Official fuck the banks thrad

[specious_reasons]

Guess what? The new financial crisis won't be in student loans! It'll come from the house rental market:

How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again « naked capitalism

Here's where the shit starts hitting the fan (emphasis mine):

Wall Street’s rental empire is entirely new. The single-family rental industry used to be the bailiwick of small-time mom-and-pop operations. But what makes this moment unprecedented is the financial alchemy that Blackstone added. In November, after many months of hype, Blackstone released history’s first rated bond backed by securitized rental payments. And once investors tripped over themselves in a rush to get it, Blackstone’s competitors announced that they, too, would develop similar securities as soon as possible.

[SR71]

From link:

In hindsight, it’s clear that the Great Recession fueled a terrific wealth and asset transfer away from ordinary Americans and to financial institutions. During that crisis, Americans lost trillions of dollars of household wealth when housing prices crashed, while banks seized about five million homes. But what’s just beginning to emerge is how, as in the recession years, the recovery itself continues to drive the process of transferring wealth and power from the bottom to the top.
Read more at How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again « naked capitalism

This is the amazing thing. Where have all the new dollars from Quantative Easing ended up? Well, where else did you think they were going to go, your pocket?

[The Man]

Wait, What If We Try Giving People Home Loans They Can’t Actually Afford to Pay Off? | The Onion - America's Finest News Source

[ImGod]

It's only a Ponzi scheme if you're the last guy in line. To those paid up front, who retire comfortably, it's a job interview for CNBC guest commentator when they round table talk about "job creators".

[Watser?]

[lisarea]

The Quest to Improve America's Financial Literacy Is a Failure - Pacific Standard: The Science of Society

I can't believe they're still victim blaming like this. The financial crisis wasn't caused by people buying too many Starbucks coffees and iPods.

This is just a diversionary tactic to draw attention away from the problem by encouraging the middle class to demonize the poor and other middle class people by perpetuating this dumb Protestant "common sense" crap that never works for anyone but the middle class, and usually doesn't work for them either.

SHUT UP WITH YOUR STUPID BULLSHIT MIDDLE CLASS FINANCIAL ADVICE. EVERYBODY.

(Oh, and I think someone else probably linked that Spent game here before, because as soon as I saw it, my stomach knotted up a little.)

[ImGod]

The financial crisis was caused by the government over regulating the financial markets. That's what I heard from my unemployed relatives.

Our kids have money management courses in school to teach them checking accounts, savings, etc. Basic junk. I added basic compound interest calculations to show them the gap between credit card interest, traditional loan interest, and interest earned on bank deposits. My youngest daughter thought that it wasn't fair how little she earned in interest versus what CC companies got. I explained to her that without the gap they wouldn't be able to pay their CEO millions a month. So she smarted right up and wants to be a CEO now.

My older daughter's class graduated to playing a fake stock market game. So I told her the key to good returns is to look for a company selling stuff everybody wants all over the world. But the best returns come from companies that do that while being able to shift profits around to tax havens and socialize any unforeseen externalities. She almost won with a mixture of stocks powered by companies like Exxon. Some kid got lucky with some tech stock rising the last couple of days. He'd probably be broke now after the founders of the company sold out and moved to Europe.

Basically, the reasons most people loose out on personal finance is they genuinely suck at math and can't get past the point that you have to abandon any and all of your principles to get into the upper levels of income (i.e. the true screw you I'm taking my private jet to my Island because you want too much of my money level). While everyone here is so worried about their credit score/report, the truly successful do stuff like sell cigarettes in third world countries after sales drop in the US because the product is determined to cause cancer, sell gasoline on the gulf coast after a major oil spill, sell electronics for 1000 times the cost to produce overseas in sweatshops, etc., etc.

Dr. Evil type Starbucks operations.

[SR71]

The statute of limitations (it's five years for this sort of thing) is running out for any fraud prior to the 2009 time frame, so it's a sure thing that no criminal prosecutions of banking executives will ever happen. A variety of excuses are offered here.

