Archive for January, 2014
The Justice Department says lots of hard-pressed borrowers – the ones that too often have to rely on payday lenders – are gagging.
The DOJ (the Department of Justice – but not always “just” itself) has sent out over 50 subpoenas to third-party payment processors and banks as part of its latest investigation, which they’re calling Operation Choke Point.
Apparently, some payday lenders and crooked Internet merchants are having their third-party payment processors simply take money out of customers’ bank accounts.
The payment processors have legitimate relationships and accounts at big and small banks. Sometimes a payday lender or an Internet merchant is given authorization to withdraw monies from borrower’s account… and sometimes they aren’t.
The problem is that under the Bank Secrecy Act banks must monitor account activity of their customers businesses and businesses’ customers if they have accounts at that particular bank.
But, many banks apparently turn a blind eye to third-party withdrawals, for a number of reasons.
Sometimes, they just believe that the payment processors have a right to take money out of accounts.
And, I know this will surprise you… Sometimes the banks know there’s something very wrong, yet they let monies be withdrawn anyway.
If account holders complain and are legally entitled to get their withdrawn money back, the banks are only too happy to comply.
Why are they happy?
On Jan. 14, I told you we would be closely watching one of the most significant events of the year:
This event, I predicted, could single-handily determine whether our economy is heading for a major upswing… or is about to fall into a downward spiral.
I’m talking about the Big Banks’ fourth-quarter earnings reports.
Well, they’re out…
And I’ve spent the last several days examining every detail to try to determine what this means for your money.
And today, I want to share the findings…
So let’s have a look at the Big Banks earnings… and see what kind of year emerges.
Last Tuesday, January 14, 2014, the Federal Reserve had finally had enough.
After supposedly looking into big banks ownership of commodity-related infrastructure operations (like warehouses, oil barges, and utilities) for the last two years, which came on the heels of their 2003 review of the same issues, the rock ’em sock ’em Fed came out swinging.
Now, they said, they needed to look at “all aspects” of what they’ve been looking at for two years. That’s not because they were looking the other way before.
It’s because now they’re thinking big and asking themselves, “What would be the systemic risk to the system if a big bank owned something like the Deepwater Horizon (the BP well that blew out and cost almost $50 billion to date), or Japan’s Fukushima Daiichi nuclear power plant (which was destroyed by an earthquake-related tsunami and is costing god only knows how much) and the bank got sued, and their share price collapsed, and depositors fled, and that caused a run on other banks, and put the entire financial system at risk?”
Yep, it’s time for a study, they said. And because they are maybe thinking about some related rule changes, in maybe a year or two or three (these things take time, you know), they put out a request for comment. You and I have 60 days to submit ours, and so do the big banks.
But that’s not the “timing” part of this story…
The timing of the Fed’s announcement on Tuesday was just amazingly coincidental, a stroke of almost incalculable luck.
Earlier this week I recommended buying Annaly Capital Management Inc. (NYSE:NLY). From now on, I’m going to offer you recommendations roughly once a month.
But let me make two things clear.
First, I’m not your financial advisor. I don’t know your financial situation and couldn’t possibly make “in the blind” investment decisions for you. I’m just telling you what I think about the market and recommending positions I think will be profitable.
Second, some will be very profitable… and some will be losers. That’s just the business.
Here’s what I want you to consider…
The Big Banks are all going to be reporting their fourth quarter earnings this week.
Make no mistake: Although it’s only January, this will be one of the most significant events of the year…
You see, in the big picture, how the banks fare and what their future prospects are could single-handily determine the trajectory and breadth of the recovery we’ve been hoping for.
Even more, their “financials” could have major implications for your money.
Depending on what happens, it may be time to take profits if you own their stocks. It may even be a good time to selectively short the financials – and make a killing doing so.
Today, I’m going to share with you how I think the whole thing will play out.
Then, I’m going to give you a special bonus:
An opportunity to make a nifty profit off of the bank’s earnings announcement – including one of the fattest dividend payments you’ll see in your lifetime…
It’s natural to look back. We live in the past.
For most people, the future isn’t an unknown full of unlimited opportunity. It’s about hoping the bad stuff in our past isn’t a prelude to the future.
