State of the World Economy: The Emperor Has No Clothes

In Hans Christian Anderson’s iconic fairy tale, The Emperor’s New Clothes, two swindling weavers promise an Emperor a “new suit” that they tell everyone will be invisible only to those who are unfit for their positions. So, when the Emperor parades before his subjects, the spellbound people laud his beautiful new clothes in fear of being exposed as unsophisticated or stupid. Eventually, it took a child to cry out, “But he isn’t wearing anything at all!” before the king’s subjects could muster enough confidence to admit the obvious reality.

Scholars note that the phrase “emperor’s new clothes” describes a common situation where “weavers” of official policy insist that the value of their labor be recognized apart from the physical reality of the moment, and has become a standard metaphor for anything that smacks of pretentiousness, pomposity, social hypocrisy, collective denial, or hollow ostentatiousness.

While today’s existing global power structure continues to try to conduct business as usual and insist that the economy is in good standing, there is no question that existing systems are unsustainable. The economic value of all of our assets and resources are at stake, and dealing with the symptoms of the problem rather than their root causes, while delaying the consequences and numbing the public to their real effects only exacerbates the inevitable results. Note these sobering facts:

The bottom line – Financial distress continues to be increasingly widespread throughout the U.S. and the world.

To make matters worse, the United States’ credit rating, described by the Wall Street Journal as “a cornerstone of the global financial world,” was shaken this month when S&P downgraded it from AAA to AA. Notably, S&P said the downgrade “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”

And it’s no better across the world. Arson, riots and looting are on the increase in Europeas public and private credit spirals into ever-riskier realms. The debt crisis is more advanced in Europe than it is in the U.S. Can Europe be anything but a precursor for theUnited States in this case? Remember,Greece had its first credit downgrade in December of 2009.

The foundation of Bank of America appears to be showing some cracks.

Ominously, the same day the financial world was shaken by the U.S. credit downgrade, officially began its Bank of America Death Watch with with the following reasoning:

It is clear that the Charlotte bank has too much in the way of legal liability that it will not be able to shed and yet-to-be-taken write-downs on balance sheet items (for instance, roughly $125 billion of home equity loans and junior liens on residential real estate as of end of last year) for it not to be at risk of a death spiral.

Any guesses as to who is likely to be holding that bill in the end? In response, and in an unprecedented move demonstrating the desperation of the moment, the Fed announced that they will freeze interest rates for the next two years to keep the government and private citizens afloat and continuing to borrow. Then, with a perfect storm of serious financial problems erupting around the world, Federal Reserve Chairman Bernanke issued the following opening statement from the bankers’ annual August retreat atJackson Holeto squarely address the nation’s most pressing financial question:

We meet here today almost exactly three years since the beginning of the most intense phase of the financial crisis and a bit more than two years since the National Bureau of Economic Research’s date for the start of the economic recovery.

Where do we stand?

Here was the master weaver’s answer…

There have been some positive developments over the past few years, particularly when considered in the light of economic prospects as viewed at the depth of the crisis. Overall, the global economy has seen significant growth, led by the emerging-market economies. In theUnited States, a cyclical recovery, though a modest one by historical standards, is in its ninth quarter. In the financial sphere, theU.S.banking system is generally much healthier now, with banks holding substantially more capital. Credit availability from banks has improved, though it remains tight in categories – such as small business lending – in which the balance sheets of potential borrowers remain impaired. Companies with access to the public bond markets have had no difficulty obtaining credit on favorable terms. Importantly, structural reform is moving forward in the financial sector, with ambitious domestic and international efforts underway to enhance the capital and liquidity of banks, especially the most systematically important banks; to improve risk management and transparency; to strengthen market infrastructure; and to introduce a more systemic, or macro-prudential, approach to financial regulation and supervision.

Current economic reality and the state of financial “reform” show the Fed chairman’s words to be akin to the Emperor’s beautiful new clothes being woven for public consumption. Just as with today’s bankers’ elaborate financial memes and schemes, the emperor’s new clothes became more imaginative with each successive description of the swindlers’ wonderful cloth – even though it had no material existence. How will the markets respond to the increasingly illusionary fashion design?

Perhaps the real truth of The Emperor’s New Clothes is not that the child’s truth is mercifully free of adult corruption, but that it recognizes the terrifying possibility that whatever words we may use to clothe our fears, the fabric cannot protect us from them. Even Chairman Bernanke seems to acknowledge this sober fact when he concludes in his Fed meeting speech:

To achieve economic and financial stability, U.S. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. As I have emphasized on previous occasions, without significant policy changes, the finances of the federal government will inevitably spiral out of control, risking severe economic and financial damage.

In sustainable development parlance, the “profit” leg of the triple-bottom-line appears more and more dubious with every passing day. Sustainable economic growth – an ever-increasingly fleeting concept in today’s world – is one of the vital legs of sustainable development. So in the absence of it, is sustainable development dead?

Absolutely not.

