Finance

Rolling Jubilee Student Debt Abolishment

August 6, 2014 Strike Debt, www.strikedebt.org Resist! Education, Finance, Strike Debt, Student Debt

This time, it’s different. Since the beginning of the Rolling Jubilee campaign, we’ve wanted to buy and abolish student debt. But most student loans are guaranteed by the federal government, and so they are not available for purchase. As part of our effort to buy private, unsecured student loans, we talked to Doug St. Peters, the Vice President of Portfolio Management at Sallie Mae, who packages that company’s debt into securities and sells your loans on the secondary market. He confirmed that Sallie Mae does sell its private loans to two large debt buying companies. He would not name names, and he refused to sell us any of these portfolios when he learned that we intended to abolish the debt. According to St. Peters, private Sallie Mae loans are sold for as little as 15 cents on the dollar. We repeat: a Vice President at Sallie Mae confirmed that they sell private loans for 15 cents on the dollar. One goal of the Rolling Jubilee campaign has been to educate ourselves and others about how little our debts are actually worth to the creditors who control our lives. If you have a private Sallie Mae loan, you should know that it may be sold at pennies on the dollar, even as the lender and debt collectors demand full payment, plus interest, from you.

Soros Drops Shares In SodaStream

August 4, 2014 Mahmoud Kassem, thenational.ae Organize! Finance, Israel, Palestine

Soros Fund Management, the family office of the billionaire investor George Soros, has sold its stake in SodaStream, the soda making appliance producer that profits from the Israeli occupation of Palestinian territories and was made popular by actress Scarlett Johansson’s endorsement. The decision comes as a number of big international investors, including the fund linked to the Microsoft founder Bill Gates, join in a burgeoning financial boycott of Israel amid a push by the boycott, divestment and sanctions (BDS) movement and other groups seeking more rights for Palestinians. SodaStream, headquartered in the Israeli city of Lod, has its main factory in the West Bank settlement of Ma’ale Adumim. “Soros Fund Management does not own shares of SodaStream,” Michael Vachon, a spokesman for the fund, told The National, declining to comment further on when and why it sold the shares. In a May filing with the US markets regulator, the fund said it had bought 550,000 shares of SodaStream during the first quarter. Bloomberg reported that the fund acquired the shares for $24.3 million, with the new holding making up 0.3 per cent of the fund’s $9.3 billion stock portfolio. “After pressure from Soros partners in the region and the world, they dropped SodaStream and promised, in private letters so far, to issue guidelines similar to those adopted by the EU to prevent any investment into companies that sustain the Israeli occupation and settlements in particular,” said Omar Barghouti, the Palestinian activist and co-founder of the BDS movement.

Argentina Is Right To Defy The Taliban Of Global Finance

August 4, 2014 Jerome Roos, www.roarmag.org Resist! Argentina, Capitalism, Finance, Vulture Funds

On Wednesday, Argentina defaulted on its sovereign debt for the second time in 13 years, defying a US court ruling and a small cabal of financial fundamentalists led by the right-wing multi-billionnaire hedge fund mogul Paul Singer. Needless to say, most mainstream analysts are already bandying the usual platitudes, having us believe that Argentina’s populist government and its economic mismanagement are to blame for this outcome. While there is little point in defending Argentina’s corrupt political elite here, it is important to provide a much-needed corrective to this tired mainstream narrative. The first thing to note is that, despite repeated accusations by the vultures that Argentina is in contempt of US court rulings, Argentina’s willingness to pay its debts is not in question. The country has credibly committed itself to repaying its foreign creditors ever since it restructured its unsustainable debt load in the wake of its historic 2001 default, with over 93% of bondholders accepting crisp new bonds in 2005 and 2010. In fact, the government last month deposited $539 million with the Bank of New York Mellon to honor its commitments — in full and on time. Willingness to pay is simply not an issue.

