You are here

Money

Two time losers

Submitted by Roanman on Fri, 07/13/2012 - 08:34

 

From Huffington Post

We'll say it again, why bother arguing about new financial regulations, when existing regulations go unenforced?

Our financial system is corrupt our government regulators are at best incompetent and at worst complicit.

Once again regulators across two different presidential administrations of two different political parties had been on notice with regards to problems at a supposedly regulated company, and did nothing to protect the public.

 

PFG Collapse Hits Some MF Global Victims

 

 

When commodities brokerage firm MF Global collapsed last October, losing $1.6 billion in customer funds in the process, Christopher Dickerson was sure he'd dodged a bullet. Just one month before the collapse, Dickerson had taken the bulk of his money out of his MF Global account.

He'd moved his cash, about $250,000 in all, to a smaller commodities brokerage firm based out of Cedar Falls, Iowa, called PFGBest, because it was offering the same services he sought -- Dickerson trades futures contracts in his spare time -- for much lower fees. "I thought that would never happen again," Dickerson said. "Stupid me."

On Tuesday, Peregrine Financial Group, which operates PFGBest, filed for bankruptcy, the same day that the Commodity Futures Trading Commission filed suit against the firm for fraud. The day before, police in Cedar Falls discovered the firm's founder, Russell Wasendorf, unconscious in his car near the firm's offices after an apparent suicide attempt. According to reports, he has now emerged from a coma.

In the complaint, the CFTC accuses Wasendorf and his firm of illegally tapping into customer funds since at least February 2010, and falsely reporting to regulators that it had over $220 million on its books when in reality the firm had just $5.1 million. The complaint also alleges that Wasendorf falsified some bank records he'd sent to regulators.

 

 

To quote Peter Brandt

Submitted by Roanman on Wed, 07/11/2012 - 08:45

 

We typically try pretty hard to create posts for everyone, knowing of course that we seldom succeed at that goal.

This post is specifically for the about 12 people we know for sure are active in the commodity markets, although the moral should be washing over just about everybody about now.

The financial system across the entirety of "The West" is rotten to it's core, the call for more regulation and the condemnation of laissez fair capitalism miss the greater point, that being that the regulations in place are neither followed nor enforced, and that the regulators cashing the peoples paychecks are at best incompetent and at worst complicit in the now chronic frauds perpetrated by the banks.

To quote Peter Brandt on the issue,

 

 

CFTC stands for Commodities Futures Trading Commision.

Sorry about the ad, everybody is getting slicker about keeping their promotions in the vid.

 

Dr. Michael Burry tells it like it is ... and was.

Submitted by Roanman on Sun, 06/24/2012 - 08:27

 

It was Dr. Michael Burry who brought the idea to Goldman Sachs and asked them to engineer a means of shorting what we now know was the massive real estate bubble of the first decade of the 21st Century.

Dr. Burry who suffers from Asperger syndrome, a type of autism that inspires repetitive fascinations and makes social interaction difficult had pursued a passion for investing as an undergrad at UCLA and continued that pursuit as a medical student at Vanderbuilt University and later as a resident and intern of Neurology at Stanford Hospital in Connectict.

Dr. Burry left the medical business early in his career in order to form Scion Capital which he managed from 2000 until 2008.  He approached Goldman in 2005.  The best accounting of Dr. Burry's story can be found in Michael Lewis' fine book, The Big Short: Inside the Doomsday Machine, now on sale at Amazon for 34% off.

Cheap at twice the price.

This is Dr. Burry addressing the 2012 graduating class from UCLA's School of Economics.

Way super double highly recommended.

 

 

Who Destroyed The Middle Class?

Submitted by Roanman on Wed, 06/20/2012 - 17:48

 

The following quotes and charts were all taken from a Burning Platform post titled Who Destroyed the Middle Class? - Part 1.

You should read it as it's probably your ass that's getting chewed off here.

You should also read Part 2.

As always, click on any of the charts for a link to this outstanding piece.

 

“Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.” – Charles Ferguson – Predator Nation

 

 

 

The Federal Reserve released its Survey of Consumer Finances last week. It’s a fact filled 80 page report they issue every three years to provide a financial snapshot of American households. As you can see from the chart above, the impact of the worldwide financial collapse has been catastrophic to most of the households in the U.S. A 39% decline in median net worth over a three year time frame is almost incomprehensible. Even worse, the decline has surely continued for the average American household through 2012 as home prices have continued to fall. Median family income plunged by 7.7% over a three year time frame and has not recovered since the collection of this data 18 months ago. Even more shocking is the fact that median household income was $48,900 in 2001. Families are making 6.3% less today than they were a decade ago. These figures are adjusted for inflation using the BLS massaged CPI figures. Anyone not under the influence of psychotic drugs or engaged as a paid shill for the financial oligarchy knows that inflation is purposely under reported in order to keep the masses sedated and pacified. The real decline in median household income is in excess of 20% since 2001.