In a revealing new article, Developing a Sustainable Endgame for the Global Economy, SLDI has identified why this should all have been expected (but wasn’t), and how shifting investments from Wall St. and banking-based assets to the only investments which mitigate the increasing risk of systemic failure of the economy brought on by excessive debt – sustainable global infrastructure – is the best course of action from here. Only by investing in nature-based assets with lasting inherent value such as land, shelter, food, water quality, and other ecosystem restoration services will we mitigate the increasing systemic economic risk and achieve the short- and long-term wealth gains we all strive to achieve.

Back in January 2009, amid all the bad news and demands being placed on the President-elect Obama transition team prior to his inauguration, SLDI offered a reason to hope for the future by formally submitting its offer of assistance to help boost the administration’s economic recovery plan and policy agenda – and save the country billions in the process. Unfortunately, the politics of money have continued to rule Washington. SLDI’s public proposal for sustainable infrastructure was ignored, and little has been done to improve our dire circumstance.

While today’s weavers fail all of us, the real economic system at play will continue to deliver real value – if we manage it sustainably. Anything less, including the actions currently being taken, is akin to attempting to build on top of a falling house of cards. Those with the vision to invest in sustainable infrastructure assets will profit through this time of unprecedented turbulence – even while trillions worth of financial “assets” disappear into thin air.

Sustainable Land Development Initiative

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205 responses

  1. UPDATE:

    EU Bailout Fund will Top $1.4 Trillion –

    The Ecological Rift: Capitalism’s War on the Earth –

    Will new federal mortgage policies help the market? –

    Economic Collapse of Oregon Rural Counties? –

    Natural Systems Key to Addressing Climate Change –

    Another Eurozone Country Bites the Dust –

    Fed Lowers Forecast but Does Nothing –

    OWS Changes Austerity Debate –

    Italy: Too Big to Bail –

    The Emergence of “Sacred Demise” –

    Nouriel Roubini Sees Double-Dip Recession –

    Roubini Warns of Catastrophe for Goldman Sachs –

    Berlusconi’s Ouster Won’t Avert Italian Default –

    Lessons from MF Global Collapse –

    Rooting Investment Portfolios in Forestry Real Estate –

    Does US have the best “can” to kick down the road? –

    First Greece. Then Italy. Is France Next? –

    1. UPDATE:

      NY Times
      As Crisis Mounts, Europe’s Central Bank Stands Back
      Published: November 25, 2011

      FRANKFURT — To some people, the European Central Bank seems like a fire department that is letting the house burn down to teach the children not to play with matches.

      The E.C.B. has a fire hose — its ability to print money. But the bank is refusing to train it on the euro zone’s debt crisis.

      The flames climbed higher Friday after the Italian Treasury had to pay an interest rate of 6.5 percent on a new issue of six-month bills — more than three percentage points higher than a similar debt auction on Oct. 26. It was the highest interest rate Italy has had to pay to sell such debt since August 1997, according to Bloomberg News.

      But there is no sign the E.C.B. plans a major response, like buying large quantities of the country’s bonds to bring down its borrowing costs. The E.C.B. “is not the fiscal lender of last resort to sovereigns,” José Manuel González-Páramo, a member of the executive board of the bank, told an audience at Oxford University on Thursday, a view that has been repeated by members of the bank’s governing council in recent weeks.

      To many commentators, the E.C.B.’s attitude seems so incomprehensible that they assume the central bank is just putting pressure on politicians to make sure they keep their promises. Rather than let the euro break apart, the thinking goes, the bank will eventually relent and drench the economy with cash as the United States Federal Reserve and Bank of England have done.

      But another possibility is that when the E.C.B. says “no,” it in fact means “no”…

  2. Financial Post
    ‘Unique urgency’ facing global economy

    Diane Francis · Dec. 31, 2011

    New America Foundation, sponsored by Silicon Valley tycoons such as
    Eric Schmidt and Steve Jobs’ widow, Laurene Powell Jobs, recently
    published an important and concise prescription to fix the listing

    The Way Forward was written by two academics and one
    financial practitioner: Professors Robert Hockett of Cornell University,
    Nouriel Roubini of New York University and Daniel Alpert, a partner
    with Westwood Capital. They outline the causes of the current fiscal
    calamity and propose sweeping global policies to repair and renovate the
    global economy…

  3. UPDATE from World Economic Forum in Davos:
     NY Times – January 28, 2012
    In Davos, Europe Is Pressed for Debt Crisis Solution
    …While many European leaders and businesspeople have argued that the risk of a catastrophic breakup of the euro zone has declined, leaders of other regions said the crisis still had the potential to sow global misery.

    “I’ve never been as scared as now about the world,” said Donald Tsang, chief executive of Hong Kong. He said the effect on the world financial system is unpredictable. “We do not know how deep this hole would be when the whole thing implodes on us,” he said.

    Ms. Lagarde said: “No one is immune. It’s not just a euro zone crisis. It’s a crisis that could have collateral effects, spillover effects around the world.”

    The undercurrent of their remarks was that European policy still lacks credibility in the eyes of the world.

    “This has got to have an effect on influence, on perceptions of power in the world that are going to be significant for years to come,” said Robert B. Zoellick, president of the World Bank Group.  

