Let’s Do This Thing!

Everybody keeps telling me to write something positive and to stop harping on gloom and doom in our future.

I really wish I knew how to do that, because every day I search for some signs, or any sign that there is some hopeful event on the horizon that will create a positive impact on our future, but I can’t find any.

I turn on the TV News and without fail, there are varying degrees of sterilized coverage of some economic event that happened three days earlier that will have far greater impact than the newsies imply and is of far greater complexity than they can possibly understand or communicate.

So, they don’t, and America does what? Goes about their business placated by the blind faith that their leaders will figure out how to prevent the world from ending before it does?  Do they say to themselves, “Hey, how bad could it get? After all, we went through some deep shit in the 30’s and we came out alright.”

Cable news is marginally better because at least they have a longer segment in which to explore the charts, data, directions, patterns, history, etc., but it is still not enough. Then, I have to remind myself every day that people just don’t care. Here is what people care about:

TRENDING NOW (from Yahoo web searches ranked by popularity) on this fine day in July:

01 Mariah Carey

02 Sigourney Weaver

03 Harrison Ford turns 70

04 Michelle Obama threat

05 Chevy buy-back

06 F-22 hypoxia

07 Bonnie and Clyde guns

08 Bankruptcy protection

09 GOP vice-presidential candidates

10 Rheumatoid arthritis

So, it is obviously more important to the American people that Mariah Carey and Sigourney Weaver are celebrating Harrison Ford’s 70th birthday, while Michelle Obama has threatened a Chevy buy-back and some pilots are still experiencing hypoxia when they ride in the cockpit of a jet the military never wanted, and Bonnie and Clyde have hidden their guns and filed for bankruptcy protection because the GOP VP candidates have rheumatoid arthritis.

THIS is what the people care about.

How can that be? I haven’t a clue.

And, if I believe we are truly headed for hell, then why don’t I write about what we can do about it and instead of warning people all the time, point out some things that people can do once they know it.

OK. Here goes: If you have a job, no matter how shitty, keep it and shut-up about how shitty it is. You are blessed. It isn’t like they promised it would be. So, what? If you are still in school, stay there. Slow it down. Take fewer courses. Get Mono. Avoid graduation like the plague. Yes, even if you are at Harvard or Stanford. And, yes, even if you will have an MBA. Particularly if you have an MBA. Stay on your parents’ health care plan as long as you can. If you have a government job, you are even more blessed.

If you are an Airline Pilot, a Doctor or Lawyer, you are just fine. Not making very much money, but fine. Don’t buy anything you don’t need. Don’t buy real estate, yet.

If you are an investment banker, you are also fine. In fact, you are great. There will be tons of money to be made on the craziest gambles you’ve ever seen. Derivatives? Nah, child’s play. China? Gold? Corn? Salmon? Copper? You betcha.

If you are a commercial banker, you are screwed. Too bad.

If you are unemployed, find something that only you can do and offer it for sale. Try Fiverr, or the like. Make something up. “I will sing Happy Birthday in my silly hat for $5”. Really.

Stop looking for work if you haven’t already. It is bad for your soul. If you’ve been out of work for a year, you undoubtedly have erectile dysfunction. You may have already joined many who have considered suicide. Don’t do it.

Get creative. Find others and band together in some common cause. Like tearing down the government. Don’t do it like the Occupy movement did. Actually form a political party and talk to the media. Use simple words. Talk slowly. Even though it makes no sense, talk about the government making jobs. Or, find a bunch of people and start a business that capitalizes on the GREATEST DEPRESSION EVER. Put people in need together with people who have. Make something up. Now is the time. Bend rules. The law will be so busy chasing truly bad guys, it won’t have time to worry about you. And, where would they put you? Jail? Who would look after you? They are all out of work too.

If you are a teacher, you are doomed, but at least 40% of you still have jobs. Try to stay out of site and don’t ever complain.

If you’re in the military, stay in the military. Re-up. For anything.

If you are upside down on your house, walk away and start over somewhere. If you have a ton of debt, declare bankruptcy before they change the law again and make it even harder. If you are lucky enough to be on unemployment or other government welfare programs, revel in it and stay on them. They are NOT entitlements. You paid for them in taxes. They are yours. You have earned them.

If you have a ton of money, you will have fun and be able to make lots more by betting against all fiscal progress and economic recovery. Bet against Greece. Bet against European banks surviving. Bet against the dollar. Bet against every bank stock, and bet on every European sovereign bond default.

Oh, that’s not what you meant, huh?

OK. The truth is we live in the modern world. And, no matter what happens in Washington or in our State Capitols, this is still the modern world (it would be easy to say this is still America, but technology now allows our freedoms to enable behavior around the world, so I call this the modern world). We can do anything we want here. You want to know what to do? Then, page down to the end, and I’ll tell you.

In the meantime, the cracks in the ice are getting bigger.  At this point it is really hard to have much confidence in the global financial system at all.  The lying leaders told us that MF Global was an isolated incident.  Well, the horrific financial scandal over at PFGBest last week is essentially MF Global all over again.  And, either no one was watching or no one was telling. They told us that we would not see a huge wave of municipal bankruptcies in the United States.  Well, three California cities have declared bankruptcy in less than a month, and many more are on their way.  They told us that we could have faith in the integrity of the global financial system.  Well, now we are finding out that global interest rates have been fixed by insiders for years, including our own Treasury leader. 

They told us that Greece was an isolated problem and that none of the larger European nations would experience anything remotely similar.  Well, what is happening in Spain right now looks like an instant replay of exactly what happened in Greece.  So who are we supposed to believe?  Why does it seem like nearly everything that “the authorities” tell us turns out to be a lie?   What else haven’t they been telling us? I think I know.

Look, tens of millions of American families are about to go through economic hell and most of them don’t even realize it. For some weird reason, most Americans don’t spend a whole lot of time thinking about things like “monetary policy” or “economic cycles”.  The vast majority of people just want to be able to get up in the morning, go to work and provide for themselves and their families.  Most Americans realize that things seem “harder” these days, but most of them also have faith that things will eventually get better.  Why? I have no idea.

