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$600,000 not enough for Fannie, Freddie CEOs?
Seven years after Fannie Mae and Freddie Mac drew anger for their role in the nation’s financial collapse, the agency that oversees them said Tuesday that it wants to let their chief executives bust through their $600,000 salary cap. The proposal comes while Fannie and Freddie’s independent regulator is still considering how to run the government-controlled housing giants over the long term, with no sign yet from Congress on their ultimate fate. But the possibility of CEO pay raises is already drawing criticism from Capitol Hill and resistance from the White House — and putting Federal Housing Finance Agency Director Mel Watt in an awkward position less than a year and a half after he took over. Nobody expected that the two mortgage titans would still be around so long after the government took them over at the height of the financial crisis in 2008. Watt says Fannie and Freddie’s CEO pay structure needs a makeover, in part to keep the chief executives from bolting and to better plan...

Dollar Better than Gold? Ask Venezuela
Venezuela's recent experience is instructive. The Chavez regime had moved away from the fiat US dollar and had the bulk of its reserves in gold. Last month, Venezuela's reserves had been drawn down to about $19 bln, of which $14 bln was thought to be gold. Venezuela has found out the hard way that dollars are better than gold. At the end of last month, it swapped 1.4 mln troy ounces of gold for $1 bln with a large US bank. Venezuela's gold was discounted by a little more than 40% and it will pay interest on the dollars it receives. The swap is four years in duration, and at the end of it, Venezuela has the first right to buy the gold back. It is true that Venezuela has a relative extreme macro economic situation. The IMF expects the economy to contract 7% this year after 4% contraction in 2014. Inflation is projected to be well over 100% and the fiscal deficit may be 20% of GDP. The black market rate for the bolivar has depreciated by nearly 50% so far this year.

IRS Approves Billions in Iffy Education Tax Credit Claims, Watchdog Says
The Internal Revenue Service approved $5.6 billion in questionable education tax credits on the returns of 3.6 million taxpayers, a sign that the tax agency’s ongoing efforts to curb improper payments needs bolstering, according to a watchdog. An IRS official disputed some of the findings. "The IRS still does not have effective processes to identify erroneous claims for education credits,” said J. Russell George, Treasury Inspector General for Tax Administration, in a Tuesday statement accompanying the report dated March 27. “Although the IRS has taken steps to address some of our recommendations, many of the deficiencies TIGTA previously identified still exist. As a result, taxpayers continue to receive billions of dollars in potentially erroneous education credits." The higher education tax credits in question date back to the 1997 Taxpayer Relief Act, which established the Hope Credit and Lifetime Learning Credit. The 2009 American Recovery and Reinvestment Act temporarily replaced...

Is it possible to retire at 65?

Is the Return of $60 Crude Oil Here to Stay?
It is no secret that the energy sector has suffered after oilfellfrom $100 to under $50 faster than almost even the most bearish traders expected. Now we are seeing $60 oil prices again. That being said, and without trying to expect that $60 will be the new normal, how likely is it that we have seen the worst in the prices of black gold? The latest recovery in prices is likely attributed to a couple of key issues, both of which are overseas and both of which may fall under geopoliticalrisks because they are by and large outside of the hands of traditional domestic supply and demand issues. A protest in Libya has reportedly shut down one of the nation’s top export hubs for Libyan oil. Also, Saudi Arabia has reportedly raised prices for oil it sells to the United States and Europe. Could it be that demand trends have solidified enough? So, again, did oil bottom out in the mid-$40s? It is possible, even if the oil price in the low $60 handles does not hold up. Of course, time will be the ultimate judge.

Greek government takes aim at creditors over stalled bailout talks
Greece’s government has blasted its creditors for holding back progress on bailout talks, laying the blame squarely on differences between the European Union and the International Monetary Fund. Racheting up the pressure on the two bodies, the anti-austerity Syriza government said conflicting strategies and opposing views were not only impeding negotiations but injecting “a high level of danger” into the talks at a time when the country’s finances had hit rock bottom. “Serious disagreements and contradictions between the IMF and European Union are creating obstacles in the negotiations and a high level of danger,” said a government source. The official added that both lenders were digging in their heels on divergent issues, effectively enforcing “red lines everywhere”. While the IMF was refusing to compromise on labour deregulation and pension reform but was relaxed on fiscal demands, the EU was insistent that primary surplus targets be met while being much more conciliatory about structural changes.

26 million consumer are ‘credit invisible’
The Consumer Financial Protection Bureau has found that 26 million Americans are “credit invisible” meaning they do not have any credit history with a nationwide consumer reporting agency. The report also found that Black consumers, Hispanic consumers, and consumers in low-income neighborhoods are more likely to have no credit history with a nationwide consumer reporting agency or not enough current credit history to produce a credit score. “Today’s report sheds light on the millions of Americans who are credit invisible,” said CFPB Director Richard Cordray in a release. “A limited credit history can create real barriers for consumers looking to access the credit that is often so essential to meaningful opportunity—to get an education, start a business, or buy a house. Further, some of the most economically vulnerable consumers are more likely to be credit invisible.” The three nationwide credit bureaus generate credit reports that track a consumer’s credit history.