    Nouriel Roubini, a professor of economics at New York University known for his pessimistic views, forecast Saturday that Greece would have to leave the euro zone this year, and said that there was at least a 50 percent chance that the euro zone would break up within three to five years.

    “The euro zone is a slow-motion train wreck,” Mr. Roubini said…

    January 29, 2012

    Davos founder Klaus Schwab: “We have sinned”

    DAVOS, Switzerland

    Capitalism is out of whack, the founder of the World Economic Forum
    says, welcoming critics’ ideas of how to fix it — even those camped out
    in protest igloos near his invitation-only gathering of global VIPs…

    “I’m a deep believer in free markets, but free
    markets have to serve society,” he said in Davos, the ski resort tucked
    away deep in the Swiss Alps. He lamented excesses and “lack of inclusiveness in the capitalist system.”

    have sinned,” he said, adding that this year’s forum would put
    particular emphasis on ethics and resetting the moral compass of the
    world’s business and political community.

    said the forum invited members of the Occupy protest movement, camped
    in igloos in Davos, to a session on the sidelines to talk about
    reforming capitalism…

  5. NY Times Op-Ed Contributor
    Why I Am Leaving Goldman Sachs
    Published: March 14, 2012

    An executive resigns from his position over an integrity problem too big to ignore…

    “I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.”

    NY Times Editorial
    The Banks Win, Again
    Published: March 17, 2012

    Last week was a big one for the banks. On Monday, the foreclosure settlement between the big banks and federal and state officials was filed in federal court, and it is now awaiting a judge’s all-but-certain approval. On Tuesday, the Federal Reserve announced the much-anticipated results of the latest round of bank stress tests. 

    How did the banks do on both? Pretty well, thank you — and better than homeowners and American taxpayers.

    That is not only unfair, given banks’ huge culpability in the mortgage bubble and financial meltdown. It also means that homeowners and the economy still need more relief, and that the banks, without more meaningful punishment, will not be deterred from the next round of


    US Consumer Debt Now Growing at Unsustainable Rate –

    “What the numbers tell us today (as illustrated in the below graph)
    is that, as of January 2012, the growth rate in all forms of consumer
    credit on a 3 month average basis grew at a rate greater than at any
    time during the credit bubble. Moreover, at $2.495 trillion,
    outstanding consumer credit stands a 97% of its peak of $2.576 trillion
    in August of 2008. Deleveraging, my friends, this is not.”

  7. “The only winning move is not to play”—the insanity of the regulatory race to the bottom
    March 25, 2012
    By William K. Black

    The JOBS Act is insane on many levels.  It creates an extraordinarily criminogenic environment in which securities fraud will become even more out of control.   One of the forms of insanity is the belief that one can “win” a regulatory “race to the bottom.”  The only winning move is
    not to play in a regulatory race to the bottom.  The primary rationale for the JOBS Act is the claim that we must win a regulatory race to the bottom with the City of London by adopting even weaker protections for investors from securities fraud than does the United Kingdom (UK)…

  8. UPDATE:


    JPMorgan Chase has suffered big, unexpected losses at a closely watched trading desk, providing fodder to supporters of a new financial regulation the bank’s CEO has loudly opposed… 

    Storm Alert for World Economies. A perfect storm – such is the general economic forecast from leading global institutions and experts. The US recession and eurozone turmoil coupled with disruptions in the global corporate credit market are expected to stress-test the globe soon.

    Nothing but a chain of financial shocks and break-ups lie ahead for Europe and the world’s economic locomotive, the US, says “Dr. Doom” – professor Nouriel Roubini, who predicted the start of the current economic crisis…

  9. UPDATE:

    The Economist
    Europe’s biggest fear: A Run They Cannot Stop
    May 25th 2012

    …Fears of a full-scale bank run in Greece have not yet materialized. But the possibility of a deposit run in Europe’s peripheral states is still very much alive. It is also the thing that policymakers are least prepared for… there is a horrible, insoluble mismatch between the timescales to which Europe’s policymakers work and the timescale of a bank run. A run
    is most likely within the next few weeks. And if a run starts, Europe’s governments will have to reassure within a matter of hours. You might just about get a communiqué from Brussels in that timeframe, but could it really reassure when so many questions are unanswered?

    If it does not, then the run will continue until such time as the banks close their doors to further withdrawals or the central banks have satisfied depositors’ demand for cash. The former means trapping depositors inside a system they do not trust. The latter means providing liquidity to a
    banking system that has been abandoned by its own citizens. It would be hard to come back from either position.

  10. World Braces for Test of Euro – Wall Street Journal

    BRUSSELS—Europe, facing a momentous Greek election after a week of mounting financial stresses, is preparing for what some financial analysts are calling its “Lehman moment”: the prospect that Greece could leave the euro currency union following Sunday’s vote…

     “Most Aid to Athens Circles Back to Europe” NY Times.

    “Since May 2010, Greece has been sent about $177 billion in European taxpayer money to keep the country afloat and ward off a bigger crisis that might threaten the entire currency union. Of that amount, a full two-thirds has gone to pay off bondholders and the troika.

    Only a third has been earmarked to finance government operations, with only a tiny sliver spent on stimulus projects for the anemic economy.”

