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Italy Considers Raiding Bank Deposits to Save Failing Banks

“Uninsured deposits could be used in future bank failures provided global rulemakers agree on a common approach, according to Federico Ghizzoni, the chief executive officer of Italy’s biggest lender, UniCredit SpA. (UCG)

Cutting large deposits in failing banks, along with other liabilities such as bonds, to offset losses is acceptable as long as small savers’ funds remain protected, Ghizzoni told reporters in Vienna late yesterday. The European Union has to introduce identical rules in all of its member statesand ideally those rules would be coordinated globally, he said….”

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Depositors With More Than 100k Euro’s in Bank of Cyprus May Loose 60%

“Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc accounts exceeding 100,000 euros ($128,000) as part of an aid deal to stop the country from going bankrupt.

Customers will have 37.5 percent of their deposits above this amount converted into shares with full voting rights and access to any future Bank of Cyprus dividend, the Nicosia-based central bank said in an e-mailed statement. A further 22.5 percent will be temporarily withheld to ensure the lender meets the terms of its recapitalization, as agreed under Cyprus’s loan agreement with international creditors, the central bank said.

President Nicos Anastasiades agreed March 25 to impose losses on Bank of Cyprus’s larger depositors in exchange for a 10 billion-euro bailout after failing to get financial aid fromRussia, one of the nation’s biggest investors. The agreement also shuttered Cyprus Popular Bank Pcl (CPB), the country’s second- largest lender.

The deposit-loss plan “will make things worse as small and medium-sized companies will run out of liquidity,” Marios Mavrides, a lawmaker for the ruling Disy party, said in a phone interview from Nicosia. The move “does not help to gain back people’s trust, deposits should be free in order to gain that trust,” he said.

Deal Rejected…”

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U.S. Savings Rate Near Record Lows

“There was some good news for headline scanning algos this morning, when both personal incomes and spending came in modestly higher than expected, with incomes rising 1.1% compared to an estimated 0.8% increase, while spending was up 0.7%, also higher than the 0.6% expected. But while the superficial headline grab did indicate a modestly better climate for both spending and incomes, it was a look under the cover once again that revealed the full extent of the pain that US consumers continue to find themselves in, over 5 years since the start of the second great depression.

First, the bulk of the bounce in spending was driven by a surge in Non-Durable Goods, which rose by $48.5 billion in one month, and amounting to 61% of the total increase in personal outlays in February. This was the biggest monthly jump since the onset of the financial crisis: hardly inspiring much confidence for those companies which are wondering whether to ramp up capital expenditures and spending, especially since spending onDurable Goods declined by $400 million in February….”

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PTSD Linked to Morality

“Post-traumatic stress disorder (PTSD) may be linked to more than the combat of war, but also to actions that violate a soldier’s sense of morality, according to new research.

The study, which will be published in the April issue of the Personality and Social Psychology Bulletin, found that PTSD levels can be influenced by the amount of support the nation has for the war itself, which can impact the perception of the conflict’s moral standing. Although citizens may express support for their nation’s troops, a wide lack of support for the war being fought—such as displayed through anti-war protests—can cause a soldier to feel that his actions may be in violation of what is morally correct. The result is an increase the level of PTSD in that soldier.

“What we would suggest, however, is that it is not protest, per se, that puts a soldier’s mental health at risk, but the initial decision to go to war,” David Webber of the University of Alberta and the study’s lead author told Raw Story. “War protest usually only occurs when that war is unfounded. If war is enacted for legitimate reasons, the public will usually support that effort.” …”

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The Worst Law in Technology Gets Expanded

The Computer Fraud and Abuse Act was passed in 1984 to combat the cracking of huge computer systems owned by financial institutions and the government. Nearly 30 years and seven amendments later, the law is regarded by many lawyers and academics as overly “expansive” and “sweeping,” as it lets the government incarcerate “any Internet user they want,” according to former federal prosecutor Orin Kerr.

“The Computer Fraud and Abuse Act is the most outrageous criminal law you’ve never heard of,” Tim Wu, a Columbia law professor and pioneer of network neutrality, wrote in the New Yorker. “It bans ‘unauthorized access’ of computers, but no one really knows what those words mean.”

