Big US Banks Have Gained Market Share in the Looter Assistance Business

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As I noted earlier, the Tax Justice Network just released a study showing that there is somewhere between $21 and 32$ Trillion that tax cheats have hidden in tax havens. Really obscenely rich people like Mitt Romney make up for $9.8 trillion of that–or about 18% of the total liquid net worth in the world, hidden away in tax havens.

But there are two other tables from the study that bear notice. The study suggests that the money stashed in tax havens has been growing steadily at a rate of 16% a year.

Our analysis finds that at the end of 2010 the Top 50 private banks alone collectively managed more than $12.1 trillion in cross-­‐border invested assets for private clients, including their trusts and foundations. This is up from $5.4 trillion in 2005, representing an average annual growth rate of more than 16%.

But that’s sort of misleading. As the table above makes clear, the amount in tax havens grew by 67% between 2002 and 2004, then grew by 40% in the following two years, then by another 23% in the last year of the bubble. Then it crashed, basically losing that 23% and plateauing for a year. And then it started growing again, 18% between 2009 and 2010. And who knows how much in the last year?

The banksters paid a price for 2 years, but the looting has begun again.

What I find particularly interesting–though I’m not sure what to make of it–is the changing share of looter service the big banks are doing. While UBS’ tax shelter dollars continued to grow, they lost market share among tax cheats. Meanwhile Goldman Sachs’ tax shelter dollars almost quadrupled in that time. Bank of America and Wells Fargo made big gains too (though Morgan Stanley’s tax cheat business shrank and JP Morgan’s was somewhat flat.

Like I said, I don’t know what to make of it. But it sure seems like since the crash at least some of the banks have decided to recover by catering to tax cheats.

Lovely. Some of the same banks that are still in business because tax payers bailed them out are increasingly some of the biggest players in facilitating the looting of our own–and every other–country.

Update: This Title was changed.

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Mitt and His Buddies Looted Almost $10 Trillion from Real Economy

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The Tax Justice Network just released an updated version of a report showing how much money gets siphoned out of the real economy into tax shelters: conservatively, $21 Trillion, and possibly as much as $32 Trillion.

I’ll have more to say about what the report says about the how the super wealthy have done in the last decade and which banks have been helping to loot the real economy.

But for now, consider where Mitt Romney fits into this picture. TJN shows that it’s really just the richest of the rich–those 91,186 people who make up the top .001%–that account for the biggest chunk ($9.8 Trillion) of this looting.

Not only is Mitt a member of that tiny club. But his net worth–commonly reported to be $250 Million but, given all the secrecy, possibly much more–puts him well above the mean $183 Million that members of this club enjoy.

And Mitt and his buddies in this very elite club have stashed 18% of the total liquid net worth of the world in places where not only can’t potential presidential voters know about it, but it also remains outside the kind of circulation that would really contribute to real economic growth.

Last week, Obama released an ad that said Mitt is the problem. TJN shows just what a big problem Mitt and his buddies really are.

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Trained in America; Clothed in China

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When ABC reported last week that the $1,400-$1,900+ uniforms Ralph Lauren won the contract to provide to Olympic athletes were made in China, Sherrod Brown not only pushed the US Olympic Committee to try to rectify the issue by the Winter 2014 Olympics, but he introduced a bill to require Federal uniforms to be made in the US (currently, they must be 51% US made).

But the news–which came out just before the Alliance for American Manufacturers released their yearly poll showing near unanimous support for what could be called an industrial policy to support US manufacturing–had a more interesting public relations effect.

For example, after CNN posted a list of US manufactured clothes in response to the uniform news, the sales of Lawson Nickol’s Ohio company, All American Clothing Company, skyrocketed to 14 times what they normally would be.

Brown had a conference call with Nickols (whose company is located outside of Dayton) and Youngstown native Nanette LePore (whose clothes are manufactured in the US, though of foreign–usually Italian–cloth) to talk about efforts to bring back clothing manufacture to the US.

