Category Archives: Big Banks

Banks accused of rigging silver price

From BBC News:

silver bars‘Deutsche Bank, HSBC and Bank of Nova Scotia have been accused of attempting to rig the price of silver, in a lawsuit filed in the US. The plaintiff alleges the banks, which set the price of silver each day, abused their position in the market. Deutsche Bank and HSBC have not commented on the filing, while Bank of Nova Scotia told Bloomberg news agency it would “vigorously defend” itself.

The lawsuit follows similar filings in the gold price-fixing market. Earlier this year, Barclays Bank was fined £26m ($44m) by UK regulators after one of its traders was discovered attempting to fix the price of gold. Investor Scott Nicholson from Washington said in the filing against the three banks for price-fixing: “The extreme level of secrecy creates an environment that is ripe for manipulation.”‘

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Banks To Overhaul Gold-Fix Amid Rigging Fears

Mark Kleinman reports for Sky News:

Stacked gold bars‘The banks which set the global price of gold are to open the process to independent scrutiny amid evidence that it has been subject to the same manipulation as other crucial financial benchmarks.

The 95-year-old gold fixing mechanism is poised to seek an independent chairman and third-party administrator for the first time, under plans to be unveiled by its current operators. A new code of conduct for participants in the fixing process is also being finalised and is expected to be published shortly.

The reforms will represent a crucial step towards protecting a globally-recognised mechanism set in London and used across the world’s gold industry to set a reference price for bullion.’

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U.S. Federal Reserve Won’t Let Germany Inspect Its Own Gold

Gold standard vs Fiat vs Bitcoin

‘Over the past 100 years the global money supply has increased dramatically, leading to rising prices, ordinary people forced into heavy borrowing and government debt spiraling out of control – US national debt, for example, currently stands at more than US$17.5 trillion (as of 30/04/14). In response to this, some people have been calling for a return to the gold standard, a monetary system where the value of national currencies is directly linked to gold. This is different to the fiat money system currently in use the world over, where the value of national currencies is determined by governments. Other people, however, are suggesting that the cyrptocurrency Bitcoin could be the answer, with many asking if it’s the “new gold standard”.’ (Truthloader)

Bitcoin entices gold diggers in bid to replace conventional currencies

Isaac Arnsdorf reports for Bloomberg:

Bitcoin entices gold diggers in bid to replace conventional currencies‘Call it bitgold. It’s what you get when you combine bitcoin, one of the world’s newest would-be currencies, and gold, one of the oldest. Add mistrust of centralized authority, a dash of rebelliousness and a dollop of profit motive and you might have the Independence Coin, the first gold-backed crypto-money, unveiled this month at FreedomFest, a libertarian convention in — where else? — Las Vegas.

…Despite the skepticism, bitcoin and gold make a natural match, like kittens and milk. Gold, a store of value since ancient times, has long been popular with investors seeking a haven and doomsayers rejecting fiat currencies churned out on central bank printing presses. Bitcoin, cooked up by programmers six years ago, has been embraced by hipster anarchists and others eager to trade online while avoiding the constraints of conventional money. There are signs that the two sides are finally meeting.’

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We must be wary of ‘caring capitalism’

Alex Andreou writes for The Guardian:

‘If ever a story deserved to be filed under the heading “irony” it is the one about a “caring capitalism” summit ending in a bitter legal dispute among the organisers over money. Thursday’s Evening Standard reports that Lady Lynn Forester de Rothschild – the former financier, director of Estee Lauder and the Economist and member of one of the world’s wealthiest families – is suing the charity that helped stage the Conference on Inclusive Capitalism in May, the Henry Jackson Society, on a catalogue of issues, including intellectual property and residual funds and unpaid invoices totalling £187,000.

The world was abuzz in the 90s with conversations of whether capitalism could indeed be “caring”. Companies such as Ben & Jerry’s were leading the way with new corporate concepts and ethical structures. Some academic articles glumly concluded that such new concepts “will be prone to eventual failure and subsumption by fast capitalism”. Twenty years later, while inequality continues to grow and the world is becoming increasingly volatile, we are still having the same conversation. Meanwhile, Ben & Jerry’s has been bought by Unilever.

Capitalism, in its unadulterated form, is not caring. It is not inclusive, responsible or ethical. It is fast, callous, amoral, decisive, aggressive, self-interested and only cares about one thing: the bottom line. This is not a criticism. It is just how it is built.’

