Juggling Dynamite

White House economic adviser Gary Cohn is said to have signaled his support for reshaping how Wall Street’s biggest banks do business, by separating consumer-lending from investment banks. Bloomberg’s Michael Moore is joined by Jon Moulton, founder at Better Capital. Here is a direct video link.

While support for a return to Glass Steagall divisions in finance is long overdue, necessary and welcome, Better Markets points out that there is much cause for skepticism about the goals that ex-Goldman head Cohn and his finance-centric colleagues, have in mind here.  See: A Huge Warning on Gary Cohn’s Surprising Statement on Glass-Steagall and the Unique Benefits For Goldman Sachs

This statement on a real estate agent’s blog last month caught my eye:

“In Canada, the middle class are relying more on real estate agents for retirement advice than licensed financial consultants.” –March 3, 2017

Since our homes represents the lion share of net worth for Canadian families, this statement is undoubtedly accurate.  It’s also true, that realtors and mortgage brokers (aka “mortgage architects”), like the vast majority of those working as financial consultants/investment advisors today, are licensed sales people who earn fees on transactions, and owe no fiduciary duty to put the best interests of their customers ahead of their own profits.

We also know that a frenzy of borrowed money, speculation and money laundering has driven a massive surge in price and transaction volumes over the past few years.  The cash flow running through the broker/dealer/financial sector has boomed along for the ride.  But for all their self-proclaimed expertise and savvy, as this cycle moves toward its inevitable conclusion, the defining question, as always, will be this:

How many realtors/mortgage brokers/financial ‘experts’ used the boom period to pay off their own debt and build up cash? Rather than the opposite?

The answer as usual, will be, not many.  As the bubble tide recedes, truth will be revealed once more.  As cash flows plunge, foreclosures and loan/lease defaults rise, repo men will be coming to take back a fleet of the fanciest autos and gizmos.  Lawsuits, investigations and charges for illegal activities will follow.  Same story, every cycle.  Stay tuned.

Former California Governor Arnold Schwarzenegger (R) was on The Messy Truth with Van Jones last night and explained why he couldn’t vote for Donald Trump. Refreshing when people stand up for the issues that matter to all of us, rather than just mindlessly endorsing party heads.

This segment on immigrant workers in California’s food belt was also insightful.

CNN’s Van Jones spoke with farmers in California about their fear that the fields will be raided by federal agents and they will lose their workforce of undocumented labor.