Friday, November 01, 2013 - Halloween, Christmas and Banksters

Everyday is Christmas

by Sinclair Noe

DOW + 69 = 15,615
SPX + 5 = 1761
NAS + 2 = 3922
10 YR YLD + .08 = 2.62%
OIL – 1.78 = 94.60

GOLD – 6.90 = 1316.80
SILV - .04 = 21.97

I hope you enjoyed Halloween, maybe you got to hand out some candy to the little kids. And what wasn't handed out, well I hope it's digested, because this this might make you queasy. Merry Christmas, Happy Hannukah, etc., etc. Today is Black Friday. Retailers facing the shortest holiday season in years are preparing to assail customers with deals and promotions as of right now. Wal-Mart is kicking off its online deals today, a month earlier than usual, underscoring worries that intense discounting aimed at luring budget-conscious shoppers could result in the most tepid holiday spending rise in four years.

Retailers have traditionally kicked off the all-important holiday shopping season on or the day after Thanksgiving and saved some of their best online deals for "Cyber Monday," the Monday after Thanksgiving when workers return to offices and use computers to make holiday purchases. This year, the holiday falls on Nov. 28 and as a result there are six fewer shopping days between Thanksgiving and Christmas, prompting many retailers to jump the gun on incentives.

So, if you want a 42-inch JVC LED TV for just $299, or a Xelio 10-inch tablet for just $49, with free shipping, today is your day, because all you are in the eyes of corporate America is nothing but a consumer who understands the real meaning of the holiday season is not a message of faith, hope, or anything so maudlin. So, don't rush online, because...

this holiday season will be the most promotional one since 2008, so you've still got plenty of time to grab a deal.

Now, let's turn our attention to the banksters; a regular rogues' gallery. JPMorgan disclosed today in their quarterly SEC filings that the Department of Justice and agencies from other jurisdictions are investigating hiring practices in Hong Kong, where they are already being investigated by the Securities and Exchange Commission. Plus, JPMorgan is also being questioned about its currency trading by various other authorities; more on that in a moment.

JPMorgan also gave more details about US government investigations into the bank's relationship with convicted Ponzi schemer Bernie Madoff. The US Attorney's Office for the Southern District of New York and the Office of the Comptroller of the Currency, are currently looking into the ties between Madoff and the bank.

The US Attorney's Office for the Southern District of New York is also investigating the bank's activities in the California and Midwest power markets that were the subject of a $410 million settlement between JPMorgan and the Federal Energy Regulatory Commission.

Additionally, the bank offered more specifics on the amount of claims that investors and bond insurers had over mortgage-backed securities. Total claims added up to approximately $117 billion, $88 billion of which involves Bear Stearns, Washington Mutual, JPMorgan or its affiliates as an issuer and $29 billion of which involves the entities solely as underwriters.

Meanwhile, Citigroup's SEC filing revealed the bank has put its chief currency trader in London on leave as US government agencies and authorities from other jurisdictions are investigating foreign exchange trading. Citi is not alone. Barclays, Standard Chartered, and JPMorganhave all put traders on leave as regulators from around the globe investigate manipulation of the $5.3 trillion dollar a day forex market. Royal Bank of Scottland is co-operating with regulators. If it all sounds familiar its because it basically follows the pattern of the Libor rigging scandal; here, authorities are investigating whether traders colluded with counterparts at other banks to try to rig benchmark foreign exchange rates, tipping each other off about their positions and trying to influence the rate set.

Yesterday, Fannie Mae, the government controlled mortgage company, filed suit in District Court in Manhattan against 9 banks of colluding to rig Libor interest rates, during the 2008 financial crisis. Fannie Mae sued for $800 million. Libor underpins hundreds of trillions of dollars of transactions, and is used to set interest rates on such things as credit cards, student loans and mortgages. The lawsuit claims: "defendants' promises and representations regarding the legitimacy of Libor were false," causing Fannie Mae to lose money on swaps, mortgages, mortgage securities and other transactions.

