Search Results for: Federal Reserve

By Pam Martens and Russ Martens: December 20, 2017 Like that box of macaroni in your kitchen cupboard, the U.S. stock market has become a lot more expensive but has actually shrunk in terms of quantity. In 1975, U.S. domestic companies that traded on U.S. exchanges totaled 4,819. Forty years later, the market has shrunk to less than 4,000, despite a tripling in GDP. If you take a shorter time span of  20 years, which included the dot.com craze of listing companies known to Wall Street insiders as “crap” and “dogs,” the numbers are worse. In September of last year, Jim Clifton, the Chairman and CEO of Gallup, the polling company, reported the following: “The number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years — from about 7,300 to 3,700. Because firms can’t grow organically — that is, build more business … Continue reading →

By Pam Martens and Russ Martens: December 15, 2017 During Janet Yellen’s last press conference as Federal Reserve Chair on Wednesday, Donna Borak, the Senior Economics Writer at CNN, asked Yellen a question regarding the proposed tax cut. Borak queried: “To return back to the prospective tax bill questions, in your view at all is the Republican tax bill an ill-timed fiscal stimulus, and are you concerned at all it will wind up squandering the tools both the Congress and the Fed have when it comes time to dealing with the recession?” Yellen answered as follows: “So look, I will just say that it is up to the administration and Congress to decide on appropriate fiscal policy, and our job is to maintain our focus on employment and inflation. We continue to think, as you can see from the projections, that a gradual path of rate increases remains appropriate even … Continue reading →

By Pam Martens and Russ Martens: December 14, 2017 The outgoing Chair of the Federal Reserve, Janet Yellen, held her last press conference yesterday following the Federal Open Market Committee’s decision to hike the Feds Fund rate by one-quarter percentage point, bringing its target range to 1-1/4 to 1-1/2 percent. Given the growing reports from market watchers that the stock market has entered the bubble stage and could pose a serious threat to the health of the economy should the bubble burst, CNBC’s Steve Liesman asked Yellen during the press conference if there are “concerns at the Fed about current market valuations.” Yellen gave a response which may doom her from a respected place in history. She stated: “So let me start Steve with the stock market generally. Of course the stock market has gone up a great deal this year and we have in recent months characterized the general … Continue reading →

By Pam Martens and Russ Martens: December 8, 2017 Some of the same warning signs that emerged before the 1929 to 1933 market crash, the tech mania crash of 2000, and the epic Wall Street meltdown of 2008 are flashing red. If you have significant amounts of your 401(k) invested in equity mutual funds (that is, those invested in stocks), it’s time to take an objective appraisal of today’s market versus historic benchmarks. This is also a good time to remember that markets have lost as much as 50 percent of their value from peak to trough in the last 20 years. If that’s more pain than you’re prepared to suffer, it may be time to trim back your exposure. We’ll get to the specifics on today’s market shortly, but first some necessary background. In the market crash of 1929 to 1933, the stock market lost 90 percent of its … Continue reading →

By Pam Martens and Russ Martens: November 29, 2017 “Populist” candidate for President, Donald Trump, railed against the “political establishment” and Wall Street elites who were “getting away with murder.” On October 26, 2016, just days before the Presidential election, Trump spoke at a rally in Charlotte, North Carolina and promised to uphold the plank in the Republican Party platform to break up the big banks by restoring the Glass-Steagall Act. He stated: “The policies of the Clintons brought us the financial recession — through lifting Glass-Steagall, pushing subprime lending, and blocking reforms to Fannie and Freddie. Two friendly names but they’re not so friendly. It’s time for a 21st century Glass-Steagall and, as part of that, a priority on helping African-American businesses get the credit they need.” Now, as the sitting President, the former populist candidate has become the embodiment of the political establishment he railed against. He has stacked his … Continue reading →

