Juggling Dynamite

Wall Street (Bay Street, London’s ‘Square Mile’ et al) and their purchased political representatives take the rest of us for fools. And that approach continues to be very successful for them. Until the people insist on prosecution of individual offenders and the enforcement of ethics and conflict of interest rules, it will continue to enrich the protected class at the expense of everything else.

Far from leading needed change, Trump so far has solidified this status quo both in his personal business conflicts, lack of financial disclosure and key cabinet appointments.  Must read article:  Wall Street’s Revolving Money Door: Ceresney and Cohn take a spin:

It was announced yesterday that Andrew Ceresney, the head of enforcement for the Securities and Exchange Commission (SEC) since 2013, would be returning to Debevoise & Plimpton as co-head of its litigation department – a nice promotion.

In 2009, one year into the biggest financial crash since the Great Depression, Debevoise & Plimpton’s Ceresney was lead author, with two of his colleagues, of a lengthy article for the American Criminal Law Review titled: Regulatory Investigations and the Credit Crisis: The Search for Villains. Debevoise & Plimpton, both then and now, represents some of the largest Wall Street banks that have serially engaged in fraudulent conduct against the investing public. The article seemed to be suggesting that prosecuting these banks would be too labor intensive and the facts too hard to prove because the deals were too complex…

As Ceresney spins out of the Washington side of the revolving door and heads back to representing Wall Street, Gary Cohn is spinning in the other direction. Cohn recently stepped down as the President of Goldman Sachs in order to become Trump’s Director of the National Economic Council.

According to a Goldman Sachs filing with the SEC yesterday, Cohn’s new job has turned into a mega windfall for him. According to Goldman’s filing with the SEC, it has a “Conflicted Employment” provision that removes restrictions on stock awards to its executives “if the recipient accepted employment in the U.S. government.”

The below segment does a good job of pointing out that new Presidents inherit their economic cycle, they don’t create it. Trump is coming into power near a cyclical peak while Obama came into the seat near a cyclical low. What’s missed however, is that the law of mean reversion, while heavily supportive of improving conditions under Obama, suggests deteriorating conditions for Trump.  Here is a direct video link.

Remember how subprime mortgages packaged and sold as safe investments began to implode in 2007 and set off a domino cascade of financial loss around the world?

The same actors and actions that were allowed to reload after the 2008 meltdown, have been back at it since.  Insanity expects different outcomes.  See:  Mall owners rush to get out of the mall business

The moves are an echo of the housing crash, when mortgage borrowers stopped making payments and walked away from homes that had lost value. In some cases they sent back the keys in envelopes, a practice derided by critics as “jingle mail.”

As mall property values sink below their loan balances, “some mall owners are more aggressively taking the step to walk away,” said Morningstar Credit Ratings Vice President Edward Dittmer…

One reason mall owners struggle to restructure loans is that many were packaged into commercial mortgage-backed securities, and these bonds in turn are owned by numerous investors, making it difficult to negotiate new deals.

And it is not just commercial loans that have been oversold this cycle, student and auto loans are at record highs coming into 2017 as defaults predictably mount.  We can rest assured the bankers and brokers who helped put all this genius together have already been paid their commissions upfront.  Over to you uncle Sam. (This chart shows outstanding totals to last March, both have grown since).

The perfect cross-sell, we now also have the magical combo pack of student-car-loans with 100% approval guarantee!  No income, no assets, only debts? No problem we have a car loan for you!  See:  Student car loan.  It’s all about helping the young people!