Politics What is happening????

ASU2003 · Jun 28, 2013

Baraka_Guru said: ↑

Yesterday was the 64th anniversary of the publication of George Orwell's Nineteen Eighty-Four. I think Orwell would be positively appalled at the current surveillance state. He'd say something along the lines of, "I fucking warned you!"

“If liberty means anything at all, it means the right to tell people what they do not want to hear.”

“The further a society drifts from truth, the more it will hate those who speak it.”

“In a time of universal deceit, telling the truth is a revolutionary act.”

—George Orwell (1903-1950)
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And no one elected George Orwell. And if the Germans had covertly invaded England during WW2 and were blowing up stuff, he might have a different take as to try and figure out who the bad people were.

And I still think he should have written a sequel to Animal Farm where the pigs get slaughtered and the rest of the animals live in peace and happiness with their windmill. But instead of the pigs being the leaders of the revolution, they were the titans of industry.

Baraka_Guru · Jun 28, 2013

ASU2003 said: ↑

And no one elected George Orwell. And if the Germans had covertly invaded England during WW2 and were blowing up stuff, he might have a different take as to try and figure out who the bad people were.
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It's not so much about pointing out specific bad guys so much as raising awareness on how to do it.

And I still think he should have written a sequel to Animal Farm where the pigs get slaughtered and the rest of the animals live in peace and happiness with their windmill. But instead of the pigs being the leaders of the revolution, they were the titans of industry.
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It doesn't need to be Orwell. It could be you.

It doesn't have to be a sequel, even. It could be a retelling. But maybe add a twist. Call it Pet Shop or something.

CrazyBeing · Jun 29, 2013

Sometimes i think illuminati is real and is controlling us.

rogue49 · Jun 30, 2013

AwesomeLife said: ↑

Sometimes i think illuminati is real and is controlling us.
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I personally think the story of the Illuminati was created to describe the ambiguous cooperation and dynamic of the many and various people of influence.
Now, people come and go from this sphere...on their own merits or fate.
But there are varied..."hand-shake" or "head-nod" agreements or just desire to support.
It is not done by broad organization, any cooperation is variable and limited to others' notion of survival or investment.

They cooperate to leverage more, to gain more, to influence more...for their own advancement or notions of ideal or goals.

Fortunately, they cannot control the world in total...nor can they control it's citizens in full...nor fate. (and they do not live forever)
It is too big and too chaotic to encompass.
But they do try.

However, this is only some...there are others of power and influence that oppose corruption and push more for a different ideal.
The back & forth of this fluctuates.

Fortunately for us, you can't put the genie back in the bottle...for knowledge, skill and information sharing expands.
People do learn to think for themselves more and more...and they don't like being told what to do... nor having no control or no vote.
This is the true solution to corruption.

redux · Jun 30, 2013

Or maybe he is just watching/reading too much Alex Jones.

CrazyBeing · Jun 30, 2013

redux said: ↑

Or maybe he is just watching/reading too much Alex Jones.
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or Dan Brown

Baraka_Guru · Jun 30, 2013

Or Cicero, Foucault, and Althusser.

rogue49 · Jul 1, 2013

Baraka_Guru said: ↑

Or Cicero, Foucault, and Althusser.
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ooo...that reminds me of "Foucault's Pendulum" by Umberto Eco (also know for "In the Name of the Rose")
Now he knows his conspiracy and Illuminati...awesome books with those intertwined within.

Get ready to use all your knowledge and skills in your head keeping up with his references.
You'll put your education to test. (but in a good way )

rogue49 · Jul 10, 2013

Thank God they are finally starting to go after these SOBs
They have given up every right of citizens to the businesses.
The sooner, the better.

Even now I'm battling one that came out of nowhere, from a state I'm not in, from a bill I've never heard of nor have they identified.
And after some research, it's a company notorious for doing this to thousands...and getting sued for it, losing...and they're still doing it.
It's insane that a business can just come in and try to get your money.

Fortunately, I know my legal rights and how to fight them off...
But to even have it attempted and to take the time and effort to ward them off is ridiculous.

If anyone ever gets one of these, immediately request proof/certification of source of debt, before you even discuss it with them.
And then report it to as many Consumer Protection Agencies possible...and let them know you're going to (they'll disappear)
**That is, if you know the debt is not yours, or it's already settled or written off.

U.S. Vows to Battle Abusive Debt Collectors
By JESSICA SILVER-GREENBERG and EDWARD WYATT - July 10, 2013

Federal regulators are cracking down on questionable debt collection practices by some of the nation’s biggest lenders.

