Posts tagged Bailout

The average Wall Street bonus is…

0

 

Source: http://www.againstcronycapitalism.org

By

The average Wall Street bonus is…

 

Champ-crony-cc1

$164,000

Remember, this is the average bonus. Some are astronomically higher. (Some of course are also lower.)

We at ACC have absolutely no problem with people making large piles of money, even in banking. Frankly we are all for it. However when these piles of money are underwritten in many ways by the people of the United States, and the world, the piles are less legit.

The Federal Reserve system and the experiment called “quantitative easing” has made these bonuses possible.

While the easy money translates into good times for Wall Street, the vast majority of the population which lacks assets for the most part must contend with higher prices generally and lower interest rates (which are bad for savers, particularly of the middle class kind). Though no one on the Street will admit it, much of the record bonuses of last year came indirectly from the broader public. (Don’t forget the bailout. Your kids get to pay for that one.)

It’s hard to see sometimes. People lose track of where the money goes. They forget that the Fed is still dumping $65 billion in new money into the financial system each month. People don’t see that through inflation and other forms of wealth erosion created by the Federal Reserve their lives are diminished. The Fed counts on this. It counts on the average person being bewildered by central banking.

And the investment banks count on people remaining bewildered by “bond buying” and the Fed Funds rate, and all the rest of the the bluish smoke which wafts out of the Eccles Building too. In this “fog of finance” there is money to be extracted.

(From The New York Post)

Wall Street still remains a very lucrative place to work. According to the Comptroller’s report, for fiscal year 2012 — the most recent data — the average Wall Street salary, including bonuses, was $360,700, more than five times greater than the rest of the private sector.*

Click here for the article.

* In New York City.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

Your new landlord lives on Wall Street

0

 

Source: http://www.againstcronycapitalism.org

By

Your new landlord lives on Wall Street

 

Probably not Wall Street renting this one.

Probably not Wall Street renting this one.

 

In the wake of the housing crash, wide swathes of the desert Southwest, Florida, Atlanta, parts of California, and other places were littered with relatively new homes which were empty. The pre-seeded lawn turf often hadn’t even taken root before the foreclosures began.

Each vacant home represented a personal economic disaster for someone. Families moved in with grandparents. Pets were left in shelters which were filled far beyond capacity. It was only a couple of years ago. For many the memory is still very fresh.

But at about the same time parts of Tuscon started to be reclaimed by tumbleweeds a few hedge funds (and banks) figured that there was yield to be made from renting the homes which were now unused back to the people who could no longer afford to own them. If the homes could be pooled along with the rents, perhaps the investments could even be sold as derivatives.

Market solution right?

Wrong.

Why did the Crash of 2008 happen?

The version we hear now is that Wall Street created all these bizarre instruments for investing, got greedy, and then it all toppled on itself. That’s the version one will hear from outlets like The Washington Post or Time.

Then there’s another version which is liked by the more conservative folks which holds that the Community Reinvestment Act  signed by Clinton encouraged home ownership in places where people really had no business taking on a mortgage. Then the poor risks imploded the market.

Both narratives have a lot of truth to them. Yes Wall Street got greedy. Yes it did create overly complex instruments which went haywire. And yes the Community Reinvestment Act, an insane act of social engineering if there ever was one helped to collapse the market.

But these things are only a part, and not the main part of the story.

The Crash of 2008 occurred because Allan Greenspan panicked in the wake of the 2000 recession and the 2001 attacks on the World Trade Center and Pentagon. He cut interest rates to low and kept them there for too long.

After folks had gotten hammered in the tech bubble collapse of the late 1990s they looked around for a new way to grow money. Baby boomers were staring right at retirement. Suddenly they discovered residential property which could be financed at next to nothing thanks to the Fed keeping rates lower than they should have. Plus many people rationalized, real estate was tangible, unlike tech stocks. Baby boomers, and then their children, piled in because of all the cheap money from the Fed. Before Greenspan knew it he had ignighted a worldwide fire fueled by easy money. The crash was only a matter of time.

But when the carnage came most of the banks (especially the megabanks) emerged. Some, like Goldman Sachs, stronger than ever.  First they were bailed out by the US taxpayer directly to the tune of probably more than a $trillion (we don’t really know.) Then after the acute phase – you know the time when families across the country were waiting in in humiliation for the banks to kick them out of their homes (remember that?)- the Fed began the quantitative easing infusion of monetary junk into the arm of the financial sector.

