OWS Anniversary plans citizens’ arrests of bankers - they've even got cuffs

Occupy Wall Street, the global movement against inequality that ignited in Manhattan last year, will mark its first anniversary by trying to block traffic in the financial district and encircle the New York Stock Exchange.

Planning for the Sept. 17 protest, dubbed S17, follows months of internal debate and flagging interest, according to interviews with organizers. The morning action may include attempts to make citizens’ arrests of bankers, and some activists intend to bring handcuffs, they said.

“We are here to bring you to justice,” said Sean McKeown, a 32-year-old chemist and New York University graduate who’s helping organize the demonstration. “We’re offering you the chance to repent for your sins.”

Protests against income disparity, bank greed and corporate abuse sprouted from San Francisco to Hong Kong after demonstrators established an encampment in Manhattan’s Zuccotti Park last September. Police ousted them in November, and governments around the world used concussion grenades, gas, riot gear, pepper spray and arrests to disband camps and protests. Read more>>

More Bank Job Cuts on Way as "Game's Up"

Credit Suisse is rumored to be the latest major bank set to announce large job cuts, and it is unlikely to be the last, Peter Toogood, head of investment at Old Broad Street Research, told CNBC Tuesday. “The game’s up. There’s no transactions, M&A isn’t happening, this is what deleveraging looks like. It’s a decade of austerity and that makes people feel more unlucky,” he said.

“Investment banks are going to struggle. There’s not going to be mass lending going on. The leverage game is over and people can’t accept it. Volumes are declining en masse and their headcounts are too high.” Trading volumes have declined overall since March 2009, with falls in U.S. stock trading volumes in each month this year. In April, there were 6.5 billion trades on average per day, compared with 12.1 billion at the market’s height in 2008. Both the New York Stock Exchange and Nasdaq reported that trading fell in the first quarter of 2012.

Lending has also shrunk, both because of worries about bank capitalization and because of reluctance to borrow money on the part of companies. When acquisitions happen, they are often based on cash rather than leverage, which means that banks have a smaller size of the pie. Moody’s mass downgrade of the world’s biggest investment banks last week showed the increasing worries about the sector. Read more >>

Private Prison Corporations Are Slave Traders

Prison cell, Fort Leavenworth. Deutsch: Gefängniszelle, Fort Leavenworth. (Photo credit: Wikipedia)

Concertina razor wire at a prison (Photo credit: Wikipedia)

The nation’s largest private prison company, the Corrections Corporation of America, is on a buying spree. With a war chest of $250 million, the corporation, which is listed on the New York Stock Exchange, this month sent letters to 48 states, offering to buy their prisons outright. To ensure their profitability, the corporation insists that it be guaranteed that the prisons be kept at least 90 percent full. Plus, the corporate jailers demand a 20-year management contract, on top of the profits they expect to extract by spending less money per prisoner.

For the last two years, the number of inmates held in state prisons has declined slightly, largely because the states are short on money. Crime, of course, has declined dramatically in the last 20 years, but that has never dampened the states’ appetites for warehousing ever more Black and brown bodies, and the federal prison system is still growing. However, the Corrections Corporation of America believes the economic crisis has created an historic opportunity to become the landlord, as well as the manager, of a big chunk of the American prison gulag. More...

Coffee Jumps to 12-Year High

Image by dennis.tang via FlickrArabica coffee for September delivery climbed 0.8 percent to $1.8655 a pound in New York, after earlier reaching $1.8865, the most since Sept. 11, 1997. Robusta beans for November delivery advanced 1.3 percent to $1,815 a metric ton (82.33 cents a pound) on NYSE Liffe in London, after earlier trading at $1,838 a ton, the highest price since Nov. 5, 2008.

--bloomberg.com

"Banging" the U.S. Stock Market

Janet Tavakoli
Chicago residents grew up to the sound of local early morning radio rundowns of pork belly futures and other exchange traded commodities. Every trick in the book from manipulation of soybeans to silver has played out in Chicago's trading pits. Every market professional I've talked to in Chicago since Thursday is of the same opinion. It makes no difference whether human beings or computers are front running and manipulating trades. The gyrations in the market last week have the look and feel of classic market manipulation.

If you want to manipulate a market, deregulate it as much as possible. Then make it as "dark," and fast as possible. Make it hard for outsiders to view your trades as they get done, and make it even harder for anyone to figure out why you are trading. Get as much monopoly power as possible over the market. Get funding at the cheapest possible rate. The best possible rate is the near zero cost funding available from the Federal Reserve.

