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American bankers who brought on the 2008 global financial collapse,
by and large, didn’t get indicted, or face any significant consequences
for their actions. In fact, many of them even got huge bonuses.
That wouldn’t have been the case in Vietnam, another nation struggling with corrupt and unscrupulous bankers.
During a recent cleanup of Vietnam’s financial sector, the strictly
authoritarian nation sentenced three bankers to death by firing squad in
the past six months alone.
A pair currently on death row had embezzled roughly $25 million from
the state-owned Vietnam Agribank. Back in March, a 57-year-old former
regional boss from Vietnam Development Bank, found himself sentenced to
death by firing squad over a $93-million swindling job.
According to Vietnam’s Tuoi Tre news outlet, many of the
co-conspirators got life in prison, with the “Madoffs” of Vietnam being
the high-profile characters who were sentenced to death. The point, many
in Vietnam say, is to send a message.
Adam McCarty, chief economist with the Hanoi-based consulting firm
Mekong Economics, says that “It’s a message to those in this game to be
less greedy and that business as usual is getting out of hand.”
“The message to people in the system is this: Your chances of getting
caught are increasing,” McCarty continued. “Don’t just rely on big
people above you. Because some of these [perpetrators] would’ve had big
people above them. And it didn’t help them.”
“They don’t care about foreigners. It’s all internal politics,”
McCarty said. He explains that foreign banking learders wouldn’t be
dissuaded by a few executions anyway. “If you really want to want to
resolve the problem, you can’t just arrest people,” he said. “You’ve got
to improve accountability and transparency in the entire system.”
A local, Vietnames op-ed recently ran, confronting this issue, saying
that, “it is better to prevent corruption,” the paper opined, “than
deal with it after the fact.”
(Article by M.B. David)
A number of people have been inquiring about coins as an investment
for parking money. Keep in mind that the best market for coins or stamps
tend to be the country of origin. Thus, US coins will bring the highest
prices in the USA just as German will bring the best price in Germany.
There are some markets that are international. That is Art where in
the late 1980s, the Japanese began buying famous art at huge prices.
Ryoei Saito had purchased Vincent van Gogh’s: “Portrait of Doctor Gachet”, (1890) paying $82.5 million back in 1990
(Inflation adjusted price: $146,8 million). Note: Saito lost a fortune
in the Japanese Depression and the whereabouts of the painting are now
unknown).
Ancient Coins are in that same category where the market is truly
international. The biggest buyers these days are in China and Russia.
Many famous people collected Ancient Coins from President Teddy
Roosevelt but there was also the American coin collection of US
president John Quincy Adams, Many American billionaires also formed
famous Ancient Coin collections, notably J.P. Morgan, Calouste
Gulbenkian, William Randolph Hearst, J. Paul Getty, and Nelson Bunker
Hunt (whose collection was auctioned off by Sothebys shown above). King Farouk I of Egypt assembled a massive coin collection.
Perhaps the earliest known major collector was the Roman Emperor
Augustus. Nearly all of the great European national collections were
first formed privately by kings and nobility who were often avid
collectors. Lorenzo de’ Medici, the patron of the Renaissance, was one
of the most notable ancient coin collectors of his time. Even the
Catholic popes formed outstanding private collections which are now the
core of the current Vatican collections. And many important scientists
and scholars, such as Sigmund Freud and Desmond Morris, have also formed
fine collections. In our own time many famous personalities such as
Buddy Ebsen, Elton John and Tina Turner, to mention just a few, have
also been avid collectors. There were other collectors of stamps right
down to Calvin Klein.
The Ancient Coin market is international and way under priced
compared to US coins, but far broader in the scope of collectors coming
from truly around the world. There will be such a gathering at a show in
New York City come January. The US coin market holds the record for prices paid with a 1794 US Silver Dollar fetching more than $10 million (seek Stacks Bower Sale)..
The most expensive painting was the 2011 sale for $250 million of PAUL CÉZANNE“The Card Players”, 1892/93 (Inflation adjusted price: $258,4 million). Seller: George Embiricos. Buyer: Royal Family of Qatar.
The same trend is impacting art and collectibles.
Rare coins are
becoming rarer as those who have them just hold and the supply continues
to shrink. Every field is pretty much the same story. Nobody wants to
sell for then what do you do with the cash?
