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Tag Archives: financial crisis
Shoot Bank Of America Now—-The Case For Super Glass-Steagall Is Overwhelming
Shoot Bank Of America Now—-The Case For Super Glass-Steagall Is Overwhelming
The mainstream narrative about “recovery” from the financial crisis is a giant con job. And nowhere does the mendacity run deeper than in the “banks are fixed” meme—an insidious cover story that has been concocted by the crony capitalist cabals that thrive at the intersection of Wall Street and Washington.
So this morning comes yet another expose in the Wall Street Journal about the depredations of Bank America (BAC). Not surprisingly, at the center of this latest malefaction is still another set of schemes to grossly abuse the deposit insurance safety net and enlist the American taxpayer in the risky business of financing high-rolling London hedge funds.
In this case, the abuse consisted of BAC funded and enabled tax avoidance schemes with respect to stock dividends—–arrangements which happen to be illegal in the US. No matter. BAC simply arranged for them to be executed for clients in London where they apparently are kosher, but with funds from BAC’s US insured banking entity called BANA, which most definitely was not kosher at all.
As to the narrow offense involved—-that is, the use of insured deposits to cheat the tax man—-the one honest official to come out of Washington’s 2008-2009 bank bailout spree, former FDIC head Sheila Bair, had this to say:
…click on the above link to read the rest of the article…
Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents
Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents
This morning, my Twitter stream was filled with some of the most outlandish bullish economic victory laps from pundits I’ve ever seen. The source was the monthly employment report, which showed a larger than expected increase in employment as well as higher wages. In addition, there was a huge upward revision to employment data in November. Interestingly enough, on the same day this report was released, several important articles came across my screen that make me as concerned as ever about the true state of the economy and where we are headed.
First, CNN Money just yesterday published an article titled: Obama Jobs: More Caregivers, Servers and Temps. Here are a few excerpts:
Got a job while Obama was president? Then there’s a good chance you are working in healthcare or food service or as a temp.
Those sectors were responsible more than 60% of the jobs created since Obama took office in January 2009.
Healthcare now employs 14.9 million Americans, up 11% over the past six years, according to a recent Pew Research Center report. More than one in 10 payroll jobs in the U.S. are in this industry.
Much of the job growth in healthcare has taken place in home health care services and outpatient care. That follows both the aging of America and the shift away from more costly hospital and nursing home care. These later two industries added only 3.7% and 1.2% more jobs, respectively, since 2009.
…click on the above link to read the rest of the article…
What does $200 trillion of debt really mean for the global economy?’
What does $200 trillion of debt really mean for the global economy?
A few years ago, in the depths of the recession caused by the financial crisis, I began an investigation into the consequences of several economic trends that I thought were bound to put a permanent end to the boom times that my generation, the post-war ‘baby boomers’, had grown up in. These trends included the threat to jobs caused by fierce global competition, helped by the rise of digital technology; the financialization of the economy and the relative decline of real industry; the resulting rise in inequality, and also the excessive build-up of debt, which was of course the main cause of the crash.
But the crash didn’t put an end to the build-up of debt – the credit bubble just deflated slightly, as $20 trillion or so vanished off the face of the earth. This wealth never really existed of course – it consisted only of numbers in bank accounts or over-optimistic valuations of shares or property – but even so, a lot of people saw their pension funds and other investments reduced in value.
Despite all the concerns over debt since the crisis, the credit bubble has been growing again and is now bigger than ever, both globally and in some (though not all) ‘advanced’ nations, notably Japan and the UK, two of the most indebted economies. We don’t appear to have learnt much from the crash.
What does it mean when total world debt amounts to something in the region of $200 trillion, or roughly three times annual world output?
…click on the above link to read the rest of the article…
What the Heck Is Happening to US Manufacturing?
What the Heck Is Happening to US Manufacturing?
The worst month in the Southeast since the Financial Crisis.
Despite President Obama’s emphatic assurances in the State of the Union Address that “our economy is growing and creating jobs at the fastest pace since 1999,” there have recently been some uncomfortable squiggles, so to speak.
The collapse in the prices of oil, natural gas, and natural-gas liquids has started to make its imprint on the largest hydrocarbon producer in the world, namely the US of A. Oilfield layoffs and project cancellations are raining down on the oil patch on a daily basis. Suppliers are hit too. Many energy stocks are in the process of evisceration. Energy junk bonds are in a rout.
But consumers love it – those who aren’t losing their jobs over it – because they spend less on fuel. Consumers are voters. So politicians love it because voters love it. Hence, it’s good for the economy. I get that.
These sorts of squiggles have been worming their way into national numbers. For example, Markit’s Services PMI for December dropped to 53.3, down for the sixth month in a row, after having peaked in June. This was “not just a one-month wobble,” the report said, as the economy “lost significant growth momentum at the close of the year.” But it remained above 50, the dividing line between expansion and contraction. It’s still an expansion, and “growth is merely slowing from an unusually powerful rate rather than stalling.”
