Monday, May 19, 2014 - Still Too Big to Jail

Still Too Big to Jail
by Sinclair Noe

DOW + 20 = 16511
SPX + 7 = 1885
NAS + 35 = 4125
10 YR YLD + .02 = 2.54%
OIL + .58 = 102.16
GOLD - .10 = 1293.60
SILV - .01 = 19.44

Merger Mania Monday. Late yesterday, AT&T announced an offer to buy DirecTV for $48 billion, or $95 per share. The combined AT&T-DirecTV would serve 26 million customers; that would make it the second-largest pay TV operator behind a combined Comcast-Time Warner Cable, which would serve 30 million under a $45 billion merger proposed in February. The Comcast deal still faces regulatory hurdles.

AT&T and DirecTV promised consumer benefits like more economical bundles that tie mobile phone, pay TV and Internet service together on a single bill. The deal could face regulatory scrutiny from the Federal Communications Commission and Department of Justice. Unlike the cable company tie-up, the AT&T-DirecTV merger would effectively cut the number of video providers from four to three for about 25% of US households. That's a situation that could result in higher prices for consumers and usually gives regulators cause for concern.

The value that DirecTV offers that no other national TV provider offers is a special deal for football fans; for $240 to $330 you can buy a special package that gets you all the NFL football games, including your hometown favorite no matter where you live. That’s why DirecTV paid an estimated $4 billion to the NFL for the latest Sunday Ticket contract; that deal expires at the end of the upcoming NFL season. If the Sunday Ticket arrangement were not to be extended, AT&T would reportedly have a legal out, according to terms of the takeover.

Part of the value of DirecTV is what it isn’t. DirecTV does not offer fixed-line or mobile Internet service, and its rights to airwave frequencies for satellite TV are not the kind that AT&T can use to improve its mobile phone network. If AT&T can convert DirecTV’s customers into high-speed Internet subscribers, they could have 25% of all pay TV subscribers and then two companies would control 55% to 60% of all Internet subscriptions in the US.

The board of AstraZeneca has rejected the improved, and apparently final $119 billion takeover offer from US drugmaker Pfizer. Pfizer, which is the world's second-biggest drugmaker by revenue, has been courting No. 8 AstraZeneca since January. Yesterday, Pfizer raised the offer 15% to $119 billion; that would be the richest acquisition ever among drugmakers and the third-biggest in any industry. AstraZeneca didn't take long to reject the new offer, its board arguing Pfizer is making "an opportunistic attempt to acquire a transformed AstraZeneca, without reflecting the value of its exciting pipeline" of experimental drugs.

Pfizer's offer comes amid a surge of other deals among drugmakers. Those deals include Switzerland's Novartis agreeing to buy GlaxoSmithKline's cancer-drug business for up to $16 billion, to sell most of its vaccines business to GSK for $7.1 billion, plus royalties, and to sell its animal health division to Eli Lilly for about $5.4 billion. Canada's Valeant Pharmaceuticals has also made an unsolicited offer of nearly $46 billion for Botox maker Allergan, which has turned it down, so far.

Law enforcement agents have arrested more than 90 hackers accused of infecting more than half-a-million computers worldwide with malicious snooping software. The suspects were charged with developing, selling and marketing a remote access tool, or “RAT,” that allowed users to infiltrate computers, view files and steal personal data from unwitting victims. Talk about creepy; the malware could even take over your webcam and take pictures and videos of you. The original creator of the software, who founded an organization called “Blackshades,” was arrested in June 2012, but investigators said an international ring of hackers continued to sell and disseminate the software after his arrest, reaching thousands of people in more than 100 countries; 19 countries participated in the arrests, and more than 300 searches had been conducted in what law enforcers described as one of the largest cybersecurity operations in history.

The United States charged five Chinese government officials with allegedly orchestrating cyber-attacks against six major American companies. It marks the first time the US has formally charged foreign government officials for explicitly acting at the behest of a foreign government in cyber-crimes. The companies targeted by hackers were Alcoa, Westinghouse, Allegheny Technologies, US Steel, United Steelworkers Union, and Solar World.