[lisarea]

But unless and until you're already financially secure to some extent (middle class at least), you don't have those options. That's the thing that shits me so hard. I mean, it's all well and good for someone with something left over after their paycheck to evaluate bank accounts and credit card interest and all, or to understand(ish) the stock market, but tons of people can't even get or use a bank account or a regular credit card, and they sure can't play the stock market or sock away 10% into savings every month.

And it's not just poor people living paycheck to paycheck. It's also middle class people having to cash out their savings to pay for medical bills or to get through a layoff or both. That's the kind of shit that actually happens to people, not casual and unnecessary rent to own and payday loans. People don't do that stuff because they don't know any better. They do it because that's their only option. I mean, sure, if you're buying a bunch of $6 coffees, you could save some amount of money by making it at home instead, but if you're that bad at math that you don't realize that, your problem isn't that you don't have money management skills. It's that you need to go back to Kindergarten or wherever you learn how to add. People do things like that for more complicated social and logistical reasons than that they didn't know that spending $6 makes them have 6 fewer dollars. (Plus there are startup costs even to things like making coffee at home, so that doesn't save you the whole $6 either.) The key to class mobility is not picking away at little household expenses. The key to (upward) class mobility is pretty much down to getting extraordinarily lucky.

But it makes oblivious middle class people feel better about themselves and better about the system if they believe that they have that kind of control, and that if they're financially secure, it's because of silly facile little choices they've made in their lives. It reinforces their smugness to read about really poor people who win Powerball jackpots and then spiral out of control and die destitute,* or even about regular poor people barely scraping by. They apply their own middle class ethos to people living in very very different circumstances and use that to blame them for systemic inequities. It makes them feel smart and deserving and capable, but that's bullshit.

Even that Elmo crap is bullshit. If you're poor enough, and you get a couple hundred bucks or so, the notion that you can use it to significantly pay down your debt or save it and then get something better later is not true. It is going to be gone in a few months, you are still going to be in debt, and you are not really going to get ahead, so it actually makes sense, if you are constantly deprived of any sort of luxury, to go ahead and spend it on something tangible and enjoyable, because you don't often get that opportunity. Reasonably secure, stable middle class types like to armchair how they'd lift themselves out of poverty by applying the middle class financial management skills they think are 'common sense,' but those things are generally pretty trifling. Those are all predicated on being a member of a certain social and economic class and they often don't really make that much difference at all anyway. It doesn't work for everyone, and it doesn't make sense for everyone.

And it sure as hell wasn't the cause of the financial meltdown, so making it some big public issue like that is offensive and stupid and simply designed to draw people's attention away from the real causes and convince them to fight among themselves. I know how hard it is to bite your tongue when someone makes a poor financial decision. I do it all the time, and I still don't do it enough. That middle class ethos is pretty ingrained, but it's also pretty useless for a lot of people.

* I saw a link to this story when it happened, and I immediately wondered if it was that guy. Why the hell did I even know who that guy was? I don't follow that kind of story intentionally, but there was so much outrage porn about him that I could immediately picture him and his house and all the "hur hur look at this goober trying to act like a real rich guy" because his mimickry was bad enough and his furniture tacky enough that even dull middle class goobers like me could tell he was doing it wrong. It did make me feel classy to notice that.

[Adam]

I can't [Thanks] that enough. I loathe the financial advice for the poors genre because, for real? The poors are the best fucking money managers you're going to meet.

Also, so much this:

Even that Elmo crap is bullshit. If you're poor enough, and you get a couple hundred bucks or so, the notion that you can use it to significantly pay down your debt or save it and then get something better later is not true. It is going to be gone in a few months, you are still going to be in debt, and you are not really going to get ahead, so it actually makes sense, if you are constantly deprived of any sort of luxury, to go ahead and spend it on something tangible and enjoyable, because you don't often get that opportunity.