Many emails have come in asking if we can assist in obtaining
high-end ancient coins since they are an international item and movable
without tariffs. I realize this may be in many respects safer than just
metals and diamonds for transport. But I am not sure there is enough of a
supply even available of coins $10,000+. Most seem to go to auction
where they know they can get big bucks. Here is a Naxos tetradrachm,
probably the finest known that would probably bring $1 million+ today.
If there are any hoards that appear, I typically get a phone call.
We
will keep everyone in mind since so many are looking to get “off the grid” these days and ancient coins are not likely to be confiscated as was the case with gold..
WASHINGTON
(MarketWatch) ) — Former Federal Reserve Chairman Ben Bernanke believes
history has already vindicated the novel efforts of the U.S. central
bank to revive the economy after the financial crisis of 2008.
The
Fed and the Bank of England offered financial aid to beleaguered banks
and deployed tools such as quantitative easing — creating new money — on
a massive scale to help heal badly damaged economies.
The result
has been that the U.S. and Britain have grown much faster than the
European Union, whose response has been less aggressive.
‘By stabilizing the financial system, we avoided much,
much worse persistently bad consequences for our economies.’
“By stabilizing the
financial system, we avoided much, much worse, persistently bad
consequences for our economies,” Bernanke said in an interview
with Mervyn King on BBC. King was head of the Bank of England during
the crisis and was a constant ally of Bernanke, a longtime friend whom
he had first met at MIT three decades earlier.
Saturday, December 27, 2014
David Stockman Debunks TARP Profit Claims: The Fed Runs A ‘No Banker Left Behind’ Program
By John Morgan at NewsmaxFinance
Washington’s untruths about the Troubled Asset Relief Program
(TARP)’s so-called “success” add up to something worse than the original
taxpayer bailouts of big banks and other corporations, according to
David Stockman, White House budget chief during the Regan
administration.
He noted the Treasury Department recently concluded that the 2008
TARP had actually returned a profit of $15.3 billion, returning $441.7
billion on the $426.4 in taxpayer monies invested to save the likes of
Citigroup, Bank of America, General Motors, American International Group
(AIG) and other pre-meltdown spendthrifts.
“The ‘small profit’, along with most of the so-called ‘recovery’ of
Uncle Sam’s $426 billion initial investment, was ground out of the backs
of America’s savers and depositors; or it was scalped from the massive
financial bubbles the Fed has generated in the Wall Street casino,” Stockman wrote on his Contra Corner blog.
“In short, under an honest monetary regime of market clearing
interest rates, bank balance sheets would be far smaller. Likewise,
deposit costs would be far higher, and opportunities to scalp profits
from the global scramble for yield far less abundant.”
Stockman said the mainstream economics narrative and media coverage
on the Federal Reserve’s ultra-easy money policies is simply
perpetuating a fiction.
That’s because “what lies beneath its ‘extraordinary measures,’ such
as ZIRP [zero interest rate policy], QE [quantitative easing], wealth
effects and the rest of the litany, is a central banking regime that
systematically destroys savers. Period,” he claimed.
Stockman said the central bank’s ZIRP has allowed big banks to profit
while average Americans get squeezed by earning next to nothing on
their savings.
“The policy apparatus of the state has subjected savers to brutal
punishment for one reason alone. Namely, to enable the insolvent big
banks of America to dig their way out of the deep hole they were in at
the time of the financial crisis. By scalping false profits from the
Fed’s regime of financial repression, they have, in fact, been able to
return accounting profits to pre-crisis levels and beyond.”
He noted that ZIRP has enabled banks to carry $10 trillion of
deposits at negative real interest rates, while making money on that
cash, and pay out an average of 0.4 percent on six-month CDs when an
honest payout should be closer to 4.0 percent.
“This has been called the Fed’s ‘No Banker Left Behind’ program and for good reason,” Stockman said.
“But the heart of the matter is this. The Fed and other central banks
of the world have created trillions of fiat credit that is drastically
mispriced and would not even exist in a free market based on honest
savings from current production and legitimate requirements for capital
investment.
“TARP wasn’t ‘repaid’ with a profit. It was simply perpetuated and
morphed into a new form of destructive state subvention and
mal-investment.”
The Center for Economic and Policy Research
(CEPR) was likewise suspicious of the official government line that the
U.S. made a “profit” on its TARP taxpayer loans to corporate America,
and called The New York Times’ coverage of the matter a “children’s
story.”
