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SwitchYourBank.org Examines Why Too Big Too Fail Has Failed
A very interesting new site focused on examining the goings-on of the 5 biggest US banks, Goldman Sachs, Wells Fargo, Citi, Bank of America, and JP Morgan. We are glad to see yet more eyes trained on the big banks. Here’s an introduction to the SITE.
The post SwitchYourBank.org Examines Why Too Big Too Fail Has Failed appeared first on AgainstCronyCapitalism.org.
View full post on AgainstCronyCapitalism.org
American • ECONOMIC REPORT CARD – FAIL
Posted on 8th July 2012 by Administrator in Economy |Politics |Social Issues
Ben Bernanke, BLS, budget deficits, Cash for Clunkers, debt to GDP, default rates, Dept of Defense, Food stamps, fraud, GDP, George Bush, guns versus butter, home buyer tax credit, Iraq, john maynard keynes, Mitt Romney, mortgage modification, National Debt, Obama, Operation Twist, Paul Krugman, Pork, QE1, QE2, Ron Paul, SNAP, SSDI, Stimulus, student loans, Unemployment, University of Phoenix, Wall Street, war
We are now three and one half years into Barack Obama’s presidency. I thought a few pertinent charts would help us assess the success of his economic policies. Upon his election he demanded an $800 billion stimulus package in order to keep the unemployment rate from surpassing 8%. The $800 billion was to be spent over two years we were told and then government spending would be scaled back to pre-stimulus levels. There were 145 million Americans employed when Obama was elected. There are 9 million more working age Americans today than there were in 2008. There are now 142.4 million employed Americans. So, we’ve added 9 million potential workers and still have 2.6 less Americans employed. We have the same number of Americans employed as we did in early 2006, when there were 17 million less working age Americans.
The Obama stimulus plan was passed with everything he wanted. Democrats controlled the House and Senate and gave him exactly what he proposed. By October 2009, the unemployment rate was 10%. Obama’s stimulus package and economic policies have been so successful that he has been able to get the unemployment rate all the way down to 8.2% after three and one half years, even though he said his stimulus package would keep the unemployment rate under 8%. And all it took to get the unemployment rate down to 8.2% was for 8 MILLION Americans to leave the labor force. A critical thinking person who doesn’t swallow the crap peddled by the BLS and the rest of the government propaganda machine might question WHY 8 million Americans would leave the workforce when people desperately need income. If the labor participation rate had stayed constant, the current unemployment rate is 10.9%.
The long-term chart below tells the true story. The BLS classifying millions as not in the labor force is a crock. The Obama apologists and sycophants peddle a false storyline about Baby Boomers retiring as the cause for this labor force decline. The fact is people over the age of 55 have the highest participation rate in history and it continues to rise. Of the 142.4 million employed Americans, only 114 million works more than 35 hours per week, with 28.4 million working part-time. That means that 20% of those employed are part time workers with no benefits. In 2008, prior to the ascendency of Obama, there were 125 million full-time workers and 20 million part-time workers. Obama has been able to increase the percentage of part-time workers from 14% to 20% in just over 3 years. Remember this fact when Obama touts the 3 million new jobs he’s created since 2010.
If you were wondering what the 8.5 million Americans who have left the labor force since 2008 were doing, look no further than the millions of bedrooms now functioning as classrooms for the University of Phoenix and the other on-line, for profit diploma mills that have proliferated with the doling out of hundreds of billions in cheap government student loans. These for profit diploma mills know how to game the system and get their money even if the students drop out after a few months. They educate 12% of students, receive 25% of federal student aid and account for nearly 50% of loan defaults. Sounds like a great business model.
Low interest Federal government loans have skyrocketed from $100 billion when Obama took office to $450 billion today. Total student loan debt has surpassed $1 trillion, with the average student graduating with $25,000 of debt and many more burdened with $100,000 or more of debt. Those part-time jobs making lattes at Starbucks aren’t cutting it. Default rates are already at a ten year high and are poised to skyrocket as more people graduate into a jobless job market. Not only is the American taxpayer on the hook for the $450 billion of direct Federal student loans, but the Federal government is guaranteeing another $450 billion. When the student loan bubble pops, the taxpayer financed bailout will be epic. And this is all being engineered by the Obama administration in order to artificially reduce the unemployment rate. Does this graph remind you of another bubble that resulted in a few problems for the American taxpayer?
After three and a half years, Obama’s policies have led to 11 million less full-time workers and 8 million more part-time workers – just like he drew it up on the board when he committed $800 billion of your tax dollars to saving our economy through classic Keynesianism. Obama declared the stimulus would be a two year jolt to get our economy back on track. Federal government spending was $2.7 trillion in 2006, $2.7 trillion in 2007 and $3.0 trillion in 2008, the last three years of Bush’s administration. If spending stayed on a standard trajectory, it would have been $3.1 trillion in 2009, $3.2 trillion in 2010, $3.3 trillion in 2011 and $3.4 trillion in 2012. With the end of the Iraq occupation in 2010, it should have dropped by $200 billion, resulting in total spending of $3.1 trillion in 2011 and $3.2 trillion in 2012.