Unfortunately, things are NOT going to get any better.  The number of good jobs continues to decline, the number of Americans losing their homes continues to go up, people are having a much more difficult time paying their bills and our federal government is drowning in debt.  Sadly, this is only just the beginning of how bad it is going to be.

Since the financial collapse of 2008, the Federal Reserve and the U.S. government have taken unprecedented steps to stimulate the economy.  But even with all of those efforts, we are still living in an economic wasteland.

So what is going to happen when the next wave of the economic crisis hits?

If you look at the economic relapse that’s going on right now, look at last week’s abysmal job numbers, look at the housing numbers, understand that all of this is taking place with record monetary and fiscal stimulus. What happens if we remove those supports? What do you think will happen?

Last month, the Federal Reserve’s quantitative easing program ended (QE2 for those of you still counting).  The U.S. Congress and state legislatures from coast to coast are talking about budget cuts.  The amount of borrowing and spending that has been going on is clearly unsustainable, but will the U.S. economy start shrinking again once the current “financial sugar high” has worn off? QE3? It won’t work. Trust me.

Already, most economic news has been bad and almost all true economic indicators are turning south.  And, finally, the American people are becoming increasingly restless.  One new poll has found that 59 percent of the American people disapprove of Barack Obama’s handling of the economy (which is a new high).  According to another recent poll, 63% of Americans say that they feel “not good” or “bad” about how the U.S. economy is performing. It is not surprising that my buddy, Jimmy Carville is predicting a civil uprising.

The official unemployment rate just went up to 9.1 percent, but that figure only tells part of the picture.

There are some areas of the country where it seems nearly impossible to find a decent job.  Millions of Americans have fallen into depression as they find themselves unable to provide for their families.

According to CBS News, 45.1 percent of all unemployed Americans have been out of work for at least six months.  That is a higher percentage than at any point during the Great Depression. Just two years ago, the number of “long-term unemployed” in the United States was only 2.6 million.  Today, that number is up to 6.2 million.

Can you imagine being out of work for 6 months or more? How would you survive? Do you have enough money in the bank to last 6 months with no income? 89% of Americans don’t. Should I repeat that?

 

So is there any realistic expectation that things will get any better?  Well, there were only about 3 million job openings in the United States during the month of April.  Normally there should be about 4.5 million job openings.  The economy has slowed down once again.  Good jobs are going to become even more rare. Unless we can generate 160,000 new jobs each month, we fail to satisfy new demand. And, that is just NEW demand. It says nothing about existing unemployment. In other words, every new job we fall short of 160,000 is one more added to the unemployment number. So, yes, unemployment is growing. It is not coming down as many in the Obama administration would like to believe.

There are millions of other Americans that are “underemployed”.  All over the United States you will find hard working Americans that are flipping burgers or working in retail stores because that is all they can get right now. Most temp jobs and most part-time jobs don’t pay enough to be able to provide for a family.  And there are not nearly enough full-time jobs for everyone.

Sadly, the number of “middle class jobs” is about 10 percent lower than a decade ago.  There are simply less tickets to the “good life” than there used to be. And without good jobs, the American people cannot afford to buy homes. Without good jobs, the American people cannot even afford the homes that they are in now. And, these jobs are NEVER COMING BACK.

U.S. home prices have fallen 33 percent since the peak of the housing bubble.  That is more than they fell during the Great Depression. 28 percent of all homes with a mortgage in the United States are in negative equity at this point.  There are millions of American families that are now paying on mortgages that are for far more than their homes are worth. Millions of American families literally feel trapped in their homes.  They can’t afford to sell their homes, and they are afraid to simply walk away, because as things stand now, nobody will approve them for new home loans for many years to come.

Many Americans are sticking it out and are staying in their homes until they simply can’t pay for them anymore. As the number of good jobs continues to decline, the number of Americans that are losing their homes continues to rise. For the first time ever, more than a million U.S. families lost their homes to foreclosure in a single year during 2010. As the economy slows down once again and millions more Americans lose their jobs, this problem is going to get a lot worse. WORSE THAN TODAY.

Even if they aren’t losing their homes yet, millions of other Americans families are finding it increasingly difficult to pay the bills. Wages have been very flat over the past few years and yet the cost of most of the basics just seems to keep going up and up. According to Brent Meyer, a senior economic analyst at the Federal Reserve Bank of Cleveland, the cost of food and the cost of energy have risen at an annualized rate of 17 percent over the past six months. Have your wages gone up by 17 percent over the past six months?

As 2009 began, the average price of a gallon of gasoline in the United States was $1.83.  Today it is $3.77. American families are finding that their paychecks are going a lot less farther than they used to, but Ben Bernanke keeps insisting that we have very little inflation in 2011.

Most Americans don’t care much about economic statistics – they just want to be able to do basic things like sit on their porch and have a beer, and take their children to the doctor. According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy. Sadly, soon a lot more American families will not be able to afford to go to the doctor. But, ironically, not because Doctors are earning and charging more, but because Insurance companies are.  Doctor’s wages continue to trend down while Insurance company profits continue to trend up.

As the economic situation has unraveled, an increasing number of people are being forced to turn to the federal government for assistance. One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government. Some of the hardest hit members of our society have been our children.  Today, one out of every four American children is on food stamps. At the moment, approximately 44 million Americans are on food stamps.

But our federal government cannot afford to spend money like this forever.

According to a recent USA Today analysis, the U.S. federal government took on $5.3 trillion in new financial obligations during 2010.  USA Today says that the U.S. government now has $61.6 trillion in financial obligations that have not been paid for yet. Yes, that is trillion! $61.6 TRILLION.  Who is going to end up paying that bill? I know; you don’t care. And neither do I. What I care about is where my next meal is coming from, and how I am going to afford that next gallon of gas. I suspect you do too.

So with so much bad news and with all economic indicators pointing in the wrong direction, are our leaders alarmed?