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You Can’t Taper a Ponzi Scheme: Time to Reboot

Ellen Brown writes for Web of Debt:

‘[...] The rules of money and banking have changed every 20 or 30 years for the past three centuries, in an ongoing trial-and-error experiment in evolving a financial system, and an ongoing battle over whose interests it will serve. To present that timeline in full will take another article, but in a nutshell we have gone from precious metal coins, to government-issued paper scrip, to privately-issued banknotes, to checkbook money, to gold-backed Federal Reserve Notes, to unbacked Federal Reserve Notes, to the “near money” created by the shadow banking system. Money has evolved from being “stored” in the form of a physical commodity, to paper representations of value, to computer bits storing information about credits and debits.

The rules have been changed before and can be changed again. Depressions, credit crises and financial collapse are not acts of God but are induced by mechanical flaws or corruption in the financial system. Credit may stop flowing, but the workers, materials and markets are still there. The system just needs a reboot.’

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Is the Fed fueling a giant stock market bubble?

John Maxfield writes for The Motley Fool:

07172014-bubble_large‘Take a good look at the chart and you’d be excused for concluding that we’re in the midst of the greatest stock market bubble of all time. Not only has the S&P 500 fully recovered from the financial crisis, it’s a staggering 30% higher than the peaks of the Internet and housing bull markets.

But is this really the case? With unemployment still above 6%, how could we find ourselves in the throes of yet another brewing catastrophe? Didn’t investors and analysts learn anything from the past decade and a half?

While it requires some explanation, the answer is that we’re most likely not experiencing another irrational inflation of stock prices. The market’s record level is instead a predictable response to the Federal Reserve’s policy of keeping interest rates at historically low levels.’

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Poor doors: Segregation of London’s inner-city flat dwellers

Hilary Osborne writes for The Guardian:

One Commercial Street development‘Multimillion pound housing developments in London are segregating less well-off tenants from wealthy homebuyers by forcing them to use separate entrances.

A Guardian investigation has discovered a growing trend in the capital’s upmarket apartment blocks – which are required to include affordable homes in order to win planning permission – for the poorer residents to be forced to use alternative access, a phenomenon being dubbed “poor doors”. Even bicycle storage spaces, rubbish disposal facilities and postal deliveries are being separated.

The Green party accused developers of showing “contempt for ordinary people” by enforcing such two-tier policies.’

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Greece tops eurozone poverty rate

Enet reports:

‘Greece ranks first in the eurozone and fourth among the 28 members of the European Union for the percentage of its citizens living on or below the poverty line, according to a new report. The study, conducted by the Foundation for Economic and Industrial Research (IOBE), found that just over a third (34.6%) of Greeks – some 3,795,100 individuals – were living on less than 60% of the national median income in 2013.

This percentage has risen steadily since 2010, when the country began implementing austerity measures, increasing from 27.6% in 2010 to 27.7% the following year, 31% in 2012 and 34.6% in 2013. The publication of the study, which is based on Hellenic Statistical Authority (Elstat) data, coincided with the 40th anniversary of the effective ending of military rule in 1974.’

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Canadian tax agency says ‘preventing poverty’ not allowed as goal for charity

The Toronto Star reports:

‘The Canada Revenue Agency has told a well-known charity that it can no longer try to prevent poverty around the world, it can only alleviate poverty — because preventing poverty might benefit people who are not already poor.

The bizarre bureaucratic brawl over a mission statement is yet more evidence of deteriorating relations between the Harper government and some parts of Canada’s charitable sector.’

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PETA Offers To Help Pay Water Bills For Struggling Detroit Residents — But Only If They Go Vegan

Think Progress reports:

‘Detroit residents are struggling to pay their water bills at such an alarming rate that the city’s utility announced a few months ago that it would cut off water for between 1,500 and 3,000 people every week. The situation has gotten so bad that the United Nations has had to step in and tell the city that such massive water shut-offs are a violation of human rights. People are desperate just to keep their taps turned on, as about half the city has fallen behind on its bills. As a resident recently told ThinkProgress, “when half of the city can’t do something, it tells you it’s a systemic problem.”

Now, an unlikely group seems to think it can step in and solve this systemic problem. PETA, the People for the Ethical Treatment of Animals, announced in a blog post on Thursday that it will offer financial assistance to 10 families who can’t afford their water bills — if the families go vegan, that is.’

