Puppet Masters

Stock Down

No good news: Here's where the next financial crisis may come from

next bank financial crisis
© Reuters/Brendan Mcdermid
Thanks to bank misconduct, odds are that trouble will present itself again soon. And this is what it will look like

Bloomberg financial reporter Bob Ivry has written an entertaining new book, The Seven Sins of Wall Street, which, instead of rehashing the various illegal activities that triggered the financial meltdown, focuses on what the banks have been up to since the crisis. Much of it would be familiar to readers of this space: the Bank of America whistle-blowers who were instructed to lie to homeowners, and received gift card bonuses for pushing them into foreclosure; the London Whale derivatives trade that lost JPMorgan Chase more than $6 billion; the investment banks who traded commodities while also operating physical commodity warehouses and facilities; and more. All the while, megabanks continue to enjoy subsidies on their borrowing costs because of the (accurate) perception that they will get bailed out in the event of any trouble.

The odds are that trouble will present itself soon.

Ivry's opening quote in the book comes from Jamie Dimon, whose daughter asked him, "'Dad, what's a financial crisis?' Without trying to be funny, I said, 'It's something that happens every five to seven years.'" A quick check of the calendar reveals that we're almost six years out from the bursting of the housing bubble and the fall of Lehman Brothers.

So are we on the precipice of another financial crisis, and what will it look like?

To be sure, danger still lurks in the mortgage market. The latest get-rich-quick scheme, with private equity firms buying up foreclosed properties and renting them out, then selling bonds backed by the rental revenue streams (which look suspiciously like the bonds backed by mortgage payments that were a proximate cause of the last crisis), has the potential to blow up. And continued shenanigans with mortgage documents could lead to major headaches. A new court case against Wells Fargo uncovered a bombshell, a step-by-step manual telling attorneys how they can fake foreclosure papers on demand; the fallout could throw into question the true ownership of millions of homes. Even subprime mortgages are in the midst of a comeback, because what could go wrong?

Shameless! Lloyds' top management bonuses: more than £27million following fraud scandals and attempts to circumvent cap law

© AFP/Getty Images
Lloyds chief executive António Horta-Osório
Announcement comes amid spotlight on banker pay after mis-selling scandals and attempts to sidestep EU bonus cap

Bailed-out Lloyds Banking Group has handed its top management team - including chief executive António Horta-Osório - bonuses potentially worth more than £27m.

The announcement by the 33% taxpayer-owned bank covers awards of bonuses for 2013 and 2014 - some of which do not pay out for three years - and follows its disclosures this month that its senior executives shared £12m of bonuses that had paid out from previous years.

It comes amid a sharpened focus on bankers' pay following a series of mis-selling scandals and attempts by the top banks to sidestep the EU bonus cap, which restricts bonuses to 100% of salary or 200% if shareholders approve.

The latest handouts by Lloyds include 2.1m shares for Horta-Osório - worth £1.7m at current prices - for his bonus for 2013, which is linked to the share price remaining above 73.6p for 123 consecutive days. The price of 73.6p is the average paid by taxpayers for their stake in the bank following its rescue of HBOS and bailout in 2008.
Magic Hat

Flight 370: A little bit of prestidigitation

© Veterans Today
The Saga Ends...Or Does It?

Prestidigitation: sleight of hand

a : a cleverly executed trick or deception
b : a conjuring trick requiring manual dexterity
c : skill and dexterity in conjuring tricks

Najib Razak "Malaysia Airlines deeply regrets that we have to assume beyond any reasonable doubt that MH370 has been lost and that none of those on board survived... we must now accept all evidence suggests the plane went down in the Southern Indian Ocean." (NY Times)

Razak, Malaysia's prime minister has announced that missing flight MH370 crashed in the southern Indian Ocean.

Razak based his announcement on new analysis by British satellite firm Inmarsat, which provided satellite data, and the UK's Air Accidents Investigation Branch (AAIB) which used that data to access the probability of the aircraft's ability to reach dry land.
Red Flag

World commemorates victims of NATO's illegal bombing of Yugoslavia (Photos)

Cities of the Former Yugoslavia are commemorating all those who fell victim to NATO's bombings in 1999

March 24, 2014, marks the 15th anniversary of the beginning of NATO-led operation against Yugoslavia codenamed Operation Allied Force. The facilities situated on the territories of Serbia and Montenegro became the targets of the attacks that were carried out by NATO's bombers and cruise missiles.

The failure of talks on Kosovo in Ramboulliet in France and Serbia's refusal to sign a "peace plan', and also the mass graves of the peaceful Albanian civilians who were allegedly killed by the Serbian troops that were discovered in the village of Racak served as a pretext for an act of aggression against Former Yugoslavia in which 19 NATO member-states led by the U.S. took part. Later it became known that is was a falsification that was organized by the Western special services - the majority of graves belonged to the militants of the "Kosovo Liberation Army". As a result of those bombings which lasted 78 days, 2,000 civilians were killed, and nearly 7,000 people were wounded, with children, making up 30 percent of them.

Pepe Escobar shows why the EU can't 'isolate' Russia

German Chancellor Angela Merkel could teach US President Barack Obama one or two things about how to establish a dialogue with Russian President Vladimir Putin.

As if Obama would listen. He'd rather boost his constitutional law professor self, and pompously lecture an elite eurocrat audience in the glittering Palais des Beaux-Arts in Brussels, like he did this Wednesday, on how Putin is the greatest threat to the US-administered global order since World War II. Well, it didn't go that well; most eurocrats were busy taking selfies or twittering.
Putin and Joe Kaeser
© Unknown
Putin meets the CEO of German engineering and electrical conglomerate Siemens, Joe Kaeser, at his official residence outside Moscow
Putin, meanwhile, met with the CEO of German engineering and electrical conglomerate Siemens, Joe Kaeser, at his official residence outside Moscow. Siemens invested more than US$1.1 billion in Russia over the past two years, and that, Kaeser said, is bound to continue. Angela was certainly taking notes.

