Thursday, November 29,2012 - Place Your Bets

Place Your Bets

by Sinclair Noe

Let's start with the important numbers today: 5, 16, 22, 23, 29, and the Powerball 6. And I did not win.

Somebody in Missouri and somebody in Phoenix are holding the winning tickets. Not me. All I'm holding is a $10 piece of paper which is my donation to the tax fund for the mathematically challenged.

DOW + 36 = 13,021
SPX + 6 = 1415
NAS + 20 = 3012
10 YR YLD un = 1.62%
OIL + 1.23 = 87.72
GOLD + 6.00 = 1726.80
SILV + .50 = 34.27

The U.S. economy grew at a 2.7 percent annual rate from July through September, much faster than first thought. The Commerce Department said growth in the third quarter was significantly better than the 2 percent rate estimated a month ago. And it was more than twice the 1.3 percent rate reported for the April-June quarter. The main reason for the upward revision to the gross domestic product was businesses restocked at a faster pace than previously estimated. That offset weaker consumer spending growth.

The fourth quarter GDP is expected to drop back down below 2 percent because of Hurricane Sandy, which put the brakes on all sorts of business activity along the East Coast. And then the other reason cited for the possible fourth quarter slowdown is the fiscal cliff. (Sorry, we just can't get through the day without talking about it.) So, here is the annotated version of today's fiscal cliff report: a little partisan sniping, a few snarky comments; no substantive progress, but talks are ongoing. Despite all the hype about the fiscal cliff, the markets appear to be treating it more like a fiscal bunny hill. The VIX, the volatility index is scraping along bottom at about 15, indicating a broad based complacency. And if you're actually paying attention to one of those countdown clocks, you really need to be doing something different.

Anyway, back to the GDP report. Consumers and businesses appeared to be more cautious over the summer. Consumer spending grew at a weaker 1.4 percent rate in the third quarter, down from the 2 percent rate estimated a month ago and nearly in line with the 1.5 percent rate in the second quarter. Businesses spending on equipment and software fell at an annual rate of 2.7 percent in the third quarter, the first decline since the depths of the recession in April-June 2009. The report showed continued strength in homebuilding, which rose at an annual rate of 14.2 percent. And government spending expanded at an annual rate 3.5 percent, marking its first positive contribution to overall economic growth in two years. The increase was driven by a big jump in defense spending.

Consumer spending will be a big part of the fourth quarter GDP, and it looks like we are still consuming. The National Retail Federation reports the number of shoppers in stores and on websites rose 9% over the Black Friday weekend to 247 million. Spending per shopper rose 6% to $398 and total spending was up 13% to $59 billion. Retailers were very promotional as we have to come expect during the kickoff of the holiday season. Deals were offered earlier with many stores opening on Thanksgiving and seeing good traffic. Online retailers were at least matching in-store deals and offering many of their own promotions even before Cyber Monday. Black Friday and Cyber Monday promotions appear to be holding for at least an extra week; that's not great for margins but overall it looks like a pretty strong start to the shopping season.

If you've been doing most of your shopping online Microsoft has launched a holiday season offensive against Google, claiming that search results on its rival's shopping site are bought and paid for. Microsoft says: "Google’s new redesigned shopping vertical now decides what to show you -- and how prominently to display what product offers they show -- based partially on how much a merchant selling the product has paid Google.”

This refers to new rules that Google adopted for its shopping site. Google Shopping now charges merchants who participate in its Product Listing Ads program fees on a per-click or cost-per-acquisition basis. Google makes no bones about the program. They say their relationship with merchants results in accurate and timely pricing information. Microsoft begs to differ. Google's pay-to-play program means the results that potential shoppers get will be based more on what merchants are willing to pony up than on query relevancy.

The point here is that if you are shopping online, it might pay to comparison shop by using different search engines, at least that's what Microsoft wants us to believe.

Back to the GDP report. The report reveals a dichotomy between consumers and businesses. Consumers have gone from being cranky and tight-fisted to slightly positive and mildly optimistic. Businesses, meanwhile, appear to be hunkering down in like a gaggle of doomsday preppers.

The most recent Conference Board consumer sentiment survey released earlier this week showed consumer confidence at its highest level since February 2008, while the University of Michigan consumer sentiment index is up 30% from a year earlier as of late November. The Michigan survey revealed more optimism about the employment situation than at any point since 1984. Of course any measure of consumers' feelings is bound to be subjective. And consumers have been beaten like a drum over the past few years. The surge in morale might be nothing more than a pause in the beatings.