“Before you start thinking that this is a great idea and we should
give all the government’s money to the Wall Street banks, imagine that
we had given the same money to a different institution, Bernie Madoff’s
investment fund. As we all know, Madoff’s fund was bankrupt at the time
because he was running it as a Ponzi, the new investors paid off the
earlier investors. He hadn’t made a penny on actual investment in
years,” said CEPR on its website.
CEPR said if the government had lent Madoff tens of billions of
dollars at the same low rates it charged Wall Street banks, Madoff
easily could have invested the money and paid off the debt, also. (It
apparently helps when taxpayers are subsidizing your loans.)
“This would have then allowed (former Treasury Secretary) Timothy
Geithner to boast about how we made a profit on the loans to Bernie
Madoff.
“The reality is that the boast of a profit in this context is pretty
damn silly. The question is whether an important public purpose was
served by rescuing the Wall Street banks from their own greed.”
Friday, December 26, 2014
Opinion: The Fed is heading for another catastrophe
With so much dry kindling, it will not take much to spark the next conflagration
By
StephenS. Roach
In these days of froth, the
persistence of extraordinary policy accommodation in a financial system
flooded with liquidity poses a great danger. Indeed, that could well be
the lesson of recent equity- and currency-market volatility and, of
course, plummeting oil prices.
With so much dry kindling, it will not take much to spark the next conflagration.
Central
banking has lost its way. Trapped in a post-crisis quagmire of zero
interest rates and swollen balance sheets, the world’s major central
banks do not have an effective strategy for regaining control over
financial markets or the real economies that they are supposed to
manage. Policy levers — both benchmark interest rates and central banks’
balance sheets — remain at their emergency settings, even though the
emergency ended long ago.
While this approach has
succeeded in boosting financial markets, it has failed to cure bruised
and battered developed economies, which remain mired in subpar
recoveries and plagued with deflationary risks. Moreover, the longer
central banks promote financial-market froth, the more dependent their
economies become on these precarious markets and the weaker the
incentives for politicians and fiscal authorities to address the need
for balance-sheet repair and structural reform.
A new approach is
needed. Central banks should normalize crisis-induced policies as soon
as possible. Financial markets will, of course, object loudly. But what
do independent central banks stand for if they are not prepared to face
up to the markets and make the tough and disciplined choices that
responsible economic stewardship demands?
The unprecedented financial
engineering by central banks over the last six years has been decisive
in setting asset prices in major markets worldwide. But now it is time
for the Fed and its counterparts elsewhere to abandon financial
engineering and begin marshaling the tools they will need to cope with
the inevitable next crisis. With zero interest rates and outsize balance
sheets, that is exactly what they are lacking.
There's only one media in the United States: it's all mainstream in that it's all owned by billionaires who all have the exact same motivation which is to protect their billions.
NBC, FOX, BLOOMBERG, CBS, NEW YORK TIMES, HERITAGE FOUNDATION, PROGRESSIVE POLICY INSTITUTE, SIRIUS, CNN, ETC: all owned or funded by billionaires, all perpetuate the same narrative: The US banking system is basically and fundamentally sound, profitable, deep, and safe.
This is the narrative that was shaken and almost crumbled in 2008. It was saved by the most massive transfer of wealth from the citizenry to the banking elite in the history of the world.
The narrative, now, is that the banking system is stronger than ever, that it didn't really even need the bailouts which were forced upon them and that they've paid it all back plus interest. And the economy is healing and quickly returning to full strength.
Who reported on the destruction of the Volker rule? The story was annihilated by the "story" that Sony Pictures didn't open a slapstick comedy on time because of "hackers." Wow. That's so much more important than the fact that banks again have been licensed to be gambling parlors.
Meanwhile the banks have dismantled Dodd Frank, jetisoned the Volker Rule and are piling up bets in derivatives that leverage their balance sheets by 50-1. The Fed is in worse shape with over 3 Trillion dollars of bad debt on their balance sheet.
As long is the "Strong Bank" narrative is believed by most of the people, Gold will languish. It may fall to 1000 or even 900 dollars an ounce. Which is still 300 percent above where it started to move when people began to doubt the efficacy of the banking system back in 2000.
But the very second the narrative cracks and doubt spreads through the mass consciousness gold will move at the speed of thought.
And it won't have anything to do with COT reports or calls for delivery on the Comex, or Diwali, or Chinese New Year.
