John Innes

Usually blab about economics, finance, markets, business. Comment on news, int'l relations, CH, civil liberties, good governance - corporate & political.

[John Innes @johnpinnes]

@steve_hanke Does @SecScottBessent write and pass the budget? The Administration can jawbone Congress or refuse to sign a budget. Hello shutdown and who gets blamed? Congress is the dysfunctional institution here, the Treasury and Fed are just fighting a losing battle.

[John Innes @johnpinnes]

@Dexerto This sounds like fun. Should have a renewal of vows and party? Sell tickets to see who shows.

[John Innes @johnpinnes]

@BrianCAlbrecht Yes, the potential growth rate of the economy is a huge determinant for living standards during the course of one’s life. Rule of 72 tells you that going from a 3% growth rate to 2% steals 12 years of economic growth from young people in the economy.

[John Innes @johnpinnes]

@chamath is right that rising RFR will raise financing costs across the economy. US Govt debt/GDP is too high and US is still digging with continued deficits. The 10-year rate would drop if the US Govt credibly moved towards a balanced budget.

[The All-In Podcast @theallinpod]

Chamath Explains the AI Boom’s Achilles Heel

“Doesn't matter what you do, doesn't matter what you claim to do, you're going to get run over. You're going to be roadkill.

If the bond market walks the 10-year up to 5.5 and 6%, which has nothing to do with AI, it has everything to do with debt to GDP and a bunch of other factors in broad-based Western economies, any business model that thrives on a financing spread gets cornholed.

Any and every, all of them. It will not matter when the 10-year’s at 6%. It won't matter.

As long as we can keep that from happening, we're going to be fine.

So what's the most important way, I guess, post these midterms to keep the party going?

You have to really start to focus on deficits, and you have to find a fair trade where the bond market backs off.

And I think you can see it in the tape, meaning if we start proposing huge spending programs, they're going to walk the 10-year up.

That then has a negative cascade to everything.

If, however, the posture becomes much more about keeping everything calm and like, ‘Let's just tone things down and let's find the waste in the system and squeeze it all out,’ I think people will respond very favorably.

The last thing I will say is these are like Achilles' heels, meaning all of the asset value that's getting built up, but just like the great warriors, you just slice the Achilles tendon and they just crumble to the knees.

I just want to point out, this is that thing. There is no other thing.

Meaning, all this other stuff is complete goodness, but the fact that you need to finance these things in a variable rate model as a spread to the risk-free rate is the big problem in these businesses.

And you need to essentially have Microsoft, Google, Meta, and Nvidia backstop all of this in a worst case scenario because that's the only way you can withstand a one or two-year correction in this market.”

[John Innes @johnpinnes]

@ctindale @mattwridley Financialization in the US has gone too far. @cremieuxrecueil posted support for that in the origins of billionaire wealth with Finance & Investment (F&I) being the largest category. This is partly due to F&I makes ~9% of Gross National Income with ~5% of workforce.

[John Innes @johnpinnes]

@DrJStrategy If the federal deficit declines

[John Innes @johnpinnes]

@lugaricano Nice bucking the narrative that there has been any austerity lately in western democracies. These dependencies and their consequences are damaging to the fisc and social fabric.

[John Innes @johnpinnes]

@SenSanders As someone who has been in Congress for decades and voted for and to keep ACA, perhaps you can answer why is healthcare broken?

[John Innes @johnpinnes]

@JDVance @WHFraudTF @DrOzCMS Now clawback payments made.

[John Innes @johnpinnes]

Much fraud in the US has one thing in common: a bank account receiving the funds & quickly moving it on. This fraud would not occur without those accounts & knowing the banks involved will simply shrug & not release any information without a warrant. @EverettStern1

[Everett Stern @EverettStern1]

Dear Secretary Bessent @SecScottBessent,

My name is Everett Stern. In 2010 I was a compliance officer at @HSBC. From a back office in New Castle, Delaware, I watched billions of dollars move to drug cartels, sanctioned regimes, and terrorist organizations. The enemies of the United States. I documented it, I escalated it, and when the bank would not act, I took it to the @FBI, the @CIA, and eventually the @SECGov.

The result was a $1.92 billion settlement. At the time, it was one of the largest in American history. It was also about five weeks of the bank’s profit. Not one banker was charged. Not one went to prison.

I paid a different price. I lost my career, my savings, and my place in the industry I had trained for. I was blacklisted. Every door in American finance closed at once. I slept on a camping cot in a 300 square foot apartment because I could not afford a bed, and I waited tables at @PFChangs to eat. I tell you this not for sympathy, but so you understand that I know exactly what it costs to do the right thing in American finance, and exactly how little the system does in return.

I made that sacrifice because I believed it would change something.