Obama declared the stimulus would be short-term. Federal government spending should have risen to $3.5 trillion in 2009, $3.6 trillion in 2010 ($300 billion stimulus – $200 billion Iraq withdrawal), and then revert back to $3.3 trillion in 2011 and $3.4 trillion in 2012. Let’s see whether Obama was honest in his promises:
Federal Government Spending
2009 – $3.5 trillion
2010 – $3.5 trillion
2011 – $3.6 trillion
2012 – $3.8 trillion
After three and one half years of stimulus spending, Cash for Clunkers, Home Buyer Tax Credits, mortgage modification programs, Fannie, Freddie & FHA accumulating billions in bank losses, zero interest rates, QE1, QE2, Operation Twist, unlimited student loans, wars of choice in the Middle East, mark to fantasy accounting standards for Wall Street, and hundreds of billions in bonuses for criminal bankers, we are left with a $5.3 trillion (50% increase) higher national debt and a $300 billion (2.3% increase) higher real GDP. That’s not exactly a big bang for your Keynesian buck. The response you will get from the Obama apologists is, “Imagine how bad it would have been if we didn’t spend the money”. This is a classic liberal response when their solutions are a total failure. Krugman will declare that if we had only spent another $2 trillion all would be well.
As you can see, Obama and all the politicians in Washington DC are really good at spending your money on pork projects, paying off campaign contributors and compensating their corporate cronies. Do you see any reversion back to normalized spending? How can current spending be $300 billion higher than the two stimulus years if Obama was telling the truth in 2009? The Obamanistas declare we are still in an emergency and must borrow and spend to save the economy. The emergency never ends for politicians of both parties. This is how they have bastardized John Maynard Keynes’ theory. They love to implement spending when the economy is in the dumper, but they forget his admonition to pay down debt during the good times. It never happens. There will always be another emergency. Even 2nd grade level Sesame Street fans can see the Federal government spending and debt accumulation never reverses. It couldn’t be any more obvious, unless you are an intellectually dishonest Keynesian ideologue hack (aka Krugman).
This brings us to the crowning economic achievement of the Obama administration. His most successful program is unequivocally the SNAP food stamp program. When Obama assumed power in January 2009 there were 32 million Americans on food stamps and the annual cost of the program was $44 billion. Today there are 46 million Americans on food stamps and the annual cost is pacing at $75 billion. He has been able to get fully 15% of the U.S. population enrolled in this fantastic program and the Department of Agriculture is even running advertisements to convince more people to join
And don’t worry about any restrictions. You can buy as much soda, ice cream, cheetos, and fudge brownies with your SNAP card as you choose. Of course, you are still free to purchase higher end fare.
A cynical less trusting soul than me might even conclude that Obama’s goal is to provide government entitlements to as many people as possible in order to win votes in the upcoming election. One might ask how he can tout an economic recovery and the millions of “new” jobs he has created since 2010, when 6 million people have been added to the food stamp rolls since his economic recovery officially began in 2010. I’m confused by the Obama distinction between success and utter failure.
Not far behind the food stamp program, the SSDI program has been another resounding Obama success. He has been able to enroll twice as many participants in this program as jobs created since the end of the recession. There are already 10 million people on SSDI costing the American taxpayer in excess of $150 billion per year. There are 250,000 people per month applying for benefits and the program will be broke by 2015. In a shocking development, when people began to roll off the 99 week unemployment gravy train, the number of new SSDI applications soared. I guess they were depressed at not being able to collect unemployment for two more years.
Bob Adelman recently summed up the SSDI scam:
“The program, funded federally but administered by the states, is being milked by many who have run out of unemployment benefits and other resources and haven’t been able to find work. At present one out of every eight working-age, non-retired individuals receive disability payments, some for “mental disorders” and “back pain.” Claims for mental disorders, for instance, have more than tripled from 10 percent of cases in 1982 to 32.8 percent in 2012, with half of those based on “mood disorders” such as depression or anxiety. Back or neck “problems” have increased by 31 percent and were the top cause of disability for 50- to 64-year olds. Depression and anxiety and other emotional problems increased by 20 percent, and now constitute one-third of all disability claims. Once on the rolls, beneficiaries have little incentive to return to work because their disability entitles them to additional benefits such as food stamps, Medicaid, Section 8 housing, and student-loan forgiveness. As a result less than one half of one percent of those on disability ever go back to work.”
I’m depressed by the results of Obama’s economic policies. Maybe I should apply for SSDI.
cont
http://www.theburningplatform.com/
Statistics: Posted by yoda — Sun Jul 08, 2012 9:41 pm
View full post on opinions.caduceusx.com
Other • Acemoglu and Robinson: Why Nations Fail
Acemoglu and Robinson: Why Nations Fail
In a generally deferential and ineffective Congressional spectacle, some say minuet and I think kabuki dance, Jim DeMint’s ‘questioning’ of Jamie Dimon, who responded to most serious questions with poker faced whoppers, today pushed me over the edge, and so putting the internet feed on mute, I thought I would take a moment to bring the study Why Nation’s Fail by Acemoglu and Robinson to your attention.
"Countries differ in their economic success because of their different institutions, the rules influencing how the economy works, and the incentives that motivate people,” write Acemoglu and Robinson. Extractive institutions, whether feudalism in medieval Europe or the use of schoolchildren to harvest cotton in contemporary Uzbekistan, transfer wealth from the masses to elites.
In contrast, inclusive institutions—based on property rights, the rule of law, equal provision of public services, and free economic choices—create incentives for citizens to gain skills, make capital investments, and pursue technological innovation, all of which increase productivity and generate wealth. Economic institutions are themselves the products of political processes, which depend on political institutions. These can also be extractive, if they enable an elite to maintain its dominance over society, or inclusive, if many groups have access to the political process. Poverty is not an accident: “Poor countries are poor because those who have power make choices that create poverty.” Therefore, Acemoglu and Robinson argue, it is ultimately politics that matters.
