The Panama Papers. This is an interesting developing story. Many people’s initial reaction will be that of surprise. Frankly, I’m surprised that people are surprised – wait, no I’m not. For anybody in the financial world, this is a Duh moment. Of course rich people are hiding money offshore. These people are either smart, or have smart people working for them who manage their money and know that American and Western European banks (most, not all) are bunk. The banks that most people keep their money in are under capitalized (that means that they don’t have your money). Not only that, but they are under insured for loss (remember the bailouts). These big banks are also corrupt as hell (see 2008).
If I had millions or billions of dollars, I’d keep them offshore as well. In fact, I recommend that everyone have an offshore account in a “tax haven”. These banks in so called tax havens actually pay interest! What a novel idea!
Also, living in an extremely litigious country like the good old US of A, I am forever fighting the statistical probability that I will be sued for offending a field mouse with hateful rhetoric.
Money kept offshore can be made harder to get by the blood sucking lawyers. It is a good insurance policy.
All that being said, I hope that the big dog criminals and politicians get locked up (but I know that will not happen).
CNN, FBN, FOX, CNBC, and The Guardian will all report this story; they will follow it for a few weeks, and then it will fade away.
A few bones will be thrown to the public to chew on.
Goldman Sachs buys ‘robo’ investment adviser March 15, 2016
BY: Ben McLannahan
Goldman Sachs has made a move into the fast-growing world of “robo” investment, buying Honest Dollar, a start-up which aims to make it quicker and simpler to set up savings accounts for retirement.
Goldman’s new business is distinct from firms such as Wealthfront and Betterment, the biggest automated investment companies, which manage pots of cash according to customers’ stated goals and risk appetites. Honest Dollar, launched a year ago in Austin, Texas, does not select portfolios itself but charges a per-month, per-user fee for setting up and maintaining retirement accounts which are managed by Vanguard, the fund manager with $US3.3 trillion in assets.
Honest Dollar declines to provide numbers on how many users it has, but says it is targeting the roughly 45 million Americans – freelancers and small-business owners – who do not have access to employer-sponsored retirement plans.
The size of the acquisition, made through Goldman’s investment management division, was undisclosed.
“We’re trying something very new and innovative, and we love the validation [from Goldman],” said William Hurley, Honest Dollar’s chief executive. “Goldman did an incredible amount of work, putting in the effort of understanding what we are.”
A recent surge of private investment in financial technology companies has prompted the biggest banks in the US to consider whether they would rather buy, build or partner to keep pace with the newcomers.
Goldman, which prides itself on its vast team of software engineers, has mostly bought or built, last year launching an internal venture to challenge the likes of Lending Club in loans to consumers and small businesses. It is also a driving force behind Symphony, a big consortium of financial services firms aiming to unseat Bloomberg from its dominant position in messaging.
“Honest Dollar has created a simple solution to a complex retirement savings problem,” said Timothy O’Neill and Eric Lane, co-heads of Goldman’s investment management division, in a statement. “Together, we have the potential to help millions of people achieve their investing goals.”
Mr Hurley, 44, who prefers to go by the name “Whurley”, pursued a career as a bassist in a funk band before a serious car accident sparked an interest in computing. He worked at Apple, IBM and Symbiot before founding his own design firm, Chaotic Moon Studios, in 2010. He left the company – which was sold to Accenture last year – in 2014 to co-found Honest Dollar.
He launched his latest venture about a year ago in Austin at South by Southwest, an annual set of film, interactive media, and music festivals and conferences. By then he had raised $US3 million of seed funding, including a personal investment from Vikram Pandit, the former chief executive of Citigroup.
Honest Dollar, which now has 30 staff, will stay in Austin and operate as part of Goldman’s investment management division.
“As a software person, this is my first foray into financial services, but Goldman has a 100-plus year history and a lot of the brightest minds in this space,” said Mr Hurley. “So far we’ve built this on our own; imagine what we can do with access to that data.”
My thoughts on this transaction:
The tentacles grow. This is probably the first time in history that the word “honest” has been used in the same sentence as Goldman. Buyer beware.
College Degree is now a Participation Ribbon February 24, 2016
Pardon my rant, but what is going on with our educational system?
It appears to me that a college degree has become a “participation ribbon” for the millennial generation. The level to which the system has stooped is embarrassing.
This “selfie” and “facebook” generation has been spoon-fed and coddled to an unprecedented level. Any criticism aimed at this group is “mean”. We are doomed.
I know that every generation looks at the next generation with distaste, so save it.
We need as a country and as a civilization to start spanking kids again. We need to tell them the truth when they are not fast runners or good writers. Some honesty would do us some good.
