The Hole dug by Wells Fargo Bank

Wow, what can I say about the chicanery at the Wells Fargo Bank! It is shocking us here in the States. Here’s one version of the fraud story as reported by Reuters.

The Bank is iconic “Americana.” The Wells Fargo Company dates way back (1852) to the “Wild West” days of the United States. Even the Wells Fargo logo reflects its western heritage with its stagecoach imagery. Funny thing about the illegal activities which employees performed at Wells Fargo, I don’t think even the Glass Steagell Act would have protected the Wells Fargo customers! You see Glass Steagall helped to put a “wall” between the retail and commercial activities that a bank could legally execute and perform. Glass Steagell was revoked by Congress and signed “out of law” by President Clinton around the year 1999.

The “magic” of the Glass Steagall Act was that it protected the retail bank customer from illegal bank activities that probably caused the stock market crash in 1929. The Dodd-Frank Act was enacted in 2008 to create protections and decrease risks in the financial and banking system in the United States after the housing crash in 2008/09. However, in the year 2016 there are still parts of the Dodd-Frank Act which have not been completely executed or installed within the financial/banking system of the U.S.

I don’t know if Dodd-Frank implementations would have prevented the dishonest activities performed by employees of Wells Fargo Bank. It seems to me that integrity, honesty, ethical behavior, and honest business practices are the “fall guys” in this debacle or should I call it a “too aggressively executed marketing program being used at the bank. It would appear that the illegal activities of the employees were driven by “incentives” and “market goals.”

What shocks me the most is the vast extent of the illegal activity and why it was not detected and stopped by management?

I don’t know what scares me more: the idea that bank employees can “play” with my money, or that negative interest rates will sap my money from my bank account. From news that I watch and articles that I read, the world’s financial and banking system is not as healthy as it should be. The repercussions from the financial and banking crash in 2008/09 are still being felt, the “war” in the Middle East still rages, and even container ships of commerce (Hanjin) and trade are adrift in the middle of the International waters of the World.

Guess what I’d like to say to the employees of Wells Fargo…what were you thinking!!! And, to the management of Wells Fargo…where were you when these illegal activities were happening, why didn’t you stop it!!! I worked in the business world and it’s all about bonuses. Wow, they had to flow up the ladder “a-ways”. Gee did it get to the Board Room?

We are worried about Identity Theft these days; I guess this is an example of it on a massive scale. What are the banks going to do to get our trust back? Maybe we will have to keep our savings “under the mattress” or “behind a loose brick” in the basement. Oh, wait, some of us don’t have a basement any more because a basement is part of a house!


Banks and Banking in Year 2016

Here’s what’s happened to the “big” banks and banking in general since the Great Recession. has published a piece by Yalman Onaran called “Citigroup, HSBC Jettison customers as Era of Global Empires Ends.”

Executive Summary of article

  • Citigroup®
    Since crisis has doubled derivatives contracts to $56 trillion dollars.
    Focuses on trading.
    Focuses on richest customers—high-net-worth individuals
  • HSBC Holdings PLC®
    Quits “retail” banking and stops serving 80 million customers
    Relys more on investment banking.
    Eliminated 1,600 U.S. locations in U.S.
    Closed 500+ branches in U.K.

“All this retrenchment hasn’t silenced calls to break up big banks. In the U.S., both the Republican and Democratic platforms call for reinstatement of the 1933 Glass-Steagall Act, which separated consumer and investment banking” writes Onaran.

Onaran mentions Internet banking in his article and “that near-zero interest rates have made traditional banking less profitable,” quoting KBW’s Cannon.

All in all, I guess using the U.S. Postal Office as a bank is a pretty good alternative. See my posting entitled “Back to the Future, using the USPO as a bank.” What do you think?

Author’s note, 9/24/16: Here’s a couple of articles on the Wells Fargo fiasco:
Hole dug by Wells Fargo Bank
How fragile is our Financial System?

It doesn’t really matter! (I guess)

What I’m referring to is the U.S. Presidential election and the U.S. stock market.

There is a saying “on Wall Street” that the stock market projects six (6) months “down the road.” This means that “the markets” are already anticipating the future or have “a forward looking view.” In other words, “the market” is probably not responding to the news which is happening now (e.g. July 20, 2016), or this week or perhaps even this last month, but rather “the markets” are acting positively or negatively towards “the future”.

