This Week’s Radio Show 5-23-15

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.

radio-microphone1

LISTEN HERE

Banks fined more than $5B, to plead guilty to market rigging

The big banks continue to commit their felonies. Their self-described “cartel” used an exclusive electronic chat room and coded language to manipulate national exchange rates in ways that benefited their own trading positions. It’s one of the biggest bank swindles of all times. But is any top executive going to jail? Of course not. Black and Latino teenagers are locked up for selling ounces of marijuana. Bankers who fleece the rest of us for trillions of dollars get fat bonuses.  Jamie Dimon, CEO of JPMorgan should be indicted for multiple crimes, but its not going to happen.-Lou

 

Banks fined more than $5B, to plead guilty to market rigging

WASHINGTON (AP) — A group of global banks will pay more than $5 billion in penalties and plead guilty to rigging the world’s currency market, the first time in more than two decades that major players in the financial industry have admitted to criminal wrongdoing.

JPMorgan Chase, Citigroup, Barclays and The Royal Bank of Scotland conspired with one another to fix rates on U.S. dollars and euros traded in the huge global market for currencies, according to a resolution announced Wednesday between the banks and the Department of Justice. A group of currency traders, who called themselves “The Cartel,” allegedly shared customer orders through chat rooms and used that information to profit at the expense of their clients.

The resolution is complex and involves multiple regulators in the U.S. and overseas.

The four banks will pay a combined $2.5 billion in criminal penalties to the DOJ for criminal manipulation of currency rates between December 2007 and January 2013, according to the agreement. The Federal Reserve is slapping them with an additional $1.6 billion in fines, as the banks’ chief regulator. Finally, British bank Barclays is paying an additional $1.3 billion to British and U.S. regulators for its role in the scheme.

Another bank, Switzerland’s UBS, has agreed to plead guilty to manipulating key interest rates and will pay a separate criminal penalty of $203 million.

Big banks overall have already been fined billions of dollars for their role in the housing bubble and subsequent financial crisis. But even so, the latest penalties are big. Including a separate agreement with the Federal Reserve announced Wednesday and another announced last year, the group of banks will pay nearly $9 billion in fines for manipulating the $5.3 trillion global currency market.

Unlike the stock and bond markets, currencies trade nearly 24 hours a day, seven days a week. The market pauses two times a day, a moment known as “the fix.” Traders in the cartel allegedly shared client orders with rivals ahead of the “fix”, pumping up currency rates to make profits.

Global companies, who do business in multiple currencies, rely on their banks to give them the closest thing to an official exchange rate each day. The banks are supposed to be looking out for them instead of conspiring to get even bigger profits by using customers’ orders against them. Travelers who regularly exchange currencies also need to get a fair price for their euros or dollars.

It is rare to see a bank plead guilty to wrongdoing. Even in the aftermath of the financial crisis, most financial companies reached “non-prosecution agreements” or “deferred prosecution agreements” with regulators, agreeing to pay billions in fines but not admitting any guilt. If any guilt were found, it was usually one of the bank’s subsidiaries or divisions — not the bank holding company.

More…

Why Europe Will Lead the Charge to Eliminate Cash – The Next Step in Global Meltdown

Cash will soon be illegal.-Lou

Why Europe Will Lead the Charge to Eliminate Cash – The Next Step in Global Meltdown

Europe will lead the world into this Economic Totalitarianism because government is now desperate to retain the Euro

by Martin Armstrong Europe will lead the world into this Economic Totalitarianism because government is now desperate to retain the Euro. If the Euro collapses, so will Brussels. The government exists solely because of the Euro. The fatal design of the Euro is the key. The failure to have consolidated the debts of all individual member states has been the worst possible mistake perhaps ever made in this post-Great Depression era of New Economics where government lawyers assume they can just write a law and that will be followed as some new modern dictator. Because of the failure to consolidate the debts, the reserve of the banks had to then be politically correct to conform with Brussels holding a piece of all member state debts. That meant that the defaulting in part or in whole of individual sovereign debts of member states undermined the banking system. This would be as if in the USA bank reserves were made up of state debts. If one state failed, everyone would scramble to sell the banks who had the most. Since Brussels will not reform, as Einstein put it correctly that you cannot solve a problem with the same line of thinking. This whole idea of negative interest rates is just following the same Keynesian concept that lowering rates will stimulate demand. The missing element is CONFIDENCE. If you do not believe you will make even 1%, you will not pay 0%. While they keep lowering rates to stimulate borrowers, they are wiping out the elderly who now cannot live from their savings reducing their spending destroying the entire idea of pensions and retirement (the social contract). The lack of CONFIDENCE prevents new businesses from forming and therein results in the lost generation of youth who cannot find a job. The elderly are forced to work so there becomes a shortage of jobs resulting in higher unemployment among the youth. Add to that trend wiping out the elderly and the youth, we then have the rising tensions against foreigners everywhere because they see them as taking precious jobs as they migrate to their country. It becomes a vicious cycle that cannot be broken with the same line of thinking. This is why governments are still using the same line of thinking of negative interest rates and going to the next step. They cannot meet their budges as tax revenues decline with economic activity, so they go off hunting money causing the global economy to shrink even more. As they hunt money, people hoard and invest even less. They tend to buy assets to get off the grid. To further this effort, governmental thinking then arrives at the solution to eliminate cash forcing the end of the underground economy and 100% tax collection. More…