    ‘Wall St. Helped to Mask Debt Fueling Europe’s Crisis’

    “As in the American subprime crisis and the implosion of the American International Group, financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.”

    ‘Goldman Sachs: Involvement in the European sovereign debt crisis’

    “Goldman is being criticized for its involvement in the 2010 European sovereign debt crisis. Goldman Sachs is reported to have systematically helped the Greek government mask the true facts concerning its national debt between the years 1998 and 2009.

    In September 2009, Goldman Sachs, among others, created a special credit default swap (CDS) index to cover the high risk of Greece’s national debt. The interest-rates of Greek national bonds have soared to a very high level, leading the Greek economy very close to bankruptcy in March and May 2010 and again in June 2011.”

    1. June 17, 2012 Greek Election Results –

      “Stocks and risky assets are set to rise when the market opens in Asia, according to analysts, following the victory for the New Democracy Party in the second Greek election.”

      “The rally will fade as it becomes clear that we’ve returned to the unsustainable status quo.”

  11. UPDATES:

    How shock waves will hit US if Greece drops Euro –

    European Bank $ Fleeing to Real Estate –

    OR Senator Challenges the Banking ‘Weaver’ –

    Greek Election Results –

    Naked Capitalism Interview on Bill Moyers –

    Macro Concerns for Commercial Real Estate – 

    GEAB Red Alert: Global Systemic Crisis –

    Barclays CEO Faced Rebellion Over Scandal – 

    Central banks deliver a “coordinated global easing campaign” –

    LIBOR Scandal = Financial World Built on Quicksand – 

    Mexican Economy Now Leads the US –

    Find The Root Cause –

    2013: Financial Perfect Storm Coming? –

    Libor = “Rip-off of almost cosmic proportions” –

    Top Fed Officials Set Table for More Easing –

    Capital Markets Have a Long Way to Go in Real Estate –

    ‘Dr. Doom’: Global Perfect Storm Coming –

    LIBOR: A Criminal Conspiracy from the Start? –

    Libor Scandal: The Net Widens –

    The Sucking Sound of Air Leaving the Economy –

    Tweets of Doom from Roubini & Gross –

    Bernanke: Economy Could Topple –

    American Pie in the Sky –

    Reuniting Economics & Ecology –

    IMF Working Paper: Too Much Finance? –

    Departing IMF Economist Blasts Fund – 

    Top Bankers Call for Break Up of Giant Banks – 

  12. Jackson Hole: Bernanke Sends Mixed Messages on QE3
    August 31st, 2012 –

    Econintersect: First, Fed Chairman Ben Bernanke concludes at the Global Monetary Policy meeting at Jackson Hole:

    “Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces. It certainly cannot fine-tune economic outcomes.”

    Then states:

    “… the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

  13. Looking back at 2008 Forecasts:

    Live Blogging the Financial Meltdown: Nouriel’s 26 Early Warnings and Predictions
    Author: David Nowakowski
    August 31st, 2012 –

    SLDI: Land Developers and Sustainable Economics
    October, 2008 –

    As previously forecast in this column, a series of financial “Black Swans” is now upon us. These major disruptive events, which by definition were unpredicted by the establishment experts, now include the failures of Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG, Merrill Lynch, Wachovia, and Washington Mutual, with more surprises undoubtedly on the way. While there have been numerous authorities working day and night to solve the problem, it is important to note that these same people were the ones that were managing the financial system in the first place. According to Professor Nouriel Roubini, no professional independent economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury Department’s rescue plan. This brings to mind some words of wisdom from Albert Einstein – “We can’t solve problems by using the same kind of thinking we used when we created them”…

  14. UPDATE:

    Real Estate Investment SmartBrief – Sept 1, 2012

    Bernanke edges the Fed toward stimulus

    Federal Reserve Chairman Ben Bernanke used his widely followed Jackson Hole, Wyo., speech to signal the likelihood that the central bank will launch a third round of asset purchases this year. “The Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” he said. CNNMoney (8/31), MarketWatch (9/1)

    Analysis: Global slowdown likely will hit financial markets

    Financial markets have been ignoring economic fundamentals for months, but that likely will end now that it is impossible to deny that the world is in an economic downturn, according to The Economist. “Investors may have been placing too much faith in the capacity of central banks to counteract economic weakness,” the magazine notes. The Economist (9/1)

  15. UPDATE:

    Experts warn of ‘perfect storm’ for global economy
    By DAN PERRY | Associated Press | Sep 7, 2012

    Experts and leaders gathered in Italy may disagree on the cure, but the malady seems clear: the world economy faces a “perfect storm” of risks that include prolonged crisis in a structurally flawed Europe, political paralysis pushing America off a “fiscal cliff,” a slowdown in the emerging economies drying up the last of global growth, and the spectacularly destabilizing prospect of war over Iran’s nuclear program.

    A world of such unpredictable peril is also one in which jitters suppress the appetite for private and corporate risk, yielding meager investment and low consumption and prolonging the woes that snuck up on a booming world in the summer of 2007 as a “credit crunch”, mushrooming a year later into the Great Recession.