The logic of extractive and inclusive institutions explains why growth is not foreordained. Where a cohesive elite can use its political dominance to get rich at the expense of ordinary people, it has no need for markets and free enterprise, which can create political competitors. In addition, because control of the state can be highly lucrative, infighting among contenders for power produces instability and violence. This vicious circle keeps societies poor.
In more fortunate countries, pluralistic political institutions prevent any one group from monopolizing resources for itself, while free markets empower a large class of people with an interest in defending the current system against absolutism. This virtuous circle, which first took form in seventeenth-century England, is the secret to economic growth."
James Kwak, Failure Is An Option, A Review of Why Nations Fail
As you know I have often said that in a sovereign fiat currency, inflation and deflation are a policy decision.
Acemoglu and Robinson take this premise a broad step further, and show through many historical examples that national success or failure, as one might define it in terms of the broadest happiness and success for the most people, is also the result largely of policy decisions.
Neither austerity or stimulus will be effective in restoring growth to the American economy. Most if not all of the pain of austerity will fall on the hapless victims and the disenfranchised innocent, while most of the profits of recovery through stimulus will flow to the one percent. No matter what strategy you may employ, it is difficult to be successful against a stacked deck in a rigged game.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery.
http://jessescrossroadscafe.blogspot.ca/
Statistics: Posted by yoda — Wed Jun 13, 2012 12:52 pm
View full post on opinions.caduceusx.com
Daron Acemoglu discusses “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”
Institutions — not geography, culture, or other factors — explain why some nations succeed and others fail. So says Daron Acemoglu in an ambitious new book drawing evidence from thousands of years of human history and from societies as diverse as those of the Inca Empire, 17th century England, and contemporary Botswana. Inclusive political and economic institutions, influenced by critical junctures in history, produce virtuous cycles that reinforce pluralism in the market and in politics.
View full post on Libertarianism.org
The Too Big To Fail Banks Are Now Much Bigger And Much More Powerful Than Ever
The Democrats, the Republicans and especially Barack Obama promised that something would be done about the too big to fail banks so that they would never again be a threat to destroy our financial system. Well, those promises have not been kept and the too big to fail banks are now much bigger and much more powerful than ever. The assets of the five biggest U.S. banks were equivalent to about 43 percent of U.S. GDP before the financial crisis. Today, the assets of the five biggest U.S. banks are equivalent to about 56 percent of U.S. GDP. So if those banks were “too big to fail” before, then what are they now? They continue to gobble up smaller banks at a brisk pace, and they continue to pile up debt and risky investments as if a day of reckoning will never come. But of course a day of reckoning is coming, and when it arrives they will be expecting more bailouts just like they got the last time.
The size of these monolithic financial institutions is truly difficult to comprehend. They completely dominate our financial system and everywhere you look they are constantly absorbing more wealth and more power. The following comes from a recent Bloomberg article….
Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.
Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy
Despite all of the talk from the politicians, they just keep getting bigger and bigger and bigger.
So why isn’t anything ever done?
Well, one reason is because these gigantic financial entities funnel huge quantities of cash into political campaigns.
For example, Barack Obama gives nice speeches about the dangers of the too big to fail banks, but he is also more than happy to take their campaign contributions. Goldman Sachs, JPMorgan Chase and Citigroup were all ranked among his top 10 donors during the 2008 campaign.
So do you really expect that Barack Obama is going to bite the hands that feed him?
Of course he is not going to do that.
The truth is that the Obama administration and the Federal Reserve have done everything they can to make life very comfortable for the big Wall Street banks.
During the last financial crisis, the too big to fail banks were absolutely showered with bailouts.
Meanwhile, hundreds of small and mid-size banks were allowed to die.
When representatives from those small and mid-size banks contacted the federal government for help, often they were told to try to find a larger bank that would be willing to buy them.
Sadly, the last financial crisis simply accelerated the consolidation of the banking industry in the United States that has been going on for several decades.
Today, there are less than half as many banks in the United States as there were back in 1984.
So where did all of those banks go?
They were either purchased by bigger banks or they were allowed to go out of existence.
This banking consolidation trend has allowed the big Wall Street banks to absolutely explode in size.
Back in 1970, the 5 biggest U.S. banks held 17 percent of all U.S. banking industry assets.
Today, the 5 biggest U.S. banks hold 52 percent of all U.S. banking industry assets.
So where will this end?
That is a good question.
The funny thing is that Federal Reserve Chairman Ben Bernanke and other Fed officials keep giving speeches where they warn of the dangers of having banks that are “too big to fail”. For example, during a recent presentation to students at George Washington University, Bernanke made the following statement about the U.S. banking system….
“But clearly, it is something fundamentally wrong with a system in which some companies are ‘too big to fail.’”
So does that mean that Bernanke is against the too big to fail banks?
Of course not.
The truth is that he showered those banks with trillions of dollars in bailout money during the last financial crisis.
The amount of money in secret loans that some of the big Wall Street banks received from the Federal Reserve was absolutely staggering. The following figures come directly from a GAO report….
Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Bank of America – $1.344 trillion
Goldman Sachs – $814 billion
JP Morgan Chase – $391 billion
Bernanke has shown that he is willing to move heaven and earth to protect those big banks.
So what did those banks do with all that money?