According to Federal Reserve Chairman Ben Bernanke, “growth seems likely to pick up somewhat in the second half of the year.” I swear to God, the man is on drugs or has a contract clause that forces him to keep repeating the same mantra, no matter what happens. He, and his buddies in Washington and in your State capitol are part of the same disease. The disease that brings us closer every day to Armageddon.

So, what do we do? I said I would tell you what to do, right?

OK. This may seem silly to some of you, but there is absolutely no reason why we cannot all start a new business that is independent of anyone else and relies only on our own creativity and energy. This is not a plug for Crowdfunding. This is a plug for entrepreneurship.  There are many websites around now that provide the ability to post a project and solicit funds to launch it. Kickstarter, Indiegogo and RocketHub are three American sites joined by several in the UK and elsewhere that facilitate anyone with a dream to test the water in the Crowd for enthusiasm about your project. Here’s an example:

http://www.kickstarter.com/projects/readmatter/matter — Might not be your style? How about this one: http://www.kickstarter.com/projects/1220832022/bloc-socks?ref=popular … or … this one: http://www.rockethub.com/projects/8479-social-action-10-months-in-tel-aviv

The point is that you can, and should … DO SOMETHING! Stop waiting for somebody else to do it for you. Stop looking for a job. Stop feeling sorry for yourself.

Grab some buds, and get a dialogue going around some pet idea that you have had in the back of your mind. Maybe it comes from your frustrations as a single mother, as a cabdriver, as a fireman, a teacher, a bricklayer, whatever. There must be 99 ways to whatever you do better, faster, cooler, bigger or more. You can come up with something that maybe a few hundred other people think is a good idea also.

Then, you can post it on these sites and maybe, just maybe, you will raise enough money to start a little company doing that thing. Maybe it takes off. Maybe it flops. In the meantime, you might raise enough to sustain yourself to get to the second or third idea. You know? The one that really works.

This beats sitting around, feeling sorry for yourself and looking at want-ads, doesn’t it? And, you know that will never work anyway, and all it does is bring you closer to depression. Don’t be that guy. Don’t do the stuff that brings you closer to depression. Start something. It takes zero cash. You can do this.

And, though I realize you really don’t care, it is also the way in which we re-start this country and throw all of the old paradigms about banking and central government out the window. It is up to us now. Let’s do this thing!

 

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Chickens Come Home to Roost on the Fiscal Cliff.

Erskine Bowles says that “U.S. policymakers will fail to deal with a sharp fiscal adjustment coming at the end of the year and risk sending the country spiraling into a disastrous recession.” 

Bowles is the former chief of staff to President Bill Clinton, and co-author of the Simpson-Bowles plan, which was the hard-hitting fiscal responsibility recommendations that came out of the National Commission on Fiscal Responsibility and Reform, which President Obama commissioned in February of 2010.

The committee was comprised of an equal number of Democrats and Republicans and their charter was to devise a plan to cut the deficit to 3% from 9% and they did. Congress did what they usually do with responsible thinking, and ignored the recommendations.

At the end of the year, tax breaks, including the Bush-era tax cuts, expire, while automatic spending cuts kick in. The combination of the two occurring at the same time, known as “the fiscal cliff,” could siphon $500 billion out of the economy next year alone and $7 trillion over a decade, according to some estimates.

Congress must act to adjust the timing or scope of the fiscal adjustments, but likely won’t deal with tax and spending issues in an election year, says Bowles, co-chairman, along with Alan K. Simpson, a former Republican senator from Wyoming.

“If I had to tell you the probability, I’d say the chances are 100% that we are going over the fiscal cliff. I hate to say it, but I think that’s probably right,” Bowles tells CNBC. “We worked hard to try to get common sense to overrule politics, and that’s a tough thing in Washington, and we failed.”

Most predict that Congress won’t address the fiscal cliff until next year after elections.

Then, the White House and Congress will likely work quickly to adjust tax hikes and spending cuts though retroactively from Jan. 1. If they don’t work fast, Bowles says, the country will slide back into a recession. He assumes we are not in one now. I guess this is due to the party line in D.C., that says we are in recovery. We have no retroactive remedies left. We are out of cash.

“If they don’t turn around very quickly and fix it shortly thereafter, then I think it could be really a disaster for the country. It’s $7 trillion worth of economic events. It will have an effect of 1.5 percent decline in GDP next year. That’s enough to put us back into a real recession,” Bowles says.

“This is not only the most predictable economic crisis in history, it’s the most avoidable if we just come together and put partisanship aside and pull together.”

Calling deficits “a cancer” Bowles says the country must work to improve its fiscal health.

“If you take last year, 100 percent of the revenue that came into the country, every nickel, every single dollar that came into the country last year, was spent on our mandatory spending and interest on the debt,” Bowles says.

“Mandatory spending is principally Medicare, Medicaid, and Social Security. What that means is every single dollar that we spent last year on these two wars, national defense, homeland security, education, infrastructure, high value-added research, every single dollar was borrowed and half of it was borrowed from foreign countries,” Bowles adds. “That is crazy. It’s a formula for failure in any organization.”

Simpson and Bowles made recommendations to narrow deficits, though President Barack Obama and members of Congress refused to follow up on the proposals.

Now is not the time to blame, Simpson says, as the problem of too much spending is decades old.

“People will often say, How did we get here? It’s easy how we got here. We were told to bring home the bacon for the last 70 years,” Simpson says. “Go get the highway, go get me some money, go raise this, do this and do that and you got re-elected by bringing home the bacon and now the pig is dead.”

I say the fiscal cliff is affecting the economy today, by fueling worries among businesses and increasing their reluctance to hire. “The biggest fear at the moment is that Europe will unravel, but concern that policymakers may let the nation go over the fiscal cliff is mounting,” says Mark Zandi, chief economist of Moody’s Analytics, according to CNN Money. You bet it’s mounting.

Whatever Congress decides to do will be too late, and unlike in 2008, we have no more magic bullets left to make it go down the road. The chickens are coming home to roost.