Despite the enormous reach of the Computer Fraud and Abuse Act as it currently stands – it was the same law used by prosecutors to torment late Internet activist Aaron Swartz prior to his suicide on Jan. 11 — the House Judiciary Committee has actually proposed a number of expansions to the law in a new draft, which Tech Dirt says will be “rushed” to Congress during its “cyber week” in the middle of April….”

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In the Search for Yield Leveraged Loans Make a Comeback

“(MoneyWatch) Whenever interest rates fall to low levels, investors who are normally risk averse when it comes to their bond purchases begin trading safety for yield. Among the popular choices are junk bonds, preferred stocks, high-dividend stocks, REITs and MLPs. Now, we’re even seeing resurgence in what are called leveraged loans. Apparently, investors haven’t learned their lessons from the financial crisis.


These loans are floating rate notes, which provide higher yields (currently about 5.2 percent) and don’t have the same term risk that junk bonds have because their yields move together with interest rates. However, they entail significant price risk because they’re backed by bank loans of lower quality. Banks make these loans, which are often used to finance leveraged buyouts, anticipating that they can get them off their balance sheets by selling them to investors….”

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Cyprus Bank Holiday Extended, Business’ Get Hurt

“NICOSIA, Cyprus (AP) — Banks across Cyprus remain locked Tuesday after financial authorities extended the country’s bank closure, fearing worried depositors will rush to drain their accounts. The shut-down is hammering businesses, which have been without access to their funds for more than a week.

All but two of the country’s largest lenders had been due to reopen Tuesday, after being shut since March 16 while politicians figured out how to raise the funds necessary for Cyprus to qualify for an international bailout. Under the deal for a 10 billion euro ($12.94 billion) rescue clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks.

After initially saying most financial institutions would reopen Tuesday, the country’s Central Bankmade a surprise reversal just before midnight, announcing all banks would remain closed until Thursday.

ATMs have been operating throughout the closure, but many have quickly run out of money. A daily withdrawal limit of 100 euros has been imposed on ATMs of the two largest lenders, Bank of Cyprusand Laiki. An increasing number of businesses have stopped accepting credit or check payments, insisting on cash only.

The bank closures have hammered businesses, who have found themselves unable to pay suppliers or fulfill orders. The retail market is sharply down too, shop owners say, with customers unwilling to spend on anything but the basics while they have limited access to cash.”

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Bank Fun: 300% Interest

“Step aside, Tony Soprano: Big banks will now lend money at 300 percent interestwithout threatening to break a leg.

Then again, the payday loans some big banks are offering can have other ill effects, such as financial ruin, according to a new study by the Center for Responsible Lending. Even as public anxiety grows about the dangers of payday lending, with 15 states recently banning the practice, many big banks are offering the service to their customers.

“Despite federal banking regulators’ recognition of the abuses of payday lending and aggressive action blocking previous bank partnerships with payday lenders, a few large banks have begun offering payday loans directly through checking accounts,” the study says. Large banks offering the service include Wells Fargo, U.S. Bank, Regions Bank and Fifth Third Bank.

The average annual percentage rate on a bank payday loan is 225 to 300 percent, the study says. Banks that offer payday loans extract payments automatically from the borrowers’ checking accounts on the next pay cycle. In some cases, that withdrawal cleans out a borrower’s checking account, leading to bounced checks. According to the study, users of paycheck advances are twice as likely to overdraw their bank accounts, leading to even more fees for the banks. And that’s just the start of the potential problems.

“Research has shown that payday lending often leads to negative financial outcomes for borrowers,” the study says. “These include difficulty paying other bills, difficulty staying in their home or apartment, trouble obtaining health care, increased risk of credit card default, loss of checking accounts, and bankruptcy.”

The elderly, already financially vulnerable and short on retirement savings, are making increasing use of these loans. According to the study, more than a quarter of bank payday loan borrowers are on Social Security.

Wells Fargo spokeswoman Richele Messick said the bank has been offering a payday loan service it calls “Direct Deposit Advance” since 1994. Available only to Wells Fargo customers, this loan has a set fee of $7.50 per $100, regardless of the length of the loan, which Messick said compares to the payday loan industry standard of about $17 per $100.

