Hello, again, Kiddies,
Just old Buster back trying to frighten y’all into action (or at least a little thought) with some more scary stuff on our delightful (if ya happen to be a one percenter) financial system and economy.
Hey, before I get too serious, I’ve heard about various people “coining” words and/or phrases, and, suddenly having a sort of divine inspiration, I thought it’d be fun to try that! Thought I’d try two that come to mind due to pappy’s constant findings of almost pursuing unbelievable stuff in the press. Here they are, and you’ll see an example of each later today: 1 – Egregious Criminality, and 2 – Stupendous Stupidity. Examples will be self-explanatory!
Ya know, there are times when I begin to wonder if maybe my old pappy is just a tad jealous that he didn’t flunk out of the Accounting Curriculum, and have to drop down to the Finance studies. He may even wish that he could have enjoyed the very lucrative banking rackets instead of pursuing the low-esteem (and compensated) beancounting career.
Well, all that hysterical stuff be as it may, pap got me back to thinking about those old banking rascals because he was reading (again) about yet another big bank “nearing a deal” for a large settlement with the Justice Department. This time it is Citigroup supposedly paying a “fine” of $7Billion, $3Billion of which will be in “so-called soft dollar penalties, including mortgage modifications and other forms of relief to homeowners.” This to settle Citi’s share in selling securities tied to shoddy mortgages leading to the last financial crisis! Believe that those homeowners are going to see much relief, and Santa is going to bring you a shiny new Ferrari for Christmas. At the moment, Citi is back to wagering on govamint-backed mortgage bonds due to an exemption in rules meant to curb risk-taking by banks. These bonds are safer than the junk they were fooling with before aught 8, but still are subject to interest rate fluctuations.
Continuing, along come our European friends with old Barclays of Britain attracting a securities fraud lawsuit by New York regulators for deceiving investors by executing stock orders on “dark pool” trading systems (you gotta look that stuff up yourself). Not to be outdone, BNP Paribas, France’s largest bank, will plead guilty to criminal charges, and pay a record $8.9Billion fine for “transferring billions of dollars on behalf of Sudan and other countries blacklisted by the US. BNP will also be required to part ways with 13 employees, including one of its chief operating officers. No mention of hard time for anyone.
No, children, these are not the same bankers as their forebears, the fellows who leaped from their skyscrapers during the Great Depression. These dudes are hiding behind their Corporate structures, having their stockholders to pay huge fines while denying any personal culpability. They are not about to do the honorable thing, and besides they will be quick to inform you that the windows in these modern buildings are designed not to open, making leaping out of them virtually impossible!
All of these legal proceedings might cause one to think that a few individuals might actually get some prison time out of it. All the reasons why that consequence almost never happens are way beyond this old hound dog’s comprehension. Back in the Savings and Loan smashup, which was only about 30 years ago, over 1,000 people were charged, and more than 100 company officers and directors served some time. Of course, our legal (read: political) system has gotten so much more “sophisticated” since then!
Gracious sakes, these modern-day Henry Potters have even embarrassed poor old Hillary, and caused her to seek even more $250,000 speaking engagements. Washington Post writer, Daniel W. Drezner, claims that Hillary has a bad case of SID (status-income disequilibrium), a malady that occurs when successful intellectuals and politicians socialize with Wall Street CEO’s, investment bankers, and tycoons, leaving them feeling as if they are unfairly deprived. (Wonder if he made that illness up?)
What us worry? The DOW has hit 17,000, and is seemingly inexorably climbing, despite the fact that neither the economy nor corporate earnings have grown anywhere near as much. “Call it irrational exuberance, part two,” says Irwin Kellner on MarketWatch.com. Just happens that old pap was watching one of those TV financial shows (pap doesn’t watch much TV, so this was a real coincidence), and saw Carl Icahn speaking about Janet Yellen reportedly speaking about the Feds low, low interest rates that no one knows what they are doing to the Markets, etc. That’s kinda how old pappy feels; the Fed is supporting the markets, but how long can you keep that going, and what happens when you stop?
Holy lizards, Batman, we gotta move on before our legions of readers all commit hara-kiri!
Here ya go with a little levity: Old pappy was waiting behind a vehicle at a traffic light here in old Boiseee, and when the light turned green the truck moved off in a cloud of very dark smoke. Pap, of course, kept his distance, thinking that something was seriously wrong with the smoking vehicle. It turned off at the next intersection and seemed to be ok, so pap thought no more of it. Until, this morning when he read the following article:
“Anti-environmentalist conservatives have found a new way of expressing their opposition to President Obama’s climate change initiatives: adding a device and smokestacks to their trucks so that they spew out as much black exhaust as possible. Called, ‘coal rolling,’ it’s a way of giving liberals ‘the finger,’ said one Wisconsin smokestack seller. ‘You want clean air and a tiny carbon footprint?’ Well, screw you.’”
This interesting protest both pap and I would definitely nominate for my brand new moniker, “Stupendous Stupidity.”
