

This could have been on a "Family Guy" episode ... Grey wolf appears in Iowa for the first time in 89 years and is shot dead (The Guardian).


JUST POLITICS
Is the south waking up? Senate Democrats leading in Red State polling (Daily Kos).

Why Karl Rove uses dirty tricks: They work (The Atlantic).

The Republican advantage among older voters won't last (David Frum / The Atlantic).

America's most gerrymandered districts, with cool interactive (Washington Post).


JUST PLAIN STUPID ... AMERICA'S QUOTA PROFIT INDUSTRY 
Infographic: Subsidized immigration detention centers are making big bucks off of you and me while running for-profit prisons (Center for American Progress).

Related, detained immigrants are kept in for-profit prisons to meet industry guaranteed quotas (Center for American Progress).

Congress' immigration bed quota (Center for American Progress).


MISCELLANEOUS
A wealth management site for the 99% of us who don't have millions to invest (Business Insider).

George Bush is painting ... and at least one critic isn't impressed (The Guardian).

Meanwhile, in the real world ... New Hampshire police commissioner refers to President Obama with the N-word (The Big Story).

Five habits of emotionally intelligent people (Business Insider).

- Mark

NO, LOWER TAXES ON THE RICH IS NOT THE BEST MEDICINE FOR A STRONG ECONOMY, OR MORE JOBS.

We've been told for well over 30 years now that if we just lower the taxes on the richest people in America that jobs will appear, the national debt will be paid and angels will appear from heaven (or something like that). Here's a few things to consider for perspective ...

Now for the evidence over the years. First, the highest marginal income tax rates, since 1917.

Higher tax rates on the rich correlates with more jobs. Here's the job creation record when the tax rate on the richest Americans is 28-31%, 35%, 38.6%, 50%, 69-75%, 75-80%, and over 90% ...

Higher tax rates on the rich correlates with stronger economic growth. Here's a chart showing what happens to economic growth when the tax rate on the richest Americans is 28-31%, 35%, 38.6%, 50%, 69-75%, 75-80%, and over 90% ...

Want more?  If you want more supporting evidence on the relationship between higher taxes on the rich and greater economic performance and job growth the Congressional Research Services takes a look here.

- Mark 

SAME THEORY, DIFFERENT ERA

- Mark 

DOONESBURY REFLECTS ON "W" ... THE ARTIST

You may not have heard, but former President George W. Bush has taken up painting.

So, yeah, while former President Carter's humanitarian efforts have him trotting the world advocating for women and the poor, and former President Clinton has developed a Global Initiative project that brings world leaders together to help solve some of the world's most pressing problems, President Bush is painting.

Self reflection, I guess.

Anyways, here's Doonesbury's take on "W", the aspiring Rembrandt ...

In the FYI category, our local paper - the Bakersfield Californian - dropped Doonesbury from it's pages years ago. It inflamed conservative sensibilities.

- Mark

Kudos to Robin for the link.

LABOR FORCE PARTICIPATION RATE NOT A BIG DEAL UNTIL "PRESIDENT BLACKENSTEIN" ARRIVED

Barry Ritholtz has a spectacular piece that explains why we have had a sudden concern over labor force participation rates in America. Labor force participation rates (LFPR) measure the number of working age people (beginning at age 16) who are actually participating in the labor market because they are working, or looking for work.

The LFPR started rising in the early 1960s (from about 59 percent) and began to slow and decline in 2008. Under President Obama the LFPR has dipped from about 66 percent in 2008 to 63 percent today.

If you listen to those on the Political Right the sky is falling, and it's all President Obama's fault. But the reality is quite different.

Specifically, as Ritholtz makes clear, there are two things happening. First, because of the Baby Boomer generation (those born between 1946 and 1964), we have always known that more elderly people would be around about this time. The growing number of elderly in our population represent about 40 percent of the shift from 66 percent to 63 percent in the LFPR.

Second, the recession that started under President Bush in 2008 - which the GOP has worked tirelessly to prolong, and dump on President Obama's lap - continues to haunt our economy, which makes it difficult for anyone to find work.

So, yeah, the dip in the Labor Force Participation Rate is a product of primarily two things: Shifting demographics and the 2008 recession.

All of this begs the question, Why is the LFPR suddenly an issue with the far right? Very simple. As Ritholtz points out, the LFPR meant nothing until "President Blackenstein" hit town. Ritholtz adds that this is a "very curious" development.