With time the banks were recapitalized (even if they were now easy money junkies) and fat bonuses were had by many courtesy of the taxpayer.

The former homeowners were not recapitalized however, and found that they had just rejoined the rental market – if they were lucky enough to have a stream of income. 2010- 2011 were especially hard years for many Americans. They were record years for a few of the megabanks.

Now a few years on the recapitalized banks, the insiders, the friends of the Fed, have picked up the homes which were in distress to rent them back to great unwashed. How nice of them. Especially having been bailed out by the great unwashed.

But that is life in a crony capitalist economy. If one has friends in the government one gets hooked up. If one doesn’t one gets to rent one’s house from a faceless PO Box in downtown Manhattan.

And make sure the rent is on time. You wouldn’t want to have us kick you out of your home again would you?

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

“Too Big To Fail” designation of banks makes economic disaster more likely

0

 

Source: http://www.againstcronycapitalism.org

By

“Too Big To Fail” designation of banks makes economic disaster more likely

 

Bank-cc-cc-cc1-565x424

 

The big banks, which in 2008 nearly went belly-up because they were overleveraged and needed a taxpayer funded bailout in order to survive a reversal in the economic tide, are even bigger today. They pose more risk than they did 5 years ago. Because they have been designated as “too big to fail” the megabanks now enjoy an implicit subsidy courtesy of you and me. Their borrowing costs are lower because we backstop them. Because of the backstop and lower costs bankers are incentivized to take on more risk. Sooner or later this will create major instability as the market mechanism has been distorted and will seek to correct for this distortion.

 

(From Bloomberg.com)
 
Do markets still view the nation’s largest banks as too big to fail? Have regulators failed to eradicate the perception that, when the next crisis comes, the government will again come to the rescue?
 
Given that the largest banks are now even bigger than they were before the last financial crisis, it’s a pressing question. Unfortunately, a careful look at the data suggests the answer is less encouraging than many policy makers think.
 
Expectations of government bailouts create dangerous distortions. When, for example, creditors assume they’ll get rescued in an emergency, they don’t demand higher interest rates from banks that take on bigger risks. This lack of market discipline gives bankers a strong incentive — consciously or not — to engage in behavior that makes disasters more likely. Taxpayers effectively end up subsidizing activity that threatens their own well-being.

Click here for the article.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

Okay Mr. President, you want to talk about “inequality”? Let’s talk about it.

0

 

Source: http://www.againstcronycapitalism.org

By

Okay Mr. President, you want to talk about “inequality”? Let’s talk about it.

 

SOTU-cc-565x376

 

I woke up this morning to Steve Liesman on CNBC explaining the theme of tonight’s State of the Union Address. You see, since 1980 middle class wages have only gone up only 50% in inflation adjusted terms whereas for the top 1% of earners income has gone up by 210%. Something clearly must be done. How can such a disparity be? This is unfair. Can’t the government “solve” this?

The new narrative which has likely been crafted by John Podesta super crony capitalist extraordinaire, is that Congress (specifically the Republican controlled House) isn’t letting the president address the issue of income inequality.

“It’s those old guys who don’t care about you who are holding back the manna from heaven aka Washington DC. It’s their fault not mine. I’m not incompetent and way out of my league even after 5 years in the White House. Not my fault. It’s the selfish and rich Republicans. They want you to remain poor.”

Rally the base when times are bad is the old political wisdom, and they are very bad for this president. Shore up the folks who will defend you no matter what and change the conversation from Obamacare. Anything but Obamacare.

Given that the ACA is Obama’s chief “achievement” to date this is a particularly sad state of affairs. The president’s “pivot” (the word is right up there with “optics” in my book) toward income inequality is a cynical political move. The White House is desperate to regain at least some momentum in the face of a 2013 which was one failure after another.

But since Mr. Obama seems keen on bringing it up, let’s talk about inequality.