It will be 400,000,000 Americans and 4 Billion other world citizens suddenly realizing all at once that their dollars and their euros and their yen in their Bank Accounts are not a safe store of value.
New G20 Rules: Cyprus-style Bail-ins to Hit Depositors AND Pensioners
by Ellen Hodgson Brown / December 1st, 2014
On the weekend of November 16th, the G20 leaders whisked into
Brisbane, posed for their photo ops, approved some proposals, made a
show of roundly disapproving of Russian President Vladimir Putin, and
whisked out again. It was all so fast, they may not have known what they
were endorsing when they rubber-stamped the Financial Stability Board’s
“Adequacy of Loss-Absorbing Capacity of Global Systemically Important
Banks in Resolution,” which completely changes the rules of banking.
Russell Napier, writing in ZeroHedge,
called it “the day money died.” In any case, it may have been the day
deposits died as money. Unlike coins and paper bills, which cannot be
written down or given a “haircut,” says Napier, deposits are now “just
part of commercial banks’ capital structure.” That means they can be
“bailed in” or confiscated to save the megabanks from derivative bets
gone wrong.
On December 11, 2014, the US House passed a bill
repealing the Dodd-Frank requirement that risky derivatives be pushed
into big-bank subsidiaries, leaving our deposits and pensions exposed to
massive derivatives losses. The bill was vigorously challenged by
Senator Elizabeth Warren; but the tide turned when Jamie Dimon, CEO of
JPMorganChase, stepped into the ring. Perhaps what prompted his
intervention was the unanticipated $40 drop in the price of oil. As financial blogger Michael Snyder points out,
that drop could trigger a derivatives payout that could bankrupt the
biggest banks. And if the G20’s new “bail-in” rules are formalized,
depositors and pensioners could be on the hook.
The new bail-in rules were discussed in my last post here.
They are edicts of the Financial Stability Board (FSB), an unelected
body of central bankers and finance ministers headquartered in the Bank
for International Settlements in Basel,
Fed Delays Volcker Rule, Giving Wall Street Another Holiday Gift
WASHINGTON -- Christmas came early for Wall Street this year. The Federal Reserve on Thursday granted
banks an extra year to comply with a key provision of the Volcker Rule,
a move that gives financial lobbyists more time to kill the new
regulation before it goes into effect.
The Volcker Rule is a key
element of the 2010 Dodd-Frank financial reform law that bans banks from
engaging in proprietary trading -- speculative deals that are designed
only to benefit the bank itself, rather than its clients. Thursday's
move by the Fed gives banks an additional year to unwind investments in
private equity firms, hedge funds and specialty securities projects. The
central bank also said it plans to extend the deadline by another 12
months next year, which would give Wall Street a two-year reprieve
through the 2016 presidential election.
The Fed's delay comes less
than a week after Congress granted Wall Street a reprieve from another
reform that had been mandated by the 2010 Dodd-Frank financial reform
law. The measure, known as the swaps push-out rule had eliminated
federal subsidies for trading in risky derivatives -- the complex
contracts at the heart of the 2008 banking meltdown. Bank watchdogs say
the Volcker Rule delay adds insult to injury.
A HIGHLY IMPORTANT IMPERIAL EMBROIDERED SILK THANGKA
YONGLE SIX-CHARACTER PRESENTATION MARK AND OF THE PERIOD (1402-1424)
This massive panel is exquisitely embroidered in gold thread and brilliant coloured silk threads on leaf-green jiang chou
silk enriched with a regular pattern of dark blue medallions of curled
leafy scrolls outlined with gold thread. The central image is of the
wrathful Raktayamari, depicted in tones of red, standing in yab-yum embracing his consort Vajravetali. Her left leg encircling his waist, his right hand wielding above his head a khatvanga embellished with human heads in varying states and the vajra thunderbolt, his left arm supporting his facing consort and holding a kapala
or skull cap in his left hand. The locked couple is trampling on the
blue corpse of Yama, the Lord of death, wearing a tiger skin and crown,
lying on the back of their mount, a brown buffalo recumbent on a
multi-coloured lotus base. All below two rows of buddhas and
bodhisattvas seated on lotus bases, the upper including Heruka
Vajrabhairava on the far left and Manjusri on the far right, flanking
the five Dhyani Buddhas, Ratnasambhava, Akshobhya, Vairocana, Amitabha
and Amoghasiddhi. The lower row with Green Tara and White Tara. On the
lower panel is a row of seven offering goddesses dancing on lotus bases
and holding aloft dishes as offerings below the couple. The thangka is bordered by an embroidered yellow-ground band of vajra.