…click on the above link to read the rest of the article…
The End Of The World Of Finance As We Know It
The End Of The World Of Finance As We Know It
I’ve said before, and quite a while ago too, – more than once-, that the world of investing as we’ve come to know it is over. It’s still as true as it was then, and I can only hope that more people today understand why it is true, and why I said it in the past. The basic underlying argument then and now is that financial markets have been distorted to such an extent by the activities, the interventions, of central banks – and governments -, that they can no longer function, period.
What we’ve seen since 2008 – not that things were fine and rosy before that – is that all ‘private’ losses were taken over by the public sector, just so the private sector didn’t have to fess up to what it lost, and the appearance of a functioning market system could be upheld. And those who organized this charade were dead on in thinking that as long as Dow and S&P numbers would look good, and they said ‘recovery’ in the media often enough, people would believe there still was a functioning financial marketplace. And they did. But those days are over. Or at least, they soon will be.
What I mean by that is that the functioning marketplace is long gone, and only now people’s beliefs, too, about it are changing, being forced to change, and soon quite radically. The entire idea that ruled the world of finance and kept it -seemingly – standing upright is crumbling fast. And we’re going to have to find a way to deal with that. As of today, we have none, we come up zero. The overriding narrative – which overrides every other thought – is that we’re on our way back to recovery. And then we’ll get back to becoming ever richer, live in ever bigger homes and drive ever bigger, smarter and faster cars. Or something in that vein.
…click on the above link to read the rest of the article…
Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds
Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds
If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer. As I write this, the price of U.S. oil is sitting at $45.76 a barrel. It has fallen by more than 60 dollars a barrel since June. There is only one other time in history when we have seen anything like this happen before. That was in 2008, just prior to the worst financial crisis since the Great Depression. But following the financial crisis of 2008, the price of oil rebounded fairly rapidly. As you will see below, there are very strong reasons to believe that it will not happen this time. And the longer the price of oil stays this low, the worse our problems are going to get. At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before. So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead. Because if not, the price of oil is going to absolutely rip the global economy to shreds.
What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.
The only precedent that we can compare the current crash to is the oil price collapse of 2008. You can see both crashes on the chart below…
…click on the above link to read the rest of the article…
China to invest $20bn in struggling Venezuela
China to invest $20bn in struggling Venezuela
China has agreed to invest more than $20bn in economic, social, and oil-related projects in Venezuela, as the country struggles from a financial crisis brought on from falling oil prices.
President Nicolas Maduro said on Wednesday he was seeking to strengthen ties with Chinese banks after meeting Chinese President Xi Jinping in Beijing, a week after Caracas announced it was in a recession.
“We have wrapped up over $20bn in investments during the course of this day’s work,” Maduro told Venezuela’s official AVN news agency.
The sweeping investment deal covers a wide range of areas including technology, housing and urban planning, AVN said.
Maduro, however, did not say whether the latest investments include new loans for the cash-strapped OPEC member, or if the investments were part of an existing oil-for-loans deal between Venezuela and China.
Beijing has extended $42bn in long-term loans to Venezuela, $24bn of which has been paid out so far, according to Venezuelan officials.
Xi said that China, the world’s second-biggest economy which has been bolstering its diplomatic and economic reach in South America – had agreed to “strengthened cooperation”.
…click on the above link to read the rest of the article…
Bank of England minutes to lift lid on global financial crisis | Business | The Guardian
Bank of England minutes to lift lid on global financial crisis | Business | The Guardian.
The inside story of the Bank of England’s response to the financial crisis will be revealed this week when the details of meetings which took place at the height of the crisis are published for the first time.
In response to pressure from the Treasury select committee, Threadneedle Street will take steps to show its inner workings by publishing the minutes of meetings of its court, which is akin to a board of directors.
The publication will lift the lid on information that has otherwise been kept private since the financial crisis and follows requests by the select committee for the last four years for the Bank to become more accountable.
The minutes of meetings of the court between 2007 and 2009 are to be published on Wednesday alongside those from 1914 to 1946. The Bank of England pledged in December to publish the minutes of meetings up to 1987 during the course of 2015.
We Just Witnessed The Worst Week For Global Financial Markets In 3 Years
We Just Witnessed The Worst Week For Global Financial Markets In 3 Years.
Is this the start of the next major financial crisis? The nightmarish collapse of the price of oil is creating panic in financial markets all over the planet. On June 16th, U.S. oil was trading at a price of $107.52. Since then, it has fallen by almost 50 dollars in less than 6 months. This has only happened one other time in our history. In the summer of 2008, the price of oil utterly collapsed and we all remember what happened after that. Well, the same patterns that we witnessed back in 2008 are happening again. As the price of oil crashed in 2008, so did prices for a whole host of other commodities. That is happening again. Once commodities started crashing, the market for junk bonds started to implode. That is also happening again. Finally, toward the end of 2008, we witnessed a horrifying stock market crash. Could we be on the verge of another major one? Last week was the worst week for the Dow in more than three years, and stock markets all over the world are crashing right now. Bad financial news continues to roll in from the four corners of the globe on an almost hourly basis. Have we finally reached the “tipping point” that so many have been warning about?
