Category Archives: Financial Crisis

White House Brags Sanctions Put Russia On ‘Brink of Collapse’

Jason Ditz reports for Antiwar:

Confirming that they intend to impose a new round of sanctions on Russia, White House officials are seeking to claim “credit” for Russia’s recent economic woes, bragging that they have put Russia on the brink of an economic collapse.

Russia’s current economic problems center around weakness in the ruble. Russia’s central bank raised interest rates yesterday to try to stave off further inflation, but the weakness continued in today’s trading.

Wilson Center scholar Matthew Rojansky defended the sanctions, saying the logic behind them is to damage the Russian economy so much that it “starts hurting the Russian public’s ability to buy food or heat homes,” forcing Putin to act in the face of the crisis.

Russia’s economy is far from pushing the average citizen to the brink of starvation, however, though a new round of sanctions at this point makes it clear that is indeed the US goal.’

The Bilderberg Group and Its Link to World Financial Markets

Andrew Gavin Marshall writes:

This article looks at the published lists of participants attending recent Bilderberg meetings, specifically ones that took place between 2008 and 2014. From these lists, we’re better able to understand the relevance of Bilderberg meetings to specific institutions, ideologies and powerful sectors of society connected with global economic governance. As such, the following articles in this series examine financial markets, banks, technocracy, finance ministries, central banks, the IMF and the European Union.

When discussing the Bilderberg group, its meetings and their impacts, there is one major problem: the meetings are held in secret. When 130 of the world’s most influential individuals and institutions get together behind closed doors for a “private chat,” the public is left unaware of what was said, debated, agreed or decided. The official website for Bilderberg publishes recent lists of attendees as well as a press release of the “topics” due to be discussed.

With no details added, the list for the 2014 meeting’s topics included, “Is the economic recovery sustainable?”, “What next for Europe?”, “China’s political and economic outlook,” and “Current Events.” This is essentially all we have to go on in our efforts to discern what was debated and discussed behind the scenes.

So, instead of engaging in speculation about what was or was not discussed at Bilderberg meetings, let’s instead look at the individuals and institutions that are frequently represented there. What role do those groups play in society? What is their history and evolution as institutions and individuals? What ideologies do they embrace and propagate? Seeking the answers to these questions raises further inquiries: what do these individuals, institutions and ideologies tell us about our society? What do they tell us about power and how it is organized, exercised and expanded?’

READ MORE…

Dodd-Frank Budget Fight Proves Democrats Are a Bunch of Stuffed Suits

Matt Taibbi writes for Rolling Stone:

‘[…] Conservatives for welfare, and liberals for big business. It doesn’t make sense unless we’re not really dealing with any divided collection of conservatives or liberals, and are instead talking about one nebulous mass of influence, money and interests. I think of it as a single furiously-money-collecting/favor-churning oligarchical Beltway party, a thing that former Senate staffer and author Jeff Connaughton calls “The Blob.”

What’s happening here is that The Blob, which includes supposed enemies like Reid and Graham, wants to give donation-factory banks like Citi and Chase a handout. But a coalition of heretics, including the liberal Warren, the genuinely conservative Vitter and (surprisingly to me) the usually party-orthodox Nancy Pelosi is saying no to the naked giveaway.

Is killing the Citigroup provision really worth the trouble? Is it a “Hill to die on”? Maybe not in itself. But the key here is that a victory on the swaps issue will provide the Beltway hacks with a playbook for killing the rest of the few meaningful things in Dodd-Frank, probably beginning with the similar Volcker Rule, designed to prevent other types of gambling by federally-insured banks. Once they cave on the swaps issue, it won’t be long before the whole bill vanishes, and we can go all the way back to our pre-2008 regulatory Nirvana.’

READ MORE…

Thom Hartmann: “Somebody’s messing with the price of oil and it could lead to depression or war”

Oil prices plunge after OPEC meeting

The looters the media tells you about and the ones it doesn’t

G20 Recommits to Lifting Private Sector Activity: Interview with Leo Panitch

Editor’s Note: Professor Leo Panitch is a distinguished research professor of Political Science at York University in Toronto, Canada and editor of the Socialist Register. He is also co-author of ‘The Making of Global Capitalism: The Political Economy of American Empire‘. In this interview with the Real News, Panitch states that the G20 countries may have managed to contain a major crisis in capitalism after the financial crisis in 2007-08, but may actually be starting to realise that massive government sector spending is required to prevent it from happening again.

