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Wall Street

Jon Corzine: The Face of American Crony Capitalism

This week, House Republicans called for a criminal probe of Jon Corzine, the former New Jersey governor and former CEO of MF Global. Republicans allege that Corzine may have committed perjury when testifying in front of Congress after his firm's collapse.

Actually, Corzine personally ran MF Global into the ground.

In October 2011, MF Global declared bankruptcy after Corzine made a bad bet on $6.4 billion in European sovereign debt. After the collapse, more than $1.2 billion in client funds went missing.

Corzine has denied any wrongdoing, even though recorded conversations suggest that Corzine was directly responsible for illicitly redirecting customer funds.

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Washington

Why the Dodd-Frank Act Didn't Work

On July 21, the Dodd-Frank Act turned three years old.

But, unlike most three-year-olds who can walk and talk, this one hasn't gotten out of the crib yet…

You see, the Dodd-Frank Act was a promise to protect Americans from the excesses and ruthlessness of Wall Street. It was meant to streamline the regulatory process.

But three years later, we are still waiting for its full implementation.

In fact, as of last week, only 155 of 398 rules required by this law are considered final.

That's because instead of focusing on the systemic problems that caused the crisis, the pen to write the bill ended up in the hands of disconnected agencies and lobbyists.

Instead of fixing the serious problems of current law, Dodd-Frank failed to curtail Wall Street – just a few years after a major financial crisis.

At a time when Sen. Elizabeth Warren, D-MA, and Sen. John McCain, R-AZ, have pushed for a new Glass-Steagall Act to reduce risk, some voices like Treasury Secretary Jack Lew argue that the Dodd-Frank bill will alleviate the problems of Too Big to Fail, systemic risk, and cronyism.

But we know that such arguments are spurious at best.

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Washington

President Obama's Grand Bargain is DOA

In attempts to break the fiscal stalemate lingering in Washington, D.C., U.S. President Barack Obama claims he's ready to do some serious "grand bargaining"…

The president presented his so-called grand bargain plan Tuesday during a trip to an Amazon.com Inc. (Nasdaq: AMZN) distribution center in Chattanooga, TN. The controversial proposal includes cutting the corporate tax rate, long-favored by congressional Republicans, in exchange for stepped-up spending on jobs programs.

"I've come here to offer a framework that might help break through the political logjam in Washington and get some of these proven ideas moving," President Obama said.

The GOP, unmoved, immediately slammed the suggestions and cast doubts about the plan's prospects.

And the "grand bargain" turns into just another speech…

Washington

Why Doesn't Jack Lew Support the New Glass-Steagall Act?

You'd think that in the wake of the Great Collapse of 2008, reviving the Glass-Steagall Act would be a no-brainer.

As it happens, there are quite a few powerful members of government who oppose it, including Treasury Secretary Jack Lew, who seems to be pushing Dodd-Frank and the Volcker Rule a little too hard as the only regulation that's needed to keep the banks from making bad bets in toxic derivatives again.

But a little history lesson will show why his plan won't work.

In the wake of the Great Collapse of 2008, it was clear that we needed legislation that tightly regulates the big banks and their investments while encouraging economic growth.

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Washington

DON’T BE SO ARROGANT, MR. PRESIDENT

Editor's Note: Romulus Augustus, the last emperor of Rome, had a lot of time to think about what went wrong to cause the fall of the greatest empire in history. Here, for the first time, in this exclusive essay he tells the full story of the fall and gives Obama sage advice to our Chief Investment Strategist, Keith Fitz-Gerald on how to avoid the same fate in the US. Please forward this to interested friends or family members.

My name is Romulus Augustus. I was the last Roman Emperor. Though I only ruled a few years before giving up my throne on 4 September 476, I lived for at least another 25 years according to the tax records. I drew a pension until at least 507 according to Cassiodorus. And, in doing so, had plenty of time to think about what went wrong.

I have made the journey through time to offer my counsel and perspective lest your country repeat the same damning mistakes that ended centuries of Rome's greatness.

Let's begin at the top.

When I took the throne, the puppet masters held sway over the citizens. Theoretically, the citizens ruled Rome but sadly, true power was held by those who served as their representatives. The concentration of power is very real when it is the diffusion of power that best serves liberty.

Do not let your representatives take this for granted.

America, like Rome, will cross the most dangerous lines once voters figure out that they can entitle themselves. You will go from a nation of makers to a nation of takers.

We learned the hard way as our treasury became a proxy for a handout. Our citizenship changed radically and so did our elections. Towards the end, our political process was not about who would build a better future for the Empire, but who would be least likely to take away the handouts.

