RPT-Bankia compensation qualms signal loss of faith in Spain’s banks
Mon May 20, 2013 2:39am EDT
* Spanish govt created compensation scheme to defuse scandal
* Bankia expects around 150,000 people to seek arbitration
* Lawyers say many people inquiring about taking cases to court
By Sonya Dowsett
MADRID, May 19 (Reuters) – Many duped savers at Spanish lender Bankia are shunning a state-supervised compensation scheme in favour of expensive lawsuits, prolonging a mis-selling scandal and complicating efforts to restore faith in the banking system.
The disputes over mis-selling at Bankia and other nationalised banks have created a major headache for the government as it tries to take the next step in their rescue, imposing large losses on holders of junior debt.
It set up the arbitration process to try to end daily protests by some of those debt holders – elderly savers who say they were mis-sold complex debt products as safe, high-interest deposit accounts.
But many people caught up in Bankia’s rescue see it as a trick to stop them getting their money back.
"We are not going to enter the arbitration process because we think it’s a swindle," said 66-year-old Carlos Peral at a recent protest outside a Bankia branch in a Madrid. All the demonstrators Reuters spoke to were seeking legal action.
Peral and his wife, both blind, have 80,000 euros ($103,300)of life savings tied up in Bankia preference shares, a form of hybrid debt due to be converted under the rescue by May 24 into ordinary shares worth around 38 percent less
The terms of its EU-funded 24.5 billion euro bailout require Bankia and its parent group BFA to raise 6.5 billion euros this way — by converting debt into equity at a large discount.
Whether customers win misselling claims through the courts or through the state-sponsored scheme, the bank will have to find the money to compensate them, a factor not taken into account when its recapitalisation was calculated.
"The arbitration process is not something positive for Bankia. The bank will have to settle those claims in cash," said a banker involved in Bankia’s recapitalisation.
Court cases drag out the issue for even longer. "You don’t know when the legal cases will end, they could last years."
Bankia declined to say how many court cases had been lodged against it related to preference shares, but said it was much fewer than the number who had requested arbitration.
A bank spokesman said the compensation claims would be easily covered by parent group BFA and would not affect Bankia’s capital. Preference share holders will have the market value of their shares deducted from any compensation package.
The mis-selling scandal is salt in the wound for Spaniards forced to put up with years of tax hikes and spending cuts to deal with the country’s financial crisis.
A 2013 survey carried out by public relations agency Edelman found Spaniards the most unhappy worldwide with their banks, outstripping Ireland, Great Britain and Italy, all of which have suffered banking scandals in recent years.
Peral, one of 300,000 hybrid debt holders whose new shares are due to start trading on May 28, is deeply mistrustful: "The measures have been drawn up to trick people into making a claim which will then be rejected and they’ll keep the money."
Bankia customers have until June 30 to file claims of mis-selling. Auditor KPMG determines the maximum amount that could be awarded to the claimant, who then signs an agreement which waives future legal action. A state arbitrator then determines the actual level of payout.
The legal route is more expensive as it includes lawyers’ fees, but many preference share holders believe they have a better chance of getting more money back through the courts.
No arbitration case has yet paid out, but Bankia says successful claims should receive their money back, adjusted for interest. Lawyers were cashing in on the confusion surrounding the arbitration process, said a source close to the process.
"For the lawyers, the fact that there is a quick and free compensation process is very bad news," he said. "There is huge business for them in taking these cases to court."
The bank said that 44,316 people had so far applied for the arbitration process and it expected around 150,000 customers to turn to it in total.
The banker involved in the recapitalisation said many may turn to arbitration after May 28 when the new shares start trading if their price dips because savers cash them in.
MONEY BACK PLEASE
To determine eligibility for compensation, factors such as whether bank staff explained the risks of the product and the customer’s investment history are taken into account.
On the street, confusion over the criteria reigned.
"To win the arbitration you have to have Alzheimer’s, or be illiterate or on an extremely low income," said Raul Gomez, 60, who has 145,000 euros locked in preference shares, including a redundancy package from his former job as a supermarket manager.
"Going to court is the only way for me to get something back," he adds. He says that out of 52 court cases he knows of, 51 have been successful.
Legal firm V Abogados recently put on back-to-back presentations about the arbitration process at a Madrid hotel to packed audiences, where people clamoured for advice.
"We’ve had around 2,000 people coming to our offices connected with this issue," says V Abogados lawyer Santiago Viciano. "Our switchboard has been blocked with people ringing in from all over Spain."
