Saturday, 29 April 2017
Last updated 18 hours ago
Apr 20 2017 | 12:37pm ET
Today, we question why government regulators are bad at their job, why France is flirting with communists, and why people anywhere can defend socialism given recent developments in Venezuela?
Hair of the Dog
Quotes of the Day
"The OCC did not take timely and effective supervisory actions after the bank and the OCC identified significant issues with ... sales practices.”
Over in Washington D.C., it turns out that the entire Wells Fargo debacle could have been prevented years ago if regulators had actually done their job.
The Office of the Comptroller of the Currency was alerted to problems regarding Wells Fargo’s sales practices back in 2010, according to NBC.
They even met with the Carrie Tolstedt, the executive in charge the firm’s consumer banking operations. The OCC wanted to know why it had more than 700 whistleblower complaints about the firm’s aggressive sales practices…
But the regulators trusted her sooooo much that they decided not to investigate it any further. No wonder she was paid as well as she was if she could dodge those questions without attracting attention.
Years later, more than two million fake accounts were created, a brand was destroyed, but – hey – at least they clawed back… what… $41 million from the nine figures John Stumpf took home over the years?
No one should be defending Wells Fargo for its predatory practices. But the entire purpose of regulation and watchdog oversight to the market is enforcement, not the threat of it.
You know what this means now, right?
It means that we need more banking regulators to oversee the other banking regulators to make sure they are properly regulating the banks?
We know, we know. You’re saying, “But who would regulate the regulators overseeing the other regulators?”
We’ll just have to raise taxes and get more regulators at the low-low price of $140,000 a pop.
Don’t you understand how bureaucracy works?
"I believe that there is a limit to the accumulation [of wealth]. If there are any who want to go abroad, well, goodbye!"
And here are the immortal words of an uneducated man.
For those not paying attention, Jean-Luc Melenchon is a far-left candidate backed by the French Communist Party. He has said that he plans to slap a 100% tax on any income over €400,000 (£428,800, $425,000).
Not only does he want to confiscate wealth… he has encouraged capital flight.
Now, in most places, this man would be laughed out of the room.
But in a four-way race heading into Sunday’s first round of its election… he’s within serious striking distance of heading to the second round. That would actually make this man a serious candidate.
Here are Melenchon’s proposals:
Here’s another way to put each of these proposals…
So, why the violations of common sense?
This story begins and ends like the book The Man with the Big Red Balloon.
Of course, our opinion doesn’t count.
So, here’s Philippe Marques, a restauranteur in Paris, explaining to Bloomberg why capital flight and a massive brain drain are inevitable.
“People are saying they’ll leave if Melenchon wins, and I’m sure that sooner or later I’ll have to look for a way out too,” he said. “There’s no economy possible with a President Melenchon. His plans for taxes, for limits on wages -- it’ll be a bigger blow for the economy than the terrorist attacks were.”
France is already one of the most highly-taxed economies.
In recent years, the capital flight has not been surprising since it has annual wealth taxes that start on income over €900,000 (on top of income taxes, of course).
But Marxism always turns out for the best though… so everything should just work out as planned without any further intervention in the nation's market...
"[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights."
General Motors released a statement shortly after the Venezuela’s Marxist government confiscated its production plant in Valencia this week.
The auto giant said it will halt its operations in the country after spending seven decades there. The company called the confiscation an “illegal judicial seizure of its assets.”
What? But things seemed to be going so well…
Aren’t they the country with the largest proven oil reserves in the world… yet they have rolling blackouts and a gasoline shortage?
The General Motors factory is just another victim in the failures of their wonderful economic system that brings equality to everyone by ensuring that everyone has nothing.
There’s no point to being an innovative company when your production and your resources end up being the property of the state. Why even bother working hard when the only incentive is to end up with the same rumbling stomach as the guy who didn't even show up to work?
This is just the latest example of how socialism ends (and it always ends this way.) We’re also seeing how late-stage socialism relies on confiscation of property and then blames anyone but the failed ruling party.
In this case, the nation’s failing auto plants belong to the people…
And the inventory of the remaining cars? They now belong to the rulers.
That’s how it works.
By the way, the Maduro government has just decided to arm 500,000 pro-government militia members.
Of course, no one else is allowed to own guns because the government confiscated and outlawed them five years ago.
“Mr. Kleinfeld added that he had been looking for an Indian headdress to send to Mr. Singer. It isn’t clear what he meant by that.”
The Wall Street Journal reports more on the vague threat that former Arconic CEO sent to Paul Singer in a letter that ultimately got him booted from the company.
In the letter, Kleinfeld references Singer’s legendary partying during the 2006 World Cup and then hints that he wants to send him an Indian headdress.
Kleinfeld also enclosed a soccer ball in the package.
The Wall Street Journal has hundreds – even thousands – of reporters hungry for a story at any given moment. They need to get on this headdress story.
What is it? What did he mean?
Clearly, this is far more important than the French election.
Thursday’s Hedge Fund Reading List
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Garrett Baldwin is the voice of the The Daily Alpha, the features editor for Modern Trader magazine, and the author of The Man with The Big Red Balloon.