The push comes after revelations that some of the same practices that have haunted the foreclosures of homes — like robo-signing and faulty documentation — have cropped up in efforts to recoup delinquent credit card debt.

The debt collection practices of banks and lenders have long existed in a kind of regulatory gulf. The primary federal law that governs how companies pursue consumers behind on their bills does not apply to firms that are trying to recoup money that they lent directly to a consumer.

As a result, the lenders — from national banks like Capital One to big department stores like Macy’s — can hound consumers behind on their bills with repeated calls, even though the practice is restricted by the Fair Debt Collection Practices Act.

But on Wednesday, the Consumer Financial Protection Bureau plans to assert at a hearing that it has the authority to regulate banks’ debt collection practices under the Dodd-Frank financial overhaul law. The act bars the firms from employing “unfair, deceptive or abusive acts.“

“It doesn’t matter who is collecting the debt — unfair, deceptive or abusive practices are illegal,” Richard Cordray, the agency’s director, said in a statement early Wednesday.

Another agency, the Federal Trade Commission, on Tuesday won a $3.2 million penalty against Expert Global Solutions, the world’s largest debt collection operation, over accusations that the firm harassed consumers.

Adding to the scrutiny, the Office of the Comptroller of the Currency, a chief bank regulator, is investigating how banks like JPMorgan Chase collect credit card debt, according to several people close to the matter.

The regulator spotted errors in roughly 9 percent of monetary judgments — the dollar amount the bank sought from consumers — won through collection lawsuits filed from 2009 to 2011, these people close to the matter said. JPMorgan declined to comment, but the bank has been cooperating with regulators to fix problems in its collection lawsuits, according to people briefed on the situation. And in roughly 90 percent of the flawed judgments, the consumers did not pay the full amount, the people said.

JPMorgan also stopped filing new credit card lawsuits in 2011, these people said, because of concerns that some of the underlying documentation was flawed. In courts across the nation, according to judges, JPMorgan has also been dropping pending lawsuits.

As they work through a glut of soured debts, from credit card balances to overdue auto loans, some of the big lenders are going to court to get what they are owed, according to interviews with judges, lawyers for consumers and federal regulators.

While fewer customers are falling behind on their bills as the nation moves farther away from the financial crisis, lenders are still working to reduce the amount of bad loans on their books.

In most instances, consumer advocates say, customers acknowledge that they owe some money. The problems arise, though, when the credit card companies and third-party debt collectors run roughshod over legal procedures that govern how the firms can collect money, according to consumer lawyers.

“It’s a huge problem where creditors and debt buyers are mass producing fraudulent documents,” said Susan Shin, a lawyer at the New Economy Project, which works with community groups in New York.

Some lawsuits, the judges and lawyers say, hinge on erroneous documents, quickly thrown together to make up for critical paperwork that is missing, like payment histories or the original contracts.

For some consumers, the problems begin long before they set foot in a courtroom. Rogerio Normanilson, 56, said that the calls he received from collectors for Macy’s — sometimes four times a day — caused him crippling stress and aggravated his health issues, including H.I.V. Mr. Normanilson, who fell behind on his payments in January and is currently living in a New York City shelter, said that the calls continued even after he begged for them to cease.

Macy’s would not comment on the individual case, citing its confidentiality policy. Jim Sluzewski, a spokesman for Macy’s, said the company abided “by regulations governing credit and collection activities.”

Since such collection efforts fall into the regulatory void, consumer lawyers say, consumers have little recourse. “These creditors are essentially given free rein,” said Carolyn E. Coffey, a lawyer at MFY Legal Services.

Lenders have been buffeted by these kind of problems before, particularly over the way they pursued struggling homeowners. Last year, five of the nation’s largest banks reached a $26 billion deal with 49 state attorneys general over claims the lenders wrongfully seized homes.

Now regulatory scrutiny is shifting from mortgages to credit cards. The problems in credit card lawsuits often proliferate in the shadows, because unlike in foreclosure cases, borrowers sued over credit card debt rarely show up to defend themselves. As a result, more than 95 percent of lawsuits result in a default judgment, an automatic win for the lender.

The default judgments can be devastating, entitling the lenders to garnish a consumer’s wages or freeze bank accounts. In New York, for example, the judgments are good for 20 years and accrue annual interest of 9 percent.

Sometimes borrowers do not even realize that they have been sued until a lender wins a default judgment, consumer lawyers say. The situation often arises when lenders claim to serve borrowers with notice of a lawsuit, as they are required to do under the law, but do not actually do so.

