JPMorganChase plans, axes Twitter Q&A after #Ohsh!t moment…

JPMorgan1

JPMorganChase Vice Chairman Jimmy Lee was all set to use their official Twitter account, @JPMorgan to answer questions posed to the banking giant using #AskJPM.  The seemingly innocuous move turned immediately to panic as apparent distrust, anger and indeed simple trolling immediately took over the hashtag.

Several hours later, JPM retracted the idea.
Image

Why did this become such a problem?

Aside from simple internet trolling, public confidence in America‘s banking system remains low — and indeed, possibly even contemptuous.  Even I stopped myself from submitting the following question:

“Why did you purchase new jets and hangars for them while you received $25 Billion of my money? Wasn’t it because you were in trouble and needed help? Or was it because you screwed America, and you knew it and wanted to get away with it again? #TARPFunds #BankingCrisis #AskJPM

I still don’t trust the banking system — particularly after having worked in it for several years from the mortgage backed securities side.  Consumers get ripped off at every opportunity, and while improvements have been made, it’s a system of ethics and thought that drives the industry to produce “more, more, more; and damn everything else!”

…like any rabidly for-profit market, I guess.

#2013Shutdown’s effect on Business and the Future of America…

Professor David Victor, Ph.D.

Professor David Victor, Ph.D.

One of my former (and future, no doubt!) professors from Eastern Michigan University, Dr. David Victor, posted this morning about a possible future oil boom for Iceland, noting that a recent survey and discovery shows Iceland sits on a *LOT* of the possible undiscovered oil reserves in the world, estimates place it at 13%.  With the thawing of the northern ice cap, and the North Atlantic Current keeping ice from marring up the major ports of the island nation, all of these things could conspire to bring a well-needed boon to it’s economy.

However, another follower on Facebook of Dr. Victor, the Chair of CitrinGroup, also threw in his two cents, stating that while the Chinese are courting and betting on future oil producers, such as Iceland, the United States, already suffering an anemic economy, is wasting it’s time on policy matters that in the grand scheme of things, don’t really matter.  I tend to agree.

The United States’ economy is JUST starting to  gain traction, while sitting fairly stationery and spinning it’s wheels, begging to move forward since the crisis began in the Subprime Mortgage market in 2007.  We’re finally starting to see forward momentum beyond the familiar numbers of “0.04% gains.”  People are beginning to feel confident in the economic system again.

However, when people see the Government itself can’t get it together and pay it’s OWN bills, that’s when people begin to hold onto their OWN money, going “What if I find myself right back in 2008 again?”  I admit, I found myself thinking twice when I made a relatively small purchase this morning, because the well-being of MY household budget is determined by the fiscal health of the Federal Government.

When recessions and slumps hit the nation, the Government is there to provide relief, to buffer the blow with benefits, stimulus and other some-such capital, by pumping money into the system.  However, if that money is cut off too soon, the economy can slump again.  Bad news breeds bad feelings.  Bad feelings breed either a binge on spending, or a lack of spending, more often, the latter.  When people stop spending, the economy grinds to a screeching halt — as we saw starting with the credit freezes of 2008.  While one can argue the merits of policy on both sides of the aisle, the latest budgetary and policy debate is doing nothing but killing consumer confidence, and indeed, making foreign markets question the stability of the American economy.

While Obamacare is certainly an expensive program, so was the F-35 Fighter — which estimates have the cancelled fighter costing as much as a trillion dollars — a number often attributed to the cost of Obamacare.  Oddly enough, I haven’t heard it mentioned once by Republicans on the Hill, even though it is now essentially a great waste of capital and expenditures.

Who’s right?  Who knows.  One thing I do know is — #2013Shutdown can be a death knell for the fragile traction the American economy took years to get.

A Government Shutdown… what it means, and why you should care…

download“Due to the failure of Congress to enact appropriations for fiscal year 2014, Office of Management and Budget Director Sylvia Mathews Burwell tonight directed agencies to execute their plans for an orderly shutdown of the Federal government.”

Continue reading

Repo the Wrong House — and No Criminal Charges?

Nikki Bailey, a homeowner in West Virginia, came home to a startling discovery — moving men were in the process of cleaning out her home, because a bank had ordered it repossessed.  Like many foreclosures and home repossessions, this is an all-to-familiar story in the wake of the Great Recession.  But there’s a minor detail to this story:

MIss Bailey paid off her mortgage: 25 years ago.