The Empire Economy Does Not Work

July 9, 2014 Paul Craig Roberts, Dave Kranzler, and John Williams, www.paulcraigroberts.org Educate! Debt, Finance, Finance and the Economy, Foreign Policy, Wall Street

The third and final estimate (until the annual GDP revisions) of first quarter 2014 real GDP growth released June 25 by the US Bureau of Economic Analysis was a 2.9% contraction in GDP growth, a 5.5 percentage point difference from the January forecast of 2.6% growth. Apparently, the first quarter contraction was dismissed by those speculating in equities as weather related, as stock averages rose with the bad news. Stock market participants might be in for a second quarter surprise. The result of many years of changes made to the official inflation measures is a substantially understated inflation rate. John Williams (www.shadowstats.com) provides inflation estimates based on previous official methodology when the Consumer Price Index still represented the cost of a constant standard of living. The 1.26% inflation measure used to deflate first quarter nominal GDP is unrealistic, as Americans who make purchases are aware. A reasonable correction to the understated deflator gives a much higher first quarter contraction. The two main causes of inflation’s understatement are the substitution principle introduced during the Clinton regime and the hedonic adjustments ongoing since the 1980s that redefine price rises as quality improvements. Correcting for excessive hedonic adjustments gives a first quarter real GDP contraction of 5%. Correcting for hedonic and substitution adjustments gives a first quarter real GDP contraction of 8.5%.

Seeds Of A New Financial Structure

July 8, 2014 Ariel Noyola Rodríguez, www.voltairenet.org Create! Brazil, BRICS, China, Finance, India, Russia

On the day following the end of the World Cup in Brazil, the Sixth Summit of BRICS (Brazil, Russia, India, China and South Africa) will be held in Fortaleza and Brasilia, on the 14th, 15th and 16th of July, to establish a financial architecture under the slogan: “Inclusive growth and sustainable solutions”. In contrast to the initiatives of financial regionalization in Asia and South America, the BRICS countries, since they do not have a common geographical space, at a time when they are less exposed to simultaneous financial turbulence, can increase the effectiveness of their defensive instruments. A monetary stabilization fund called Contingent Reserve Arrangement (CRA) and a development bank called BRICS Bank will operate as a multilateral mechanism in support of balance of payments and investment financing. De facto, the BRICS will distance themselves from the International Monetary Fund (IMF) and the World Bank, institutions created some seven decades ago under the orbit of the US Treasury Department. In the midst of the crisis, both of these initiatives open space for financial cooperation in the face of the volatility of the dollar, and financial alternatives for countries in critical situations without subjecting themselves to structural adjustment programmes or economic reconversion. As a consequence of the growing economic slowdown on a world level, it has become more complicated for BRICS countries to reach growth rates above five per cent.

Oil Divestment Must Focus On Private Investors

July 8, 2014 Matthew Cunningham-Cook, www.america.aljazeera.com Strategize! Divestment, Finance, Fossil Fuels

Fossil fuel divestment would target only major corporations that are listed on the stock market. But pension funds and endowments, the entities largely targeted by the 350.org campaign, invest hundreds of billions of dollars in privately traded securities, such as hedge funds and private equity — vehicles that are invested at all levels of the fossil fuel economy. (In particular, hedge funds and private equity have been found to be the key financial backers of the fracking boom.) Were the Massachusetts divestment bill to pass, state pension funds would invariably still be invested in the fossil fuel economy. The divestment campaign argues that 200 publicly traded fossil fuel companies dominate the fossil fuel exploration market. But they ignore that such companies frequently depend on private equity and hedge funds for financing new investments when large banks are uninterested in taking on further risk. The public can rarely (if ever) verify that these types of arrangements take place, even if it is a teacher attempting to verify what her pension fund is doing with her money. Pension funds and endowments have not always invested in the private market. In the 1980s and before, in fact, they were almost exclusively invested in publicly traded securities. Laws such as the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 allowed the public to verify how the companies in which pension funds and endowments were investing used their funds and provided transparency to investors in order to prevent fraudulent activity.

Bipartisan Deal Will Raise Student Interest Rates 20%

July 3, 2014 Kimberly Hefling, www.AP.org Educate! Barack Obama, Finance, Finance and the Economy, Interest Rates, Student Debt

Interest rates go up Tuesday for students taking out new federal loans. This hike is relatively minimal but could foreshadow more increases to come. The change stems from a high-profile, bipartisan deal brokered last year by Congress and signed by President Barack Obama that ties the rates to the financial markets. Interest rates go from 3.86 to 4.66 percent on undergraduate Stafford loans. Graduate student loans go from 5.41 percent to 6.21 percent. Interest rates on Plus loans for parents go from 6.41 percent to 7.21 percent. For every $10,000 borrowed, the average borrower under the hike will pay back about $4 more every month when they begin paying back the money - about the price of a fancy latte. If the economy continues to improve, however, these kinds of rate hikes could continue. Congress stipulated that the rates for new loans be reset annually, but that borrowers keep the rate they were given for the life of the loan. The compromise in Congress was reached after rates doubled last July.