Despite what the establishment #oldmedia always say, the increased income inequality that we see is not the result of the “rich” taking advantage of unfettered markets and then making a mint at the expense of everyone else. Capitalism, free markets, free thinking, entrepreneurship, innovation, is not the problem. Capitalism is in most respects the cure. No, the problem is that business and government have increasingly partnered with one another to make some very rich and to shut out others. It’s too little capitalism which is the problem.

Let’s take a look at the most obvious example, Wall Street.

Has Wall Street reaped the windfall it has over the past 5 years because of the free market, because of capitalism?

Absolutely not. Had the free market been allowed to work in 2008 Goldman Sachs, AIG, Citi, Bank of America, and Morgan Stanley would probably be history. These banks leveraged themselves out too far and got caught exposed. Their greed did them in. Mr Market made a margin call and many “masters of the universe” turned out to have feet of clay after all. The banks should have been allowed to collapse so that better managed banks could fill in the space.

The banks weren’t too big to fail. They could have failed and life would have gone on. ATMs would have kept working. The sun would have still risen in the east. The economy after a period of adjustment would have righted itself and emerged much healthier for having jettisoned the poorly managed firms. Lloyd Blankfein would have been out of a job, but he’d have survived somehow in the Hamptons.

But that isn’t what happened as we know. The managers of these institutions knew how to manipulate the levers of power. They were able to engineer a massive bailout, which started at $700 billion and just grew from there. In the years after the bailout bonuses were paid out at the big banks with abandon. These bonuses were for the most part paid for by the American taxpayer. No wonder people are angry.

But the bailouts weren’t capitalism. The bonuses which were paid to Jamie Dimon and friends weren’t a result of “free markets.” They weren’t the just rewards of building a better mousetrap, or even building a better derivative algorithm. They were the result of crony capitalism, a soft form of fascism, which is of course a form of socialism. The bankers made millions because the state redistributed the income of everyday Americans and gave it to Wall Street.

Or take for example the sell off of the taxpayer’s (forced) position in GM at a loss last year. In addition to losing $10 billion on the deal for the taxpayers, the deal done by Treasury unleashes the executives which so long as money was still owed to the taxpayer couldn’t go nuts with executive compensation. Now, after the $10 billion taxpayer loss they and the GM board are free to do as they wish in the pay department.

Or what about the huge percentage of so called “green” energy initiative grants and loans which went to politically connected people in 2009. Folks made millions, in wind, solar, algae, and who knows what else, all again courtesy of the US tax payer. Almost none of the ventures were economically viable. But lots of people got paid that is for sure.

There are probably thousands of other examples over the last 10 years or so (and many more going back way before the past decade,) ranging from war profiteering of all sorts, to cronyism in the new healthcare law, to draconian copyright laws which are a subsidy to Hollywood, to, well, there are many other examples which we have chronicled at Against Crony Capitalism.

So we shouldn’t be surprised that there is so much income inequality. Business and government in this country have partnered up. Sometimes the government has the upper hand. Sometimes business does. But both parties engage in the crony capitalism waltz to enrich themselves, to the exclusion of a large part of the American population.

And at the heart of it all, is the Federal Reserve.

Nothing creates illegitimate inequality (there is legitimate income inequality which exists in a free price system) like the Federal Reserve.

0% interest rates are for the most part pretty good for rich people. Money which is super cheap can be used to speculate and invest at almost no cost. In theory such low rates are also good for home buyers. Low rates keep monthly payments lower. More people buying homes (with lower payments) spurs the economy and then the economy roars back to life as we all buy Sub Zero freezers and SUVs. This was the logic behind the housing boom in the mid 2000s and it is the same logic the Fed is using now (with less success.)

But 0% rates also means that savers are hung out to dry. The prudent middle class is hammered. Those who have a nice nest egg built up over a lifetime of hard work and thrift find that unless they take on significant risk there is no return for their money. $500,000 in a CD not so long ago yielded an yearly payout of $25,000. Now because of the Fed keeping money cheap artificially that same $500,000 might yield $5,000 on an annualized basis if one is lucky.

Over time granny finds that $5000 per year isn’t enough to get by on even though her house is paid off. She finds she must dip into her nest egg a little more each year, which also in turn lowers her already modest yield. Soon the nest egg is gone.

Of course she can always seek increased yield in other places like the stock market, (which though they won’t say it is exactly where the Fed wants granny to put her money) but widows and orphans really have no business there. It’s bad enough for granny to lose her pool of wealth over years. Losing much of it in an afternoon is tougher to take. But that is what our current monetary policy encourages.

