Don’t Hold your Breath
by Sinclair Noe
by Sinclair Noe
DOW – 140 = 16,361
SPX – 15 = 1863
NAS – 72 = 4075
10 YR YLD - .02 = 2.66%
OIL – 1.25 = 100.69
GOLD + 9.90 = 1304.80
SILV + .07 = 19.83
SPX – 15 = 1863
NAS – 72 = 4075
10 YR YLD - .02 = 2.66%
OIL – 1.25 = 100.69
GOLD + 9.90 = 1304.80
SILV + .07 = 19.83
Consumer sentiment rose in April to a nine-month high as
views on current and near-term conditions surged. The Thomson
Reuters/University of Michigan's final April reading on the overall index of
consumer sentiment came in at 84.1, up from 80 the month before.
Meanwhile, a new Gallup
poll shows more Americans are optimistic about the job market this month
than at any time since the 2008 financial crisis, with 30% saying now is a good
time to find a quality job.
That marks a significant improvement from the 8% who said
they were optimistic about the job market in 2010, but it’s still a drop from
the pre-2008 highs of almost 50%. And even though almost a third of Americans
are optimistic, two-thirds still say the job market is lackluster; 66% of
Americans say it’s not a good time to hunt for employment.
Next week’s economic calendar includes a two day Federal
Reserve FOMC meeting. Next Friday, we’ll have a monthly jobs report; the
current estimates call for 215,000 net new jobs in April and the unemployment rate
dipping to 6.6% from 6.7%. Also, the Commerce Department will release its first
guess of first quarter GDP; the consensus estimate on the initial estimate is
that the economy grew about 1%.
The situation in Ukraine is going to hell in a hand
basket. Russian militants have now become entrenched in towns across eastern
Ukraine; Russian troops are massed on the border. Ukrainian leaders said
operations to expel pro-Russian militants in eastern cities would continue,
even though military action so far has done little more than prompt Russia to
stage military exercises on Ukraine’s border and raise concerns about Moscow’s
next move. The government in Kiev says that if the Russians cross the border
they would view that as an invasion. Ukraine's Prime Minister said Russia
wanted to start World War Three by occupying the country and creating a
conflict that would spread to the rest of Europe.
A group of foreign military observers, possibly including
some Germans, traveling under the auspices of the Organization of Security and
Cooperation in Europe, along with their Ukrainian military hosts, were detained
by pro-Russia separatists in Slovyansk. It was unclear precisely how many were
in the group, about a dozen, but the detention appeared to be the first time
that members of the Ukraine armed forces had been taken into custody by the
separatists.
The US, Britain, and Germany are now calling for more
sanctions against Russia, but none of the three countries gave any details of
what the sanctions might be, or when they might be enacted. The standoff has
already led to heavy capital flight from Russia, prompting credit rating agency
Standard & Poor's to cut the country's ratings. That forced the Russian central
bank to raise its key interest rate to reverse a drop in the ruble.
The Federal Communications Commission announced new rules
governing Internet service. The rules effectively put an end to net neutrality,
or the idea that all web traffic should be treated equally. A court decision in
January struck down FCC rules meant to ensure that Internet providers do not
discriminate by blocking or slowing certain content.
That new rule gives broadband providers what they’ve
wanted for a long time, the right to speed up some traffic and degrade others.
When broadband accelerates some traffic the result is that other traffic slows
down. We take it for granted that bloggers, start-ups, or nonprofits on an open
Internet reach their audiences roughly the same way as everyone else. Now they
won’t. They’ll be moved over to a slow lane and forced to line up for their
chance to reach an audience as they watch as companies that can pay tolls to
the cable companies speed ahead. The motivation is not complicated. The
broadband carriers want to make more money for doing what they already do.
Never mind that American carriers already charge some of the world’s highest
prices, around sixty dollars or more per month for broadband, a service that
costs less than five dollars to provide.
After the ruling, internet providers like Comcast and
Verizon cut deals with content providers, such as Netflix, which would pay to
stream their content in an Internet “fast lane.” The new rules effectively
create a fast lane and a slow lane on the internet. The fast lane includes big
tech companies that can afford to pay; the slow lane includes startups, small
businesses and everybody else. The internet providers are also becoming more
and more involved in providing content, and it just makes sense to think their
content will get preferential treatment. Companies like Verizon and Comcast
will have staggering power to decide what bits of information reach your
devices and mine, in what order and at what speed. That is, assuming we're
permitted to get that information at all.