Indeed.

- Mark 

THINGS TO REMEMBER WHEN THEY SAY "REMEMBER BENGHAZI"

It looks like this isn't going away, so let's keep a few things in mind ...

And let's not forget President Reagan's Benghazi moment ... when he "cut and ran" from the Middle East ... and the Republicans in the U.S. Congress said nothing ...

President Reagan in 1983 reviewing flag draped military coffins from Lebanon, where 241 U.S. Marines lost their lives. 

As usual, it's left to Jon Stewart to explain the reality behind the Republicans concern over Benghazi.

- Mark 

HA-JOON CHANG'S NEW BOOK

For my students (past and present), who have read University of Cambridge economist Ha-Joon Chang's books. Professor Chang has written another book, Economics: The User's Guide, which he discusses here ...

In one of Chang's opening comments during the book's unveiling he asks, almost rhetorically, why "class" is dismissed by most economists as an "old Marxist" concept. He addresses the issue by pointing out that advertising firms live by targeting class-based groups with their ads.

You can check out this and other Chang insights in the YouTube clip above.

In all cases, if you want to read an accessible and common sense introduction to economics, I encourage you to buy the book.

- Mark 

READING FOR THE WEEKEND (May 9, 2014)

Valley Fever, caused by a fungus once thought to be found only the American southwest (in places like my own Kern county), has been found in the state of Washington (NBC News).

Realistic solution to end voting lines and voter intimidation (Truth Out).

Putin's latest law forces Russian bloggers to register with the government (Mashable).

THE POPULIST EYE
The six principles of the new populism ... and the establishment's nightmare (Truth Out).

Robbing Main Street to prop up Wall Street: Why California Gov. Jerry Brown's rainy day fund is a bad idea (Truth Out).

Keeping an eye on insurance companies that refuse to pay claims (Center for Public Integrity).

Taxpayers to continue paying for lawmaker cars (Washington Post).


BENGHAZI ON MY MIND
The latest Benghazi freak out explained in 10 sentences (Mother Jones).

Republicans didn't "Benghazi" Ronald Reagan over hundreds of GI deaths in Lebanon (Buzz Flash).


UKRAINE
Dozens of FBI, CIA agents in Ukraine 'assisting Ukraine security' (RT).

Commentary on Ukraine from Carnegie (Carnegie Europe).


RELIGION RUNNING AMOK?
Kentucky spends millions busing students to religious, private schools (Kentucky).

God save this honorable court (The Daily Beast).


NATIONAL SECURITY STATE RUN AMOK?
McClatchy: CIA monitored senate staffers investigating the CIA (Mother Jones).

FBI agent held in Pakistan after carrying ammo into airport (NBC News).

U.S. citizen Naji Mansour refuses to become an FBI informant and his life becomes a living hell (Mother Jones).

Spy plane fries air traffic control computers, shuts down LAX (NBC News).

Everyone is under surveillance now, according to whistleblower Edward Snowden (The Guardian).

Defense attorneys for terror suspect(s) want access to original FISA court application filed by the federal government. The request is opposed by prosecutors because the documents deal with "exceptionally sensitive issues with profound national security implications" (ABC News).


MISCELLANEOUS
Charter schools gone wild: Study finds widespread faud, mismanagement and waste (Truth Out).

Landmark report warns that time is running out to save U.S. from climate catastrophe (Truth Out).

- Mark 

THE END OF ECON 101 ... AND FREE MARKET ECONOMICS

So much for the savings-investment function, and the free market ... 

This is you depositing your money in the bank.

If you deposit your money in a bank we are taught that they will lend your money out like this ...

How the savings-investment function is supposed to work.

However, according to the most recent policy bulletin produced by the Bank of England - "Money Creation in the Modern Era" - the major banks aren't actually lending the money of their depositors. Instead they are making loans and advancing credit from the money created by central banks, like the Federal Reserve and the Bank of England, via Quantitative Easing policies (which I discuss here). 

Quantitative Easing has the same effect as printing money.

This revelation from the Bank of England is significant for three reasons. 

First, the Bank of England is telling us that client deposits remain in their "demand" accounts.  

Relatedly, and second, this means that the central bank's monetary policy rather than the savings-investment function (i.e. you make a deposit, the banks lend) now dominates our economic lives. 