U.S. Council of Mayors Endorse Postal Banking

July 2, 2014 Matt Stannard, www.bankact.org Create! Banks, Finance, Mayors, Postal Banking, Postal Service

At its June 20-23, 2014 annual meeting, the US Conference of Mayors (USCM) adopted a pair of resolutions endorsing postal banking, co-signed by eight mayors from six states. Their goal is to bring $1 trillion of job-creating economic stimulus primarily to low-income neighborhoods, over the next decade, at zero cost to taxpayers. Post office-based financial services will generate sales tax revenues of as much as $3 billion a year, benefiting cities of the more than 200 mayors attending the USCM meeting, according to BankACT, a nonprofit advocacy group. In one resolution, the USCM calls upon the United States Postal Service (USPS) to offer basic financial services, such as small payday loans and reloadable money cards. Payday lenders and other financial predators target low-income working families and retirees at exorbitant cost, totaling nearly $100 billion a year, noted BankACT president Marc Armstrong. “By offering inexpensive financial services,” he said, “the USPS can help drive out financial predators, restoring billions of dollars to low-income neighborhoods at no cost to taxpayers.” The other USCM resolution urges the Postal Service to bring back once-popular postal savings accounts and use the deposits to help fund a national infrastructure bank. This specialized bank will reduce the high cost of financing public construction projects — a boon to local governments, Armstrong added, that can generate thousands of jobs.

Investors Beware: Enbridge Not As Safe As It Seems

June 30, 2014 Franklin Cameron, www.bnn.ca Educate! Canada, Enbridge, Finance, Investment

For many investors looking for a safe and steady income, dividend-paying Canadian pipeline companies have been a natural choice. And with a yield of almost 3 percent, Enbridge (ENB.TO 50.66 0.06 0.12%) would seem to fit the bill. However, according to Toronto-based money manager, Patrick Horan, Principal at Agilith Capital, investors might want to look elsewhere. "Enbridge is actually quite a dangerous stock," Horan tells BNN. "Their growth strategy is at risk." For Horan, who is actively short Enbridge stock, the issue lies with the company's dividend policy. Enbridge has raised its dividend steadily about 7-10 percent a year over the past three years, he explains. However at the same time, they have been issuing new shares to raise equity. "This is a conflicting strategy," says Horan. "Why raise the dividend and then go issue shares?" According to Horan, Enbridge is using all its free cash flow to support the dividend. "There's nothing in the tank for growth," he says.

Argentina President Blasts US Bank ‘Extortion’

June 19, 2014 Lauren McCauley, www.commondreams.org Educate! Argentina, Banks, Debt, Finance, Supreme Court

Argentina will not submit to Wall Street's "extortion" of their debt, said President Cristina Fernández de Kirchner in a national address Tuesday night. De Kirchner's comments came after it was announced that the U.S. Supreme Court refused to hear an appeal by the South American country despite their argument that obliging predator banks would "encourage creditor free-for-alls" and "intensify and prolong the suffering of the poor in countries undergoing sovereign debt crisis." On Wednesday, following news that the Supreme Court would uphold two lower court rulings which demanded that Argentina pay $1.3 billion in debt holdouts to "vulture" funds before repaying their other restructured debts, Standard & Poor lowered the country’s rating to CCC-. According to the credit rating bureau and reported by Bloomberg News, this is the lowest rating for any nation that’s currently assessed by the company and is nine levels below "investment grade."

Business Groups Fear Hong Kong Occupy Protest

June 18, 2014 Kelvin Chan, www.thestate.com Resist! China, Finance, Hong Kong, Occupy, Protest

Foreign business groups in Hong Kong on Wednesday joined the city's billionaire tycoons in opposing a pro-democracy group's plans for an Occupy-style protest while activists burned copies of a policy document asserting Beijing's authority over the Asian financial center. In a newspaper ad, the Canadian, Indian, Italian and Bahraini groups called for organizers to rethink plans to blockade the central business district to press for full democracy. It's the first time foreign businesses have waded into the debate over Hong Kong's political future, which intensified after Beijing released a policy paper Tuesday reiterating that it has ultimate control over the former British colony. The document was seen as a warning ahead of the protest. Outraged pro-democracy activists reacted by burning copies of the paper in front of the Chinese central government's liaison office. Hong Kong became a special administrative region of China in 1997. Under a principle known as "one country, two systems," the freewheeling capitalist bastion is allowed to keep Western-style civil liberties until 2047.

