+ A Shuffle of Aluminum, but to Banks, Pure Gold.<\/strong><\/p>\n MOUNT CLEMENS, Mich. \u2014 Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.<\/p>\n The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers\u2019 aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.<\/p>\n This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.<\/p>\n Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process \u201ca merry-go-round of metal.\u201d<\/p>\n Only a tenth of a cent or so of an aluminum can\u2019s purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year \u2014 and add the tons of aluminum used in things like cars, electronics and house siding \u2014 and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.<\/p>\n The inflated aluminum pricing is just one way that Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets, according to financial records, regulatory documents and interviews with people involved in the activities.<\/p>\n The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices, and last week JPMorgan was trying to reach a settlement<\/a> that could cost it $500 million.<\/p>\n For the entire NYTimes article, click here.<\/strong><\/a><\/p>\n \u00a0+ Chase, Once Considered “The Good Bank,” Is About to Pay Another Massive Settlement<\/strong><\/p>\n During the financial crisis, while Dr. Evil-ish Wall Street villains like Goldman and Lehman Brothers were getting all the bad press, pundits continually referred to J.P. Morgan Chase as the “good bank.” The myth of Chase as the finance sector’s one upstanding rock of rectitude reached its zenith in July of 2009 with an embarrassingly hagiographic piece in the New York Times entitled, “In Washington, One Bank Chief Still Holds Sway.” In that one, the paper breathlessly praised Jamie Dimon for emerging from “the disgrace of his industry” to become Barack Obama’s “favorite banker.”<\/p>\n Chase and Jamie Dimon kept that rep for a good long time. As late as 2011, Dimon’s name was being floated around Washington very seriously as a potential replacement for Tim Geithner’s Treasury Secretary post. Even when Dimon showed up on the Hill last year to testify (read: obfuscate) about the infamous “London Whale” episode, Senators on the banking committee – who, as writer George Zornick noted, had collected a cumulative $522,088 in donations from Chase – slobbered all over Dimon and shelved the important London Whale matter to ask the great genius’s advice on how to fix the economy.<\/p>\n Well, there’s some more news about the “good bank” – Chase is about to pay yet another ginormous settlement for cheating and stealing from the public. According to the Wall Street Journal, the Federal Energy Regulatory Commission (FERC) will fine Chase “close to $1 billion” for manipulating energy prices in Enron-esque fashion in Michigan and California. The story is interesting in itself – and we’ll write more about it later – but for now, it’s just the fact of yet another massive settlement for this bank that’s so interesting.<\/p>\n In the three-year period between 2009-2012, Chase paid out over $16 billion in litigation costs. Noted financial analyst Josh Rosner of Graham Fisher slammed Chase in a report earlier this year, pointing out that these settlements and legal costs represented a staggering 12% of Chase’s net revenue during this time. There couldn’t possibly be a clearer demonstration of the modern banking model, in which companies break rules\/laws as a matter of course, and simply pay fines as a cost – a significant cost – of doing business.<\/p>\n For sheer curiosity’s sake, I thought I’d list, in capsule form, some of the capers Chase has been caught up in in recent years:<\/p>\n \u0007 They were fined $153 million for the infamous “Magnetar” fund case, another scam in which a bank allowed a hedge fund to create a “born-to-lose” mortgage portfolio to bet against. Very similar to the Abacus case that’s at the heart of the ongoing “Fabulous Fab” trial;<\/p>\n \u0007 Chase paid $228 million for its role in the egregious municipal bond bid-rigging case we wrote about in Rolling Stone in 2011;<\/p>\n \u0007 Chase paid $297 million to the SEC last November for fraud involving mortgage-backed securities;<\/p>\n \u0007 Chase paid $75 million in cash and generously agreed to forego $647 million in fines in the Jefferson County, Alabama mess, in which a small-town pol was bribed into green-lighting a series of deadly swap deals;<\/p>\n \u0007 In two separate orders this spring, Chase was reprimanded by the OCC and the Fed for money-laundering behaviors similar to the infamous HSBC case, and also for regulatory failures and fraud in the London Whale episode. There was a separate FBI investigation into the London Whale probe in which they allegedly lied to customers and investors about the loss;<\/p>\n \u0007 They’re under investigation for allegedly failing to disclose Bernie Madoff’s trading activities to