G20 Summit Failed to Seriously Address Global Problems: Interview with James Henry

Editor’s Note: James Henry is an economist and author who serves as a senior advisor at the Tax Justice Network. In this interview with the Real News he discusses how the recent G20 meeting in Brisbane, Australia neglected serious focus on long-term issues like tax reform, infrastructural investment, and climate change.

Russia’s Poor Feel Impact Of Sanctions

Pope Urges World Leaders To Rein In Greed, Feed The Hungry

Growth: the destructive god that can never be appeased

George Monbiot writes for The Guardian:

A man walks past a television monitor showing a drop in Hong Kong's benchmark Hang Seng IndexAnother crash is coming. We all know it, now even David Cameron acknowledges it. The only questions are what the immediate catalyst will be, and when it begins.

You can take your pick. The Financial Times reported yesterday that China now resembles the US in 2007. Domestic bank loans have risen 40% since 2008, while “the ability to repay that debt has deteriorated dramatically”. Property prices are falling and the companies that run China’s shadow banking system provide “virtually no disclosure” of their liabilities. Just two days ago the G20 leaders announced that growth in China “is robust and is becoming more sustainable”. You can judge the value of their assurances for yourself.

Housing bubbles in several countries, including Britain, could pop any time. A report in September revealed that total world debt (public and private) is 212% of GDP. In 2008, when it helped cause the last crash, it stood at 174%. The Telegraph notes that this threatens to cause “renewed financial crisis … and eventual mass default”. Shadow banking has gone beserk, stocks appear to be wildly overvalued, the eurozone is bust again. Which will blow first?

Or perhaps it’s inaccurate to describe this as another crash. Perhaps it’s a continuation of the last one, the latest phase in a permanent cycle of crisis exacerbated by the measures (credit bubbles, deregulation, the curtailment of state spending) that were supposed to deliver uninterrupted growth. The system the world’s governments have sought to stabilise is inherently unstable; built on debt, fuelled by speculation, run by sharks.’

READ MORE…

Money is God

How the coalition government has helped the rich by hitting the poor

Daniel Boffey reports for The Observer:

George Osborne's claim that 'we are all in this together' in economic terms is damaged by the findin‘A landmark study of the coalition’s tax and welfare policies six months before the general election reveals how money has been transferred from the poorest to the better off, apparently refuting the chancellor of the exchequer’s claims that the country has been “all in it together”.

According to independent research to be published on Monday and seen by the Observer, George Osborne has been engaged in a significant transfer of income from the least well-off half of the population to the more affluent in the past four years. Those with the lowest incomes have been hit hardest.’

READ MORE…

Prombron Black Shark: Chinese elite’s $1 million ride of choice

Editor’s Note: At $1 million each, this vehicle could become the ride of choice for the world’s global elite who are increasingly becoming paranoid about the bewildered herds growing anger at rising inequality and their increasingly extravagant lifestyles while so many struggle to get by. Why not peasant proof themselves with a Prombron Black Shark?

Nick Gentle reports for Bloomberg News:

Black Shark 1 (2).jpgLeather seats and a champagne fridge used to be the ultimate in car luxury. Now, it’s Tiffany blue bonnets encrusted with Swarovski crystals.

In China, where millionaires are being minted daily and displays of excess are still easily found despite a crackdown on extravagance, the bar for conspicuous consumption is being raised ever higher.

Enter the Prombron Black Shark, a bespoke luxury vehicle from Latvia’s Dartz Motorz Co. that in addition to armor-plating, crowd-suppression lasers and anti-paparazzi electrified door handles, offers exotic leather interiors, a Bang & Olufsen A/S sound system and, yes, as one customer has requested, that famous blue paint job. Costing in excess of six figures, these cars are clearly for people who want to do more than just get from point A to point B.’

READ MORE…

The story of the millionaire Tory MP and the tenants facing homelessness

Aditya Chakrabortty writes for The Guardian:

Richard Benyon Official.jpgLyndsey Garratt had never heard of Richard Benyon – until he wound up buying her home and those of her 92 neighbours. Now that the millionaire Tory MP and his business partners threaten to make them all homeless, the 35-year-old mother can’t stop talking about him.

Garratt lives on the fringes of the City of London, on the New Era estate. Built by a charitable trust in the mid-1930s, the redbrick square has provided homes to local working people at affordable rents. There was a time when the term “affordable housing” was not a sick joke, when inner London did house people on moderate incomes. But now the capital has become a global hotspot for property speculators; Hoxton is overrun with overpriced burger joints and media start-up companies, and New Era is one of the last estates to provide working-class Londoners with a home.