    Many attendees at the annual Ambrosetti Forum at Lake Como on Friday fretted about mounting U.S. debt and the Europe’s inability to balance electorates’ apparent insistence on national sovereignty with the need for regional coherence to salvage the teetering euro.

    But economist Nouriel Roubini predicted years of gloom almost regardless of what is decided.

    That analysis is rooted in the specific nature of this crisis, a downward spiral in which a financial meltdown largely caused by excess credit was defused by a blast of public spending; that 2009 stimulus, widely credited with avoiding a global depression, pushed some governments too far into the red for the markets’ liking _ a “sovereign debt crisis”;
    and this is turn was attacked through severe austerity measures that suppressed spending to the point that countries cannot grow their way back to prosperity…

  16. UPDATE:

    NY Times – September 13, 2012
    The Fed Makes Its Move

    Ben Bernanke, the Fed chairman, and all but one of the other members of the Fed policy committee, took decisive steps on Thursday to spur the economy, pledging to buy $85 billion worth of assets each month until the end of the year and to continue pumping money into the economy until the job market improves “substantially”…

    The Fed’s QE3: No Exit

    …the Fed looks to have painted itself in a corner. Is the US going to have 3.5% mortgage interest rates forever? If the central banks does manage to create a bit more inflation, how does it think it will exit? A mere 1% increase in interest rates, from 3.5% to 4.5%, increases mortgage payments on a 30 year fixed rate mortgage payments by 13%. That will translate into a meaningful dent in housing prices. And where does the Fed go if a financial crisis or other shock occurs?

  17. September 17, 2012

    Is QE3 Yet Another Stealth Bank Bailout?

    It’s difficult to puzzle out what Bernanke thinks he is accomplishing with QE3… Given that previous QEs amped up the stock market, weakened the dollar,
    lifted commodity prices, and made central bankers in emerging markets
    mighty unhappy (risk on trades boosted their currencies and sent hot
    money into their economies, developments they did not like), all on a
    temporary basis, it’s quite a stretch for Bernanke to depict it as a way
    to boost employment in the US…
    One interpretation is that Bernanke, despite his protests otherwise, is
    giving the stock market a short term sugar high to assure an Obama
    Another is that the central bank is quite cognizant of what it is doing
    and is deliberately boosting bank profits, perhaps also hoping that the
    banks will eventually feel robust enough to do more lending. The wee
    problem is that financial speculation is so much more profitable and
    much easier to dial up and down quickly…

  18. David Stockman: ‘Bernanke Killed The Financial Markets’

    Mon, 10
    Sep 2012

    Video of former Reagan Budget Director David Stockman on
    Squawk Box last Monday, 3 days before Bernanke unleashed $40
    billion in additional monthly Qeternity…

    The Emperor is Naked: David Stockman

    May 6th, 2012

    “paralyzed” Federal Reserve Bank, in its “final days,” held hostage by Wall
    Street “robots” trading in markets that are “artificially medicated” are just a
    few of the bleak observations shared by David
    Stockman, former Republican U.S. Congressman and director of the Office of
    Management and Budget…

  19. PIMCO Investment Outlook
    October 2012
    By William H. Gross –

    …when it comes to debt and to the prospects for future debt, the U.S. is no “clean dirty shirt.” The U.S., in fact, is a serial offender, an addict whose habit extends beyond weed or cocaine and who frequently pleasures itself with budgetary crystal meth. Uncle Sam’s habit, say these respected agencies, will be a hard (and dangerous) one to break.

  20. New York Times
    I.M.F. Lowers Its Forecast for Global Growth
    Published: October 8, 2012

    WASHINGTON — The International Monetary Fund is cutting its global economic forecasts yet again, calling the risks of a slowdown “alarmingly high,” primarily because of policy uncertainty in the United States and Europe…

  21. 10/11/2012
    Growth Warning
    Top German Economists Say Greece Is Lost

    Several top German economic institutes on Thursday warned that German growth is slowing as the country continues to be hampered by the ongoing euro-zone debt crisis. And Greece, they say, will be unable to “free itself from its debt burden” and will need another haircut…

  22. Fed’s renewed quantitative easing raises questions
    by Nouriel Roubini, October 16 2012

    “… In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process. In the short run, QE3 will lead investors to take on risk, and will stimulate modest asset reflation. But the equity-price rise is likely to fizzle out over time if economic growth disappoints, as is likely, and drags down expectations about corporate revenues and profitability.”

  23. Financial Integrity & Economic Development

    Book Launch: Global Corruption: Money, Power and Ethics in the Modern WorldOctober 17, 2012

    Corruption is a key factor in sustaining appallingly high levels of
    poverty in many developing countries, particularly in relation to the
    provision of basic services such as education and health. It is also a
    major reason why increases in the growth rate in Africa and South Asia
    have failed to benefit large segments of the population. Corruption
    drives the over-exploitation of natural resources, capturing their value
    for a small elite – whether timber from Indonesia or coltan from the
    Congo. In the developed world, corrupt party funding undermines
    political systems and lays policy open to heavy financial lobbying…

  24. US suit cites ‘brazen’ mortgage fraud at Countrywide, even after Bank of America purchase
    By Associated Press, October 24, 2012

    The latest federal lawsuit over alleged mortgage fraud paints an unflattering picture of a doomed lender: Executives at Countrywide Financial urged workers to churn out loans, accepted fudged applications and tried to hide ballooning defaults.