Dianne Carr, 68, who lives in New York, said she had no idea that Capital One was suing her over stale credit card debt until last year, when she went to a credit counselor and learned of the black mark. By then, it was too late to fight back, she said.

“It feels so bad,” said Ms. Carr.

Capital One declined to comment on the case.

In the Federal Trade Commission’s fine against companies owned by Expert Global Solutions, based in Plano, Tex., the agency secured a $3.2 million civil penalty against the firm for using unfair and deceptive practices and illegal debt-collection techniques.

The F.T.C. said that it was the largest civil penalty ever obtained by the agency against a third-party debt collector.

The companies were accused of violating the F.T.C. Act and the Fair Debt Collection Practices Act by calling consumers several times a day, even after being asked to stop; calling early in the day or late at night; calling consumers’ workplaces; and leaving phone messages that disclosed the debtor’s name and existence of the debt to third parties. In a proposed consent decree filed in United States District Court for the northern district of Texas, the companies agreed, in addition to paying the fine, to investigate claims that the debt information was wrong, to not communicate with third parties about a consumer’s debt and to not otherwise harass consumers while trying to collect debts.

Expert Global Solutions and its subsidiaries, with 32,000 employees, recorded more than $1.2 billion in revenue in 2011, the F.T.C. said. The firm declined to comment on the case. But the agency fine was a tiny fraction of that amount — one-quarter of 1 percent of annual revenue.

Like its federal peers, the Federal Trade Commission has been increasing its oversight of debt collection agencies since the financial crisis and recession, said Christopher Koegel, an assistant director for financial practices in the agency’s bureau of consumer protection. The bureau has filed three debt collection cases so far in 2013, after bringing six in 2012, five in 2011 and one in 2010. During that time, the F.T.C. has assessed $56 million in judgments, and the largest civil penalty collected by the agency has grown to $3.2 million in the case on Tuesday, from $2.5 million.

Copyright 2013 The New York Times Company
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redux · Jul 15, 2013

Things are heating up in the Senate tonight with Harry Reid calling for a "live" quorum call to deliberate on filibuster reform. Senators who dont show up could be arrested and dragged into the chamber.

Senate Majority Leader Harry Reid plans to use some procedural trickery Monday night—and it could get some senators arrested.

In an effort to get all senators to the Senate chamber at 5:30 p.m., the Nevada Democrat is going to employ a rarely used procedure called a "live" quorum. Reid wants all the senators back to the Capitol to discuss potential rule changes to the filibuster.

more: Why Senators Can Be Arrested for Not Going to Work - NationalJournal.com
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They will meet in the old senate chamber with no gallery and no C-SPAN so we cant watch the fireworks.

ASU2003 · Jul 16, 2013

We will see what happens today I guess. It should be interesting.

rogue49 · Jul 16, 2013

No nuke. They averted it.
Like The Cuban Missile Crisis.

Except, I really don't think the GOP leadership has true control of their players to guarantee anything...unlike Khrushchev who had power in the USSR to make a promise happen.

We'll see.
Man, they should just get rid of the damn thing...or no more threats...make them ACTUALLY talk forever, really filibuster.

rogue49 · Jul 19, 2013

Ok, back to keeping a fair playing field.
I guess there's no integrity anymore on the international-scale business front. If you can get away with it, you do it.

Well, the nations are starting to get hip and strike back.
They're starting to realize what these open policies are starting to cost them...and their citizens.

The question is this...are the politicians who have to ratify these policy going to play ball...because they have lobbyists in their ears, if not filling their bank-accounts.

The law should be equal, period.

G-20 Backs Plan to Curb Tax Evasion by Large Corporations

By ANDREW E. KRAMER July 19, 2013

MOSCOW — Government officials from the world’s largest and richest economies have endorsed a blueprint to curb widely used tax avoidance strategies that allow some multinational corporations to pay only a pittance in income taxes.

In one widely cited example, Starbucks has managed to post a profit of nothing in Britain even after selling untold millions of beverages and baked goods. Apple drew scrutiny for leaving billions of dollars in profits overseas and instead passing along the fruits of its commercial success to shareholders by taking out loans.

In light of such practices – which are entirely legal, but take advantage of differing tax rules around the world – the Organization for Economic Cooperation and Development is proposing that all nations adopt a list of 15 new tax principles for corporations. The plan focuses only on corporations and would, if adopted widely, shift some of the global tax burden toward large companies and away from small businesses and individuals.