They certainly didn’t lend it to us. Lending to individuals and small businesses by those big banks actually went down immediately after those bailouts.
Instead, one thing that those banks did was they started putting massive amounts of money into commodities.
One of those commodities was food.
Over the past few years, big Wall Street banks have made huge amounts of money speculating on the price of food. This has caused food prices all over the globe to soar and it has caused tremendous hardship for hundreds of millions of families around the planet. The following is from a recent article in The Independent….
Speculation by large investment banks is driving up food prices for the world’s poorest people, tipping millions into hunger and poverty. Investment in food commodities by banks and hedge funds has risen from $65bn to $126bn (£41bn to £79bn) in the past five years, helping to push prices to 30-year highs and causing sharp price fluctuations that have little to do with the actual supply of food, says the United Nations’ leading expert on food.
Hedge funds, pension funds and investment banks such as Goldman Sachs, Morgan Stanley and Barclays Capital now dominate the food commodities markets, dwarfing the amount traded by actual food producers and buyers.
Goldman Sachs alone has earned hundreds of millions of dollars in profits from food speculation.
Can you imagine what kind of mindset it takes to do this?
Can you imagine taking food out of the mouths of hungry families on the other side of the world so that you and your fellow employees can pad your bonus checks?
It really is disgusting.
But that is the way the game is played.
It is set up so that the big guy will win and the little guy will lose.
The other day I wrote about how this is particularly true when it comes to our system of taxation.
Well, since that article I have discovered some new numbers that were just released by Citizens for Tax Justice. Some of the things that they have uncovered are absolutely amazing….
Between 2008 and 2011, Verizon made a total profit of $19.8 billion and yet paid an effective tax rate of -3.8%.
Between 2008 and 2011, General Electric made a total profit of $19.6 billion and yet paid an effective tax rate of -18.9%.
Between 2008 and 2011, Boeing made a total profit of $14.8 billion and yet paid an effective tax rate of -5.5%.
Between 2008 and 2011, Pacific Gas & Electric made a total profit of $6 billion and yet paid an effective tax rate of -8.4%.
So why should middle class families continue to be suffocated by outrageous tax rates when hugely profitable corporations such as General Electric are able to get away with paying nothing?
Our current tax system is an utter abomination and should be completely thrown out.
But as is the case with so many other things, our current system is going to persist because the “big guys” really enjoy the status quo and they are the ones that fund political campaigns.
It would be bad enough if the “big guys” were beating us on a level playing field.
But the truth is that the game has been dramatically tilted in their favor and they know that the politicians are going to take care of them whenever they need it.
So what is going to happen the next time the too big to fail banks get into trouble?
They will almost certainly get bailed out again.
Unfortunately, the big Wall Street banks continue to treat the financial system as if it was a gigantic casino. The derivatives bubble just continues to grow larger and larger, and it could burst and absolutely devastate the entire global financial system at any time.
According to the New York Times, the too big to fail banks have complete domination over derivatives trading. Every month a secret meeting that includes representatives from JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup is held in New York to coordinate their control over the derivatives marketplace. The following is how the New York Times describes those meetings….
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
When the derivatives market fully implodes, there will not be enough money in the world to bail everyone out. According to the Comptroller of the Currency, the too big to fail banks have exposure to derivatives that is absolutely outrageous. Just check out the following numbers….
JPMorgan Chase – $70.1 Trillion
Citibank – $52.1 Trillion
Bank of America – $50.1 Trillion
Goldman Sachs – $44.2 Trillion
So what happens when that house of cards comes crashing down?
Well, those big banks will come crying to the federal government again.
They will want more bailouts.
They will claim that if we don’t give them the money that they need that the entire financial system will collapse.
And yes, if several of the too big to fail banks were to collapse all at once the consequences would be almost unimaginable.
But of course all of this could have been avoided if we would have made much wiser decisions upstream.
Our financial system is more vulnerable than it ever has been before, and the too big to fail banks just continue to grow.
The lessons from the financial crisis of 2008 have gone unheeded, and we are steamrolling toward an even greater crash.
What a mess.
View full post on The Economic Collapse
Other • The Too Big To Fail Banks Are Now Much Bigger
The Too Big To Fail Banks Are Now Much Bigger And Much More Powerful Than Ever
The Democrats, the Republicans and especially Barack Obama promised that something would be done about the too big to fail banks so that they would never again be a threat to destroy our financial system. Well, those promises have not been kept and the too big to fail banks are now much bigger and much more powerful than ever. The assets of the five biggest U.S. banks were equivalent to about 43 percent of U.S. GDP before the financial crisis. Today, the assets of the five biggest U.S. banks are equivalent to about 56 percent of U.S. GDP. So if those banks were "too big to fail" before, then what are they now? They continue to gobble up smaller banks at a brisk pace, and they continue to pile up debt and risky investments as if a day of reckoning will never come. But of course a day of reckoning is coming, and when it arrives they will be expecting more bailouts just like they got the last time.
The size of these monolithic financial institutions is truly difficult to comprehend. They completely dominate our financial system and everywhere you look they are constantly absorbing more wealth and more power. The following comes from a recent Bloomberg article….
Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.
Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy
Despite all of the talk from the politicians, they just keep getting bigger and bigger and bigger.
So why isn’t anything ever done?
Well, one reason is because these gigantic financial entities funnel huge quantities of cash into political campaigns.