Yesterday, your department fined @BankofAmerica $1.2 billion for failing to report more than $5 billion in suspicious transactions, some of it tied by your own findings to Chinese laundering networks, narcotics, and the southwest border, alongside 475 apparent sanctions violations touching Russia, Iran, and global terrorism. The bank admitted it willfully violated the Bank Secrecy Act.

Fourteen years after HSBC. A bank with “America” in its name. And once again, not one individual charged.

Secretary Bessent, I want to say plainly what I believe you already know. The fines are not working.

A fine is paid by shareholders, absorbed by the balance sheet, and forgotten by the next earnings call. Bank of America reported earnings this morning. Nobody who set the alert thresholds, nobody who decided the 2024 cease and desist could wait, nobody who chose the backlog over the law will lose a single thing they value. Their lives are untouched. That is the entire reason the behavior repeats.

This is money laundering. This is blood money. Money that reaches a cartel buys fentanyl that kills Americans. Money that reaches a terrorist organization buys the next attack. This country has fought a war on drugs and a war on terror for decades, at enormous cost in lives and treasure, and all the while we have allowed the financing to flow through institutions we charter and regulate. Cut off the money and we win. We have never seriously tried.

There is also a question of equal justice that I cannot let go.

Before I walked into the FBI building to report HSBC, I stopped in front of the Great Seal on the wall and read the words engraved beneath it: “Justice is the defense of our liberty.” I believed that. I still want to. But every day in this country, people go to prison for crimes that are nothing next to moving money for the people who want Americans dead. A suit, a title, and a corporate badge should not be a shield from the consequences that apply to everyone else. If a street dealer goes to prison for what he sells, the banker who moved the cartel’s money should be standing next to him.

I also want to raise something that is rarely said in these conversations. Why has no one inside Bank of America come forward the way I did? The answer is that everyone in American banking knows what happened to me, and to the whistleblowers who came after. The last person who spoke up is the only policy anyone believes. That is a culture problem, and it starts with leadership, in the banks and in the agencies that regulate them.

This is not a political issue. It has spanned administrations of both parties. It is a national security issue, and I am asking you to treat it as one.

Three things would change the math overnight.

Refer individuals for criminal prosecution. Not the analyst in the queue. The executives who set the thresholds and chose the risk. One banker in handcuffs would do more than every fine in Treasury’s history combined.

End “too big to jail.” An institution cannot be too big to fail and too big to jail at the same time. If it is the first, it must be held to a higher standard, not a lower one.

And if Bank of America will not act as America’s bank, review its charter. A national charter is a privilege granted on behalf of the American people. It should be conditioned on not moving money for the people trying to kill them.

Secretary Bessent, you said yesterday that these actions send a clear message that even the biggest institutions are not above the law. With respect, the institution was never the problem. The people inside it are above the law, and they know it. Until that changes, I will keep writing letters like this one, and the next bank will keep paying the next fine.

I gave up everything I had to stop this. I am asking you to use the power you have to finish it.

Respectfully,

Everett A. Stern
HSBC Whistleblower
Founder and Intelligence Director, Tactical Rabbit

[John Innes @johnpinnes]

@dlacalle_IA Limiting government spending with >$2T deficits? This has been core argument against recession doomsayers since GFC, namely, calling for a recession with $2T fiscal stimulus every year?

[John Innes @johnpinnes]

@Chris_arnade I used the Booker and Nobel lists to find literature for years. Nobel have to look past the poets and playwrights, buy the Booker short list is gold.

[John Innes @johnpinnes]

@scottfelsenthal As soon as information goes through a layer of management, it gets filtered. CEOs need to walk the floors themselves.

A corollary: when >~100 employees, CEO has hard time knowing what each employee contributes, injecting politics into personnel decisions.

[John Innes @johnpinnes]

@_whitneywebb Hastert is my go to example of a structured transaction and someone going to jail for it.

[John Innes @johnpinnes]

@anasalhajji The cars are stiffer and feel road humps more due to the battery pack.

[John Innes @johnpinnes]

@hkuppy Always wondered who went to Oktoberfest and went to the wine tent 🙂

[John Innes @johnpinnes]

@realEstateTrent @zerohedge Have seen a significant drop in discretionary spending, anecdotally. If this continues will start seeing discretionary services closing.

[John Innes @johnpinnes]

@MebFaber My church land holdings remaining untaxed is canonical to my beliefs.

[John Innes @johnpinnes]

@investing_law @RobertMSterling Was just talking about this with a partner. Have to read every single word of AI output, no skimming outside important sections.

[John Innes @johnpinnes]

@JackPosobiec Ask them why they are not cutting the federal deficit that is driving inflation. These stopping fraud pressers are too little, too late.