The U.S. Dow Jones Industrial Average (DJIA) is bumping it’s head up against ANOTHER “all-time high.” To quote the New York Times, “The Dow Jones industrial average inched 25.96 points, or 0.1 percent, higher for its eighth consecutive gain to set another record at 18,559.01.”

Here’s how the Canadian newspaper, the Globe and Mail relates the U.S. stock market in relation to the U.S. presidential election.

CNBC has an interesting “take” on the stock market vs. presidential election phenomenon: History shows stocks rally

If you are interested in “market indicators”, here are two (2) blog posts which focus on this subject:

What are Economic Indicators?

U.S. Economic Indicators

Update: Putting a Face to the LIBOR scandal

Sometimes having a clearer picture helps understand the issue or situation. The Financial Times just published an update on the LIBOR scandal. There are now legal proceedings being exercised against perpetrators who allegedly contributed to the global financial crisis of 2008 and 2009. This posting is not meant as a “dart board” but further explanation of “what happened.”

This is a reprint of my blog article “Laboring over LIBOR scandal.”

A definition of what LIBOR is:  “a benchmark rate that some of the world’s leading banks charge each other for short-term loans. It stands for Intercontinental Exchange London Interbank Offered Rate and serves as the first step to calculating interest rates on various loans throughout the world.”  Definition by

Read more: Investopedia’s definition of LIBOR.
Source: Investopedia

Here’s a short video presentation on what LIBOR is, made by CNBC and lectured by Salman Kahn, Libor:CNBC Explains.

Now for some details of the scandal, first a quote from the New York Times newspaper:

“…Now, the regulatory void has spawned another round of criminal accusations and multibillion-dollar penalties — enough to wipe out nearly all the revenue that major investment banks generated from their foreign exchange businesses last year.

On Wednesday, four large global banks —CitigroupJPMorgan ChaseBarclays and Royal Bank of Scotland — pleaded guilty to a series of federal crimes over a scheme to manipulate the value of the world’s currencies…”   Michael Corkery and Ben Protess, NYTimes, 5/20/2015

Well, just when we thought it was “safe to go back into the pool”, the LIBOR scandal started to unfold. I can’t pinpoint when the popular media “got the scent” and the LIBOR story “broke” to the general public but I’m offering three (3) timelines for your perusal.

Reuters timeline for the LIBOR scandal.  Reuters timeline

ProPublica’s timeline for the LIBOR scandal.   ProPublica timeline

New York Time’s timeline for the LIBOR scandal.    New York Times timeline

Here’s the link to the complete article by Corkery and Protess of the New York Times. Title of their article is Rigging of Foreign Exchange Market Makes Felons of Top BanksCorkery and Protess article

To close out this blog item, here’s PBS and Frontline’s documentary entitled The Untouchables. It was produced in January of year 2013. The Untouchables


Going “Long” the “Big Short”

I just viewed the outstanding motion picture “The Big Short.” The acting was great. Steve Carell or others may get a “nomination.” But that’s not why I’m writing about the movie. The movie depicts “in a 2-hour nutshell” how the Great Recession began.

I’m not trying to be simplistic, the Great Recession is still unfolding in courtrooms, mortgage delinquencies, housing foreclosures, you name it! However, the producers of this movie have put a pretty good focus on the money-gambling economic crisis we have all experienced. There’s nothing like a few big name stars with a good script to bring mundane subject matter to the masses in a “fairly” digestible manner.

I have written several blogs about the unfolding of the Great Recession. For the professional version vs. the entertainment version of this I’m also listing the Frontline® documentary links available through other blogs I have written.

Humpty Dumpty had a great Fall even though there wasn’t a Wall

Eye Crosser #2: Collateralized Debt Obligations or CDOs

Regulate Derivatives, No Way!!!

Here is the Frontline® website where all of the  documentaries are listed. They highlight and focus upon specific actions or reactions during the initial “blowup” of the American financial system. Among the documentary titles are:

  • Breaking the Bank
  • The Madoff Affair
  • Ten Trillion and Counting
  • Inside the Meltdown
  • The Warning

For my readers who are teenagers or early 20’s, these events are not ancient history. They took place within the last 10 to 15 years. You may have been children but you were “living”  in this history. Feature films such as “The Big Short” help everyone to become aware of current events with some entertainment added in.

Enjoy the movie with popcorn and a cool drink. Enjoy the “rebound” from the Great Recession while it lasts!