Both make a profit–though not the same margins they’d make if they outsourced to China. LePore noted that Ralph Lauren spends his money on advertising rather than manufacturing. Nickols claimed his jeans last longer, which helps to offset the somewhat four times higher costs. But ultimately they were both sacrificing some profit to keep manufacturing close. For Nickols, it seems like a quality and patriotic issue. It’s patriotic for LePore, too, but manufacturing in midtown Manhattan also gives her much more direct control over her line.

And both mentioned things that would help bring clothing manufacturing back to the US–much of it pertaining to sourcing for lower cost runs.

At this point, we’re largely talking about symbolic gestures: Olympic uniforms, Federal uniforms, jeans made 6 hours away. But the underlying message seems to be (and AAM’s poll backs this up abstractly) that people will seek out things made in the US.

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No Banksters Were Harmed in the Production of This Anti-Crime Video

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[YouTube]nV2cYC9IfNc[/youtube]

The United Nations Office on Drugs and Crime has rolled out a campaign to raise awareness of Transnational Crime.

$870 billion dollars a year. Including $250 billion on counterfeit goods. $320 billion on drugs. $32 billion on human trafficking. $250B on illegal arms.

But nowhere did the UNODC include the crimes of multinational banks.

Not the gaming of a key market measure, LIBOR. Not the theft of customer money. Not the theft of millions of homes through foreclosure fraud, or the massive fraud involved in the inflating of the housing bubble. It’s not even clear the UNODC includes the banks’ stake in all this illicit trade.

In short, while the UNODC laudably wants to draw attention to how much of our transnational trade benefits gangsters and thugs, it left an entire category–perhaps the most insidious–of thugs out of its reporting (the same blind spot the US government had when it rolled out sanctions against TCOs).

At this point, there’s no getting around it, no matter how much polite society would like to deny this fact. If we want to go after TCOs–and we should–we need to go after the cornerstone of transnational crime, which is increasingly the banks the government and international community has been propping up for the last 5 years.

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Yesterday’s Some-Sayers Have Become Today’s Fact-Checkers

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Paul Krugman makes a very good argument why the Bain attacks on Mitt Romney are necessary.

There is, predictably, a mini-backlash against the Obama campaign’s focus on Bain. Some of it is coming from the Very Serious People, who think that we should be discussing their usual preoccupations. But some of it is coming from progressives, some of whom are apparently uncomfortable with the notion of going after Romney the man and wish that the White House would focus solely on Romney’s policy proposals.

This is remarkably naive. I agree that the awfulness of Romney’s policy proposals is the main argument against his candidacy. But the Bain focus isn’t a diversion from that issue, it’s complementary. Given the realities of politics — and of the news media, as I’ll explain in a minute — any critique of Romney’s policies has to make use of his biography.

The first point is that voters are not policy wonks. They do not go to the Tax Policy Center website to check out distribution tables. And if a politician cites those distribution tables in his speeches, well, politicians say all kinds of things.

Nor, alas, can we rely on the news media to get the essentials of the policy debate across to the public — and not just because so many people get their news in quick snatches via TV. The sad truth is that the cult of balance still rules. If a Republican candidate announced a plan that in effect sells children into indentured servitude, the news reports would be that “Democrats say” that the plan sells children into indentured servitude, with each quote to that effect matched by a quote from a Republican saying the opposite.

He’s right. While I alluded to this in my post on Glenn Kessler’s changing belief in the seriousness of SEC filings, it deserves exposition directly. Glenn Kessler, back in the days when it was time to distinguish Gore’s economic plans from Bush’s, back in the days when it was time to consider whether Bush’s huge tax cuts would serve the interest of the country, committed just that kind of journalistic sin.

I pointed to this May 3, 2001 story, titled, “Some See Deficiencies in Bush’s Budget Math,” as just one example. It cited Rudolph Penner as the only expert speaking in any way supportively of Bush’s tax cut.

This fiscal situation, despite the uncertainties, is extraordinarily good.

But of course, Penner doesn’t actually say the tax cut is a good idea, just that Bush effectively inherited a good fiscal situation from Clinton.