    The suit, filed Wednesday by the top federal prosecutor in Manhattan, also underscored how Bank of America’s purchase of Countrywide in July 2008, just before the financial crisis, backfired severely…

  25. Reuters
    Analysis: Fiscal cliff could hit economy harder than many expect
    By Jason Lange
    WASHINGTON | Oct 28, 2012

    The United States runs the risk of a recession far deeper than many investors and
    policymakers may think if lawmakers fail to avert looming tax hikes and cuts to public spending.

    Absent action by Congress, the country will face the so-called fiscal cliff at the start of next year, a combination of lower spending and higher taxes that is expected to extract about $600 billion from the economy.

    Many economists think every dollar of deficit reduction will subtract nearly the same amount from economic growth.

    By that measure, the current course could cause the economy to contract by 0.5 percent in 2013, according to estimates by the Congressional Budget Office (CBO) that have been largely embraced by Wall Street and the U.S. Federal Reserve…

  26. The Atlantic
    January/February, 2013
    What’s Inside America’s Banks?

    Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing
    enormous risks—the sort that could again take down the economy. A close investigation of a supposedly conservative bank’s financial records uncovers the reason for these fears—and points the way toward urgent reforms.

    ….Perhaps there is a silver lining in the loss of sophisticated investors’ trust. The disillusionment of the elites, on top of popular outrage, could foment change. Without such a mobilization, all of us will remain in the dark, neither understanding nor trusting the banks. And the rot will spread.

  27. The Trillion-dollar Coin: Joke or Game Changer?
    Posted: 01/22/2013
    By Ellen Brown

    ….Somehow we have come to accept that it is less silly for the central bank to create money out of thin air and lend it at near zero interest to private commercial banks, to be re-lent to the public and the government at market interest rates, than for the government to simply create the money itself, debt- and interest-free.

    The banks obviously have the upper hand in this game; and they’ve hadit for the last 2-1/2 centuries, making us forget that any other option exists. We have forgotten our historical roots. The American colonists did not think it was silly when they escaped a grinding debt to British bankers and a chronically short money supply by printing their own paperscrip, an innovative solution that allowed the colonies to thrive.

    In fact, the trillion-dollar coin represents one of the most important principles of popular prosperity ever conceived: national debt-free money creation….

  28. Business Insider
    States Where People Are Living On The Edge Of Financial Ruin
    Mandi Woodruff
    Feb. 4, 2013

    A sobering new report by the Corporation for Enterprise Development (CFED) shows nearly half of U.S. households (132.1 million people) wouldn’t last three months if they ran into bumps in the road like unemployment, natural disasters, or a medical emergency.

    Read more:

  29. Board of Governors of the Federal Reserve
    Vice Chair Janet L. Yellen
    February 11, 2013

    A Painfully Slow Recovery for America’s Workers: Causes, Implications, and the Federal Reserve’s Response

    Thank you for the opportunity to speak to you today about the Federal Reserve’s efforts to strengthen the recovery and pursue a goal that it shares with the labor movement: maximum employment.

    ….While the Committee’s longer-term goals remain unchanged, what has changed is that the FOMC is now providing more information about how it expects to pursue its inflation and employment goals. In particular, we will employ our policy tools, as appropriate, to raise aggregate demand and employment in the context of continued price stability, consistent with our balanced approach. That’s good news for workers, because I believe that these steps will increase demand, and more demand means more jobs.

    It will be a long road back to a healthy job market. It will be years before many workers feel like they have regained the ground lost since 2007. Longer-term trends, such as globalization and technological change, will continue to pose challenges to workers in many industries.

    Let me close with some words of encouragement. The job market is improving. The progress has been too slow, but there is progress. My colleagues and I at the Federal Reserve are well aware of the difficulties faced by workers in this slow recovery, and we’re actively engaged in continuing efforts to promote a stronger economy, more jobs,
    and better conditions for all workers.

    Thank you for the opportunity to speak to you today.

  30. Calvert-Henderson Quality of Life Indicators
    Current Issues – In Context
    Update: February, 2013
    By Hazel Henderson

    ….The re-election of President Obama was a vote of confidence, even though few can acknowledge a key problem: the US domestic money supply which is created by banks lending has collapsed. Since our money is created by private banks when they make loans, after 2008, lending dried up and securitization of loans which had ballooned during the housing bubble also collapsed….

  31. Mergers & Acquisitions February 14, 2013
    Confidence on Upswing, Mergers Make Comeback

    The mega-merger is back.

    For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and chief executives, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms.Cycles, however, turn, and in the opening weeks of 2013, merger activity has suddenly roared back to life….

    But perhaps the single biggest factor driving the return of corporate takeovers is the banking system’s renewed health. Corporations often rely on bank loans for financing acquisitions, and the ability of private equity firms to strike multibillion-dollar transactions depends on the willingness of banks to lend them money.