McDonald's turnaround plan in 60 seconds

Quantitative Easing appeals to economists with no grasp of history
There is one thing riskier than investing in a free market: investing in a rigged market when you think the central bank has your back. At some point, the free market returns with a vengeance, like a coiled spring made out of pure risk. That time may be coming soon. Last week, German government 10-year bond yields suddenly spiked from just 8 basis points to 37 basis points. Now, a 29 basis point (0.29%) jump may not seem like much, but with yields so slender, a move of that magnitude is easily enough to put a few leveraged funds out of business. Bonds have never been more expensive in human history, and yet their supply has never been higher. 10-year US Treasuries yield just 2.1%. 10-year UK Gilts yield 1.84%. 10-year German government bonds now yield 0.37%. And that bug-in-search-of-a-windshield 10-year Japanese bonds yield 0.32%. Bloomberg’s William Pesek highlights the tortured logic plaguing Bank of Japan Governor Haruhiko Kuroda as he attempts to escape from the corner of the bond market...

Secrecy Defines Trans-Pacific Partnership Deal as Opponents Decry Threat to Jobs
Critics are mounting in Congress and across the country over the Trans-Pacific Partnership (TPP), making a major issue out of stopping President Obama’s attempt to fast track the secretive trade agreement. Grassroots opponents have been fighting the TPP for years now, while powerful corporate interests have negotiated favorable terms for a deal that could cost a great deal both to national sovereignty and to the economic livelihood of the working and middle classes. Thus, opposition is coming from the political left-aisle – prominent Democrats are distancing themselves from Obama and voicing their opposition to the TPP in conjunction with labor interests, unions and others poised to meet unfair competition from lower wage manufacturers throughout the existing and developing multi-national “free trade” manufacturing zones in competing overseas nations. These members of Congress and others are complaining about the highly secretive process of the trade agreement, and the extreme measures taken...

No, Pentagon says: We’re not plotting the military takeover of Texas
The Pentagon wants to make it clear: No one is messing with you, Texas. Defense officials are swatting down Internet-fueled rumors about a training exercise planned for this summer in the Southwest U.S. involving four branches of the military. According to the Pentagon, the exercise — called Operation Jade Helm 15— is meant to simulate covert military operations in “hostile” territory in Texas, Utah and part of southern California. Some conspiracy theorists have postulated that the exercise is a ruse to institute martial law, possibly involving underground tunnels and five recently closed Wal-Mart stores. “Jade Helm and Walmart are inextricably linked and the existing evidence suggests one of two possible end game probabilities for Jade Helm,” radio host Dave Hodges posted on his show’s website on April 30. “1. Converted Wal-Mart stores will be processing centers for FEMA camp political prisoners,” he continued. “2. Some Walmarts will be used as supply and staging centers for an internal conflict...

More Banks Are Offering Student Loan Refinancing, But Is It Really Safe & Beneficial?
For the last several years legislators have repeatedly introduced a bill that would allow student loan borrowers to refinance their private and federal student loans to the lower interest rates at which new loans are currently being issued. Although the legislation hasn’t managed to make it into law, that hasn’t stopped banks and credit unions from creating their own refinancing programs to help alleviate the debt burden for student loan borrowers. Such was the case last month when Navy Federal Credit Union not only announced it would begin to issue private student loans, but would allow borrowers to refinance outstanding loans issued by other lenders. While many borrowers might jump at the prospect of refinancing their student loans, consumer advocates and federal regulators caution that there may be a downside that isn’t immediately obvious. Maura Dundon, senior policy counsel for the Center for Responsible Lending, tells Consumerist that several years ago it may have been difficult...

Nepal quake 700 times the power of Hiroshima bomb, says expert

Puerto Rico Hedge-Fund Group Hires Law Firm as Cash Dwindles
A hedge-fund group that owns $4.5 billion of Puerto Rico debt said it agreed to hire a litigation firm to represent it as the island’s cash dwindles and officials warn the government may have to shut down within months. The 34-member group, led by Fir Tree Partners, retained attorneys at Washington-based law firm Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, according to Russ Grote, a spokesman for the funds at Hamilton Place Strategies. The funds’ holdings include the island’s general obligations and sales-tax bonds, as well as debt of the Government Development Bank. The companies have been in talks for months with Puerto Rico officials about the structure of a planned sale of as much as $2.9 billion of bonds backed by oil taxes. “The group remains committed to working with the commonwealth to provide financing that can bridge Puerto Rico to a balanced budget and growing economy,” Grote said in an e-mail. “Given the lack of progress thus far to achieve this objective...

