By Pam Martens and Russ Martens: October 12, 2015 To fully get your mind around Hillary Clinton’s new, toothless plan to “Prevent the Next Crash” on Wall Street, you need to know a few things right up front. Hillary hails not from the Democratic Party that genuinely cares about America’s staggering wealth and income inequality and the plight of the little guy, but from a grotesquely disfigured hybrid organization informally known as the “Wall Street Democrats.” In that hybrid organization, money trumps morals, duty to country and the public interest. It is a shrine to crony capitalism, infused with lawyers who believe “it’s legal if you can get away with it.” Just as Wall Street’s watchdogs suffer from regulatory capture, the Wall Street Democrats are afflicted with “cognitive capture,” a polite way of saying public officials covet the wealth they hang around with on Wall Street and expect equal earning power when … Continue reading →

By Pam Martens and Russ Martens: October 8, 2015  Our email inbox yesterday and this morning raised more alarm bells for the mega banks – you know the ones we mean; the ones that should have been broken up before we were on the cusp of the next downturn. Here’s a quick rundown before we get into the details: Deutsche Bank announced it will take an approximate $7 billion writedown in the third quarter and potentially eliminate its dividend; Charles Schwab is out with a report on the potential for deflation and what it could do to corporate earnings; The Treasury’s Office of Financial Research released a report on big bank liquidity concerns; Bank of America released a report on the $100 billion exposure that the troubled commodities firm, Glencore, poses to global financial institutions; Bloomberg Business is reporting on the anticipated revenues downturn when big U.S. banks begin to … Continue reading →

By Pam Martens and Russ Martens: October 7, 2015  Hillary Clinton just can’t catch a break. After making the admitted poor choice of using a private server for her emails during her time as Secretary of State instead of one protected by the U.S. government and its security octopus, Hillary has told the public that she turned over all work-related emails from her time as Secretary of State to the government and erased all of her 31,000 personal emails from that period. Now it turns out that a company called Datto Inc., which routinely makes demos of setting fire to equipment to show how indestructible its data backup system is, may have a stash of Hillary’s emails. Its founder and CEO, Austin McChord, was named this year as one of Forbes “30 Under 30,” a prestigious list of technology entrepreneurs under the age of 30. To make matters even more … Continue reading →

By Pam Martens and Russ Martens: October 6, 2015  Will the American people ever get an honest writing of the 2008-2009 Wall Street collapse? If you think it is to be found in the new book released on Monday by former Fed Chairman Ben Bernanke (which we seriously doubt you are thinking) you will be disappointed. What you will find in Bernanke’s book are photos of his grandparents, a photo of the Time Magazine cover with himself named “Man of the Year,” a photo of Bernanke with the masterminds of the repeal of the investor protection act known  as Glass-Steagall (Robert Rubin, Alan Greenspan, Larry Summers), a photo of the grand double staircase in the Federal Reserve building, and so forth. What you will not find is an honest accounting of how the Fed allowed Citigroup to grow into a financial Frankenstein and then quietly and secretly shoveled trillions of … Continue reading →

By Pam Martens and Russ Martens: October 5, 2015  Last week we wrote about the invisible hand’s removal of a negative paragraph on the financial industry from the Pope’s speech before a joint session of Congress and some bizarre shenanigans with Fed Chair Janet Yellen’s highly anticipated speech in Amherst, Massachusetts. This past Saturday, Adam Posen, the President of a powerful think tank, the Peterson Institute for International Economics, delivered a speech at a conference sponsored by the Federal Reserve Bank of Boston, calling the U.S. Financial Stability Oversight Council (FSOC) “a mess.” That speech has gone missing from online access. FSOC is the body created under the Dodd-Frank financial reform legislation of 2010 to reassure the American people that Wall Street would never again be able to take the U.S. economy, the financial system, and the housing market to the cleaners and then get a multi-trillion dollar bailout. FSOC … Continue reading →