    For years, banks, saddled by the toxic mortgage assets weighing on their balance sheets, turned off the lending spigot. But with the housing crisis in the rearview mirror and economic conditions slowly improving, banks are again lining up to provide corporate loans at record-low interest rates to finance acquisitions.The banks, of course, are major beneficiaries of megadeals, earning big fees from both advising on the transactions and lending money to finance them….

  32. Nouriel Roubini Is Bullish…For Now: “The Mother of All Bubbles” Has BegunBy Aaron Task | Daily Ticker
    February 22, 2013

    “The risk of the end game from QE is not going to be goods inflation, it’s not going to be a rout in the bond market,” Roubini says. “The risk is like during the 2003-06 [cycle] – we’re exiting very slowly and we got an asset bubble.”

    Roubini’s rationale for “the mother of all asset bubbles,” is that Federal Reserve is going to be even more reluctant to pull back now vs. the prior cycle, when they executed a steady stream of 25 basis point rate hikes in 2004-2006.

    Roubini being Roubini, he doesn’t predict a happy ending to the Fed’s current experiment. ”We could create an asset bubble worse than the previous one which could lead to another financial crisis not this year, not next year but two or three years down the line if we keep on doing these policies,” he says. “You’re building the financial leverage that’sgoing to lead you to [another] bubble and eventual crash.”

    Off camera, Roubini sums up his analysis of all this as “short-term bullish, long-term catastrophic.”

  33. How the Fed Could Fix the Economy… and Why It Hasn’t
    Posted: 02/25/2013
    By Ellen Brown

    Quantitative easing (QE) is supposed to stimulate the economy by adding money to the money supply, increasing demand. But so far, it hasn’t been working. Why not? Because as practiced for the last two decades, QE does not actually increase the circulating money supply. It merely cleans up the toxic balance sheets of banks. A real “helicopter drop” that puts money into the pockets of consumers and businesses has not yet been tried. Why not? Another good question…

  34. Gold, Golden, Gilded, Glittering
    Representations of Value, or The Unexpected Double History of Banking and The Art World
    November/December 2012
    Rachel Cohen

    “….Lately, I find that I read the financial news with the constant sense of sleight of hand at work. Since 2008, and the crisis of mismanagement that resulted in the failure of Lehman Brothers and precipitated our current financial woes, it has seemed to me that the business of all the large financial institutions—even the ones that conspicuously did not fail, like Goldman Sachs and JP Morgan Chase—has something important in common with the sale of Hirst’s diamond-encrusted skull. All of these institutions have, or had, significant interests in financial products like derivatives and mortgage-backed securities. These products, or “instruments,” or “vehicles,” are anchored not to any concrete goods but
    only to finance itself…..”

  35. March 6, 2013
    As Dow Sprints to New High, the Middle Class and Manufacturing Languish

    ….It’s perverse that stock market averages are treated in the business and
    popular media as a proxy for the health of the economy. They are now
    the indicator, at most, of the well being of the wallets of the wealthy,
    which is coming more and more at the expense of everyone else.

  36. The New York Times
    JPMorgan’s Follies, for All to See
    Published: March 16, 2013

    BE afraid.

    That’s the takeaway for both investors and taxpayers in the 307-page Senate report detailing last year’s $6.2 billion trading fiasco at JPMorgan Chase. The financial system, thanks to dissembling traders and bumbling regulators, is at greater risk than you know.

    After bailing out the nation’s banking system in 2008, taxpayers and investors have been assured that such a crisis will not happen again. The Dodd-Frank legislation was supposed to make our system safe from the kinds of reckless banking activities that brought the economy to its knees.

    The Senate report disproves this premise with vigor….

    1. The Spectacular Rise and Fall of Jamie Dimon, Wall Street’s Golden Boy
      More than just a tawdry tale, Dimon’s demise is a critique of the American Dream.
      March 19, 2013 |

      They called him a hero. The most esteemed banker of his time. The captain who could steer the ship while others foundered. The handsome, charismatic CEO of JP Morgan Chase, he of the silver hair and golden tongue, beloved by presidents and praised by pundits. Now the truth is out, and Wall Street’s golden boy, Jamie Dimon, has fallen to earth with a thud….

  37. Fed’s Token Voice Of Reason: Megabanks Undermine Americans’ Faith In Democracy
    Sunday, March 17, 2013
    by Wolf Richter

    At the Conservative Political Action Conference, as the GOP struggled with its future, some speakers drew crowds of over 1,000 people. But Dallas Fed President Richard Fisher was shuffled off to “an out-of-the-way ballroom” Saturday morning with barely two dozen people showing up; yet he’d talk about “the injustice of operating our economy under the thumb” of too-big-to-fail banks….

  38. “Cyprus Fired A Warning Shot Across The Globe”
    Jim Grant on CNBC with Maria Bartiromo –

    Selected quotes:

    QE is the greatest and most perilous experiment in the history of paper money.

    Chilling phrase from Cyprus – stability contribution.

    Mr. Market will defeat Mr. Bernanke.