While continuing to clean out her home, the representatives of the repossession company, CTM Industries, refused to disclose the name of the bank who ordered the repossession, and continued to clean out the home, taking everything she owned to the local trash dump.

A lifetime of memories in possessions taken away and virtually irretrievable, with the exception of some objects, such as a chest of drawers.  Family momentos, pictures,  and even a “Teacher of the Year” award from her local school district — all gone, thrown away by the offending company as if it were simple trash.

It turns out, CTM WAS repossessing the wrong house.  Her address on Godby Heights was over ten miles away from the home SUPPOSED to be foreclosed upon, on Godby Street, in Logan.

Even when the company admitted the mistake of address, the company still refuses to give the name of the Bank that ordered the repossession, as contacting the Bank would go a long way toward finding out who’s responsible for the botched address.  When contacted by local media, CTM refused to answer questions, and hung up.

Even more disturbing: the local prosecutor has said that criminal charges against either party (The Bank or CTM) is “unlikely,” because this was a “mistake.”

While civil and charges and penalties are still on the table, a Kanawha County Prosecutor, Mark Plants says “It’s a lot like taking someone’s luggage at the airport. If I take a black bag, a black piece of luggage, get home and realize this is not my bag — that’s not a crime. That’s an accident.”

Is it the same thing though?  Is the simple accident of taking similar luggage akin to breaking and entering, illegally, and burglarizing the home in question?  Isn’t there a procedure to follow that ensures the CORRECT home is Foreclosed and Repossessed properly?  And indeed, when done so legally, can the lender order all the stuff inside, which the Bank has no title to, simply removed and discarded like trash, without even the opportunity of the owner to reclaim it?

Could this also be an example of big money being immune from the laws of good order that the rest of us are required to follow?  Another example of how Banks were not held accountable for being responsible for the Great Recession?

Definitely disturbing.

The Banking System isn’t getting better — it’s getting worse.

Having worked in finance for over half a decade, and now having been involved in high finance now nearly a decade, I’ve been exposed to now only the internal workings of how credit and finance works from the inside, but I’ve studied it extensively as a matter of interest, and I see a problem developing — some if it we all know about, the other parts, not so much.

While our individual finances are improving overall, I see a big problem developing with the same system that brought it down in 2007 — unregulated banking.

In the United States, from the 1700s to the early 1900s, there was banking crash roughly every 15 years.  With the institution of strong regulation, particularly after the Stock Market Crash of 1929, the United States entered a golden age of banking.

How can this be?  With over 100 years of 15 year booms and busts, why did it all of a sudden stabilize?  Regulation.  With strong, effective regulation, bank busts came to a halt.  Not a SINGLE widespread bank bust occurred for over FIFTY years in America.

While a majority of this process took place in the 80s and 90s, the arguable beginning was the Nixon Shock; a term attributed to the end of the Bretton Woods system in the United States, when Nixon unilaterally wrote off the US Dollar’s ability to be converted into Gold; the United States Dollar became a free-floating value currency, which caused the US Dollar to become a reserve currency in many nations of the world — massively increasing it’s value.  In the 1980s, this trend continued: deregulation became the buzz word.  With more risks, banks could make more money with the same hard cash in it’s accounts.

restore-glass-steagallThe most hardcore change, in my opinion came during the Clinton administration, when Congress approved the repeal of the Glass-Steagall Act of 1933, repealed by the Gramm-Leach-Bliley Act of 1999, signed by Bill Clinton in November of that year.  This VERY important piece of legislation turned banking regulation on it’s head: Glass-Steagall was an instrument that separated Main Street banks from Wall Street banks.  In english, this means regular depositor banks (such as Bank of America, or Huntington Bank or Chase Bank) could play the stock market and make investments with depositor money that it otherwise barred from doing under the 1930s legislation, just like Investment banks and corporations can and do.

