Juggling Dynamite

Years of evidence and negotiated admissions on rampant money laundering, price fixing, insider trading, breach of trust and epic financial plundering of households, pensions, cities, states, trusts and foundations have all, so far, been widely tolerated.  But incontrovertible evidence of flagrantly facilitating and profiting from systemic tax evasion may finally be a step too far… After all, it did take proof of tax evasion to finally jail Al Capone.  It also took admission of tax evasion by Charles Mitchell under cross-examination by Ferdinand Pecora in 1933 to finally knock the head of City Bank from his undeserved position of privilege and reverence in American society.  The statements by Credit Suisse today feigning remorse and insisting that the actors involved were rogue or fringe is utterly laughable on the evidence of secret elevators, offices and clandestine meetings with hundreds of bank officers over many years.

Another possible chink in the normal political forbearance on financial crimes, is that today’s hearing on the criminal activities of Credit Suisse is not taking place before the heavily funded, cozy colleagues on the Senate Banking and Finance Committee, but rather before the Permanent Subcommittee on Investigations, Homeland Security and Governmental affairs Committee. We shall see…

No one should be under any misunderstanding:  rampant financial crimes are one of the most dominant issues undermining Homeland Security in our time.

Sen. Carl Levin (D-MI) held a Homeland Security and Governmental Affairs Subcommittee on Permanent Investigations hearing on offshore tax evasion. Witnesses included officials from Credit Suisse Group AG and the Justice Department.  Watch it live here.

As you listen to the session, keep in mind, that no effective or serious cross-examination can take place unless the questioners have already done their research in advance and know in detail the answers to the questions they put forth in the public hearing. Only in this way is it possible to hold witnesses accountable and elicit meaningful answers from those who routinely feign lack of direct knowledge on the topics in question. Senators who ask open questions and use the hearing to “learn” about the actors and events are useless at uncovering truth in this forum.

You can read a copy here of the full 175 page Senate Subcommittee report on how the second largest Swiss bank Credit Suisse allowed up to 22,000 Americans to avoid paying taxes for years.

Nope not about the weather…home sales have fallen the most in the west–no polar vortex there.

Mortgage applications to buy a home fell last week to the lowest level in nearly two decades, according to a weekly survey from the Mortgage Bankers Association.

The report is a clear sign of weakness in buyer demand heading into the usually busy spring housing season.

“Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it,” said Mike Fratantoni, the association’s chief economist.

“We’re in a critical juncture in housing, and it started when rates went up a small 1 percentage point back in June,” housing analyst Mark Hanson told CNBC on Tuesday. “We’re going from an investor-led housing market to an end user-led housing market, and that’s creating a lot of problems.” See: Mortgage applications at lowest level in 2 decades

That is a problem indeed.  Since end-users (the masses) have been largely left out of economic “recovery” since 2008…they have very little ability to buy houses today, especially at now higher prices and higher mortgage rates. Who is going to provide the exit capital “liquidity events” for all the investors who piled into reality markets the past few years?

Even after 6 year of QE-extended recovery in US stock and high yield bond prices, deficits in public pensions continue to outpace all gains as cash-strapped states defer necessary reforms, and direct planned funding towards other short term expenses. One can imagine how much larger these deficits will be once the next bear market has had its way once more with now egregiously over-valued asset markets. See: Public Pension Tabs Multiply as States defer Costs and Hard Choices.

Central Banks were trying to bail out banks not pension plans with QE, but nonetheless, any hope for lasting ancillary benefit to pensions has not panned out. A temporary reflation in asset values has only bought an extension of misguided policies. For the pension plans at least, QE was a backdoor bailout that has not worked.