The list, presented Friday at a meeting of finance ministers of the Group of 20 countries in Moscow, includes ideas to prevent corporations from so-called “treaty shopping” for the best pair of countries to do business in – presumably, one with good infrastructure, education and defense, the other with low taxes.

The group recommended strict rules for defining where a company has a permanent presence. It also proposed three measures to limit the practice of transfer pricing: the shunting of profits and losses between subsidiaries disguised as internal corporate payments for goods or, increasingly common, copyright or patent royalties.

If accepted, the countries in the Group of 20 would commit to the reform at a gathering of heads of state in St. Petersburg, Russia, in September.

“It’s a matter of justice and fairness,” Angel Gurría, the secretary general of the O.E.C.D., said at the presentation of the new plan with the finance ministers of France, Britain, Germany and Russia.

Pierre Moscovici, the minister of economy and finance of France, said some multinational corporations manage to pay an income tax of 3 percent or so. “This is unbelievable to our fellow citizens, who pay their fair share,” he said.

Shifting profits to low-tax countries and costs to high-tax countries is less an option for small businesses and individuals, who inevitably wind up carrying more of the tax burden as a result.

In the United States, for example, corporate profit taxes contributed 40 percent of all income tax to the United States Treasury 50 years ago. Today, corporations contribute less than 20 percent, with the slack taken up by small companies and those paying individual income tax.

The instance with Starbucks in Britain is telling. It legally reported profits close to nothing after paying high prices for coffee and for brand royalties to other subsidiaries of the coffee giant that were domiciled outside the jurisdiction of British tax authorities.

In contrast, the owners of a small coffee shop would probably not be able to pay royalty fees to an overseas company owning the rights to the name of their cafe, thus increasing their costs and lowering their tax liability. That multinationals can quite easily do so, however, creates an uneven playing field for small restaurant owners, critics contend – even if they provide better coffee at a better price.

The reform is intended to address such inequities, the minsters said.

Starbucks violated no laws in Britain. All the same, the company volunteered to pay about $16 million in additional taxes to the British government in future years, saying it understood its British customers were upset by the outcome of the tax rules the company was following.

Though the United States did not have a representative at the presentation, the Obama administration has endorsed the international reform and signed an initial commitment earlier this year.
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rogue49 · Jul 23, 2013

Yet another SEC investigation and another half-BILLION settlement.

At least they are finally starting to go after them for their puppeteering.
They need to get rid of the Oil & Ethanol subsidies...they're screwing us.

We bail them out.
They get record profits.
We pay them subsidies...from our taxes & debt.
They play games to raise rates, so we pay more for staples.

Oi Vey, unfortunately most of the public is unaware of these situations.
Or there would be consequences.

A Shuffle of Aluminum, but to Banks, Pure Gold
By DAVID KOCIENIEWSKI - July 20, 2013

MOUNT CLEMENS, Mich. — Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where Goldman stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back–and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”

Only a tenth of a cent or so of an aluminum can’s purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year — and add the tons of aluminum used in things like cars, electronics and house siding — and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.

The inflated aluminum pricing is just one way that Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets, according to financial records, regulatory documents and interviews with people involved in the activities.

The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices, and last week JPMorgan was trying to reach a settlement that could cost it $500 million.

Using special exemptions granted by the Federal Reserve Bank and relaxed regulations approved by Congress, the banks have bought huge swaths of infrastructure used to store commodities and deliver them to consumers — from pipelines and refineries in Oklahoma, Louisiana and Texas; to fleets of more than 100 double-hulled oil tankers at sea around the globe; to companies that control operations at major ports like Oakland, Calif., and Seattle.

In the case of aluminum, Goldman bought Metro International Trade Services, one of the country’s biggest traders of the metal. More than a quarter of the supply of aluminum available on the market is kept in the company’s Detroit-area warehouses.

Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.

Longer waits might be written off as an aggravation, but they also make aluminum more expensive nearly everywhere in the country because of the arcane formula used to determine the cost of the metal on the spot market. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.

Goldman Sachs says it complies with all industry standards, which are set by the London Metal Exchange, and there is no suggestion that these activities violate any laws or regulations. Metro International, which declined to comment for this article, in the past has attributed the delays to logistical problems, including a shortage of trucks and forklift drivers, and the administrative complications of tracking so much metal. But interviews with several current and former Metro employees, as well as someone with direct knowledge of the company’s business plan, suggest the longer waiting times are part of the company’s strategy and help Goldman increase its profits from the warehouses.