Great Recession Retrospective Redux

I started my blogging adventure on WordPress with a series of articles about the Great Recession (in my opinion another depression). I have decided to bring them all together in one posting. Why? Partly because many of the issues have never been addressed by the “powers to be”, partly because it’s nice not to have to rummage to find them, partly because it looks like deja vu all over again, and, as history repeats itself, reflection is not a bad thing. It may be “food for thought” as the year 2016 unwinds precariously before us. Besides, the documentary producers at Frontline did a great job of capturing the essence of the demise of the U.S. economy through Wall Street’s greed and the U.S. government’s political blunders (to put it kindly). I placed links to these Frontline documentaries in several of the following blog articles below.

So, without further ado, here are some stories of the Great Recession in all its Greek tradegy splendor:

A Taste of Events in the Great Recession crisis
Timeline and Overview of the Great Recession Crisis
Regulate Derivatives? No Way!!!!
Humpty Dumpty had a great fall even though there wasn’t a Wall!
The Nationalization of Wall Street
The U.S. Taxpayer as Lender of Last Resort–The TARP Program
Deja Vu all over again, a little bit about Greece, the crisis goes global!
Some details that help explain the Great Recession and Global Ecomony Crisis
Laboring over the LIBOR scandal
The “Flash Crash” and the “London Whale”
It’s a Credit Crisis! It’s a Liquidity Crisis! It’s a Solvency Crisis!
And now in the center ring: An Asset Bubble!!!

It’s a New Year, let’s hope for some sanity but… don’t hold your breathe too long.

Market Recap for week of January 8, 2016

Happy New Year! Or is it?

Is the U.S. stock market like the movie King Kong (circa 1933) or perhaps more like the movie Wall Street ? Is the gorilla the International marketplace and “the girl” Fay Wray the U.S. marketplace or maybe King Kong is Wall Street and Fay Wray is the American consumer; or how about “party time” as depicted in the movie The Wolf of Wall Street?

Any way you look at it, it has turned out to be a very scary week on Wall Street in the U.S. I guess the slowdown of China’s economy, being the second largest economy in the world after the United States, has caused much more chaos than anyone bargained for in our global economic universe.

Here are some links to help you “wrap your head” around just what’s happening “this time”!

Graph of 10 largest economies: World’s Largest Economies

Reuters: Wall Street has worst start to year ever

Wall Street JournalBad Week for U.S. stocks dims outlook

 New York TimesStock Market Ends Its Worst Week Since 2011

NBC News:  China Shares Turn Higher After Wild Start to 2016

Did the teeter totter flip both “riders” into the air at the same time? It would seem so. Here’s my reference to the U.S. market as a teeter totter:

The Stock Market as a Teeter Totter

P.S. Let’s be optimistic and say “Yes, it’s a Happy New Year.”

A vending machine mentality

I can’t recall what year it was, but I was in downtown Chicago at the Union Station train depot. I saw a vending machine (not an unusual sight by any means!) but THIS vending machine was selling GOLD Bullion. Wish I could remember the year because then I could better relate the economic environment then versus now.

What does a vending machine offer? Convenience, access, impulse buying, anonymity, all are appropriate reasons for using one. Well, anonymity is a “relative” term because I don’t think the machine accepted cash, the buyer needed to use a credit card. Mmm, I wonder if the vending machine had a coin return?

OK, so I’m just playing a little with my mind and maybe yours! Actually it’s our psyche that’s being played with. After all, our society has “grown up” with vending machines; we may even, once in a while, look for a vending machine. They were sure big in the day of 75-cent packs of cigarettes. Thank heavens I was a social not-really-a-smoker person in those days, I was just trying to fit in our crowd. Now, back to gold…

What does it say about a society that buys gold bullion from a vending machine??? What does it says about gold that it is sold from a vending machine? Gold is a commodity just like crude oil or corn or wheat. However, at times, gold is considered a “scarce” resource. There are the “gold bug” investors who believe in holding the bullion physically in a vault or perhaps buy gold mining stocks. There are other investors with a different opinion on investing in gold.

According to, “Traditionally, investing in gold has been used as a hedge against inflation.”
Read more:

This is a quote from CNBC’s Quarterly Investment Guide: “The biggest knock against gold is that it is a nonproductive asset: There’s no productivity underlying its value, which is set by perceptions of its relative safety.”

