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Iran-Saudi Rapprochement Will Deal A Deathblow To The Dollar


Jacob Lawrence Struggle: From the History of the American People, Panel 8 1954
Eurasia’s geo-economic integration took a great leap forward as a result of the IranianSaudi rapprochement, which unlocks the Gulf Cooperation Council’s (GCC) trade potential with Russia and China. Its wealthy members can now tap into two series of Iranian-transiting megaprojects in one fell swoop through this deal, with the North-South Transport Corridor (NSTC) connecting them to Russia while the China-Central Asia-West Asia Economic Corridor (CCAWAEC) will do the same vis-à-vis China.

The bloc’s de facto Saudi leader has been prioritizing a comprehensive economic reform policy known as “Vision 2030” that was introduced by Crown Prince and first-ever Prime Minister Mohammed Bin Salman (MBS) upon his rise to power in 2015. It regrettably stumbled as a result of the disastrous Yemeni War that he’s been waging since that same year, but everything is now back on track and more promising than ever after securing $50 billion worth of investments from China last December.

The People’s Republic regards Vision 2030 as complementary to its Belt & Road Initiative (BRI) due to MBS’ focus on real-sector investments for preemptively diversifying the Saudi economy away from its presently disproportionate dependence on oil exports. His country’s location at the crossroads of Afro-Eurasia also makes investments there extremely attractive from the perspective of China’s logistical interests, hence its massive commitment to his comprehensive economic reform policy.

Without last week’s Beijing-brokered deal, China would have had to rely on maritime routes under the control of the powerful US Navy to facilitate the forthcoming explosion in bilateral real-sector trade, but now everything can be conducted much more securely via the Iranian-transiting CCAWAEC. Looking forward, there’s also a theoretical possibility of Chinese energy investments in Iran connecting the Gulf to Central Asia and thenceforth to the People’s Republic, thus fully securing its strategic interests.

…click on the above link to read the rest…

After Biden Rehabs MbS’ Image, Saudis Announce Increase In Oil Production Capacity

After Biden Rehabs MbS’ Image, Saudis Announce Increase In Oil Production Capacity

After Joe Biden’s red carpet fist bump with the “pariah” it appears Crown Prince Mohammed bin Salman got what he wanted – namely the necessary optics of being deemed “back in” with Washington and having his blood stained reputation rehabilitated on a global stage, signaling that everyone can finally “get over” the heinous murder of Jamal Khashoggi… and now it seems MbS is following through with his part of the quid pro quo, on Saturday announcing the kingdom will increase its oil production capacity to 13 million barrels per day.

Speaking at Saturday’s Jeddah summit of Middle East leaders the day following his closed-door meeting with Biden, MbS stressed investing in fossil energy but according to “clean techniques” – saying at a moment the war in Ukraine and resulting oil supply crisis is on everyone’s minds (or rather the soaring price boomerang in the wake of the West seeking to “punish” Putin), “It’s important to reassure investors that the policies adopted don’t threaten their investments, to avoid discouraging them from investing causing a shortage in energy supplies.”

“The kingdom has announced an increase in its energy capacity to 13 million barrels a day. After that the kingdom will have no further capacity to increase production,” the Saudi ruler unveiled, per Bloomberg.

Saturday Jeddah summit, via Saudi Press Agency (SPA)

With the US administration having provided the ‘wayward’ crown prince a rehabilitating photo op, Biden too now has enough to claim ‘victory’ and return home proclaiming an ease to the supply problem.

Though it remains that not everyone is buying it, even in the mainstream media, with for example The Washington Post, Khashoggi’s former employer, on Friday slamming Biden for the “shameful” fist-bump, writing in a statement that it “projected a level of intimacy and comfort that delivers to MBS the unwarranted redemption he has been desperately seeking.”

…click on the above link to read the rest of the article…

Here’s Why the Housing Market Has Gone from Overheated to Raging Inferno

Here's Why the Housing Market Has Gone from Overheated to Raging Inferno

Image credit: Creative Commons (CC0)

The housing market is on the verge of spinning out of control. Just about everything that could be going wrong is going wrong.

The only holdout for the moment is home prices, which are up an astonishing 22.5% just this year. For many homeowners, that’s great news. Home equity is a huge source of wealth for middle-class Americans. And when home prices are high (just like when stock prices are high), you feel wealthy.