Not so long ago granny could keep up. She could beat inflation and pay her living expenses. When she died her wealth was passed on to the next generation.

But now, thanks to the Fed and it’s policies which benefit the hedge fund guys instead of the average saver it is unlikely that much of granny’s wealth will be passed on. Wealth has been pulled from the middle class.

“Inequality” has been exacerbated by a government which is too large. The only way to get the economy on track is to lessen the footprint of government. Free prices. Free markets. Let people create. Make it easier to start businesses

But tonight Obama is unlikely to talk about how after years and years of failure government must now get out of the way. (Boy how great would that be?) Or how government sponsored public/private partnerships steal money from the average American. Or how the government enabled the biggest bonus binge Wall Street has ever seen. Or how granny is getting clobbered because of loose monetary policy.

No, my bet is that he will talk about how the economy has worked for the “rich” while others have fallen behind. But he won’t call for freer markets and an end to price fixing at the Federal Reserve. He will instead insist that government “do something.” What that something is I’m not sure but the term “shovel ready” will likely make an appearance tonight along with its old buddy “infrastructure improvement.”

The president will probably wag his finger at the House GOP a bit and threaten to use executive actions to go around them. He’ll try to look like he means business.

Obama will also talk about the need to raise the minimum wage, which is basically economic suicide but makes for good sound bites. He will give hope to people who are hurting but who unfortunately may not understand that if the minimum wage is raised they may soon be out of a job.

In short Obama will be long on proposals, long on rhetoric, but woefully short on understanding. Pretty much the to story of his presidency.

Image credit: http://www.againstcronycapitalism.org


Nick Sorrentino
About Nick Sorrentino

Nick Sorrentino is the co-founder and editor of AgainstCronyCapitalism.org. A political and communications consultant with clients across the political spectrum, he lives just outside of Washington DC where he can keep an eye on Leviathan.

 

 

Federal Reserve Whistleblower Tells America The REAL Reason For Quantitative Easing

2

 

Source: http://theeconomiccollapseblog.com

By Michael Snyder

Federal Reserve Whistleblower Tells America The REAL Reason For Quantitative Easing

 

Wheelbarrow-of-Money-300x300A banker named Andrew Huszar that helped manage the Federal Reserve’s quantitative easing program during 2009 and 2010 is publicly apologizing for what he has done.  He says that quantitative easing has accomplished next to nothing for the average person on the street.  Instead, he says that it has been “the greatest backdoor Wall Street bailout of all time.”  And of course the cold, hard economic numbers support what Huszar is saying.  The percentage of working age Americans with a job has not improved at all during the quantitative easing era, and median household income has actually steadily declined during that time frame.  Meanwhile, U.S. stock prices have doubled overall, and the stock prices of the big Wall Street banks have tripled.  So who benefits from quantitative easing?  It doesn’t take a genius to figure it out, and now Andrew Huszar is blowing the whistle on the whole thing.

From 2009 to 2010, Huszar was responsible for managing the Fed’s purchase of approximately $1.25 trillion worth of mortgage-backed securities.  At the time, he thought that it was a dream job, but now he is apologizing to the rest of the country for what happened…

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

When the first round of quantitative easing ended, Huszar says that it was incredibly obvious that QE had done very little to benefit average Americans but that it had been “an absolute coup for Wall Street”…

Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.
 
You’d think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germany’s finance minister, Wolfgang Schäuble, immediately called the decision “clueless.”
 
That was when I realized the Fed had lost any remaining ability to think independently from Wall Street.

Of course the fact that the Fed cannot think independently from Wall Street should not be a surprise to any of my regular readers.  As I have written about repeatedly, the Federal Reserve was created by the Wall Street bankers for the benefit of the Wall Street bankers.  When the Federal Reserve serves the interests of Wall Street, it is simply doing what it was designed to do.  And according to Huszar, quantitative easing has been one giant “subsidy” for Wall Street banks…

Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.

But Huszar is certainly not the only one on Wall Street that acknowledges these things.  For example, just check out what billionaire hedge fund manager Stanley Druckenmiller told CNBC about quantitative easing…

 

This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.
 
“Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.”
 
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs—essentially betting on “trickle-down economics.”
 
“I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”

 

And Donald Trump said essentially the same thing when he made the following statement on CNBC about quantitative easing…

“People like me will benefit from this.”

The American people are still being told that quantitative easing is “economic stimulus” which will make the lives of average Americans better.

That is a flat out lie and the folks over at the Federal Reserve know this.

In fact, a very interesting study conducted for the Bank of England shows that quantitative easing actually increases the gap between the wealthy and the poor…

It said that the Bank of England’s policies of quantitative easing – similar to the Fed’s – had benefited mainly the wealthy.
 
Specifically, it said that its QE program had boosted the value of stocks and bonds by 26 percent, or about $970 billion. It said that about 40 percent of those gains went to the richest 5 percent of British households.
 
Many said the BOE’s easing added to social anger and unrest. Dhaval Joshi, of BCA Research wrote that  “QE cash ends up overwhelmingly in profits, thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it.”

And this is exactly what has happened in the United States as well.

U.S. stocks have risen 108% while Barack Obama has been in the White House.

And who owns stocks?

The wealthy do.  In fact, 82 percent of all individually held stocks are owned by the wealthiest 5 percent of all Americans.

Meanwhile, things have continued to get even tougher for ordinary Americans.

While Obama has been in the White House, the percentage of working age Americans with a job has declined from 60.6% to 58.3%, median household income has declined for five years in a row, and poverty has been absolutely exploding.

But the fact that it has been very good for Wall Street while doing essentially nothing for ordinary Americans is not the biggest problem with quantitative easing.

The biggest problem with quantitative easing is that it is destroying worldwide faith in the U.S. dollar and in the U.S. financial system.

In recent years, the Federal Reserve has started to behave like the Weimar Republic.  Just check out the chart below…

 

M1-Money-Supply-2013-425x255

The rest of the world is watching the Fed go crazy, and they are beginning to openly wonder why they should continue to use the U.S. dollar as the de facto reserve currency of the planet.

Right now, most global trade involves the use of U.S. dollars.  In fact, far more U.S. dollars are actually used outside of the United States than are used inside the country.  This creates a tremendous demand for U.S. dollars around the planet, and it keeps the value of the U.S. dollar at a level that is far higher than it otherwise would be.

If the rest of the world decides to start moving away from the U.S. dollar (and this is already starting to happen), then the demand for the U.S. dollar will fall and we will not be able to import oil from the Middle East and cheap plastic trinkets from China so inexpensively anymore.

In addition, major exporting nations such as China and Saudi Arabia end up with giant piles of U.S. dollars due to their trading activities.  Instead of just sitting on all of that cash, they tend to reinvest much of it back into U.S. Treasury securities.  This increases demand for U.S. debt and drives down interest rates.

If the Federal Reserve continues to wildly create money out of thin air with no end in sight, the rest of the world may decide to stop lending us trillions of dollars at ultra-low interest rates.

When we get to that point, it is going to be absolutely disastrous for the U.S. economy and the U.S. financial system.  If you doubt this, just read this article.

The only way that the game can continue is for the rest of the world to continue to be irrational and to continue to ignore the reckless behavior of the Federal Reserve.

We desperately need the rest of the planet “to ignore the man behind the curtain”.  We desperately need them to keep using our dollars that are rapidly being devalued and to keep loaning us money at rates that are far below the real rate of inflation.

If the rest of the globe starts behaving rationally at some point, and they eventually will, then the game will be over.

Let us hope and pray that we still have a bit more time until that happens.

This article first appeared here at the Economic Collapse Blog.  Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here


Image credit: http://theeconomiccollapseblog.com

Whistleblower Explains How Banks Gamble With Customer Funds

0

 

Source: http://www.occupycorporatism.com

By Susanne Posel
Occupy Corporatism

Whistleblower Explains How Banks Gamble With Customer Funds

 

Orig.src_.Susanne.Posel_.Daily_.News-crowdfundingrisk

Cathy Scharf, former compliance officer, spoke at the Certified Anti-Money Laundering Specialists (CAMS) conference in Nevada; explaining how SunFirst Bank (SFB), a Utah bank, she worked for was “illegally processed at least $200 million for the offshore gambling sites PokerStars and Full Tilt Poker.”

