Financial machinery gone wrong

[petrea_mitchell]

One of the things I love about Money Stuff is that it doesn't just provide an endless stream of bizarre financial news, it will stop and explain the underlying workings at a level that even finance naïfs like me can understand. Thursday's issue leads off with a great example, explaining how a clever idea to leverage accounting rules results in lots of natural gas wells not being capped despite laws saying they need to be capped.

Item #2 in that newsletter is much less technical and explains how the naked pursuit of more money is leading large investors to demand that Fox spin off its news division into a public-benefit corporation which would be required to focus on reporting true and accurate news.

Meanwhile, over at Politico today, there is a fascinating article which, being a book excerpt, buries its lede:

As money-launderers and illicit financiers hide their money in the American Midwest, they’ve become part of the story of the decline of small-town, blue-collar America.

Comments

[delosharriman]

[T]hat is a valuable service and you can make a nice profit from it. But it is not a value-creating service. It is a value-shifting service. You take the value from the creditors and split it up among the buyer and seller.

This is one of those topics where I feel people need to step back and make a distinction between real profits, in which something of value is added to the world, on the one hand, and paper profits on the other, which move value from one person to another. This distinction gets obscured very frequently and to a great degree, and especially since the 1980s move to get everyone involved in the financial markets (where the only kind of profit is the paper one) by changing from defined-benefit pension plans to market retirement accounts.

In the case of coal mining, Federal law requires operators to post a bond for the amount required to remediate the mine sites after they're worked out. The Bureau of Mines has, however, for decades allowed operators to "self-bond", in effect, just say they're good for the money. Then, when the mine is near being worked out, it's sold to another operator (often spun off from the former one), which then declares bankruptcy. Pretty much every single time. It's strange how that happens.

Also : oh my God Ukrainian organized crime. Some of the most useless people in the entire world.