Unfortunately, like stocks, home prices can drop like a rock at a moment’s notice. That’s one lesson we learned all too well in 2008. Another Great Recession-type plummet in home prices forces many buyers underwater, stranding them with an asset they overpaid for and can no longer afford, and can’t even sell.

Let’s start our brief examination of today’s overheated housing market by taking a glance at how the Fed has been propping it up so far.

How the Fed props up housing prices

The Fed employs various financial interventions to coax the economy in the direction they choose. We know the words: quantitative easing. Lowering interest rates. Repo and reverse repo. Obscure financial hocus-pocus that nevertheless moves markets worldwide.

When it comes to the housing market, the Fed doesn’t need to do anything fancy. They just create artificial demand for mortgage-backed securities (MBS, also known as one of the notorious “toxic assets” that poisoned the U.S. in 2008).

Mike Shedlock revealed the trick:

In a single week the Fed added $22 billion in mortgage backed securities, nearly all of which had a duration of 10 years or longer. This is an ongoing process despite major subtractions via reverse repos. In the process, the Fed gooses housing by extending the duration of the assets it does hold, effectively lowering long-term interest rates in the process.

…click on the above link to read the rest of the article…

Bomb Bomb Bomb Iran

Bomb Bomb Bomb Iran

Pablo Picasso Femme aux bras leves- Tête de Dora Maar- 1936

As a nation, you’re certifiedly (is that a word?!) in deep trouble if and when Donald Trump is your most peaceloving man. But nevertheless, that is America today. It all harks back to the days when Trump was first -grudgingly and painstakingly- recognized as an actual presidential candidate.

He campaigned as a man who would end the costly and neverending decades-old and counting US wars far away from American shores and territory. He hasn’t lived up to those campaign goals at all, far from it, and he hired doofuses like John Bolton and Mike Pompeo to show everyone that he didn’t, but in the early hours of June 21 2019 he apparently decided at the last minute that it just didn’t add up.

You don’t kill 150 people because someone destroyed a piece of machinery, he got that right. I vividly remember writing a hundred times that a country of 320 million people that can’t come up with a better president than Trump has a behemoth problem. I also remember saying that Trump himself is not that problem, it’s the system that gave rise to him and his popularity. A war-hungry-system, that is, which has pervaded Washington DC.

And there is absolutely nothing that tells me anything has changed in that system. There are hearings and investigations all over the place, right now from Hope Hicks to Jerry Nadler, but none of them are geared towards trying to make peace with Iran or Russia or China, or anyone else. None.

Trump’s domestic opponents don’t appear to want peace, not those in the Democratic party, and not those in the MSM, or at least not anyone I’ve seen, other than Tulsi Gabbard.

 …click on the above link to read the rest of the article…

The real reason Western media & CIA turned against Saudi MBS

The real reason Western media & CIA turned against Saudi MBS

The real reason Western media & CIA turned against Saudi MBS
Forces are aligning against Saudi Arabia’s Crown Prince, lead by elements within the CIA and strong players in the mainstream media. But what is really behind this deterioration in relationship, and what are its implications?

Following the brutal murder of Washington Post columnist Jamal Khashoggi, western media and various entities, including the CIA, appear to have turned their back on Saudi Crown Prince Mohammad Bin Salman (MBS). In response to the scandal, the Guardian released a video which its celebutante, Owen Jones, captioned“Saudi Arabia is one of the biggest threats on Earth. Time to stop propping up its repulsive regime.”

The Guardian was not alone in its condemnation. “It’s high time to end Saudi impunity,” wrote Hana Al-Khamri in Al-Jazeera. “It’s time for Saudi Arabia to tell the truth on Jamal Khashoggi,” the Washington Post’s Editorial Board argued. Politico called it “the tragedy of Jamal Khashoggi.”

Even shadowy think-tanks like the Council on Foreign Relations (CFR) and the Atlantic Council released articles criticising Saudi Arabia in the wake of Khashoggi’s death.

A number of companies began backing away from Saudi money after the journalist’s death, including the world’s largest media companies such as the New York Times, the Economist’s editor-in-chief Zanny Minton Beddoes, Arianna Huffington, CNN, CNBC, the Financial Times, Bloomberg, Google Cloud CEO, just to name a few.

The CIA concluded that MBS personally ordered Khashoggi’s death, and was reportedly quite open in its provision of this assessment. Antonio Guterres, secretary-general of the UN, also took time out of his schedule to express concern over Saudi Arabia’s confirmation of the killing.

