If ever there was a news story that encapsulates the way the general public are being treated by some investment professionals its this one.
In a nutshell, JP Morgan Chase & Co (JPM) a Wall Street banking giant, has tentatively reached a deal with US regulators to pay out $13 billion – the largest in US history between a single company and the US government – for allegedly selling loans (mortgage backed assets) it knew were very risky to investors before the financial crises.
This comes on top of a $1 billion dollar fine JP Morgan paid last month over the ‘London Whale’ scandal.
Most people agree that these ‘mortgaged backed assets’ played a central role in the near collapse of the entire banking system in 2007 and for the continual misery citizens of many nations are suffering as a result – youth unemployment in Greece is 60%.
Now I’m not blaming JP Morgan for Greece’s woes but the cascading effect of the financial crises has been well documented.
But no worries.
JP Morgan can afford the $13 billion fine; they have a contingency fund of $23 billion to cover legal expenses/fight lawsuits as a result of their alleged skulduggery.
A quick look at their latest 10Q (quarterly report) filed 7 August 2013 for the period ending 30 June 2013 shows not only that they are incorporated in the tax haven of Delaware but their net revenue for the quarter alone was $12 billion.
Year to date net revenue is reported as $23.6 billion.
Now I understand there is currently a focus on the likes of Google and Starbucks to pay their fair share of taxes and that’s fair enough. But banks operating out of a tax havens within the borders of the United States that were responsible for the biggest shift in wealth transference (confiscation) in history due to greed?
How To Make Sure You’re Smart With Money
To put this in perspective using a real life example, I was was accosted last week by a young person (who shall henceforth be called Aaron) who admitted to me that his grandfather had placed his property and transferred his cash into Aaron’s name in order to escape paying care home fees because a friend of his grandfather’s was forced to sell all his property to pay for care home fees and had nothing left to give his children and grandchildren.
“Why would my grandfather have to do that? I thought you paid into the system and it would then look after you in old age”
“We live in an increasingly uncaring world”
What else could I have said? I mean yes I could have told Aaron about JP Morgan and banksters, political lobbyists, media ownership, draconian tax laws, the failed euro experiment, 60% unemployment in Greece, the taxation of pensions, fiat currency, The Bilderberg Group, record graduate indebtedness etc – but he was already upset enough, no need to grind a young person’s positive outlook on life into the floor.
“Read Benjamin Graham”
My advice instigated a quick FAQ’s session as to who Ben Graham was and why it would benefit Aaron to read Graham’s most famous book.
“But what has the stock market and wealth creation got to do with my grandfather’s house being in my name?”
“I’m not sure when your grandfather started to accumulate his wealth and pay off the mortgage on his house in order to be able to transfer it to you albeit earlier than he probably planned to but the world has changed. It was easier for your grandfather’s generation to be able to do that. Due to the economic chaos of recent years young people such as yourself will need to be smart about how you conduct your financial affairs because in all likelihood, there will not even be a state sponsored care system for you to enjoy by the time you retire.”
I couldn’t end the FAQ’s without directing Aaron to additional reading specifically designed to steer him clear of indebtedness at all costs: The Richest Man In Babylon.
Being a teenager and therefore always in need of the short answer 🙂 I couldn’t help thinking that The Richest Man In Babylon would be the closest to the short answer as I could direct Aaron to.
“Life’s so unfair”
“Yes Aaron. It is”
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