Metro International holds nearly 1.5 million tons of aluminum in its Detroit facilities, but industry rules require that all that metal cannot simply sit in a warehouse forever. At least 3,000 tons of that metal must be moved out each day. But nearly all of the metal that Metro moves is not delivered to customers, according to the interviews. Instead, it is shuttled from one warehouse to another.

Because Metro International charges rent each day for the stored metal, the long queues caused by shifting aluminum among its facilities means larger profits for Goldman. And because storage cost is a major component of the “premium” added to the price of all aluminum sold on the spot market, the delays mean higher prices for nearly everyone, even though most of the metal never passes through one of Goldman’s warehouses.

Aluminum industry analysts say that the lengthy delays at Metro International since Goldman took over are a major reason the premium on all aluminum sold in the spot market has doubled since 2010. The result is an additional cost of about $2 for the 35 pounds of aluminum used to manufacture 1,000 beverage cans, investment analysts say, and about $12 for the 200 pounds of aluminum in the average American-made car.

“It’s a totally artificial cost,” said one of them, Jorge Vazquez, managing director at Harbor Aluminum Intelligence, a commodities consulting firm. “It’s a drag on the economy. Everyone pays for it.”

Metro officials have said they are simply reacting to market forces, and on the company Web site describe their role as “bringing together metal producers, traders and end users,” and helping the exchange “create and maintain stability.”

But the London Metal Exchange, which oversees 719 warehouses around the globe, has not always been an impartial arbiter — it receives 1 percent of the rent collected by its warehouses worldwide. Until last year, it was owned by members, including Goldman, Barclays and Citigroup. Many of its regulations were drawn up by the exchange’s warehouse committee, which is made up of executives of various banks, trading companies and storage companies — including the president of Goldman’s Metro International — as well as representatives of powerful trading firms in Europe. The exchange was sold last year to a group of Hong Kong investors and this month it proposed regulations that would take effect in April 2014 intended to reduce the bottlenecks at Metro.

All of this could come to an end if the Federal Reserve Board declines to extend the exemptions that allowed Goldman and Morgan Stanley to make major investments in nonfinancial businesses — although there are indications in Washington that the Fed will let the arrangement stand. Wall Street banks, meanwhile, are focusing their attention on another commodity. After a sustained lobbying effort, the Securities and Exchange Commission late last year approved a plan that will allow JPMorgan Chase, Goldman and the Blackstone Group to buy up to 80 percent of the copper available on the market.

By early next year, according to documents filed with the S.E.C., Goldman plans to be storing copper in the same Detroit-area warehouses where it now stockpiles aluminum.

Banks as Traders

For much of the last century, Congress tried to keep a wall between banking and commerce. Banks were forbidden from owning nonfinancial businesses (and vice versa) to minimize the risks they take and, ultimately, to protect depositors. Congress strengthened those regulations in the 1950s, but by the 1980s, a wave of deregulation began to build and banks have in some cases been transformed into merchants, according to Saule T. Omarova, a law professor at the University of North Carolina and expert in regulation of financial institutions. Goldman and other firms won regulatory approval to buy companies that traded in oil and other commodities. Other restrictions were weakened or eliminated during the 1990s, when some banks were allowed to expand into storing and transporting commodities.

Over the past decade, a handful of bank holding companies have sought and received approval from the Federal Reserve to buy physical commodity trading assets.

According to public documents in an application filed by JPMorgan Chase, the Fed said such arrangements would be approved only if they posed no risk to the banking system and could “reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices.”

By controlling warehouses, pipelines and ports, banks gain valuable market intelligence, investment analysts say. That, in turn, can give them an edge when trading commodities. In the stock market, such an arrangement might be seen as a conflict of interest — or even insider trading. But in the commodities market, it is perfectly legal.

“Information is worth money in the trading world and in commodities, the only way you get it is by being in the physical market,” said Jason Schenker, president and chief economist at Prestige Economics in Austin, Tex. “So financial institutions that engage in commodities trading have a huge advantage because their ownership of physical assets give them insight in physical flows of commodities.”

Some investors and analysts say that the banks have helped consumers by spurring investment and making markets more efficient. But even banks have, at times, acknowledged that Wall Street’s activities in the commodities market during the last decade have contributed to some price increases.

In 2011, for instance, an internal Goldman memo suggested that speculation by investors accounted for about a third of the price of a barrel of oil. A commissioner at the Commodity Futures Trading Commission, the federal regulator, subsequently used that estimate to calculate that speculation added about $10 per fill-up for the average American driver. Other experts have put the total, combined cost at $200 billion a year.