Well, that’s as much joking as one can do given the stark reality of the state of the “Union.” This next little segment for the week reeks of raw sewage, so at least get a hanky and take an aspirin.
Actually, most of these following notes relate to actions which I believe qualify for my other newly coined phrase, “Egregious Criminality.”
Your DC legislating wizards have come up with a cheerful sounding new (at least to pappy’s memory) term for some regular slight-of-hand they have practiced a few times before: “Pension Smoothing.” This is just a “kinder, gentler” term for reducing the legal minimum that companies must pay into their pension funds. The idea is that by reducing their pension funding their profits will increase and they will owe and pay more taxes. Of course, years later when the companies have to pay up, their taxes will go down, and our govamint deficit will go up!
This time it just happens that they are planning to use the extra taxes to help out the Highway Trust Funds repair a few roads and bridges. Just wouldn’t do to increase the gasoline tax that is supposed to fund the Highway work.
What’s worse is that the lower pension funding requirements will further deteriorate the potential for workers ever getting the pensions they were promised from their companies.
Which brings us to the tax cheating that has become so popular among our wealthier citizens. We now have the cheapest income tax rates that have ever prevailed during wartime. Wait, you may say, we’re not at war right now? Wake up kids, we haven’t begun to pay for the last two wars yet! Despite our very low taxes, the people “in the know” are hiding their income all over the world to avoid paying their taxes.
Now arrives little old Puerto Rico welcoming rich Americans yearning to breath tax free air. Wishing to become the Singapore of the Caribbean, the Puerto Rican government has passed laws which will allow US citizens living there at least 183 days a year to avoid many taxes on interest and dividends and even salaries in certain instances. Unlike Singapore and even Bermuda, you can retain your US passport. Residents of Puerto Rico are US citizens, but just can’t vote in federal elections (what do these dudes care, they can buy the elections). As fate would have it, many of the over-taxed (in their twisted minds) folk moving south for this scam, are the same characters who on Wall Street were loving their enormous bonuses to the point of certifiable madness. Now, they can do their thing without paying their taxes on their gains (at least until the next time they come running to us taxpayers to bail them out).
The Puerto Rican authorities are justifying their actions as pulling the bankrupt island out of its economic morass. One of the financial gurus who is considering the move feels it is a no-brainer as long as his private equity business is eligible for the tax breaks. He’s not sure it is a “no-brainer” for the Puerto Ricans though. His quote in a Bloomberg News article, “We’ll know in five years if you end up with a couple areas of haves amid a whole bunch of have-nots.” As far as our poor old U.S.of A. is concerned, we better change the rules that allow this “territory” to assist these tax dodgers!
Brace yourselves! One cannot mention taxes in almost any manner without bringing up the HATED IRS. Hatred for this government agency is somewhat understandable since at least once a year all of us are required to bare our souls in the form of our income tax returns. The IRS just happens to be the public face of the taxes we dislike paying. However, old pappy and I believe this hatred is misplaced. We don’t actually think hate is a good emotion to apply anyway, because it harms the hater while the hated may not even be aware of it. We do feel that those people attempting by hook or by crook to avoid paying their taxes are certainly worthy of our dislike, and should be brought to justice.
Pappy was reading just the other day about the IRS stepping up their efforts to uncover taxable income hidden in offshore “havens.” Congress actually passed (way back in 2010) a Foreign Account Tax Compliance Act (FATCA), but since then has been steadily stymieing IRS efforts to enforce the act by cutting their budgets. Yikes, it just occurred to me that with just a little more imagination, those industrious lawmakers could have expanded the title of their ground-breaking work so as to have the very appropriate acronym, “FATCATS.”
Now, here comes a fellow bucking for 2014 winner of both of my brand newly coined phrases, Publisher and Editor-in-Chief of Forbes Magazine (and also ran Republican Presidential primary candidate in 1996 and 2000), good old Steve Forbes. Steve’s fame, such as it is, mainly came from his proposal of a Flat Tax back in those campaigns. In the July 21st issue of his magazine, Steve proposes defunding the IRS in big red letters. When you are drowning in red ink, and you’ve got legions of tax avoiders running around, is it really the smartest thing to do – hobble your collection agency? Well, I think not, and that’s why I’m also recommending Steve for the “Stupendously Stupid” award. Further, here’s a guy, born with the proverbial silver spoon), having squandered only part of his enormous inheritance from his pappy on his hapless political campaigns, doing everything in his power to justify the horrible wealth and income inequality growing steadily in our good old U.S. of A. For his shameless, persistent salutes to unfettered Greed, I would wish to nominate dear old Steve for my other newly coined phrase, “Egregious Criminality,” but his unsavory musings are probably not outside the laws on the books.
Next week, I’ll do what I can to introduce you to some folk who happen to agree with me and old pappy on a few of these issues. Any such corroboration would be strictly coincidental, of course.
PS: Regarding the “creeds” business, we meant to add, “You can Google this stuff,” but the old computer, which probably needed replacement a few years ago, dropped it.