Juggling Dynamite

In terms of their profits, fraud is the dominant business model of investment banks.  Today they are still being allowed to pay cost-of-business-fines and continue.  And we the people, keep paying a crushing price in capital losses and deficits in our most critical institutions and expenditures.  This latest story is more of the same, the State of California is trying to go after Morgan Stanley for financial damages for the 2008 losses.  See:  CA sues Morgan Stanley over public pension funds.

The State of California has sued investment bank Morgan Stanley, filing a complaint in San Francisco Superior Court, seeking redress for what officials said was massive harm to its public-sector workers.

“Public employees in California, including peace officers, firefighters, teachers, and other public servants, suffered major losses as a result of Morgan Stanley’s residential mortgage-backed securities, in which high-risk home loans were purchased from subprime lenders, bundled together and sold for billions of dollars to investors,” the complaint alleges, according to CBS San Francisco.

The nauseating reality here is that as one of the big 5 US investment banks, Morgan Stanley (thanks to the removal of Glass Steagall and regulatory forbearance since) still commands FDIC underwriting for its reckless risk taking with client deposits in 2016. So not only have they been granted a license to continue abusing trust and selling toxic products as ‘investments’ but they get to retain their proceeds of fraud and have the insurance of taxpayer bailouts when they blow themselves up again.

For the big banks it is a brilliant business indeed.  For the rest of the population who keep paying and tolerating this while taking financial ‘advice’ from the cartel, Stockholm Syndrome must be real.

As plans for increased student funding and forgiveness of education loans are being rolled out by well-meaning politicians from Obama to Trudeau, Senator Warren to candidates like Bernie Sanders, the elephant in the room–top-heavy, resort-style, debt-fattened institutions and directors–is growing larger and more unsustainable by the day. In a world of stagnant wages since the 1980’s, the 137% spike in the cost of higher education over the past 15 years (chart below) has only been made possible by families and governments taking on now crushing levels of debt. Does this look reasonable to anyone?

Costs have to revert. Leaner more effective education models must be cultivated.  The ‘add-even-more-government-backed-debt and stir days’ that fueled rapid growth and allowed the post-secondary sector to become cost-prohibitive for the 99.9%, are done.  The below segment covers some refreshing observations on this topic.

Investor and entrepreneur Peter Thiel talks about education in America. Here is a direct video link.

Today bank stocks are bid as JP Morgan reported its much gamed Q1 earnings ‘beat’ of lowered profit growth expectations.  We will know we have come through this crazy lawless time, when the masses and policy makers speak of today’s law-breaking, fine-paying, ‘TBTF’ executives as people of ill repute rather than admired business leaders worthy of extravagant compensation and privilege. This news clip from April 12, 1938 gives a flavor of what that looks like.  See the video here:  Sing Sing Gates close on Richard Whitney (former head of the New York Stock Exchange)

Meanwhile the complex Dodd Frank reforms have been largely ineffective because they lacked the critical piece– breaking up the investment bank conglomerates and their destructive, queering influence over policy, politicians, financial advice and free markets.  In the present arrangement depositors and thus taxpayers remain still fully exposed to the next wave of investment bank insolvency.  And it is coming.  Will the executives get to keep all the profits and accolades while taking taxpayer funds to bail them out again?

Five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money, federal regulators said on Wednesday, saying the institutions could face stricter oversight if they do not fix their plans.

The “living wills” that the Federal Reserve and Federal Deposit Insurance Corporation jointly agreed were not credible came from Bank of America, Bank of New York Mellon, JPMorgan Chase, State Street, Wells Fargo.

Here is a direct video link.

Also see:  Goldman Sachs just got a $1 billion break on its financial crisis settlement. Are its political contributions the ultimate investment strategy?

Yes. works beautifully for them.