Attorney General Eric Holder said: “In some cases, they stole trade secrets that would have been particularly beneficial to Chinese companies at the time they were stolen. In others, they stole sensitive, internal communications that would provide a competitor, or adversary in litigation, with insight into the strategy and vulnerabilities of the American entity. In sum, the alleged hacking appears to have been conducted for no reason other than to advantage state-owned companies and other interests in China, at the expense of businesses here in the United States.”

The Justice Department has criminally charged Credit Suisse AG and two of its units with conspiring to willfully help Americans evade taxes. A Virginia federal court filing accuses Credit Suisse of conspiring to in part "advise the preparation and presentation of false income tax returns and other documents to the Internal Revenue Service.'' The four-page criminal information charges the bank with "assisting clients in using sham entities'' as the purported owners of secret offshore accounts and "soliciting IRS forms that falsely stated under penalties of perjury that the sham entities … owned the assets in the accounts.''

The criminal case follows a Senate subcommittee investigation that found the bank provided accounts in Switzerland for more than 22,000 US clients totaling $10 billion to $12 billion. The report said Credit Suisse sent Swiss bankers to recruit American clients at golf tournaments and other events, encouraged US customers to travel to Switzerland and actively helped them hide their assets.

Credit Suisse has apparently agreed as part of a settlement to plead to one count of conspiring to aid tax evasion. It would mark the first time in more than 20 years that a major bank has plead guilty to criminal wrongdoing. But make no mistake, this was a negotiated guilty plea that does not bear the consequences of criminal guilt. Credit Suisse will pay about $2.6 billion in penalties and hire an independent monitor for up to two years, which sounds exactly like a civil penalty. Recognizing that criminal charges could prompt regulators to revoke a bank’s license to operate, the corporate equivalent of the death penalty, prosecutors met with regulators to discuss punishing Credit Suisse without putting it out of business and imperiling the economy. The biggest challenge facing Credit Suisse could be that some of its own clients, such as pension funds, have internal requirements that prohibit them from doing business with an entity that has pleaded guilty to a crime.

Otherwise, this amounts to another slap on the wrist. The CEO and Chairman keep their positions. Credit Suisse will admit to a statement of facts that shows the U.S. tax evasion was widely fostered by the bank, the people said. The firm won’t have to disclose the names of US account holders under terms of the agreement.

The Credit Suisse plea won’t be the last. BNP Paribas is expected to plead guilty in coming weeks to doing business with countries like Sudan and Iran that the United States has blacklisted; BNP is also expected to pay more than $5 billion in fines. And eventually, we could see criminal charges brought against American banks such as JPMorgan and Citigroup, which are the subjects of criminal investigations, but those inquiries are at an earlier stage and it is unclear whether they would result in criminal charges. The Justice Department's highest-profile settlement over sales of risky mortgage securities in the run-up to the financial crisis — the $13 billion deal among the department, state regulators and JPMorgan Chase — was a civil case, and no bank executives were charged. Federal prosecutors in California have been conducting a related criminal investigation.

So for now we have a new strategy for controlling the illegality of the big banks: charge them with criminal activity and punish them with civil penalties. So what we have, in the end, seems to be a version of the anemic civil settlements and deferred-prosecution agreements that banks always get when they commit crimes. As usual, it is little more than the cost of doing business. Eric Holder can say that no bank is too big to jail, but then he folds like a tortilla when it comes to pursuing criminal charges that actually carry criminal penalties. For now, the government's message to banks remains the same: Go ahead and break the law. If worse comes to worst, your low-level bankers will take the fall, and your shareholders will pick up the tab.

Wednesday, February 26, 2014 - Inequality With a Dash of Salt

Inequality With a Dash of Salt

by Sinclair Noe

DOW + 18 = 16,198
SPX + .04 = 1845
NAS + 4 = 4292
10 YR YLD - .03 = 2.67%
OIL +72 = 102.55
GOLD – 11.80 = 1330.80
SILV - .68 = 21.32

Sales of new single-family homes started 2014 with surprising strength, with January posting the fastest pace in more than five years. Home sales jumped 9.6% in January to a seasonally adjusted annual rate of 468,000, hitting the highest level since July 2008. Today’s sales news follows a string of recent reports signaling recent sputtering in the housing market. The data, to be fair, have a huge confidence interval—plus or minus 17.9% in January. That means we can’t know for certain whether sales rose or fell during the month. On a three-month average, sales rose 1.2% in January. Sometimes you have to take a look at economic data with a dash of salt.