For example, Barack Obama gives nice speeches about the dangers of the too big to fail banks, but he is also more than happy to take their campaign contributions. Goldman Sachs, JPMorgan Chase and Citigroup were all ranked among his top 10 donors during the 2008 campaign.
So do you really expect that Barack Obama is going to bite the hands that feed him?
Of course he is not going to do that.
The truth is that the Obama administration and the Federal Reserve have done everything they can to make life very comfortable for the big Wall Street banks.
During the last financial crisis, the too big to fail banks were absolutely showered with bailouts.
Meanwhile, hundreds of small and mid-size banks were allowed to die.
When representatives from those small and mid-size banks contacted the federal government for help, often they were told to try to find a larger bank that would be willing to buy them.
Sadly, the last financial crisis simply accelerated the consolidation of the banking industry in the United States that has been going on for several decades.
Today, there are less than half as many banks in the United States as there were back in 1984.
So where did all of those banks go?
They were either purchased by bigger banks or they were allowed to go out of existence.
This banking consolidation trend has allowed the big Wall Street banks to absolutely explode in size.
Back in 1970, the 5 biggest U.S. banks held 17 percent of all U.S. banking industry assets.
Today, the 5 biggest U.S. banks hold 52 percent of all U.S. banking industry assets.
So where will this end?
That is a good question.
The funny thing is that Federal Reserve Chairman Ben Bernanke and other Fed officials keep giving speeches where they warn of the dangers of having banks that are "too big to fail". For example, during a recent presentation to students at George Washington University, Bernanke made the following statement about the U.S. banking system….
"But clearly, it is something fundamentally wrong with a system in which some companies are ‘too big to fail.’"
So does that mean that Bernanke is against the too big to fail banks?
Of course not.
The truth is that he showered those banks with trillions of dollars in bailout money during the last financial crisis.
The amount of money in secret loans that some of the big Wall Street banks received from the Federal Reserve was absolutely staggering. The following figures come directly from a GAO report….
Citigroup – $2.513 trillion
Morgan Stanley – $2.041 trillion
Bank of America – $1.344 trillion
Goldman Sachs – $814 billion
JP Morgan Chase – $391 billion
Bernanke has shown that he is willing to move heaven and earth to protect those big banks.
So what did those banks do with all that money?
They certainly didn’t lend it to us. Lending to individuals and small businesses by those big banks actually went down immediately after those bailouts.
Instead, one thing that those banks did was they started putting massive amounts of money into commodities.
One of those commodities was food.
Over the past few years, big Wall Street banks have made huge amounts of money speculating on the price of food. This has caused food prices all over the globe to soar and it has caused tremendous hardship for hundreds of millions of families around the planet. The following is from a recent article in The Independent….
Speculation by large investment banks is driving up food prices for the world’s poorest people, tipping millions into hunger and poverty. Investment in food commodities by banks and hedge funds has risen from $65bn to $126bn (£41bn to £79bn) in the past five years, helping to push prices to 30-year highs and causing sharp price fluctuations that have little to do with the actual supply of food, says the United Nations’ leading expert on food.
Hedge funds, pension funds and investment banks such as Goldman Sachs, Morgan Stanley and Barclays Capital now dominate the food commodities markets, dwarfing the amount traded by actual food producers and buyers.
Goldman Sachs alone has earned hundreds of millions of dollars in profits from food speculation.
Can you imagine what kind of mindset it takes to do this?
Can you imagine taking food out of the mouths of hungry families on the other side of the world so that you and your fellow employees can pad your bonus checks?
It really is disgusting.
But that is the way the game is played.
It is set up so that the big guy will win and the little guy will lose.
The other day I wrote about how this is particularly true when it comes to our system of taxation.
Well, since that article I have discovered some new numbers that were just released by Citizens for Tax Justice. Some of the things that they have uncovered are absolutely amazing….
Between 2008 and 2011, Verizon made a total profit of $19.8 billion and yet paid an effective tax rate of -3.8%.
Between 2008 and 2011, General Electric made a total profit of $19.6 billion and yet paid an effective tax rate of -18.9%.
Between 2008 and 2011, Boeing made a total profit of $14.8 billion and yet paid an effective tax rate of -5.5%.
Between 2008 and 2011, Pacific Gas & Electric made a total profit of $6 billion and yet paid an effective tax rate of -8.4%.
So why should middle class families continue to be suffocated by outrageous tax rates when hugely profitable corporations such as General Electric are able to get away with paying nothing?
Our current tax system is an utter abomination and should be completely thrown out.
But as is the case with so many other things, our current system is going to persist because the "big guys" really enjoy the status quo and they are the ones that fund political campaigns.
It would be bad enough if the "big guys" were beating us on a level playing field.
But the truth is that the game has been dramatically tilted in their favor and they know that the politicians are going to take care of them whenever they need it.
So what is going to happen the next time the too big to fail banks get into trouble?
They will almost certainly get bailed out again.
Unfortunately, the big Wall Street banks continue to treat the financial system as if it was a gigantic casino. The derivatives bubble just continues to grow larger and larger, and it could burst and absolutely devastate the entire global financial system at any time.
According to the New York Times, the too big to fail banks have complete domination over derivatives trading. Every month a secret meeting that includes representatives from JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup is held in New York to coordinate their control over the derivatives marketplace. The following is how the New York Times describes those meetings….
On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.
The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
When the derivatives market fully implodes, there will not be enough money in the world to bail everyone out. According to the Comptroller of the Currency, the too big to fail banks have exposure to derivatives that is absolutely outrageous. Just check out the following numbers….