We tried giving the people free wheat as the progressive minds of our time thought that would change things. In reality, it made them worse.

Big Data

Goodbye Privacy: Big Data Is Coming to Town

Just like the Christmas song, "He knows when you've been sleeping, he knows when you're awake, he knows when you've been bad or good…"

But nowadays it isn't Santa, it's Big Data. And it's becoming big business.

What can companies do with big data?

Get this:

The Fed

Larry Summers Should Not Be the Next Federal Reserve Chairman

Just this week, the Wall Street Journal reported that former Treasury Secretary and Harvard
President Larry Summers is "hell-bent" on becoming the next U.S. Federal Reserve Chairman.

The more important issue, however, is whether Americans should want Summers involved in such a prominent role in the global economy.

Arguments that favor Summers center on the fact that when the building clears out in 2014, Summers will be one of the few individuals left with significant experience in the international financial system. With Timothy Geithner gone, Ben Bernanke leaving in 2014, and departures of David Lipton at the IMF Michael Froman at USTR, Summers is considered one of the last "battle tested" individuals left. He has significant experience following the 1994 Russian crisis, the 1997 Asian Crisis and the 2008 Great Recession.

But while experience in necessary, so is the importance of accomplishments.

Critics have argued that handing the keys of the U.S. economy to Larry Summers would be equivalent to allowing a blind sheepdog to protect Americans from wolves. Summers' past 25 years of experience is riddled with questions about his ability to understand crisis, his commitment to corporate influence, and his irrational pledge to illogical academic arguments.

Given that few in Washington seem to vet political appointees of this administration, we decided to explore several important questions about Summers' potential candidacy and past understanding of the Federal Reserve's role in the global economy.

Housing Market

Hedge Fund Sues Government Over Seizing Fannie Mae, Freddie Mac Profits

A hedge fund hoping to capitalize on the comeback of Fannie Mae and Freddie Mac claims in a lawsuit the government illegally seized the profits of the two mortgage finance giants.

The suit, filed Sunday by Perry Capital LLC, says the government violated a 2008 law that put Fannie and Freddie into conservatorship, through an amendment changing the terms of the government's bailout.

Under original terms, Fannie and Freddie paid fixed quarterly dividends equal to 10% of the government's stake.

But in 2012, the U.S. Treasury Department amended the terms of the bailout and began taking all Fannie and Freddie's quarterly profits.

Theodore Olson, an attorney representing Perry Capital, said in a news release the 2008 law "established very specific rules about the government's limits and obligations under conservatorship. Investors had every right to expect these rules to be followed.

"If the government wanted to assume the powers of receivership, it could have chosen that course," Olson said. "Instead, it chose conservatorship, and with the [amendment] it overreached, exceeding the legal boundaries of the statute and failing to meet obligations of conservatorship mandated by Congress" under the 2008 law.

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Washington

Latest Obama Outrage: More People on Food Stamps Than Are Working Full Time

This Obama economy has soup lines as far as the eye can see. It also appears that many could easily be standing in two, three or even four lines simultaneously!

There are 103.4 million people currently enrolled in any one of
15 subsidized federal food assistance programs. The most people in our nation's history.

Due to the governments sloppy management of resources it's anybody's guess how many people are standing in how many lines, at the same time.

One thing we do know for sure is one third of our nation is now receiving Subsidized Food Assistance.

These programs are extremely expensive and the cost is increasing daily. In 2012 the bill to taxpayers paid was a staggering $114 billion. 

But sit down if you're standing, because it gets worse!

Even more shocking: The Bureau of Labor Statistics (BLS) reports there are 97,180,000 full time workers in the private sector.

This means: The number of people receiving food stamps is greater than the number of people in America working full time.

Never in our nation's history has this been the case. This is a historical first.

G8

The G8 Will Never Get a Handle on Taxes at This Rate

The G8 meetings this week at Lough Erne in Northern Ireland had a theme of "Tax Evasion and Transparency." This theme may have been chosen because "Enchantment under the Stars," or "A Night to Remember" were taken by the local high school prom committee.

And I joke not to lampoon this august body – far from it. It's only that the efforts of a group of people – none of whom put on a necktie – who help shepherd the world's largest economies ought to be focusing on economic growth, such as that which we haven't really experienced in the West for quite some time now.

Instead, the world is given the Lough Erne Declaration, which calls for a "robust" international framework to ensure fair tax collection and rational tax regimes. That the United States should be mentioned in the same breath as "fair tax collection" or "rational tax regime" is ludicrous enough.

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