“It is an expensive form of credit, and we’re very clear with our customers that it is an expensive form of credit and not to be used as a long-term solution,” Messick said. “We have policies in place to make sure customers don’t use the service in the long term.”

Wells Fargo will not clean out a borrower’s account when taking money to pay itself back for payday loans, Messick said. The bank makes sure the customer gets to keep at least $100 from each paycheck, and if customers use the service for six months in a row, Wells Fargo will cut them off from more paycheck advances for a bit — what the CRL study calls a “cooling-off” period….”

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Student Loans Continue to See a Rise in Defaults

“College graduates are defaulting on growing amounts of the staggering $1 trillion in student loans in the United States, and some universities are suing to get their money back.

Well-known schools among those filing suit for nonpayment include Yale, the University of Pennsylvania and George Washington University, NBC News reported.

College students are defaulting on nearly $1 billion in federal student loans earmarked for the poor, which could jeopardize the revolving Perkins loan fund intended for those with extraordinary financial hardship, according to Bloomberg.

Unlike most forms of debt, student loans cannot be forgiven even by declaring bankruptcy. Colleges are obligated to recover the money on behalf of taxpayers, according to Bloomberg.

“With $80,000 worth of debt, even if you get a job that pays $60,000, which is about the average for a lot of college-level jobs, you’re still below the water and the potential for you to default is much higher,” Jonathan Robe, research fellow for the Center for College Affordability and Productivity, told Fox Business Network.

“I think that’s what’s happening here — the students feel like they just flat out don’t have the money.”

At public universities, enrollment declined slightly in 2012 to 11.5 million students, but state and local support per student declined 9 percent to $5,896 per student, the lowest level in 25 years, according to the State Higher Education Executive Officers Association.

Even as student loans are going bad at a growing rate, the demand for student loan securities by investors remains high….”


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Cyprus Banks May Not Reopen

“Cypriot leaders held crisis talks on Wednesday to avert financial meltdown after rejecting the terms of a controversial European Union bailout, turning instead to Russia for help.

Banks on the Mediterranean island may never reopen, Germany warned after lawmakers late Tuesday turned down a $12.9 billion deal that would have seen Cypriots lose up to 10 per cent of their bank deposits.

Thousands of Cypriots withdrew savings over the weekend fearing the deal might pass, emptying ATMs and sending global money markets into a steep dive.

Banks were ordered to remain closed after finance officials predicted a run on savings and a huge outflow of capital if they were to reopen.

Germany’s finance minister, Wolfgang Schaeuble said major Cypriot banks were “insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached.

Greek media reports suggested the Cyprus Popular Bank had been sold to Russian investors, but the Cypriot government denied such a deal, Reuters said….”

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Trust, Obey, Follow

“Fresh evidence is revealed today about how MI6 and the CIA were told through secret channels by Saddam Hussein’s foreign minister and his head of intelligence that Iraq had no active weapons of mass destruction.

Tony Blair told parliament before the war that intelligence showed Iraq’s nuclear, chemical, and biological weapons programme was “active”, “growing” and “up and running”.

A special BBC Panorama programme tonight will reveal how British and US intelligence agencies were informed by top sources months before the invasion that Iraq had no active WMD programme, and that the information was not passed to subsequent inquiries.

It describes how Naji Sabri, Saddam’s foreign minister, told the CIA’s station chief in Paris at the time, Bill Murray, through an intermediary that Iraq had “virtually nothing” in terms of WMD.

Sabri said in a statement that the Panorama story was “totally fabricated”.

However, Panorama confirms that three months before the war an MI6 officer met Iraq’s head of intelligence, Tahir Habbush al-Tikriti, who also said that Saddam had no active WMD. The meeting in the Jordanian capital, Amman, took place days before the British government published its now widely discredited Iraqi weapons dossier in September 2002.

Lord Butler, the former cabinet secretary who led an inquiry into the use of intelligence in the runup to the invasion of Iraq, tells the programme that he was not told about Sabri’s comments, and that he should have been.

