Listen to this week’s “The Financial Physician” radio show.-Lou
IRS ‘deliberately’ cut customer service, made tax season extra painful
The IRS “deliberately” cut its customer service this year, making the tax season more painful than it had to be for millions of taxpayers, House Republicans concluded in a new report Wednesday that accused the agency of wasting money on pet projects while hanging up on millions of callers.
Wait times spiked to an average of 34.4 minutes before callers got through, and less than half of all callers ever got that far in the first place, with most calls being rejected by an overloaded system, the House Ways and Means GOP staff said in the new report.
The IRS cut its funding for customer service even as it continued to spend money in areas GOP lawmakers said were questionable at best — including millions of dollars on performance awards paid to most employees.
Fiscal year 2014 bonus money could have been used to answer 7.2 million additional phone calls,” said Rep. Peter J. Roskam, Illinois Republican and chairman of the Ways and Means oversight committee.
IRS Commissioner John Koskinen bristled at the charges, saying he’s been forced to make the cuts because Congress has reduced his agency’s budget even as the number of filings has gone up and the agency is taking on ever more duties, such as policing Obamacare’s individual mandate.
But he denied that his agency had singled out taxpayers’ customer service for special reductions.
“We’ve had to make choices across the board. We’ve cut enforcement services, we cut taxpayer services, and we cut information technology,” he told the panel, saying those are the three discretionary areas where he can reduce spending, and he made cuts in all of them.
He said they’ve been cutting personnel as well, including hiring fewer temporary employees during tax crunch time, which hurt service levels.
They are all crooks and should be in jail. Instead, they just pay a fine and move on to the next fraud. Time for regulators to go after the manipulators in the gold and silver market.-Lou
Deutsche Bank in record $2.5bn fine over interest rate manipulation
Deutsche Bank has been fined $2.5bn (£1.66bn) by US and UK regulators for trying to manipulate interest rates.
The German bank has been fined $2.1bn by US regulators, and £227m by the UK’s Financial Conduct Authority.
The fine relates to manipulation of the Libor and Euribor inter-bank rates.
It is a record penalty for such misconduct because Deutsche tried to mislead regulators and could have hampered investigators. The bank said it “deeply regrets” the matter.
Deutsche said in a statement that it had “disciplined or dismissed individuals” involved and tightened governance controls. However, US regulators have demanded the dismissal of a further seven senior individuals still employed.
Georgina Philippou, the FCA’s acting director of enforcement and market oversight, said in a statement: “This case stands out for the seriousness and duration of the breaches by Deutsche Bank – something reflected in the size of today’s fine.
“One division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market. This wasn’t limited to a few individuals but, on certain desks, it appeared deeply ingrained.”
“Deutsche Bank’s failings were compounded by them repeatedly misleading us. The bank took far too long to produce vital documents and it moved far too slowly to fix relevant systems and controls,” she said.
The FCA said that in one instance, Deutsche in error destroyed 482 tapes of telephone calls that should have been kept. “Deutsche Bank also provided inaccurate information to the regulator about whether other records existed,” the FCA said.
The misconduct involved at least 29 Deutsche Bank individuals, including managers and traders, mainly based in London but also in Frankfurt, Tokyo and New York. It took place between 2005 and 2009.
Libor and Euribor are benchmark interest rates, influencing the setting of other rates. They are used as a barometer to measure the health of the banking system and as a gauge of market expectation for future central bank interest rates.
The FCA said they “are fundamental to the operation of both UK and international financial markets”.
To set Libor, for example, leading banks submit the rate at which they would lend to each other, with the average rate published each day.
But traders colluded to set these benchmark rates, hoping to improve their trading positions. The regulators released email exchanges between traders and submitters – the people who provide the information on which rate Libor and Euribor is set each day.
One exchange said: “Can we have a high 6mth libor today pls gezzer?” The submitter agreed, “Sure dude, where wld you like it mate ?”
In another exchange about how the rates are set, one banker said: “people just randomly make those numbers up”.
It won’t be long before cash will be illegal-Lou
War On Cash Intensifies: JPMorgan Chase To Prohibit The Storage Of Cash In Safety Deposit Boxes
Some JPMorgan Chase customers are receiving letters informing them that the bank will no longer allow cash to be stored in safety deposit boxes.