…click on the above link to read the rest of the article…

The Impending Endgame In Oil Markets

The Impending Endgame In Oil Markets

Chess

U.S. president Trump is facing strong internal pressure to punish Saudi Arabia in the coming days.

For Washington, however, this could be a double-edged sword, as turning on Saudi Crown Prince Mohammed bin Salman could result in two unwanted major geopolitical consequences. The still fresh Jamal Khashoggi murder case continues to make headlines due to a relentless anti-Saudi media and a diplomatic offensive by Turkey, Qatar and Western diplomats, and it could trigger the largest U.S.-Saudi/Arab crisis in decades.

U.S. politicians have set their sights on the position of the young Saudi Crown Prince, based on still unsubstantiated claims of direct involvement by Ankara and unnamed CIA-officials, U.S. president Trump finds himself backed into a corner to deal directly with the Kingdom.

Until now, the U.S. Administration has refrained from mentioning the direct involvement of MbS in the murder of the former Saudi journalist, but has put sanctions on the officials being connected to the case. Inside of the Kingdom, the pressure is also increasing but this time not to remove MbS, but instead to prepare a harsh response to any possible U.S. claims or sanctions on Royal Family members. Senior Saudi officials have already indicated that a direct attack by Washington or European leaders will be met by severe repercussions.

A Western-Turkish move to pressure Saudi King Salman to remove his son from power is at present unrealistic. Looking at the ongoing situation inside of the Kingdom, and in the Arab world, the support gathered the last weeks by the Saudis from their allies UAE, Bahrain, Egypt, Jordan and Lebanon, is clear. No Arab country will allow for a ruling Crown Prince to be removed from power by an outside, non-Arab entity.

…click on the above link to read the rest of the article…

Mortgage Rates May Hit 6% Sooner, as Fed Sheds Mortgage-Backed Securities, But What Will that Do to Housing Bubble 2?

Mortgage Rates May Hit 6% Sooner, as Fed Sheds Mortgage-Backed Securities, But What Will that Do to Housing Bubble 2?

Mortgage rates are climbing faster than the 10-year Treasury yield.

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) and a 20% down-payment rose to 5.17% for the latest reporting week, according to the Mortgage Bankers Association(MBA) today. This is the highest average rate since September 2009 (chart via Investing.com):

Many people with smaller down payments and/or lower credit ratings are already paying quite a bit more. Top-tier borrowers pay less.

Thus, mortgage rates have moved a little closer to the next line in the sand, 6%, which is still historically low. At that point, the interest rate would be back where it had been in December 2008, when the Fed was unleashing its program of interest rate repression even for long-dated maturities via QE that later included the purchase of mortgaged-backed securities (MBS), which helped push down mortgage rates further.

Now the Fed is shedding Treasury securities and mortgage-backed securities, and we’re starting to see the impact on mortgage rates: The difference (spread) between the 10-year yield and the interest rate of the average 30-year fixed-rate mortgage has widened sharply.

Since the beginning of the year:

  • The 30-year mortgage interest rate has risen 95 basis points, or nearly 1 percentage point (from 4.22% to 5.17%).
  • The 10-year Treasury yield has risen 71 basis points (from 2.46% to 3.17%)
  • The spread between the two has widened from 176 basis points on at the beginning of January to 200 basis points now.

In other words, mortgage rates are climbing faster than the 10-year Treasury yield, now that the Fed has begun the shed mortgage-backed securities. This is expected. It’s part of the QE unwind – it’s part of the Fed exiting the mortgage market and pulling its support out from under it.

But 6% is still low:

…click on the above link to read the rest of the article…

The Fed’s QE Unwind Hits $321 Billion

The Fed’s QE Unwind Hits $321 Billion

The “up to” exacts its pound of flesh.

Over the four-week period from October 3 through October 31, the Federal Reserve shed $35 billion in assets, according to the Fed’s weekly balance sheet released Thursday afternoon. This brought the balance sheet to $4,140 billion, the lowest since February 12, 2014. Since October 2017, when the Fed began its QE unwind, or “balance sheet normalization,” it has now shed $321 billion:

The Fed acquired Treasury securities and mortgage-backed securities (MBS) as part of QE, which ended in 2014. Between the end of QE and the beginning of the QE Unwind in October 2017, the Fed replaced maturing securities with new securities to keep their levels roughly the same. In October last year, the Fed kicked off the QE unwind and began shedding those securities. But the balance sheet also reflects the Fed’s other activities, and the amount of its total assets is always higher than the sum of Treasury securities and MBS it holds.