Butler says of the use of intelligence: “There were ways in which people were misled or misled themselves at all stages.” …”

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[youutbe://http://www.youtube.com/watch?v=eY7EPE9biO0 450 300]

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The Fed Creates Additional Risks by Giving Lifelines to Potentially Failing Companies

“Struggling companies that otherwise might not be able to stay afloat have found a friend in the Federal Reserve.

The central bank’s cheap-money policies have allowed borderline companies to get low-cost financing thanks to investors who are thirsting for yield and buying risky bonds as the Fed keeps its target funds rate near zero.

While that’s been a boon for poorly rated firms, it also poses the threat that companies that otherwise might fail are getting artificial support and in danger of causing substantial economic damage once interest rates rise.

“We’re paying the price for a dysfunctional system,” said Cornelius Hurley, director of the Boston University Center for Finance, Law and Policy. “Fiscal policy is dead in the water because of the political stalemate in Washington, and as a result the Fed in its monetary policy role has to overcompensate.”

While corporate cash gets cited often as one of the strongest positives for economic potential, corporate debt is swelling as well.

Nonfinancial companies added debt at an 8.75 percent pace in the fourth quarter, the biggest jump since 2007, with the majority of debt coming from corporate bonds, according to Fed flow of funds data.

Much of that has come from companies rated below investment grade.

High-yield debt soared to $326 billion in 2012 from $226.3 billion the previous year, according to Thomson Reuters.

In 2013, junk bond volume in the U.S. is at $69.2 billion compared to $78.3 billion for the same period in 2012 – off last-year’s record pace but still well ahead of any previous year and more than double what it was at the pre-financial crisis high in 2007.

Globally, high-yield bond issuance stands at a historic mark of $108.5 billion, buoyed by central banks around the world mimicking Fed policy and cutting rates at breakneck pace.

Spreads between junk bond yields and their benchmark measuring sticks are at the lowest since 2007…..”

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Analyst Say the Cyprus Banking Deal Could Be a Trigger for Disaster, Bank Holiday Declared, Systemic Consequences Rise

“On Thursday, Société Générale analysts made a prescient call on Europe.

“It is far too early to dismiss euro area crisis as a key [market] driver,” wrote SocGen’s Vincent Chaigneau. “We fear another shockwave in the spring.”

As it turns out, they may not have had to wait very long. News this weekend that the ECB, EU, and IMF bailout of the Cypriot banking system will include an instant 10 percent “tax” on bank deposits before banks re-open following Monday’s holiday has already triggered runs on ATMs there.

Now, the banks have a problem on their hands. “The Cypriot cabinet has declared Tuesday a bank holiday, for fear of capital flight, and this may even be stretched to Wednesday, as depositors are certain to withdraw huge sums from the Cypriot banks after the haircut imposed,” reports Greek newspaper Kathimerini.

Many market observers are expressing concerns that the decision could have a ripple effect throughout Europe come Monday when markets open. After all, if European leaders have decided to violate the unspoken rule of bank bailouts – that deposits are sacrosanct – what’s to say it can’t happen in a bigger eurozone country, like Spain?

In a Sunday morning note to clients, Morgan Stanley economist Joachim Fels wrote, “I view this as a worrying precedent with potentially systemic consequences if depositors in other periphery countries fear a similar treatment in the future.”

“This will probably go down as an ill-thought-out rescue plan with consequences for peripheral Europe,” says Galy. “It breaks a cardinal rule — namely, public trust on which money relies.”

The decision, therefore, has everyone scratching their heads. Why would European leaders play with that public trust in bank deposits?

The SocGen report last week predicting a new eurozone “shockwave” this spring summed it up concisely: “Germany, now six months into a general election, will not be keen to share further risks and tolerate policy slippage.

In other words, German politicians are up for re-election in September, and bailouts of other countries with German taxpayer funds don’t help their cause much. So, Cyprus had to be made to share in the burden somehow — hence the haircut on deposits…..”
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Little Old Lady vs To Big to Fail


“SAN FRANCISCO — What if your home was foreclosed on even if you never missed a payment?