But what about the stock market? 2013 was a spectacular year, at least for stocks it was. And already people are afraid about the future. They’re afraid that after a great year for stocks, the bloom is off the rose.
Are people naturally pessimistic? Are they afraid of the market?
The answer to both of those questions is, unfortunately, “yes.”
I know because I used to be one of those people.
Not any more though, not for a long time. I make money in the markets because I’m not pessimistic. I make money because I’m optimistic, because I’m optimistic about making money.
The past is the past. I’ve had my share of bad stuff, some so bad that I can’t believe I made it out the other end, that I didn’t break down and give up… on life. But I realized a long time ago that it’s up to me. I decide what happens to me. And I learned that because I was being pessimistic, more bad things were happening to me.
When I realized I actually had a choice and the choice was all mine, I chose to be optimistic. I finally got it that the past wasn’t coming back. It was the past. And I wasn’t going to let it be my future.
That was the start of my success.
I’m talking about being successful in life. And that also means being financially successful.
Here’s the lesson…
I’ve said it before, and even though I’ve been threatened, in not so subtle ways, and been warned not to piss off certain people in power, I’m going to keep on saying it:
JPMorgan is a criminal enterprise.
Today the mega enterprising bank is in talks to settle civil and criminal charges that it ignored signs its banking client Bernie Madoff was a Ponzi-running, lying, cheating crook. (Which he was.)
It looks like the brazen bank will pay $2 billion to get out of jail free; free, of course being a relative charge. But I call it free because JPM has been posting record profits, and another multi-billion-dollar fine is unlikely to change that.
So what that they’ve paid about $20 billion in settlement fines in the last 12 months? They’re still in business. They’re in the business of making insane amounts of money to pay insane fines for insane criminal activity.
I’ll say it again… JPMorgan Chase is a criminal enterprise.
For this new payoff, I mean payment, to the government, JPM’s criminal ways were nodded to and shunted aside in a deferred prosecution agreement with the feds. The tradeoff will be such that JPM will swear it will do no evil (just the evil they will list, not any of the other evils they do that they don’t have to list) and promise to be good while they’re being watched. And if they don’t do any more Ponzi-schemer aiding and abetting in the probably five years they will be watched, the deferred prosecution agreement dissolves. After that, they have a Whale of a party, probably over in London, where they hide other stuff.
I’m going to keep this short. There’s another reason, besides not wanting to repeat myself over and over, and I’ll tell you the other reason on Thursday. So keeping this short, I’m just going to say one thing to explain JPMorgan’s role in the biggest Ponzi scheme in history.
In my expert opinion, it’s just not possible that JPMorgan (and plenty of other intermediaries and feeder funds) didn’t know that Madoff was running a scheme.
I didn’t know anything about Madoff. No one ever asked me about him or what he might be doing to generate the returns he was generating. But any back-of-the envelope calculation of numbers – based on what he said he was doing – would have come up with a giant “does not compute” answer.
Here’s the deal.
It used to be that getting an education was a ticket to a better life. Maybe not so much anymore.
That’s because the ticket that gets “punched” too often punches back – hard.
It’s not that a college education isn’t good for you. It’s that the cost of higher education could ruin you and your family.
It sure looks to me like “selling” kids on an education that will saddle them with an extraordinary amount of debt, for a promise that’s increasingly hard to cash in on, is a racket. It’s just another consumer come-on.
If the education system was so stellar and such a conduit to a better life, why are 40 million people in America saddled with an average, AN AVERAGE, of $30,000 in student loan debt?
Where are the jobs they’ve mortgaged their futures for?
It’s especially painful to see young people load up on debt when they don’t know what they want to do with their lives or what career path to follow. Those kids come out of college with a piece of paper that’s closer to a sentence than a pardon.
Last October, when the nation’s headline unemployment was at 7.3%, youth unemployment (those between 20 and 24 years old) was 12.5%. On top of that, the Consumer Financial Protection Bureau (CFPB) says real wages for young college grads fell 5.4% between 2000 and 2011.
Then there are the millions of other Americans being sold on careers that are supposedly only available if you have a degree from some for-profit training school that spits out students, an increasing majority without any degrees, with no job prospects, but with a mountain of unforgivable debt. These come-on schools are very profitable.
Now here’s the real problem underlying all of this… and a simple way to trade it today for projected 38.46% gains…