Most preference share holders have won their claims so far, he said, adding that he expected an avalanche of rulings through the courts after the summer.
The protesters just want their money. "We’re not interested in the swap or the compensation," said Mariano Hernanez, a retired carpenter with 464,000 euros in preference shares.
"I’m 81 now, and I will keep fighting until I get all my money back."
Statistics: Posted by DIGGER DAN — Thu May 23, 2013 5:37 pm
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Sears reports net loss of almost $500 million
Hadley Malcolm, USA TODAY
Net loss of almost $500 million
Same store sales down 3.1%
Focusing on member-based business
6:18PM EST November 15. 2012 – Sears Holdings reported a net loss of almost $500 million versus $410 million last year, showing the retailer continues to struggle to turn business around.
Revenue was also down, though mostly due to closing several Sears and Kmart stores. Sales for stores open at least a year were down 3.1%, slightly better than a 3.7% decline in the second quarter.
The retailer continues to focus energy on its rewards program, Shop Your Way, which accounts for more than half of revenue for Sears and Kmart U.S. operations, CEO Lou D’Ambrosio said in a conference call Thursday afternoon.
"We’re rapidly moving to a member-based business model," he said.
Shop Your Way members get access to personalized deals and earn points for purchases that can be redeemed at Sears, Kmart or Lands End, online or in stores. The company doesn’t disclose how many Shop Your Way members it has, but spokesman Chris Brathwaite says it’s in the "tens and tens of millions."
Online business for the company grew more than 20% in the quarter.
The Sears announcement comes on the heels of Target and Wal-Mart’s third quarter earnings out Thursday morning. Both retailers reported increases in net income heading into Black Friday next week and the subsequent holiday shopping season.
Statistics: Posted by yoda — Fri Nov 16, 2012 10:10 am
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By Charles Penty – Sep 1, 2012
Spain will inject capital into the Bankia (BKIA) group after the nationalized lender posted a 4.45 billion-euro ($5.6 billion) first-half loss.
The nation’s bank rescue fund, known as FROB, will pump from 4 billion euros to 5 billion euros into Bankia, Spain’s third-biggest lender, in the next two weeks, said a person familiar with the situation who asked not to be identified because those details aren’t public.
Bankia SA’s plea for a bailout pushed Spain toward requesting a 100 illion-euro rescue for its banking system from the European Union earlier this year.
The capital is an advance on money Bankia is due to receive once a reorganization plan is completed in October and approved by European authorities in November, FROB said in a statement yesterday. Bankia’s May request for 19 billion euros in state aid followed a 4.5 billion-euro bailout in 2010 and came two weeks after Economy Minister Luis de Guindos said 15 billion euros would be enough for the whole industry.
“The important thing for Bankia is to clean up the balance sheet because it’s already known that they’re going to have very big losses this year,” said Carlos Joaquim Peixoto, an analyst at Banco BPI SA in Porto, Portugal.
The unraveling of Bankia, with an asset base almost a third the size of the country’s economy, focused investors on the costs of fixing Spanish lenders and helped push the government to seek as much as 100 billion euros of European bailout funds in June to shore up the banking system.
Spain’s cabinet set out a framework for restructuring the banking industry yesterday, including a bad bank that will take soured real estate from rescued lenders and seek to sell the assets over 10 to 15 years. The European bailout requires the government to spell out procedures for dealing with failed lenders that limit costs to taxpayers.
Spain is tightening bank regulation against a backdrop of doubts about the nation’s finances that spurred the government to call on the European Central Bank to buy its bonds to rein in financing costs. Spanish lenders have about 180 billion euros of troubled real estate assets, according to the Bank of Spain.
The “gigantic” financial reform announced yesterday will bring benefits to Spain’s economy over the medium long-term and the process of cleaning up the banking system is on its way to completion, Prime Minister Mariano Rajoy said today in a speech to party members at Soutomaior Castle in Galicia.
In its third reform of the financial system this year, the government also bolstered the powers of FROB to restructure troubled banks. The fund will be able to take on debt to a limit of 120 billion euros in 2012, the economy ministry said.
Spanish banks rose in Madrid trading after de Guindos announced details of the bad bank. Banco Santander SA (SAN), Spain’s biggest lender, climbed 6 percent and Banco Sabadell SA jumped 10 percent. Bankia rose 6.3 percent. The company released earnings after the close of trading.
The Bankia group set aside 6.8 billion euros in the first half to provision for bad loans and real estate, and a further 6.9 billion euros of charges are expected this year, the bank said. The group lost 12.8 billion euros of deposits in the first six months of the year, a 10 percent decline, it said.