I just learned that the local University is working on a plan to address problems that transexual students are having choosing which bathroom to go to and which name they should be called by professors. Wow.
I think that jailing some lawyers would go a long way towards bringing back reality.
Frivolous lawsuits brought on by someone who is offended by reality should be rewarded with a countersuit by the population who are the offenders. I think if the population of the United States who are not offended by the offense pooled their cash for the countersuit we’d have more cash for a better lawyer. This is what the big corporations do, lets follow “suit”.
I’m done ranting…..for now! Thanks for letting me vent.
THE US ECONOMY HAS NOT RECOVERED AND WILL NOT RECOVER February 22, 2016
Jobs offshoring benefitted corporate executives and shareholders, because lower labor and compliance costs resulted in higher profits
BY: PaulCraig Roberts
February 18, 2016
The US economy died when middle class jobs were offshored and when the financial system was deregulated.
Jobs offshoring benefitted corporate executives and shareholders, because lower labor and compliance costs resulted in higher profits. These profits flowed through to shareholders in the form of capital gains and to executives in the form of “performance bonuses.” Wall Street benefitted from the bull market generated by higher profits.
However, jobs offshoring also offshored US GDP and consumer purchasing power. Despite promises of a “New Economy” and better jobs, the replacement jobs have been increasingly part-time, lowly-paid jobs in domestic services, such as retail clerks, waitresses and bartenders.
The offshoring of US manufacturing and professional service jobs to Asia stopped the growth of consumer demand in the US, decimated the middle class, and left insufficient employment for college graduates to be able to service their student loans. The ladders of upward mobility that had made the United States an “opportunity society” were taken down in the interest of higher short-term profits.
Without growth in consumer incomes to drive the economy, the Federal Reserve under Alan Greenspan substituted the growth in consumer debt to take the place of the missing growth in consumer income. Under the Greenspan regime, Americans’ stagnant and declining incomes were augmented with the ability to spend on credit. One sourcre of this credit was the rise in housing prices that the Federal Reserves low inerest rate policy made possible. Consumers could refinance their now higher-valued home at lower interest rates and take out the “equity” and spend it.
The debt expansion, tied heavily to housing mortgages, came to a halt when the fraud perpetrated by a deregulated financial system crashed the real estate and stock markets. The bailout of the guilty imposed further costs on the very people that the guilty had victimized.
Under Fed chairman Bernanke the economy was kept going with Quantitative Easing, a massive increase in the money supply in order to bail out the “banks too big to fail.” Liquidity supplied by the Federal Reserve found its way into stock and bond prices and made those invested in these financial instruments richer. Corporate executives helped to boost the stock market by using the companies’ profits and by taking out loans in order to buy back the companies’ stocks, thus further expanding debt.
Those few benefitting from inflated financial asset prices produced by Quantitative Easing and buy-backs are a much smaller percentage of the population than was affected by the Greenspan consumer credit expansion. A relatively few rich people are an insufficient number to drive the economy.
The Federal Reserve’s zero interest rate policy was designed to support the balance sheets of the mega-banks and denied Americans interest income on their savings. This policy decreased the incomes of retirees and forced the elderly to reduce their consumption and/or draw down their savings more rapidly, leaving no safety net for heirs.
Using the smoke and mirrors of under-reported inflation and unemployment, the US government kept alive the appearance of economic recovery. Foreigners fooled by the deception continue to support the US dollar by holding US financial instruments.
The official inflation measures were “reformed” during the Clinton era in order to dramatically understate inflation. The measures do this in two ways. One way is to discard from the weighted basket of goods that comprises the inflation index those goods whose price rises. In their place, inferior lower-priced goods are substituted.
For example, if the price of New York strip steak rises, round steak is substituted in its place. The former official inflation index measured the cost of a constant standard of living. The “reformed” index measures the cost of a falling standard of living.
The other way the “reformed” measure of inflation understates the cost of living is to discard price rises as “quality improvements.” It is true that quality improvements can result in higher prices. However, it is still a price rise for the consumer as the former product is no longer available. Moreover, not all price rises are quality improvements; yet many prices rises that are not can be misinterpreted as “quality improvements.”
These two “reforms” resulted in no reported inflation and a halt to cost-of-living adjustments for Social Security recipients. The fall in Social Security real incomes also negatively impacted aggregate consumer demand.
The rigged understatement of inflation deceived people into believing that the US economy was in recovery. The lower the measure of inflation, the higher is real GDP when nominal GDP is deflated by the inflation measure. By understating inflation, the US government has overstated GDP growth.