October was a new milestone: the QE unwind left the ramp-up phase and entered the cruising-speed phase, according to the Fed’s plan. In the cruising-speed phase, the Fed is scheduled to shed “up to” $30 billion in Treasuries and “up to” $20 billion in MBS a month, for a total of “up to” $50 billion a month.

From October 3 through October 31, the Fed’s holdings of Treasury Securities fell by $23.8 billion to $2,270 billion, the lowest since February 19, 2014. Since the beginning of the QE-Unwind, the Fed has shed $195 billion in Treasuries:

The “up to” exacts its pound of flesh

The plan calls for shedding “up to” $30 billion in Treasury securities in October. But the Fed shed only $23.8 billion. Why?

…click on the above link to read the rest of the article…

Saudi Coup “Imminent” As Crown Prince’s Uncle Arrives To Oust “Toxic” MbS

The youngest brother of Saudi Arabia’s King Salman has returned from self-imposed exile to “challenge” Crown Prince Mohammed bin Salman (MbS) “or find someone who can,” reports the Middle East Eye.

Prince Ahmad bin Abdulaziz

Prince Ahmad bin Abdulaziz is reportedly hoping to oust his 33-year-old nephew in the wake of an allegedly state-sanctioned murder of journalist Jamal Khashoggi. MbS has virtual control over Saudi Arabia after a June 2017 shakeup in which King Salman removed Muhammad bin Nayef as heir apparent.

Crown Prince Mohammed bin Salman

The septuagenarian prince, an open critic of bin Salman (MBS), has travelled with security guarantees given by US and UK officials.

He and others in the family have realised that MBS has become toxic,” a Saudi source close to Prince Ahmad told Middle East Eye.

“The prince wants to play a role to make these changes, which means either he himself will play a major role in any new arrangement or to help to choose an alternative to MBS.” –Middle East Eye

Prince Ahmad has reportedly been meeting with other members of the Saudi royal family living outside the kingdom, along with “figures inside the kingdom” who have encouraged him to usurp his nephew. According to MEE, “there are three senior princes who support Prince Ahmad’s move,” who remain unnamed to protect their security.

According to Saudi dissident Prince Khalid Bin Farhan Al Saud, he expects a coup to be orchestrated against King Salman and MbS, as reported by the Middle East Monitorwhich reports that a coup is “imminent.”

“The coming period will witness a coup against the king and the crown prince,” said Prince Khalid while commenting on the Khashoggi murder.

…click on the above link to read the rest of the article…

War Plans on Iran Mean Trump and Saudis Coordinating Cover-up of Khashoggi Killing

War Plans on Iran Mean Trump and Saudis Coordinating Cover-up of Khashoggi Killing

War Plans on Iran Mean Trump and Saudis Coordinating Cover-up of Khashoggi Killing

Finally, nearly three weeks after what most of the world suspected to be a foul murder, the Saudi regime has officially admitted that Jamal Khashoggi was killed in its consulate in Istanbul, Turkey. No sooner had the Saudis issued their latest lie to cover up previous lies, US President Trump was lending White House prestige to the travesty.

Trump said the belated Saudi version of what happened was “credible”. He also welcomed as “good first steps” the Saudi arrest of 18 individuals and sacking of several top officials.

The Saudi “explanation” of Khashoggi’s death stretches credulity to snapping point. They are saying he was killed after a fist-fight broke out in the consulate. The Saudis are also claiming the de facto ruler of the kingdom, Crown Prince Mohammed bin Salman (MbS), did not know anything about the murder, its planning or aftermath. Recall that MbS asserted in an interview with Bloomberg on October 5 that Khashoggi had walked out of the consulate the same day he arrived.

Now the Crown Prince has been appointed by his father, aging King Salman, to head up a committee to oversee an overhaul of the royal court’s intelligence organization. The former deputy head of intelligence, Ahmed al-Assiri, is one of those senior aides who has been sacked and set to take the rap.

In other words, the heir to the throne, MbS, is being absolved of any responsibility in the scandal. The sacked aides and arrested men, who are believed to include the 15-member team that went to Istanbul to intercept Khashoggi, are being made the scapegoats.

It is customary Saudi treachery at work. There is simply no way that a 15-member team that included top bodyguards of the Crown Prince could have carried out the Khashoggi abduction and killing without the monarch’s knowledge and sanction.