Seen as a vestige of post-Crash and pre-/post-World War II stabilizing legislation, it was, at the time, seen as unnecessary.  However, when deregulation began picking up steam in the 1980s, things happened in short order:

– The 1980s and 1990s Savings & Loan Crises: Savings and Loan thrifts were given many of the same powers as banks under deregulation legislation signed by President Carter in 1980; without the same regulations banks were subject to.  With the massive take-off of real estate lending, (outstanding mortgage debt was $700 Billion-ish in 1970, and nearly doubled to $1.2 Trillion in 1980), S&L’s took massive risks by lending out more money than they should have, on top of rising interest rates caused many institutions to fail.  This was failure to such a degree the United States had never seen.

– Repeal of Glass-Steagall Act: With the S&L failures still fresh on the minds of financiers and politicians, many argued further deregulation was required to avert such a disaster in the future.  Congress passed Gramm-Leach-Bliley and it was signed by President Clinton at the twilight of his Administration.  By the end of the next Administration (G. W. Bush), only EIGHT years later. the United States was reeling from the worst banking and credit crisis it had seen since the dawn of the 20th century, and it was spreading throughout the world.  The FDIC began publishing lists of bank failures every Friday, conducting raids on banks it or the State controllers deemed in danger of failing, or already had, legally — and, for the first time in history, the FDIC, the Federal Depositors Insurance Corporation’s funds went NEGATIVE from insuring lost depositor money.

All of these took place within 25 years of the beginning of banking deregulation in the United States — AFTER an over 50-year golden era for banking in the United States where bank failure was almost unheard of, to the point where bank failures and bank runs were becoming regular weekly news events on Friday nights.

Even more disturbing, the largest four banking institutions in the United States, the four largest banks (Bank of America, Citigroup, JPMorganChase and Wells Fargo) are now THIRTY percent LARGER than they were in 2007!

How can the next banking crisis be softened, if not stopped?

– Reconstitute a Bretton Woods-like system for the American economy: peg it with something convertible to stabilize the possible future crash of the US Dollar.  This would, in general, lower the value of the dollar, however, the dollar would be safe from a crash, or other cataclysmic disaster brought on by a perceived lack of confidence in the American financial system, which is all that currently “holds up” the American economy and the value of the US Dollar.

– Reinstitute a Glass-Steagall Law.  Banks shouldn’t be allowed to gamble with depositor money.  When banks buy futures or invest in trusts or mutual funds with depositor money, it’s the same as taking it down to the Casino and betting on a three-of-a-kind.  In fact, I’d be willing to bet on a CASINO win, over futures and stocks, at the moment.

Gag Order includes your Defense?

Courtesy drivebyplanet.com

Courtesy drivebyplanet.com

Ladar Levison started the email service Lavabit ten years ago; taking a significant amount of his adult life building his business.  While it’s understandable some in the government could be concerned over the use of non-government interceptable communications (is that even a phrase?) being used by terrorists or other people bent on causing whatever, this fact isn’t what disturbs me.

What deeply disturbs me, is he was forced to close, then under a gag order of the United States Government, isn’t allowed to discuss it at all — not even with his LAWYER.

Has it come to such a point where the United States will use legal scare-tactics to not only shut down threatening interests, but even deny those people (when they, themselves, have done nothing wrong) the right to not only defend themselves against it, but silence them?

I get that Lavabit was seen as a threat by the US Government, I’m not denying that.  Stuff like that CAN a threat.  It’s that they went after the owner, who has business interests in keeping people’s private information PRIVATE, and they essentially scared him into silence to such a point, he can’t even legally consult his lawyer.

Deeply disturbing.

Cummings’ Rules of Being The Boss…

Having been a manager, I have a pretty solid set of rules I’ve always followed that not only work well, but inspired some true loyalty from the people I employed — honestly, to the point that I felt truly moved by the dedication I received from them.  With any luck, someone will read it one day, and it may inspire them as a manager.

FE_DA_BossRelax_032713425x2831.  Never make your employees do something you’re not willing to do yourself.
Yes, part of being a Boss is delegating, but never make people who work under you do something that you’re not willing to take on yourself should the time call for it.

2.  Be straight with those who work with you.
If you have intentions that could effect them, get their input on it, if at all possible; which brings us to:

3.  Be willing to get input from those under your charge.
Those who work for you can not only draw inspiration from your confidence in them, but it can make them more productive if they feel their opinion is respected.  There are times autocratic leadership is required — but in just as many, if not more times, more democratic authority can make for just as effective, if not even better solutions.