authorities;<\/p>\n \u0007 They were one of 13 banks asked to pay up in this year’s $9.3 billion robosigning settlement;<\/p>\n \u0007 They were one of four banks last year to settle for a total of $394 million with the OCC for improper mortgage servicing practices;<\/p>\n \u0007 They were ordered by the CFTC to pay $20 million last year for improper segregation of customer funds (this was part of the Lehman investigation). The CFTC also fined Chase $600,000 last year for violating position limits in the cotton markets;<\/p>\n \u0007 Last year, Chase paid a $45 million settlement to the federal government for improperly racking up fees for veterans in mortgage refinancings. Hey, if you’re going to steal from everyone, you can’t leave out those veterans overseas!<\/p>\n \u0007 In 2010, Chase paid $25 million to the state of Florida for selling unregistered bonds to a state-run municipal money-market fund;<\/p>\n \u0007 The bank last year was convicted in Europe along with several other banks for fraudulent sales of derivatives to the city of Milan. A total of about $120 million was seized from Chase and three other banks.<\/p>\n There have been so many settlements with so many agencies around the world (I’m in a hurry and can’t get to Chase’s messes in Britain, Japan and elsewhere) that they’re almost impossible to count. Some papers are reporting that Chase is being investigated by as many as eight different agencies in the U.S. alone.<\/p>\n There are some other civil actions left out, too, like the $110 million class-action settlement for improper charging of overdraft fees, or their part in the gigantic $6 billion settlement completed last year involving Visa, MasterCard and other credit card providers for manipulating card service rates. And states like California have only just begun crawling up Chase’s backside for its role in the lunatic filing of erroneous credit card collection lawsuits, a scam outed by whistleblower Linda Almonte.<\/p>\n Chase is turning into the Zelig of the corruption era. In virtually every corruption scandal, the bank is in the background somewhere. The HSBC money-laundering mess? Chase was reprimanded for similar abuses. The Madoff story? They’re under investigation there. MF Global? As banker to Jon Corzine’s notorious firm, they were part of a $546 million settlement to return money to MF Global’s outraged customers. Jefferson County? That was them. And again, you might have heard of Abacus, but Magnetar was just as bad. Not that anyone’s counting or anything.<\/p>\n For the entire Rolling Stone article, click here.<\/strong><\/a><\/p>\n + Case Reveals Cohen’s Links to Dubious Actions at SAC.<\/strong><\/p>\n Steven Cohen, the founder of the hedge fund SAC Capital Advisors.Steve Marcus\/ReutersSteven Cohen, founder of the hedge fund SAC Capital Advisors.<\/p>\n As government investigators closed in on the billionaire hedge fund manager Steven A. Cohen in recent years, his defenders argued that the unusual structure of his firm, SAC Capital Advisors, shielded him from any illegal trading by his employees.<\/p>\n Mr. Cohen, they said, sat atop a sprawling, decentralized operation in which about 140 small teams were each given hundreds of millions of dollars to invest. These teams had almost complete autonomy, so if they were crossing the line, Mr. Cohen would not know about it.<\/p>\n But in a detailed legal filing on Friday, federal regulators made their case that Mr. Cohen was not only well aware of suspicious trading activity at SAC but participated in it. Piecing together phone records, e-mails and instant messages, the Securities and Exchange Commission’s filing painted Mr. Cohen as a boss deeply engaged in his employees’ questionable behavior.<\/p>\n “Faced with red flags of potentially unlawful conduct by employees under his supervision, Cohen allowed his traders to execute the recommended trades and stood by,” the S.E.C. said.<\/p>\n For the entire NYTimes article, click here.<\/strong><\/a><\/p>\n A little more from John Paulson at last week’s CNBC’s Delivering Alpha Conference:<\/em><\/strong><\/span><\/p>\n + Paulson loves housing and mortgages. Remember he was one of the guys shorting sub-prime mortgages back when. Since then he’s bought 30,000 housing lots in Arizona, Nevada, Florida and California. He bought them in distress “There’s been very little new home construction. So there’s a shortage of homes to purchase. In order to meet the demand, the rate of new home construction has to increase. .. Now you’ve bottomed, there’s a momentum.” The housing market follows seven year cycles. It’s not too late to get involved. Buying a home is still the best investment anyone can make. He also’ purchased Realogy (RLGY) because “they’re the largest real estate broker in the country.”