Kessler then goes on to provide a bunch of anonymous quotes from Bush officials about the tax cuts–many admitting they’re not providing a full picture of the cuts and budget increases–as well as Ari Fleischer providing an excuse for why Bush didn’t include the cost to privatize social security in his estimates.

Which leaves this as the only non-Administration quote in support of the tax cuts.

“Look, [the spending ceiling is] going to hold because you have a different team,” said Sen. Pete V. Domenici (R-N.M.). “We’ve got the president in town.”

Compare that to evidence like this:

“The president is proving his critics right,” said William G. Gale, a budget expert at the Brookings Institution. “The ink isn’t even dry on the tax cut, and he’s already moving ahead on Social Security and defense. The president’s budget adds up only if you think the government will not do anything other than it has been doing.”

[snip]

One budget expert calculated that just the $100 billion in tax refunds will result in $73 billion in additional interest payments over the next 11 years. The entire tax cut would increase interest costs by about $400 billion, thus reducing the surplus by $1.75 trillion.

The budget agreement would increase spending on annually funded federal programs in fiscal 2002 by 4.9 percent, or about $667 billion, slightly higher than the 4 percent sought by the president. The rest of the nearly $2 trillion federal budget goes to pay for programs whose costs can’t be easily reduced — Social Security and Medicare, and interest payments on the national debt.

And while Kessler likely didn’t stamp that case with the “Some Say” headline, he failed to do what a journalist presenting such evidence should have: said clearly that Bush’s budget numbers didn’t add up, even before you accounted for the increases in defense and social security spending Bush planned (to say nothing of unexpected expenses like post-9/11 Homeland Security and two wars).

Mind you, that wasn’t the only version of such a story Kessler wrote. He also wrote the following “Some Say” stories:

May 3, 2000: Candidates Duel Over Tax Cuts; Gore and Bush Trade Analytical Shots, Seeking an Imprimatur of Fiscal Responsibility

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BREAKING! Importers Get Cost-Benefit Consideration, But You Don’t

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The Department of Homeland Security just blew off a deadline, last Thursday, to scan all US-bound shipping containers.

The Department of Homeland Security was given until this month to ensure that 100 percent of inbound shipping containers are screened at foreign ports.

But the department’s secretary, Janet Napolitano, informed Congress in May that she was extending a two-year blanket exemption to foreign ports because the screening is proving too costly and cumbersome. She said it would cost $16 billion to implement scanning measures at the nearly 700 ports worldwide that ship to the United States.

Instead, the DHS relies on intelligence-gathering and analysis to identify “high-risk” containers, which are checked before being loaded onto ships. Under this system, fewer than half a percent of the roughly 10 million containers arriving at U.S. ports last year were scanned before departure. The DHS says that those checks turned up narcotics and other contraband but that there have been no public reports of smuggled nuclear material.

You’ll see discussions about this measuring the relative danger of shipping containers: the possibility terrorists could ship a nuke or weapons to the US using a shipping container. You’ll see Janet Napolitano’s purportedly prohibitive cost–$16B–as rationale not to implement 100% scanning.

But what you won’t see is a discussion of why you have to be scanned not only every time you return to the US from another country, but every time you get on a plane, while cheap plastic goods from China don’t have to be.

The underlying message, though, after spending $360B implementing security measures that inconvenience you, many of which have no real effect on security, $16B is suddenly too much to spend on security measures on shipping.

Of course that’s not the cost Napolitano’s concerned about. She’s concerned about the cost the time delay of scanning shipping containers has on imports. She’s worried that implementing security measures will raise the price of cheap plastic goods from China.

Perhaps that might make US-manufactured goods more competitive against imports?

Of course, the $360B Homeland Security has paid on security infrastructure–including things like $170,000 backscatter machines at every airport, for example–doesn’t pay for the extra time it takes you to get through an airport, the extra time it takes you to drive rather than fly on closer trips, the decline in airline travel because flying is a pain in the ass., the actual fees the airlines charge you for the privilege of undergoing security theater before you get on a plane.