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Times Are Good – For Investment Bankers, Anyway

Jim Naureckas writes for Fairness & Accuracy In Reporting:

Roger Altman (cc photo: Ralph Alswang/CAP)‘Time magazine (7/17/14–subscription required) has some good news for you, courtesy of investment banker and former Clinton Treasury official Roger Altman: “Surprise: The Economy Isn’t as Bad as You Think.”

After noting that “in the latest NBC News/Wall Street Journal poll, 63 percent of respondents said the US is on the wrong track,” Altman insists that “despite the pessimistic mood, America is experiencing a profound comeback.”‘

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Citigroup Just Bought a $7 Billion Get-Out-of-Jail-Free Card

Robert Scheer reports for Truthdig:

Citibank‘Barack Obama’s Justice Department on Monday announced that Citigroup would pay $7 billion in fines, a move that will avoid a humiliating trial dealing with the seamy financial products the bank had marketed to an unsuspecting public, causing vast damage to the economy.

Citigroup is the too-big-to-fail bank that was allowed to form only when Bill Clinton signed legislation reversing the sensible restraints on Wall Street instituted by President Franklin Roosevelt to avoid another Great Depression.

Those filled with Clinton nostalgia these days might want to reflect back on how truly destructive was his legacy for hardworking people throughout the world who lost so much due to the financial shenanigans that he made legal.’

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Serious Fraud Office launches criminal probe into forex manipulation

Ben Chu reports for The Independent:

‘The Serious Fraud Office has launched a criminal investigation into allegations London bankers rigged key foreign exchange benchmarks for profit, the agency announced today [July 21st]. Traders found guilty of illegally manipulating the $5.3 trillion-a-day currency market could face jail and the banking institutions for which they work could also face prosecution.

America’s Department of Justice announced its own probe into alleged manipulation of the $5.3trillion a day foreign exchange market last October. At the same time the Financial Conduct Authority, Britain’s principal financial regulator, launched an investigation. Market watchdogs in Europe and Asia are also involved. The SFO is understood to have been gathering information for several months before formally launching its investigation. Sources at the SFO said they are working closely with other agencies, both in the UK and abroad, although they stressed the decision on whether to bring criminal charges would not depend on the outcome of parallel investigations.’

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Are Students Who Protest Against the Cuts ‘Extremists’?

Josh Allen writes for Vice:

‘Letters to parents requesting a meeting to discuss “concerns that have been raised” usually only happen at school to the parents of kids with the foresight to realise that smoking while your lungs are still developing is totally badass. When you’re an adult, you don’t have to worry about your parents finding out what you get up to, unless you’re stupid enough to get duped into taking a free holiday by BBC3.

So you can imagine the surprise University of Birmingham Politics student Pat Grady’s parents felt when a letter from counter terrorism police, landed on their doormat inviting them “into the local police station” to “discuss concerns” that their son “[might] be involved with domestic extremism”.’

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Facing mass protests, Detroit temporarily halts water shutoffs

‘Detroit is temporarily suspending its policy of cutting off water for low-income residents who are delinquent on their bills. In March, the city sent out 45,000 shutoff notices and began turning off water for thousands of citizens. After a public backlash, rallies against the policy and even calls to the UN for humanitarian assistance, the bankrupt city decided it may need to reevaluate how it is handling the situation.’ (Meghan Lopez)

NYC Approves Apartment Building With Separate Entrance for Poor People

Andy Cush reports for Gawker:

NYC Approves Apartment Building With Separate Entrance for Poor People‘It would be difficult to come with a more on-the-nose metaphor for New York City’s income inequality problem than the new high-rise apartment building coming to 40 Riverside Boulevard, which will feature separate doors for regular, wealthy humans and whatever you call the scum that rents affordable housing.

Extell Development Company, the firm behind the new building, announced its intentions to segregate the rich and poor to much outrage last year. Fifty-five of the luxury complex’s 219 units would be marked for low-income renters—netting some valuable tax breaks for Extell—with the caveat that the less fortunate tenants would stick to their own entrance.’

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Nomi Prins: Dodd-Frank Turns Four and Nothing Fundamental has Changed

Editor’s Note: Nomi Prins is a former managing director at Goldman Sachs and a former senior managing director at Bear Stearns. You can read an abridged version of her remarks at her website. I would HIGHLY recommend reading her new book “All The Presidents’ Bankers“, one of the best works on the history of America’s financial elite that has ever been written. She is also author of “It Takes A Pillage” and the novel “Black Tuesday“.