Bank earnings jumped in the fourth quarter, but not solely because of increased net income. According to the Federal Deposit Insurance Corporation, financial institutions in the US earned a whopping $40.3 billion in net income in the fourth quarter of 2013, up 16.9% from a year earlier. More than half of the 6,812 FDIC insured institutions reported a year-over-year growth in quarterly earnings. And the portion of unprofitable banks dropped to 12.2% from 15% in the fourth quarter of 2012.

But it’s not all good news. The improvement in earnings was largely attributable to an $8 billion decline in loan-loss provisions, which is a way banks can boost the bottom line by fudging the numbers. Revenue was lower year-over-year due to slowing mortgage activity and a drop in trading throughout the industry. Mortgage activity fell 62% in the fourth quarter compared to the same period the year before for one- to four-family homes, as rising interest rates in the first half of 2013 reduced the demand for mortgage refinancings. Net Income for the full year in 2013 was up 9.6% to $154.7 billion, compared to 2012.

The Senate Permanent Subcommittee on Investigation, or PSI, has issued its report on offshore tax avoidance; the report would make Robert Ludlum flinch; it’s full of implausible cloak and dagger schemes that could never pass muster in a quality spy novel. Truth is stranger than fiction, but it is because fiction is obliged to stick to possibilities; so said Mark Twain.

The co-authors of the tax avoidance story were Senators Carl Levin and John McCain. For more than 6 years, US officials have been investigating how Americans dodged taxes by hiding assets in secret Swiss bank accounts. At a press briefing, McCain said offshore tax practices operated by Credit Suisse and other institutions had cost US taxpayers $337 billion in potential revenue, which he called “the largest amount of tax revenue lost due to evasion in the world.” He said Credit Suisse, Switzerland’s second largest bank, had “greatly profited from this infamous business model”.

According to Senator Levin, Credit Suisse’s US office used a series of intermediaries to set up a series of offshore shell companies for US clients “in order to hide their assets”. Large sums were divided into smaller ones before they were sent to the US so as not to trigger investigations by US tax authorities. The Credit Suisse crowd also set up phony visa applications to disguise their travels to meet clients. And when they did meet clients, they played the spy game, complete with clandestine exchanges of bank statements, and smuggling cash. In other words, all the actors knew they were doing something that should not be exposed to the light of day.

An investigation into similar practices at UBS, Switzerland’s biggest bank, ultimately led to the recovery of $6 billion in undeclared taxes from US customers, but investigations into the tax schemes had been hampered by the Swiss government. Instead of turning over the names of US taxpayers who have Swiss accounts like UBS did, the Swiss government has delayed requests for assistance and prevented banks from turning over information in an effort to close the door on past conduct.

According to the PSI report the tax avoidance schemes went on from at least 2001 to 2008. Over the past five years the Justice Department has obtained information, including US client names, for only 238 undeclared Swiss accounts out of the tens of thousands opened offshore. Two top Justice Officials told the subcommittee "the department is committed to global enforcement against financial institutions that engage in or facilitate cross-border tax evasion." So far that commitment has seen the Justice Department file tax-evasion related charges against 73 account holders and 35 bankers and advisors since 2009.

An investigation into Credit Suisse resulted in a deal last week between the Swiss bank and the Securities and Exchange Commission. Credit Suisse agreed to pay $197 million for servicing US clients without approval; that means the bankers traveled to the US and met with US clients - maybe 8,500 clients - and advised those clients on how to evade taxes, but they didn’t register as financial advisors. The agreement left unsettled a criminal probe into Credit Suisse and others over whether they helped Americans evade taxes. About 1,800 Credit Suisse staff worked on the accounts, but only 10 people have been disciplined and none had been fired.

McCain said: “This fine pales in comparison to the full range of wrongdoing perpetrated by the bank and its unwillingness to take responsibility for its actions immediately.”