That’s what the two dozen supporters of San Francisco resident Yin Wong, who gathered in front of the Market Street offices of PNG Financial Services Group on Friday afternoon, argue happened to the 64-year-old former lab technician after the banking giant attempted to evict her from her home of ten years.

Wearing Occupy SF buttons and chanting “PNC you know you’re wrong, don’t evict Yin Wong,” the group, organized by a coalition of anti-foreclosure activists from the Alliance of Californians For Community Empowerment (ACCE), handed out flyers listing the home phone number of PNC CEO James Roar and the cell phone number of PNC President William Demchak urging people call and pressure the company to let Wong and her daughter stay in their home.

After spending a few minutes demonstrating on Market Street’s busy sidewalk, the group pushed past a pair of security guards into the building’s recessed plaza, but were stopped at the locked front door.

“We never paid late,” Wong insisted to the assembled media. “We always paid on time.”

For a decade, Yin Wong and her adult daughter had been living in a house in the city’s Bayview district with a home loan held by National City Mortgage. During the 2008 financial meltdown, PNC, the sixth largest bank in the United States, purchased National City Mortgage and acquired Wong’s home loan in the process.

In November of the following year, Wong received notice from the bank that it was no longer accepting her electronic payments. Partially due to her limited English skills, she was unable to determine how to reconfigure her payments so they would be accepted. A few days later, she received notice that the bank had begun foreclosure proceedings.

The next summer, PNC, which had reportedly increased Wong’s monthly mortgage payment from $1,000 to $1,800, attempted to sell the home at auction, but Wong blocked the action by personally going to the sale and urging potential purchasers not to buy.

The company has since offered to sell Wong her house back. However, she can’t afford the price of $222,000, which is more than the $160,000 she still owed on the mortgage….”

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USDA To Bailout Sugar Companies

“The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey‘s HSY +0.08% Kisses—to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

The action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview.

The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp. The USDA wouldn’t say how many companies have received loans, or identify them. U.S. Sugar said it doesn’t have any USDA loans outstanding. American Crystal and Amalgamated didn’t respond to requests for comment.

Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA, NESN.VX +0.67% and could ultimately boost retail food prices, at a time when many consumers are financially stretched….”

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Australian Central Banked Gets Hacked by Chinese Created Malware, No Serious Compromise Reported

“The Reserve Bank of Australia said cyber attacks on its network haven’t compromised its systems and the central bank has “comprehensive security arrangements” that ensured viruses didn’t spread.

“The bank’s IT systems operate safely, securely and with a high degree of resilience,” the RBA said in a statement on its website. The Australian Financial Review reported today that the central bank’s system was repeatedly and successfully hacked with malicious software developed in China.

Central bank computers were infiltrated by a Chinese- developed software designed to collect information on sensitive G20 negotiations, the newspaper said, citing RBA officials it didn’t identify. The RBA responded by hiring a private security firm to carry out penetration testing, or authorized hacking of its computer networks, to assess its security, the newspaper said…..”

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Not Even the Crumbs Shall Trickle Down



“Corporatism: A System Of Control Designed By The Monopoly Men Of The Global Elite

The Dow is at a record high and so are corporate profits – so why does it feel like most of the country is deeply suffering right now? Real household income is the lowest that it has been in a decade, poverty is absolutely soaring, 47 million Americans are on food stamps and the middle class is being systematically destroyed. How can big corporations be doing so well while most American families are having such a hard time? Isn’t their wealth supposed to “trickle down” to the rest of us? Unfortunately, that is not how the real world works.

Today, most big corporations are trying to minimize the number of “expensive” American workers on their payrolls as much as they can. If the big corporation that is employing you can figure out a way to replace you with a worker in China or with a robot, it will probably do it. Corporations are in existence to maximize wealth for their shareholders, and most of the time the largest corporations are dominated by the monopoly men of the global elite. Over the decades, the politicians that have their campaigns funded by these monopoly men have rigged the game so that the big corporations are able to easily dominate everything. But this was never what those that founded this country intended.