Steve Wynn: Economic recovery ‘pure fiction’
One of America’s most astute businessmen, known for having expanded the Las Vegas strip of resort hotels and casinos in the 1990s, says the U.S. remains mired in an economic funk and any talk of a broad recovery is “pure fiction. A lie.” Steve Wynn, the 73-year-old founder and CEO of Wynn Resorts, made the comments in a televised interview with Jon Ralston of PBS’ “Ralston Live.” He opened the Wynn Hotel and casino in Macao, China, in 2006, and is known as an international gaming and casino magnate. Wynn’s Macao operation recently reported a 28 percent quarterly loss in revenue, and a 70 percent downturn in earnings. He is now building the Wynn Palace in China, which he calls “the nicest, most extravagant hotel in the world,” with 1,700 rooms and a $4 billion price tag. He cited corruption as his primary concern in China, but in the U.S. he said the economy has never really bounced back from the 2008 financial meltdown. “You’re not sanguine about Las Vegas, though.

Immigration Reform 2015: Arizona Judge Rules Dreamers Entitled To In-State Tuition
A judge in Phoenix Tuesday ruled so-called dreamers can pay the same tuition at state schools as other Arizona residents. Maricopa County Superior Court Judge Arthur Anderson ruled the federal government determines who is in the United States legally, rejecting arguments from the state Attorney General's Office that those accepted into the Obama administration's Deferred Action for Childhood Arrivals (DACA) program are in the country illegally. Anderson ruled states don't get to decide who is and is not in the country legally -- something Arizona has tried to do for a number of years. President Obama in 2012 ordered the Department of Homeland Security not to deport certain undocumented youths who came to the United States as children and expanded the program last November. The program allows these undocumented youths to apply for work permits but does not grant them a path to citizenship. "The state cannot establish subcategories of 'lawful presence,' picking and choosing...

Cyprus stuck in recession 3 years after bailout: EU
Eurozone country Cyprus will not shake off a three-year recession in 2015, a European Commission spring forecast predicted on Tuesday. Although the bailed-out island’s recession is running out of steam, the Commission said the green shoots of recovery would not appear this year. Nicosia has previously stated there will be a marginal recovery in 2015. The report said the ravaged economy would decline by 0.5 percent of GDP this year but finally grow 1.4 percent in 2016. There was a 2.3 percent contraction last year, milder than the 5.4 percent in the bailout year of 2013. And unemployment will remain stubbornly high this year at 16.2 percent, falling by one percent next year. "Although available short-term indicators for economic activity in the beginning of 2015 suggest a slowly improving growth momentum, the economy is not expected to grow before 2016,” said the EU. "Despite low oil prices, domestic demand is forecast to contribute negatively to growth, together with a modest negative contribution...

California’s government pensions are a crippling burden
California is a cautionary tale for taxpayers in the rest of the country. The people of California are being burdened by an unsustainable, unfunded liability–a trillion dollar government pension system. At the end of the day under California law, the taxpayers will subsidize the shortfall in the budget. Besides this debt, California has a debt of $340 billion–and that debt stands to be increased by some of the proposals within the state’s 2016 ballot measures. California is in economic collapse: while tax revenue increases, the policies to kill off the state are in place and beginning to take effect. In 2012, the Federal Government mandated that, on January 1, 2014, all government pension plans must adopt the same stringent accounting methods used by private pension plans. This was to assure that the government pensions were as protected as those in the private sector. Prior to this, each government pension plan had its own definitions, assurances and accounting methods.

ISIS In Texas?

U.S. Fears a European “Lehman Brothers”
Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, wrote an important and little noticed article last week questioning complacency on the part of European policy makers regarding a Greek default and potential exit or ‘Grexit’. Tett wrote that statements out of Germany that Europe could manage a potential Greek exit and that markets had already priced in that eventuality had alarmed certain policy makers in the U.S. The German stance was a reflection of their frustration with the lack of progress made over three months of talks with Greece and a consequent hardening of tone. However, U.S. officials are alarmed by the risk they see in European complacency to a Greek exit. Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets.

PayPal Wants to Make Your Body a Password
PayPal wants to get to know you. Really well. Really really well. They know how much you hate having to remember all your different passwords. So, to ease your burden, they have a new device. It’s simple really, simpler even than clicking a few times to have PayPal move money from your bank account to that guy selling the weird lamp you don’t need but accidentally bid on during an eBay excursion. For those who have classic garden-variety paranoia: you’d be advised to stop here. But for those insensate to the stirrings of good old American paranoia, or who are prescribed large doses of mood flatteners, read on! PayPal plans to put a teensy weensy little microchip into a pill; a pill you swallow every now and again; one where the microchip is sort of like an electronic key that you swipe. Rather than swiping here is what happens: Every time you are near a computer and get the itch to buy something, your pals at PayPal won’t ask you to remember your password.