Classic Case of Fraud in U.S. Regulatory Oversight. Futures Trader Trust is Gone.

PFG (Peregrine Financial Group) follows MFG (MF Global) into bankruptcy. MFG filed 6 months ago in December of 2011. Both companies were Commodity Futures Traders and both were regulated by the U.S. Commodity Futures Trading Commission (CFTC).

It seems like this is the logical and dispirited ending to every fraud: liquidation; and a very sad ending for the 10,000 – 25,000 creditors who will get nothing as a result of this liquidation proceeding.

MF Global, as you might recall, was John Corzine’s (former U. S. Senator, former New Jersey Governor, and former CEO of Goldman-Sachs) company about which he famously said, “I am stunned that we couldn’t find the money”, (hundreds of millions of dollars in client money mysteriously disappeared in the days before the firm’s collapse), and “I have no idea where it’s gone.” And, by the way, Mr. Corzine has not served any prison time nor has he been formally accused of or prosecuted for fraud.

MF Global filed for bankruptcy protection in December of 2011, becoming the first American financial casualty of the European debt crisis. The firm took a gamble in buying the troubled bonds of Italy, Portugal, Spain and Ireland last year, gambling (with other people’s money) that they would soon recover. Bad gamble. $1.6 billion in missing client cash has yet to be recovered by trustees overseeing the liquidation of the firm.

Peregrine Financial Group Inc., on Tuesday filed to liquidate under Chapter 7 of the U.S. bankruptcy code. Missing this time? Over $300 million in customers’ funds.

Russell Wasendorf Sr attempted suicide Monday, July 9. Wasendorf was found in his car with a note, the contents of which the sheriff declined to divulge. A hose ran from the vehicle’s exhaust pipe into the passenger compartment.

“A note was found in the vehicle that indicated possible discrepancies with accounts at Peregrine Financial Group,” according to the sheriff’s report.

Here’s where this story gets interesting: It turns out that Russell Wasendorf Sr. intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation testified for the record.

Once Wasendorf realized he was caught, and knew the implications of his actions would be exposed for the whole world to see, he tried to commit suicide, and failed. And while crime happens all the time, what is truly stunning is that the CFTC gave the firm a clean bill of health in its January inspection of Peregrine Financial Group. That’s 6 months ago. The CFTC, as a reminder, was it regulator. The entity, whose sole charge is to make sure that firms at least have real, not rehypothecated, cash in their segregated client bank accounts. PFG failed to do so for at least the past two years. And somehow, the CFTC missed this. MF Global was a warning shot, and the CFTC missed it entirely. And not only that, 2 months later, it pronounced PFG clean.

Gary S. Gensler is the chairman of the CFTC.

Gensler was Undersecretary of the Treasury (1999-2001) and Assistant Secretary of the Treasury (1997-1999) in the United States. Barack Obama selected him to lead the Commodity Futures Trading Commission, which has jurisdiction over $5 trillion in trades. Gensler was sworn in on May 26, 2009.

In March 2009, Senator Bernie Sanders (I-VT) attempted to block his nomination to head the Commodity Futures Trading Commission. A statement from Sanders’ office said that Gensler “had worked with Sen. Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history.” He also accused Gensler of working to deregulate electronic energy trading, which led to the downfall of Enron, and supporting the Gramm-Leach-Bliley Act, which allowed American banks to become “too big to fail.”

In early November, 2011, Gensler stepped aside from the CFTC’s investigation of the giant derivatives broker MF Global because of his longstanding ties to Jon Corzine, the CEO of MF Global, for whom Gensler had worked while both were at Goldman Sachs.

For the PFG fiasco, and for the failure to adequately investigate MF Global, Gensler has to be fired immediately, with prejudice, and never allowed to serve anywhere in the U.S. government again. Unfortunately, this is only the tip of the iceberg as we will see during the rest of 2012 and all of 2013. 


The History of the American Financial Holocaust.

This is the coolest documentary you will ever watch.

Charles Ferguson is arguably an American hero. He produced, wrote, and directed this incredible documentary about the fraud and corruption that led to the global financial crisis in 2007 and 2008 and extends to the one we are about to experience in 2012 and 2013.

Then, upon winning the Academy Award for Best Documentary in 2011, he began his acceptance speech by stating, “Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.”

Ferguson recently published his book, Predator Nation, and has continued his crusade to expose fraud, criminality and corruption in the private sector, in government, and in academia. In ways I can only dream about.

If you have not seen this movie, you have to watch it. If you know anyone who has not seen this movie, get them to watch it. Every American should be aware of what is transpiring at the highest levels of our financial governing infrastructure. Both here, in the U.S. and across the globe, particularly now in Europe. As you watch this film, think about all of the posts you have read here throughout the first half of this year. Well, at least the non-self-serving ones anyway.

Inside job image

Another one of my heroes.

Somehow, we need to get people to stop watching the evening news on TV. Somehow, we have to get people excited about being actually smart and knowledgeable and understanding about the financial issues that are affecting their everyday lives and driving their entire existence. Somehow, we need to stop paying attention to the Kardashians and start paying attention to Angela Merkel, the Fed and the Treasury, the bills that actually make it through Congress (someone should actually read them), and what people like Jamie Dimon are doing every day. Since all of that affects employment. All of that affects housing. All of that affects taxes. All of that affects our lives.

Charles Ferguson Sony Classics Tom Bernard, producer Audrey Marrs, Gillian Tett, and director Charles Ferguson attend the "Inside Job" Premiere during the 35th Toronto International Film Festival at Ryerson Theatre on September 9, 2010 in Toronto, Canada.

It is incredible to me that everyone who turns 18 is just given the right to vote. I suppose voting competency tests are right up there with parenting tests for would-be parents, and I know both are wrong and could never happen, but God, I can dream, right?  

Of course, this goes well beyond America’s borders; everyone in this world should make themselves aware of the injustice, criminality, and corruption that sways policy and creates a needlessly precarious and dangerous world for us all. 