America was supposed to be a place where the power of collectivist institutions would be greatly limited, and individuals and small businesses would be free to compete in a capitalist system that would reward anyone that had a good idea and that was willing to work hard. But today, our economy is completely and totally dominated by a massively bloated federal government and by absolutely gigantic predator corporations that are greatly favored by our massively bloated federal government. Our founders tried to warn us about the dangers of allowing government, banks and corporations to accumulate too much power, but we didn’t listen. Now they dominate everything, and the rest of us are fighting for table scraps.

In early America, most states had strict laws governing the size and scope of corporations. Individuals and small businesses thrived in such an environment, and the United States experienced a period of explosive economic growth. We showed the rest of the world that capitalism really works, and we eventually built the largest middle class that the world had ever seen.

But now we have replaced capitalism with something that I like to call “corporatism”. In many ways, it shares a lot of characteristics with communism, and that is why nations such as communist China have embraced it so readily. Under “corporatism”, monolithic predator corporations run around sucking up as much wealth and economic power as they possibly can. Most individuals and small businesses cannot compete and end up getting absorbed by the corporations. These mammoth collectivist institutions are in private hands rather than in government hands (as would be the case under a pure form of communism), but the results are pretty much the same either way. A tiny elite at the top gets almost all of the economic rewards.

There are some out there that would suggest that the answer to our problems is to move more in the direction of “socialism”, but to be honest that wouldn’t be the solution to anything. It would just change how the table scraps that the rest of us are getting are distributed.

If we truly wanted a return to prosperity, we need to dramatically shift the rules of the game so that they are tilted back in favor of individuals and small businesses. A much more pure form of capitalism would mean more wealth, less poverty and a more equitable distribution of the economic rewards in this country.

But it will never happen. Most of our politicians are married to the big corporations and the wealthy elitists that fund their campaigns. And most Americans are so uneducated that they believe that what we actually have today is “capitalism” and that the only alternative is to go “to the left” toward socialism.

Very few people out there are suggesting that we need to greatly reduce the power of the federal government and greatly reduce the power of the big corporations, but that is exactly what we need to do. We need to give individuals and small businesses room to breathe once again.

With each passing year, things get even worse. In fact, the founder of Subway Restaurants recently said that the environment for small businesses is so toxic in America today that he never would have been able to start Subway if he had to do it today.

For much more on how small business is being strangled to death in the United States, please see my previous article entitled “We Are Witnessing The Death Of Small Business In America”.

What I want to do now is to discuss some of the results that “corporatism” is producing in America.

First of all, we continue to see incomes go down even though we live in an inflationary economy.

As Time Magazine recently reported, personal incomes took a huge nosedive during the month of January…

Data released by the Commerce Department last week showed that personal income fell 3.6% in January, the biggest decline in 20 years. The drop was even bigger when taxes and inflation are taken into account. Real personal disposable income fell by 4%, the biggest monthly drop in half a century.
But this is part of a longer term trend. Median household income in the U.S. has declined for four consecutive years, and it is now significantly lower than it was all the way back in 2001…

Real median US household income — that’s “real,” as in “adjusted for inflation” — was $50,054 in 2011, the most recent data available from the US Census Bureau. That’s 8% lower than the 2007 peak of $54,489.
Meanwhile, big corporations are absolutely raking in the cash. The following is from a recent New York Times article…

“So far in this recovery, corporations have captured an unusually high share of the income gains,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “The U.S. corporate sector is in a lot better health than the overall economy. And until we get a full recovery in the labor market, this will persist.”

The result has been a golden age for corporate profits, especially among multinational giants that are also benefiting from faster growth in emerging economies like China and India.
Today, corporate profits as a percentage of U.S. GDP are at an all-time high, but wages as a percentage of U.S. GDP are near an all-time low.

Just check out the following chart. Corporate profits have absolutely exploded over the past decade…”

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Your Tax Dollars at Work

“In spending $60 billion to rebuild Iraq, the US has wasted more than $9 billion in taxpayer funds, only to find that Iraq is just as wrecked and unstable as before.

One decade after the US invaded Iraq, the reconstruction effort has been largely deemed a failure. In his final report to Congress, a 171-page assessment titled “Learning from Iraq”, Special Inspector General for Iraq Reconstruction Stuart Bowen concluded that the costs of the war far surpassed the results.


