BANKING 101

The economic recovery looks as fragile as ever, Gross Domestic product shrank 0.7 percent in the first quarter of this year, far worse than the Feds estimate of 0.2 percent growth.

Though last year the economy seemed to be on the brink of a long-delayed breakout, it has now contracted for the third time since the recession ended in mid-2009. The blame: strong U.S. dollar, brutal winter, but more importantly financial institutions still do not get it.

The too big to fail syndrome is still alive and functioning in the world banking community. The top five banks in the world:

1). ICBC – China,  2). HSBC – United Kingdom,   3). Deutsche Bank – Germany,

4). Credit Agricole – France,  5). BNP Paribas – France  (notice no U.S. Banks in top five)

These institutions continue to support high risk, high return, high failure, speculative ventures. Examples, supporting declining Chinese stock market, supporting failing economies like Greece, Spain, Portugal, Brazil, and funding aggressive development in Africa.

You wonder why no American banks in the top five – after the 2007-2008 credit collapse of U.S. banks – their fear of high risk, speculative investing has been replaced by the European and Asian institutions aggressive development of these markets. Any one look at the Southern California real estate market the last few years, who is buying real estate?

World credit markets are so interdependent the credit risks of Europe and Asia effect credit and growth in the U.S. No need to panic, just beware: job growth has been steady, household income adjusted for inflation is up 3 percent over the past year. Building permits are at their highest level since 2008, as are sales of new homes.

But tell that to the average American, consumer spending is down, this hangover from the recession will continue through 2014 – then look for the Federal Reserve to raise rates in 2015 to ignite spending.  This may not be a cause for optimism, but it’s surely an argument for reduced pessimism.

HAPPY BIRTHDAY DODD-FRANK – Tuesday (July 21) marks the fifth anniversary of the landmark financial regulation. Lots of events planned this week by both proponents and opponents. The pro view from Better Markets in remarks going out later today as party of their anniversary event at the Newseum that features the only joint appearance of both Barney Frank and Chris Dodd along with Treasury Secretary Jack Lew: "Better Markets today released an extensive Cost of the Crisis Report detailing how the 2008 financial crash and the economic catastrophe it caused will cost the United States more than $20 trillion. ...

"The Report shows those human and economic costs, including historically high unemployment, underemployment, long-term unemployment, foreclosures, homelessness, underwater mortgages, bankrupt businesses large and small, lost savings, deferred or denied retirements, educations cut short, and more. Although there has been substantial economic recovery since the dark and terrifying days after the collapse of Lehman Brothers in 2008, the Report also outlines the many Americans across the country who are still suffering."

THE CON VIEW from an op-ed in this a.m.'s Wall Street Journal from House Financial Services Chairman Jeb Hensarling who keynotes AEI's Dodd-Frank event on Tuesday:

"Too-big-to-fail institutions have not disappeared. Big banks are bigger, small banks are fewer, and the financial system is less stable. Meanwhile, the economy remains in the doldrums. ...

"Dodd-Frank was based on the premise that the financial crisis was the result of deregulation. Yet George Mason University's Mercatus Center reports that regulatory restrictions on financial services grew every year between 1999-2008. It wasn't deregulation that caused the crisis, it was dumb regulation."

POLITICS 101 - CAMPAIGN EARNINGS TO DATE -  (campaign + outside groups): ... Team Jeb: $114.4 million ... Team Hillary: $69.3 million ... Team Cruz: $51 million (that includes the $4 million his campaign raised in the 1stQ) ... Team Rubio: $43.8 million ... Team Perry: $17.9 million ... Team Carly: $4.8 million.

COLLEGE CHRONICLES – Phoenix, Falling: For-profit colleges have had a rough time of it lately as doubts about the quality of their courses and the propriety of their business practices have continued to multiply. Even the University of Phoenix, the best known of the chains, has not been immune, and last week its parent company. Apollo Education Group, announced a series of moves that it said were aimed at improving the university’s poor retention rates, raising its academic quality, and cutting its costs.

For starters, the university will cut 50,000 students by dropping most of its associate-degree programs. It will also shut down some of its physical locations and for the first time adopt academic admissions standards (shocking). By next year it expects to have about 150,000 students – down from 460,000 five years ago.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this weekend to: Bill Bigglestone, Tucson, AZ.;  Rosey Grier (83), Los Angeles, CA.;  Patrick Pugliese, Pasadena, CA. …watch out for him in the 2018 NHL Draft; Barry Sanders (47), Scottsdale, AZ.; Carlos Santana (68), Malibu, CA.

THE BOTTOM LINE – About 40 percent of U.S. workers are required to take drug tests during the hiring process. In 2014, 9.1 million workers provided urine samples to major testing company Quest Diagnostics. About 3.9 percent tested positive, most of them for marijuana, followed by amphetamines and painkillers.

WATER QUIZ -  How Much Do You Know About Hydration: Is it necessary to drink eight glasses of water per day?

The Correct Answer: False

There's no evidence to back that up. The Institute of Medicine recommends that men get about 125 ounces of water daily and that women get 91 ounces, but that includes water from all foods and beverages. Most people get enough hydration unless they're exposed to heat stress or they're very active for a long time.

HARD DRIVE – If you use Google Chrome as a browser, RR does, the strain on computer memory is brutal. I found an app “The Great Suspender” that suspends tabs in use but leaves the content just a click away.

THE SWAMI’S WEEK TOP PICKS –

(MLB, July 25) Los Angeles Dodgers (53-40) 2 at New York Mets (48-44) 5

(CONCACAF Gold Cup semifinals, July 22) U.S.A. 3 Jamaica 0

Season to date (63-29)

WHAT’S ON THE iPAD? – five songs we are listening to this week:

1). “A Buena Vista”, 2004 – Luis Frank Arias

2). “Call Me The Breeze”, 1974 – Lynyrd Skynyrd

3). “Chain of Fools”, 1968 – Aretha Franklin

4). “Why I Sing the Blues”, 1983 – B.B. King

5). “Someone to Watch Over Me”, 1950 – Ella Fitzgerald

DRIVING THE WEEK - President Obama today holds a bilateral meeting with Nigerian President Muhammadu Buhari at the White House ... Obama this afternoon will deliver remarks at a reception for the 25th anniversary of the Americans with Disabilities Act ... Treasury Secretary Jack Lew speaks at the Better Markets Dodd-Frank event at 4:00 p.m. ... Both Heritage and AEI hold Dodd-Frank discussion on Tuesday ... Senate Banking subcommittee on Tuesday holds a hearing at 10:00 a.m. on SIFI designations ... Center for American Progress has a Dodd-Frank at five event on Wednesday ... Jeb Bush is at Florida State University in Tallahassee, FL today to deliver a speech on changing the way Washington works ... Index of leading indicators Thursday at 10:00 a.m. expected to rise 0.2 percent ... Morgan Stanley reports second quarter earnings this morning.

Special Olympics visit Southern California Communities this week, try to get out and support the visiting athletes.

Next week: Words and Jack Ass of the Month.

Until Next Monday, Adios.

Claremont, CA

July 20, 2015

#VI-7-269

CARTOON OF THE WEEKEND – Sharks in the waters