Before you watch it, please be advised that a mind-mindbogglingly complex subject has been Kardashian-ed down to fit into a two hour window, and there is a certain amount of suspended disbelief, and a little dose of blind trust necessary to digest this film, but I know these guys ain’t lying. The best test of this is to note who did NOT agree to be interviewed for this film.

View it here:

http://vimeo.com/25491676#

If you have trouble viewing this, just hit reload until it plays. Thanks.


The Latest Threat To Our Relationship With Iran.

How are we doing on the global oil market these days? Not much news coming out of Iraq in particular.

Wonder what happened to all of that oil we were fighting to defend over there.

Iran has a lot, but I don’t think we are going to get any of it anytime soon. We have to play nice and work with the U.N. to try and sort out this nuclear business. In the meantime, China says to hell with the rest of you, and goes about its business of locking in oil supplies with whoever wants to play, in this case, Iran seems like a good partner.  It seems it is about to invest, not just in developing the northern, but also the southern Iranian oil fields (which are capable of producing 700,000 barrels per day of crude). Perfect for the Chinese.

One of the southern fields, Azadegan, has one of the world’s largest oil deposits, with in-place oil reserves estimated at 42 billion barrels, and recoverable resources estimated at about 5.2 billion barrels. It is one of the biggest oil fields found in Iran, in the last 30 years, and enough to tide China over a for a while.

Speaking to reporters in a visit to the Petropars Company on Sunday, Iran’s Oil Minister Rostam Qasemi said the agreement for developing Azadegan and Yadavaran oil fields has been reached after 10-15 years of negotiations with the Chinese side.

 He added that the Chinese side has started its activities by investing USD20 billion dollars in the oil fields. Must be the interest from all those U.S. Treasury bonds.

“So far, more than 20 drilling rigs have been installed in Azadegan and Yadavaran oil fields and plans have been made for the daily production of 700,000 bpd of crude oil [when development of both fields is complete],” Qasemi stated.

The minister said contracts have been signed for the development of 12 new oil fields in the past few months, adding, “Development of some fields, including Azar and Changouleh oil fields has also begun.”

Yadavaran oil field is located in the southwestern Khuzestan Province bordering Iraq. The development project of the oil field is expected to be implemented in three phases. Upon the completion of all phases, some 300,000 barrels of oil are expected to be pumped out on a daily basis.

Iran holds the world’s third-largest proven oil reserves and the second-largest natural gas reserves.

The country’s total in-place oil reserves have been estimated at more than 560 billion barrels, with about 140 billion barrels of extractable oil. Moreover, heavy and extra heavy varieties of crude oil account for roughly 70-100 billion barrels of the total reserves.

Between Clinton’s ‘prices to be paid’ and Obama’s new trade-war, is it any wonder the Chinese have decided to escalate their ‘more-than-rhetoric’ from bartering away from the USD. After ignoring the sanctions and then receiving their exemption, they are doing what they usually do and sending a major F-you to our girl in the mid-east? What’s next? Oh. Defending their new investment in global oil reserves. That’s what.

Do the Iranians look like dummies to you?


Obama vs. Romney.

This time around, there is no great black hope, no chanting, “yes, we can.”, no Black-eyed Peas reminding us that the future can be different, if we are willing to elect a reasonable man or woman to the highest office in the land.

This time around, we have seen what 3+ years of a reasonable man can do in that office, and we are deflated, depressed and disenfranchised even further than we were under eight years of the Bush presidency. How could that be even possible?

Did we really just witness 3+ years of congress doing imitations of the ultimate fighting championships, promoted to kill any legislation that Obama was behind, just because he was behind it, regardless of its impact on the American people? Really? I thought the Clinton years were brutal, but those were kindergarten neener-neener nasty compared to this. And, they even included an impeachment.

I really can’t take any more of this. Even the thought of voting for Romney is crazy. Is that what people want? Back to No future III? The Bush years revisited, but with a Republican congress? You like this quarter’s jobs report? You’ll LOVE it under Romney. You like the state of housing? Romney will give you a boner. You like the cost of health care? Romney will make it even higher. You like social programs for those who are in trouble? Forget about it. You like rich guys being protected by the government and helped to get even richer? You will be in heaven.

Do we need to be reminded that our current predicament is the result of eight years of Bush policies? Really?

Deficit spending: higher under George Bush. Military spending: higher under George Bush. National Debt: higher under George Bush. Government employment: higher under George Bush. Pace of the increase in National debt: higher under George Bush. Authorization for  the biggest government handout in history: George Bush.

When Obama took office, the first thing he got to witness was the implementation of the most poorly thought out policy dictate in American history, an $887 billion bailout of the nation’s banks. Obama didn’t get a vote in this. It just was. And, guess what? It wasn’t enough. We needed to bail them out some more. Then, the banks hunkered down and we haven’t seen them since (except when trading derivatives and disclosing over-exposures to European trading partners). Credit? HA! You want credit? You get Yogi Berra credit. You can have all you want as long as you don’t need it. If you need it, you can’t have it.

Then the housing market crashed, but banks didn’t like the way they filled out those pesky loan documents, so they sort of delayed full disclosure on their exposures. Now, we all see their exposures and nobody likes it, especially the banks. Obama said, “Shouldn’t the banks be held to some accountability if we are going to keep them afloat?”, and congress laughed. That boy clearly doesn’t understand how the game is played, does he?

He tried to close Guantanamo like he promised, but congress said, “Hell no, boy. Don’t you understand people don’t want those ‘ragheads’ in their neighborhood prisons?” as if someone actually asked anybody what they wanted? Nope – not how it’s done.

He authorized a (relatively) small bailout for the auto industry and guess what happened? The industry is stronger now than it has ever been, and they all paid their loans back well before they were due. Detroit has jobs now. People are working in the auto industry again. Did you know that? Probably not, because Obama’s message seems to get drowned out in the air waves, or nobody seems to remember how bad it was, just 3 years ago. Or, how scary.