Bad loans as a proportion of total lending jumped to 11 percent in June from 7.63 percent in December, while customer funds plunged 37.6 billion euros, or 18 percent, over that period, the bank said. Lending shrank 2.9 percent from December and the group’s core capital ratio under Basel II standards, a measure of financial strength, dropped to 6.3 percent from 8.3 percent, the bank said.
Olli Rehn, the EU’s economic and monetary affairs commissioner, said in a statement that Spain’s commitment would pave the way for the capital injection’s approval in November.
“I am very happy with the declarations by the Spanish and European authorities because they mean a great support for our project,” Jose Ignacio Goirigolzarri, Bankia’s chairman, said in a statement sent by e-mail. “It means a commitment by these authorities to Bankia’s future.”
The FROB will first pass funds to the Bankia group parent Banco Financiero y de Ahorros, which will then in turn recapitalize the listed Bankia SA unit, the person familiar said. Other government-controlled banks also reported big losses yesterday.
Catalunya Banc, another lender nationalized last year, reported a first-half loss of 1.44 billion euros. De Guindos said yesterday the bank’s soured real estate would be passed to the bad bank before it is put on sale. NCG Banco, a Galician lender also taken over by the government last year, posted a 1.4 billion-euro loss.
Bankia’s woes piled pressure on other Spanish banks because it stress-tested residential mortgages and company loans, as well as real estate, to calculate the size of its bailout request to the government. Spain nationalized the group in June after experts appointed by the country’s bank rescue fund said its parent company had a negative value of 13.6 billion euros.
Bankia’s travails have also had wider consequences for the government and its own former management.
The practice by Bankia and other lenders of selling subordinated debt such as preference shares to retail clients has come back to haunt the banks as European officials demand these investors absorb losses under terms of the bailout. The new regulation passed yesterday enshrines the principle that holders of subordinated debt at banks receiving state aid should be made to bear losses.
“This is never going to happen again,” said Rajoy, referring to the “lamentable” situation facing retail clients sold subordinated debt. He said the government was working on ways to ease the impact of the losses facing affected customers.
Statistics: Posted by yoda — Sat Sep 01, 2012 4:41 pm
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JPMorgan Trading Loss May Reach $9 Billion
By JESSICA SILVER-GREENBERG and SUSANNE CRAIG
Daniel Rosenbaum for The New York TimesJamie Dimon, chief executive of JPMorgan Chase, discussed the deal last week before the House Financial Services Committee.
Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation.
When Jamie Dimon, the bank’s chief executive, announced in May that the bank had lost $2 billion in a bet on credit derivatives, he estimated that losses could double within the next few quarters. But the red ink has been mounting in recent weeks, as the bank has been unwinding its positions, according to interviews with current and former traders and executives at the bank who asked not to be named because of investigations into the bank.
The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year.
A Complex Strategy That Backfired
As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.
With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.
Nonetheless, the sharply higher loss totals will feed a debate over how strictly large financial institutions should be regulated and whether some of the behemoth banks are capitalizing on their status as too big to fail to make risky trades.
JPMorgan plans to disclose part of the total losses on the soured bet on July 13, when it reports second-quarter earnings. Despite the loss, the bank has said it will be solidly profitable for the quarter — no small achievement given that nervous markets and weak economies have sapped Wall Street’s main businesses. To put the size of the loss in perspective, JPMorgan logged a first-quarter profit of $5.4 billion.
More than profits are at stake. The growing fallout from the bank’s bad bet threatens to undercut the credibility of Mr. Dimon, who has been fighting major regulatory changes that could curtail the kind of risk-taking that led to the trading losses. The bank chief was considered a deft manager of risk after steering JPMorgan through the financial crisis in far better shape than its rivals.
“Essentially, JPMorgan has been operating a hedge fund with federal insured deposits within a bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner.
A spokesman for the bank declined to comment.
In its most basic form, the losing trade, made by the bank’s chief investment office in London, was an intricate position that included a bullish bet on an index of investment-grade corporate debt. That was later combined with a bearish wager on high-yield securities.
The chief investment office — which invests excess deposits for the bank and was created to hedge interest rate risk — brought in more than $4 billion in profits in the last three years, accounting for roughly 10 percent of the bank’s profit during that period.
In testimony before the House Financial Services Committee last week, Mr. Dimon said that the London unit had “embarked on a complex strategy” that exposed the bank to greater risks even though it had been intended to minimize them.
