It's "Talk like a Pirate Day" - but which set of Pirates?

Today (Thursday, September 19) is International Talk Like A Pirate Day so here is my obligatory "Yaaarrrr." Or maybe it should be an "Arrrggghhh!"

Yeah, I think I will go with the "Arrrggghhh!" After all, that is my normal response when I read the daily idiocies in the TradMed like the articles on Sunday that inspired this post. I could probably link to most of the posts I have written these last few years as most of them are in response to some level of stoopid provided by the TradMed.

But the days of pirates sailing the Spanish Main are long in the past. No more sacking of Cartagena. No, today's "pirates" wear business suits and do their sailing on Wall St. Just today, we have reports that JP Morgan Chase is paying a $920M fine for the "London Whale Fail" trading losses. Amazingly enough, JP Morgan is even admitting "fault":

WASHINGTON JPMorgan Chase & Co. (JPM) is paying $920 million in penalties and admitting wrongdoing over a $6 billion trading loss last year that tarnished the bank's reputation.

Regulators said Thursday that the largest U.S. bank failed to properly supervise traders in its London operation, allowing them to assign inflated values to trades and cover up losses as they ballooned. Two of the traders are facing criminal charges of falsifying records to hide the losses.

Of course, JP Morgan had reported profits for their second quarter of the year as $6.5B so a $920M fine is still just a cost of doing business tax and nothing more.

Reuters is reporting that Wells Fargo is cutting 1,800 jobs in their mortgage business:

(Reuters) - Wells Fargo & Co (WFC.N), the largest U.S. mortgage lender, said on Thursday that it will cut 1,800 jobs in its home loan business due to lower demand for refinancing amid higher interest rates.

The fourth-largest U.S. bank provided a 60-day notice on Wednesday to employees whose jobs were to be eliminated, the bank said in a statement.

Chief Financial Officer Tim Sloan told investors at a conference on September 9 that the San Francisco bank had laid off 3,000 employees in its mortgage business so far in the third quarter. Sloan also said Wells Fargo expected to make $80 billion in home loans in the third quarter, nearly 30 percent below its second-quarter figure.

I wonder how this will impact the on-going problems Wells Fargo and other banks have in mortgage servicing. My WAG is it will not be pretty but I would also take a WAG that paying fines and "admitting no wrongdoing" is still cheaper than actually making things operate correctly.

It is not just the banksters that make me say "Arrrggghhh" though. The AP is reporting that a federal judge in New Orleans has accepted a guilty plea for destroying evidence after the BP oil spill in 2010. Of course, the corporate person known as Halliburton really won't feel much pain from this plea - a $200K fine and a $55M donation to the National Fish and Wildlife Foundation (the donation is not a condition of the guilty plea.) Halliburton profits for the quarter that ended 30 June were $679M so $55.2M in fines and donations equals a cost of doing business and nothing more.

Today's pirates don't have to snarl and say "Arrrggghhh" or "Avast ye Mateys." They do not need to carry cutlasses and sail the Spanish Main. They (mostly) walk amongst us wearing business suits. They sit in their board rooms, plot the ways to increase their profits, often on the edge of legality (well, they are pirates after all so those legal niceties are mostly a formality anyway), and leave the rest of us to clean up their messes while they sail their yachts away to the Caribbean.

Arrrggghhh! That is so not snark, believe me.

And because I can:

These are only problems for the top 1%

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If you read me often enough, you have probably noticed that I tend to check various news and opinion sites throughout the TradMed each morning, after I've spent a few minutes reviewing emails and jobs sites. Most of the time, I just shake my head at the various levels of stupidity I find, not being able to quite give it the full YOU HAVE GOT TO BE F*CKING KIDDING ME! treatment so richly deserved. Then there are days like today where teh stoopid is so truly dumbfounding.

Today, we have Henry Kravis, co-founder of private equity firm KKR, sending up a fine whine to Bloomberg on how tighter credit rules are forcing the private equity firms to kick in more of their own money and making buy-outs more expensive. Sayeth Mr Kravis:

“As the debt markets tighten and the cost of capital goes up, something has got to give,” Kravis said yesterday at the Bloomberg Dealmakers Summit in New York. “You just have to pay more.”

