By Pam Martens: February 27, 2014 Mark Karpeles, a 28-year old Frenchman and the head of the now shuttered Bitcoin web site Mt. Gox, where customers are said to have lost hundreds of millions of dollars, may be a very talented software developer and entrepreneur, but what he clearly is not is a competent banker; and yet, he was allowed to accept large quantities of deposits of money from the public. Mt. Gox, a purveyor of the virtual currency, Bitcoin, held no banking license or bank charter in the U.S. It had no FDIC insurance guaranteeing the deposits. There were no bank examiners periodically checking the books to be certain the deposits were safe. And yet, according to the chart below from Alexa, it may be U.S. citizens who suffered the largest losses. Alexa ranks sites by traffic from around the globe. Despite the fact that Karpeles was based in … Continue reading →

By Pam Martens: February 26, 2014 Coming off the greatest financial collapse in modern history because of unregulated derivatives backed by dodgy collateral, it is more than a little disconcerting that we are now forced to use our digital ink to explain the pitfalls of investing in a digital currency backed by air. There seems to be a mass hypnosis at work. For example, last evening, at 6:47 p.m., the wire service Reuters explained Bitcoin to its readers as follows: “Unlike traditional currencies, where a central bank decides how much money to print based on goals like controlling inflation, no central authority governs the supply of bitcoins. Like other commodities and currencies, its value depends on people’s confidence in it.” The last sentence of the Reuters statement was likely penned by someone who has never traded commodities or registered with the Commodity Futures Trading Commission. Bitcoin is decidedly not like other traded commodities. … Continue reading →

By Pam Martens: February 25, 2014 According to a Freedom of Information Act response received by Wall Street On Parade, Federal law enforcement may share the blame with JPMorgan Chase for allowing Bernard Madoff’s Ponzi scheme to be perpetuated for so long. On January 7 of this year in a press conference called to announce felony charges against JPMorgan Chase for its role in the Madoff Ponzi scheme, U.S. Attorney Preet Bharara, FBI Assistant Director-in-Charge George Venizelos, and the Director of the Financial Crimes Enforcement Network, Jennifer Shasky Calvery, took turns at the podium excoriating JPMorgan for observing brazen, long-term money laundering activity occurring under its nose in the business bank account it held for Bernard Madoff while ignoring its legally mandated duty to file a Suspicious Activity Report (SAR) with the federal government. The Financial Crimes Enforcement Network, known throughout Wall Street and the banking world as FinCEN, is … Continue reading →

By Pam Martens and Russ Martens: February 23, 2014 On the evening of Sunday, December 15 of last year, six weeks before the onset of the latest rash of tragic deaths of young men in their 30s employed at JPMorgan, the Pearland, Texas police received a call of a person in distress outside a Walgreens pharmacy at 6122 Broadway in Pearland. The individual in distress was Jason Alan Salais, a 34-year old Information Technology specialist who had worked at JPMorgan Chase since May 2008. A family member confirmed to Wall Street On Parade that Salais died of a heart attack on the same evening the report of distress went in to the police. The incidence of heart attack or myocardial infarction among men aged 20 to 39 is one half of one percent of the population, according to the National Center for Health Statistics and National Heart, Lung, and Blood … Continue reading →

By Pam Martens: February 20, 2014 The U.S. government’s economic policy wonks are the habitual finger wags. They’ve lectured Japan incessantly for 20 years on how to beat its intractable deflation problem and in more recent years pointed at China for keeping its currency artificially low to boost exports.  Last October 30, when the U.S. Treasury released its semi-annual “International Economic and Exchange Rate Policies” report to Congress, it turned its finger-pointing on Germany, grousing that: “Within the euro area, countries with large and persistent surpluses need to take action to boost domestic demand growth and shrink their surpluses.  Germany has maintained a large current account surplus throughout the euro area financial crisis, and in 2012, Germany’s nominal current account surplus was larger than that of China.  Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro-area countries have … Continue reading →

