By Pam Martens and Russ Martens: October 6, 2022 ~ Last Thursday, while news outlets focused on videos of the devastating impact of Hurricane Ian on the southwest coast of Florida, two researchers at the Office of Financial Research published a breathtaking and almost surreal analysis of how the mega banks on Wall Street are once again doubling down on unprecedented risk with derivatives and threatening the financial stability of the U.S. The report was ignored by mainstream business media. The Office of Financial Research was created under the Dodd-Frank financial reform legislation of 2010 to make sure that Wall Street mega banks could never again ravage the economy and financial system of the United States — as they did in 2008 – by engaging in reckless derivative trades and toxic bets. OFR describes its mission as follows: “Our job is to shine a light in the dark corners of the … Continue reading →

By Pam Martens and Russ Martens: October 5, 2022 ~ If a major fire occurs in most cities and towns across America, there is a standing procedure to quickly call for mutual aid from other fire departments to achieve a speedy and safe resolution. But when it comes to the Lee County Electric Cooperative (LCEC) that provides electricity to the city of Cape Coral, Florida, something has gone terribly wrong in the process of calling for that mutual aid in a timely manner after one of the most devastating hurricanes in Cape Coral’s history. Cape Coral is a city of 204,000 residents according to the U.S. Census Bureau. LCEC has been providing electric power to Cape Coral since its first six model homes were constructed in 1958 – a span of 64 years. But for days after Hurricane Ian hit the Southwest coast of Florida on Wednesday, September 28, as a … Continue reading →

By Pam Martens and Russ Martens: October 4, 2022 ~ At 6:53 a.m. this morning (ET), Dow futures were up 454 points. That followed the Dow Jones Industrial Average gaining 765 points yesterday. No one who has been a trader on Wall Street or a stock broker for multiple decades believes this rally is real. Wall Street veterans are thinking that either the Fed’s plunge protection team or the Treasury’s plunge protection team is behind the rally. Equally unbelievable, as the chart above indicates, is the fact that the major mega banks on Wall Street closed in the green yesterday. Many of these are counterparties to Credit Suisse derivatives and thus subject to the potential for contagion. Until everyone who works on Wall Street is 25 years old and too young to remember what happened in 2008 after Citigroup began to quake, Wall Street traders are not going to believe that … Continue reading →

By Pam Martens and Russ Martens: October 3, 2022 ~ The Swiss global bank, Credit Suisse, which is a derivatives counterparty to major Wall Street banks and U.S. insurers, raised alarm bells in markets on Friday and is raising more anxiety this morning. Its 5-year credit default swap (CDS), a measurement of its risk of defaulting on its debt, jumped to 250 basis points on Friday and traded as high as 350 basis points in early morning trade today. The big move in the CDS on Credit Suisse is further impacting the price of its common stock. The shares closed on Friday in New York at $3.92, just pennies away from its all-time low, then dropped another 11 percent in early morning trading in Europe today. When a major derivatives counterparty begins to see a blowout in its credit default swaps, that impacts the stock prices of all major Wall Street … Continue reading →

By Pam Martens and Russ Martens: September 30, 2022 ~ Yesterday, Senator Robert (Bob) Casey, Jr. (D-PA) and Senator John Cornyn (R-TX) testified before the Senate Banking Committee. At a time when there is little that the two political parties can agree on in Congress, it was refreshing to hear these two Senators from different parties earnestly explain the threat that China’s ambitious agenda poses to the U.S.; how outward investment by U.S. corporations is furthering China’s agenda; and outline legislation to deal with the threat. Senator Casey explained the problem as follows: “For decades, the United States has steadily ceded its manufacturing power to other countries, particularly foreign adversaries, like the Chinese Communist Party (CCP) and the Russian Federation. Outsourcing our manufacturing and supply chains has put our economic and national security at risk. Unfortunately, the pandemic exacerbated this problem, as we experienced acute shortages of things like PPE and … Continue reading →