The content of a post over on the Collectors Universe message board suggests that we may be about to see a resurgence of the old fashioned method of stuffing bank notes under the mattress.
My mother has a SDB at a Chase branch with one of my siblings as co-signers. Last week they got a letter outlining a number of changes to the lease agreement, including this:
“Contents of the box: You agree not to store any cash or coins other than those found to have a collectible value.”
Another change is that signatures will no longer be accepted to access the box. The next time they go in they have to bring two forms of ID and they will be issued a four-digit pin number that will be used to access the box then and in the future.
The letter, entitled “Updated Safe Deposit Box Lease Agreement,” was sent out to customers at the beginning of the month.
“Hide your wallets, the banksters are on the move,” warns the Economic Policy Journal.
As of last month, Chase has also instituted a new policy which, “restricts borrowers from using cash to make payments on credit cards, mortgages, equity lines, and auto loans,” writes Professor Joseph Salerno of the Mises Institute.
The news arrives on the back of comments by Citi’s Willem Buiter, who recently advocated abolishing cash altogether in order to “solve the world’s central banks’ problem with negative interest rates”.
Last month we also reported on how the Justice Department is ordering bank employees to consider calling the cops on customers who withdraw $5,000 dollars or more.
Efforts to impose restrictions on the use of cash by banks are seen by many as an attack on anonymity and an example of how financial institutions are positioning themselves to handle the fallout of the next economic crash – at the expense of customers.
According to reports which emerged last year, HSBC is now interrogating its account holders in the UK on how they earn and spend their money as well as restricting large cash withdrawals for customers from £5000 upwards.
Banks in the U.S. are also making it harder for customers to withdraw and deposit cash, with Chase imposing new capital controls that mandate identification for cash deposits and ban cash being deposited into another person’s account.
In October 2013, we also covered policy changes instituted by Chase which banned international wire transfers while restricting cash activity for business customers (both deposits and withdrawals) to a $50,000 limit per statement cycle.
Last month, French Finance Minister Michel Sapin hailed the introduction of measures set to come into force in September which will restrict French citizens from making cash payments over €1,000 euros.
More and more families no longer can call themselves “middle class”.-Lou
From: Two Cents
The Salary Required To Be Middle Class In Every State
“Middle class” doesn’t have a definite, official definition. But the Pew Charitable Trust defines it as households that earn between 67 and 200 percent of a state’s median income. Based on this metric and some statistics, Business Insider came up with a list of how much you have to earn to be considered middle class, depending on your state.
Pew analyzed numbers from the U.S. Census Bureau’s 2013 American Community Survey (the most recent) and found that the middle class has shrunk in every state between 2000 and 2013. Business Insider looked at the survey, too, then crunched some numbers based on Pew’s definition of “middle class” to come up with their list.
You can see the full results below. In the left column, they list the median household income for each state. The middle column is the minimum you have to earn to be considered middle class, based on Pew’s definition. And the right column is the upper range of middle class.
Head to Business Insider’s full link for more information.
How much you have to earn to be considered middle class in every US state | Business Insider
The Salary Required to Be “Middle Class” in Every State
In Canada today…….America tomorrow?-Lou
“Surviving Or Thriving” – What Canada’s 40% Surge In Meat Prices Means For Ordinary People
On the surface, Canada’s 1.2% inflation is negligible, and barely enough to keep up with the pace of overall growth as mandated by a few central bank academics. It is below the surface, however, that one finds the scary truth. Because when stripping away the sliding energy prices (which at the recent pace of short covering among oil speculators are about to surge) some scary numbers emerge, such as a 3.8% monthly jump in food prices, primarily as a result of a whopping 30-40% increase in select meat prices in the last 8 months.
How do ordinary people – which excludes those who work in central banks and have taxpayers fund their everyday purchases, which allows them to fully ignore soaring food and rent costs – survive in an environment of soaring food prices?
As the following brief documentary by CBC’s The National reveals, food inflation means people have no choice but to eat “far less beef” than they used to, “or chicken.” Others are ok with the runaway food inflation: “it doesn’t matter to me, I buy the meat at the price it is and that’s fine with me” say a gentleman who likely works for a hedge fund and BTFD for a living.