JPMorgan executives are briefed each morning on the size of the trading loss. The tally could shrink if the market moves in JPMorgan’s favor, the people briefed on the situation cautioned.
But hedge funds and other investors have seized on the bank’s distress, creating a rapid deterioration in the underlying positions held by the bank. Although Mr. Dimon has tried to conceal the intricacies of the bank’s soured bet, credit traders say the losses have still mounted.
While some hedge funds have compounded the bank’s woes, others have been finding it profitable to help JPMorgan get clear of the losing credit positions.
One such fund, Blue Mountain Capital Management, has been accumulating trades over the last couple of weeks that might help reduce the risk of the bets made by JPMorgan in a credit index, according to interviews with more than a dozen credit traders. The hedge fund is then selling those positions back to the bank. A Blue Mountain spokesman declined to comment.
As traders in JPMorgan’s London desk work to get out of the huge bet, which started generating erratic losses in late March, the traders based in New York are largely sitting idle, according to current traders in the unit.
“We are in a holding pattern,” said one current New York trader who asked not to be named.
Long before the losses started mounting, senior executives at the chief investment office in New York worried about the trades of Bruno Iksil, according to the current traders.
Now known as the London Whale for his outsize wagers in the credit markets, Mr. Iksil accumulated a number of trades in 2010 that were illiquid, which means it would take the bank more time to get out of them.
In 2010, a senior executive at the chief investment office compiled a detailed report that estimated how much money the bank stood to lose if it had to get out of all Mr. Iksil’s trades within 30 days. The senior executive recommended that JPMorgan consider putting aside reserves to deal with any losses that might stem from Mr. Iksil’s trades. It is not known how much was recommended as a reserve or whether Mr. Dimon saw the report, but the warning went unheeded.
The losses are the most embarrassing fumble for Mr. Dimon since he became chief executive in 2005.
In appearances before Congress, Mr. Dimon has taken pains to assure investors and lawmakers that the overall health of JPMorgan remained strong and that it had more than sufficient amounts of capital to weather any economic dislocation.
Even as he apologized for the trade, calling it “stupid,” Mr. Dimon emphasized to lawmakers that the loss was an “isolated incident.”
The Federal Reserve is currently poring over the bank’s trades to examine the scope of the growing losses and the original bet.
Statistics: Posted by DIGGER DAN — Thu Jun 28, 2012 12:11 pm
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Barclays facing $1bn loss from BlackRock disposal
Barclays plans to crystallise a loss of up to $1bn (£630m) by selling its 20pc stake in fund manager BlackRock in a move that will boost the high street lender’s capital buffers.
Barclays acquired the 20pc stake in BlackRock as part of its sale of Barclays Global Investors in June 2009 By Philip Aldrick, Economics Editor
BST 21 May 2012
Barclays acquired the stake in June 2009 when it sold its in-house asset management business Barclays Global Investors (BGI) to BlackRock for $13.5bn. Under the terms of the deal, Barclays was paid $6.6bn in cash and $6.9bn in BlackRock shares.
Announcing the planned disposal, Barclays said its stake was valued at $6.1bn at BlackRock’s closing share price on Friday. However, bankers said Barclays would probably have to sell at a discount to the market price, given the scale of the offer. The pricing is expected to be completed within the next few days.
Although Barclays will crystallise a loss against the purchase price, it wrote down the stake last September to about $5.5bn to comply with accounting standards. As a result, it is likely to book a small gain that will boost its already strong 10.9pc core tier one capital buffer, releasing funds that could be used to increase business and household lending.
The decision appears to have been taken in anticipation of strict new Basel 3 capital rules due to come into effect from January next year. Because BlackRock is a financial services company, less of the $5.5bn book value of the shares will qualify as core capital under the new regulations – weakening the bank’s balance sheet and reducing the buffer against which new loans can be made.
The decision to sell seems to be an effort to avoid the negative capital effect of holding the shares instead of cash.
Under the terms of the deal, BlackRock has agreed to buy back $1bn of the offer. Bob Diamond, Barclays’ chief executive who joined the BlackRock board to speak for the bank’s one-fifth stake in the fund manager, is also likely relinquish his non-executive position as part of the deal.
Barclays Capital, Morgan Stanley, and Bank of America Merrill Lynch are acting as joint bookrunners in the offering.