Next, get your "men" stationed in the most influential positions at the exchanges. Make sure your cronies have shock and awe market dominance through, say, High Frequency Trading algorithms that now make up the majority of stock trades.

Then, make sure you have advance information of major market-moving events. A bailout announcement by the European Union would do nicely. A few days before the announcement, "bang" the market. Pound down the value so you can monetize put options and other bearish instruments. Trigger customers' stop-loss orders, and pick up bargains at their expense. Then cash-in again when the market pops up on bailout news.

To paraphrase Paul Erdman's 1975 tongue-in-cheek observation: "The lack of discretion in financial and political circles these days is appalling."

Meanwhile, take the heat off of yourself by leaking "fat finger" rumors to CNBC, since they can be relied up on to repeat as gospel any self-serving news you throw at them. Did someone type billions? It should have been millions. If we want to rescue the market from the Jaws of future disasters, we have to recognize that "this was no boating (or typing) accident." The system itself is flawed.

(See also: "How to Corner the Gold Market," TSF, March 30, 2010)

The NYSE was supposed to provide market liquidity. Trading safeguards are no good unless they are system-wide. The current and former heads of the NYSE, billed as the "best and the brightest," i.e., the most connected, should be asked a few questions about High Frequency Trading and "liquidity" providers. Our mega-bank trading desks that control most of the volume on the exchanges should be called in for an accounting and justification of their trading activities. Trading patterns during last week's debacle and over the last year should be examined.

Unfortunately, as others have observed before, the SEC is both largely incompetent and captured. They are learning to crawl in the space age. Moreover, the next stop for SEC officials seems to always be a highly paid influential job at a law firm, fund, or other entity that heavily relies on Wall Street for revenues. Financial reform requires radical overhaul of our "regulators."

As for Wall Street mega-bank reform, Congress seems disinclined to break up our Too-Big-To-Fail banks, define proprietary trading, or sever Goldman Sachs, Morgan Stanley, and proprietary trading at large banks from the Federal Reserve's, i.e., taxpayers' heavy subsidies. (See also: "Goldman Sachs: Spinning Gold," Huffington Post, April 7, 2010.)

If everyone wants to stick to the story of "woe is us, we had no idea things could go this wrong," then fine. No one is in control; no one is in charge; and no one can competently regulate our current system. This is a compelling argument for immediate radical financial reform.

Congress Allowed To Use Inside Info To Invest in Stocks

wgrz.com
For a group often criticized for being out of touch with what's happening on Main Street, some argue Congress seems to be deeply in touch with what will soon happen on Wall Street, especially when compared to the average investor.

"If the question is -- are they using information that they're picking up in Congress to beat the market? The answer is absolutely," said Dr. Alan Ziobrowksi, a professor of economics at Georgia State University.

This may surprise you, but it's perfectly legal for both members of Congress and their staff to use inside knowledge about upcoming legislation to play the stock market.

For example, let's say Congress is quietly preparing to pass a bill that helps the dairy industry. Before the public is aware of Congress's intentions, our elected leaders and their staffer can invest in dairy companies that stand to benefit from the bill. Then, they can pass the bill and watch the stock take off. Critics call it a form of legalized insider trading.

For those of you wondering whether scenarios like that really happen, five years ago Dr. Ziobrowksi studied the stock market investments on United States Senators. He discovered they were beating the market averages by 12 percent a year.

ZIOBROWSKI: That's actually about twice as high as the abnormal profits made by insiders, corporate insiders -- which is an extraordinary amount of money.

REPORTER: Is there any way to explain how they made those profits other than the fact that they may have had advance knowledge of what would happen to those companies?

ZIOBROWSKI: Uh, no. Frankly... These guys are way outside the margin of accident.

Critics of Congressional investment practices point to a recent transaction made by Republican House Minority Leader John Boehner of Ohio. In September of 2008, when the economy was on the brink of collapse, the U.S. Treasury Secretary and Chairman of the Federal Reserve went to Capitol Hill to privately brief Boehner and other congressional leaders. At the time, one of the greatest economic dangers the country was deflation. One day after that meeting, records show Congressman Boehner pulled his money from a fund tied to inflation.

"It says to me he picked up some information and he tried to save himself a lot of money by dumping it as soon as he could," Dr. Ziobrowksi said. "And again, though, technically speaking, there is absolutely nothing illegal about that."