The Credit Suisse chief executive, Brady Dougan, told the senators that he was blocked by Swiss law from disclosing the names to the US authorities. The bank's general counsel, said: "We would all face criminal indictments and possibly prison terms if we were to hand over these client names."

Dougan testified before the senators: "To our deep regret, it is also clear that some Swiss-based bankers at Credit Suisse appear to have helped their US clients hide income and assets in the past… Although it was not and is not illegal for Swiss banks to accept deposits from Americans, it is absolutely unacceptable for Swiss-based bankers to help US taxpayers evade taxes or to provide them with securities advice in the US without being properly licensed."

That doesn’t exactly sound like remorse for tax evasion, as much as annoyance for not having the licenses in order.

So, now the question is what will be done. The senators said the Justice Department had decided to tackle the issue by filing treaty requests, with little success. McCain said he would be quizzing Justice Department officials about why they had not made more progress. Years and years of illegal activity; a 178 page report detailing the wrongdoing; and this on top of repeated offenses from banks that have resulted in slap-on-the-wrist fines and DPA’s, deferred prosecution agreements – which is basically an agreement that says if you break the law again you actually get punished. And the result is the banks never get punished. They break the law with impunity. This tax evasion is stealing, plain and simple.

Meanwhile the International Monetary Fund has released a new study on income inequality, and the takeaway is that income inequality can lead to slower or less sustainable economic growth, while redistribution of income, when measured, does not hurt and can even help an economy.

The IMF has traditionally advised countries to promote growth and reduce debt, but has not explicitly focused on income inequalities. In the past year, IMF Managing Director Christine Lagarde has said that creating economic stability is impossible without also addressing inequality.

According to the study: "It would still be a mistake to focus on growth and let inequality take care of itself, not only because inequality may be ethically undesirable but also because the resulting growth may be low and unsustainable."

The IMF report said countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly. It warned that inequality can also make growth more volatile and create the unstable conditions for a sudden slowdown in GDP growth.

The new study comes after several years of heated debate over the path that developed and developing countries' economies have taken since the financial crash and whether their recoveries are sustainable. Anti-poverty charity Oxfam welcomed the report, saying it shows "extreme inequality is damaging not only because it is morally unacceptable, but it's bad economics".

It added: "The IMF has debunked the old myth that redistribution is bad for growth and demolished the case for austerity. That redistribution efforts -essential to fight inequality- are good for growth is a welcome finding. Low tax and low public spending are clearly not the route to prosperity."

"We find that inequality is bad for growth ... in and of itself, and we can say that redistribution by itself doesn't seem to be bad for growth, unless it's very large."

They said the traditional view that efforts to redistribute incomes would have a corresponding and most likely detrimental effect on growth was unfounded.

"Rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect, counting both potential negative direct effects and positive effects of the resulting lower inequality."

Friday, December 27, 2013 - Fooled Again

Fooled Again

by Sinclair Noe

And now we present the curious case of Michael Steinberg. Not familiar? That's understandable; Michael Steinberg is a convicted felon, securities fraud and conspiracy, specifically insider trading. Steinberg is a close personal friend and former trader with Steven A. Cohen. You've likely heard that name. Cohen is the billionaire, stock picker who runs SAC Capital hedge fund; recently fined $1.2 billion by the SEC for insider trading and not maintaining adequate supervision of his employees. Cohen has not been charged as an individual.

Eight SAC employees have been criminally charged; six have pleaded guilty and are cooperating with the government; one faces trial in January; Steinberg just lost his trial, and when the verdict was announced, the fellow fainted. The other guy who faces trial in January fainted when he was arrested. It's a bit funny, a bit pathetic. Steinberg faces a maximum of 85 years but that won't happen. Still, it looks like a potential case against Cohen could gain traction.

The US Attorney's Office in Manhattan has secured 77 insider trading convictions since 2009, without losing a single case. Jurors are capable of understanding insider trading. It's a fairly simple form of cheating. Jurors are also capable of understanding more complex forms of cheating. The markets are rigged by cheaters, in the form of insider trading and other, more complex scams. There are many honest people who earn god livings in the markets, but there are plenty of cheaters. The prosecutors aren't even going after the folks on the other side of the insider trades; someone supplied information on Weight Watchers, Gymboree, Dell, Nvidia, and Intermune (and others). At some point, those people expected something for their information. There is an old saying: if you can't identify the “mark” at a poker table, it's you.