I think, based upon looking at the polls, people don’t remember anything that happened yesterday. This country polls hugely (above 65%) in favor of every component of what is now known as Obamacare, yet when asked whether they approve of Obamacare itself, they poll negative. How can that be? Oh, that’s right. The Kardashian’s are making $40 million a year and have renewed their insane reality show for another five years. Now, it all makes sense.

Obama tries to take credit for ridding the planet of the most dangerous terrorist that ever lived and people pretty much yawn.

What have you done for us lately, I guess? Seemed like a pretty big deal when Bush was in office. Whatever.

Jobs? Obama has clearly failed to create any new ones. But, when he actually does something to try and create new ones, he gets shot down in congress. The JOBS act struggled to get out of a Democratic controlled Senate with major revisions and is now stalled out in the SEC during implementation over petty issues surrounding accreditation of lenders. Come’ on, man! Is this what you people want?

How about at least prosecuting the ‘criminal’ banks? Are you kidding me? Not one banker does any jail time, yet they all played a major part in taking down the world’s financial system as we knew it, and it will probably get much worse. Instead, his AG gets rung up on contempt of congress on some nonsensical ATF screw-up that no one cares about, least of all the guys still looking for work in their 24th month of unemployment.

I mean really. This is what congress focuses on? This is way worse than re-arranging deck chairs while the Titanic sinks.

A couple of inherited wars? Obama ended one and has begun to end the other, meanwhile avoiding the “crazies” in Iran and their brinkmanship. Silly people; they want their own nuclear bomb just like the big guys. Where do they get off? Israel? The peace process grinds along and Obama has done as much or as little to placate all sides as anyone before him, while trying to keep the Israelis in a state of reason.  But, no way is Obama a tough war president like Bush or that Romney guy, both of whom are delighted to send our young men and women into harm’s way, particularly if there is oil or other stuff we want. National security, you know.

Health care? Never mind that he risked almost all of his political capital to usher in the most revolutionary health care reform bill in history, and the people LOVED it (see above), but he also frightened the living skittles out of the insurance companies and lobbyists at the same time. How many times has your health insurance premiums gone up in the last twelve months? There is a reason for that, and yes, we are on the path to a single payer health plan … unless, of course Romney gets elected. In that case, Obamacare will be overturned (though it will be interesting to see how he actually does this) and 33 million Americans can return to having no health care, along with all of the college students now on their parent’s plans for a few more years. Pre-existing conditions? Forgetaboutit.

And then there’s the economy. Give me a break. If this election is won or lost based on the economy, Obama is history. The economy is lousy now, hasn’t improved in the slightest in the last 4 years, and is about to get really bad. The only thing we can be sure of is that we are hopelessly overexposed to Europe, the European bankers are even bigger liars than our own bankers, and when the sizzle finally hits the fan, the US banks and the US economy will be a disaster. The recent jobs report will look the same or worse for the rest of the year. Housing hasn’t budged and won’t, except to fall even further. All of that, we can be sure of.

But, the election shouldn’t be won or lost based on the economy. Generally reasonable people should conclude that no one individual, especially the president of the US, can actually do anything to alter this course, and that many complex factors must resolve themselves before any of this can begin moving in the right direction. Factors that rely on individuals at the levers of power to do things that are in the interests of the general well-being of mankind, as opposed to their own private interests.

Fixing this mess will require that the Fed and Treasury break some rules and force bankers to do truly radical things like forgiving all of the bad mortgage debt, for openers. Stop collecting bad debts. Open their credit drawers to small businesses and returning vets and people who used to have good credit. In other words, pitch in and help.

Our current situation is in many ways, reminiscent of World War II. A small group of evil men determined to wreak havoc on the rest of global society with the fiercest and most treacherous means available at their disposal. But, instead, a few good men stood tall and acted like the statesmen they were, and inspired the rest of us to carry on and fight the good fight. And, they called for immense sacrifice.

We went without – a lot of stuff – for a long time. Rules were broken and changed. There were very few sacred cows untarnished. The future of the world was on the line. And, because of all of that, the people banded together and prevailed.

This election also needs to be about statesmanship and leadership.

We face three major disasters today — the first being fallout from the financial recession of 2008 with respect to the balance sheets of consumers and government entities. The collapse of housing prices destroyed trillions in family assets. The median net worth of families in the United States dropped by 39 percent over a three year period — from $126,000 in 2007 to $77,300 in 2010 — leaving family wealth back where it was in 1992, two decades before.

Second, the housing collapse led to permanent damage to our financial and banking system. Banks are not making normal loans because they still have a lot of bad debt on the books and they are uncertain about future regulatory requirements, and global financial developments. As much as I hate them, they are doing what is right for their shareholders. But, what they are doing is wrong for the world.

And third, our enormous government debt breeds uncertainty. No one has any idea how we can pay this debt down, and especially when Congress continues to do their UFC imitations and seems completely unable to function.

And, we face one huge potential disruptor – the coming financial fallout from the impending collapse of most of Europe and many of their most prestigious banking institutions. This event will create panic, banking disasters, it will plunge the economy even deeper into chaos and cause even greater job loss.

We can avoid all of this, but it will require a summit like no other and leadership rarely witnessed in history. It will require that we throw away all convention and determine to start anew at whatever cost and whatever pain to those most heavily invested. I once asked the head of Levi Strauss’s Jeanswear division why they decided to stop shipping product to China and he said, “The Haas brothers don’t need any more money.” Well, I think that reasoning applies aptly to a lot of people in power today as well.

How can we stop all this?

Whether you’re a Republican or Democrat, Conservative, Liberal or Libertarian, we need to vote for a leader and a statesman. The only man running, who is capable of delivering speeches to raise the spirit and pride of the American people, who is driven by reason and not by politics, who can conjure the presence and will of Roosevelt and Churchill, Kennedy and Lincoln, and who can summon our courage and strength when we will need it most. There is only one who can bring global leaders to a summit and get them to do the hard things that must be done to put a stop to this spiral. There’s only one statesman running, and his name isn’t Mitt Romney.


New Peer-to-peer Lender Enters Space.