But if you're not a member of Congress, or not lucky enough to work for one, buying and selling stocks based on information not available to the public can be a crime. Just ask Martha Stewart, who went to prison for lying to investigators about that very topic.

Even corporate CEOs play by tougher rules than Congress. When a CEO or a company officer buys or sells stock in their company, of which they have inside information, they have to publicly disclose that transaction within two days. Members of Congress report their stock transactions once a year.

"Well, it's really a double standard between what we in the corporate world have to adhere to and what people in government have to adhere to," said Amherst-based investor Tony Ogorek of Ogorek Wealth Management.

There also are concerns about conflicts of interest. After all, members of Congress could be voting on bills that directly or indirectly affect the companies they're invested in.

"I think the worse danger of course is that they're going to be passing and lobbying legislation on the basis of what's good for their portfolio rather than what's good for you and I," Dr. Ziobrowski said.

For three years, U.S. Representative Louise Slaughter (D-Fairport, NY) has been trying to stop the practice.

"Well, the only reason it's legal is because it had never been declared illegal," Slaughter said.

In 2006, Slaughter introduced a bill known as The Stock Act, which would ban Congress and its members from using their inside knowledge of upcoming legislation to make money.

REPORTER: How big of a problem has this become?

SLAUGHTER: We don't know the real scope of it. We just knew that there was a point in time when it seemed to be pretty apparent.

According to Slaughter, when the market was soaring a few years ago, Congress discovered some of its staff members were using their government-owned computers to play the stock market during work.

"The first apparent piece of that came when there was some legislation about asbestos removal, and what we were going to do about it," Slaughter said. "And there was a senate bill that we were waiting for that sort of collapsed. The next morning, the stock on asbestos went through the roof, and there was no question that they had had some kind of prior notice that this was going to happen."

As powerful as Slaughter has become on Capitol Hill. Her cause has gained little momentum; however, she has found an ally in Senator Charles Schumer, who supports even tougher rules that would ban members of Congress from trading any stocks.

REPORTER: Why do you think this measure has not passed or gained any traction so far in Congress?

SCHUMER: I suppose there are Senators and Congressmen who would be affected by it and don't like being told they shouldn't do it. But you know what? You want to trade a lot of stocks? You want to own a lot of stocks? Don't be a Congressmen or Senator. No one is forcing you to run for office.

It's not uncommon for members of Congress, who are paid a base salary, to leave office a lot wealthier than when they arrived. We sifted through the financial disclosure forms for as many Western New York members of Congress - past and present - as we could find. Most did not directly own any company stock or had their money tied up in special funds whose investments they did not control.

We did, however, discover that former Buffalo Congressman John LaFalce, who rang the closing bell at the New York Stock Exchange before he retired in 2002, was heavily invested in the market while in office, even while he served as the ranking member of the House Financial Services Committee.

LaFalce declined an on-camera interview, but told 2 On Your Side, "I always stayed away from banking stocks and (any) stocks within the jurisdiction of my committee."

We found nothing to suggest LaFalce traded based on knowledge unavailable to the public. But in a body as big as Congress, with its massive staff, Slaughter is convinced that the practice of insider trading continues in Washington, D.C.

"We have no business doing that," Slaughter said. "What we're there for is writing legislation to benefit everybody in the United States of America. We are not there to make it possible for somebody to make any money what(so)ever on that information."

To some, it is a frightening prospect at a time when Congress has never had as much financial control over Wall Street, and perhaps inside knowledge of what will happen next in the market.

Slaughter said she is going to try to attach her bill banning Congressional insider trading to a bigger bill that regulates the credit card industry. She believes that could make it more difficult for her colleagues to vote against it.

List of company names and their recent layoff announcements [more green shoots]

Wall St. Cheat Sheet
Lately, I continue to see layoffs popping up in the news on a very consistent basis (again). So, I put together a list of company names and their recent layoff announcements right here as a one-stop-shop to showcase the fact that these people, who are consumers in the global economy, will be very worried about their future come Holiday time.