No need to actually sit at the table with big time hedge fund types – you're still the “mark”. Just look at what's happening in Detroit. I knew it was just a matter of time until we started hearing more about how the big banks bet against Detroit; slowly but surely the information is oozing out as the vultures fight over the carrion.

Detroit, of course, has many problems, long standing problems. Back in 2005, Detroit's pensions were underfunded to the tune of $1.44 billion. Then-mayor Kwame Kilpatrick and other city officials set up nonprofit entities and corporations to issue the debt, and bought interest rate swaps as a hedge against rising interest rates (more precisely, they were sold interest rate swaps). Interest rates then dropped to the lowest levels in history; they lost the bet. Detroit owes the holders of the swaps the difference between the interest rates, adding to the pensions' underfunding by as much as $770 million over the next 22 years. Essentially, the politicians and banks gambled with the city's debt, and that bet may have exceeded legal limits on the debt; raising the question of whether the illegal bet is valid. There will probably be lawsuits.

And now that Detroit is in bankruptcy, the unelected emergency manager of Detroit, Kevin Orr, worked out a tentative deal to pay the UBS AG and Bank of America Merrill Lynch Capital Services more than $300 million in “secured debt”. Those banks are considered secured creditors because Detroit put up revenue from three casinos as collateral for the loan; which is now the only stable source of revenue for Detroit. The initial settlement would given the banks about 80 cents on the dollar of what they are owed, compared to 16 cents on the dollar that Orr has offered to retirees for their pensions. The judge told attorneys for Orr’s team to renegotiate the casino money deal because every deal the city has made relating to the swaps “has been made with a gun to its head”.

And so they went back to the table, and they have come up with a new deal, an incrementally better settlement that leaves much of the original structure intact. If the deal is approved by federal bankruptcy Judge Steven Rhodes, Detroit would get out of the swaps deal for about 56 cents on the dollar, get $120 million in cash to bolster city services and free up casino revenues, crucial to the city’s ongoing operations, that were used to secure a previous renegotiation of the swaps deal in 2009. Detroit might be smart to argue that the two major issues with the swaps in the bankruptcy proceeding: whether the swaps are secured debt, and whether the deal was legal in the first place. A favorable ruling for the city on either matter could result in a far better outcome than what has been agreed to.

Over the past five years Detroit has reduced its salary expenses by 30 percent. More than 2,350 public jobs have been cut, accelerating the city’s already notable pace of deterioration. Far from uncontrollable, the cost of health benefits for the city’s public workers and retirees has risen more slowly than the national rate of 4 percent a year. Since 2008, Detroit has reduced its spending by more than $400 million. In the same period, city revenues have fallen by nearly $260 million, with a steep decline after 2011. This decline, rather than its pension obligations, more than accounts for the city’s projected deficit this year of $198 million.

One consequence of these cuts is that public services like transportation, infrastructure maintenance and education are barely functioning. And yet there is one expense that has, so far, been spared: service fees on derivatives that were sold to the city by banks backed by UBS and Bank of America. In fact, these fees are the only significant increase in spending over the past five years. There have been many numbers tossed about in the Detroit bankruptcy, including the claim that the pensions are underfunded by $3.5 billion, but by some calculations, if you strip out the wheeling and dealing, the actual underfunded amount may be closer to $800 million. The public sector pays for the mistakes of the financial sector, and observers are led to believe that the basic promise of retirement is the city’s problem.

This isn't the first time the “swaps” problem has hurt municipalities, we also have examples from Montgomery County, Alabama and San Bernardino, California, and at the core is the question of whether pensions, secured by 20, 30, or 40 years of work are more or less secure than bets by banks. A new report by the Center for Retirement Research at Boston College indicates that costly pension promises are not the major cause of municipalities weak financial conditions. The researchers compared 32 cities that have recently made headlines as they struggle with serious budget problems to a list of 149 other cities that are in relatively good financial shape. "When identifying the source of the problems, fiscal mismanagement leads the list," the study's authors found. "Economic problems, in large part a response to the financial crisis and ensuing recession, come in second." And, "In many cases pension were a contributing factor, but they weren't the driving factor in the fiscal challenges these cities are facing."