JPMorgan Chase – $70.1 Trillion
Citibank – $52.1 Trillion
Bank of America – $50.1 Trillion
Goldman Sachs – $44.2 Trillion
So what happens when that house of cards comes crashing down?
Well, those big banks will come crying to the federal government again.
They will want more bailouts.
They will claim that if we don’t give them the money that they need that the entire financial system will collapse.
And yes, if several of the too big to fail banks were to collapse all at once the consequences would be almost unimaginable.
But of course all of this could have been avoided if we would have made much wiser decisions upstream.
Our financial system is more vulnerable than it ever has been before, and the too big to fail banks just continue to grow.
The lessons from the financial crisis of 2008 have gone unheeded, and we are steamrolling toward an even greater crash.
What a mess.
http://theeconomiccollapseblog.com/arch … -than-ever
Statistics: Posted by yoda — Tue Apr 17, 2012 6:49 pm
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Other • How the Elites Manipulate Big Stocks – and Why They’re Fail
How the Elites Manipulate Big Stocks – and Why They’re Failing
Thursday, April 12, 2012 – by Staff Report
Where Has All the Trading Gone? … It’s one of the biggest mysteries on Wall Street. How can stocks be in their fourth year of a bull market and trading activity be so low? During March, average daily volume in equity shares was at their lowest level since December 2007, according to new data from Credit Suisse. This is the same month that marked the three-year anniversary of the bull market that caused the Standard & Poor’s 500 to double from its March 2009 credit-crisis low. – CNBC
Dominant Social Theme: What’s wrong with the stock market? It’s just in the doldrums and will recover shortly. In fact, it already did …
Free-Market Analysis: This kind of question is a kind of elite dominant social theme, no doubt about it. It frames the conversation and presupposes that the market itself is a greater good and that its growing failure is bound to be mitigated by additional success.
The elites are wedded to the stock market, which allows them to monetize various financial promotions. The bigger companies (stocks) receive the most attention. Facebook is a prime example of this. The company is likely in some sense an Intel operation, but it is being rolled out as investment opportunity of tremendous consequence. For our take, just Google "Facebook" and "Daily Bell."
Smaller equity opportunities and private equity opportunities are, ironically, perhaps more sincere ones, in that they are less subject to elite manipulation. For the most part, the powers-that-be don’t bother so much with the small fry, but there’s no doubt the elites value the stock market for their larger efforts.
This can be seen with the nascent "green" economy. Without a stock market, the "new" economy that the elites are trying to put into place cannot be properly positioned. Stock markets are supposed to provide a public buy in, to essentially validate these vast, industrial promotions.
Middle classes are actually entangled in them as part of their "portfolios" and this provides further support for even the most dubious corporate efforts. Now howver, as the Internet creates further skepticism about the Way the World Works, it would seem this strategy generally is attracting increased scrutiny.
Of course, every time the market goes down these days it seems it is soon going back up. On Tuesday, stocks were up in many major capitals around the world. But this does not mean that the troubles of public equity generally are over. Far from it.
Looked at from the standpoint of directed history, the evolution of the stock market cannot now be said to be entirely natural. As with most mainstream monetary facilities, it was cultivated and raised in the United States.
The evolution of the stock market – and securities markets generally – into what it is today began after the Civil War in the US when the New York Stock Exchange went on a buying binge, acquiring up to a dozen or more New York area exchanges.
This seems to have been a trigger for a massive rise in equity trading that turned railroads into the first big equity bubble. JP Morgan was one of the catalysts for this evolution, and the advent of the Federal Reserve in 1913 provided the fiat money fuel that rocketed the market into the Roaring 20s.
After the Great Crash, subsequent Depression and World War II, the mavens running the NYSE went on a countrywide tour, reselling equity as a logical investment methodology. The American public eventually bought it and for the rest of the century the stock market prospered. But no more. Here’s some additional text from the article:
"There’s no way to sugar-coat it: Volumes are down and trending lower," wrote Ana Avramovic of Credit Suisse, in a note to clients. "A growing preference for other asset classes may be drawing money away from equities." Daily equity volume in March was 6.59 billion shares a day, the lowest since a sub-6 billion volume month in December 2007, according to Credit Suisse. (The firm adjusted December 2011′s low figures to account for the holiday-skewed week.) …
The Credit Suisse analyst also notes that high-frequency trading, which accounts for half of all market activity, has been on the decline since last summer … After two vicious bear markets in a decade, the average investor simply doesn’t trust this market anymore. "There is no fresh money going into the markets," said Doug Kass of Seabreeze Partners. "Why should we be surprised the retail investor is not there? We’ve had two huge drawdowns in stocks since 2000, a flash crash two years ago and real incomes are stagnating."
Stock mutual fund flows are negative on the year despite a double-digit percentage gain for the S&P 500 in 2012. Meanwhile, bond funds of all kinds keep garnering more assets, even with interest rates in the basement … "The financial industry has placed itself above the investing public," said Alan Newman, author of the Crosscurrents financial newsletter. "The public’s confidence has been shattered, possibly beyond repair."
The power elite that apparently wants to run the world is intent on expanding the large public equity market and has been successful in doing so in the past half century. But this drive toward a seamless world marketplace would seem to be faltering of late. The elites have done what they can to reignited the meme, even putting in place – in the states – a "plunge protection team."