At least it was until Benyon’s family firm recently moved in as part of a property consortium and snapped up the lot.’

READ MORE…

US wealth inequality: Top 0.1% worth as much as the bottom 90%

Angela Monaghan reports for The Guardian:

Wealth inequality in the US is at near record levels according to a new study by academics. Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%. For the bottom 90% of families, a combination of rising debt, the collapse of the value of their assets during the financial crisis, and stagnant real wages have led to the erosion of wealth.

The research by Emmanuel Saez and Gabriel Zucman [pdf] illustrates the evolution of wealth inequality over the last century. The chart shows how the top 0.1% of families now own roughly the same share of wealth as the bottom 90%.

The picture actually improved in the aftermath of the 1930s Great Depression, with wealth inequality falling through to the late 1970s. It then started to rise again, with the share of total household wealth owned by the top 0.1% rising to 22% in 2012 from 7% in the late 1970s. The top 0.1% includes 160,000 families with total net assets of more than $20m (£13m) in 2012.

In contrast, the share of total US wealth owned by the bottom 90% of families fell from a peak of 36% in the mid-1980s, to 23% in 2012 – just one percentage point above the top 0.1%.’

READ MORE…

Nomi Prins: QE isn’t dying, it’s morphing

Editor’s Note: Nomi Prins is a former managing director at Goldman Sachs and a former senior managing director at Bear Stearns. I would HIGHLY recommend reading her latest book “All The Presidents’ Bankers“. It is quite possibly the best work on the history of America’s financial elite that has ever been written. She is also author of “It Takes A Pillage” and a novel “Black Tuesday“. You can check out more of her work at her website, or via the select links below.

Nomi Prins writes:

A funny thing happened on the way to the ‘end’ of the multi-trillion dollar bond buying program known as QE – the Fed chronicles. Aside from the shift to a globalization of QE via the European Central Bank (ECB) and Bank of Japan (BOJ) as I wrote about earlier,what lingers in the air of “post-taper” time is an absence of absence. For QE is not over. Instead, in the United States, the process has simply morphed from being predominantly executed by the Federal Reserve (Fed) to being executed by its major private bank members. Fed Chair, Janet Yellen, has failed to point this out in any of her speeches about the labor force, inflation, or inequality.

The financial system has failed and remains a threat to us all. Only cheap money and the artificial inflation of asset values can make it appear temporarily healthy. Yet, the Fed (and the Obama Administration) continue to perpetuate the illusion that making the cost of (printed) money zero by any means has had a positive effect on the population at large, when in fact, all that has occurred is a pass-the-debt-ponzi-scheme co-engineered by the Fed and big US bank beneficiaries. That debt, caught in the crossfires of this central-private bank arrangement, is still doing nothing for American citizens or the broader national or global economy.

The Fed is already the largest hedge fund in the world, with a book of $4.5 trillion of assets. These will plummet in value if rates rise.  Cue the banks that are gearing up their own (still small in comparison, but give them time) role in this big bamboozle. By doing so, they too are amassing additional risk with respect to interest rates rising, on top of all their other risk that counts on leveraging cheap money.’

READ MORE…

How Deep is the Rot on Wall Street? Interview with Bill Black

Editor’s Note: William K. Black is a lawyer, academic, author, and a former bank regulator. Black played a central role in exposing Congressional corruption during the Savings and Loan Crisis. He is the author of several books including ‘The Best Way to Rob a Bank is to Own One‘ and also writes regularly at New Economic Perspectives.

The Rise of Europe’s Far-Right: Interview with John Weeks

Editor’s Note: John Weeks is a professor emeritus of the University of London’s School of Oriental and African Studies. He is author of ‘The Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy’.

Anti-Fascists Rise Against Golden Dawn in Greece

‘In September 2013, Greek authorities took the unprecedented action of arresting a number of members of the far-right political organization Golden Dawn — including its leader, Nikos Michaloliakos. In the wake of the economic crisis, Golden Dawn has risen to become Greece’s third major political party, despite regular reports linking the organization to hate crimes. The trigger for these arrests was the murder of Pavlos Fyssas a.k.a. Killah P, a rapper whose songs often carried anti-fascist sentiments. His death sparked an investigation into Golden Dawn, leading to members being charged with crimes including murder, running a criminal organization, weapons offenses, and reported assaults on immigrants. In the days surrounding the first anniversary of Fyssa’s death, VICE News traveled to Greece to attend a protest in the rapper’s memory and see how the events of the past year have affected Greece’s anti-fascist movement.’ (VICE News)

Nomi Prins: Why the Financial and Political System Failed and Stability Matters

Editor’s Note: Nomi Prins is a former managing director at Goldman Sachs and a former senior managing director at Bear Stearns. I would HIGHLY recommend reading her new book “All The Presidents’ Bankers“, quite possibly the best work on the history of America’s financial elite that has ever been written. She is also author of “It Takes A Pillage” and a novel “Black Tuesday“. You can check out more of her work at her website, or via the select links below.