Our next story takes us to Switzerland, where 300 Swiss banks are working to meet Department of Justice year-end deadline to put a stop to tax evasion by American clients. Banks with reason to believe they violated tax laws can ask the DOJ to waive prosecution if the banks disclose how they helped Americans hide assets, and the banks will be required to hand over data on undeclared accounts, and pay penalties. If the banks don't apply for waivers and cooperate, then the banks and their customers could face criminal probes.

To gain the non-prosecution deals the banks must pay 20% of the value of accounts not disclosed by August 2008, 30% for accounts opened between August 2008 and February 2009, and 50% for accounts opened afterward. Fourteen Swiss banks are already part of criminal investigations. The crackdown on tax cheats really took off back in 2009, when the US charged UBS, the biggest Swiss bank, with aiding Americans in hiding some $20 billion in assets. UBS admitted it fostered tax evasion; they paid $780 million in fines; they avoided prosecution.

The banks are complaining, whining really, that the penalties are too high. Some Swiss banks may decide to opt-out of the non-prosecution deal, but that comes with a risk. Nearly 40,000 clients told the IRS all about their offshore accounts so that they might avoid prosecution. If it is later learned that some of those clients had accounts with banks that skipped the non-prosecution deal, it would seem like a slam dunk case against the bank. One area that still seems confusing is how to treat multinational corporations with headquarters in the US but offices in Switzerland.

You might think the decision to opt-in to the non-prosecution deal would be simple because the banks aren't really paying a penalty; the money comes from client accounts; it isn't really the banks' money; it is the clients' money. Of course this is not how banksters think. Once the money is in the banks' account, it becomes their money; it is capital they can leverage, and then use to trade.

Just a reminder, we're talking about tax evasion, the same crime that brought down Al Capone. Imagine some petty thief robs the local liquor store and steals a case of beer; he won't get a non-prosecution deal by just handing over a few beers to the cops. Meanwhile, two Swiss banks, Wegelin and Bank Frey, have already gone out of business; and UBS estimates several more will likely close in the coming year. Tax evasion is the business model of the Swiss banks; without it they really can't function. The practice has become institutionalized over time. There is a much older model for taxation: render unto Caesar.

We “celebrated” the Federal Reserve's 100^th anniversary on December 23. Of course, we could probably eliminate taxes if we could just come up with a better central bank. The government, if it and not the Fed was in control of its money supply, could spend as needed to meet its budget, drawing on credit issued by its own central bank (not the Fed); it could do this until price inflation indicated a weakened purchasing power of the currency. Then and only then, could the government need to levy taxes; and the need for taxes would not be to fund the budget but to counteract inflation by contracting the money supply.

In 1977, Congress gave the Fed a dual mandate, not only to maintain the stability of the currency but to promote full employment. The Fed also has another job, as a regulator of the banking system; and as a regulator, it is an abysmal failure; worse than an atheist priest.

There is a discipline in economics known as the “theory of repeated games” and the basic idea is that if you repeatedly cheat at a game, then it increases the likelihood that I will retaliate by trying to cheat you. Of course that is just a theoretical game. In the real world, I might just stop playing your game. When corruption and cheating permeates a society, everything starts to break down, fairness and trust turn to dust and the vacant, crumbling buildings of Detroit.

You have probably invested through Wall Street at some time or another, and yet we know that insiders rig the game; they cheat to fatten their own wallet at your expense. We know that the banks change the laws to make their wagers more “secure” than the pensions of retired cops and firefighters. Even the new deal for Detroit values banks bets at 56 cents on the dollar but pensioners would only get 20 cents on the dollar. Ah, but you might not have a public pension, so you are not concerned. Do you have a private retirement account? A 401k or IRA? The banksters have no more respect for private accounts than public accounts.