“And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” – Matthew 25:40 By Pam Martens and Russ Martens: September 28, 2022 ~ This morning, the words “catastrophic” and “dangerous” and “life threatening” are being used to describe Hurricane Ian, a category 4 hurricane that is expected to make landfall this afternoon on Florida’s Gulf Coast, then rip through the central and northern parts of the state. Those words are weighing heavily on the minds of Floridians this morning, as well as the words above from Matthew 25, verse 40. It was exactly two weeks ago to the day that Florida Governor Ron DeSantis lured desperate migrants, including children, who were seeking asylum in the United States after a treacherous journey from Venezuela, to board two charter planes that dumped them on Martha’s Vineyard … Continue reading →

By Pam Martens and Russ Martens: September 27, 2022 ~ Both Wharton finance professor Jeremy Siegel and Harvard economics professor Larry Summers are trolling Federal Reserve Chairman Jerome Powell. Siegel thinks Powell is “talking way too tough” on inflation while Summers thinks Powell is not restrictive enough. Siegel appeared on CNBC yesterday and scolded Powell to “offer the American people an apology” for his poor monetary policy over the years. In a Tweet, Summers effectively told the Fed Chairman to shut up, lecturing him on not talking so much at his press conferences. (See Tweets below.) In his CNBC interview, Siegel cited “home prices declining, commodity prices declining, freight rates declining,” as examples of easing inflationary pressures that warrant the Fed taking a less aggressive stance on raising rates. He also cited the sharp rise in the U.S. dollar, saying “the dollar is showing how tight the Fed actually is.” Summers … Continue reading →

By Pam Martens and Russ Martens: September 25, 2022 ~ The corrupt political backdrop for today’s unprecedented market quagmire feels like a hyperbolic trailer for a low-budget sci-fi thriller: The former president of the only remaining superpower in the world has been charged with “staggering” frauds against banks – the ones he just deregulated as president. (This same former president was also caught red-handed with Top Secret documents after he left public office — but the super power’s 18 intelligence agencies have no idea what he did, or was planning to do, with these documents.) On the other side of the globe, the sitting president of a bygone superpower is engaging in nuclear saber-rattling and conscripting 60-year-old men to fight an illegal war while young, able-bodied men flee the country en masse. The world’s financial markets have gone off the rails in an equally disorienting fashion. The central bankers that had … Continue reading →

By Pam Martens and Russ Martens: September 22, 2022 ~ Yesterday, the New York State Attorney General, Letitia James, filed a 222-page lawsuit against former President Donald Trump, the Trump Organization, his three adult children (Donald Jr., Ivanka and Eric), and two company executives, Allen Weisselberg and Jeffrey McConney. The lawsuit is the culmination of a three-year investigation and documents in meticulous detail a “staggering” pattern of fraud from 2011 through 2021. A sampling of the more than 200 instances of fraud alleged by the New York State Attorney General is as follows: “Relying on objectively false numbers to calculate property values. For example, Mr. Trump’s own triplex apartment in Trump Tower was valued as being 30,000 square feet when it was 10,996 square feet. As a result, in 2015 the apartment was valued at $327 million in total, or $29,738 per square foot. That price was absurd given the fact … Continue reading →

By Pam Martens: September 21, 2022 ~ Yesterday, Gurbir Grewal, the Director of Enforcement for the Securities and Exchange Commission, said that the manner in which Wall Street mega bank, Morgan Stanley, had allowed the personal information of its clients to be auctioned off online on hard drives was “astonishing.” Grewal is not someone who can be easily astonished. Grewal came to the SEC from his post as Attorney General of New Jersey. Before that he had been the Bergen County Prosecutor. Prior to that he held various positions in the Justice Department’s U.S. Attorney’s Office for the District of New Jersey, including his last position there as Chief of the Economic Crimes Unit. Exactly what was it that astonished Grewal? According to the SEC’s Cease and Desist Order, here’s what happened: The retail brokerage unit of Morgan Stanley known as Morgan Stanley Smith Barney wanted to decommission two of its … Continue reading →