By Pam Martens and Russ Martens: February 19, 2014 Since January 28 of this year, one tragic death per week has occurred at JPMorgan among men in their 30s, the latest occurring yesterday — a statistically improbable random occurrence. Each JPMorgan employee worked at a headquarters’ building in a key financial market for JPMorgan – London, New York, and Hong Kong. And in each and every case, the press has been blocked from obtaining vital information to properly do its job. The deaths started on January 28 when Gabriel Magee, a 39-year old technology Vice President, was found dead on the 9th level rooftop of JPMorgan’s European headquarters at 25 Bank Street in the Canary Wharf section of London. After much prodding by Wall Street On Parade, the Metropolitan Police in London could not confirm that one eyewitness to the fall existed despite London newspapers widely circulating the story that … Continue reading →

By Pam Martens: February 18, 2014 Yesterday, the UK’s Serious Fraud Office brought criminal charges against three more individuals in the matter of rigging the interest rate benchmark known as Libor. But the sum total of what we learned about those charges from the Serious Fraud Office are the following two sentences: “Criminal proceedings by the Serious Fraud Office have commenced today against three former employees at Barclays Bank Plc, Peter Charles Johnson, Jonathan James Mathew and Stylianos Contogoulas, in connection with the manipulation of LIBOR.  It is alleged they conspired to defraud between 1 June 2005 and 31 August 2007.” There was no formal criminal complaint released to the press; no smoking gun emails; no transcripts of collusion in chat rooms. Just the above two sentences. In the U.S., we are certainly not getting financial crimes by the big banks under control any better than the UK but at … Continue reading →

By Pam Martens and Russ Martens: February 17, 2014 The probability of two vibrant young men in their 30s who are employed by the same global bank but separated by an ocean dying within six days of each other is remote. And few companies are in as good a position to understand just how remote as is JPMorgan: since 2010, it has received four patents on quantifying longevity risks and structuring wagers via death derivatives. The two deaths at JPMorgan remain unexplained. Gabriel Magee, a 39-year old technology Vice President was found dead on the 9th level rooftop of JPMorgan’s European headquarters at 25 Bank Street in the Canary Wharf section of London on January 28 of this year. A London coroner’s inquest is scheduled for May 15 to determine the cause of death. Six days later, Ryan Crane, a 37-year old Executive Director involved in trading at JPMorgan’s New … Continue reading →

By Pam Martens: February 13, 2014 The new Chair of the Federal Reserve Board, Janet Yellen, is one of the most seasoned and knowledgeable central bank chiefs in the 100-year history of the Fed. But there was one sentence in Yellen’s testimony on Tuesday before the U.S. House Financial Services Committee which is alarming. Yellen told the Congressional panel: “Inflation remained low as the economy picked up strength, with both the headline and core personal consumption expenditures, or PCE, price indexes rising only about 1 percent last year, well below the FOMC’s 2 percent objective for inflation over the longer run.” A strong economy is incompatible with declining inflation. One or the other will win out. In a consumer based economy such as the United States, where personal consumption represents 70 percent of GDP, preventing deflation from getting a foothold is prominently on the Fed Chair’s radar screen, whether it … Continue reading →

By Pam Martens and Russ Martens: February 12, 2014 The nonstop crime news swirling around JPMorgan Chase for a solid 18 months has started to feel a little spooky – they do lots of crime but never any time; and with each closed case, a trail of unanswered questions remains in the public’s mind. Just last month, JPMorgan Chase acknowledged that it facilitated the largest Ponzi scheme in history, looking the other way as Bernie Madoff brazenly turned his business bank account at JPMorgan Chase into an unprecedented money laundering operation that would have set off bells, whistles and sirens at any other bank. The U.S. Justice Department allowed JPMorgan to pay $1.7 billion and sign a deferred prosecution agreement, meaning no one goes to jail at JPMorgan — again. The largest question that no one can or will answer is how the compliance, legal and anti-money laundering personnel at … Continue reading →