High Premiums

The entrance to one of Metro International’s main aluminum warehouses here in suburban Detroit is unmarked except for one toppling sign that displays two words: Mount Clemens, the town’s name.

Most days, there are just a handful of cars in the parking lot during the day shift, and by 5 p.m., both the parking lot and guard station often appear empty, neighbors say. Yet inside the two cavernous blue warehouses are rows and rows of huge metal bars, weighing more than half a ton each, stacked 15 feet high.

After Goldman bought the company in 2010, Metro International began to attract a stockpile. It actually began paying a hefty incentive to traders who stored their aluminum in the warehouses. As the hoard of aluminum grew — from 50,000 tons in 2008 to 850,000 in 2010 to nearly 1.5 million currently — so did the wait times to retrieve metal and the premium added to the base price. By the summer of 2011, the price spikes prompted Coca-Cola to complain to the industry overseer, the London Metal Exchange, that Metro’s delays were to blame.

Martin Abbott, the head of the exchange, said at the time that he did not believe that the warehouse delays were causing the problem. But the group tried to quiet the furor by imposing new regulations that doubled the amount of metal that the warehouses are required to ship each day — from 1,500 tons to 3,000 tons. But few metal traders or manufacturers believed that the move would settle the issue.

“The move is too little and too late to have a material effect in the near-term on an already very tight physical market, particularly in the U.S.,” Morgan Stanley analysts said in a note to investors that summer.

Still, the wait times at Metro have grown, causing the premium to rise further. Current and former employees at Metro say those delays are by design.

Industry analysts and company insiders say that the vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them, a process known as rewarranting.

To encourage aluminum speculators to renew their leases, Metro offers some clients incentives of up to $230 a ton, and usually moves their metal from one warehouse to another, according to industry analysts and current and former company employees.

To metal owners, the incentives mean cash upfront and the chance to make more profit if the premiums increase. To Metro, it keeps the delays long, allowing the company to continue charging a daily rent of 48 cents a ton. Goldman bought the company for $550 million in 2010 and at current rates could collect about a quarter-billion dollars a year in rent.

Metro officials declined to discuss specifics about its lease renewals or incentive policies.

But metal analysts, like Mr. Vazquez at Harbor Aluminum Intelligence, estimate that 90 percent or more of the metal moved at Metro each day goes to another warehouse to play the same game. That figure was confirmed by current and former employees familiar with Metro’s books, who spoke on condition of anonymity because of company policy.

Goldman Sachs declined to discuss details of its operations. Michael DuVally, a spokesman for Goldman, pointed out that the exchange prohibits warehouse companies from owning metal, so all of the aluminum being loaded and unloaded by Metro was being stored and shipped by other owners.

He said, “The warehouse companies, which store both L.M.E. and non-L.M.E. metals, do not own metal in their facilities, but merely store it on behalf of the ultimate owners. In fact, L.M.E. warehouses are actually prohibited from trading all L.M.E. products.”

As the delays have grown, many manufacturers have turned elsewhere to buy their aluminum, often buying it directly from mining or refining companies and bypassing the warehouses completely. Even then, though, the warehouse delays add to manufacturers’ costs, because they increase the premium that is added to the price of all aluminum sold on the open market.

The Warehouse Dance ...cont.
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Full Article...remaining material

ASU2003 · Jul 24, 2013

They should make it a federal $0.10 cent deposit on aluminum cans like MI has. The increased amount of recycling would put a dent in the price of Al.

But yes, raw material costs are a big reason inflation happens and prices go up. I think someone should be in jail for stealing money from the average person for coming up with this scheme.

rogue49 · Jul 24, 2013

Followup article...Now they are questioning the Fed...for allowing this.

Link - Fed Criticized on Oversight of Bank-Owned Commodity Units

Perhaps...if regulators can keep track of the web complexities of banking & commodities interactions,
they should set up a Big Data repository to connect the dots,
just like the NSA does for the public vs. terrorists...on their phone calls.

Develop a software program that shows potential conflicts.

Because I think the volume of financial misconduct is happening more often these days,
and the impact can be just as significant...just a bit more subtle.

It's like radiation...just because you can't see it...doesn't mean it can't hurt you.

rogue49 · Aug 4, 2013

I'm all for capitalism and making a buck.
But some leverage it for all it's worth, even to the point of taking advantage or harm.

I'm not really for limits...but I wonder about the integrity and honor of others.