So while the surveys show the most positive results in years, it’s possible that they are only positive relative to how negative people were in 2009, 2010 and 2011, and that compared to the 1980s and 1990s, people aren’t actually feeling so confident. The same goes for income: More people than at any point since early 2008 say their finances are improving; that raises the index. But given that most incomes have been stagnant for the past decade or more, improvement does not necessarily translate into objectively good.

On the flip side, business executives can't seem to get past this idea that uncertainty is the boogie man that lurking in the shadows. The big fear is the fiscal cliff, of course. And frankly it is disconcerting to see the captains of industry cowering like an abused dog. There is a real good chance that the CEO who is afraid of the fiscal cliff, doesn't have the stuff of a real entrepreneur. An entrepreneur will put a second mortgage on the house. An entrepreneur will max out the credit cards to keep the business afloat for another week, or another month. (truck full of canaries)

An entrepreneur sees a fiscal cliff and straps on the bungee cord. A CEO sees a fiscal cliff and breaks down in flop sweat.

From 2009 to 2012, the companies of the Standard & Poor’s 500-stock index generated double-digit profits and even healthier revenue gains. Yes, it looks like corporate profits are slowing slightly but corporate coffers are bulging; there seems to be a little resolution to the crisis in Europe, even if it is just kicking the can out a year or two; emerging markets may not be booming but Brazil, and India, and China are still rolling along.

So, who is right, the consumer or the business exec? Income levels tend to be a better predictor of what people will spend, along with the value of their homes and the ease of obtaining credit. Given that incomes are stable and slightly growing, homes values are on the rise and credit is easing, it’s a good bet that people will spend a bit more and the overall economic picture will brighten.

Business execs are lousy economic prognosticators. While spending by companies is a key component of economic vitality, spending plans are much more elastic than they were decades ago and can be adjusted more rapidly. That may not be true for building a manufacturing plant, but it is certainly true for hiring and marketing and inventory. So present concerns and stated intentions to cut back could change quickly to exuberance and plans to spend more freely.

A separate report today showed the number of Americans seeking unemployment benefits fell 23,000 to a seasonally adjusted 393,000 last week, the Labor Department said. It was the second straight drop after Hurricane Sandy had driven applications to 451,000 three weeks ago. Millions of Americans are unemployed and underemployed, but tens of millions more are gainfully employed,and although they might be feeling some anxiety about their job, most of the deepest corporate cost cutting has already been done. If you still have a job, it's probably because you're good at it, and the company you work for is about as lean as it can get. If it could be outsourced, it probably was. When people feel gainfully employed, they tend to spend and demand increases, businesses respond to demand, not to sentiment.

Expectations have undoubtedly come down in recent years, as people reconcile themselves to more modest changes and more realistic horizons. Business sentiment matters, but it is the consumer and the demands of the consumer that push the economy. The smart business execs will be on the lookout for indications of increased demand, and they will be well suited to go out on the far end of the curve and they should be ready to gamble just a little, ready to invest to meet demand. Americans have shown a remarkable and consistent predilection to spend over the years, with only a few notable pullbacks such as during the worst periods of the past few years.

Take it from someone who knows a lousy bet. You shouldn't bet against the American consumer.

Years ago, the late Mexican dictator Porfirio Diaz utter a famous line about his country: “Mexico, so far from God, so close to the United States.”

Next week the leaders of North America’s two most populous countries are due to meet for a neighborly chat in Washington, DC. According to The Economist The re-elected Barack Obama and Mexico’s president-elect, Enrique Peña Nieto, have plenty to talk about: Mexico is changing in ways that will profoundly affect its big northern neighbour, and unless America rethinks its outdated picture of life across the border, both countries risk forgoing the benefits promised by Mexico’s rise.

The White House does not spend much time looking south. During six hours of televised campaign debates this year, neither Mr Obama nor Mr. Biden mentioned Mexico directly. That is extraordinary. One in ten Mexican citizens lives in the United States. Include their American-born descendants and you have about 33m people (or around a tenth of America’s population).

Mexico's GDP ranks higher than South Korea. It's economy is growing faster than the Brazil's. Can you name the largest exporter of flat screen TV's? It's Mexico. And the place where you will likely see signs of the growing Mexican economy is in the shopping malls. In addition to TVs, they are the top exporter of BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more. On present trends, by 2018 America will import more from Mexico than from any other country. “Made in China” is giving way to “Hecho en México”.