By Pam Martens and Russ Martens: November 27, 2017 Since its financial meltdown in 2008 and unprecedented bailout by the U.S. taxpayer, Citigroup (parent of Citibank) has been repeatedly charged by its Federal regulators with odious crimes against its pooled mortgage investors, credit card and banking customers, student loan borrowers, and for its foreclosure frauds. It has paid billions of dollars in fines for its past misdeeds while new charges pile up. In 2015, it became an admitted felon for participating in rigging foreign exchange markets. In short, Citigroup is a lawbreaking recidivist. If it were a mere human, it would be serving a long prison term. Instead, its fines for charges of egregious acts are getting smaller, not larger. Last Tuesday, the Consumer Financial Protection Bureau (CFPB), which typically has a good track record of holding the big Wall Street banks accountable for their misdeeds, imposed an unusually feeble … Continue reading →

By Pam Martens and Russ Martens: November 20, 2017 Last Wednesday, Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB), announced he would be stepping down from his post at the end of this month. Cordray is the former Attorney General of Ohio and there are rumors he may make a run for Governor there. The CFPB, a Federal agency, was created under the Dodd-Frank financial reform legislation of 2010. The legislation resulted from the greatest fraudulent wealth transfer from the middle class to the 1 percent since the Wall Street frauds of the late 1920s. Both periods ended in an epic financial crash that left the U.S. economy on life support. Since the financial crash of 2008, the U.S. economy has grown at an anemic 2 percent or less per year despite massive fiscal stimulus and unprecedented bond purchases (quantitative easing) by the Federal Reserve. Despite the … Continue reading →

By Pam Martens and Russ Martens: November 17, 2017 U.S. Treasury Secretary Steven Mnuchin appears to have inaugurated a perpetual bring your wife to work day. It’s become so farcical that it frequently feels like the United States Treasury Department has morphed into a low-budget, badly scripted reality TV show where the female star is so out-of-touch that she must continually scurry about in her haute couture erasing the haughty things she has written about the little people on multiple continents. We’ll get to that shortly, but first some background: It all started back on January 19 when actress and then fiancée Louise Linton sat by her man during his Senate Finance Committee confirmation hearing to become U.S. Treasury Secretary. At the hearing, Democratic Senator Ron Wyden of Oregon had this to say about his repugnance to see Mnuchin fill the post as U.S. Treasury Secretary: “Mr. Mnuchin’s career began … Continue reading →

By Pam Martens and Russ Martens: November 9, 2017 In November of 2016, there was more than 100 basis points (one percent) difference between the yield on the 2-year and the 10-year U.S. Treasury Note. As of this morning, that difference stood at 68 basis points, a dramatic flattening in the yield curve and harkening to the levels seen during the onset of the financial crisis in 2007. As of 7:48 a.m. this morning, the spread between the 10-year Treasury Note (yielding 2.33 percent) and 30-year Treasury Bond (yielding 2.81 percent) is even smaller, at a meager 48 basis points or less than half of one percent. It is a serious commentary on the bizarre financial times in which we live that a fixed income investor would be rewarded with less than half a percent of additional income to add 20 years of risk to the maturity date on his … Continue reading →

By Pam Martens and Russ Martens: November 8, 2017 According to the now publicly available transcript of the testimony that former U.S. Treasury Secretary Robert Rubin gave before the Financial Crisis Inquiry Commission (FCIC) on March 11, 2010, he was not put under oath, despite the fact that the bank at which he had served as Chairman of its Executive Committee for a decade, Citigroup, stood at the center of the financial crisis and received the largest taxpayer bailout in U.S. history. The fact that Rubin was not put under oath might have had something to do with the fact that he showed up with a team of six lawyers from two of the most powerful corporate law firms in America: Paul, Weiss, Rifkind, Wharton & Garrison and Williams & Connolly. One of Rubin’s lawyers from Paul, Weiss was Brad Karp, the lawyer who has gotten Citigroup out of serial … Continue reading →