This Is What $800 Million In Ten Pieces Of Art Looks Like

Pure Insanity. The rich have way too m much money. Look at the third most expensive painting, an orange square that sells for $81.9 million. 

 

 This Is What $800 Million In Ten Pieces Of Art Looks Like

 Zero Hedge

On Monday, Picasso’s Women of Algiers (Version O)set an auction house record when it sold for $179,365,000, including the house’s premium, prompting us to remark that if you were looking for signs of runaway inflation, Christie’s may be a good place to start.

The nearly $200 million price tag for the “riot of colors focused on scantily dressed women” is, according to WSJ, reflective of the work’s “trophy” status which it earned as a result of its “ownership pedigree”. Translated from high-end art world parlance to plain English: for billionaires who have seen their obscene fortunes balloon under monetary policies designed to inflate financial assets at the expense of everything else (including market stability), purchasing art affords the buyer an even greater opportunity to “boast” than hoarding $100 million homes because after all, there a lot of mega mansions, but there’s only one vibrant, multi-hued Picasso riff on a Delacroix, so really, $180 million is a bargain, especially when most of the purchase price will be recouped by S&P 2,500, or SHCOMP 6,000 (depending on the nationality of the unnamed buyer).

This trend isn’t likely to change anytime soon, and as Bloomberg reportsmore than $2 billion in art has been sold at Christie’s and Sotheby’s in the last week alone with the top 10 pieces accounting for an astounding $800 million. 

The art market is on such a tear even the insiders are scratching their heads. Since New York’s spring sales started last week, at least $2.1 billion of art has been sold at Christie’s and Sotheby’s, with the top 10 lots accounting for almost $800 million.

 

Christie’s said collectors from 35 countries were bidding at its May 11 sale while Sotheby’s said clients from more than 40 countries were out in force the next evening. They jockeyed for Impressionist, modern, postwar and contemporary art.

 

 

“There’s a lot of money out there and people are chasing great works,” said Mera Rubell, who, along with her husband, Don, runs a private museum in Miami showcasing their collection. “Now the young artists are selling for millions.”

Without further ado, here is what $800 million in 10 pieces of art looks like:

#1: Pablo Picasso, “Les Femmes d’Alger (Version ‘O’),” $179.4 million

#2: Alberto Giacometti, “L’Homme au Doigt,” $141.3 million

#3: Mark Rothko “No. 10,” $81.9 million

#4: Pablo Picasso, “Buste de Femme (Femme a la Resille),” $67.4 million

More…

 

EGG, TURKEY MEAT PRICES BEGIN TO RISE AS BIRD FLU SPREADS

EGG, TURKEY MEAT PRICES BEGIN TO RISE AS BIRD FLU SPREADS

p_anne-chicken_1661204b

DES MOINES, Iowa (AP) — Prices for eggs and turkey meat are rising as an outbreak of bird flu in the Midwest claims an increasing number of chickens and turkeys. Market experts say grocery stores and wholesalers are trying to stock up on eggs, but there’s no need to worry about having enough turkeys for Thanksgiving.

The cost of a carton of large eggs in the Midwest has jumped nearly 17 percent to $1.39 a dozen from $1.19 since mid-April when the virus began appearing in Iowa’s chicken flocks and farmers culled their flocks to contain any spread. Neighboring Nebraska reported its first case of bird flu Tuesday, affecting 1.7 million chickens at an egg farm in Dixon County.

A much bigger increase has emerged in the eggs used as ingredients in processed products such as cake mix and mayonnaise, which account for the majority of what Iowa produces. Those eggs have jumped 63 percent to $1.03 a dozen from 63 cents in the last three weeks, said Rick Brown, senior vice president of Urner Barry, a commodity market analysis firm.

Turkey prices, which had been expected to fall this year, are up slightly as the bird flu claimed about 5.6 million turkeys nationwide so far. About 238 million turkeys were raised in the U.S. last year.

The price of fresh boneless and skinless tom breast meat primarily used for deli meat has risen 10 percent since mid-April to $3.37 a pound, a USDA report said Friday. Frozen hens in the 8- to 16-pound range, those often used for home roasting, were up about 3 percent to $1.06 a pound.

Egg supplies are falling short of demand, the U.S. Department of Agriculture has indicated, and Brown said egg buyers such as grocery stores and wholesalers are trying to stock up for fear that another large farm with millions of chickens will be stricken – causing prices to spike higher.