I know companies are out to make their owners as much as possible,
but shouldn't there be an effort to create and give back also?

I guess that's just me, I want to improve the world AND get rich making it better.

In Need of a New Hip, but Priced Out of the U.S.
By ELISABETH ROSENTHAL | Published: August 3, 2013

WARSAW, Ind. — Michael Shopenn’s artificial hip was made by a company based in this remote town, a global center of joint manufacturing. But he had to fly to Europe to have it installed.

Mr. Shopenn, 67, an architectural photographer and avid snowboarder, had been in such pain from arthritis that he could not stand long enough to make coffee, let alone work. He had health insurance, but it would not cover a joint replacement because his degenerative disease was related to an old sports injury, thus considered a pre-existing condition.

Desperate to find an affordable solution, he reached out to a sailing buddy with friends at a medical device manufacturer, which arranged to provide his local hospital with an implant at what was described as the “list price” of $13,000, with no markup. But when the hospital’s finance office estimated that the hospital charges would run another $65,000, not including the surgeon’s fee, he knew he had to think outside the box, and outside the country.

“That was a third of my savings at the time,” Mr. Shopenn said recently from the living room of his condo in Boulder, Colo. “It wasn’t happening.”

“Very leery” of going to a developing country like India or Thailand, which both draw so-called medical tourists, he ultimately chose to have his hip replaced in 2007 at a private hospital outside Brussels for $13,660. That price included not only a hip joint, made by Warsaw-based Zimmer Holdings, but also all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket from America.

“We have the most expensive health care in the world, but it doesn’t necessarily mean it’s the best,” Mr. Shopenn said. “I’m kind of the poster child for that.”

As the United States struggles to rein in its growing $2.7 trillion health care bill, the cost of medical devices like joint implants, pacemakers and artificial urinary valves offers a cautionary tale. Like many medical products or procedures, they cost far more in the United States than in many other developed countries.

Makers of artificial implants — the biggest single cost of most joint replacement surgeries — have proved particularly adept at commanding inflated prices, according to health economists. Multiple intermediaries then mark up the charges. While Mr. Shopenn was offered an implant in the United States for $13,000, many privately insured patients are billed two to nearly three times that amount.

An artificial hip, however, costs only about $350 to manufacture in the United States, according to Dr. Blair Rhode, an orthopedist and entrepreneur whose company is developing generic implants. In Asia, it costs about $150, though some quality control issues could arise there, he said.

So why are implant list prices so high, and rising by more than 5 percent a year? In the United States, nearly all hip and knee implants — sterilized pieces of tooled metal, plastic or ceramics — are made by five companies, which some economists describe as a cartel. Manufacturers tweak old models and patent the changes as new products, with ever-bigger price tags.

Generic or foreign-made joint implants have been kept out of the United States by trade policy, patents and an expensive Food and Drug Administration approval process that deters start-ups from entering the market. The “companies defend this turf ferociously,” said Dr. Peter M. Cram, a physician at the University of Iowa medical school who studies the costs of health care.

Though the five companies make similar models, each cultivates intense brand loyalty through financial ties to surgeons and the use of a different tool kit and operating system for the installation of its products; orthopedists typically stay with the system they learned on. The thousands of hospitals and clinics that purchase implants try to bargain for deep discounts from manufacturers, but they have limited leverage since each buys a relatively small quantity from any one company.

In addition, device makers typically require doctors’ groups and hospitals to sign nondisclosure agreements about prices, which means institutions do not know what their competitors are paying. This secrecy erodes bargaining power and has allowed a small industry of profit-taking middlemen to flourish: joint implant purchasing consultants, implant billing companies, joint brokers. There are as many as 13 layers of vendors between the physician and the patient for a hip replacement, according to Kate Willhite, a former executive director of the Manitowoc Surgery Center in Wisconsin.

Hospitals and orthopedic clinics typically pay $4,500 to $7,500 for an artificial hip, according to MD Buyline and Orthopedic Network News, which track device pricing. But those numbers balloon with the cost of installation equipment and all the intermediaries’ fees, including an often hefty hospital markup.

That is why the hip implant for Joe Catugno, a patient at the Hospital for Joint Diseases in New York, accounted for nearly $37,000 of his approximately $100,000 hospital bill; Cigna, his insurer, paid close to $70,000 of the charges. At Mills-Peninsula Health Services in San Mateo, Calif., Susan Foley’s artificial knee, which costs about the same as a hip joint, was billed at $26,000 in a total hospital tally of $112,317. The components of Sonja Nelson’s hip at Sacred Heart Hospital in Pensacola, Fla., accounted for $30,581 of her $50,935 hospital bill. Insurers negotiate discounts on those charges, and patients have limited responsibility for the differences.