Finally, if the economy is dependent on central bank QE policies to advance electronic credits and create money what we learned in Economics 101 is a quaint concept, that's no longer tied to reality. 

More to the point,  the Bank of England is telling us, once again, that there are no invisible hands in our market system. Free markets have little to do with how money moves, and how our modern economy functions. 

It's really that simple.

- Mark

FRACKING IN CALIFORNIA (for beginners)

At least 12 rigs off the California coast have federal permits to dump more than nine billion gallons of fracking wastewater in the ocean off the California coast. Fracking consists of injecting a mix of potentially hazardous chemicals into undersea rock formations at high pressure. Breaking up the rock makes it easier to pump out the crude.

And it's currently being done off the coast of Santa Barbara, California.

Oil rig off the Santa Barbara coast, with the Channel Islands in the background.

KCET notes some of the potential problems associated with fracking ...

Fracking wastewater contains more than just the chemicals used by oil and gas companies to break up the rocks, including toxic substances like methanol, benzene, naphthalene, and trimethylbenzene. It can also include nasties that it picks up from those deep rock formations, including lead and arsenic. And while safely disposing of such substances isn't easy in the best of situations, ocean disposal poses special risks for those who play in, live near, or eat fish from the sea.

So, yeah, fracking has the potential of releasing some pretty nasty stuff into the environment.

But the bigger problem are the earthquake problems associated with fracking in other non-earthquake prone states where fracking has been introduced. In Oklahoma, for example:

Between 1972 and 2008, the USGS recorded just a few earthquakes a year in Oklahoma. In 2008, there were more than a dozen; nearly 50 occurred in 2009. In 2010, the number exploded to more than 1,000. These so-called "earthquake swarms" are occurring in other places where the ground is not supposed to move. 

Coincidence? You be the judge.

Anyways, in a quake-prone state like California, where we already get two or three big ones every year (5.5 magnitude or larger), we probably should be doing a few more studies.

- Mark

WHY QUANTITATIVE EASING ISN'T WORKING

Quantitative Easing, or QE. Many people have heard of it. Most people, including those who have heard about it, still have no clue what it is. In a few words QE is akin to the government printing money.

Now, let's be clear. The government, through the Federal Reserve, hasn't printed trillions of dollars the old fashion way. It's not turning on the printing press. Nor is it calling up Kinko's and saying "print up more cash" (as it were). It simply credits accounts with more money electronically.

So, yeah, while we're not actually printing more money the effect is the same as if we did. We're dumping more money into the system (I've written about QE many times, here, here, here, here, and here).

What Quantitative Easing (QE) is really all about.

The logical follow up to the government printing money is, Why are we dumping more money into the system? The answer is quite simple. With the economy still in trouble from the 2008 market crash, and with consumers effectively scared or tapped out, the federal government has determined that it needs to keep markets vibrant.

So, through the Federal Reserve, the U.S. government is shoving more money into our nation's financial infrastructure. The problem is that the money isn't making it to you and me.

HOW QE WORKS
To put more money into the economy the Federal Reserve does two things. First, it lowers interest rates, which encourages more borrowing. Second, it purchases financial instruments (like public and private bonds) through a variety of programs.

Lower interest rates (currently .25%) are designed to encourage commercial banks to borrow more money from the Federal Reserve. The banks, in turn, are supposed to turn around and lend to people like you and me. When this happens Economics 101 tells us that more economic activity will be the result.

The second part of the plan - bond purchases - begins with the Federal Reserve (and the Treasury Department) creating numerous purchasing and credit programs. These programs are backed with trillions of dollars, which allow the Federal Reserve (and the Treasury Department) to make major bond purchases in the market. These programs are designed to keep the banking community - but especially investment banks - afloat.

So, yeah, the Fed is literally dumping loads of cash into the financial sector.

What Quantitative Easing looked like 85 years ago.

The real beneficiaries here are the commercial and investment banks. In effect, with their QE purchases of their assets, the Federal Reserve is telling the world that the private sector has nothing to worry about because it will purchase all the private and public bonds it's selling. And, yes, this includes the Treasury notes the investment banks are holding, which is a windfall for the banks because (in the "WTF" Department) the Fed can legally purchase Treasuries only from investment banks.

Added up these bond-asset purchasing programs are backed with at least $14 trillion in government guarantees.