The U.S. government bailed out Fannie Mae and Freddie Mac in 2008. Both companies are now overseen by the Federal Housing Finance Agency (FHFA), which tries to conserve and recover assets for the benefit of taxpayers. In 2011, the FHFA sued 18 banks and financial companies to recover losses that it said Fannie Mae and Freddie Mac suffered on about $200 billion of mortgage securities.

The Commodity Futures Trading Commission has decided not to press charges against two traders in the "London Whale" case partly because it is so strapped for cash. The CFTC is also slowing down investigations and laying off staff as a result of its funding crunch. The CFTC budget has grown from $111 million five years ago to $195 million today, but that is well below the requested budget of $315 million, which was rejected, even though the CFTC has collected many times its budget in fines. Meanwhile, the markets under the CFTC's jurisdiction have gotten more than ten times bigger. The CFTC was just recently handed a critical new task, based on the Dodd-Frank financial-reform law, of watching the $600 trillion -- that's "trillion," with a "t" -- market for swaps. These derivatives were at the heart of the financial meltdown in 2008. The CFTC was already struggling to keep an eye on the $37 trillion -- again, "trillion," with a "t" -- futures market.

Food stamp benefits are being cut for more than 47 million Americans effective today, as a temporary boost to the federal program comes to an end without a new budget from a deadlocked Congress to replace it.

Under the program, known as the Supplemental Nutrition and Assistance Program, or SNAP, a family of four that gets $668 per month in benefits will find that amount cut by $36. Last year, the average monthly benefit per household was $278. . The average beneficiary received $133.41 in food stamps per month last year – less than $1.50 per meal. Children, seniors or people with disabilities account for 83% of SNAP benefits and the average SNAP household has a gross monthly income of $744. Nearly 1 in 2 Americans are now living at or near the poverty line according to recent Census Bureau data. Mother Jones, citing research from the Center on Budget and Policy Priorities, reports that the “13.6% temporary boost in food stamp dollars helped more than half a million Americans.” Food stamp purchases account for 25% to 40% of sales for some Walmarts across the country.

Two factors are driving the fiscal squeeze. The first is the windup of additional SNAP allocations under President Obama's 2009 stimulus bill. The second is the inability of Congress to agree on a new farm bill.

Negotiations on a new bill, including cuts to the SNAP program, began Wednesday. Five-year farm bills passed by both the House and the Senate would cut food stamps, reductions that would come on top of the cut that goes into effect Friday. But the two chambers are far apart on the amounts. A farm bill usually win bipartisan support because it includes funds for agricultural programs favored by farm and business interests and SNAP, which is supported by liberal and urban interests. If a joint bill is not passed by the end of the year and current farm law is not extended, certain dairy supports would expire, possibly raising the price of milk. Farmers would start to feel more effects next spring.

About 1 in 9 US bridges, about 66,500 in total, are rated structurally deficient and in urgent need of repairs, maintenance or even replacement. Everyday, Americans of all different stripes drive across these deficient bridges, with more than 260 million trips taken on them each day. To put that crazy number in perspective, McDonald's restaurants will serve about 64 million people today, worldwide. Anyone who travels at all can see how shoddy America has become. Our airports and train stations are a disgrace by international standards. The US is slipping into third world status when it come to infrastructure. That's another area that has been hit hard by budget constraints. In the past ten years there has been a sharp drop in infrastructure spending, from around $330 billion in 2003 to about $225 billion now; that includes state and local government spending, which is where the rubber tends to meet the road. And waiting doesn't make it better. It's like postponing the repair of your roof, which you know has a bad leak; putting off repairs doesn't make it cheaper later one; just the opposite; there is an increased probability that the leak turns into a roof collapse at a much greater expense. And that doesn't even include the lost productivity from time lost in traffic on subpar roads, and other such delays.

And right now, interest rates are incredibly low, and likely to go higher at some point, which means even greater expense in the future.

I had someone ask me why I tend to focus on the banksters.,.