On the upper right side is the vertical presentation mark in gold
thread on a red embroidered ground below the White Tara. Accompanied
with a Qing dynasty silk surround now detached.
$565,000 Greubel Forsey GMT Black Watch Is Idiosyncratic, Incredible(y stupid)
By Stephen PulvirentDec 14, 2014 1:03 AM ET
Photographer: Stephen Pulvirent/Bloomberg
The Greubel Forsey GMT Black.
There are no two ways about it: Greubel Forsey makes incredible
watches. The designs are a bit, shall we say, "idiosyncratic," and after
a decade they still continue to ignore all but the highest end of the
market. It's all part of the charm. The GMT was first released in 2011,
but the GMT Black is a departure from the rose gold and platinum
versions we've seen trickle out since, utilizing lightweight titanium
instead of a precious metal for the case. This is a watch to stare at.
Go ahead, we'll be here a while. First Thoughts:
Even if the GMT Black isn't the sort of thing I'd wear to watch to the
Giants game on Sunday (unless I owned the team, maybe), it's the most
approachable version of one of the most impressive watches on the
market. The titanium case means that even with its large profile it
still weighs less than a Ferrari -- even if it costs more. The black
finish makes it less in-your-face and lets you really admire the
finishing on the non-blackened components. The GMT might be a few years
old by now, but staring at that globe never gets old. Cocktail Party Fact: It's
a little hard to give Greubel Forsey's case shapes proper names, but
that wonky geometry has a purpose. At 43.5mm across (without the
bulges), the GMT's case is already big. The idea with the asymmetrical
design is to highlight the design elements that Greubel Forsey wants
wearers to focus on, to give the tourbillon and globe room to breathe,
without having a bunch of empty dial space around the edges. The extra
sapphire window at the side of the globe is another nice touch that adds
to the effect. It might seem strange at first, but the unusual shape is
a really smart solution.
Shakespeare's First Folio found in France: Bard's 400-year-old book
was overlooked on library shelf - and it's worth £3.5 million
Found in St-Omer, the book is the first compilation of the Bard's plays
Book is the 231st copy found in the world, and only the second in France
Because it is in English, it is thought French readers overlooked it
It is in good condition, but missing 30 pages, including the title page
First folio is the only source for 18 of Bard's plays, including Macbeth
Published seven years after Shakespeare's death, it originally sold for £1
A
rare and valuable copy of William Shakespeare's First Folio - the
first-ever compilation of the Bard's plays - has been uncovered in a
provincial library in France.
The
1623 book, which is one of the most coveted in the world, lay
undiscovered among hundreds of others in St-Omer, near Calais, for some
400 years.
Worth
up to £3.5 million ($5.5 million), it was discovered when librarian
Remy Cordonnier dusted off a book of Shakespeare's works for an
exhibition.
+8
Hidden in plain sight: A rare and valuable copy of William Shakespeare's First Folio (pictured), the fir
Jamie Dimon, head of JP Morgan, personally telephoned individual
lawmakers to urge them to vote for the repeal of Dodd Frank. This is
getting really out of hand. Let us make this very clear. Besides the
fact that these banks LACK the models to prevent them
from blowing up every single time running to government with their hand
out asking can they spare a trillion, the sheer fact that they can make
heaps of money from trading means they are NOT lending.
Spain converted itself from the richest nation in Europe to the poorest
by doing precisely this short-term type planning.
Spain did not invest in developing its country. Spain squandered all
its money living high on the hog, as they say. The saying was a French
man knew how to unload ships rather than a Spaniard. The banks are
traders not lenders.They are trading with YOUR money.
Profits are their’s – losses are taxpayers. Allowing them to be
derivative junkies means they do not do what they are supposed to be
doing – lending money that expands jobs and builds the national economy.
The Republicans are simply counting their donations for political
campaigns. This will be the downfall of the Republican Party come 2016.
