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This Journal editorial on Citigroup considers the continuing risks posed by its "too-big-to fail" status after the departure of CEO Pandit in Oct. 2012. The new CEO, Corbat, has experience in commercial banking in contrast to Pandit, yet the challenges remain at Citigroup.

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Ross Sorkin says the information put out in Groupon's IPO filing by the investment banks and other information raises warning signs. Groupon has $225 million in the bank, lost $102 million in the 3rd quarter 2011 on revenue of $878 million. The company has current liabilities of $681 million and only $376 million in assets. It owes vendors $392 millon as part of the current liabilities. Groupon spent $432 million in the first 6 months of 2011 on marketing. Other information shows Eric Lefkovsky, Groupon's chairman, sold a dotcom company in 1999 which went into bankruptcy a year later. And of the $950 million in a pre-IPO round in January 2011, Groupon paid out $810 million to investors and employees. Of this Mr. Lefkovsky and his wife were given $319 million. Goldman Sachs is the lead underwriter behind Groupon's IPO offering. Because of the huge fees involved investment banks and accounting firms were willing to come up with inflated valuations and a questionable metric called Adjusted Consolidated Segment Operating Income, that showed operating income excluding major marketing and acquisition related costs....

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Roben Farzad of Bloomberg BW meets with Goldman Sach's Harvey M. Schwartz, co-head of the global securities division, to get Goldman's account of the global financial crisis of 2008-2009, the AIG rescue, and John Paulson.

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Questions raised about whether the bets made by trader Iksil of the CIO at JP Morgan Chase were made to hedge risk, or to simply engage in proprietary trading for the bank in the hope of making large speculative profits. Bets made earlier by Iksil made large profits, but were simply speculative trades that increased bank profits. In late 2011 Iksil made a $1 billion bet that some companies would default on their debt in a few months. When American Airlines filed for bankruptcy protection Iksil's trades made about $450 million for Chase. But the trade had little to do with hedging risk.

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Daniel Altman's proposal for a tax on wealth over $1 million. He makes the case for taxing wealth not incomes to reduce inequality as this is where the situation in terms of inequality has worsened for the U.S. in recent decades. To support this proposal Altman cites the change in the U.S. Ginni coefficient, which measures inequality. The Ginni coefficient is anumber from 0 to 100 which goes up with higher income inequality. From the late 70's to the 1990's, the Cnesus Bureau showed this to be in the low 40's. By 1992 the Ginni coefficient went up to the mid-70's, according to the Federal Reserve data. It increased to about 80 in 2010. In 1992 the top 10% in the U.S. population controlled 20 times the wealth of the bottom 50%. By 2010 this figure triples to 65 times. and the graduated income tax even if it redistributes a small share of the wealth does little to affect the trend of wealth extremes from building up and threatening the social fabric of America, reducing mobility and opportunities for the bottom 50% to unprecedented levels since the 1950's. ...

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A Tax Policy Center study (joint project of the Brookings Institution and the Urban Insitute) shows $157 billion would be generated in the first year from an increase in taxes on the top 1% of income earners in the U.S., about 1.13 million households earning average $2.1 million, by increasing the federal tax rate from current 33.4% for this group to 40%. This could pay for a program to provide tution free education in America's colleges and universities. Even increasing the federal tax to 40% on the 115,000 households earning over $9.4 million on average, the top 0.1% of American households, would generate $55 billion in the first year, enough to pay for the $47 billion cost of tution free education at all of America's public colleges and universities, according to the Tax Policy Center. Economists including Stiglitz and others, point to significant impact of revenue generated from such a tax when applied to improving educational opportunity for the middle class and lower income groups. Education is a great leveler of income disparities as seen in the U.S. after World War II. During recent decades the highest income groups weren major beneficiaries of tax and economic policy, at the very time the middle class and factory workers were hit hard by global competition which lowered wages and exported jobs. The interest rate policies of the Fed after boom bust cycles also favored large investors in equity markets over smaller income earners with savings account deposits, whose savings experienced little growth under interest rates close to zero. ...

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Transcripts of Federal Open Market Committee meetings of the Federal Reserve in 2006, show new chairman Bernanke, and New York Fed president Geithner's failure to see the housing slump. Fed Governor Susan Bies raised the housing issue at meetings of the Fed, and is ignored by Bernanke, who sees a soft landing for the housing market.

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Difficulties facing Britain which depends on continental Europe for exports and would be affected by whatever happens in Europe, and yet is reduced to being on the sidelines. This comes at a difficult time for the Cameron government, which is a coalition of Conservative party members who are euroskeptics, and the Liberal party members who are the most europhile of the the three major British parties. Sarkozy and Merkel have made clear that they would move ahead with a closer fiscal union within the eurozone, no matter what Britain's views are. This leaves David Cameron's government to what Labor leader, Ed Miliband, called "handwringing," as Britain can do little about the future direction of the EU. Cameron is able to please backbenchers in parliament from his party with talk about protecting British interests, but has no neotiating leverage, according to Steven Fielding, director of the Center for British Politics at the University of Nottingham. Britain may also have antagonized European leaders. Sarkozy said about Cameron and British government views: "You say you hate the euro and now you want to interfere with our meetings." This also happens as Britain faces rising unemployment, and deficits larger than anticipated after austerity measures taken by the Cameron government....

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After S&P downgraded 17% of its Triple A-rated structured finance securities in 2010, the company has faced intense scrutiny about how it rates securities. Mark Adelson joined S&P in May 2008. He is the chief credit officer of S&P, and the man most responsible for S&P's efforts to reestablish its credibility as a ratings firm. He worked for Moody's in the late 1990's, before joining the research team at Nomura Securities in 2001. Adelson made changes to the S&P ratings system for mortgage securities in 2009, which resulted in cutting the ratings of 68% of its commercial-mortgage securities. Adelson also helped set the new S&P criteria on sovereign debt rating issued on June 30, 2011.

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The Black teen jobless rate in 2011, the third year of the Obama administration- a shocking 46.5%!

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Sales of automobiles in China in July 2012 declined 12.6% from the prior month according to the China Association of Automobile Manufacturers. There are two parts of China's automobile sector, the foreign brands of GM, Toyota, VW, Ford and others, and the Chinese brands. There are 48 Chinese domestic carmakers for 30% of China's automobile market, with sales of 87,500 per brand on average, according to J.D. Powers. Many of these carmakers will not survive even with subsidies from local governments. China's car buyers prefer foreign brands because of the better quality and reliability. Foreign carmakers face an oversupply of cars as GM, Honda, Ford, VW have continued to add capacity. Total automobile manufacturing capacity is about 28.5 million cars and commercial vehicles. This is 9 million more than the expected sales in 2012, according to J.D. Powers. The most recent company adding large capacity is Ford Motor Company, which was relatively late in the Chinese market, and decided to boost capacity from 450,000 in 2011 to 1.2 million in 2015, to make it the largest manufacturing location outside of its home base of Michigan. This creates the prospect of foreign carmakers having to offer larger incentives and discounts to manage inventory and operating with higher levels of unused capacity, reducing profits in future years. Most of the plans to increase capacity were made when China's GDP growth was over 10%, it is now slowing to 7.5%....