Nomi Prins writes:

‘The recent spike in global political-financial volatility that was temporarily soothed by European Central Bank (ECB) covered bond buying and Bank of Japan (BOJ) stimulus reveals another crack in the six-year-old throw-money-at-the-banks strategies of politicians and central bankers. The premise of using banks as credit portals to transport public funds from the government to citizens is as inefficient as it is not happening. The power elite may exude belabored moans about slow growth and rising inequality in speeches and press releases, but they continue to find ways to provide liquidity, sustenance and comfort to financial institutions, not to populations.

The very fact – that without excessive artificial stimulation or the promise of it – more hell breaks loose – is one that government heads neither admit, nor appear to discuss. But the truth is that the global financial system has already failed. Big banks have been propped up, and their capital bases rejuvenated, by various means of external intervention, not their own business models.

In late October, the Federal Reserve released its latest 2015 stress test scenarios. They don’t even exceed the parameters of what actually took place during the 2008-2009-crisis period. This makes them, though statistically viable, completely irrelevant in an inevitable full-scale meltdown of greater magnitude. This Sunday [Oct 26th], the ECB announced that 25 banks failed their tests, none of which were the biggest banks (that received the most help). These tests are the equivalent of SAT exams for which students provide the questions and answers, and a few get thrown under the bus for cheating to make it all look legit.

Regardless of the outcome of the next set of tests, it’s the very need for them that should be examined. If we had a more controllable, stable, accountable and transparent system (let alone one not in constant litigation and crime-committing mode) neither the pretense of well-thought-out stress tests making a difference in crisis preparation, nor the administering of them, would be necessary as a soothing tool. But we don’t. We have an unreformed (legally and morally) international banking system still laden with risk and losses, whose major players control more assets than ever before, with our help.’

READ MORE…

Predictors of 1929 Crash See 65% Chance of 2015 Recession

Simon Kennedy reports for Bloomberg:

Predictors of 1929 crash sees a 65% chance of 2015 global recession‘In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.

That call runs counter to the forecasts of Morgan Stanley and Goldman Sachs Group Inc. The two banks posit an expansion that has plenty of room to run.’

READ MORE…

BoE Deputy Governor warns City misconduct is undermining public trust

Jill Treanor reports for The Guardian:

‘The Bank of England has warned of “deep-rooted problems” in the City that are undermining public trust in the financial system, as it launched a sweeping review intended to wipe out market manipulation.

In her first speech as deputy governor of the Bank of England, Nemat “Minouche” Shafik said the behaviour of traders in foreign exchange, currencies and bonds markets pointed to a pattern of behaviour that goes beyond a few rogue players.

Saying she had found the behaviour of Libor riggers outrageous, Shafik said that the ongoing fines for misconduct were “like salt rubbed into the wounds to public confidence in financial markets”.’

READ MORE…

The End Of An Era: Is The US Petrodollar Under Threat?

Andrew Topf writes for Oil Price:

‘Recent trade deals and high-level cooperation between Russia and China have set off alarm bells in the West as policymakers and oil and gas executives watch the balance of power in global energy markets shift to the East.

The reasons for the cozier relationship between the two giant powers are, of course, rooted in the Ukraine crisis and subsequent Western sanctions against Russia, combined with China’s need to secure long-term energy supplies. However, a consequence of closer economic ties between Russia and China could also mean the beginning of the end of dominance for the U.S. dollar, and that could have a profound impact on energy markets.’

READ MORE…

Why American Financial Markets Have No Relationship to Reality

Paul Craig Roberts and Dave Kranzler write:

‘The bullion banks (primarily JP Morgan, HSBC, ScotiaMocatta, Barclays, UBS, and Deutsche Bank), most likely acting as agents for the Federal Reserve, have been systematically forcing down the price of gold since September 2011. Suppression of the gold price protects the US dollar against the extraordinary explosion in the growth of dollars and dollar-denominated debt.