At this point, we’d speculate that the market for the elites biggest stocks is a fairly inflated oned, kept up by all sorts of inflated trading. But we wonder how long this can last in an era where commodities and precious metals investment is obviously ascendent. The markets went up and down in the 1970s, a decade analogous to the first decade of the 2000s in our view.
There will no doubt be further ups and downs of the stock market over the course of this year, without necessarily a resolute trading trend. This is because, as we’ve often pointed out, the business cycle has trended toward gold and silver and will like do so until either the elites interfere strongly, or until finally there is a paper blowoff of junior miners.
Smaller equity plays, private deals, bootstrap equity created locally among family and friends, all this has a place in the modern investment paradigm. But the large-deal market is surely not what it was. In fact, in our view, the elites themselves realize this and are getting ready to pound Wall Street with yet more regulations and purges as they did during the 1930′s Great Depression.
Conclusion: People have certainly lost faith in stocks – but this must be seen within the context of the larger bull market in money metals. This is what the paper money crowd is fighting against and why stocks are resistant to re-stimulation.
http://www.thedailybell.com/3786/How-th … re-Failing
Statistics: Posted by yoda — Thu Apr 12, 2012 10:38 am
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Biased Media • CNN babes fail
CNN babes fail
March 31, 2012 by Don Surber
The following post contains male (and lesbian) chauvinism that may offend the easily offended as it judges women just by their looks. But then again, everyone on television is judged by his or her looks. The last news person who did not look good on TV who drew ratings was Dorothy Fuldheim. If you are offended by male (and lesbian) chauvinism, kindly read one of the 1 million other political blogs.
The difference between CNN and Fox News is that the Fox News babes are blond and the CNN babes are brunette. That and the women on Fox News get the ratings. The women on CNN get awards.
I bring this up because another CNN babe is about to bite the dust.
From Robert Stacy McCain:
Soledad O’Brien, America’s least-popular cable TV news personality.
Executives at CNN must be in shock at the catastrophic implosion of their morning lineup, as Starting Point With Soledad O’Brien (7-9 a.m. weekdays) recorded the cable network’s lowest ratings for that time slot in more than a decade. Fewer than 100,000 adults 25-54 tuned in to O’Brien’s program on an average day, according to the latest quarterly Nielsen numbers.
Inside Cable News called the CNN morning numbers “brutal,” and “an epic ratings collapse,” further adding: “CNN cannot continue to hemorrhage viewers like this much longer without taking drastic corrective action.” While industry observers were amazed by O’Brien’s unprecedented unpopularity, the outspoken liberal host’s historically low ratings were a cause for vengeful celebration by conservatives like the Daily Caller’s Jim Treacher.
Soledad O’Brien’s unpopularity is symptomatic of how out-of-touch CNN is. The network lost its credibility with conservatives, who are the core audience for cable TV news. MSNBC at least can get frat boy libs to tune in at night. CNN? It has to stick TVs in dental offices, airports and gas chambers to get people to watch. If I were about to be executed, I would say, hurry up. Wolf Blitzer is coming back on.
On top of all that, Miss O’Brien is not all terribly bright. Apparently she misunderstood critical race theory, which is OK unless you are interviewing someone on the subject.
Compare her to Megyn Kelly, a blond with a law degree. Her show draws 1.2 million viewers a day.
Miss O’Brien’s bio on Wikipedia lists all her awards for being a minority, but says nothing about her education. OK, I get that she is Irish, Hispanic and black. But she should have some other qualifications.
Blonds are supposed to be dumb, while brunettes are supposed to be more intelligent than men. Perhaps this is why men prefer blonds — and why so many brunettes become blonds. Just saying.
http://blogs.dailymail.com/donsurber/archives/53537
Statistics: Posted by yoda — Sat Mar 31, 2012 10:56 am
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International News • Greek default looms as voluntary debt deal looks set to fail
Authorities in Athens are ready to enforce the controversial collective action clauses, or CACs, to impose the restructuring deal on all bondholders as the number of voluntary agreements look set to fall short of the required amount.
Credit rating agencies have warned they will declare Athens to be in default if the CACs are triggered which would be a dramatic culmination to a three-year rollercoaster ride for Athens, the eurozone and global markets.
While the markets have been ready for a Greek default for months, the move could leave Greece and its banks barred from funding from the European Central Bank (ECB). On Monday, Standard & Poor’s declared Greece to be in a state of “selective default” which led to the ECB announcing it would no longer accept Greek government bonds as security for new loans.
The rating agency said its decision had been prompted by the threat of the CACs and the actual use of them is likely to tip Greece into actual default. The agency said it regarded the process as a “distressed debt restructuring”.
Raoul Ruparel of Open Europe, the London-based think-tank, said: “Greece is likely to struggle to reach the targets for a voluntary agreement so the credit rating agencies are almost certainly going to see this as a default.
"Greek banks will probably be barred from normal ECB funding and have to turn to the Emergency Liquidity Assistance [provided by the ECB] instead but for how long, we don’t know.”
Greece needs around 95pc of its private creditors to accept the deal by the deadline on Thursday in order to secure its €130bn international bail-out package and avert imminent bankruptcy.
Greek politicians back the use of CACs – which allow the deal to be imposed on all bondholders if 66pc agree to it – being inserted retrospectively if the voluntary agreement falls short.
The uncertainty over the deal on Greek debt put further pressure on the euro last week. The single currency fell sharply against the dollar and other major currencies.
Uncertainty over Spanish willingness to stick to its austerity programme also put pressure on the currency.