What I have written is easily ascertained and proven; yet the financial press does not question the propaganda that sustains the psychology that the US economy is sound. This carefully cultivated psychology keeps the rest of the world invested in dollars, thus sustaining the House of Cards.
John Maynard Keynes understood that the Great Depression was the product of an insufficiency of consumer demand to take off the shelves the goods produced by industry. The post-WW II macroeconomic policy focused on maintaining the adequacy of aggregate demand in order to avoid high unemployment. The supply-side policy of President Reagan successfully corrected a defect in Keynesian macroeconomic policy and kept the US economy functioning without the “stagflation” from worsening “Philips Curve” trade-offs between inflation and employent. In the 21st century, jobs offshoring has depleted consumer demand’s ability to maintain US full employment.
The unemployment measure that the presstitute press reports is meaningless as it counts no discouraged workers, and discouraged workers are a huge part of American unemployment. The reported unemployment rate is about 5%, which is the U-3 measure that does not count as unemployed workers too discouraged to continue searching for jobs.
The US government has a second official unemployment measure, U-6, that counts workers discouraged for less than one-year. This official rate of unemployment is 10%.
When long term (more than one year) discouraged workers are included in the measure of unemployment, as once was done, the US unemployment rate is 23%. (See John Williams, shadowstats.com)
Fiscal and monetary stimulus can pull the unemployed back to work if jobs for them still exist domestically. But if the jobs have been sent offshore, monetary and fiscal policy cannot work.
What jobs offshoring does is to give away US GDP to the countries to which US corporations move the jobs. In other words, with the jobs go American careers, consumer purchasing power and the tax base of state, local, and federal governments. There are only a few American winners, and they are the shareholders of the companies that offshored the jobs and the executives of the companies who receive multi-million dollar “performance bonuses” for raising profits by lowering labor costs. And, of course, the economists, who get grants, speaking engagements, and corporate board memberships for shilling for the offshoring policy that worsens the distribution of income and wealth. An economy run for a few only benefits the few, and the few, no matter how large their incomes, cannot consume enough to keep the economy growing.
In the 21st century US economic policy has destroyed the ability of real aggregate demand in the US to increase. Economists will deny this, because they are shills for globalism and jobs offshoring. They misrepresent jobs offshoring as free trade and, as in their ideology free trade benefits everyone, claim that America is benefitting from jobs offshoring. Yet, they cannot show any evidence whatsoever of these alleged benefits. (See my book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West.) http://www.amazon.com/Failure-Laissez-Faire-Capitalism/dp/0986036250/ref=sr_1_1?s=books&ie=UTF8&qid=1455746560&sr=1-1&keywords=paul+craig+roberts-the+failure+of+laissez-faire+capitalism
As an economist, it is a mystery to me how any economist can think that a population that does not produce the larger part of the goods that it consumes can afford to purchase the goods that it consumes. Where does the income come from to pay for imports when imports are swollen by the products of offshored production?
We were told that the income would come from better-paid replacement jobs provided by the “New Economy,” but neither the payroll jobs reports or the US Labor Departments’s projections of future jobs show any sign of this mythical “New Economy.”
There is no “New Economy.” The “New Economy” is like the neoconservatives’ promise that the Iraq war would be a six-week “cake walk” paid for by Iraqi oil revenues, not a $3 trillion dollar expense to American taxpayers (according to Joseph Stiglitz and Linda Bilmes) and a war that has lasted the entirely of the 21st century to date and is getting more dangerous.
The American “New Economy” is the American Third World economy in which the only jobs created are low productivity, low paid nontradable domestic service jobs incapable of producing export earnings with which to pay for the goods and services produced offshore for US consumption.
The massive debt arising from Washington’s endless wars for neoconservative hegemony now threaten Social Security and the entirety of the social safety net. The presstitute media are blaming not the policy that has devasted Americans, but, instead, the Americans who have been devasted by the policy.
Earlier this month I posted readers’ reports on the job situation in Ohio, Southern Illinois, and Texas. In the March issue of Chronicles, Wayne Allensworth describes America’s declining rural towns and once great industrial cities as consequences of “globalizing capitalism.” A thin layer of very rich people rule over those “who have been left behind”—a shrinking middle class and a growing underclass. According to a poll last autumn, 53 percent of Americans say that they feel like a stranger in their own country.
Most certainly these Americans have no political representation. As Republicans and Democrats work to raise the retirement age in order to reduce Social Security outlays, Princeton University experts report that the mortality rates for the white working class are rising.
The United States government has abandoned everyone except the rich.
Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.