What we witnessed last week is being described as “a bloodbath” that was truly global in scope. The following is how Zero Hedgesummarized the carnage…
Three Conditions and Three Warning Signs | Mind on Money
Three Conditions and Three Warning Signs | Mind on Money.
How to Tell if the Next Financial Crisis is Upon Us.
In the last post, it was suggested that the rapid collapse in oil prices might have set up a repeat of the 2008 financial crisis. Before we all run for the bunkers and the freeze-dried food, we should know the conditions needed for a crisis to happen, and the signposts we’ll see if the crisis gets going.
For a sector correction to become a meltdown, and for that to turn into a global crisis, several preconditions need to be in place.
The first condition is a serious market sector correction.
According to some participants in the market for energy company bonds and loans, such a correction is already underway and heading toward a meltdown (the second condition). Others are more sanguine, and expect a recovery soon.
That smaller energy companies have issued more junk-rated debt than their relative size in the economy isn’t under debate. Of a total junk bond market estimated around $1.2 trillion, about 18% ($216 billion, according to a Bloomberg estimate) has been issued by energy-related companies. Yet those companies represent a far smaller share of the economy or stock market capitalization among the universe of junk-rated companies.
…click on the above link to read the rest of the article…
Continuing With The Insanity | Humanity’s Test
Continuing With The Insanity | Humanity’s Test.
During the peak of the financial crisis during 2008 and 2009, there was a window of opportunity for a fundamental remaking and realignment of the massively over-sized and dysfunctional global financial system. Perhaps, also a questioning of the consensus that supports general deregulation and globalization. This opportunity was not taken, and instead the status quo was supported. Now, five years later, the insanity continues. Just a few stories from a single issue of the Financial Times (October 28th, 2014) pay testament to this ….
Rebound in sales of risky assets raises fears over quantitative easing’s legacy
In the financial crisis the risky assets were subprime housing loans (retail loans to borrowers with very low credit scores) bundled together and securitized (turned into bonds and other financial instruments that could be sold to investors). The new risky assets of choice are subprime car loans, and junk-rated corporate (companies with low credit ratings) bonds. In the United States, the issuance of sub-prime car loan securitizations has grown rapidly from its nadir during the crisis, and may surpass its pre-crisis peak this year. Investors are taking on more risks to gain what they see as an acceptable return, in a low interest rate environment, just as they did pre-crisis. The overall issuance of securitized assets is still significantly below pre-crisis levels, but its current rapid growth shows how little the crisis changed things.
…click on the above link to read the rest of the article…
Making the banks pay | The Sunday Edition with Michael Enright | CBC Radio
Making the banks pay | The Sunday Edition with Michael Enright | CBC Radio.
Why Japan’s Money Printing Madness Matters | David Stockman’s Contra Corner
Why Japan’s Money Printing Madness Matters | David Stockman’s Contra Corner.
This is getting hard to believe. The announcement that Japan has plunged into a triple dip recession should have been lights out for Abenomics. But, no, its madman prime minister has now called a snap election to enlist more public support for his campaign to destroy what remains of Japan’s economy.
And what’s worse, he’s not likely to be stopped by the electorate or even the leadership of Japan Inc, which presumably should know better. Here’s what Japan leading brokerage had to say about the “unexpected” 1.6% drop in Q3 GDP—- compared to the consensus expectation of a 2.2% gain and after the upward revised shrinkage of 7.3% in Q2.
We think that the economy is gradually improving,” said Tomo Kinoshita, an economist at Nomura Securities. “There’s no reason to be pessimistic about the economy going forward.”
Really? How in the world can an economist perched at the epicenter of Japan Inc. think that its economy is improving when Japan’s constant dollar GDP has now fallen back to pre-Abenomics levels; and, in fact, is no higher than it was in late 2007 prior to the “financial crisis”? Indeed, aside from the Q1 pull-forward of spending to beat the consumption tax increase, Japan’s economy has remained stranded on the flat-line it attained after world trade recovered from its 2008-2009 plunge.
…click on the above link to read the rest of the article…
The Last Days Of The Growth Story – The Automatic Earth
The Last Days Of The Growth Story – The Automatic Earth.
Dorothea Lange Rear window tenement dwelling, 133 Avenue D, NYC June 1936
I am thinking about the similarities between a financial crisis and for instance a family crisis, the death of a loved one or close friend, a divorce, or a personal bankruptcy.
And I wonder why in the case of our recent (aka current) financial crisis, we allow nothing to enter our communications, and our train of thought, but the idea of recovery and a return to growth. Has everyone always reacted that way after earlier financial crises – history is full of them -, or is something else going on?
Why do we insist on returning to something we once had, even if we have no way of knowing whether we can ever return? Why don’t we focus – more – on what lies ahead, instead of what is behind us? Is it because we loved what we had so much? Or is something else going on?
…click on the above link to read the rest of the article…