I get, like, actual throat punching mad when I hear or read people moaning about how these dumb lazy poors aren't really poor because they have an Xbox or whatever. First, shut the fuck up. Second, it always reminds me of a (quite possibly apocryphal) thing I read back in the early 90's or so that tried to explain that the reason middle class Japanese consumers were way more into apparently frivolous luxuries than American consumers at the same economic level was that the chief thing Americans at that income level saved for was a house, and real estate was expensive enough in Japan that their Japanese counterparts, quite reasonably, didn't bother saving for a house they'd never be able to afford anyway. You stupid poor, why didn't you take that hundred bucks or whatever and save it so you could afford like one hundredth of one percent of a catastrophic medical bill instead of blowing it on on some minor luxury that makes your day to day life marginally better?

Why don't people get that there is absolutely no point in saving for things that you will never be able to actually afford?

[ImGod]

I want my kid's to realize both ends of it. Sometimes you have to do without and work hard to get ahead and sometimes the rich guy got ahead by cutthroat probably should be illegal means while sitting on his ass. And some sort of in between.

I found the more people I know the more money I make. Friends help friends. The level of hard work is the same for me because it's difficult for me to be a total dick. I'm too much of a win-win guy. And I hate golf. If I learned to golf and joined a country club I'd prolly be a lot wealthier due to better connections. But seriously golf. I should get the girls to play now that they let women on most courses.

[ImGod]

Originally Posted by lisarea

...

(Oh, and I think someone else probably linked that Spent game here before, because as soon as I saw it, my stomach knotted up a little.)

I played around on that site and it was oddly constraining. It didn't give me the opportunity to do an unpaid internship at my Harvard Lawyer Dad's friend's Law firm, or sell crack on a street corner.

Plus, like there are 3 job listings for work in the paper. Let alone $9/hr jobs. How unrealistic in today's economy. There'd be 400 applicants for each one.

My wife and I were discussing it the other day. The problem with middle class life is that you have too little and too much at the same time. If I was poor and had no possessions like my Sister in Law, I could go to the ER for healthcare and say suck it when they sent a bill. Insert blood/turnip analogy. If I was filthy rich I could fly my personal jet or take the yacht to see whatever doctor was the best and pay him in cash or favors.

But if you save all your life and get comfy, you run the risk of loosing everything you worked for over the years. In that case you'd have been better off blowing all your money instead of saving it since you can never make enough to get super wealthy. Barring selling your soul over humanity or winning the mega millions lottery.

I'm leery of the 401k system. But feel better after they bailed out Wall Street. If I saved for years in a pension they would have said sorry but fuck you, pensions aren't really a contract, we spent it, and the money is gone during bankruptcy. With a 401k the financial system has to go down and the rich aren't about to let that happen.

[lisarea]

Originally Posted by ImGod

I want my kid's to realize both ends of it. Sometimes you have to do without and work hard to get ahead and sometimes the rich guy got ahead by cutthroat probably should be illegal means while sitting on his ass. And some sort of in between.

Well, but the thing is that that's for your kids. It doesn't apply to everyone. So, like, I know some stuff about how my kid and kids like him can improve their chances at moving around a little bit within the middle class. My little tips and tricks are just that, though, really, and are mostly applicable to people in that general social class already.

But there are very few opportunities for significant upward class mobility. You could probably chart position on the socioeconomic scale pretty neatly with 'likelihood of making your first million investment banking vs. rapping,' where rapping is actually considerably more viable than investment banking as a vocation the lower you get on that scale. (This is why I focus primarily on rapping about investments and investing in rappers. Because I know my place.)

I found the more people I know the more money I make. Friends help friends. The level of hard work is the same for me because it's difficult for me to be a total dick. I'm too much of a win-win guy. And I hate golf. If I learned to golf and joined a country club I'd prolly be a lot wealthier due to better connections. But seriously golf. I should get the girls to play now that they let women on most courses.

But you can see probably that it doesn't work that way for everyone. Knowing more people usually helps regardless of your social class, but when you are systemically poor, most of your friends and family are too.