Statistics: Posted by yoda — Mon May 21, 2012 7:03 am
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The 2 Billion Dollar Loss By JP Morgan Is Just A Preview Of The Coming Collapse Of The Derivatives Market
When news broke of a 2 billion dollar trading loss by JP Morgan, much of the financial world was absolutely stunned. But the truth is that this is just the beginning. This is just a very small preview of what is going to happen when we see the collapse of the worldwide derivatives market. When most Americans think of Wall Street, they think of a bunch of stuffy bankers trading stocks and bonds. But over the past couple of decades it has evolved into much more than that. Today, Wall Street is the biggest casino in the entire world. When the “too big to fail” banks make good bets, they can make a lot of money. When they make bad bets, they can lose a lot of money, and that is exactly what just happened to JP Morgan. Their Chief Investment Office made a series of trades which turned out horribly, and it resulted in a loss of over 2 billion dollars over the past 40 days. But 2 billion dollars is small potatoes compared to the vast size of the global derivatives market. It has been estimated that the the notional value of all the derivatives in the world is somewhere between 600 trillion dollars and 1.5 quadrillion dollars. Nobody really knows the real amount, but when this derivatives bubble finally bursts there is not going to be nearly enough money on the entire planet to fix things.
Sadly, a lot of mainstream news reports are not even using the word “derivatives” when they discuss what just happened at JP Morgan. This morning I listened carefully as one reporter described the 2 billion dollar loss as simply a “bad bet”.
And perhaps that is easier for the American people to understand. JP Morgan made a series of really bad bets and during a conference call last night CEO Jamie Dimon admitted that the strategy was “flawed, complex, poorly reviewed, poorly executed and poorly monitored”.
The funny thing is that JP Morgan is considered to be much more “risk averse” than most other major Wall Street financial institutions are.
So if this kind of stuff is happening at JP Morgan, then what in the world is going on at some of these other places?
That is a really good question.
For those interested in the technical details of the 2 billion dollar loss, an article posted on CNBC described exactly how this loss happened….
The failed hedge likely involved a bet on the flattening of a credit derivative curve, part of the CDX family of investment grade credit indices, said two sources with knowledge of the industry, but not directly involved in the matter. JPMorgan was then caught by sharp moves at the long end of the bet, they said. The CDX index gives traders exposure to credit risk across a range of assets, and gets its value from a basket of individual credit derivatives.
In essence, JP Morgan made a series of bets which turned out very, very badly. This loss was so huge that it even caused members of Congress to take note. The following is from a statement that U.S. Senator Carl Levin issued a few hours after this news first broke….
“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making.”
Unfortunately, the losses from this trade may not be over yet. In fact, if things go very, very badly the losses could end up being much larger as a recent Zero Hedge article detailed….
Simple: because it knew with 100% certainty that if things turn out very, very badly, that the taxpayer, via the Fed, would come to its rescue. Luckily, things turned out only 80% bad. Although it is not over yet: if credit spreads soar, assuming at $200 million DV01, and a 100 bps move, JPM could suffer a $20 billion loss when all is said and done. But hey: at least “net” is not “gross” and we know, just know, that the SEC will get involved and make sure something like this never happens again.
And yes, the SEC has announced an “investigation” into this 2 billion dollar loss. But we all know that the SEC is basically useless. In recent years SEC employees have become known more for watching pornography in their Washington D.C. offices than for regulating Wall Street.
But what has become abundantly clear is that Wall Street is completely incapable of policing itself. This point was underscored in a recent commentary by Henry Blodget of Business Insider….
Wall Street can’t be trusted to manage—or even correctly assess—its own risks.
This is in part because, time and again, Wall Street has demonstrated that it doesn’t even KNOW what risks it is taking.
In short, Wall Street bankers are just a bunch of kids playing with dynamite.
There are two reasons for this, neither of which boil down to “stupidity.”
- The first reason is that the gambling instruments the banks now use are mind-bogglingly complicated. Warren Buffett once described derivatives as “weapons of mass destruction.” And those weapons have gotten a lot more complex in the past few years.
- The second reason is that Wall Street’s incentive structure is fundamentally flawed: Bankers get all of the upside for winning bets, and someone else—the government or shareholders—covers the downside.
The second reason is particularly insidious. The worst thing that can happen to a trader who blows a huge bet and demolishes his firm—literally the worst thing—is that he will get fired. Then he will immediately go get a job at a hedge fund and make more than he was making before he blew up the firm.
We never learned one of the basic lessons that we should have learned from the financial crisis of 2008.
Wall Street bankers take huge risks because the risk/reward ratio is all messed up.
If the bankers make huge bets and they win, then they win big.
If the bankers make huge bets and they lose, then the federal government uses taxpayer money to clean up the mess.