The doorway for those imports is a 2,000-mile border, the world’s busiest. Yet some American politicians are doing their best to block it, out of fear of being swamped by immigrants. They could hardly be more wrong. Fewer Mexicans now move to the United States than come back south.

Undervaluing trade and overestimating immigration has led to bad policies. Since September 11th 2001, crossing the border has taken hours where it once took minutes, raising costs for Mexican manufacturers (and thus for American consumers). Daytrips have fallen by almost half. More crossing-points and fewer onerous checks would speed things up on the American side; pre-clearance of containers and passengers could be improved if Mexico were less touchy about having American officers on its soil (something which Canada does not mind). After an election in which 70% of Latinos voted for Mr Obama, even America’s “wetback”-bashing Republicans should now see the need for immigration-law reform.

Mexico is poised to become America’s new workshop. If the neighbors want to make the most of that, it is time for them to take another look over the border.

You know who Rupert Murdoch is? Owns Fox News. The same Rupert Murdoch who scandalized England with phone hacking, influence peddling and bribery. The same Rupert Murdoch who stays up late Saturday nights pondering things on Twitter, like what to do about "the Jewish-owned press".

Murdoch already owns the Wall Street Journal, the New York Post, Fox News Channel, Fox movie studios, 27 local TV stations, and much more. And there are reports that he really wants to buy the Los Angeles Times and the Chicago Tribune - the bankrupt-but-still-dominant newspapers (and websites) in the second- and third-largest media markets, where Murdoch already owns TV stations. Under current media ownership limits, he can't buy them. It's illegal ... unless the Federal Communications Commission changes the rules.

Just by pure coincidence, FCC Chairman Julius Genachowski has been circulating an order at the FCC to lift the longstanding ban on one company owning both daily newspapers and TV stations in any of the 20 largest media markets. And he wants to wrap up this massive giveaway just in time for the holidays.

If these changes go through, Murdoch could own the Los Angeles Times, two TV stations and up to eight radio stations in L.A. alone. And he's not the only potential beneficiary: These changes could mean more channels for Comcast-NBC, more deals for Disney and more stations for Sinclair Broadcasting.

For anyone who actually cares about media diversity and democracy, the gutting of media ownership limits will be a complete disaster. These rules are one of the last barriers to local media monopolies. Without them, we will lose competing voices for local news. We will see the mainstream media get even more monotone, monochrome and monotonous, and more than likely, even more inaccurate.

Genachowski's proposal is essentially indistinguishable from the failed policies that millions rallied against in 2003 and 2007. Ninety-nine percent of the public comments received by the FCC opposed lifting these rules when the Republicans tried to do it. Genachowski's proposal is nearly identical to the one the Senate voted to overturn with a bipartisan "resolution of disapproval" back in 2008. The federal courts have repeatedly - and as recently as 2011 - struck down these same rules, noting the FCC's failure to "consider the effect of its rules on minority and female ownership." The 3rd U.S. Circuit Court of Appeals ordered the FCC to study the impact of any rule changes before changing the rules. The FCC has done nothing of the kind.

Yet if Genachowski gets his way, according to reports, the FCC will vote on this major overhaul "on circulation" - that is, in secret and behind closed doors - with no public participation or accountability.

Monday, June 11, 2012 - The Non-Bailout Spanish Bank Bailout - by Sinclair Noe

DOW – 142 = 12,411 

SPX – 16 = 1308
NAS – 48 = 2809
10 YR YLD -.04 = 1.60%
OIL – 1.50 = 81.20
GOLD + 1.40 = 1597.10
SILV + .05 = 28.58
PLAT + 13.00 = 1450.00

So, here's the headline from the Murdoch Street Journal: “US Stocks Tumble as Spain Bank Bailout Optimism Fades”. And my question is how many phones did they have to hack before they found someone who was optimistic about the Spanish Bank Bailout?

Over the weekend, Spain requested a bailout of up to 100 billion euros ($125 billion) in loans from the European Union to assist its banks. Statements about the deal left several open questions, including the exact amount of aid the country will need and how the funds will be distributed. What exactly is there to be optimistic about? Oh, the Euro did not explode over the weekend – that's a relief but not a reason to be a big time buyer of equities.

It's not like the Spanish Bank Bailout makes anything better, except for the specific Spanish Banks being Bailed-Out. Europe still has a nasty circle of slow or no growth and increasing debt burdens. Greece's first bailout in 2010 sparked a healthy 1.3 percent rally in the S&P 500 stock index on the following day, but subsequent rescues fostered more muted responses.

