By Pam Martens and Russ Martens: June 20, 2018 ~ General Electric Co. (GE) will be unceremoniously sacked from the Dow Jones Industrial Average on June 26, it was announced yesterday by the S&P Dow Jones Indices folks. GE was one of the original 12 companies in the index when it was created in 1896. The Dow now consists of 30 companies and GE has been in the index continuously since 1907. Curiously, GE – an industrial giant that makes highly sophisticated commercial jet engines for Boeing and turbines for power plants among numerous other lines of business – will be replaced in the Dow by a retail drugstore chain, Walgreens Boots Alliance (WBA). GE’s exit from the Dow has a lot of the same hallmarks as the exit of Citigroup from the Dow. Citigroup got the same one-week notice that GE is getting. The announcement came on June 1, … Continue reading →

By Pam Martens: June 19, 2018 ~  According to Dr. Colleen Kraft, President of the American Academy of Pediatrics, the U.S. President of the United States, Donald Trump, is deploying a policy of separating immigrant children from their parents at the U.S. southern border that is tantamount to child abuse. Speaking on CBS News (see video below), Dr. Kraft said when she visited a detention facility for separated children in Texas she saw a toddler girl “sobbing, wailing and beating her little fists on the mat.” She said staff there are told they are not allowed to hold a child to comfort them when they are crying. Dr. Kraft explained that what this kind of emotional stress can do to a child is “disrupt the synapses and the neurological connections that are part of the developing brain.” When asked if the children can recover from this kind of trauma, Dr. … Continue reading →

By Pam Martens and Russ Martens: June 18, 2018 ~  Goldman Sachs CEO Lloyd Blankfein famously said in 2009 at the height of the financial crisis that he was “doing God’s work.” What Goldman Sachs was actually doing in secret at that time was receiving billions of dollars in undisclosed loans from the Federal Reserve – often at the insanely low interest rate of .01 percent. Goldman was also living off billions of dollars in publicly acknowledged taxpayer bailouts, while paying out obscene bonuses to its executives, including those who had shorted (made bets against) the U.S. housing market as it collapsed into the greatest disaster since the Great Depression. (See related articles below.) Last week we received an unsolicited direct mail offer from Goldman Sachs. It was offering us the ability to borrow a personal loan ranging from $3500 to $40,000 with rates ranging from 6.99 to 24.99 percent. The … Continue reading →

By Pam Martens and Russ Martens: June 15, 2018 ~  On Monday Reuters reported that “a judge in Mexico has issued an arrest warrant for the country head of U.S. investment bank JPMorgan for alleged fraud….” Details about the arrest warrant were provided the same day in a lawsuit filed in the Federal District Court for the Southern District of New York. The lawsuit explained that “…a prosecutor has conducted a criminal investigation into fraud by J.P. Morgan. Based on the preliminary evidence collected, the prosecutor recently (in June 2018) requested that a judge detain Eduardo Cepeda, the chairman of the board and chief executive officer of Defendant’s Mexican unit, and former J.P. Morgan managing director Miguel Barbosa. Upon review of the evidence presented by the prosecutor, a criminal court judge has found the elements of felony fraud in the amount of $100 million, and issued a detention order for … Continue reading →

By Pam Martens and Russ Martens: June 14, 2018 ~ Finance Professor John Griffin and fellow researcher Amin Shams, both at the University of Texas, released a study yesterday that is causing alarm bells to ring for investors in Bitcoin and other digital currencies. Titled “Is Bitcoin Really Un-Tethered?” the researchers found strong evidence that Tether, another digital currency, is being used to artificially support the price of Bitcoin when it comes under selling pressure. Griffin and Shams found further that “Tether seems to be used both to stabilize and manipulate Bitcoin prices.” Bitcoin soared over 1400 percent last year but has been selling off this year. It’s lost about 70 percent from the peak it set last year. The researchers write: “To illustrate the potential magnitude and predictive effect of Tether issuances on Bitcoin prices, we focus on the hours with the largest lagged combined Bitcoin and Tether flows on … Continue reading →

