No one accused Apple of having violated US tax laws. The Senate hearings merely exposed how Apple is dodging income taxes by doing what multinationals do: taking advantage of handouts and loopholes that Congress hands them. Now it turns out that much of the discussion was based on a fairytale.
Entries in Wall Street shenanigans (48)
Contributed by John Mauldin and Barry Ritholtz: Last month, Senators Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican, introduced a resolution calling for the end of the implicit subsidies that TBTF banks enjoy and that put taxpayers at risk. The Senate voted 99-0 in support. Now they're turning their ideas into actual legislation.
During their second term, Presidents become obsessed with “legacy.” One of the yardsticks to measure success is the stock market. Many people can relate to it. Retirement depends on it. It’s mentioned even on NPR several times a day. Outside of a few shorts, everyone wants it to go up. But President Obama must now be biting his fingernails down to the quick.
The last big thing was green tech – from wave-power generators to the smart grid. Hyped in the bipartisan stimulus bill, it promised gobs of jobs, billions in revenues, and untold riches. Private investors plowed in billions too. It ended up in a massive pileup of capital destruction. Fatalities were everywhere.
The Dow and S&P 500 are stumbling like drunken but determined sailors from one all-time high to the next, despite lousy employment and economic data, and declining corporate revenues. Bonds have done the same, and their 100-year graph has assumed the terrifying shape of open crocodile jaws, worse even than in 1999 and 2007.
On paper, Apple has no reason to borrow. Last time it issued bonds was in 1996 when it flirted with bankruptcy and absolutely had to get its hands on some moolah. After Steve Jobs returned in 1997, Apple wisely stayed away from Wall Street and did its own thing. But that era is over. And a new era is dawning upon the icon: Wall-Street engineering.
Some of the crown jewels of corporate America have reported declining revenues and earnings, and have lowered their forecasts, and in doing so, have unleashed a flood of obfuscation and excuses – from Easter falling on the wrong date to lazy sales reps. So when Caterpillar reported on Monday, it was almost refreshing in its unvarnished ugliness.
The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back. This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.
At the CPAC, as Republicans struggled with the future, some speakers drew crowds of over 1,000 people. But Dallas Fed President Richard Fisher was shuffled off to “an out-of-the-way ballroom” with barely two dozen people showing up; yet he’d talk about “the injustice of operating our economy under the thumb” of too-big-to-fail banks.
Contributed by Chriss Street. The SEC determined that Illinois violated Federal Securities Laws by misstating the financial condition of its depleted pension funds when it sold $2.2 billion in bonds from 2005-2009. After a historical failure to fund the pension systems, it exposed the State to an $83 billion unfunded liability. Former Democratic Governor Rod Blagojevich was unable to comment. He was in prison.
By the irony of timing, the Dow hit an all-time high as markets opened. Exuberance wafted through the air. Hype was flowing thickly. Happy days were back. New highs beget new highs. And everyone knew why: the Fed’s money-printing and asset-purchase operations. By the irony of timing... because 30 minutes later, kitchen-table reality polluted the scene.
Contributed by Lee Adler, The Wall Street Examiner. The Fed is growing deposits far faster than banks can deploy them, or than the economy can use them. It is growing them far faster than anybody wants or needs. And so, there are "hundreds of billions of dollars of potential fuel unused." Therein lies the potential for big problems.
“Former employees of the SEC routinely help corporations influence SEC rulemaking, counter the agency’s investigations, soften the blow of SEC enforcement actions, and win exemptions from federal law.” A damning report on how Wall Street insiders rotate in and out of the SEC—until Wall Street culture and personalities dominate the agency. Regulation and enforcement become a joke. A principle called, “Regulatory Capture.”
Friday evening when no one was supposed to pay attention, Google announced that Executive Chairman Eric Schmidt would sell 3.2 million of his shares in 2013, after having already sold 1.8 million in 2012—suddenly dumping 53% of his Google shares, though he'd sold practically nothing from 2008 through 2011. And Google's reasons don't make sense.
By now we should have gotten used to the odor emanating from banks—bailouts, money laundering, Libor rate-rigging, the other misdeeds. But in Europe over the last few days, it was particularly dense. “In this uncertain world, I cannot exclude anything,” said Deutsche Bank co-CEO reassuringly.
On January 22, 2012, French presidential candidate François Hollande shook up the banks: “It has no name, no face, no party, it will never be candidate, it will never be elected, yet it governs: that enemy is the world of finance,” he said. Freed “from all rules,” it “took control of the economy, of society, and even our lives.” He’d fight it, and promised tough reforms. But these days, you’d think he is being tutored by JPMorgan Chase CEO Jamie Dimon.
“Repression” is what Richard Fisher, President of the Dallas Fed, called “the injustice of being held hostage to large financial institutions considered ‘too big to fail.’” He sketched out the destructive impact of these TBTF banks that, as “everyone and their sister knows,” were “at the epicenter” of the financial crisis. And he offered a “simple” plan for coming to grips with them. But he did something else: he defined BIG.
The National Federation of Independent Business tried to shock the world with its report that small-business owner optimism had plunged below the level of apocalyptic post-Lehman November 2008. A huge setback; small businesses are job creating machines. “Something bad happened, and it wasn’t Sandy,” said NFIB chief economist Bill Dunkelberg. “It was the election.”
Especially of CEOs who parachute into the executive office. Wall Street's knee-jerk reaction can be phenomenal. Citigroup’s massacre of 11,000 souls caused its stock to jump. But the same day, we learn that wages adjusted for inflation dropped 1.4% in the third quarter—a continuation of 12 years of declines that has hollowed out the middle class, pushed people into the lower classes, and devastated the poor.
During the off-hours on Sunday, when few people were willing to ruin whatever remained of their weekend and when even astute observers weren’t supposed to pay attention, the National Association of Insurance Commissioners approved new rules that would allow life insurance companies to lower their reserves for future claims—at the worst possible time—having already forgotten all about the financial crisis.