The reaction after Spain's bank bailout has been the most downbeat of the lot. The four prior bailouts – for Greece and Ireland in 2010, Portugal in 2011 and Greece again in 2012 -- showed the euro's rallies fade within a month, while stocks were mixed, based on various factors.

In the credit default swaps market, where investors take out insurance against the risk of sovereign default, the pattern has been similar. The cost of buying insurance against Greek, Irish or Portuguese default tended to drop after the first two weeks as investors took the bailout news as a sign of relief, only to rise back to pre-bailout levels or higher within a month. After initially falling, the cost of insuring $10 million of Spanish government debt against default rose to 595 basis points, or $595,000 per year for five years. That is just off a record high.

For the Spanish economy as a whole, there has been no debt relief. This is what happened to Ireland. The banks are in healthier shape today, but the country is still in real trouble. In fact, a report by Spain's central bank showed Spanish banks were the main buyers of Spanish sovereign debt last year, essentially making the government dependent on the banks it is now trying to help. The Spanish government bails out Spanish banks, and Spanish banks bail out the Spanish government. And the longer this insanity persists the more likely people are to realize that the entire solution is a big game played on a closed course.

Bloomberg reports Wall Street bankers and traders, given hope by a market rebound in the first quarter, are now seeing earnings and paychecks threatened by turmoil in Greece. Yep it's all about the bankers and their profits and their bonuses. People in Spain have lost their homes, they have lost their jobs, and so clearly the concern here is the paychecks of Wall Street bankers. The government and the banks have forgotten why we have an economy in the first place; we do not have an economy to serve the banks and the government, which are morphing into one and the same. The reason for a bailout is not to make the banks whole. We've seen this game before. It is losing its effectiveness because we can all see through the scam.

Wait just one minute; just a week ago, Spain was saying they didn't want a bailout, they didn't need a bailout. What's going on here? Well, technically it is not a bailout, it is a line of credit to Spanish Banks. What's in a name? A rose by any other name would smell as sweet.

So, maybe the better question is whether the bailout that isn't a bailout will work. And the answer is probably not. Spain's access to capital markets and its cost of debt is not being addressed. The last auction of Spanish government bonds saw yield around 6.50% with the bulk of bonds being purchased by local banks. Spain and its banks also face pressure on their own ratings, which are now perilously close to becoming non-investment grade. The bailout may actually adversely affect the ability of Spain and its banks to funds. Commercial lenders are now subordinated to official lenders. Based on the precedent of Greece, this increases the risk significantly, discouraging investment.

The amount – 100 billion euro or more depending on the independent assessment of the needs of Spanish banks- may not be enough. The capital requirements of Spanish banks may turn out to much higher – as much as 200-300 billion euro. And since the money is going to rebuild the banks instead of rebuilding the economy, you will have banks that won't make loans to people who don't have jobs, and the nasty downward circle continues to swirl. The bailout will be provided with no conditions, which creates its own problems. The lack of conditions may lead to Greece, Ireland and Portugal seeking relaxation of the terms of their assistance packages.

The relief in Rome was short-lived. Italian bonds rallied early but within hours, Italian borrowing costs were creeping back up again, reflecting persistent market fears that the Continent’s third-largest economy could be the next to falter. Contagion into Italy and other countries is a reality. There seems to be little Italy can do to protect itself. Technocratic Prime Minister Mario Monti, appointed last November to succeed Silvio Berlusconi, has tried to shore up finances, overhaul the pension system, and implement regulatory reforms. The country is on track to bring its budget deficit within 3 percent of GDP this year. Italian banks are relatively healthy, and unemployment is less than half the 24 percent in Spain. Spain’s fundamentals are much worse than Italy’s.

Italy’s situation is hardly rosy. Its debt burden—120 percent of GDP—is the highest of any European country except Greece. Its economy slid into recession during the fourth quarter of 2011 and is expected to contract 1.7 percent this year. Monti’s reform agenda is stalling, unemployment at 10.2 percent is the highest in a decade, and consumer confidence is the lowest in 15 years. Italy is positioned to be the next lightning rod in the euro area. For now, yields on Italian debt are at 5.84 percent, less than they were when Monti took over last year.

Apparently the idea of the non-bailout, no pre-conditions Spanish Bank Bailout was that it would appear as if Spain itself is not paying for the bailout. In other words, it was a gamble by the Spanish government to avoid a general government bailout. The gamble failed; the Spanish government will now own this bailout and they will soon be stuck with the same kind of conditions imposed on the Greeks, and this will continue until it ends badly.