Scharf said that executives at the bank supported the activity because it kept their bank from going under.

The bank then hired “criminal lawyers to threaten” her to arrest if she revealed the scheme.

SFB was also entangled in offshore money laundering connected with gambling operations that explained why the bank was focused on acquiring more customer deposits.

Scharf explained: “Whenever a gambler transferred funds to one of the offshore card sites, the money went through the small Utah bank. The bank was making $400,000 a month in transaction fees, violating a 2006 law that makes it a federal crime to knowingly accept payment for illegal internet gambling. They wanted to keep making money so they could bring the bank back. My frame of mind was just shoot me and put me out of my misery.”

In April, former House Representative Ron Paul stated that the depositor theft in Cyprus exposed how “these banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.”

Paul went on to state: “The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one’s money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?”

David Stockman, former director of the Office of Management and Budget (OMB) under the Reagan administration, said: “As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games . . .”

Earlier this year, it was revealed that Wells Fargo was involved in loan manipulation to the tune of $176 billion in cooked books. Deposit monies climbed for Bank of America (BoA) to $221 billion, while JP Morgan & Chase Co (JPM) reported $460 billion in excess of depositor funds.

In 2012, the biggest banks in the US were given advisement by US regulators that they must make plans to stave off a complete financial collapse without relying on the US government.

BoA, Goldman Sachs and other technocrats have secretly crafted worst-case scenarios in which they can continue to thrive during a full-blown domestic monetary crisis.

The Federal Reserve Bank (FRB) and the US Office of the Comptroller of the Currency (OCC) named Citigroup Inc., Morgan Stanley and JPM, as well as others, to devise “recovery plans” in 2010. Banks were directed to have schemes to remain afloat by selling off assets, finding alternative sources of funding, reducing risky measures that make a quick buck. These strategies were to be perfected with “no assumption of extraordinary support from the public sector.”

Resolution plans , required under the 2010 Dodd-Frank financial reform law describe how to liquidate banking assets without causing further damage to a failing financial system. By selling “non-core assets” without upsetting shareholders while protecting the monetary system, taxpayers and creditors is the work of the mega-banks who have contributed solely to the destruction of the global financial markets.

The OCC constantly monitors the largest banks and evaluates their resolution plans to provide assurance to the US government that financial instability will not destroy the banking industry in America.

The details of the resolution plans are considered confidential. While the mega-banks wait to see if another round of banker bail-outs will alleviate the pressure of the international interests as BoA and Citigroup begin to act as if they are implementing their resolution plans covertly.

BoA has sold off portions of their domestic assets to secure capitol while Citigroup has followed suit.

Citigroup, in their resolution plan decided by management meetings by regulators, will “make appropriate assumptions as to the valuations of assets and off-balance sheet positions.”

Image credit: http://www.occupycorporatism.com


About the author:

Susanne Posel Chief Editor, Investigative Journalist OccupyCorporatism.com Radio Host: The Region 10 Report, Live Thursdays 1-3PM PST on American Freedom Radio

By adhering to initiatives provided by the Financial Stability Board (FSB), these mega-banks will, when they enact their resolution plans, coordinate with international banking institutions and regulators rather than simply implode.

Fed Czars go to War – Chuck Morse

0

Fed Czars go to War – Chuck Morse

 

#N3 video capture

#N3 video capture

 

YouTube Preview Image

 

Published by  NextNewsNetwork  NextNewsNetwork

 

For what may be the first time in the 100-year history of the Federal Reserve System, two candidates are publicly contending to replace the Fed’s outgoing chairman, Ben Bernanke.

Janet Yellen, vice chairwoman of the Fed’s Board of Governors, is said to be locked in a dead heat with Larry Summers, former President of Harvard and a former high-ranking economic adviser to Presidents Clinton and Obama.

As is the case in electoral politics, the contest between Yellen and Summers has included dirty campaigning — with supporters of Yellen accusing Summers of sexist behavior as Harvard President. They also point out that Mr. Obama would make history by appointing Yellen to be the Fed’s first female chairman.

In substantive terms, there’s not much difference between Yellen and Summers. Both of them support the Keynesian model of economics in which debt-driven government spending is seen as the key to expanding the economy.