By Pam Martens and Russ Martens: June 13, 2018 ~  Yesterday the Securities and Exchange Commission (SEC) quietly dropped a bomb on the relationship that the behemoth Wall Street firm Merrill Lynch has with its institutional clients. For those willing to skip past the timid press release from the SEC and dig carefully through the Administrative Proceeding Order, there was this startling revelation: Merrill Lynch had charged obscene markups (profits for the house) on bond trades over a three and a half-year period that were in two cases cited 23 times and 3 times the industry prescribed legal limit of less than 5 percent. Merrill Lynch agreed to settle the charges by paying $10.5 million in disgorgement to its ripped-off customers and to pay penalties of $5.2 million to the SEC. Merrill Lynch is best known as a firm with 15,000 brokers (financial advisors) in branch offices across the United … Continue reading →

By Pam Martens and Russ Martens: June 12, 2018 ~ Last Friday, Steven Pearlstein, a Pulitzer Prize-winning business and economics columnist at the Washington Post, penned an in-depth article on the hubris of stock buybacks and the role they are playing in retarding future growth of the U.S. economy as well as fueling the next debt implosion. That dire warning was followed yesterday by equally ominous remarks delivered at the progressive think tank, the Center for American Progress, by newly appointed SEC Commissioner Robert J. Jackson, Jr. (Jackson was appointed by President Trump to fill a Democratic seat on the SEC.) Pearlstein outlined the looming problem as follows: “Last year, public companies spent more than $800 billion buying back their own shares and, thanks to all the cash freed up by the recent tax bill, Goldman Sachs estimates that share buybacks will surge to $1.2 trillion this year. That comes … Continue reading →

By Pam Martens and Russ Martens: June 11, 2018 ~   Most Americans are not aware that the Securities and Exchange Commission (SEC) had the opportunity to stop Bernie Madoff’s Ponzi scheme 16 years before he confessed in 2008. In 1992, the SEC settled an investigation against two Florida accountants, Frank Avellino and Michael Bienes. The duo had been raising money for Bernie Madoff to “invest” for their clients for 30 years by handing out promissory notes to investors that promised returns of 13.5 percent or higher. Avellino and Bienes sold over $440 million in these unregistered notes to thousands of unwitting investors. The Avellino and Bienes matter was settled by the SEC with an order for the accountants to stop selling unregistered securities and with Madoff returning the money. No inquiry was made into where Madoff obtained the funds to pay back investors. The SEC did not lay a finger on … Continue reading →

  By Pam Martens and Russ Martens: June 8, 2018 ~ A long-tenured cartoonist at the Pittsburgh Post-Gazette has recently had his anti-Trump cartoons censored by the editorial director at the newspaper. Yesterday the New York Times reported that the Justice Department has seized years of one of its reporters’ email and phone records. Before we get to those details, it’s important to look at the backdrop around these actions. Four days after Donald Trump’s inauguration as President on January 20, 2017 he began a propaganda campaign against a free press in the United States on his Twitter page, labeling major media outlets as “Fake News.” According to the searchable database of Trump Tweets, he has since that time posted a total of 230 Tweets calling out major media as “Fake News.” Former FBI Director James Comey wrote in a memo regarding a February 2017 meeting he had with the … Continue reading →

By Pam Martens and Russ Martens: June 7, 2018 ~ Short memories are going to once again doom millions of stock market investors who are getting their advice from Wall Street’s minions of deeply conflicted analysts and brokers. This is a good time to reflect on the fact that when the dot.com bubble went bust from 2000 to 2002 it wiped 78 percent of the value off the Nasdaq stock index. In the midst of the crash, this is how Ron Chernow correctly described what was happening for New York Times’ readers on March 15, 2001: “Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody — close to $4 trillion in market value erased in one year —  that it amounts to nearly four times the carnage recorded in the October 1987 crash.” Chernow characterized the Nasdaq stock market … Continue reading →