So much for a firewall.

The Federal Reserve has release a new study that shows the average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes. Fed economists conduct the surveys every three years to produce a snapshot of household balance sheets, pensions, income, and demographics that’s more detailed than broader reports about the economy. The surveys allow comparisons over time, with a consistent methodology since 1989.

Median net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the central bank said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600. Just a reminder, the “mean” is the average while the “median” is more like the midway point.

The impact has been a massive destruction of wealth all across the board and especially for the broader middle class, or what once was the middle class. The decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.

The housing slump and financial crisis also boosted the dependence on wages as a percentile of net worth for the wealthiest 10 percent. The top 10 percent by wealth got 55.8 percent of their pre-tax family income from wages in 2010, up from 46.2 percent in 2007, the survey found. The portion earned from capital gains plunged to 2.3 percent from 14.4 percent. Once upon a time it was a widely held belief that the wealthiest would be able to pull the economy out of a downturn, but the uber-wealthy are a small proportion of the overall population and they can only account for a tiny fraction of the consumer spending you might expect from hundreds of millions of consumers who have been forced to tighten their belts.

Debt as a share of family assets rose to 16.4 percent from 14.8 percent as asset values declined. For those households with debt in 2010, the median value of debt was unchanged from 2007, while the share of families having debt fell to about 75 percent from 77 percent. Debt payments more than 60 days overdue were reported by 10.8 percent of families in 2010, up from 7.1 percent in the prior survey. Measures of debt payments relative to income might have been expected to increase. In fact, total payments relative to total income increased only slightly, and the median of payments relative to income among families with debt fell after having risen between 2004 and 2007. The share of families with high payments relative to their incomes also fell after rising substantially between 2001 and 2007. If there is any one thing that makes sense during these difficult economic times, it is to cut or eliminate debt.

Fed policy makers meet next week to consider whether the central bank needs to add to its record stimulus after employment grew at the slowest pace in a year in May.

The Fed has already cut its key interest rate almost to zero and injected hundreds of billions to bailout banks and purchased a few trillion in debt to lower long-term borrowing costs. Even so, the jobless rate has stayed above 8 percent since February 2009, compared with the central bank’s long-range goal of 4.9 percent to 6 percent. Why? Because the actions taken by the Fed were more consistent with saving the banking and financial sector than with fulfilling its mandate of maximum employment. I don't know if it is impossible for the Fed to bring down unemployment with monetary policy alone, only that their policy has not done the job even though it has benefited the banksters, you know, just like what's happening right now over in Europe. 

Tuesday, May 01, 2012 - The Return of Occupy Wall Street

DOW + 65 = 13, 279

SPX + 7 = 1405
NAS + 4 = 3050
10 YR YLD +.04 = 1.96%
OIL - .15 = 106.01
GOLD – 2.10 = 1663.20
SILV -.04 = 31.07
PLAT + 3.00 = 1577.00

The Dow Industrials hit the highest point since December 2007. Later this week we'll have reports on retail sales and the big monthly jobs report on Friday. Today, the ISM reported their manufacturing index rose to 54.8% last month from 53.4% in March. The results were much better than anticipated. We may have hit a top in the stock market: Former Federal Reserve Chairman Alan Greenspan said U.S. stocks offer good value and are likely to rise as corporate earnings increase over time. “Stocks are very cheap,” Greenspan said today at the Bloomberg Washington Summit hosted by Bloomberg Link, citing “a very low price-earnings ratio. There is no place for earnings to grow except into stock prices,” I mean, when Greenspan speaks it must be a contrary indicator.

Today is the one year anniversary of the killing of Osama bin Laden. President Obama is in Afghanistan, and he'll deliver a speech a little later.

Today is also May Day. Occupy Wall Street is back; trying to resurrect the movement with May Day marches, which gained momentum through the day. Protesters marched on banks, chanted anti-corporate slogans, and clashed with police in an opening day of sorts for the movement’s summer revival. In New York, hundreds of protesters gathered in Union Square. A crowd surged out of Washington Square Park carrying a banner that read “On Strike.” Officers shouted for protesters to remain on the sidewalk, but several protesters holding the banner stepped into the middle of Avenue of the Americas, where several officers — including one in plain clothes who had appeared to be marching with the crowd — tackled and arrested them. The most recent reports have about a half dozen people arrested.