Nobel Economist Joseph Stiglitz Hails New BRICS Bank Challenging U.S.-Dominated World Bank & IMF

‘A group of five countries have launched their own development bank to challenge the U.S.-dominated World Bank and International Monetary Fund. Leaders from the so-called BRICS countries — Brazil, Russia, India, China and South Africa — unveiled the New Development Bank at a summit in the Brazilian city of Fortaleza. The bank will be headquartered in Shanghai. Together, BRICS countries account for 25 percent of global GDP and 40 percent of the world’s population. To discuss this development, we are joined by Nobel Prize-winning economist Joseph Stiglitz, a professor at Columbia University and the World Bank’s former chief economist. “It’s very important in many ways,” Stiglitz says of the New Development Bank’s founding. “This is adding to the flow of money that will go to finance infrastructure, adaptation to climate change — all the needs that are so evident in the poorest countries. It [also] reflects a fundamental change in global economic and political power. The BRICS countries today are richer than the advanced countries were when the World Bank and the IMF were founded. We’re in a different world — but the old institutions haven’t kept up.”‘ (Democracy Now!)

America’s Moaning Moguls: Why Are the Super-Rich So Angry?

James Surowiecki writes for The New Yorker:

‘[...] Although the Obama years have been boom times for America’s super-rich—recent work by the economists Emmanuel Saez and Thomas Piketty showed that ninety-five per cent of income gains in the first three years of the recovery went to the top one per cent—a lot of them believe that they’re a persecuted minority. As Mark Mizruchi, a sociologist at the University of Michigan and the author of a book called “The Fracturing of the American Corporate Elite,” told me, “These guys think, We’re the job creators, we keep the markets running, and yet the public doesn’t like us. How can that be?” Business leaders were upset at the criticism that followed the financial crisis and, for many of them, it’s an article of faith that people succeed or fail because that’s what they deserve. Schwarzman recently said that Americans “always like to blame somebody other than themselves for a failure.” If you believe that net worth is a reflection of merit, then any attempt to curb inequality looks unfair.

That’s not how it’s always been. A century ago, industrial magnates played a central role in the Progressive movement, working with unions, supporting workmen’s compensation laws and laws against child labor, and often pushing for more government regulation. This wasn’t altruism; as a classic analysis by the historian James Weinstein showed, the reforms were intended to co-opt public pressure and avert more radical measures. Still, they materially improved the lives of ordinary workers. And they sprang from a pragmatic belief that the robustness of capitalism as a whole depended on wide distribution of the fruits of the system.’

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Wall Street Buys NATO Microwave Towers in Traders’ Speed-of-Light Quest

Jesse Westbrook and Sam Mamudi reports for Bloomberg:

‘An 800-foot microwave tower in a Belgian cow pasture transmitted messages for the U.S. armed forces in 1983 when suicide bombers killed hundreds of military personnel at Marine barracks in Beirut, Lebanon. Now it’s being used by high-frequency traders.

Jump Trading LLC, a Chicago-based company founded by former pit traders, bought the tower last year through a U.K. affiliate called Toren Navo Aansluiting Ltd., according to documents filed in the U.K. and Belgium. The English translation of the name: “NATO connection tower.”

Trade orders that were once executed using shouts and hand signals now travel across continents with a swiftness that can approach the speed of light. Fiber-optic cable used to be the choice of electronic trading firms such as Jump that are locked in a contest to be the fastest. Now they’re adopting microwave technology, which can convey data in nearly half the time, to squeeze profit from fleeting and often tiny price discrepancies in assets traded around the world.’

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Jim Rickards: BRICS Development Bank A Significant Step Away From The Dollar

Americans Have Spent Enough Money On A Broken Plane To Buy Every Homeless Person A Mansion

Hayes Brown reports for Think Progress:

An F-35 Joint Strike Fighter in its natural habitat: on the ground‘Just days before its international debut at an airshow in the United Kingdom, the entire fleet of the Pentagon’s next generation fighter plane — known as the F-35 II Lightning, or the Joint Strike Fighter — has been grounded, highlighting just what a boondoggle the project has been. With the vast amounts spent so far on the aircraft, the United States could have worked wonders, including providing every homeless person in the U.S. a $600,000 home.

