By Pam Martens and Russ Martens: December 22, 2015 Corporate front groups got a big fat Christmas present in the recently passed Omnibus spending bill. Congress is hoping that voters are too distracted with holiday preparations to look at the fine print in its more than 2,000 pages. We were winding our way through its copious contents when we stumbled upon its section on the IRS. Somehow this so-called “spending” bill has legislated into law a right-wing vendetta against the Internal Revenue Service. For example, the IRS is effectively stripped of its ability to writes new rules on 501(c)(4) organizations. Those organizations are increasingly being used as corporate-funded political front groups masquerading as social welfare organizations: The new Omnibus law reads as follows: “During fiscal year 2016: (1) none of the funds made available in this or any other Act may be used by the Department of the Treasury, including … Continue reading →

By Pam Martens and Russ Martens: December 21, 2015  According to a Rasmussen national telephone survey during the week ending December 10, only 24 percent of likely U.S. voters think the country is heading in the right direction. Tens of millions of Americans believe that they can’t put a person in the White House or in Congress who shares their core principles because the system is rigged in favor of powerful moneyed interests. Against that backdrop, with a continuance of the Clinton Dynasty and the Wall Street power players looking ever more likely to dominate in the 2016 Presidential election, along comes an astounding story of how the Democratic National Committee (DNC) handles critical voter information for competing Democratic Presidential campaigns. Let that sink in for a moment.  A Presidential candidate like Senator Bernie Sanders who is asking the American people to engage in a political revolution to meaningfully change … Continue reading →

By Pam Martens and Russ Martens: December 17, 2015  In a properly functioning, rational, and efficient market, any form of Fed tightening after seven years of filling the punch bowl with an elixir of easy money should have been viewed by the markets as a contraction of monetary policy and sent both stocks and risky bonds plunging. But what we saw in the markets yesterday can only be described as bizarre. The Dow Jones Industrial Average, composed of 30 large cap stocks which are viewed as a barometer of the overall U.S. economy, soared 244 points by the close of trading. The Nasdaq, made up mostly of smaller companies than those in the Dow, which would have a harder time in a higher interest rate environment because their debt is rated lower generally, also soared and closed up 75.77 points. A rise in interest rates should have sent utility stocks … Continue reading →

By Pam Martens and Russ Martens: December 16, 2015 If the U.S. government issued a warning yesterday that there was a credible threat of a new terrorist attack from a foreign terrorist, we can guarantee you that it would have made front page headlines. What the U.S. government did instead yesterday was to issue a formal warning that the prospects for a new financial crisis have grown, and, in one area, are at an “historically elevated level.” Since the financial crisis of 2007-2009 did more economic damage to the U.S. than all terrorist attacks combined and will have a devastating impact on the standard of living of the next generation, one would think this new financial warning would have been worthy of a mention on the front pages of mainstream newspapers. And yet, we could find no mention in the New York Times, Los Angeles Times, Chicago Tribune, Washington Post, … Continue reading →

By Pam Martens and Russ Martens: December 15, 2015 The selloff in junk bonds has rattled the markets and is raising questions about just who it is that is providing liquidity to the junk bond Exchange Traded Funds (ETFs) — which have magically redeemed billions of dollars in withdrawals from retail investors while the underlying bonds in their portfolio are under severe stress in the broader marketplace. (Both a junk bond mutual fund and a separate hedge fund were forced to freeze investor withdrawals of their cash last week due to illiquidity in the junk bond market.) Unknown to most retail investors is that there is an entity called an “Authorized Participant” hiding behind the curtain of ETFs that is making that liquidity possible. According to an August 8, 2014 written question and answer exchange between the National Association of Insurance Commissioners and BlackRock and State Street – two large … Continue reading →

By Pam Martens and Russ Martens: December 14, 2015  Last week we saw shades of 2007 with both a hedge fund and junk bond mutual fund halting the ability of investors to withdraw funds. An additional credit hedge fund announced it is shutting down. The problem this time around is a dearth of liquidity (read buyers’ strike) for junk bonds. In 2007 the problem was subprime mortgage backed securities and related derivatives. On June 7, 2007, long before anyone recognized that they were in the first inning of what would become the epic financial crash of 2008, Bear Stearns quietly sent a letter to investors in its High-Grade Structured Credit Strategies Enhanced Leverage Fund, telling them it was suspending the ability of investors to withdrawal their money from the hedge fund because the “investment manager believes the company will not have sufficient liquid assets to pay investors.” The following month, … Continue reading →

By Pam Martens and Russ Martens: December 10, 2015 The Office of the Comptroller of the Currency (OCC), which regulates national banks, including the behemoth Wall Street banks that either blew themselves up or became part of shot-gun marriages during the 2008 crash to avoid outright collapse, issued a warning yesterday that credit risks are rising at banks. The rising risks are the result of a loosening of loan underwriting standards, which, says the OCC, “reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis….” The first question that comes to mind from this report is what good is increased capital at the mega banks if the banks are simultaneously increasing the riskiness of the loans on their books. The next question is why the regulators have sat back and watched this risk grow over the past tumultuous year without nipping it in … Continue reading →

By Pam Martens and Russ Martens: December 9, 2015 Paranoia is rampant among Republicans on the House Financial Services Committee and was on display throughout its hearing yesterday. Unfortunately for the nation, much of that paranoia is well founded. Just take a look at the photo above. The panel of witnesses that testified yesterday represent just eight of the ten voting members of the Financial Stability Oversight Council (FSOC; which is pronounced F-Sock), another layer of oversight imposed by the Dodd-Frank financial reform legislation of 2010 to monitor an ever sprawling octopus of a financial system that looks to most Americans as if it is still out of control, seven long years after the greatest financial collapse since the Great Depression. Behind each of the regulators on the panel (see list and testimony below), with the exception of S. Roy Woodall, the independent member of FSOC with insurance expertise, there … Continue reading →

By Pam Martens and Russ Martens: December 8, 2015  Yesterday, the New York Times gave Presidential candidate Hillary Clinton a free infomercial (a/k/a OpEd) to spin her toothless plan “to rein in Wall Street.” Hillary begins by telling us this: “Seven years ago, the financial crisis sent our economy into a tailspin. Over five million people lost their homes. Nearly nine million lost their jobs. Nearly $13 trillion in household wealth was wiped out.” But that’s not what her husband, former President Bill Clinton told us was going to happen when he repealed the 66-year old Glass-Steagall Act on November 12, 1999. Here’s what Bill Clinton promised us from this massive deregulation of Wall Street: (See video of his full remarks below.) President Bill Clinton: “You heard Senator Gramm characterize this bill as a victory for freedom and free markets. And Congressman LaFalce characterized this bill as a victory for … Continue reading →

By Pam Martens and Russ Martens: December 7, 2015 Last evening, in his speech to the nation from the Oval Office, President Obama reminded Americans that “Muslim Americans are our friends and our neighbors, our co-workers, our sports heroes — and, yes, they are our men and women in uniform who are willing to die in defense of our country.”  In his concluding remarks, the President told viewers that our nation was “founded upon a belief in human dignity — that no matter who you are, or where you come from, or what you look like, or what religion you practice, you are equal in the eyes of God and equal in the eyes of the law.” (See full video of the speech below.) What the President didn’t say is that while the recent mass killing in San Bernardino, California was conducted by a married couple who were Muslim, the … Continue reading →