Ben Bernanke said recovery? I still smell recession …

Since November 1st, 2009, here are the major layoff announcements which hit the wires:

-Applied Materials (Nasdaq: AMAT) to cut 1,300 to 1,500 jobs;

-AOL (TWX) lays off 100 employees ahead of spinoff ;

-Adobe (Nasdaq: ADBE) to cut about 680 full-time jobs;

-Electronic Arts Inc. (Nasdaq: ERTS) said it is cutting 1,500 jobs, representing about 17 percent of its work force;

-Toyota Motor Corp. (NYSE: TM) is shutting 300 dealerships in Japan over the next three years;

-Lloyds Bank (NYSE: LYG) is cutting or moving 5,000 more jobs;

-Sprint (NYSE: S) plans to cut up to 2,500 jobs;

-Daimler (NYSE: DAI) to cut 1,000 jobs in Germany;

-HSBC cutting 1,700 jobs in the UK;

-Paper maker UPM to lay off 870 workers in Finland;

-Nokia Siemens Networks (NYSE: SI) to lay off up to 5,700;

-RBS (NYSE: RBS) to cut 3,700 jobs in their UK branch network;

Cost-cutting is good for a company’s bottom line, but it does not support the all-important consumer who contributes to shopping at retail, paying their mortgage, and sustaining their monthly expenses. These numbers indicate people all over the world will be requiring more help from the government, therefore increasing deficits.

If I’ve missed some job cut announcements you have seen, feel free to leave a comment and let me know!

Disclosure: No positions in the companies mentioned.

Wall Street Prison Consultants

Corruption runs rampant on Wall Street, so much so that "wealthy first-time convicts are turning to a novel cottage industry: prison coaches with advice on what it's like inside the big house". Of course most of the big time financial crooks will never see the inside of prison walls, not until mass arrests are made on members of Congress.

Meet Larry Levine, a Los Angeles based consultant who served 10 years for drug trafficking, securities violations and distribution of machine guns. His "Fedtime101" course covers it all: coping with the daily grind of prison, avoiding assaults, decoding prison lingo, and even an inside scoop on what the best prison jobs are. Levine is one of "a half-dozen similar firms [that] have emerged across the country, according to USA Today's Kevin Johnson. Johnson says Levine's website has photos depicting the harsh transition "from the exchange floor to the prison yard." and that last week, the New York Stock Exchange Group demanded Levine drop the references, arguing that they tarnish the exchange's image -- an image Congress lauds as they praise Goldman Sachs for manipulating the stock market for profit.

At least a half-dozen similar firms have emerged across the country, says Johnson. Steve Oberfest, who opened his firm after the 2002 Enron collapse, calls himself an "inmate adaptation specialist" and offers a course in close-quarters combat. "I can prepare you to go into hell," says Oberfest. The fees for these prison coaches go up to $20,000, and clientele includes the likes of Martha Stewart and Bernard Madoff. Johnson says Madoff and Stewart got their penitentiary insight from the Baltimore-based National Center for Institutions and Alternatives. Herbert Hoelter, its co-founder, says the firm waived its fee for Madoff because his assets were frozen.

What an indictment this is of the hopelessly corrupt American political system, a system that serves as nothing but a front for thieves, liars, cheats, cons, and confidence men, with the main stream media serving as their obedient stenographers. The fact is, in most prisons in America, all the wrong people are in jail. Most prison inmates are petty criminals compared to the grand theft of America Wall Street and Congress are pulling off.

Still wonder if the market's rigged?

After a former Goldman Sachs employee was arrested by the FBI on federal charges for stealing software codes from Goldman's automated stock and commodities trading business, a story in Bloomberg indicated Goldman was concerned that there was a danger somebody who knew how to use their stolen program could use it to "manipulate markets in unfair ways". So how was Goldman using it?

Now read John Crudele's take:

According to the New York Stock Exchange figures for the week of April 13 that I quoted, Goldman executed twice as many big trades -- called "program" trades by the industry -- as any other firm. And, the bulk of the 1.234 billion shares bought by Goldman that week were paid for with the firm's own money.

Of course, Goldman would have to be mighty confident that stock prices were going up to risk so much of its own capital. Or, perhaps, it knew stocks would be rising. This was the time, remember, when banks were trying to recapitalize by selling shares to the public. Goldman, you'll also recall, had turned itself into a bank holding company so it could take $10 billion in government money under the Troubled Asset Relief Program.

Goldman also sold billions worth of new stock to the public while all this was happening. How much harder would it have been for banks to sell stock to nervous investors if the market was swooning rather than booming? Goldman's sudden and inexplicable optimism about stocks was incredibly opportune for the banking industry in general, for Goldman in particular and -- here's where the conspiracy starts to unfold -- for the government.

It's tough, however, to do what needs to be done to rescue the market when pesky journalists and annoying bloggers are looking over your shoulder. So a couple weeks ago the NYSE suddenly announced that brokerage firms would no longer have to report their program trades. The new rule takes effect next week. Convenient!