One way of looking at Quantitative Easing is to understand that by putting a large quantity of money into the system the Federal Reserves programs are easing pressure on markets - hence Quantitative Easing. At this point about $4 trillion has already been "eased" into the market.

A look at the programs that allow the federal government to put more money into the economy.

So, yeah (and, again), there is no free market. The game is rigged. The federal government has become one big ATM for America's largest financial institutions.

What the Treasury Department actually does when it buys private sector "assets" or loans money.

WHAT'S EXPECTED ... AND WHAT'S ACTUALLY HAPPENING
When the Federal Reserve (i.e. government) puts more money into the system the stock market and the economy are supposed to stabilize or grow. In theory the primary beneficiaries are supposed to be you and me because we're supposed to have access to more loans.

But our nation's financial institutions are afraid of you and me. They understand that we have to live in the real world, which the bankers wrecked. They understand that we don't have access to bailout funds. So the banks don't trust our capacity to pay the money back. So instead of lending us money the banks are keeping it (see here, here, and here), and gambling on commodities and derivative products.

By hoarding cash and making speculative bets the banks, and especially the market players on Wall Street, are the only groups benefiting from Quantitative Easing.

In reality, Quantitative Easing is just another form of corporate welfare.

For a somewhat humorous explanation of QE check this out (a more serious description here) ...

Let me restate the above.

America's financial institutions are getting trillions in dirt cheap money from the Fed. But they're not recirculating it. The long-term stability and growth we're supposed to be experiencing because of the Fed's money dumps isn't happening because the banks and Wall Street aren't doing their part.

The Bankers Ball ... celebrating years of Quantitative Easing?

At the end of the day, the Federal Reserve is being played the fool by the banks. So is the American taxpayer.

THE END (not really, the crash is next)
In the FYI category - and to be fair - one industry analysis of QE (from EconoMonitor) argues that because of low interest rates the real losers in our economy are the banks. Why? Because our nation's financial institutions are being robbed of the opportunity to charge higher interest rates. According to this line of thinking, because interest rates are kept artificially low QE actually removes money from the system, which makes QE a tax (an I argument I don't buy).

While this "QE is a tax" argument is self-serving and couched in industry-speak, I encourage you to read it anyways, here (for no other reason to see how market players think, and how they convince themselves about something).

At the end of the day, the banks are hoarding money. Worse, Wall Street is using cheap money to speculate on commodities, while making bigger and bigger derivative bets. They are not lending, as they should, or using money to make sound financial decisions.

This is why QE is not working.

- Mark 

THE CYCLE OF LIFE?

If you put a Vegas-style chapel on the other side of the liqour store (and forget the middle word, "loction"?) there's a cycle of life story here. The essence of one stop shopping ...

- Mark

READING FOR THE WEEK (May 4, 2014)

The 10 states in the U.S. with the highest teen birth rates, and they're not the Blue States (The Richest).

Let's say you have the option of choosing where you will be born, but you have no control over your position in society. Which country is the best to be born in? (EconoMonitor).

Sweden championed gender equality to raise birth rates, and it worked (Truth Out).

The story of Barack Obama ... according to Conservatives. This is how America's right-wing sees President Obama (The Daily Banter).

CIA 'torturer in chief' now living in two-story house in Southern California (Washington Post).


WAR TALK
It's not Russia that's pushed Ukraine to the brink of war (The Guardian).

In the long run, wars make us safer and richer (Washington Post).


VOTER ID TALK
Comprehensive database of U.S. voter fraud uncovers no evidence that photo ID is needed (Voting Rights).

Having to restate what we already know, a federal judge rules that in-person voter fraud is virtually non-existent (Huffington Post).

Everything you always wanted to know about Voter ID laws (Pro Publica).


WHY THE PLUTOCRATS ARE WINNING
A few years old but here's a big part of our problem ... criminal prosecutions for financial crime has been falling for years (Trac Reports).

Retiring Securities & Exchange Commission attorney draws applause at retirement party by saying that the SEC is agency that "polices broken windows on the street level and rarely goes to the penthouse floors" (Bloomberg).

Retiring White House prosecutor says the SEC is corrupt (Counterpunch).

The rise of corporate impunity in America (Pro Publica).

Banks take the economy hostage (Barry Ritholtz).


POLITICS IN AMERICA
Cliven Bundy, Donald Sterling, and the reality of racism (Truth Out).