Band-aids On The Gaping Wound Of Student Debt

June 10, 2014 Because Finance Is BORING, www.becausefinanceisboring.com Educate! Finance, History, Student Debt

In the 1960s, Ronald Reagan helped kill free higher education in the United States. Today, in the face of the student debt crisis, the best fight the Democrats are mustering is to try and lessen the pain of Reagan’s legacy. Everyone agrees we are in a student debt crisis, even the Federal Reserve. Over 38.8 million Americans have student debt (as of the end of 2012). 7 million of them are in default on their loans. Worse still, it is now accepted as fact that college, whether public or private, will be an undue financial burden that students may never get out of. The best one can hope is for a parent or relative to plan early for college. Put money away in a 529 plan (with Wall Street skimming money, as always, off the top). It wasn’t always this way. Once Upon A Time, America Had Free Higher Ed As Mike Konzcal and Aaron Bady wrote in “From Master Plan to No Plan: The Slow Death of Public Higher Education," there really used to be free higher education all across the state of California. And then, Governor Ronald Reagan took office, griped about the “orgies” happening on campuses, and proceeded to dismantle free higher education in the state:

Even When Admitting Crimes Banks Too Big To Punish

May 24, 2014 Phil Mattera, www.dirtdiggersdigest.org Educate! Bankers, Criminal Justice and Prisons, Finance

Ever since the financial meltdown, corporate critics have been clamoring for criminal charges to be brought against major financial institutions. With the exception of the guilty plea extracted from an obscure subsidiary of UBS in a case involving manipulation of the LIBOR interest rate index, the Obama Administration long resisted these calls, continuing the dubious practice of offering corporate miscreants deferred prosecution agreements and escalating but still affordable fines. The Justice Department has now given in to the pressure, forcing Credit Suisse’s parent company to plead guilty to a criminal charge of conspiring to aid tax evasion by helping American citizens conceal their wealth through secret offshore accounts. Yet what should be a watershed moment in corporate accountability is starting to feel like a big letdown. Despite weeks of handwringing by corporate apologists about the risks for a bank of having a criminal conviction, along with impassioned pleas for mercy by Credit Suisse lawyers, the world has hardly come tumbling down for the Swiss financial giant since Attorney General Eric Holder announced the plea.

Colorado Prepares Banking System For Marijuana Sellers

May 9, 2014 AP, www.theguardian.com Create! Colorado, Finance, Marijuana

Colorado lawmakers have approved the world's first financial system for the marijuana industry, a network of uninsured co-operatives designed to give pot businesses a way to access basic banking services. The plan, approved Wednesday, seeks to move the marijuana industry away from its cash-only roots. Banks routinely reject pot businesses for even basic services such as checking accounts because they fear running afoul of federal law, which considers marijuana and its proceeds illegal. The result: pot shop owners deal in large amounts of cash, which makes them targets for criminals. Or they try to find ways around the problem, like drenching their proceeds in air freshener to remove the stink of marijuana and try to fool traditional banks into accepting their money. "This is our main problem: financial services for marijuana businesses," said Senator David Balmer. "We are trying to improvise and come up with something in Colorado to give marijuana business some opportunity, so they do not have to store large amounts of cash."

Spain’s ‘Robin Hood’ Swindled Banks To Help Fight Capitalism

April 22, 2014 Ashifa Kassam, www.theguardian.com Resist! Civil Disobedience, Finance

From 2006 to 2008, Duran took out 68 commercial and personal loans from 39 banks in Spain. He farmed the money out to social activists, funding speaking tours against capitalism and TV cameras for a media network. "I saw that on one side, these social movements were building alternatives but that they lacked resources and communication capacities," he said. "Meanwhile, our reliance on perpetual growth was creating a system that created money out of nothing." They call him the Robin Hood of the banks, a man who took out dozens of loans worth almost half a million euros with no intention of ever paying them back. Instead, Enric Duran farmed the money out to projects that created and promoted alternatives to capitalism. After 14 months in hiding, Duran is unapologetic even though his activities could land him in jail. "I'm proud of this action," he said in an interview by Skype from an undisclosed location. The money, he said, had created opportunities. "It generated a movement that allowed us to push forward with the construction of alternatives. And it allowed us to build a powerful network that groups together these initiatives."

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