US intelligence intercepts have claimed to show that MbS was indeed involved in the planning of Khashoggi’s doom. It is simply preposterous that the 15-member hit squad went “rogue” and carried out a murder on their own initiative.

…click on the above link to read the rest of the article…

This Is The Worst Case Scenario If Investors Dump Saudi Arabia

So many Wall Street CEOs and other titans of investing and industry have pulled out of next week’s “Davos in the Desert” conference that even the Ritz-Carlton, owner of the Riyadh venue hosting the conference (as it did last year), has been slammed by human rights groups over its continued support for Crown Prince Mohammad bin Salman and his brutal regime. In perhaps the biggest blow to the conference’s clout, Treasury Secretary Steven Mnuchin has opted not to attend, eve as President Trump has insisted that Saudi Arabia’s story about the circumstances surrounding the (now confirmed) death of critical journalist (and former government insider) Jamal Khashoggi is “credible”. To deflect blame away from MbS, the Saudi leadership has orchestrated a purge of the country’s senior intelligence apparatus and arrested 18 other Saudi nationals for their “involvement” in orchestrating and carrying out the killing. And in the mother of all ironies, the royal family has tasked MbS with running a ministerial committee responsible for restructuring the Saudis foreign intelligence service.

Though Silicon Valley and Wall Street would probably have you believe that they aren’t simply ready to “forget” about Khashoggi, the reality is slightly more nuanced. But the simple fact is that both industries have become too reliant on Saudi money to simply walk away, as Bloomberg and the New York Times laid bare in a batch of stories that exposed this corporate indignation as little more than posturing.

Saudi

But that doesn’t change the fact that Saudi Arabia’s economy is reliant on foreign money, without which it would grind to a halt (imagine what would happen if foreigner buyers of Saudi oil simply walked away?).

…click on the above link to read the rest of the article…

Chill!

René Magritte Pandora’s box 1951

They can’t help themselves even as they hurt themselves. Look guys, chill! I saw someone imply on Twitter that Donald Trump is an accomplice in a murder cover-up. This person knows as well as all the ones who liked the tweet that they all just don’t know. They don’t know exactly what Trump knows about the chilling Khashoggi execution.

Just like they don’t know exactly what happened in the consulate. Information from anonymous Turkish sources is dripping through drop by drop, and it looks terrible -and terribly graphic-, but the conclusion that Trump wants to cover up a murder is multiple tokes over the line.

The Saudi attempt at labeling the execution a kidnapping gone wrong is out the window if only a tenth of the Turkish sources’ claims is true. What emerges is a picture of premeditated torture and murder. And one that was ordered by someone in the royal family. Which can really only be one of two people: the King or his son, MbS, and the latter seems more suspect. But what any of it has to do with Trump remains to be seen,

He’s not liking the whole thing one bit, that’s for sure. If only because whatever America does vis a vis the Saudi’s is now ultimately his call. While the strong link between the two countries was established decades ago, and would be very hard to untangle, if it comes to that. See, I can write Ban Saudi Oil, as I did last week, but I also realize how extensive the consequences for the US economy would be if such a thing were considered.

Not a decision you take lightly. Trump for instance knows full well what would happen to his standing and popularity if gas prices were to double or triple overnight. Is that a reason to let the Saudi’s get away with murder? No, but it is a reason to be circumspect, and to demand solid evidence. Doing that doesn’t make anyone an accomplice to a murder cover-up.

…click on the above link to read the rest of the article…

Ban Saudi Oil

Alfred Eisenstaedt Egyptian Fishing Boats. Suez Canal near Port Said 1935

According to Middle East Eye, Richard Branson, Andrew Ross Sorkin, Economist editor-In-chief Zanny Minton Beddoes, World Bank president Jim Yong Kim, New York Times, Financial Times, Uber CEO Dara Khosrowshah, Viacom CEO Bob Bakish and AOL founder Steve Case have all withdrawn from Saudi Arabia’s Future Investment Initiative conference, to be held this month in Riyadh. Branson also put a $1 billion investment plan on hold.

Also, on Wednesday, former US energy secretary Ernest Moniz said that he had suspended his role on the board of Saudi Arabia’s planned mega business zone NEOM, to which he was named on Tuesday. The Harbour Group, a Washington firm that has been advising Saudi Arabia since April 2017, ended its $80,000 a month contract on Thursday. JPMorgan CEO Jamie Dimon is still scheduled to speak at the conference, as is Mastercard CEO Ajay Banga, but they won’t risk the damage to their reputations.