\u00a0 Harry’s chart:<\/p>\n Stop Press: Apollo is selling its stake in Realogy for $1.24 billion. According to today’s Wall Street, “the offering is yet another case of private-equity firms rushing to sell stakes this year in portfolio companies they’ve taken public, many of which have benefited from the stockmarket’s broad gains.” Another reason to own APO?<\/p>\n + Anticipate consolidations. He focused on wireless, e.g. Sprint (which he bought) and then got bidded up by multiple bidders. He bought a 9.7% stake in Leap, which got recently bought by AT&T.\u00a0 Who could be taken over next?\u00a0 Take a look at the cable industry, he suggests.<\/p>\n + People who bought gold in anticipation of inflation have lost patience. Hence the price has gone done.\u00a0 But the printing of money will cause inflation over time. The rationale for owning gold is still positive. But gold, admittedly, is volatile. If you’re looking for a hedge against inflation in the future, and if you have a long-term view, then gold makes sense.<\/p>\n P.S. This morning, I’m at my country “mansion.” I watched my Verizon FiOS recording of Paulson via Slingbox to New York. It worked flawlessly, even though I’m on a relatively slow telephone company DSL Internet line. I love my Slingbox.<\/p>\n LED bulbs have issues.<\/strong><\/span> My palatial 10 x 10 office has seven MR-16 bulbs on a track in the ceiling.<\/p>\n New idea: replace them with LED bulbs. They burn cool (you can touch them when they’re on), they use little energy (85% less) and they allegedly last forever (at least 25 years).<\/p>\n Issues:<\/p>\n 1. Amazon (and others) advertise them as “dimmable.” They’re not. They don’t work with circuits which happily dim normal MR-16s. They stay full bright, no matter how much you slide the dimmer switch.<\/p>\n 2. They cost about five times as much per bulb.<\/p>\n My “real” goal was to see if the leading manufacturer of LED bulbs — CREE Inc — was a good “buy.” And the answer? Oih!<\/p>\n I missed it. CREE’s P\/E is a ridiculous 116. And their earnings suck:<\/p>\n I note they are introducing many new consumer LED bulbs. But CREE’s are pricey.<\/p>\n I can’t figure if the XE-CREE bulbs I bought from\u00a0 Amazon are actually a CREE bulb. I’ve emailed CREE,\u00a0 but no response as yet and I can’t find XE-CREE (which is made in China) on CREE’s web site. Maybe it’s a cheap rip-off?<\/p>\n So much that brilliant idea. Maybe it’s a good short? It looks very pricey.<\/p>\n The happy couple at the gas pump.<\/strong> I’m filling my 12-year old Subaru up. In pulls in this bright red Bentley. <\/strong><\/span><\/span><\/p>\n There’s got to be a story. I beetle over. Turns out he promised it to her on their 60th wedding anniversary. Said he, “I never thought I’d be married that long.”<\/p>\n Though it’s her car, she doesn’t drive it. She prefers to be driven. And though the car will happily hit 200 MPH with its 12-cyclinder motor, he’s never driven it more than 70 MPH. “If I drove it more than 65 MPH, I’ll get a ticket.” It’s a 2009 model. He bought it used …\u00a0 for $179,000. Expensive promise.<\/p>\n Cell phone etiquette<\/strong><\/span> As the train rolled out of the station, the guy sitting next to her pulled out his cell phone and started talking loudly:<\/p>\n “Hi sweetheart, it’s Eric, I’m on the train – yes, I know it’s the six thirty and not the four thirty but I had a long meeting – no, honey, not with that floozy from the accounts office, with the boss. No sweetheart, you’re the only one in my life – yes, I’m sure, cross my heart” etc., etc.<\/p>\n Fifteen minutes later, he was still talking loudly, when the woman sitting next to him, annoyed by his continuous loud blabbing, yelled: “Hey, Eric, turn that stupid phone off and come back to bed!”<\/em><\/p>\n Eric doesn’t use his cell phone in public any longer.<\/p>\n How to annoy a frog.<\/strong> A wonderful video. Watch to the end. It’s short. Click\u00a0How\u00a0 to_Piss_Off_a_Frog<\/a>.<\/strong><\/span><\/span><\/p>\n![\"Realogy\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2013\/07\/Realogy.jpg\")
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\nThey work nicely, but they give off huge heat. So much heat — that my AC couldn’t drop the temperature in my office last week until I turned them all off.<\/p>\n![\"XE-CREE](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2013\/07\/XE-CREE-LED.jpg\")
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\nChart courtesy, the Wall Street Journal.<\/em><\/p>\n![\"BrightRedBentley\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2013\/07\/BrightRedBentley.jpg\")
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\nAfter a very busy, tiring day at the office, the young woman settled down in her seat and closed her eyes as the train left the station.<\/p>\n
![\"\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2012\/11\/HarryNewton.jpg\" "\\"HarryNewton\\"")
<\/a>![\"umbrellacable\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2013\/07\/umbrellacable.jpg\")
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