“We’re starting to see a little bit of that demand increase, and the sellers are reluctant to give clients too much more than they normally have because they know what’s going on and they don’t want to be caught short either,” he said.

More…

 

 

Moody’s downgrades Chicago debt to ‘junk’ with negative outlook

Coming to a city near you.-Lou

Moody’s downgrades Chicago debt to ‘junk’ with negative outlook

Chicago_River

CNBC

Moody’s downgraded Chicago’s credit rating down to junk level “Ba1″ from “Baa2.”

The announcement, which the ratings agency released Tuesday afternoon, cited a recent Illinois court ruling voiding state pension reforms. Moody’s said it saw a negative outlook for the city’s credit.

Following that May court decision, Moody’s said it believes that “the city’s options for curbing growth in its own unfunded pension liabilities have narrowed considerably.”

Read MoreMunicipal money matters: Why Chicago is not the next Detroit

“Whether or not the current statutes that govern Chicago’s pension plans stand, we expect the costs of servicing Chicago’s unfunded liabilities will grow, placing significant strain on the city’s financial operations absent commensurate growth in revenue and/or reductions in other expenditures,” the agency said in a release.

The downgrade affected $8.9 billion of general obligation, sales, and motor fuel tax debt, according to Moody’s.

The firm said its downgrades could trigger up to $2.2 billion in accelerated payments on Chicago debt.

 

 

Americans Not In The Labor Force Rise To Record 93,194,000

Another fudged employment report that the market just loves (Dow up 260 points). Almost all the jobs created were in the 55 and older category. Most jobs were part time. Many full time jobs were lost in April. And ,by the way, March’s weak job number was revised significantly lower. More worrying is the continued increase in Americans who are no longer in the work force. The chart below is quite ominous.-Lou

 

Americans Not In The Labor Force Rise To Record 93,194,000

Zero Hedge 

In what was an “unambiguously” unpleasant April jobs payrolls report, with a March revision dragging that month’s job gain to the lowest level since June of 2012, the fact that the number of Americans not in the labor force rose once again, this time to 93,194K from 93,175K, with the result being a participation rate of 69.45 or just above the lowest percentage since 1977, will merely catalyze even more upside to the so called “market” which continues to reflect nothing but central bank liquidity, and thus – the accelerating deterioration of the broader economy.

 

End result: with the civilian employment to population ratio unchanged from last month at 59.3%, one can easily on the chart below why there will be no broad wage growth any time soon, which will merely allow the Fed to engage in its failed policies for a long, long time.

More…

Russia Is Hoarding Gold, You Should Worry

To match feature GOLD-FIXING/

Russia Is Hoarding Gold, You Should Worry

Washington Times

MOSCOW — The Central Bank of the Russian Federation announced this week on its website that in March, Russia bought approximately 30 tons of gold, bringing its total gold reserves to 1,238 metric tons.  Russia is now the fifth-largest holder of gold reserves, according to the International Monetary Fund. And this is only the gold that Russia wants to the world to know about! As with ChinaRussia may not be fully reporting its gold reserves to the IMF, which is dominated by the United States. The West should be worried about China’s hoarding of gold as well, but that’s for another column.

Why is this a problem for the West? It’s not if taken in a vacuum of world events. However, when coupled with recent geopolitical history, Russia hoarding gold is a sign of things to come. It is a window into the mind of Russian President Vladimir Putin.

One only has to look at the fiscal and monetary foolishness of the current administration to understand that our overwhelming sovereign debt, profligate spending, and looming vulnerability of our currency, will ultimately bring disaster. Any objective observer can see that our adversaries are looking to the future and attempting to exploit our weaknesses. In the military, they call it assymetric warfare. I’ll just call it smart long-term strategy.

Russia, in spite of all its xenophobia and authoritarianism, has one bright, shining characteristic — Russia does what it thinks is good for Russia. It does things that the Kremlin believes will enhance its national power. It doesn’t do things to appeal to some Western, idealistic, feel-good, politically correct agenda. They’ve been there, done that, and it just didn’t work. It was called the Union of Soviet Socialist Republics. Why the West hasn’t learned from their experience I can’t understand as we are heading down that road.

Russia is not socialist or communist. They are nationalist. In some ways, you could say Russia is more laissez-faire capitalist than the West. There is no safety-net to speak of and oligarchs rule the country. I’ve always said Russia is, in many ways, a hundred and fifty years behind the West in its development. They are experiencing the age of the robber barons with all the problems that type of society will bring.

More…

HTEF “Night With The Stars”

I had a great time being honored as one of the “Stars” of the Howell Education Foundation’s “Night With The Stars”.-Lou

This Week’s Radio Show 4-24-15

Listen to this week’s “The Financial Physician” radio show.-Lou

radio-microphone1