4.  Be straight with prospective hires.
Often, people are just not the right fit for the job you’re advertising for, and you have to let them down — particularly those who need the work.  Be up front with your feelings, but offer them reassurance.  There’s no reason to create ill-will with those who could very well pass along someone else to you who could be a better fit.  While it’s not your job to hand-hold or counsel a prospective employee, it doesn’t hurt to give them a little positive reinforcement.

5.  NEVER fire on a Friday.
To me this is a capital offense I see too many managers make, particularly those who are calculating a firing in advance that could otherwise be served at another time.  Not only is it depressing for your employee facing the terminal pen, it can also create an atmosphere of distrust.  Mondays are a better time for this; not only for your employee (Getting fired sucks, but hey, I can go home early on Monday!)  Getting a pink slip on a Friday kills a weekend.  Hard.

6.  Encourage productivity and positive work environments.
Start an “Employee of the Month” program.  Offer prizes or incentives for those who put in the extra “little bit” or who perform just that little bit more.  Not only does this create some friendly rivalry in the office to compete for the prizes you lay out, but it also can show who has dedication and drive to succeed.

7.  Reward those who go out of the way for you on a favor.
Sometimes, you may have to call an employee in for that weekend audit, or something that they normally wouldn’t do.  While they’re being paid for their work, give them a little something extra.  Buy them a lunch, or offer to pick up a set of concert tickets for the band you hear them talk about.  After they’ve done their job during their otherwise off-time…  offer them a $20 from your wallet.  The gesture alone says a lot, even if they refuse.

8.  Ask them “How’s everything going, all okay?”
As their supervisor, the decisions you make effect their lives.  With the swipe of a pen, your decisions can make their day, or throw them into a depression.  While you may not care to know about every detail of their lives… be interested in your employees.  Ask them about their hobbies and interests.  Not only does this give you an insight as to who they are past their nametag, it inspires a feeling of trust and interest that can make an employee feel important, and that they really are a part of your team.  If you see a change in their behavior, even if it’s not effecting their performance, ask them about it.  Give them a moment or two to vent.  They produce to make you productive — stuff like that only helps.

Zardari leaves Pakistan with a legacy…

English: Asif Ali Zardari.

Pakistani President Asif Ali Zardari.

In the last week, Pakistan has held it’s Presidential elections in which PML (N) nominee Mamnoon Hussain won in a landslide 432 to 77 against Pakistan Movement for Justice party nominee Wajihuddin Ahmed.

Why is the election of Hussain such a big deal?  Political handoffs take place all the time.

This is the first, in Pakistani history, that a democratic change, by the will of the people has come.  For Pakistan, a nation nearly a century old, this is it’s first true democratically willed exchange of power.

Pakistan itself was conceived in 1930 by a proclamation by British Indian politician Sir Muhammad Iqbal, the nation itself formed in 1940 as a sovereign state for Muslims that was originally part of British-controlled India.  Since then, it has been fraught with political problems and disaster that left many wondering if Pakistan would ever become democratically governed.

Pakistan received official independence on 14 August, 1947 from British India, becoming a British controlled dominion under control of King George V of the United Kingdom, under the title of “Emperor of India.”  He later renounced this role and styled himself as the “King of Pakistan,” a title passed to his daughter, the incumbent Queen Elizabeth II of the United Kingdom, who styled herself as the Queen of Pakistan.

In 1956, a revolution created and installed an Islamic Parliamentary Republic, which was supposed to be civilian run, but in the process, a military coup took over the revolution and installed the army’s commander-in-chief, Ayub Khan, as the ruler of Pakistan.

Pervez Musharraf

Former Chief Executive and President General Pervez Musharraf

In 1970, free elections were held, heralded as a transition from a military junta to a democratically elected civilian government, but the sitting military government refused to hand power to the elected successor.  Internal fighting in the nation sparked an independence movement which led to a secession of east Pakistan into the nation now known as Bangladesh.

Power was handed to a civilian government which didn’t last long, and Pakistan soon found itself under martial law again with the coup led by army General Zia-ul-Haq.  Zia, who died in a plane crash 1988, was succeeded by Pakistan’s first female Prime MInister, Benazir Bhutto, followed by Nawaz Sharif after a scandal which cost her her seat.  During Sharif’s time in office, Pakistan’s military nuclear weapons testing led to destabilization and the Kargill War of 1999, in which point Army Chief of Staff General Pervez Musharraf assumed power in a bloodless coup.