It’s hard to argue against the need to modernize aircraft used to defend the country and counter enemies overseas, especially if you’re a politician. But the Joint Strike Fighter program has been a mess almost since its inception, with massive cost overruns leading to its current acquisition price-tag of $398.6 billion — an increase of $7.4 billion since last year. That breaks down to costing about $49 billion per year since work began in 2006 and the project is seven years behind schedule. Over its life-cycle, estimated at about 55 years, operating and maintaining the F-35 fleet will cost the U.S. a little over $1 trillion. By contrast, the entirety of the Manhattan Project — which created the nuclear bomb from scratch — cost about $55 billion in today’s dollars.’

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Call for curbs as UK executive pay reaches 180 times average wage

From AFP:

‘The government on Monday faced a call to impose legal caps on executive salaries after a study found top pay in Britain has reached 180 times average wages. The High Pay Centre said that since the late 1990s executive pay has grown from 60 times that of the average British worker to nearly 180 times.

It wants the government to consider requiring companies to cap executive pay at a fixed multiple of their lowest-paid employee. Last year the government gave shareholders the power to vote down executive pay policy at company AGMs if they thought the proposed pay package was too large.

So far, however, every vote at a FTSE 100 company has seen a majority of shareholders support the company policy on top pay, the Centre said. Last year pay received by the average FTSE 100 chief executive increased to £4.7 million, up from £4.1 million in 2012, it said.’

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Britain’s economy forecast to stay on global A-list

Phillip Inman reports for the Guardian:

Canary Wharf Skyline ‘Forecasters have good news for those fearing that Britain faces a long, slow decline into economic mediocrity: the UK will still stand tall among the world’s biggest economies in 2030, having overtaken France and even made progress on closing the gap with Germany.

Only India will leapfrog the UK on the rich list of nations, according to the report by PricewaterhouseCoopers (PwC), as the previously fast-growing countries Russia and Brazil struggle to make ground on the global league table.

According to the report, the youthful vigour of the UK economy, with its high birthrate and flexible labour market, will contrast markedly with the ageing populations of mainland Europe. Ignoring the potential for Scotland to spoil the party by voting to separate in September, the report forecasts that Britain will remain “a significant member of the global economic A-list”.’

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Food bank Britain: can MPs agree on the causes of poverty in the UK?

Amelia Gentleman writes for the Guardian:

“We have found that welfare reforms play a huge part in this,” Reverend Alan Dickinson from the North Tyneside food bank told 60 food bank managers and charity workers gathered in a church hall in South Shields yesterday afternoon.

A group of MPs from the all-party parliamentary inquiry into hunger and food poverty listened for two hours as food bank staff described why people in the area around Newcastle were increasingly demanding their help.

The MPs, both Labour and Conservative, making a rare joint excursion from Westminster, were trying to shed light on one of the most contentious issues of the coalition administration: why is it that use of food banks has exploded in the past four years, and how extensive is food poverty across the country?’

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More banking scandals to come, admits Treasury Minister

Andrew Grice reports for The Independent:

‘More scandals in the financial sector are in the pipeline, the Treasury Minister responsible for the City of London has admitted. Andrea Leadsom, who previously worked in banking and finance for 25 years, warned that there were more “cringeworthy announcements” to come and that there was “still a lot of baggage” in the financial industry.

Ms Leadsom, who held senior roles at Barclays and Invesco Perpetual before becoming an MP, told the parliamentary magazineThe House there was still a long way to go change the City’s culture. Asked whether it is learning the lessons of the financial crisis, she replied: “I would say that at the top echelons of the banks, absolutely. But I think there’s quite a long way to go to really change the culture. I think it did become very transaction-oriented and I think it will take time to recover that. I think we are still going to see a lot of cringeworthy announcements.” She admitted that when she heard about the Libor interbank lending rate scandal, she thought: “Well, if Libor is rigged, then what wasn’t rigged?”’

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BNP Paribas Case: An Example of How Mighty the Dollar Is

Neil Irwin writes for The New York Times:

‘Even if you are a bank as gigantic as BNP Paribas, $9 billion is a lot of money. Shareholders of the French bank know that all too well, as that is what they are paying in penalties to the United States for a conspiracy to allow money transfers to Sudan and other blacklisted nations.

The case is remarkable for the size of the penalty, which is a bit more than the bank’s total earnings for 2013. But it may be more interesting for the lesson it teaches about how the United States’ financial power goes hand in hand with its role in foreign affairs.

In short: The dollar is the global reserve currency, the bedrock of the world financial system. And that role gives the United States surprising power over what happens in the world even in spheres that would have little to do with finance.’

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BNP Paribas Fine Shows Financial Crime Still Pays Big Time: Interview with Bill Black