You are being asked to pay the security costs of your plane travel, but importers are not asked to pay the security externalities of shipping cheap goods to the US that undercut American manufactured goods. If something does blow up at a port, we’ll all be paying that price because Napolitano and her predecessors refused to ask shippers to pay their fair share.

This is a good time to talk about scanning shipping containers for security reasons. But it’s also a good time to ask why you’re treated with less respect than importers are.

One more point: scanning shipping containers would not just help prevent terrorism. It would help fight the war on drugs, counterfeits, illegal immigration, all of which use shipping containers to violate the borders of the US too. Precisely the same “wars” the Administration has fought so ruthlessly elsewhere would benefit from scanning shipping containers too.

But still the importers’ concerns win out.

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Glenn Kessler Didn’t USED to Treat SEC Filings as Boilerplate

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As gobsmacked as I am that no one can seem to find the people running Bain Capital from 1999 to 2002, when Mitt Romney was officially listed as its CEO, Chairman, and President, I’m equally shocked by Glenn Kessler’s claims that SEC documents are not to be trusted.

Kessler’s scarequoted SEC documents

On Thursday, Kessler suggested SEC filings don’t mean what they say.

There appears to be some confusion about how partnerships are structured and managed, or what SEC documents mean. (Just because you are listed as an owner of shares does not mean you have a managerial role.)

Then on Friday, he mocked the journalistic convention that treated “SEC documents” (his scarequotes) as factual.

There is a journalistic convention that appears to place great weight on “SEC documents.” But these are public filings by companies, which usually means there are not great secrets hidden in them. The Fact Checker, in an earlier life covering Wall Street, spent many hours looking for jewels in SEC filings.

[snip]

We had examined many SEC documents related to Romney and Bain in January, and concluded that much of the language saying Romney was “sole stockholder, chairman of the board, chief executive officer, and president” was boilerplate that did not reveal whether he was actually managing Bain at the time. (For instance, there is no standard definition of a “chief executive,” securities law experts say, and there is no requirement for anyone to have any responsibilities even if they have that title.)

Trillions of dollars are traded based on what these documents say, but a purportedly respectable journalist who used to cover Wall Street says they’re just boilerplate.

Only, he didn’t used to say that.

As Kessler reminds his readers, he used to cover finance. So to see how he, as a finance reporter, treated SEC documents, I thought I’d review what he wrote during precisely the period Mitt’s corporate whereabouts are in such dispute, 1999 to 2002. Kessler covered finance at the WaPo from the time he moved there in 1998 until about May 2, 2002, when he started covering foreign affairs. Thus, Kessler stopped covering finance just weeks after the time Mitt resigned from the boards of Marriott and Staples (presumably Mitt’s severance deal with Bain was around the same time).

SEC filings, more SEC filings, and no boilerplate

It was an interesting time to cover finance, too. In addition to a slew of articles engaged in one-side, other-side journalism citing experts warning that Bush’s tax cuts might bring back deficit spending but Pete Domenici and Ari Flesicher saying they wouldn’t so he couldn’t really be sure, Kessler covered growing awareness about tax havens, the end of the Dot-Com bubble, the AOL Time-Warner merger, and Enron. And in a number of those stories he treated earnings reports and other SEC documents as transparent truth.

Kessler pointed to corporate earnings reports for a January 29,1999 story predicting the economy would begin to slow.

Corporate earnings are closely watched on Wall Street because, in a world of dreams, deals and wild bets, earnings are real; they are the equivalent of batting averages for baseball addicts. Corporate earnings also provide hints on the general direction of the economy, which is why some analysts remain downbeat about the economy in the coming year despite the string of positive earnings reports. [my emphasis]

And he looked at them in very close detail.

Individual corporate earnings reports also turn up nuggets of how companies have boosted their profits. Compaq Computer Corp., the world’s number two computer maker, said Wednesday that fourth-quarter earnings rose a better-than-expected 2.2 percent. Profits rose to 43 cents a share, compared with 42 cents in the same period of 1997. But tax credits from Compaq’s purchase of Digital Equipment Corp. last year significantly cut the company’s tax rate, boosting net income about 5 cents a share.