RainFin: latest entry into peer-to-peer lending – but, in South Africa.

RainFin intends to disrupt South Africa’s financial services sector by allowing credit-worthy South Africans to engage in peer-to-peer lending, cutting out banks in the process and offering higher returns to lenders and better interest rates to borrowers.

Sean Emery, cofounder and CEO of RainFin, says the company’s online platform links people who need to borrow money with people who have money to lend. He says borrowers can access funds at lower interest rates and with better terms and conditions than they could through a bank.

Emery says borrowers may be able to get interest rates as low as half of those offered by traditional banks. Lenders, meanwhile, can achieve “superior returns” on money they loan to others. He calls it “social lending”, and it fits well with American models that are rolling out this year, in advance of the JOBS act and attendant CrowdFunding bill, though Emery contends social-lending is different.

Lending is making the wrong people rich and the wrong people poor,” says Emery. There’s an important distinction between “CrowdFunding” and “social lending”, he says. The latter is a subset of the former and sees a group of people engaging in transactions while sidestepping traditional intermediaries rather than pooling resources to create a product or fund an event.

In order to use RainFin, consumers must be older than 18 and resident in South Africa. The site employs a thorough credit vetting process, after which borrowers can apply for loans of between R1 000 ($123 US) and R75000 ($9,191 US) using the RainFin marketplace.

These are small, short-term loans. Borrowers can specify the loan amount, the maximum interest they are willing to pay and the loan duration they prefer. The maximum repayment period is one year.

Individual lenders, meanwhile, can invest between R100 ($12 US) and R500000 ($61.275 US) in the service and spread it across numerous loans. Investors are not obliged to lend to groups or individuals, and have access to anonymous credit risk information based on factors such as age, gender, location and credit score.

RainFin earns a percentage-based transactional fee on every loan that takes place. Emery says this makes the costs of the platform “completely transparent” to its users. There is a 2% origination fee charged to the borrower and a 1% fee to lender for managing the transaction. Thus, the service takes 3% of a transaction’s value, added to it.

“We believe that consumers have an opportunity to take back some of the power they have given to banks, benefitting each other rather than large institutions in the process.”

Emery says RainFin intends to add other products to its offering, including financing for small and medium-sized businesses and mortgages in coming months.

The service is aimed at two types of borrowers. The first are highly creditworthy borrowers who want a better return on investment than they get currently.

The second is the first-time borrower or a borrower that is shunned by the formal banking sector because of their age — whether too young or too old — or because they are freelancers, students or entrepreneurs.

At launch, the service is designed to handle up to 100,000 users. Emery says there are no plans to launch the service outside South Africa on account of the banking regulation complexities that it would entail. The service doesn’t require a banking license because it doesn’t take deposits.

“In the same way a real estate agent isn’t a bank, we aren’t either. We don’t take deposits and reinvest them for profit; we merely facilitate the moving of money between people,” says Emery.

Co-founder Hannes van der Merwe says RainFin is not a micro-lender. “We are not trying to extract as much money out of you as we can.” He says one of the challenges the service faced was designing a process that would allow users to engage in a legally binding contract online.

Lenders stipulate the interest rate they are prepared to accept and, in the case of two or more lenders offering the same rate, the first to bid on a loan request wins it. The service warns lenders if it appears a lender is taking on too much of a loan and inadequately spreading their risk on the service.

Van der Merwe says lenders can be kept up to date on new loans coming into the marketplace via Web feeds. Alternatively, the service includes an automatic “bid agent” that will bid on loans that meet specific criteria or notify the lender via e-mail.

Emery says the bulk of the service’s marketing will be done online, as that is where its audience is. “We are focused on using the mediums in which we operate so online, mobile and social networks to start with,” he says.

RainFin is funded by SA capital and went live on Tuesday.


Crowdfunding Update.

David Drake of LDJ Capital and TheSohoLoft.com continues today with his sixth article on his series regarding CrowdFunding for equity solutions, reprinted here with his permission.

Perhaps it was no surprise when Mary Schapiro, Chair of the Securities and Exchange Commission, told a House subcommittee that the Securities and Exchange Commission will not meet the July 4, 2012 deadline imposed under the JOBS Act to implement rules for lifting the general solicitation ban under Regulation 506, Section D (advertising rules).

Ms. Schapiro explained to the House Committee on Oversight and Government Reform on June 28, 2012 that the JOBS Act mandates that the SEC create rules that will require issuers to verify that they are accepting investments only from accredited investors who are responding to a general advertisement. Creating such rules are difficult and will require more time. “We want to create something that is workable and usable,” she said. The SEC Chair expects that general solicitation rules will be issued “this summer.”

The SEC’s commitment to provide general solicitation rules this summer is encouraging and badly needed. Representative Patrick McHenry probably summed up the urgency for the rules the best by advising Ms. Schapiro: “Entrepreneurs are waiting and we urge you to move forward with that.”

As the SEC develops rules for general solicitations, issuers must understand that they will need to move cautiously if the plan to use general advertisement to solicit offerings. The JOBS Acts require that issuers verify that they are accepting investments only from accredited investors under the SEC Act. The SEC rules ultimately will determine what verification process is needed and whether any safe harbors are available. We suggest that issuers looking forward to make general solicitations stay apprised of developments as the SEC formulates its rules, so that issuers are prepared to move forward when the rules go public.

The Securities & Exchange Act in 1933 required that only accredited investors could be solicited for investments and non-accredited investors could not be unless they had an exemption through Reg A, Reg D, a Direct Public Offering or a registered security being traded on an exchange.

Under the 1933 Act, the accredited investor was considered someone who made $200,000 per year the previous 2 years and expected to make $200,000 the following year or a couple making $300,000.  Under a later amendment adopted in 1982, another criteria that would allow you to qualify as an accredited and sophisticated investor would be that you had a net worth of $1,000,000.