“You think if you throw money at a problem, you can fix it. It was just not strategic thinking,” Kurdish government official Qubad Talabani, son of Iraqi president Jalal Talabani, told auditors of the report.


“You can fly in a helicopter around Baghdad or other cities, but you cannot point a finger at a single project that was built and completed by the United States,” Iraq’s acting interior minister told Bowen, who said that dumping so much money into a warzone simply created a “triangle of political patronage” that instigated further corruption.


Bowen interviewed numerous American and Iraqi officials, many of whom criticized the US for taking on too many large projects without consulting Iraqis. When American troops withdrew, many of these projects were largely abandoned and Iraq continues to look as broken as before.


Additionally, Americans “wore out [their] welcome” by planning to “do it all and do it our way” – all while wasting taxpayer dollars, Deputy Secretary of State William J. Burns told the inspector general.


The US has spent more than $60 billion in reconstruction grants, which comes out to about $15 million for each day of the conflict. A $2.4 billion fund set up by Congress to rebuild Iraq’s water and electricity systems and to provide food, healthcare and governance was largely wasted. President George W. Bush asked for $20 billion more just a few months after the March 2003 invasion to accomplish these goals.


Abandoned projects include a 3,6000-bed prison that cost $40 million but was never finished or used and a $108 million wastewater treatment center that still remains unfinished. The US also spent millions repairing infrastructure they blew up, including a $75 million pipeline and a $29 million bridge in north-central Iraq. Contractors were also found to have overcharged the US government for supplies, with one contractor charging the Pentagon $900 for a $7 control switch.


“Waste and fraud at the levels we saw are a symptom of a failure to have a structure in place to effectively plan for stabilization and reconstruction operations, execute such operations and be held accountable for them,” Bowen said in an interview with Business Week….”

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Congressional Leaders Find the London Whale Was Only Part of the Debacle

“While a trader known as the “London whale” has come to represent a multibillion-dollar blowup at JPMorgan Chase, Congressional investigators have discovered that the problems involved more senior levels of the nation’s largest bank.

A report by the Senate Permanent Subcommittee on Investigations highlights flaws in the bank’s public disclosures and takes aim at several executives, including Douglas Braunstein, who was chief financial officer at the time of the losses, according to people briefed on the inquiry. The report’s findings — scheduled to be released on March 15 — are expected to fault the executives for allowingJPMorgan to build the bets without fully warning regulators and investors, these people said.

The subcommittee, led by Senator Carl Levin, could ask Mr. Braunstein and other senior executives to testify at a hearing this month, according to the people. The subcommittee does not currently intend to call the bank’s chief executive, Jamie Dimon, but Congressional investigators interviewed Mr. Dimon last year.

JPMorgan, which has been cooperating with the investigation and discussed the findings with the subcommittee, declined to comment. Mr. Braunstein and other bank executives have not been accused of any wrongdoing, and he is not the focus of a separate law enforcement investigation into the trading loss.

Congressional officials have yet to set the final details of the hearing and plans may change, the people cautioned. Politico earlier reported the scheduled date for the release of the report.

The Congressional investigation could revive questions about the role of senior executives in the $6 billion trading loss at a time when the bank has started to put the blunder behind it.

Mr. Dimon declared last year that the “Whale has been harpooned.” The bank reported record earnings in January and has forced out the architects of the bet.

The Senate report, however, shifts the focus from lower-level traders in London who placed the bet to senior executives and regulators who failed to stop it. Expanding on a sweeping report the bank released in January, the Congressional inquiry is expected to open a window into how executives ignored warning signs and failed to alert investors about changes to its method for detecting risk….”

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59% of Tuna Sold in the U.S. is NOT Tuna, NYC Leads the Way in Fish Labeling Fraud

“This is just the latest revelation in the stealth inflation and food fraud theme I have written about frequently in recent months.  The non-profit group Oceana took samples of 1,215 fish sold in the U.S. and genetic tests found that that 59% of those labeled tuna were mislabeled.


It seems that “white tuna” should be avoided in particular as “84% of fish samples labeled “white tuna” were actually escolar, a fish that can cause prolonged, uncontrollable, oily anal leakage.” …”

Full article and charts

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