Kravis, 67, said the cost of capital for a leveraged buyout has risen more than 2 percentage points since the firm agreed to buy Pfizer Inc.’s Capsugel unit in April, forcing buyers to put up more cash for deals and borrow less. Uncertainty in the equity markets also is making it more difficult to reap profits through initial public offerings or sales of companies owned by private-equity funds, he said.

...snip...

Buyout firms typically use loans secured on the targets they acquire to finance more than half of the purchase price and cash from their own funds for the rest. The firms seek to improve performance at the companies they acquire or expand them before selling them within about five years.

KKR, which Kravis created in 1976 with George Roberts and Jerome Kohlberg, is expanding into hedge funds, real estate and underwriting to reduce reliance on buyouts after the firm gained a listing on the New York Stock Exchange last year. KKR this year hired a group of former Goldman Sachs Group Inc. (GS) traders led by Bob Howard to start KKR’s first hedge fund.

Wow. Just. Wow.

Mr. Kravis joins JP Morgan Chase CEO Jamie Dimon as a poster child for those who have no clue about life amongst the peons. Now Dimon has set the whiners' bar high with his whines about how banksters get no love and how it's just so mean as to be anti-American to require banks to increase their capital but I think Kravis has nudged Lloyd Blankfein out of second place.

Private Equity firms use small per cents of their own funds and large debt in leveraged buy-outs. There seem to be as many articles saying LBOs are bad as there are good. I'm sure it is no surprise that I lean towards the LBO = bad perspective. While there may be some benefits in efficiencies, there are far too many examples of lost jobs, high interest payments on those loans, and destroyed pensions. The pattern seems to be Private Equity firm creates huge debt to take over Business. Business then has to service the resulting debt before investing in R&D, employees, pensions, whatever. In order to streamline costs, Private Equity firm is within a couple of years "forced" to declare bankruptcy, turning their pension obligations over to the Pension Benefit Guaranty Corporation. At the end of approximately five years, the private equity firm files for an "Initial Public Offering" for all or part of the firm they had taken private five years before. IN the intervening years, they have cut employees, destroyed the pension, used company assets to pay off the debt (which never seems to be in their names, but only in the name of the company they used the debt to acquire) and walk away with more millions to off set the devastation they leave in their wake.

Congratulations Henry Kravis, your whine even managed to top that of folks CNN found who complained that they were more like Joe Schmuck than Warren Buffett and shouldn't have to pay a "Millionaire's Tax":

Only 24% of millionaires said higher taxes on higher incomes is the fairest way to go, according to recent survey from Spectrem Group, a research firm specializing in finances of affluent Americans. The biggest chunk of millionaires, 44%, think a flat rate tax across all income brackets is the fairest system.

...snip...

One millionaire CNNMoney reader said that for the past five years, his tax rate (including state income taxes) has ranged from 40% to 55% -- which he thinks is more than enough money to be forking over to Uncle Sam.

Uh, Earth to CNN Money reader - taxes going to the state are not going to Uncle Sam. You might also check with the folks making $30K or $40K per year and find out how much they are paying in taxes and fees at all levels.

DoG, but these WATBs do tend to irritate, don't they?

And because I can:

Jamie Dimon's Move Cost How Much?

Yesterday morning (Friday, April 8), I was doing my regular surfing of news sites, after once again not finding any jobs in my daily job search when I came across this story from Reuters on the pay that JP Morgan Chase CEO Jamie Dimon received for 2010. The thing that caught my eye most of all however was not the $20.8M in total compensation. Nor was it the $5M cash bonus on top of the $1M cash salary for the year. No, the items that caught my eye were at the bottom of the article on the "perks" Dimon received:

His 2010 compensation also included $579,624 worth of perks, including $421,458 of "moving expenses," $95,293 to use company aircraft and $45,730 for personal automobile use. Most of the rest went toward home security.

Like many Americans who have had trouble selling their homes, Dimon did too. The moving expenses relate to the sale in 2010 of Dimon's Chicago-area home, in which he had lived while heading Bank One Corp that was sold to JPMorgan in 2004.