Under those kind of conditions, why not bet the farm?
Sadly, most Americans do not even know what derivatives are.
Most Americans have no idea that we are rapidly approaching a horrific derivatives crisis that is going to make 2008 look like a Sunday picnic.
According to the Comptroller of the Currency, the “too big to fail” banks have exposure to derivatives that is absolutely mind blowing. Just check out the following numbers from an official U.S. government report….
JPMorgan Chase – $70.1 Trillion
Citibank – $52.1 Trillion
Bank of America – $50.1 Trillion
Goldman Sachs – $44.2 Trillion
So a 2 billion dollar loss for JP Morgan is nothing compared to their total exposure of over 70 trillion dollars.
It is hard for the average person on the street to begin to comprehend how immense this derivatives bubble is.
So let’s not make too much out of this 2 billion dollar loss by JP Morgan.
This is just chicken feed.
This is just a preview of coming attractions.
Soon enough the real problems with derivatives will begin, and when that happens it will shake the entire global financial system to the core.
View full post on The Economic Collapse
The American financial system has two major problems. Together, they are like an iceberg. One is large and obvious. The other is enormous, costing at least 10 times the first. Although this second problem has been present for many years, it has never been perceived as urgent or critical; and so it has been ignored, and is effectively unseen.
The obvious problem has been the growth of domestic and foreign debt. Over the last 25 years, debts to American banks have grown at an average rate of $0.8 billion per day. The rate of growth has been increasing. Since the year 2000, it has been averaging $1.6 billion per day.
On the other hand, the unseen problem is currently costing the American economy about $23 billion per day, and is growing. This problem has caused the demise of manufacturing and other import competing industries and the reduction of the rate of economic growth.
The second problem is a side-effect of policies that President Richard Nixon implemented in 1973 to treat symptoms of the first problem, which at that time was evident as falling foreign reserves. The economic consequences of Nixon’s policies are more visible when we consider some of the factors they have affected. For example, as shown in Figure 1, average real wages for production workers in America have not grown, but have fallen since 1973. Real wages for American workers would be about 80 per cent higher today if it were not for the highly praised yet misguided policies that President Nixon put into effect.
Statistics: Posted by yoda — Wed Apr 18, 2012 12:50 pm
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March 25, 2012
Cashless Sweden + No ATM Fees = Total Loss of Freedom
Greg D. Franks
I, like many, have been perplexed over the past few years at the left’s constant barrage of "No ATM Fees" and why it seems to be an issue that won’t go away. Every few years it seems to return to the front burner when it comes to Democrats and the left presumably fighting for the little guy.
Sure, for consumers who use digital payment for most everything, it seems like a great "populist" idea. Who wants to pay fees every time he pulls his own money out of his own account? Really, who has time to go to the bank to get cash? Furthermore, who needs cash, period? That is why I thought of this as a political issue and why the Democrats used it as a way of getting votes.
I, like most capitalists, realize that there is a cost of doing business and that banks must be able to assess some fees for the use of an ATM card. But it wasn’t until Sweden announced this week that they were going "cashless" that I started adding up the cost of such an action.
At first look, going cashless seems to be a progression to ultimate freedom. There will be no need to get cash from the bank. When you get paid, the money is immediately deposited into your account. There is no need to enter checks and balance your checkbook. And there will no longer be a need for the coin jar sitting in the corner, slowly filling up to allow for buying something frivolous every year. We can just sit around downloading ABBA and have the funds digitally removed from our accounts without even getting out of our beanbags.
This all sounds great — why would anyone object to such a natural progression? Maybe the problem arose when Gen. Petraeus disclosed that the CIA has the ability to monitor us through our TV, dishwasher, and refrigerator. Or maybe it is the recent article in Wired that says that by September 2013, the NSA will have complete and total access to all things digital. Or maybe it’s the fact that the Fed has been so devaluing the dollar that if (more likely when)the dollar collapses, the Fed will have us deposit all of our cash into an account and issue us a card with everything we own and move the decimal point over a couple of digits.
But most importantly, the problem with going cashless is the total loss of liberty required. A cashless society gives the government absolute access into our lives, without anywhere to hide; indeed, it grants government total control of our finances and way of life.
Until recently, all this seemed far-fetched and conspiratorial. But I contend that the only thing stopping this from taking place is the ATM fee. Because once that is removed, there will be no reason to stop everyone from going as calm as Hindu cows when it comes to giving the government total control of our lives.
Statistics: Posted by yoda — Sun Mar 25, 2012 12:43 am
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