It is almost all about connections once you get higher up. Almost everyone I know who went to Ivy League and other top ranked colleges didn't really have much to do with it personally. Either they were legacies, or their parents sent them to tony private schools, sometimes both. They didn't necessarily do anything evil or psychotic in order to make more money than others with less prestigious qualifications. It's an entitlement. They just got their jobs through their connections. And tying in with that prestige economy stuff, you not only have to go to expensive top ranking schools to get into certain fields or certain strata, but often, you also need a support system so you can afford to work at internships for low or no pay for a while after, too. It's not easy to do that if your family can't afford to support you while you do it.

But there are middle class entitlements, too, and most of this financial advice stuff is pretty lousy with it. You know, we can take umbrage at rich people blithely advising young people to start a business with loans from their parents, but to a lot of people, advising them to shop around for car loans or even get a checking account is just as ignorant.

[Ensign Steve]

Originally Posted by Adam

I get, like, actual throat punching mad when I hear or read people moaning about how these dumb lazy poors aren't really poor because they have an Xbox or whatever. First, shut the fuck up.

Right?

Okay, anecdote time: One time when I was a kid, my mom and I spent Christmas with my aunt, uncle, and cousin, who were my mom's little sister, her husband, and their daughter, a few years younger than me. I was totally blown away by their massive entertainment system in their house. They had a big TV with surround sound, a CD player, a video game console, and two VCRs. They had a ton of VHS tapes, many store-boughten, and many more that were copies of rentals, courtesy of their sweet dual-VCR setup.

When I asked my mom in private how they could afford all that stuff, her answer blew my mind. She said they don't have the money to spend on vacations and meals out and theater tickets, so they make all their limited entertainment dollar stretch by spending it on something they can use over and over. Something that will provide hours of entertainment for many years, like movies and video games, rather than on a trip that lasts a week and then becomes a memory.

I think even then I understood that I was getting the better end of that deal, even if it meant I didn't have the fancy game console.

[ImGod]

It is sort of hard to get the proper Ivy League type connections if you're black and from the hood. Plus getting together with friends to put together a tech start up is hard if your friends are getting shot left and right and your computer is a 1990 Dell tower you found in the dumpster.

I told my kids that it helps to be white, male, and tall. Good financial advice in these troubling times.

The Suze Orman types drive me nuts, because she's always talking about straightening people out who already have an income. Is there a Suze Orman for poor people?

The best financial advice I can think of for poor people in general is don't have kids, live in a group to cut down on expenses, find free food where ever possible, and try to avoid paying taxes by working under the table as much as possible. That's more college kid advice though.

[chunksmediocrites]

So imagine you traded in markets where you were betting on the price of aluminum, for example. Now imagine you owned a number of the distribution centers that controlled the amount of aluminum available. Or maybe you owned the mines. It's not really betting at a certain point, is it, when you have a big role in determining the supply?

It's okay, you don't have to imagine.

Senator Brown told the participants at the hearing that “the six largest U.S. bank holding companies have 14,420 subsidiaries, only 19 of which are traditional banks.” In July 2012, the Federal Reserve Bank of New York issued a study titled A Structural View of U.S. Bank Holding Companies. That report presented a frightening picture of the encroachment of banks into commodities and the industrial side of the U.S. economy.

The study showed that U.S. bank holding companies owned 16 utilities; 479 insurance companies; 2,388 real estate firms; 1,682 healthcare and social assistance companies; and 5 mines. We know from more recent revelations that Wall Street’s largest banks own at least 104 metal warehouses with complaints coming from beer and soda manufacturers that these firms control the London Metal Exchange and are rigging the price of aluminum to the detriment of both the manufacturers and consumers.

Yesterday’s hearing accentuated the fact that with enablement from the Federal Reserve, the public has very limited access to information on just how extensive Wall Street’s control and ownership of physical commodity firms actually is.

So consider that the history of many of these large banks is rife with fines and payouts for rigging markets- like JPMorgan Chase rigging the electricity market in California from 2010 to 2012. And that's not even touching rigging involved with Libor, for example. Or municipal bonds. Or the rigging of precious metals and currency markets that is being investigated now.