 

       

 

 

 

 

   

Start shopping for your pitchfork, get yourself a real pointy one.

 

Ya gotta love Nigel Farage

Submitted by Roanman on Wed, 06/13/2012 - 09:48

 

I know we do around here.

As a member of the European Parliment Mr Farage has roasted the European Union, it's leadership, it's member governments, and it's currency the Euro on numerous occasions and with a mighty passion.

This particular rant may be his finest.

Our favorite part.

On Spain's Prime Minister Mariano Rajoy, "I've got the feeling after all his twists and turns that he is just about the most incompetent leader in the whole of Europe.  And that's saying something because there's pretty stiff competion."

 

 

You go Nigel.

 

In five minutes and thirty eight seconds, the single best analysis of the federal budget deficit anybody around here has ever seen.

Submitted by Roanman on Wed, 05/02/2012 - 16:59

 

And we've been looking.

Whoever this guy is, he's my new personal hero.

 

 

Abusing the tax code

Submitted by Roanman on Tue, 05/01/2012 - 10:39

 

Here's just a little more nonsense resultant from our nonsensicle tax code.

From Rueters, this FAIL like much of the rest of our system of taxation is the consequence of trying to work social policy through the tax code, which should be an instrument for raising revenue for the government and nothing else.

 

 

I'd like a Double Irish With A Dutch Sandwich please.

Submitted by Roanman on Tue, 05/01/2012 - 07:36

 

The funniest thing to me about the growing brewhaha over Google and now Apple's perfectly legal (and dare I say it? ... moral) by the letter application of our moronic tax code is the fact that their approach is so well known and by the way so pervasive, that not only does it have a name, "Double Irish With A Dutch Sandwich" it also has a Wikipedia page.

From Wikipedia.

As always click anywhere below for the entire article.

 

Double Irish arrangement

 

Overview

Typically, the company arranges for the rights to exploit intellectual property outside the United States to be owned by an offshore company. This is achieved by entering into a cost sharing agreement between the U.S. parent and the offshore company, in the terms of U.S. transfer pricing rules. The offshore company continues to receive all of the profits from exploitation of the rights outside the U.S., without paying U.S. tax on the profits unless and until they are remitted to the U.S.[2]

It is called "The Double Irish" because it requires two Irish companies to complete the structure. The first Irish company is the offshore company which owns the valuable non-U.S. rights. This company is tax resident in a tax haven, such as Bermuda or the Cayman Islands. Irish tax law provides that a company is tax resident where its central management and control is located, not where it is incorporated, so that it is possible for the first Irish company not to be tax resident in Ireland. The first Irish company licenses the rights to a second Irish company, which is tax resident in Ireland, in return for substantial royalties or other fees. The second Irish company receives income from exploitation of the asset in countries outside the U.S., but its taxable profits are low because the royalties or fees paid to the first Irish company are deductible expenses. The remaining profits are taxed at the Irish rate of 12.5%.

For companies whose ultimate ownership is located in the United States, the payments between the two related Irish companies might be non-tax-deferrableand subject to current taxation as Subpart F income under the Internal Revenue Service's Controlled Foreign Corporation regulations if the structure is not set up properly. This is avoided by organizing the second Irish company as a fully owned subsidiary of the first Irish company resident in the tax haven, and then making an entity classification election for the second Irish company to be disregarded as a separate entity from its owner, the first Irish company. The payments between the two Irish companies are then ignored for U.S. tax purposes.[1]

 

Dutch Sandwich

The addition of a Dutch Sandwich to the Double Irish scheme further reduces tax liabilities. Ireland does not levy withholding tax on certain receipts fromEuropean Union member states. Revenues from income of sales of the products shipped by the second Irish company are first booked by a shell company in the Netherlands, taking advantage of generous tax laws there. Funds needed for production cost incurred in Ireland are transferred there, the remaining profits are transferred to the first Irish company in Bermuda. If the two Irish holding companies are thought of as "bread" and the Netherlands company as "cheese," this scheme is referred to as the "Dutch Sandwich."[3] The Irish authorities never see the full revenues and hence cannot tax them, even at the low Irish corporate tax rates. There are equivalent Luxembourgeois and Swiss sandwiches.

 

Companies using the arrangement

Major companies known to employ the Double Irish strategy are:

 

I left the list out just because I wanted you to give Wikipedia a click as I couldn't figure a way to abbreviate this post and still have it make sense.

The moral remains constant.

The lower the rate, the less incentive to create and exploit loopholes in your tax code and more importantly the greater the incentive you create for the rest of the world to bring their taxable income to you.

That's a good thing.

Best of all, the only cost of this approach accrues to your corrupted government types who lose the ability to exchange tax writing favors for political power.

Be still my beating heart.

 

Pages

Subscribe to RSS - Money