Bottom line is that the internet is going to get more
expensive; if content providers have to pay extra for the fast lane, they’ll
pass those costs on to the end user. The finer details will be hashed out in
the coming months, starting on May 15, when the proposed rules become public.
Back in the Spring of 2010 the Office of the Comptroller
of the Currency (OCC) and the Federal Reserve issued consent orders to 11 mortgage
servicers, mandating that borrowers who had pending foreclosures, or had
completed foreclosure sales in 2009 or 2010 could request an investigation by
independent reviewers. The independent reviews would be paid for by the
servicers, and in a shocking twist, the independent reviewers were anything but
independent.
Eventually 16 servicers were included in the reviews,
accused of using forged and shoddy paperwork to rapidly foreclose on
homeowners, a practice known as “robo-signing.” The servicers, including Bank
of America and Wells Fargo, agreed to have independent consultants review their
foreclosure files for errors. In the 12 months that the review was up and
running, not a single homeowner received any compensation. But the eight
consultants managing the process were paid a total of $1.9 billion.
And so the independent review was cancelled and the
regulators and the banksters worked out a quick and dirty settlement, with $3.3
billion going to wronged homeowners; a bunch of insultingly small checks
distributed to a wide swath of people, and the regulators and banksters got to
say: look how many people we helped. Meanwhile, nobody went to jail for the
thousands of forged documents, the perjury, the obstruction of justice, etc.,
etc. in what was surely one of the largest fraud cases in American history.
Another problem is that nobody really knew who had been
wronged and in what amounts, and so when the restitution was paid, nobody
really knew if there was any rationale for the payments. The OCC said the
consultant’s review had found an overall error rate of about 4.5% after assessing
about 100,000 files, but that always seemed to be a lowball estimate.
Meanwhile, Representative Elijah Cummings continued to
get data, and now that data is coming to light. In one example, a reviewer, Promontory
Financial, found errors with 60% of the loan modifications conducted by Bank of
America; a partially completed review found similar problems of the cases
reviewed for PNC Bank. Based upon those numbers, the banksters got off with a
puny little fine, and the wronged homeowners got shortchanged.
Now, you’re probably thinking to yourself, that this is
old news about the robo-signing, but what is still relevant is how the politicians have suppressed this
information for so long; further proof of how deeply pretty much all of
Washington DC is in bed with the banks. Only now when foreclosure abuses are
considered old news does the public begin to get an inkling of how much the
official story was close to a complete fabrication.
Of course, the people who went through the Independent
Foreclosure Review process knew full well what a charade it was, but they were
never taken seriously. The review process cost nearly $2 billion and it turned
out to be a cost efficient whitewashing by the banksters. If you’ve lost your
home, you are sure to be under financial duress, and people with no money don’t
have any clout with our government. Foreclosure is considered a stigma, which
discourages victims from telling their stories and sets those brave enough to
do so up for abuse; the banks have done a great job of playing up the “deadbeat
borrower” meme, whether it fits or not.
And we finish today with the story of how a top bank
executive finally has to pay for his fraudulent actions. Bank of America's
former finance chief, Joe Price, has agreed to pay $7.5 million to settle a New
York lawsuit that accused the bank and its former executives of misleading
investors during the lender's acquisition of Merrill Lynch. The top execs at
BofA lied about the toxic assets on the books at Merrill Lynch and mounting
losses leading to the merger; and misrepresenting the impact the merger would
have on the bank's future earnings; this violated so many securities laws that
it is crazy.
New York Attorney General Eric Schneiderman said: "This
settlement is one more step in our effort to hold top financial executives
accountable for their actions." What a crock.
The bank paid the fine for Joe Price, which means the
shareholders are actually paying. Joe Price did not have to admit wrongdoing. Former
BofA CEO Ken Lewis settled last month; the bank paid his fine too; Lewis did
not admit wrongdoing.
Meanwhile, there is still a $2.3 billion class action
lawsuit pending, and the Department of Justice is now offering a $13 billion settlement
to Bank of America to resolve federal and state investigations of the lender’s
sale of bonds backed by home loans in the run-up to the 2008 financial crisis.
Don’t hold your breath for justice.