The banks will blow up AS ALWAYS, and the people will
get outraged because at G20 they said the depositor has to pay for the
next bailout – bail-ins. There is no disclosure mandated. There should
be a warning label on bank accounts – THIS BANK SPECULATES WITH YOUR MONEY. Hey – borrow this regulation from the FDA regulating food
The Department of Treasury is spending $200,000 on survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. As FreeBeacon reports, survival kits will be delivered to every major bank in the United States and includes a solar blanket, food bar, water-purification tablets, and dust mask (among other things). The question, obviously, is just what do they know that the rest of us don't? As Free Beacon reports,
The Department of Treasury is seeking to order survival kits for all of its employees who oversee the federal banking system, according to a new solicitation.
The emergency supplies would be for every employee at the
Office of the Comptroller of the Currency (OCC), which conducts on-site
reviews of banks throughout the country. The survival kit includes everything from water purification tablets to solar blankets.
The government is willing to spend up to $200,000 on the kits, according to the solicitation released on Dec. 4.
The survival kits must come in a fanny-pack or backpack that can fit
all of the items, including a 33-piece personal first aid kit with
“decongestant tablets,” a variety of bandages, and medicines.
After months of hard-fought negotiations over agency dollars and
policy provisions, the net result is a 1,600 page bill released last
night.The deal was announced late yesterday after Democrats accepted
Republican demands to undo
some regulations including the banking provision that will allow the
trading banks to deal in derivatives again in subsidiaries will full
insurance from the government once again. The big banks can keep swaps
trading in units with federal FDIC insurance. Just amazing. Grease
enough palms and the country is yours. This bill has to pass by Friday.
They would not have stuck this partial repeal of Dodd-Frank if they did
not have the votes.
Big Banks Will Take Depositors Money In Next Crash -Ellen Brown
The G-20 met recently in Australia to make new banking rules for the
next financial calamity. Financial reform advocate Ellen Brown says
these new rules will allow banks to take money from depositors and
pensioners globally. Brown explains, “It became rules we agreed to
actually implement. There was no treaty, and Congress didn’t agree to
all this. They use words so that it’s not obvious to tell what they
have done, but what they did was say, basically, that we, the
governments, are no longer going to be responsible for bailing out the
big banks. These are about 30 international banks. So, you are
going to have to save yourselves, and the way you are going to have to
do it is by bailing in the money of your creditors. The largest class
of creditors of any bank is the depositors.”
It gets worse, as Brown goes on to say,
“Theoretically, we are protected by deposit insurance up to $250,000 in
the U.S. and 100,000 euros in Europe. The FDIC fund has $46 billion,
the last time I looked, to cover $4.5 trillion worth of deposits. There
is also $280 trillion worth of derivatives that the five biggest banks
in the U.S. are exposed to, and under the bankruptcy reform act of 2005,
derivatives go first. So, they are basically exempt from these new
rules. They just snatch the collateral. So, if you had a big
derivatives bust that brought down JP Morgan or Bank of America, there
is no way there is going to be collateral left for the FDIC or for the
secured depositors. This would include state and local governments.
They all put their money in these big banks. So, even though we are
protected by the FDIC, the FDIC is not going to have the money. . . . This
makes it legal for these big 30 banks to take our money when they
become insolvent. They are too-big-to-fail. This was supposed to avoid
too-big-to-fail, but what it does is institutionalizes
too-big-to-fail. They are not going to go down. They are going to take
our money instead.”
Part of the coming financial calamity will involve hundreds of
trillions of dollars in un-backed derivatives. Brown contends, “If the
derivative bubble pops, nobody knows what is going to happen, and it’s
obvious it has to pop. It can’t just keep growing. Depending on who
you read, some people say it is up to two quadrillion dollars. It’s
virtual money, and it cannot keep going on.”
When a financial crash does happen, you can forget about getting
immediate access to your money. Brown says, “The banks will say, well,
we don’t have it. All the money goes into one big pool since Glass
Steagall was repealed. They are allowed to gamble with that money and
that’s what they do. I think maybe Bank of America is the most
vulnerable because of Merrill Lynch. Everybody is concerned, and they
do very risky deals and they are on the edge. I think they have over
$50 trillion in derivatives and over $1 trillion in deposits. . . The
Dodd-Frank Act says we, the people, are no longer going to be
responsible for the big banks when they collapse. It is not clear the
FDIC will even be able to borrow from the Treasury, but even if they
could, who is going to pay that money back? Let’s say they borrowed $1
trillion. Who is going to pay that $1 trillion back? It will bankrupt
all the small banks that had to contribute to this premium. They will
say we’re raising your premium to everything you got, basically. Little
banks will go out of business, and who is going to survive–the big
banks. . . . What we’re going to have left is five big banks, and
everybody else is going to be bankrupt.”
