Tuesday, June 14, 2016

Today's Links

"If you look at the last 40 years of the share of the economic pie that is being taken, certainly by the top 1%, and as you point out the top .01%, but also the labor share of the pie has gone to record low levels. There is this fundamental dichotomy in the economy now where if you are well off, you are doing better than you ever have before in history. But the majority of Americans—the majority of workers in this country haven’t gotten a raise in real terms since the early 1990s and many people in the working class and minorities haven’t gotten one since the late 1960s. That is a real problem in an economy that is 70% consumer spending because at some point the math starts to not work. If people don’t have more money, they can’t spend and we get these underlying growth problems." Rana Foroohar

1--Stocks Plunge Most In 4 Months As Yuan Turmoils To 5-Year Lows

2--Russia Is Reportedly Set To Release Clinton’s Intercepted Emails

Reliable intelligence sources in the West have indicated that warnings had been received that the Russian Government could in the near future release the text of email messages intercepted from U.S. Presidential candidate Hillary Clinton’s private e-mail server from the time she was U.S. Secretary of State. The release would, the messaging indicated, prove that Secretary Clinton had, in fact, laid open U.S. secrets to foreign interception by putting highly-classified Government reports onto a private server in violation of U.S. law, and that, as suspected, the server had been targeted and hacked by foreign intelligence services.

The reports indicated that the decision as to whether to reveal the intercepts would be made by Russian Federation President Vladimir Putin, and it was possible that the release would, if made, be through a third party, such as Wikileaks. The apparent message from Moscow, through the intelligence community, seemed to indicate frustration with the pace of the official U.S. Department of Justice investigation into the so-called server scandal, which seemed to offer prima facie evidence that U.S. law had been violated by Mrs Clinton’s decision to use a private server through which to conduct official and often highly-secret communications during her time as Secretary of State. U.S. sources indicated that the extensive Deptartment of Justice probe was more focused on the possibility that the private server was used to protect messaging in which Secretary Clinton allegedly discussed quid pro quo transactions with private donors to the Clinton Foundation in exchange for influence on U.S. policy

3--Chart Of The Day: The Everything Bubble

4--Libya sues Goldman Sachs for lost $1.2bn, claims hookers & private jets used as bribes

--Libya's national investment fund is attempting to claw back $1.2 billion from nine trades it carried out with Goldman Sachs in 2008, which supposedly came about after the bank used prostitutes, private jets, and five star hotels to secure contracts.

Libya's national investment fund is attempting to claw back $1.2 billion from nine trades it carried out with Goldman Sachs in 2008, which supposedly came about after the bank used prostitutes, private jets, and five star hotels to secure contracts.

The same year Goldman Sachs raised more money for Barack Obama than any other company, the Libyan Investment Authority (LIA) says CEO Lloyd Blankfein’s team used ‘undue influence', taking advantage of LIA’s financial naivety by first gaining its trust, and then encouraging it to participate in risky complex trades which the fund did not understand.

“The disputed trades were inherently unsuitable for a nascent sovereign wealth fund such as the LIA and Goldman Sachs knew (or at the very least suspected) the LIA did not properly understand the trades, which were highly structured, complex and risky,” Libya’s Investment Authority said in a document submitted to the court.
The court heard how LIA staff received the five-star treatment and were showered with lavish gifts, hotel stays, and expensive meals during trips to Dubai, London, and Morocco.

Primarily organized by former Goldman Sachs banker Youssef Kabbaj, short trips racked up more than $31,000 in expenses.
LIA also claim during one trip, Haitem Zarti, the younger brother of the fund’s deputy executive officer, was offered an internship at the bank and Kabbaj later paid for a “pair of prostitutes to entertain them both one evening” at a cost of $600, according to Reuters.

5--Why Brussels Wants to Block Nord Stream 2 Gas Pipeline From Russia

An agreement on Nord Stream-2, involving the expansion of the Nord Stream gas pipeline, was signed in early-September 2014, during the Eastern Economic Forum in Russia’s Vladivostok. The new consortium was established by Gazprom, E.ON, Shell, BASF/Wintershall, OMV and Engie. Gazprom holds 50 percent of shares while the others own 10 percent each.
In December 2015, Gazprom said Nord Stream-2 is expected for launch in the fourth quarter of 2019.
One of the main goals of the planned pipeline is to cut reliance on Ukraine in delivering Russian gas to Europe.

6-- More on G-Sax Libya

Goldman allegedly wrongly took advantage of trusting officials at the wealth fund to persuade them to invest £846million with the bank between January and April 2008, most of which it lost.
Investments were linked to companies whose share price crashed, including US bank Citigroup and French energy giant EDF. Meanwhile, Goldman raked in 'eyewatering' profits of more than £200million for the trades

Goldman agreed a £36,000 internship for Haitem Zarti, the brother of Mustafa, which the LIA claims was intended to influence decisions by the investment fund.
Papers handed to the court by LIA state: 'Mr Kabbaj took Haitem Zarti on holidays to Morocco on various occasions. Mr Kabbaj also took him to Dubai for a conference, with the business class flights and five-star accommodation being paid by Goldman Sachs.

7-- Ripping off the muppets (G-Sax-Libya edition)

Libya’s sovereign-wealth fund, in a long-awaited trial that started Monday, alleged Goldman Sachs Group Inc. GS -1.64 % took advantage of its lack of financial sophistication to draw it into losing trades.
Emails in the case show Goldman executives saying that the Libyan fund had little experience in finance. “They are very unsophisticated—and anyone could ‘rape’ them,” one executive wrote in 2008.

In another internal email exchange, a Goldman executive wrote to a colleague that “you just delivered a pitch on structured leveraged loans to someone who lives in the middle of the desert with his camels.”

8-- --(archive) Why I Am Leaving Goldman Sachs

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

9--Makers And Takers—–How Wall Street Is Strangling The Economy

Rana Foroohar: I would. I think what has happened is that our economy has become financialized. By that, what I am talking about is that the size of the financial sector—which includes not only banks, but hedge funds, private equity funds, real estate trusts, the mortgage market all the parts of the economy that basically move money around—that part of the economy has more than doubled since the 1980s. So you have got a financial sector now that creates only 4% of jobs in this country but takes 25% of all corporate profits. So that is a lot of economic oxygen that is being taken out of the room.

Now what are the consequences for this? Well one of the consequences is slower growth. Why is growth slowing? Well in part because the whole model of banking has changed. The killer stat in my book is that there is a lot of deep academic research to show that only 15%—15%—of all the money sloshing around in American financial institutions ends up invested in Main Street business. So where is the rest of it going? Well it is being used to trade against existing assets, stocks, bonds, houses. It is doing something entirely different than what the banking system was set up to do, which is take all of our savings, funnel it through financial institutions into business investments; those businesses then grow and create jobs. When you only have 15% of the money in the markets doing that, you have got a problem.

Chris Martenson: As Matt Taibbi put it there is a giant vampire squid –

Rana Foroohar: Yes. Sucking sound and the squid. The squid is such a great visual metaphor for this....

Rana Foroohar: That’s right. The financial system—the whole point of it is supposed to be that banks will allocate capital to places where it is most productive. That is entirely broken. If you look at the way money is being funneled around this closed loop of the financial system itself, enriching more or less – and I’m being generous here – the top 10% of the country which owns 80% of the asset base—stocks, bonds, houses—that is a bubble that is enriching just the wealthy while not actually creating real underlying growth.

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