Wells Fargo charged with opening accounts without customers' permission
The accounts are being opened by Wells Fargo employees under pressure to meet unrealistic sales goals and quotas, according to the civil complaint filed by the Los Angeles City Attorney. The complaint charges that bank employees opened new accounts for existing customers without their authorization, in order to meet sales quotas. The employees also allegedly transferred money from customers' authorized accounts to pay fees on the unauthorized accounts. When fees on unauthorized accounts went unpaid, some customers were placed into collection. Others had negative information placed on their credit reports as a result. The complaint, filed in California Superior Court on Monday, seeks a $2,500 fine for every unauthorized account, and seeks to have all of the money taken from customers returned. It did not estimate how much those penalties could cost the bank. Wells Fargo said it would "vigorously defend" itself from the suit. But the statement it issued did not deny or even address...

Gold Withdrawals From NY Fed Vault Refuse To Stop: 200 Tons Of Gold Repatriated In Past Year
One month ago, when we commented on the latest monthly withdrawal from the gold vault lying on New York’s bedrock some 90 feet below the NY Fed building, which then saw another 10 tons quietly repatriated by unnamed foreign central bank(s) bringing the total held on behalf of foreign governments to below 6,000 tons for the first time in the 21st century, we made an observation: … it means that all of the 207 tons in Dutch and German withdrawals are now accounted for with a matched and offsetting “departure” at the Fed. Which is why the next monthly update of the Fed’s earmarked gold will be especially interesting: if March data shows that the withdrawals continue, it will mean that either Germany, or some other sovereign, has continued to redeem their gold which for some reason they no longer trust is safe lying nearly 100 feet below street level on the Manhattan bedrock.As a reminder, for years it was anathema to even hint at distrust among “developed” central banks and thus to ask for one’s gold...

Secret Lives of the Super Rich: Classic Car Bank

U.S. military personnel have been convicted of $50 million worth of crimes in Iraq and Afghanistan
U.S. Army Specialist Stephanie Charboneau sat at the center of a complex trucking network in Forward Operating Base Fenty, near the Afghanistan-Pakistan border, that daily distributed tens of thousands of gallons of what soldiers called “liquid gold”: the refined petroleum that fueled the international coalition’s thirsty vehicles, planes, and generators. A prominent sign in the base read: “The Army Won’t Go If The Fuel Don’t Flow.” But Charboneau, 31, a mother of two from Washington state, felt alienated after a supervisor’s harsh rebuke. Her work was a dreary routine of recording fuel deliveries in a computer and escorting trucks past a gate. But it was soon to take a dark turn into high-value crime. She began an affair with a civilian, Jonathan Hightower, who worked for a Pentagon contractor that distributed fuel from Fenty, and one day in March 2010, he told her about “this thing going on” at other U.S. military bases around Afghanistan, she recalled in a recent telephone interview.

US trade deficit balloons to six-year high in March
The US trade deficit swelled in March to a six-year high on a surge in imports from the end of the West Coast port strike backed by the strong dollar. The trade gap was $51.4 billion in March, jumping from a slightly upwardly revised $35.9 billion in February, the Commerce Department said Tuesday. The March deficit was the highest since October 2008 amid the financial crisis. The increase from February far exceeded the average analyst estimate of a $40.0 billion deficit and was the largest monthly gain since late 1996. Imports surged to $239.2 billion in March from $222.1 billion in February, while exports edged up to $187.8 billion from $186.2 billion. The end of the West Coast port strike in late February, in a deal between management and dock workers, unleashed a flood of imports that had been backed up in the months-long work slowdown, Commerce Department data showed. The economy imported a record $54.2 billion in consumer goods in March, the department highlighted, as the strong dollar...

Experts Are Warning That The 76 Trillion Dollar Global Bond Bubble Is About To Explode
Warren Buffett believes “that bonds are very overvalued“, and a recent survey of fund managers found that 80 percent of them are convinced that bonds have become “badly overvalued“. The most famous bond expert on the planet, Bill Gross, recently confessed that he has a sense that the 35 year bull market in bonds is “ending” and he admitted that he is feeling “great unrest”. Nobel Prize–winning economist Robert Shiller has added a new chapter to his bestselling book in which he argues that bond prices are “irrationally high”. The global bond bubble has ballooned to more than 76 trillion dollars, and interest rates have never been lower in modern history. In fact, 25 percent of all government bonds in Europe actually have a negative rate of return at this point. There is literally nowhere for the bond market to go except for the other direction, and when this bull market turns into a bear it will create chaos and financial devastation all over the planet.

Wednesday 05.06.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.