Ruling as both civilian and military leader of Pakistan, he executed his duties often under one title, as a civilian or commander in chief independently, theoretically, while being the same person.  He resigned from his Army post amid massive protests for elections, but continued on as President of Pakistan until the return of Benazir Bhutto in 2007, returning from a self-imposed exile to see that Musharraf’s dictatorship was unseated.  Assassinated in the twilight hours of 2007, Musharraf heeded calls for an election, which saw him replaced with Bhutto’s husband, Asif Ali Zardari.

President Zardari took the helm of Pakistan during some of it’s most trying times –and became a friend of the United States in the war on terror, which was extremely unpopular amongst voters in Pakistan, particularly since the capture and killing of Osama Bin Laden, which took place in an initially secret strike in Abottabad.

Which leads to today.  For the first time in it’s history, a democratically elected government of Pakistan is set to hand authority and power over to a new democratically elected government.  This is history in the making, particularly for a newer, nuclear-powered nation.  What can the future hold for a stable, and flourishing Pakistan?

How Goldman Sachs is giving you the screw…

Nick Madden, VP/CPO, Novelis, Inc.

“The situation illustrates the perils of allowing industries to regulate themselves.”
— Nick Madden, Chief Procurement Officer, Novelis, Inc.

We all know about the 2007 Financial Crisis — and how it wiped out millions of jobs around the world, and we know where it began, the US Subprime and Unsecured Credit Markets.  Now that the crisis is over, many think that a lot of the rackets, many assume that tighter financial regulations are helping keep large financial institutions from screwing over the same people they boned over in writing and trading in extremely risky securities.

Wrong.

Goldman Sachs, since 2008, has been buying up MASSIVE amounts of one metal: aluminum, and storing them in warehouses everywhere, particularly in Detroit.  What are they doing with it?  Just sitting on it.

Why is this a bad thing?  Isn’t sitting on metal a good idea when it’s cheap?  Sure… always a good thing.  However, when you buy up so much of it, you’re affecting the world supply of it, not so much.  By reducing supply, you increase demand — and what happens when demand goes up and supply goes down?  Raise the cost.

In 2008, Goldman Sachs reported that they were storing 50,000 tons of Aluminum in warehouses and company owned property.  In 2010, that number increased to 850,000 tons.  At this time?  1.5 MILLION tons.   TONS.

Now, when companies want to buy aluminum domestically, as nations like China like to set prices at the state-level, companies will turn to domestic companies, like those owned by Goldman Sachs.  Because they control the aluminum, they can say “Sorry, we can’t get it to you that fast, we apologize,” when in actuality, they can delay delivery to drive up the price.  Indeed, subsidiary of Goldman, before purchasing, was able to supply aluminum to its end-users, was 6 weeks.  After the purchase and management rearrangement by Goldman, the wait is now sixteen MONTHS.

How much, you say?  What’s YOUR bottom line?

According to Cenk Uygur with The Young Turks, the price increase at this time, broken down per aluminum can of soda/pop, is one tenth of cent, per can — equivalent.  While that doesn’t sound like a lot of money to the end user, that makes a massive dent in the profits of the initial supplier, such as the Soda company, in this case, to buy and manufacture the soda cans.  At Goldman’s level, however,

With the average of US$90 million worth of aluminum cans (ALONE) used in the US, and tons and tons of aluminum used in house sidings, wheels in automobiles, automobile body, anything you can think of.  On average, that increase works out to be roughly US$2 per every 35 pounds of aluminum.  With the average automobile using 12 pounds of aluminum (The New York Times), that adds up to US$12 in additional cost — that didn’t come from anywhere other than artificially controlling the supply to demand — only by slowing down aluminum shipment… that it owns, and stores.

Bottom line, from the entire operation of aluminum storage and shipment control, Goldman Sachs’ cut of the operation: US$5 Billion over the last three years.  (Thanks again, to The New York Times for this figure.)

Madden’s quote at the beginning of this entry has a lot sharper a point on it now, doesn’t it?  What do you think?