It is possible to suppress the price of gold despite rising demand, because the price is not determined in the physical market in which gold is actually purchased and carried away. Instead, the price of gold is determined in a speculative futures market in which bets are placed on the direction of the gold price. Practically all of the bets made in the futures market are settled in cash, not in gold. Cash settlement of the contracts serves to remove price determination from the physical market.

Cash settlement makes it possible for enormous amounts of uncovered or “naked” futures contracts — paper gold — to be printed and dumped all at once for sale in the futures market at times when trading is thin. By increasing the supply of paper gold, the enormous sales drive down the futures price, and it is the futures price that determines the price at which physical quantities of bullion can be purchased.’

READ MORE…

IMF, World Bank, Giant Consultants Admit the Storm is Coming

Andrew Gavin Marshall wrote for Occupy back in July:

‘These two groups – financial institutions and the consultants that advise them – play key roles in the spread of institutionalized corporate and financial power, and as such, warnings from these groups about the threat posed by “social unrest” carry particular weight as they are geared toward a particular audience: the global oligarchy itself.

Organizations like the International Monetary Fund (IMF) and World Bank were responsible for forcing neoliberal economic “restructuring” on much of the developing world from the 1980s onwards, as the IMF and E.U. are currently imposing on Greece and large parts of Europe. The results have been and continue to be devastating for populations, while corporations and banks accumulate unprecedented wealth and power.

As IMF austerity programs spread across the globe, poverty followed, and so too did protests and rebellion. Between 1976 and 1992, there were 146 protests against IMF-sponsored programs in 39 different countries around the world, often resulting in violent state repression of the domestic populations.

These same programs by the IMF and World Bank facilitated the massive growth of slums, as the policies demanded by the organizations forced countries to undertake massive layoffs, privatization, deregulation, austerity and the liberalization of markets – amounting, ultimately, to a new system of social genocide. The new poor and displaced rural communities flocked to cities in search of work and hope for a better future, only to be herded into massive urban shantytowns and slums. Today roughly one in seven people on Earth, or over 1 billion, live in slums.’

READ MORE…

IMF’s Post-Crisis Austerity Call Mistaken, Internal Watchdog Says

Andrew Mayeda reports for Bloomberg:

The International Monetary Fund (IMF) logo is seen at the IMF headquarters building in Washington.‘The verdict is in on the International Monetary Fund’s call for government austerity in the aftermath of the 2008 financial crisis: bad idea.

Where the fund went awry was in its 2010 shift away from recommending government stimulus to calling for budget cuts in the biggest advanced economies, according to a report released today by the IMF’s internal watchdog, the Independent Evaluation Office. That turn was inappropriate given the global recovery’s modest pace, the report said.

The findings add credence to views of critics such as Nobel economics laureate Paul Krugman, who said in 2010 that austerity was a “terrible idea” at the time. The IMF has since shifted its position, calling on countries to step up infrastructure spending at its annual meeting last month.’

READ MORE…

The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare

Editor’s Note: Matt Taibbi writes his first article for Rolling Stone since he left to join First Look Media in February, which sadly didn’t work out. Below the article preview is the first ten-minutes of an interview on Democracy Now! You can watch the full forty-minute interview here. Taibbi’s latest book is ‘The Divide: American Injustice in the Age of the Wealth Gap‘.

Matt Taibbi writes for Rolling Stone:

‘She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'”

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.’

READ MORE…

Alan Greenspan: China and the Enduring Power of Gold

Alan Greenspan, former chairman of the Federal Reserve, wrote recently for Foreign Affairs:

‘If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold. (As of spring 2014, U.S. holdings amounted to $328 billion.) But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal.

The broader issue — a return to the gold standard in any form — is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money — currency not backed by an asset of intrinsic value — rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.’

READ MORE…

36 European Banks Would Have Failed Stress Test Based on Basel III Norms

Jerin Mathew reports for the International Business Times:

A machine counts and sorts out euro notes at the Belgian Central Bank in Brussels‘A total of 36 European banks would have failed if Europe’s banking regulator had assessed them based on Basel III, a global regulatory standard on bank capital adequacy, stress test and market liquidity risk.

Last week the European Banking Authority (EBA) failed 24 banks, which had common equity of 5.5% or less under a 2014 to 2016 recession scenario, in its latest stress test. The assessment was based on transitional capital rules, which vary between countries as they introduce new regulations.

Eleven other banks would have failed if Basel III had been applied, according to data from the EBA.

“Many banks have only passed the stress test by very thin margins and/or could be challenged in meeting requirements based on fully-phased-in capital ratios. Accordingly, many banks will be expected to do more,” said Carola Schuler, a Moody’s managing director.’

READ MORE…