Political and economic inequality go hand in hand with a two-tiered justice system, and at the root of the rot are the banksters, cheating the system, lying on a grand scale, and doing it all with impunity. Maybe 2014 could be the year when we won't be fooled again. Best wishes for the New Year.

Monday, June 17, 2013 - Preaching, Practicing, and Doing

Preaching, Practicing, and Doing

by Sinclair Noe

DOW + 109 = 15,179
SPX + 12 = 1639
NAS + 28 = 3452
10 YR YLD + .05 = 2.17%
OIL + .07 = 97.92
GOLD – 6.80 = 1385.70
SILV - .24 = 21.94

President Obama is in Northern Ireland today, part of a three-day European tour that includes a G-8 summit meeting. Maybe we could call this the “Practice what I preach, not what I practice Tour”. Obama kicked off the tour with a speech in Belfast to celebrate Northern Ireland's peace process; later he'll talk with Euro leaders, including Russian President Putin about lifting a European arms embargo to arm Syrian rebels.

The G-8 summit generally deals with economic issues, and tops on the list will be tax evasion. The Brits, lead by David Cameron and George Osborne will pressure for a comprehensive deal to include developing countries while preventing developed countries from trying to water down proposals. The two big ideas include having the beneficial ownership of offshore accounts made public and then having the G-8 countries commit to a global agreement on exchange of tax information that developing countries can join. The concern for poorer countries is that the G8 will deliver a "gold standard" for itself but offer a less satisfactory agreement for poor countries, which lose three times as much in tax evasion as they gain from aid.

The Syrian conflict might actually be a positive for pushing through a deal on tax havens. It is unlikely there will be an agreement on Syria, and so the G-8 might push through something on tax evasion to be seen as having accomplished something. Of course, a deal on tax evasion is not a good bet. The issue is much more prominent in Euro-land, where multinational companies like Google and Apple and Starbucks have been playing the system and stiffing taxpayers. The mega corporations tend to stiff US taxpayers as well, but we haven't raised a ruckus about it. In Euro-land, it's a hot topic. Don't be surprised if the G-8 does little more than agree to discuss it in the future.

There will also be talk about a transatlantic trade deal between the European Union and the US, but then there has been talk about a deal for years. The US and the EU already trade about $1 trillion a year in goods and services and invest another $4 trillion in each others economies, and most of that is already free of tariffs; a trade deal would look to eliminate the rest. As you might suspect, there are multiple industries that want to protect their turf.

Then there is the idea of how to stimulate economic growth. A couple of months ago, Treasury Secretary Jack Lew talked to Euro-leaders and urged them to avoid austerity. Last week, the International Monetary Fund said an excessively rapid and ill-designed deficit reduction plan had hampered a tepid recovery in the US economy. Against that backdrop, the Federal Reserve FOMC is meeting this week in Washington.

The time is nearing for the Federal Reserve to scale back its program of Quantitative Easing to support the economy, which involves buying $85 billion in bonds each month. It's clear that QE can't go on forever, but divisions remain over when it will start tapering its bond purchases. At some point there will be an exit, and the Fed will almost certainly provide plenty of warning, well in advance of any exit.

The central bank’s Federal Open Market Committee will meet on Tuesday and Wednesday, and issue a statement at the conclusion on Wednesday, followed shortly after by a news conference by the Fed chairman, Ben Bernanke.

How does the Fed announce an exit of QE, while the President is in Europe urging the G-8 to avoid austerity? It will be a balancing act that involves a fair bit of shaming the Congress for failure to deliver fiscal policy, combined with a fair bit of cheer leading for the strength of the US economy. A positive economic assessment from the Fed might also serve as a gift wrapped present for the remainder of the G-8, who appear to be in a race to drop the value of their currencies.

The Fed's primary challenge is to drive home the idea that while the economy may be improving, there is still uncertainty surrounding the bond-buying outlook. Central bankers also need to repeat what they’ve been saying in speeches: Smaller bond buying won’t represent a tightening in monetary policy, just a reduction in the amount of stimulus the Fed is delivering. It’s a crucial point, and how they deliver the message will determine, in part, how the bond market responds. So, it is now widely anticipated that the Fed will fine tune it's monetary policy this week. Or they might not do anything. Stay tuned.