During the 1990s, Summers played a key role in creating the real estate and mortgage bubble and the huge derivatives market that grew out of it — all of which led to the financial panic of 2008 and the ongoing recession.

Yellen, for her part, believes that Bernanke’s energetic expansion of money and credit has been inadequate. If she is appointed as Fed chairman, Yellen might well inaugurate an era of hyperinflation.

The Fed Chairman has more power over the U.S. economy — indeed, the world economy — than either the president or the Congress. Why is this so? Why does the Federal Reserve exist, and are we stuck with it? We’ll discuss this today with radio host and economic analyst Chuck Morse.

In addition to hosting the nationally syndicated “Chuck Morse Speaks” program on the IRN/USA Radio Network, Chuck has written two books — The Art and Science of American Money, and The Socialist Bible. He is also a columnist whose work has appeared in the Boston Globe, the Washington Times, WorldNetDaily, and numerous other publications.

Stream: http://NextNewsNetwork.com
Facebook: http://Facebook.com/NextNewsNet
Twitter: http://Twitter.com/NextNewsNet
Sub: http://bit.ly/Sub-to-N3
Hashtag: #N3

MSNBC: “Detroit is America’s Most Libertarian City”

0

Source: http://detroitrusttoriches.blogspot.com

Posted by

 

MSNBC: “Detroit is America’s Most Libertarian City”

 

Don’t get too excited over that headline on MSNBC, because Ari Melber has not been reading my Detroit blog.

MSNBC’s Ari Melber describes Detroit’s plight with the usual media rinse-and-repeat conventional spin straight from the standard script: debt up the wazoo, decayed this, bombed-out that, no services here or there. Yawn. Seems I’ve read that 1,492 times prior. And this “condition” of decay he describes is what he deems as a condition one could expect to see as the result of libertarianism. According to Ari, a city that has been governed by unions and Marxists, and raped by nepotistic mobs, has presented to the world a visual of what libertarianism would bring us were we to put it into practice. Yet he never explains the connection between a libertarian philosophical framework and Detroit’s 4+ decades of decline.

Ari states that Detroit needs to “look to Washington.” Indeed, he says Detroit should be an outpost of the Potomac, just like the Banksters. Ari thinks that Congress should convene a special session to save Detroit. The Feds, he says, could bring jobs to Detroit, invest in property, and start up a Detroit branch of the Smithsonian to save the art of the Detroit Institute of Arts (DIA).

These media twerps never express one intelligent sentence about Detroit’s political history and sociological challenges as they pertain to the long-term decay and the current crisis. And now, finally, it can all be blamed on libertarianism and a too-small government. Melber is a boob. Follow me on Twitter @karendecoster. Thanks to Allan Caetano for the link.

7-28-2013 11-49-53 AM

Video screen capture

YouTube Preview Image

Read more from Karen’s blog Detriot: From Rust to Riches

###

Video capture added to original post.

“I Refused To Let Detroit Go Bankrupt” – Barack Obama, October 2012

0

Source: http://www.zerohedge.com

Submitted by Tyler Durden

“I Refused To Let Detroit Go Bankrupt” – Barack Obama, October 2012

 

Just nine short months after proclaiming victory on his plan to save Detroit by throwing taxpayer money at the ‘problem’ of over-levered, over-unioned, and under-demanded auto manufacturers, it seems the ball is back in President Obama’s court once again. He “refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt. We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way.”

 

YouTube Preview Image

 

Of course, what the rest of the unsuspecting US citizenry is likely unaware of yet is that once again the municipal workers’ pension plans (that face 90% losses) will be bailed-out via the Pension Benefits Guaranty Corporation (PBGC) – A US Government (ponzi) Agency. But of course, that’s for the good of the whole nation…

###

Non-stop information you should be following at:

banner_ZH

Related post

Detroit files for bankruptcy protection

New EU Plan Will Make Every Bank Account In Europe Vulnerable To Cyprus-Style Wealth Confiscation

0

Source: http://theeconomiccollapseblog.com

By Michael Snyder

New EU Plan Will Make Every Bank Account In Europe Vulnerable To Cyprus-Style Wealth Confiscation

 

Did you actually believe that they were not going to use the precedent that they set in Cyprus?  On Thursday, EU finance ministers agreed to a shocking new plan that will make every bank account in Europe vulnerable to Cyprus-style bail-ins.  In other words, the wealth confiscation that we just witnessed in Cyprus will now be used as a template for future bank failures all over Europe.  That means that if you have a bank account in Europe, you could wake up some morning and every penny in that account over 100,000 euros could be gone.