It is not just meat: prices of Canadian fruits and vegetables have also surged, driven almost entirely by the plunge and the loss of purchasing power of the Canadian dollar.
And, as a vendor of meat observes: “there doesn’t seem to be an end to it.”
So soaring food prices, flat wages, tumbling currency, and a generally deteriorating standard of living. In short: something Japan’s prime minister Abe would call a smashing success.
Full CBC documentary below:
Listen to this week’s “The Financial Physician” radio show. -Lou
Click on the upper right corner PLAY arrow on player as the middle PLAY arrow is not working.
Sorry for the lack of posts recently, tax season demanded my time. I would avoid Municipal Bonds like the plague. Some economic recovery.-Lou
Fed’s Dudley Warns about Wave of Municipal Bankruptcies
by Wolf Richter, Wolf Street
It has been a persistent ugly list of municipal bankruptcies: Detroit, MI; Vallejo, San Bernardino, Stockton, and Mammoth Lakes, CA; Jefferson County, AL. Harrisburg, PA; Central Falls, RI; Boise County, ID.
There are many more aspirants for that list, including cities bigger than Detroit. Detroit was the test case for shedding debt. If bankruptcy worked in Detroit, it might work in Chicago. Illinois Gov. Bruce Rauner wants to make Chapter 9 bankruptcies legal for cities in his state, which is facing its own mega-problems.
“Bankruptcy law exists for a reason; it’s allowed in business so that businesses can get back on their feet and prosper again by restructuring their debts,” Rauner said. “It’s very important for governments to be able to do that, too.”
His plan for sparing Illinois that fate is to cut state assistance to municipalities, which doesn’t sit well with officials at these municipalities. Chicago Mayor Rahm Emanuel’s office countered that balancing the state budget on the backs of the local governments is itself a “bankrupt” idea.
Puerto Rico doesn’t even have access to a legal framework like bankruptcy to reduce its debts, but it won’t be able to service them. It owes $73 billion to bondholders, about $20,000 per-capita – more than any of the 50 states. If you own a muni bond fund, you’re probably a creditor. Bond-fund managers use its higher-yielding debt to goose their performance. But now some sort of default and debt relieve is in the works. The US Treasury Department is involved too.
“People before debt,” the people in Puerto Rico demand. It’s going to be expensive for bondholders.
That’s the ugly drumbeat in the background of New York Fed President William Dudley’s speech today at the New York Fed’s workshop, “Chapter 9 and Alternatives for Distressed Municipalities and States.”
“We at the New York Fed are committed to playing a role in ensuring the stability of this important sector,” he said, referring to the sordid finances of state and local governments. But he wasn’t talking about future bailouts by the Fed. He was issuing a warning to municipalities and their creditors about “the emerging fiscal stresses in the sector.”
It’s a big sector. State and local governments employ about 20 million people – “nearly one in seven American workers.” The sector accounts for about $2 trillion, or 11%, of US GDP. And its services like public safety, education, health, water, sewer, and transportation, are “absolutely fundamental to support private sector economic activity.”
Speaking at the National Press Club, Mr. Koskinen pleaded with more money, saying a budget boost would help them staff their overwhelmed customer service lines. He also said it would help reverse staffing cuts in their compliance division, where he said the government will lose $2 billion this year in money it would otherwise have been able to collect if it had better staffing.
Congress has cut or held the agency’s funding static for several years now, with lawmakers deeming the agency recalcitrant in solving problems, and unrepentant for having targeted tea party groups for intrusive scrutiny.
The poor customer service is growing worse at the agency. Just a couple of weeks ago Mr. Koskinen had said they were answering 43 percent of phone calls, so dropping below 40 percent suggests things have deteriorated as the April 15 tax deadline nears
The age of privacy is over welcome to 1984 and The Brave New World.-Lou
All of the Ways Big Brother Is Watching You
Privacy as we once knew it is dead. We now find ourselves in the unenviable position of being monitored, managed and controlled by our technology—specifically the technology employed by the government against the American citizenry. As a result, warns John W. Whitehead in this week’s vodcast, we are becoming a nation where even the most virtuous citizen risks becoming an outlaw.