The May Day demonstrations took place across the United States and around the globe. In the Bay Area in California, marches and protests snarled traffic and caused road closings. Hundreds marched through Oakland, temporarily closing streets and bank branches and clashing with officers in riot gear, who deployed tear gas on crowds. The Golden Gate Ferry service, used by many commuters from Marin County to San Francisco, was shut down after workers went on strike and picketed ferry terminals. The movement is not just in New York. In Montreal and Quebec, tens of thousands of students are on the march. In Spain, more than one million people recently protested in Madrid.

The morning started with the New York Police Department and the FBI raiding the homes of people suspected of being part of the Occupy movement. "Questions included things like 'what are your May Day plans?' 'Do you know who the protest leaders are?' 'What do you know about the May Day protests?' and such."

In the early days of the movement when the number participating was small, it was overly aggressive policing that put them on the map. YouTube clips of women being pepper sprayed and arrests of people on Brooklyn Bridge went viral. Later arrests from a march across Brooklyn Bridge garnered more sympathy. An Iraq war veteran was critically injured in Oakland. Students at UC Davis were pepper sprayed as they sat in peaceful protest. The protesters weren't always non-violent either. It remains to be seen whether the Occupy movement has the staying power to effect lasting change. In Egypt, they’d been organizing (in far more difficult conditions) for five years before they reached a tipping point. I think the movement will be heard from throughout the summer. And I think the losing side will be whomever resorts to thuggish tactics.

It has become pretty routine for local police to engage in thuggery and run roughshod over Constitutional protections in the name of maintaining order, which increasingly means not annoying big companies. With habeas corpus suspended, our own Attorney General maintaining the Administration has the right to kill suspected terrorists without a trial, and electronic surveillance ever on the rise, it might seem hard to get worked up about small suspensions of the right to make a political point in public. In Charlotte North Carolina, they are getting ready for the Democratic convention this summer. OWS should make both conventions exciting for a change. The Charlotte City Council has just passed some tough security rules, such as expanded ability to search and detain, for what is deemed an extraordinary event, such as the convention. So, local businesses Bank of America and Duke Energy persuaded the council to deem their annual shareholder meeting as extraordinary events. The ACLU is not happy, particularly since the city council never contemplated nor approved having shareholder meetings deemed “extraordinary events.” Notice how no one questions this use of public funds? This is all about demonstrating who really wields clout in the social order.

The NYPD is prepared for the resurgence of Occupy Wall Street protesters today, but Mayor Michael Bloomberg questioned the point of the protests. “If you want to change things, I don’t know what protesting does,” he said. “Why not try to go out and do something and make it better. Help kids get a better education. Start a business. There’s a lot of ways that you can volunteer and help make this city better and this country better.” Bloomberg doesn't understand why these street protesters don't just take a $10 million dollar severance package and start a terminal business dealing in bond data. What slackers.

Earlier today, Occupy Wall Street protesters gathered outside of News Corp's headquarters in New York, chanting “Arrest Rupert Murdoch.”

A British parliamentary committee has issued a report that says Rupert Murdoch, the Chairman and CEO of News Corp. is "not a fit person to exercise the stewardship of a major international company" and condemned three former News Corp. executives for misleading British lawmakers over the depth of the company's phone-hacking scandal. The report offers details of a cover-up the company allegedly carried out to contain the fallout from revelations that its now-closed News of the World tabloid illegally hacked mobile-phone voice mails. The report didn't accuse Murdoch, or his son, News Corp. Deputy Chief Operating Officer James Murdoch, of misleading Parliament, (a possible but highly unlikely criminal charge), but the conclusions did say the father and son had presided over an affair that "demonstrates huge failings of corporate governance."

The resolution committee of the failed Icelandic bank Old Landsbanki has subpoenaed the international auditing firm PriceWaterhouseCoopers, accusing the company of creating wrong annual accounts which misled the markets. The committee’s damages claim runs to hundreds of millions of kronur. No I can't tell you what a kronur is worth these days. The claim is that the audits misled the markets about the strength of Landsbanki and ultimately resulted in greater losses in the Icelandic financial crisis than would otherwise have been the case.

As the Occupy Wall Street protesters take to the streets, the big banks continue to rack up gains. About two years ago, Bank of America tried to come up with ways to improve the bottom line; they gave their new (money-making) mission a special codename: Project New BAC. The answer was to reduce expenses. That's banker-speak for cut jobs, and over the past year, BofA fired 30,000 people. Today, they announced they would fire 2,000 more. The shares were up 3.5% today.