That is exactly what happened in Cyprus, and now EU officials plan to do the same thing all over Europe.  For quite a while EU officials insisted that Cyprus was a “special case”, but now we see that was a lie.  International outrage over what happened in Cyprus has died down, and now they are pushing forward with what they probably had planned all along.  But why have they chosen this specific moment to implement such a plan?  Are they anticipating that we will see a wave of bank failures soon?  Do they know something that they aren’t telling us?

Amazingly, this announcement received very little notice in the international media.  The fact that bank account confiscation will now be a permanent part of the plan to bail out troubled banks in Europe should have made headline news all over the globe.  The following is how CNN described the plan…

European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.

The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.

According to this new plan, bondholders will be the first to be required to “contribute” when a bank bailout is necessary.

Do you want to guess what that is going to do to the price of European bank bonds?

Shareholders of the bank will be the next in line to get hit when a bank bailout happens.

After that, they will go after those that have more than 100,000 euros in their bank accounts.

EU officials say that such a plan is needed because bailing out banks with taxpayer money was creating too many problems

The European Union spent the equivalent of a third of its economic output on saving its banks between 2008 and 2011, using taxpayer cash but struggling to contain the crisis and – in the case of Ireland – almost bankrupting the country.

But a bailout of Cyprus in March that forced losses on depositors marked a harsher approach that can now, following Thursday’s agreement, be replicated elsewhere.

Oh wonderful – the “Cyprus solution” can now be “replicated” everywhere in Europe.

This plan will now be submitted to the European Parliament for final approval.  The goal is to have this plan finalized by the end of this year.

If you have a bank account in Europe with over 100,000 euros in it, get your money out now.

I am not sure how else to say it.

In Cyprus, there were retirees and small businesses that lost hundreds of thousands of euros overnight.

Do not let that happen to you.

And without a doubt, we are going to see a lot of banks fail in Europe over the next few years.  This will especially be true once the next great financial crisis strikes.

But even though we haven’t even gotten to the next great financial crisis yet, the economic depression in Europe just continues to get even worse.  Just consider these facts…

-Car sales in Europe have hit a 20 year low.

-Overall, the unemployment rate in the eurozone is sitting at 12.2 percent.  That is a brand new all-time record high.

-An average of 134 retail outlets are shutting down in Italy every single day.  Overall, 224,000 retail establishments have closed down in Italy since 2008.

-It is being projected that Italy will need to ask for an EU bailout within 6 months.

-Consumer confidence in France has dropped to an all-time low.

-The unemployment rate in France is up to 10.4 percent.  That is the highest that it has been in 15 years.

-Government is now responsible for 57 percent of all economic output in France.

-In May, household lending in Europe declined at the fastest pace in 11 months.

-During the first quarter, disposable income in the UK declined at the fastest pace in 25 years.

-It is being projected that the unemployment rate in Spain will hit 28.5 percent next year.

-Just a few years ago, the percentage of bad loans in Spain was under 2 percent.  Now it is sitting at 10.87 percent.

-The national debt in Spain has grown by 19.1 percent over the past 12 months alone.

-The Greek government says that the Greek economy will shrink by 4.5 percent this year.

-It is being projected that the unemployment rate in Greece will rise to 30 percent in 2014.

And it certainly does not help that China has essentially declared a trade war on Europe.  That is not going to help struggling European industries at all.

I hope that more Americans will start paying attention to what is happening in Europe.  The crippling economic problems that are sweeping across that continent will come here too.

And at some point there is a very good chance that we will also see Cyprus-style bank account confiscation in this country.

So don’t put all of your eggs in one basket.  It is good to have your assets spread around a bunch of different places.  That makes it much harder for them to be wiped out all at once.

What we are watching in Europe right now is really unprecedented in modern times.  They are declaring open season on large bank deposits.  In the end, a lot of people in Europe are going to lose a lot of money.

Make sure that you are not one of them.

Go to Top