The Supreme Court announced a couple of rulings this morning.

First, the court struck down an Arizona law that required people registering to vore in federal elections to show proof of citizenship. In a 7-2 vote, the court, in an opinion written by conservative Justice Antonin Scalia, ruled the voter registration provision of the 2004 state law was trumped by a federal law, the 1993 National Voter Registration Act.

The other decision announced today says federal regulators can sue drug companies for antitrust violations when brand-name drug makers pay generic competitors to keep cheaper, rival copies of a drug off the market.

In a decision that shifts the balance of power in the drug business, manufacturers will now have to defend the agreements against charges that they violate anticompetition laws, perhaps exposing the companies to a greater likelihood of aggressive competition from generic drugs and to lawsuits from drug retailers and wholesalers, insurers and others. Consumers also could benefit from sharply lower drug costs.

The court did not address whether the agreements, called pay-for-delay or reverse payments, were presumptively unlawful. But it laid out a number of possibilities under which the contracts could be attacked by antitrust officials.

The case pitted a company’s constitutional right to protect its intellectual property, through reliance on a patent that excludes competitors, against antitrust law, which holds that a company cannot unfairly exclude others from legitimately entering a business with a rival product.

According to affidavits filed in a Massachusetts lawsuit against Bank of America, the bank routinely denied qualified borrowers a chance to modify their loans to more affordable terms and paid cash bonuses to bank staffers for pushing homeowners into foreclosure.

In sworn testimony, six former employees describe what they saw behind the scenes of an often opaque process that has frustrated homeowners, their attorneys and housing counselors.  They describe systematic efforts to undermine the program by routinely denying loan modifications to qualified applicants, withholding reviews of completed applications, steering applicants to costlier "in-house" loans and paying bonuses to employees based on the number of new foreclosures they initiated. 

Five big banks-including Bank of America-settled a sweeping complaint with 49 states and several federal regulators about their foreclosure and loan modification practices. 

Bank of America agreed to abide by HAMP program guidelines, which require it to modify loans for qualified buyers, when it accepted $25 billion in bailout funds from the government in 2008 following the housing collapse. In return for the financial lifeline, the bank agreed to help millions of struggling homeowners by rewriting mortgages with more affordable terms. As an added incentive, the government agreed to pay a cash bonus for every loan that was modified successfully. But, according to the former employees, while the bank was lying to borrowers, it was also falsifying its performance when reporting to the government the number of loans that had been modified. 

Later this week, a monitor assigned to track the bank's practices will issue a report that's expected to cite ongoing violations of those new rules.

What does it take to get people off the couch? Who knows? We don't seem to protest much in the US anymore. It's common elsewhere around the world. The BBC reports more than 1,000 public protests per month in Egypt so far this year. A few hundred marched in Hong Kong shouting  “Shame on NSA! Defend freedom of speech!” They carried signs written in Chinese and English and wrapped in plastic to keep out the rain. “Protect Snowden!” In Indonesia at least 4,000 people took to the streets today to protest the governments plan to raise the subsidized price of fuel. Tens of thousands of people held a rally near Malaysia’s capital against alleged electoral fraud. Around 7,500 people participated in anti-nuclear protests in Tokyo. Yemeni security officials say thousands have protested in the capital against “excesses” by security forces, calling for the overthrow of the president and national security apparatus. Greeks set up an encampment outside th state broadcaster, Hellenic Radio and Television, after it was shut down by the Prime Minister. Some 15,000 people protested in Bulgaria yesterday about the appointment of a new national security chief. More than 3,000 Chinese villagers have maintained a 24-hour silent vigil for the past 12 days over a coal mine, which they say has devastated the ground near their homes, swallowed up a road, and left cracks in their houses. Thousands of Canadians marched in downtown Montreal on Saturday to protest changes in employment insurance. Portuguese teachers are on nationwide strike, right during final exams. And thousands of Brazilians protested increased bus and subway fares in Sao Paulo and Rio de Janeiro. Those protests have been going on for ten days, and police have been firing tear gas canisters and rubber bullets at the crowds.

The world is an edgy place these days.