By Pam Martens and Russ Martens: October 1, 2015 An uncanny number of people woke up this week with the same thought – it’s time to panic over the size, structure and illiquidity of the junk bond market. (Not to put too fine a point on it, but Wall Street On Parade made the warning in 2013 and again on August 18 of this year.) On Tuesday morning, it was both Carl Icahn, the famous hostile takeover artist and hedge fund billionaire, along with the more staid academics at the International Monetary Fund (IMF), who issued junk bond warnings. (Junk bonds are corporate debt with ratings below investment grade, also known as “high yield” bonds.) Icahn released a video (see clip below) assigning blame to companies like BlackRock which have bundled illiquid junk bonds into Exchange Traded Funds (ETFs), listed them on the New York Stock Exchange, and sat back … Continue reading →

By Pam Martens and Russ Martens: September 30, 2015 On March 10, 2000 the Nasdaq stock market, which is supposed to hold the technology and startup companies that will keep America globally competitive in the future, closed at a high of 5,048.62. Yesterday, more than 15 years later, it closed at 4,517.32, a decline of 10.5 percent from its level of March 2000. To fully grasp the unprecedented nature of the Nasdaq bubble of 2000, one has to look at where the three big stocks are today that made that 5,000 mark possible 15 years ago. Just three stocks, Microsoft, Cisco, and Intel, were valued at a market cap of $1.89 trillion in 2000. As of yesterday’s close, those three stocks had a combined market cap of $616.137 billion – a shrinkage of 67 percent after more than 15 years. Much of the hype, as well as the money, that … Continue reading →

By Pam Martens and Russ Martens: September 29, 2015  Stocks were variously spiking and tanking from moment to moment in early morning trade and much of the problem resides in one eight letter word – Glencore. The Switzerland-based industrial metals producer and commodity trading firm has lost over 75 percent of its share value this year, dumping 29 percent of that just yesterday. Two of the major credit ratings agencies, Moody’s and Standard & Poor’s, have stated they may downgrade the debt of the company. Credit markets have effectively made those rating outlooks moot and already started trading the debt as junk. The Lehman Brothers’ analogy is being made by market pundits. As if all of this weren’t causing enough market angst, yesterday UK investment firm Investec issued a research report on Glencore, suggesting that shareholders could be wiped out if low raw material prices persist. The report stated: “In … Continue reading →

By Pam Martens and Russ Martens: September 28, 2015 Both Fed Chair Janet Yellen and Pope Francis delivered speeches on Thursday of last week that took an odd turn of events. A section of the Pope’s official speech transcript that slammed the finance industry was gutted before the Pope delivered his address to a joint session of Congress. In the case of Yellen, evidence strongly suggests that egregiously bad event planning sabotaged her speech at the University of Massachusetts in Amherst, triggering media hysteria and prognostications of how fast Stanley Fischer, the Fed’s Vice Chairman, would slide into Yellen’s seat as Chair of the Fed. The official transcript of the Pope’s speech to Congress appears here. It contains the following passage: “Here I think of the political history of the United States, where democracy is deeply rooted in the mind of the American people. All political activity must serve and … Continue reading →

By Pam Martens: September 24, 2015  Pope Francis will address a joint session of the U.S. Congress this morning and is expected to lecture on the country’s ethical and moral challenges. Some feel he should get his own house in order before lecturing others. President Obama held the largest welcoming event for the Pope yesterday on the White House lawn in the history of his administration, replete with color guards and a fife-and-drum corps. The Pope, who prides himself on disdain for materialism and the worship of money, arrived in a tiny Fiat. (See video below.) But the American media’s love fest with the Pope wilted in the afternoon when the Pope addressed a group of 300 bishops at the Cathedral of St. Matthew the Apostle in Washington, D.C. The Pope spoke in only cryptic terms about the horrors of sexual abuse of children within the church. He was immediately … Continue reading →