The rise and fall of Cliven Bundy: No Hero (Economist).

With unlimited financial contributions, one Robber Baron can control a state (Truth Out).

Mission Creep: Homeland Security a 'runaway train' (Albuquerque Journal).

Koch brothers, major corporations, sponsor pension reform seminar for judges (Center for Public Integrity).

Minimum wage increase blocked by Senate Republicans (Bloomberg).


THINGS YOU SHOULD KNOW (ABOUT)
13 Benghazis that occurred on Bush's watch without a peep from Fox (The Daily Banter).

5 great things that happened since weed was legalized in Colorado (The Richest).

"The Canadian health care system that I disparaged" (Wendell Potter / Center for Public Integrity).

Guess what's coming around the bend? Demographics + Debt = Doom (Zero Hedge).

Plutocrats vs. Oligarchs (Disinfo).


MISCELLANEOUS
Litigants left reeling after judges admit conflicts of interest (Center for Public Integrity).

NBA sets wheels turning for sale of Clippers (Reuters).

IMF gives the green light for $17 billion Ukraine aid package (RT).

Understanding Bitcoins (EconoMonitor).

What professional traders really think of High Frequency Trading (Zero Hedge).

- Mark 

CLASSIC MACHIAVELLI ... ON HIS BIRTHDAY

On this date in history (May 3, 1469) Niccollo Machiavelli, author of The Prince, was born. Here's a Machiavelli classic ...

- Mark 

JPMORGAN CHASE HAS A SUDDEN MORAL EPIPHANY?

Did JPMorgan Chase have a sudden moral epiphany? After engaging in unethical and immoral banking activities that helped to ruin lives and collapsed our economy in 2008 - and then feeding at the taxpayer backed bailout trough - JPMorgan Chase is now closing the bank accounts of porn stars. They have also denied at least one industry movie company a loan for moral reasons.

The salacious metaphors for this story write themselves ... which is why I'm not going to write what you all are probably thinking.

Anyways, you be the judge. Does this help clean up JPMorgan Chase's history or reputation?

- Mark 

AFTER 5 YEARS OF OBAMA

- Mark 

WHY THE BANKS HAVE TAKEN OUR ECONOMY HOSTAGE

Barry Ritholtz provides us with a masterful analysis of everything that's wrong with our political and economic system today in "Banks Take the Economy Hostage" ...

Prosecutors are considering bringing criminal charges against two overseas banks for charges ranging from perjury and fraud to laundering money. As detailed yesterday by a trio of Bloomberg News reporters, the key takeaway from the banking community was reflected in the headline: ``Criminal Charges Against Banks Risk Sparking Crisis.'' 

The reaction has been swift. “Don’t’ play with matches” exhorted Sanford C. Bernstein banking analyst Brad Hintz. Former Federal Reserve lawyer Gil Schwartz warned “The mere threat of requiring a hearing could cause customers to lose confidence in the institution and could cause a run on the bank.” U.S. Attorney Preet Bharara recounted the picture bankers painted if prosecutions occurred: “Oceans will rise; nuclear winter will be upon us; and the world as we know it will end.” 

... It used to be thought that fear of indictment, personal disgrace and threat of jail would keep bankers from engaging in illegal activities. But the extraordinary intervention of the U.S. government and Federal Reserve changed the dynamics of prosecution. 

... Prosecute our clients, said the bankers’ lawyers, and you risk destabilizing a fragile financial system. Put a systemically important financial institution in your cross hairs, and you put the entire global economy at risk. 

The Bush and Obama administrations bought this line of reasoning. 

This argument should never have carried the day. The job of a prosecutor is to prosecute, not to make economic forecasts. Convincing various governmental departments not to do their jobs was a masterful act of salesmanship, one that undercut fundamental principles of rule of law.

Ritholtz goes on to note that economists aren't very good at explaining what happened in 2008, so why should we listen to them when they make predictions about a future filled with indictments?

The rise of corporate impunity in America lies at the heart of what's wrong with America today. By failing to pursue financial crimes the Bush and Obama administrations have turned the Department of Justice and the U.S. Attorney's office into caricatures of what they are supposed to be.

Because Wall Street and their investment divisions no longer fear criminal prosecutions they know they are protected aristocrats. It's why they've taken our nation's economy hostage.

- Mark