Today’s links: Banks, crimes, frauds, GDP and how it all relates to your investment approach
Here’s what I was reading and thinking about when I wasn’t sipping the only kind of coffee I really like — a double espresso with a little bit of steamed milk. Mud, I guess. A 21st-century version of cowboy coffee. Italian cup of Jo’. Okay, I’ll get on with the links. The caffeine must be working.
Banks Jacking Up Fees to Retail Customers – If the banks weren’t continuing to receive trillions in annual explicit and implicit welfare from the taxpayer, I wouldn’t care less about the TBTF banks jacking up rates on their customers. But these banks like Citi and JPM are as they put in the article, “As various commentators have pointed out, the financial services industry had become too large relative to the real economy and is largely extractive. The interchange fees were grossly disproportionate relative to the cost of providing the service. Because the banks can no longer run interchange like a cozy oligopoly, it’s supposed to be OK for them to fleece the customer elsewhere? Remember, banks are more heavily subsidized than any other industry. To think of them as private companies is misleading.”
I’m one of those “various commentators, as I’ve been net short the banks for the last couple years in large part because as I put it in this article from October of last year called, Fight the banksters and profit by doing it: “The most important chart you’ll ever see in regards to the banks is simply any chart that shows the banking system’s earnings as a percentage of our total economy. For for the first 200 years of our country, the banks never made more than 1% of our great nation’s GDP in profits. That’s right now at more than double that at over 2%. Even after the supposed ‘crisis’:”
Financial profits share of GDP versus debt as a percentage of GDP. T2 Partners made this graph based on Federal Reserve and BEA data as of 2007:Q2.
Cody back in real-time here. Banks earnings as a percentage of GDP are still even elevated from those insanely elevated levels of the last decade, courtesy of the ongoing bailouts and zero interest rate and QE policies from your Republican/Democrat Regime in power and the Fed the enable. And those levels are so damaging to our economy, as you can see before your eyes. I’ve said it before and I’ve said it again, Occupy Wall Street isn’t anti-Wall-Street, it’s anti-welfare-for-Wall-Street.
Corporate earnings update – upward climb has stalled and Gilmartin’s Earnings Diary – Nobody’s better on keeping a pulse on the earnings trends from corporate America and — more importantly — how those earnings are being trended in the underlying reporting stocks than Brian Gilmartin. He’s getting a bit more cautious in tone than he had been when earnings season was kicking off (of course, stocks were quite a bit lower back then, huh?)
The CME acts on MF customer accounts – I’m sorry, but do have any confidence that most brokerages aren’t merging the lines between customer and prop accounts? Do you have any confidence that if such crimes are being broadly committed across the sector that the Republican/Democrat Regime and its cronies would tell you that they can’t enforce such laws and that anyway such upholding of the concept of rule of law would actually somehow undermine market confidence? We’ve seen this type of look-the-other-way and give-them-more-welfare from the government to the TBTF banks that have been committing clear fraud and other crimes throughout the last four years, and until it won’t stop under the R/D Regime, that much you better realize and think about what that means for you, the economy and your portfolio.
Cities Hit as Funds From Bonds Pay Other Bills – I mean, given all the ongoing non-prosecution of financial fraud that passes as “confidence boosting” from the mainstream media and the R/D regime it propagandizes for, do you really think they’ll prosecute these kinds of municipal and county frauds cited in this article? Or will they tell us they need to look the other way to “Save the System”?
How the US Justice Department legally hacked my Twitter account – Scary but true. Time to rethink what’s expected, much less legal, for our digital information. Go re-read the WSJ-expose on just how out of control your loss of privacy really is. Commercial and government intrusion is a form of violence.
Put simply, tread lightly again now, as the cross-currents of earnings, politics, and policies are looking awfully high-risk just now. Easy does it, guys.
Finally, here’s a video from eighteen months ago starring Hugh Hendry and Nassim Taleb talking about hyperinflation and how they’d trade the next year and a half. Any lessons in there for us that you see?