The basic design of artificial joints has not changed for decades. But increased volume — about one million knee and hip replacements are performed in the United States annually — and competition have not lowered prices, as would typically happen with products like clothes or cars. “There are a bunch of implants that are reasonably similar,” said James C. Robinson, a health economist at the University of California, Berkeley. “That should be great for the consumer, but it isn’t.”

Comparing Two Operations - ‘Sticky Pricing’

The American health care market is plagued by such “sticky pricing,” in which prices of products remain high or even increase over time instead of dropping. The list price of a total hip implant increased nearly 300 percent from 1998 to 2011, according to Orthopedic Network News, a newsletter about the industry. That is a result, economists say, of how American medicine generally sets charges: without government regulation or genuine marketplace competition.

“Manufacturers will tell you it’s R&D and liability that makes implants so expensive and that they have the only one like it,” said Dr. Rory Wright, an orthopedist at the Orthopedic Hospital of Wisconsin, a top specialty clinic. “They price this way because they can.”

Zimmer Holdings declined to comment on pricing. But Sheryl Conley, a longtime Zimmer manager who is now the chief executive of OrthoWorx, a local trade group in Warsaw, said that high prices reflected the increasing complexity of the joint implant business, including more advanced materials, new regulatory requirements and the logistics of providing a now huge array of devices. “When I started, there weren’t even left and right knee components,” she said. “It was one size fits all.”

Mr. Shopenn’s Zimmer hip has transformed his life, as did the replacement joint for Mr. Catugno, a TV director; Ms. Foley, a lawyer; and Ms. Nelson, a software development executive. Mr. Shopenn, an exuberant man who maintains a busy work schedule, recently hosted his son’s wedding and spent 26 days last winter teaching snowboarding to disabled people.

His joint implant and surgery in Belgium were priced according to a different logic. Like many other countries, Belgium oversees major medical purchases, approving dozens of different types of implants from a selection of manufacturers, and determining the allowed wholesale price for each of them, for example. That price, which is published, currently averages about $3,000, depending on the model, and can be marked up by about $180 per implant. (The Belgian hospital paid about $4,000 for Mr. Shopenn’s high-end Zimmer implant at a time when American hospitals were paying an average of over $8,000 for the same model.)

“The manufacturers do not have the right to sell an implant at a higher rate,” said Philip Boussauw, director of human resources and administration at St. Rembert’s, the hospital where Mr. Shopenn had his surgery. Nonetheless, he said, there was “a lot of competition” among American joint manufacturers to work with Belgian hospitals. “I’m sure they are making money,” he added.

Dr. Cram, the Iowa health cost expert, points out that joint manufacturers are businesses, operating within the constraints of varying laws and markets.

“Imagine you’re the C.E.O. of Zimmer,” he said. “Why charge $1,000 for the implant in the U.S. when you can charge $14,000? How would you answer to your shareholders?” Expecting device makers “to do otherwise is like asking, ‘Couldn’t Apple just charge $50 for an iPhone?’ because that’s what it costs to make them.”

But do Americans want medical devices priced like smartphones? “That,” Dr. Cram said, “is a different question.”
Click to expand...

Misguided · Aug 4, 2013

But how much is enough? I can see making money and being well off, but do I need to make 400 millions, a couple of billions? I think the regular people who just want the simple things in life are getting hosed.

rogue49 said: ↑

I'm all for capitalism and making a buck.
But some leverage it for all it's worth, even to the point of taking advantage or harm.

I'm not really for limits...but I wonder about the integrity and honor of others.

I know companies are out to make their owners as much as possible,
but shouldn't there be an effort to create and give back also?

I guess that's just me, I want to improve the world AND get rich making it better.
Click to expand...

Baraka_Guru · Aug 4, 2013

To many, there is no such thing as enough. It can harm more than others. It's also harmful to oneself.

ASU2003 · Aug 4, 2013

There is just so much of this 'regulated' capitalism going on where there are de facto monopolies. Even if there was a competitor in the US offering $16,000 hip replacements, they would be so overwhelmed that they would have to turn away most of the patients.

But, that seems to be the only sustainable business model here in the US. Cooperate with your competitors to increase the price, while using the law and regulations to keep other start-ups out or keep people from doing it themselves.

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