In a January 13, 2000 story explaining different estimates for the value of the AOL Time-Warner deal, Kessler reveals the WaPo was the only paper to look beyond stock price in its calculations; it included Time-Warner’s debt, presumably gleaned from SEC documents.

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Fat Al Gore Colludes with Banksters in the Midwest

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There’s an ominous storm brewing in flyover country that may amount to little more than higher food and fuel prices, or may amount to something else.

First there’s the drought. Last week’s heat wave and the last month’s dry weather hit just as much of America’s corn crop was set to pollinate. And if the corn doesn’t pollinate, it never grows kernels. Even as I’ve been writing this post, USDA sharply cut forecasts for the corn harvest.

As a result, corn prices (soy prices too) are rising sharply. Which will, for better and worse, have repercussions on all the aspects of our super-processed life that relies on corn.

“The drought of 2012 will be one for the records,” said Peter Meyer, the senior director for agricultural commodities at PIRA Energy Group in New York, who forecasts a drop in output to 11 billion bushels if the hot, dry spell lasts another three weeks. “Whether it’s ethanol or livestock, no one is immune from this impending disaster. The ramifications will be widespread, affecting everything from your food to your gasoline.”

And all that’s before any follow-on effects, if the drought continues. Even in Grand Rapids, we’ve had some unusual fires. Rivers that were experiencing historic floods last year are approaching record lows this year; traffic on the Mississippi has already slowed.

Yet all that–even with our country’s industrialized reliance on corn–might be no more concerning than other droughts, such last year’s drought in Texas.

Meanwhile, banksters keep stealing farmers’ money–first via MF Global and now with Peregrine.

The U.S. futures industry reeled as regulators accused Iowa-based PFGBest of misappropriating more than $200 million in customer funds for more than two years, a new blow to trader trust just months after MF Global’s collapse.

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The Banksters Know They’re Banksters

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The headline news from this survey is that almost a quarter of 500 bankster executives surveyed responded they need to engage in ethical or legal wrongdoing to succeed, and a sixth said they’d definitely engage in insider trading to make $10M if they knew they could get away with it.

In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.

Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow.

Couple those findings, though, with these responses from the survey showing that fewer than a third of those polled believe regulators are effective.

Only 30% of all respondents felt that the SEC/SFO effectively deters, investigates and prosecutes securities violations.

[snip]

With respect to FINRA and the FSA, only 29% of all respondents felt these agencies effectively deter, investigate and prosecute securities violations.

And those numbers are lower for American respondents than British ones.

The two details, together, are more important than in isolation. Not only do a significant proportion of finance execs admit they’d engage in wrongdoing if they wouldn’t get caught, but they also say the SEC and FINRA aren’t going to stop them.

No wonder the banksters keep crashing the economy.

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Rupert Murdoch and the Invisible Hand Job of Capitalism

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Someone let Rupert Murdoch free on Twitter again.

Libor ” scandal” very suspicious. 2008/9 huge crisis and Brown should defend pressure to keep rates down and prevent meltdown.

Don’t know, but suspect Diamond scapegoat used by old establishment who did not like energetic competitor.

So one of the richest and most powerful businessmen in the world–and the owner of America’s premiere business newspaper–considers the way the banks gamed a key market measure a scare-quote “scandal.” This newsman appears to suggest Gordon Brown (a man who has been trashing Murdoch relentlessly of late) should get out there and defend having his government tell Barclays to lie about how healthy it was, all to prevent a meltdown.

Nevermind the municipalities who got robbed in the process. Nevermind that the practice of gaming LIBOR started before the crash and reportedly continued after the danger had passed.

Rupert Murdoch appears to want to defend what Simon Johnson, cataloging the business press acknowledging what a big deal lying about LIBOR is, calls “Lie-More as a Business Model.”

I guess it shouldn’t surprise me. After all, some of Murdoch’s most important properties, starting with Fox, thrive on lying as a business model. But at a time when even the (British, at least) business community is finally awakening to what happens when the banksters reveal the “market” is just a bunch of really rich white guys operating behind a curtain, Rupert Murdoch is doubling down on lies.

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