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There's something rotten in banking - (www.bloomberg.com) On June 27, Barclays, the U.K.’s second-largest bank by assets, admitted
it deliberately reported artificial borrowing costs from 2005 to 2009. The
false reports were used to set a benchmark rate, the London interbank offered
rate, or Libor, which affects the value of trillions of dollars of derivatives
contracts, mortgages and consumer loans. The bank agreed to pay a hefty $455
million to settle charges with
U.S. and U.K. regulators, and on Monday its chairman resigned. Earlier today, Robert Diamond resigned as chief
executive officer. Marcus Agius, who yesterday said he would resign as
chairman, reversed his decision after Diamond quit and will stay on to lead the
search for a new CEO. In an apology to employees before he stepped down,
Diamond wrote that some of the misconduct occurred on his watch, when he was
head of Barclays Capital, the
investment-banking unit. Diamond was already in the doghouse with investors. In
April, 27 percent of shareholders, upset that Barclays had missed profit
targets, voted down his $19.5 million pay package. Heads should roll at other
banks, too. Regulators and criminal prosecutors, including the U.S. Justice
Department, are investigating at least a dozen other firms to determine whether
they colluded to rig the rate. Among them: Citigroup
Inc., Deutsche Bank AG, HSBC Holdings Plc and UBS AG.
How Stockton went broke: A 15-year spending binge - (www.reuters.com) The man in charge of the biggest U.S. city ever to file for bankruptcy
is clear about the root of the crisis. It was a decision that gave firefighters
full healthcare in retirement starting on January 1, 1996, said Bob Deis, the
city manager of Stockton, California. At the time, the move seemed cheaper than
giving pay raises sought by unions, officials involved in the decision said.
When other Stockton employees demanded the same healthcare deal in following
years, the city agreed. Deis, who signed Stockton's bankruptcy filing last
Thursday, slammed the decision to provide free healthcare to retirees as a
"Ponzi scheme" that eventually left the city with a whopping $417
million liability. Before the turn of the millennium, things looked very
different in California.
Wealthy hit hardest as France raises taxes - (www.ft.com) An extra
€2.3-billion will be raised by an exceptional tax charge on all those with net
wealth of more than €1.3-million. Citing an “an extremely difficult financial
and economic situation”, Pierre Moscovici, the finance minister, said: “The
wealthiest households and the big companies will be asked to contribute. In
2012 and 2013, the effort will be particularly large.” Further tax increases
for next year, when the government is expected to have to find €33-billion in
savings to bring the deficit down to 3 per cent of GDP, will be spelt out in
the autumn. They will include President Francois Hollande’s election pledge of
a 75 per cent marginal rate on annual incomes of more than €1m – and permanent
increases in wealth taxes.
Rigged rates, rigged markets - (www.nytimes.com) The rates in question — the London interbank offered rate, or Libor, and
the Euro interbank offered rate, or Euribor — are used to determine the
borrowing rates for consumers and companies, including some $10 trillion in
mortgages, student loans and credit cards. The rates are also linked to an estimated
$700 trillion market in derivatives, which banks buy and sell on a daily basis.
If these rates are rigged, markets are rigged — against bank customers, like
everyday borrowers, and against parties on the other side of a bank’s
derivatives deals, like pension funds.
Financial
Collapse End Game, Operation Twist Deception, Infinite QE - (www.marketoracle.com) Many are the events, signals, and telltale clues of a real live actual
systemic failure in progress. Until the last several months, such banter was
dismissed by the soldiers in the financial arena. But lately, they cannot
dismiss the onslaught of evidence, a veritable plethora of ugly symptoms of
conditions gone terribly wrong and solutions at best gone awry and at worst
never intended in the first place. My theory has been steady from the TARP Fund
scandal and the Too Big To Fail mantra of deceit. The plan all along since the
breakdown began in September 2008 has been to preserve power, to maintain
intact the insolvent banks an operational crew of zombies, to aid the financial
sector bound in Wall Street, to pay benign neglect to Main Street and
businesses (expect for symbols like General Motors), to expand the propaganda
of a fictional recovery, and to maintain the endless wars. The wars serve two
purposes, to enable significant fraud from overcharged services, and to hold
open the gateways for sizeable money laundering flows into the Wall Street
banks, those hollow structures that closely resemble a coke addict with dark
teeth, wretched bones, wasted organs, lost attention, and a listless gait. The
Greek showcase is coming to a neighborhood near you in Western Europe and Great
Britain, soon to feature debuts across North America.
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