While the Dodd Frank Act was under consideration, the SEC pushed for a high net worth amount for an accredited investor. This was highly opposed and removed. What was accomplished out of the Dodd Frank Act was:

a) The equity of your primary home would not count towards your net worth.

b) Debt surpassing your equity would count against your net worth.

c) The equity in your summer / vacation / secondary home would count towards your net worth.

The Dodd Frank Act also prohibited the SEC from adjusting the net-worth threshold for a natural person for four years.

If you take inflation into consideration, the $200,000 per year salary in 1982 would be the equivalent of approximately $1,000,000 today, and the net worth requirement set in 1982 would represent a net worth of approximately $10,000,000 today. Wow, that would not leave many people to invest. Another argument would be that are only rich people entitled to invest in private and exciting deals? Are the select few that made money on Facebook the only ones to ‘give it’ to the less rich?

Granted, $200,000 makes you rich today but I was alluding to the rich just like their counter parts in 1933. Remember, the SEC 1933 & 1934 Act was created to protect the non-accredited investors from fleecing but also to assure that they did not leverage their home 99% and spend all their money on stocks that would not only be worthless but put them jobless and homeless. The 1929 crash that led to the great depression was extreme.

While the status quo remains for determining the financial threshold of an accredited investor, a fundamental change is approaching on solicitation. Currently, any issuer intending to rely on Rule 506 of Regulation D cannot engage in any general solicitation or advertising to attract investors. The Jumpstart Our Business Startups Act (JOBS Act) directs the SEC to remove this prohibition, which the SEC expects to implement during the summer of 2012.

Here is a little history on the non-solicitation rule. Be reminded that there was no TV or internet in 1933. The ban on solicitation to non-accredited investors forced brokers and companies to only talk to ‘rich’ people for investments, that is, the accredited investors. The JOBS Act asked the SEC change the writing in 90 days – that is July 4th, 2012 – Independence day – at which point advertising online, via email to millions or on TV would allow you to advertise you wanted capital for your stock to the general public.

Note, you still could only take money from accredited investors but the monumental change is that you can freely advertise wildly. Yet again, you would lose your exemption status under Reg D 506 if you took one single non-accredited investor and they decided to sue you later for loss of capital — a rare occasion but a legal premise that may hold true. So, will this amendment be implemented by July 4th and we will see media go bananas with everyone with their mother advertising stocks of private companies you can buy?

No, the SEC will not allow such madness as they will implement a safe harbor to assure that the ‘accreditation” of an investor through this means is verifiable and not necessarily just self-monitored by the issuer.

David Drake is a founding board member of CFIRA. Crowdfund Intermediary Regulatory Advocates, or CFIRA, was established following the signing of the Jumpstart Our Business Startups (JOBS) Act. CFIRA is an organization formed by the CrowdFunding industry’s leading platforms and experts. The group will work with the Securities & Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and other affected governmental and quasi-governmental entities to help establish industry standards and best practices. For more information, visit http://www.CFIRA.org. Connect with TheSohoLoft at facebook.com/TheSohoLoft and sign up for newsletters at www.thesoholoft.com, or contact Donna Smith, Communications Manager, for more information at 212.845.9652 or via email at donna@LDJCapital.com.


Go Ask Alice.

Is it only me, or does the whole global financial crisis seem like we have fallen down a rabbit hole and are sliding through a curious hall with lots of locked doors in many sizes?

According to Bernanke’s testimony to Congress last Thursday, the Federal Reserve “stands ready to act to protect the financial system and the economy in the event that stresses from the European crisis escalate.”, yet he failed to describe what acts they may take.

“The situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely,” Bernanke said in testimony prepared for delivery to the Joint Economic Committee of Congress. Monitored closely?

“Action is needed to stabilize euro-area banks, calm market fears about sovereign finances, set in place a workable fiscal framework and lay the foundation for long-term growth,” Bernanke added, but failed to mention how anyone might go about doing that.

The Fed chief’s testimony was largely in line with expectations. Central-bank watchers did not expect Bernanke to show his hand about what the Fed might do at its next policy meeting. Ah, we wait for the next “policy” meeting. Apparently, as long as Bernanke never actually discusses policy, and only what the Fed is ready to do, then the markets will stay relaxed and avoid panic. Sort of like finding Alice’s “DRINK ME” bottle.

“Based on these comments, we do not believe the FOMC has made up its mind about the need for further stimulus,” said Michael Gapen, a senior U.S. economist at Barclays Capital. Yes, they’re still thinking, I guess.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said Bernanke only promised to act “if the sky falls.” That will be really great timing. God forbid we should act to actually prevent anything. I mean, are you KIDDING me?

Financial-market stress due to Europe and concerns about the loss of momentum in the U.S. economy has raised expectations that the Fed would do more to stimulate the economy. Last week, several key Fed officials said they were open to more easing if warranted. Nice. They’re open to it.

In his discussion of the domestic economy, Bernanke stuck to his April forecast that growth will continue at a moderate pace. He said the recovery had been bolstered by consumer spending, as consumers had more money to spend given the drop in gasoline prices. OK, average consumer drives 80 miles a week. Average car gets 22 mpg. Average price of gas is now $2.95. Average price was $3.45. Savings of $8/month. And, THIS is the “more money” consumers now have to spend?

Business caution continued to restrain the economy, he noted. That is Fed code for: austerity at the corporate level (not spending and no credit) is KILLING this country.

Bernanke suggested some of the apparent slowing in economic data, including last Friday’s weak jobs number, might be due to unusually warm weather this past winter, which may have brought forward some activity. Ah yes, it must be the weather. Couldn’t be because corporations are squeezing unprecedented productivity out of workers who are now doing two jobs instead of one? And, these are captive workers who have no other jobs to go to.

Bernanke also again called on Congress to set in place a sustainable fiscal policy. He said the severe fiscal tightening that will occur at the beginning of next year unless Congress acts — the so-called ‘fiscal cliff’ — would pose “a significant threat to the recovery” if allowed to occur. And …. ????

And then, he ate two more of those funny mushrooms that have been circulating through Washington this week, and wandered back down to the Eccles building to search for that “mad” tea party and the March Hare. I guess.