The high-flying banks are at it again. There has been lobbying going
on to sneak a clause in the continuing resolution to fund the government
over the holidays for the December 11th deadline. The provision they
are trying to sneak in would allow the banks to trade derivatives
through subsidiaries that are federally insured by the FDIC. In other
words, they are circumventing the very reforms of the 2007-2009 crash.
This is not yet confirmed. The bill was held up and the final
language was being submitted at midnight last night. This is how they
operate so everyone is asleep and the real dirty shit is stuffed in
bills in the middle of the night. This tactic is outright fraud upon the
nation and the world. We seriously need political reform or there will
be no future.
This is how the lame-duck Congress always functions – bribe time on
steroids. The manipulating banks are trying to sneak this into a bill
to keep the government funded for Christmas and they know they will get
the votes because nobody will read the fine print on Capitol Hill. They
are trying to now effectively repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173)
before the new Congress comes in. These lame-duck sessions are highly
dangerous and have done far more long-term damage to the nation than any
other session. This is Congress on sale to the highest bidder.
When we get the real real final language, we will confirm everyone what they have pulled off this time if it survives.
On the weekend of November 16th, the G20 leaders
whisked into Brisbane, posed for their photo ops, approved some
proposals, made a show of roundly disapproving of Russian President
Vladimir Putin, and whisked out again. It was all so fast, they may not
have known what they were endorsing when they rubber-stamped the
Financial Stability Board’s “Adequacy of Loss-Absorbing Capacity of
Global Systemically Important Banks in Resolution,” which completely
changes the rules of banking. Russell Napier, writing in ZeroHedge,
called it “the day money died.” In any case, it may have been the day
deposits died as money. Unlike coins and paper bills, which cannot be
written down or given a “haircut,” says Napier, deposits are now “just
part of commercial banks’ capital structure.” That means they can be
“bailed in” or confiscated to save the megabanks from derivative bets
gone wrong.
Rather than reining in the massive and risky derivatives casino, the new rules prioritize the payment of banks’ derivatives obligations to each other,
ahead of everyone else. That includes not only depositors, public and
private, but the pension funds that are the target market for the latest
bail-in play, called “bail-inable” bonds.
“Bail in” has been sold as avoiding future government bailouts and
eliminating too big to fail (TBTF). But it actually institutionalizes
TBTF, since the big banks are kept in business by expropriating the
funds of their creditors.
It is a neat solution for bankers and politicians, who don’t want to
have to deal with another messy banking crisis and are happy to see it
disposed of by statute. But a bail-in could have worse consequences than
a bailout for the public. If your taxes go up, you will probably still
be able to pay the bills. If your bank account or pension gets wiped
out, you could wind up in the street or sharing food with your pets.
In theory, US deposits under $250,000 are protected by federal
deposit insurance; but deposit insurance funds in both the US and Europe
are woefully underfunded, particularly when derivative claims are
factored in. The problem is graphically illustrated in this chart from a March 2013 ZeroHedge post:
Tuesday, December 2, 2014
Chart Of The Day: US Public Debt Will Hit $18 Trillion On December 9th
By Craig Eyermann at MyGovCost.org
Sometime in the next two to three weeks, the total public debt outstanding
for the U.S. government will exceed 18 trillion dollars. If you were to
ask us to pin down a precise date, we would say sometime around
December 9, 2014, given the rate at which the national debt has been
increasing during the federal government’s current fiscal year:
Since the start of the U.S. federal government’s 2015 fiscal year on
October 1, 2014, the national debt has grown at an average rate of $2.08
billion per day.
If it helps put these very large numbers into a more human scale,
when the U.S. national debt reaches $18 trillion, that will work out to
be about $124,275 per U.S. household, which is up from $81,984 per U.S.
household at the end of the 2008 fiscal year. And the new figure would
be on top of your mortgage, car loans, student loans, credit cards, et cetera that you might also have.
But unlike those tangible things, where you can at least point to
your house, your car, your education, or even the Christmas presents you
might be buying this upcoming Black Friday, can you point to what you
personally got in return for that $42,291 worth of additional debt per
household that the federal government accumulated during the last six
years?
If you cannot, is it really worth it?
Getty Images