Leaked: Turkey (NATO member) officials discuss military strike on Syria

Youtube blocked in Turkey
© Unknown
A Turkish citizen uses a laptop computer in Istanbul showing YouTube’s logo on March 27, 2014.

A new audio recording has emerged online, playing a discussion by top Turkish officials of possible military operations in Syria.

The audio uploaded on YouTube plays the voices of Turkey's intelligence chief, foreign minister and deputy head of the country's armed forces discussing the possible assault.

Ankara reacted by blocking users' access to YouTube throughout Turkey, saying the leaking of the controversial recording had created "a national security issue."

The You Tube ban comes a week after the government imposed a ban on Twitter, accusing the social networking website of violating Turkey's laws.

The ban on Twitter followed publication of documents allegedly exposing corruption in Erdogan's ruling elite.

The limitations come days ahead of the upcoming municipal elections scheduled for March 30.

Putin's emancipation of Russia's Jews

Putin being shown around Moscow's new $50 million Jewish Museum and Tolerance Center
Some see President Vladimir Putin as a great friend of Russia's Jews, while others argue his motives are cynical.

When even Russian policemen had to pass security checks to enter the Sochi Winter Olympics, Rabbi Berel Lazar was waved in without ever showing his ID.

Lazar, a Chabad-affiliated chief rabbi of Russia, was invited to the opening ceremony of the games last month by President Vladimir Putin's office. But since the event was on Shabbat, Lazar initially declined the invitation, explaining he was prevented from carrying documents, among other religious restrictions.

So Putin ordered his staff to prepare an alternative entrance and security-free route just for the rabbi, according to one of Lazar's top associates, Rabbi Boruch Gorin.

"It is unusual, but the security detail acted like kosher supervisors so Rabbi Lazar could attend," Gorin said.

Collapse of the American myth: Anger and disbelief following Brussels speech in which Obama claims U.S. intervention in Iraq was virtuous compared to Russia's 'invasion' of Crimea

Obama Brussels speech
© Reuters
President Barack Obama delivers a speech Palais des Beaux-Arts (BOZAR) in Brussels. ()
'In order to not appear hypocritical, Obama rewrites history around Iraq War while denouncing Russia' - Jon Queally

President Obama is on the receiving end of scorn for remarks made during a high-profile speech in Brussels on Wednesday in which he defended the U.S. invasion of Iraq in an attempt to chastise Russia for recent developments in Crimea and Ukraine.

Speaking to the international community about the ongoing crisis in Ukraine and fending off repeated accusations that the U.S. has lost its moral authority given the invasion of Iraq and other breaches of international law in recent years, Obama said:
Russia has pointed to America's decision to go into Iraq as an example of Western hypocrisy. Now, it is true that the Iraq war was a subject of vigorous debate, not just around the world but in the United States, as well. I participated in that debate, and I opposed our military intervention there.

But even in Iraq, America sought to work within the international system. We did not claim or annex Iraq's territory. We did not grab its resources for our own gain. Instead, we ended our war and left Iraq to its people in a fully sovereign Iraqi state that can make decisions about its own future.
But instead of tamping down accusations of hypocrisy, Obama inflamed it.

Obama aligned with public opinion: Americans oppose greater U.S. involvement in global politics

© AP Photo/Michael Kappeler
President Obama and German Chancellor Angela Merkel at the Brandenburg Gate in Berlin.
US President Barack Obama arrives in Europe after Russia's annexation of Crimea grappling with conflicting advice, anxious allies and unsure about Russian President Vladimir Putin's next move in Ukraine.

After the rebalancing of US diplomacy towards Asia, Mr Obama is also facing the challenge of sustained re-engagement with the continent's leaders, who often felt neglected in his first term and, more recently, bruised by allegations of US espionage.

Mr Obama will spend three days in The Hague and Brussels, at a summit of G7 leaders in the Dutch city, followed by a visit to Nato headquarters and a meeting with the EU. The overriding focus will be how to fashion and hold together a tough line against a Russian leader whose lightning incursion into Ukraine has startled the west.

So far, the US has responded with a series of sanctions against some of Mr Putin's closest associates ahead of the meeting at The Hague, taking place alongside an already scheduled nuclear security summit.

But Mr Obama's pushback against Moscow has been too little and too late, according to former administration advisers, and has failed to match the tough rhetoric from the White House about the Crimean takeover.

Comment: Coming to her senses: Merkel not ready to back economic sanctions against Russia


Russia's Federal Assembly considers sanctions against U.S. businesses

© RIA Novosti / Vladimir Fedorenk
Russia might take reciprocal action against US companies as soon as it finds suitable replacements in other countries, several lawmakers have said.

The issue of mirror sanctions is often being raised in parliament, MP Vadim Dengin told the mass circulation daily Izvestia. In particular, Russia might impose limits on companies owned by US citizens or affiliated with US-owned corporations. "If the United States is not afraid to lose business contacts with us by introducing similar sanctions, we should have already given full support to a domestic producer," Dengin said.

A member of the Lower House committee for the financial markets, Boris Kashin, emphasized that sanctions against US companies would only be imposed if the United States first introduced such measures against Russia. The lawmaker also said that it was important if Russia could do without certain services and products.

"Not all of these [US-made] goods can be produced in Russia or replaced with imports from other countries. At present we cannot do without American computers, but if we discover an alternate, for example, a China-made one,we can include the US products in the possible sanctions list," Kashin said.