Here’s a short pro and con article from the British newspaper The Telegraph: “We explain the options for those who want to buy gold – and weigh up the pros and cons.”

Actually, I don’t invest in gold, I can’t afford to!!! Ha, isn’t that a “rich” comment upon which to end a blog. However, I am ‘invested” in black gold, i.e. oil. I guess I believe in the continuity of the automobile running on gasoline for a few more years vs. Tiffany selling gold watches to the “masses.”

And now in the center ring: An Asset Bubble!!!

The Great Recession period is spoken of as a “liquidity” bubble.  See my blog posting It’s a credit crisis, It’s a liquidity crisis! It’s a solvency crisis!.  Are we now in an asset bubble that is bursting?   This craziness in the world economies and the financial markets made me think of the Lawrence Welk  TV (television) show. What a great entertainer he was and what a great family entertainment TV show he literally orchestrated. Lawrence Welk was a “big band” leader. Welk used a “bubble machine” while playing some of his orchestration pieces. Here’s a YouTube clip example of the opening of  a Welk TV program.

But I stray from my subject…

The asset bubble that we are now experiencing is seen, by some,  as a result of all the easy, cheap money provided by the governments and large financial institutions to solve the liquidity/solvency crises that emerged during the 2008-2009 financial crisis. In other words, all the quantitative easing (QE) programs implemented to stave off another Depression like that experienced during the 1930s.

What is an asset bubble? The Wall Street Journal article dated May 11, 2015, discusses The Federal Reserve Asset Bubble Machine:

Faith in the Fed’s easy-money policies has encouraged a dangerous complacency. The mantra on Wall Street is that good economic news is good news for the markets, but that bad news is also good news, because it will encourage the Fed to keep rates lower for longer. This has led to one of the longest rallies the U.S. stock market has ever experienced, without even a 10% correction.

The latest “bad news” of course has been the decline in China’s economic growth.  How does China’s economy affect us in the U.S.? Here’s an article from
U.S. Stock-Index Futures Decline After Steepest Slump Since 2011

For a little historical perspective on economic bubble machinesFrontline, that great documentary film company, has listed five famous bubbles at their site:

  • Tulip mania (1630’s)
  • The Mississippi bubble (1719)
  • The South Sea bubble (1720)
  • The Roarin’ 20’s in the U.S. (before the 1929 crash)
  • The Japanese bubble (1980’s)

As always, where are we, the individual investor, when these bubbles burst? As much as we may or may not consider ourselves speculators vs. investors, I’m afraid everyone is morphing into a little of both. After all what can one do when his/her savings are earning zero interest!


Recap of September 2015 U.S. stock market

So… what happened to the U.S. stock market? Was it:

  • the sermon to the U.S. Congress by Pope Francis,
  • the resignation of John Boehner as Speaker of the House of Representatives,
  • the on-going immigration crisis in the Euro zone countries,
  • the visit to President Obama by China’s President Xi,
  • the drug company who bought a decades-old generic drug with the intention of inflating its price 5,000%,
  • the FOMC (Federal Open Markets Committee) not raising interest rates (federal funds rate),
  •  more companies laying off hundreds of workers?
  • the crude oil market bubble bursting
  • Perhaps it’s the “guillotine” aura of the U.S. Government shutting down AGAIN on September 30, 2015, because of elected officials’ dysfunction and mismanagement.

I won’t comment or opine on any of the above events (well I did a little at the end), there are plenty of others doing it much better than I. Coverage of Pope Francis and China’s president have been all over the news networks and the ‘net. But I will include a link to the drug price “shocker” because it has raised the issue of “outrageous drug prices” in general to the “front page” at least for a little while. Here’s the skinny*:

*definition of “skinny”

The outrageous price increase:  Turing Pharmaceuticals

And the rollback:

However, I’m calling attention to a stock market (which incidentally supposedly looks six months forward in its activity) which reacts quite violently these days to daily news and events, thanks to program trading and algorithms. Below are various articles and/or opinions that are discussing this “increased” volatility, and perhaps some reasons for it, as well as the increasingly “fragile-appearing” economy the U.S. is experiencing. Heck, who needs to go to Vegas!


New York Times

Barron’s  8/21/2015

Author’s Addeneum 10/1/2015:   Here’s a Wall Street Journal article featuring the New York Federal Reserve president, William Dudley. Article is updated as of September 28, 2015. Article discusses possibility of the Federal Reserve Bank finally raising its short-term interest rates.