All this is due, obviously, to the disappearance of Jamal Khashoggi, a former close aquaintance of the Saud family, who moved to the US and wrote for the Washington Post (how’s Amazon’s Saudi business, Jeff Bezos?) after falling out with the House of Saud.

As the what someone actually labeled “unfolding diplomatic crisis” takes shape, there is really only one thing to say about these people and organizations: they the worst group of hypocrites ever. And their reasons to boycott the conference must be questioned.

Because before Khashoggi vanished they all apparently though it was quite okay to go feed at the Saud trough, despite the still ongoing slaughter of millions of people in the ‘war’ in Yemen. Which makes one suspect it’s not so much about their principles but about their public image.

…click on the above link to read the rest of the article…

Weekly Commentary: Approaching the 10-year Anniversary

Weekly Commentary: Approaching the 10-year Anniversary

We’re rapidly Approaching the 10-year Anniversary of the 2008 financial crisis. Exactly one decade ago to the day (September 7, 2008), Fannie Mae and Freddie Mac were placed into government receivership. And for at least a decade, there has been nothing more than talk of reforming the government-sponsored-enterprises.
It’s worth noting that total GSE (MBS and debt) Securities ended Q3 2008 at $8.070 TN, having about doubled from year 2000. The government agencies were integral to the mortgage finance Bubble – fundamental to liquidity excess, pricing distortions (finance and housing), general financial market misperceptions and the misallocation of resources. GSE Securities did contract post-crisis, reaching a low of $7.544 TN during Q1 2012. Since then, with crisis memories fading and new priorities appearing, GSE Securities expanded $1.341 TN to a record $8.874 TN. Of that growth, $970 billion has come during the past three years, as financial markets boomed and the economy gathered momentum. A lesson not learned.

Scores of lessons from the crisis went unheeded. The Financial Times’ Gillian Tett was the star journalist from the mortgage finance Bubble period. I read with keen interest her piece this week, “Five Surprising Outcomes of the Financial Crisis – We Learnt the Dangers Posed by ‘Too Big to Fail’ Banks but Now They Are Even bigger.”

Tett’s article is worthy of extended excerpts: “What are these surprises? Start with the issue of debt. Ten years ago, investors and financial institutions re-learnt the hard way that excess leverage can be dangerous. So it seemed natural to think that debt would decline, as chastened lenders and borrowers ran scared. Not so. The American mortgage market did experience deleveraging. So did the bank and hedge fund sectors. But overall global debt has surged: last year it was 217% of gross domestic product, nearly 40 percentage points higher – not lower – than 2007.”
…click on the above link to read the rest of the article…

Weekly Commentary: Approaching the 10-year Anniversary

Weekly Commentary: Approaching the 10-year Anniversary

We’re rapidly Approaching the 10-year Anniversary of the 2008 financial crisis. Exactly one decade ago to the day (September 7, 2008), Fannie Mae and Freddie Mac were placed into government receivership. And for at least a decade, there has been nothing more than talk of reforming the government-sponsored-enterprises.
It’s worth noting that total GSE (MBS and debt) Securities ended Q3 2008 at $8.070 TN, having about doubled from year 2000. The government agencies were integral to the mortgage finance Bubble – fundamental to liquidity excess, pricing distortions (finance and housing), general financial market misperceptions and the misallocation of resources. GSE Securities did contract post-crisis, reaching a low of $7.544 TN during Q1 2012. Since then, with crisis memories fading and new priorities appearing, GSE Securities expanded $1.341 TN to a record $8.874 TN. Of that growth, $970 billion has come during the past three years, as financial markets boomed and the economy gathered momentum. A lesson not learned.Scores of lessons from the crisis went unheeded. The Financial Times’ Gillian Tett was the star journalist from the mortgage finance Bubble period. I read with keen interest her piece this week, “Five Surprising Outcomes of the Financial Crisis – We Learnt the Dangers Posed by ‘Too Big to Fail’ Banks but Now They Are Even bigger.”

Tett’s article is worthy of extended excerpts: “What are these surprises? Start with the issue of debt. Ten years ago, investors and financial institutions re-learnt the hard way that excess leverage can be dangerous. So it seemed natural to think that debt would decline, as chastened lenders and borrowers ran scared. Not so. The American mortgage market did experience deleveraging. So did the bank and hedge fund sectors. But overall global debt has surged: last year it was 217% of gross domestic product, nearly 40 percentage points higher – not lower – than 2007.”

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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