Last week, the International Swaps and Derivatives Association (ISDA) declared that there had not yet been a credit event in Greece so there was no need for the credit default insurance instruments to be triggered.
If the CACs are triggered this week, the committee will almost certainly reconsider its decision.
http://www.telegraph.co.uk/finance/fina … -fail.html
Statistics: Posted by yoda — Sat Mar 03, 2012 4:13 pm
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American • Progress on Letting Big Banks Fail
Progress on Letting Big Banks Fail
By SIMON JOHNSON
http://economix.blogs.nytimes.com/2012/ … /?emc=eta1
Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”
The drafters of the Dodd-Frank financial reform law got an important thing right. Despite fierce pushback from the banks — and lackluster support from the White House at critical moments — the legislators communicated a key new intent: megabanks must be able to fail, and the Federal Deposit Insurance Corporation should be in charge of that liquidation process.
The F.D.I.C. was an inspired choice for this role, because it is less captivated by the “magic” of Wall Street and less captured by its money and influence than any other group of officials.
The F.D.I.C. has also long been in the business of shutting down banks while limiting the damage to taxpayers, although it did not previously have complete jurisdiction over the largest banks when they got into trouble. It could only deal with those parts that had federally insured “retail” deposits, and this turns out not to be where the biggest problems have occurred in recent times.
Charged with this mandate involving the too-big-to-fail banks and with the difficult task of potentially shutting one or more of them without disrupting the economy, the F.D.I.C. took the remarkable step of opening up its decision-making process.
By creating a Systemic Resolution Advisory Committee of informed outsiders and by Webcasting the deliberations of that group, the agency has brought perhaps an unprecedented degree of transparency to public policy for banks — a point made forcefully by Dennis Kelleher; his blog at Better Markets is a must-read for anyone who cares about financial regulatory reforms. (Disclosure: I’m a member of the committee, an unpaid position.)
Committee members hold a wide range of views. Some are quite sympathetic to our existing financial structures, some much more skeptical. You can look over the list and make up your own mind as to who is on which side, and you might want to review the recording of the Jan. 25 meeting.
There is no question that the senior leadership of the F.D.I.C. is paying attention to the committee — and at the meetings, key people are put on the spot to discuss all relevant details with well-informed committee members, who can ask a lot of follow-up questions.
It is inconceivable that any other part of our financial regulatory apparatus will ever open itself up in the same way — for example, the Federal Reserve (in both Washington and New York), the Treasury Department and the Federal Stability Oversight Council are likely to be forever opaque. They, too, should open themselves up in public to tough cross-examination by experts, but that goes directly against their aloof and perhaps arrogant culture.
The history of American public administration is littered with examples of policy gone wrong — and actions misdirected — because informed and well-meaning critics were kept at arm’s length. Information is withheld even from other agencies. Powerful special interests work their influence; the rest of society has no effective voice. Even the most energetic Congressional oversight is unlikely to work when expert critics are kept so far from the real policy action.
Within the financial sphere, if the F.D.I.C. really manages to convince the markets that big banks can and will fail — meaning that creditors face the genuine prospect of losses — that changes everything.
Once this kind of failure is a realistic option, there is more pressure for meaningful supervision, because no one wants to be the supervisor in charge when a huge financial institution goes out of business. As was the case with the Lehman bankruptcy examiner report, when a company fails, we really learn who was asleep at which switch.
Are the markets now persuaded that too-big-to-fail is really over? Not yet. As Peter Fisher of BlackRock pointed out at the meeting of the Systemic Resolution Advisory Committee, we should watch for investors demanding a higher return as compensation for the higher risk of actual failure. In other words, the interest rate at which big banks borrow would need to increase — for their holding companies, their operating subsidiaries or both.
The threat of failure for megabanks will be credible only when the F.D.I.C. can convincingly put a firewall around the losses. We need creditors to a collapsing bank to lose the value of their loans — for example, those who have lent to the bank holding company may have some part of their exposure written down and the rest converted to equity.
At the same time, there needs to be a convincing fence, in the sense that one failing megabank must not be able to bring down the rest of the financial system. The threat of liquidation for any big company will be credible only if the damage can be limited to people with direct exposure — otherwise someone at the highest level of government, presumably with the approval of the president, will override all plans and provide a backdoor bailout.
There is always a back door; the point is to make it politically unappealing and economically unnecessary to use it.
The recent failure of MF Global demonstrates that this is entirely possible. Jon Corzine must be one of the best-connected people in the country — few Wall Street financiers are as close to this administration’s power brokers. He placed big bets as if he were still running Goldman Sachs, but MF Global was only about one-twentieth the size.
People who trusted MF Global lost money (and there may have been fraud, which is a different matter and is, one hopes, subject to proper law enforcement action). But the spillover damage to the rest of the financial system was minimal. When Mr. Corzine’s bets went bad, a bailout was not discussed.
The F.D.I.C. is moving in the right direction, although there is much to do before big banks can be treated like MF Global.
Banks must be required to have a financing and legal structure within which losses can be imposed while also allowing for an orderly wind-down of the business. New management and a new board must be brought in under intense time pressure. The failure of an international bank needs ex ante cooperation agreements with other countries, particularly Britain.
Still, in a complex financial system with powerful special interests and myriad global risks, not all of which can be readily quantified, the F.D.I.C. is moving closer to a clear statement of the problem and, at a very granular level, what needs to be done. This is progress.
Statistics: Posted by DIGGER DAN — Fri Feb 03, 2012 11:05 pm
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