[Kyuss Apollo]

We should start a bank. Seriously.

[Ensign Steve]

It's been tried. Unfortunately, he showed it's damn near impossible.

[Janet]

I checked who owned the hotel I'm staying at in Vegas for ALA Conference because a grade school classmate owns a couple. Not this one, though, it's owned by Goldman Sachs. Ugh

[The Man]

Jamie Dimon Gets Well-Deserved Raise

Of course he is, because share prices have increased and this is the only thing that really matters. Did JP Morgan, under Jamie Dimon’s watch, preside over a global financial crisis, enable Bernie Madoff to conduct a years-long pyramid scheme, and rack up billions of dollars in fines due to a multi-billion dollar trading fiasco executed by the so-called “London Whale,” along with earning what may be the largest fine in the history of American financial regulation? Did it also engage in reckless manipulation of energy prices and silver prices, launder money for drug cartels, and break securities laws in mortgage deals? Yes, it definitely did many of these things and probably did most of them, but this just means that Jamie Dimon was able to see the bank through “a difficult period” and thus deserves a raise:

Go read the whole piece (it's not very long). It would be hilarious if it weren't so depressing.

[Ari]

Part of the banking elite that laundered billions for violent drug cartels?
That's a corporate fine! Just make the workers pay.
HSBC fined $2B in 2012 for money laundering.
HSBC saves $3B in 2013 by firing 14,000+ workers.

Help build a new currency that happens to be used in non-violent drug sales?
Arrest!! Maybe jail time.
Two execs of a defunct bitcoin currency exchange site arrested for laundering.

[Janet]

I don't know how his name is pronounced, but one of my coworkers said it as demon today, so I'm going with that.

[chunksmediocrites]

Matt Taibbi covers the issue of the big investment firms and too-big-to-fail banks working to own and control more and more of the raw materials, transport, energy, and means of production. Effectively rigging the game, where they "bet" on the price of goods and services while actually controlling the supply.

...last summer, The New York Times described how Goldman Sachs was caught systematically delaying the delivery of metals out of a network of warehouses it owned in order to jack up rents and artificially boost prices.

You might not have been surprised that Goldman got caught scamming the world again, but it was certainly news to a lot of people that an investment bank with no industrial expertise, just five years removed from a federal bailout, stores and controls enough of America's aluminum supply to affect world prices.

This again supports the evidence that modern too-big-to-fail and investment banks' role in society is almost purely rent-seeking and extractive, providing little or no added value- truly a parasitic barrier rather than a service. Vampire squid on the face of humanity is an apt description.

But not to worry! Private Equity has been moving in to perform the services of banks, but without any oversight or regulatory scrutiny. Firms like Blackstone and KKR have been buying up rental homes and are extending lines of credit like crazy. I'm sure that will go well:

Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.

In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.

Few outside the finance industry have heard of Blackstone. Yet today, it’s the largest owner of single-family rental homes in the nation -- and of a whole lot of other things, too. It owns part or all of the Hilton Hotel chain, Southern Cross Healthcare, Houghton Mifflin publishing house, the Weather Channel, Sea World, the arts and crafts chain Michael’s, Orangina, and dozens of other companies.

Blackstone manages more than $210 billion in assets, according to its 2012 Securities and Exchange Commission annual filing. It’s also a public company with a list of institutional owners that reads like a who’s who of companies recently implicated in lawsuits over the mortgage crisis, including Morgan Stanley, Citigroup, Deutsche Bank, UBS, Bank of America, Goldman Sachs, and of course JP Morgan Chase, which just settled a lawsuit with the Department of Justice over its risky and often illegal mortgage practices, agreeing to pay an unprecedented $13 billion fine.

Sorry, I wish I had news for this thread that was less foreboding and depressing.

[The Man]

Tim Geithner, lying sack of shit.

Probably more important than his lies is his record, which is also terrible.

Hat tip to LGM for linking both of these stories.

[The Man]