    Prices will finally escape from this prison the Fed has thrust them into.

  39. Global Edition of the NY Times
    Opinion –
    State-Wrecked: The Corruption of Capitalism in America
    Published: March 30, 2013

    ….The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse.If this sounds like advice to get out of the markets and hide out in cash, it is.

    David A. Stockman is a former Republican congressman from Michigan, President Ronald Reagan’s budget director from 1981 to 1985 and the author, most recently, of “The Great Deformation: The Corruption of Capitalism in America.”

  40. April 6, 2013
    Post in depth Foreclosure crisis
    Growing shadow inventory of foreclosed homes driving up prices in Palm Beach County

    ….Palm Beach County’s shadow inventory increased 78 percent from the first quarter of 2012 to a current measure of 25,702 homes, according to a new report from the Irvine, Calif.-based RealtyTrac.

    Statewide, the increase was even higher, leaping 82 percent from 175,707 to 319,147. The hike puts Florida in second place for the biggest shadow inventory increase in the country, behind New York’s 129 percent. New Jersey had the third highest increase in shadow inventory at 49 percent.The report is the first time RealtyTrac has released its shadow inventory measure, something Realtors have speculated on at the local level throughout the market crash and recovery.

    ….Realtor Shannon Brink of RE/MAX Prestige Realty in West Palm Beach said there is so much pent-up demand for homes, he’s more concerned about another real estate bubble than worried that the shadow inventory will weaken sale prices.

    “If we don’t see more inventory, and buyers outpace sellers, it may increase prices too much in too short of a time period,” Brink said. “We are going from one extreme of too much inventory to too little.”

  41. The Bankers’ New Clothes

    What is wrong with today’s banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers’ New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid.

    The book argues that we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society….

  42. Options-Trading Signals
    While the Fed Parties, Gold & Oil Have Left the Building
    June 13, 2013 by J.W. Jones

    Risk assets and financial markets around the world have been supported by central bank action for several years. Performing financial alchemy on a scale larger than has been seen in the history of mankind, central banks have hijacked global financial markets. Mountains of liquidity, artificially low interest rates, and the creation of future asset bubbles has been their calling card for the past few years.

    Unfortunately, time is starting to run out and these great Keynesian minds are on the verge of encountering a series of problems. While central banks can create fiat currency out of thin air, they cannot create real wealth. In fact, central banks cannot print jobs, earnings growth, or an increase in wages….

  43. Bloomberg
    U.S. Housing Prices Increased More Than Forecast in April
    By Michelle Jamrisko – Jun 25, 2013

    Home prices climbed more than forecast in the 12 months through April, rising by the most in more than seven years and showing further strength in the U.S. housing market.
    The S&P/Case-Shiller index of property values increased 12.1 percent from April 2012, the biggest year-over-year gain since March 2006….

  44. US Desperately Seeking Income
    June 26, 2013

    Nearly four years removed from the official end of the GFC recession, the US economy is exhibiting some of the signs one normally associates with a cyclical recovery. Notwithstanding these well documented signs of improvement, the spillovers from the stronger sectors have not yet been sufficient to generate a self-sustaining recovery arc. One is left with the feeling that the growth story remains weak and accordingly fragile….

  45. A ‘sitting man’ at Goldman Sachs
    Nathan Schneider
    June 27, 2013

    Max Zahn, founder of the new website Buddha on Strike, is currently on strike in front of Goldman Sachs. I asked him a few questions about what he’s up to.

    So what is it that you’re doing, and why?

    Over the past seven business days, I’ve been meditating for 3 to 4 hours directly outside the entrance of Goldman Sachs headquarters. And I intend to continue sitting silently at Goldman HQ every single business day for the coming weeks and months. Soon this effort will grow beyond me, however. Starting yesterday, we’re holding hour-long group meditations three days per week.

    The reason for my meditating at Goldman is that I seek to extend compassion to its employees and demand that they do the same for the worldwide billions affected by the bank’s practices….

  46. Mortgage Rate “Surge”…A Comparable Event to Analyze

    Bottom line on builder sales fall-out: Based on today’s rates and a $300k house price it would “cost” 8 to 10 POINTS — or $24k to $30k — to buy down the rate to the level used to “pre-qualify” the borrower when they entered into contract any time in the past year. Where is this money — or extra income in order to qualify — going to come from? –

  47. What the 25% Collapse in Homebuilder Stock Prices Tells Us
    August 9, 2013
    By Michael Lombardi, MBA for Profit Confidential:

    Homebuilder stocks are heading into dangerous territory and investors need to take note—even if they don’t own these stocks—because the move to the downside for this barometer of activity in the U.S. housing market is significant….

  48. Why Wall Street Wants Larry Summers
    By Laurence Kotlikoff and Jeffrey Sachs

    On the surface the debate about the Chairmanship of the Federal Reserve is about the merits of the two leading candidates, Lawrence Summers and Janet Yellen. But looks can be deceiving. President Obama leans toward Summers not on the merits but because the Wall Street bankers want him. Summers is one of the boys, and the bankers know that Summers will do their bidding, at the expense of everybody else…

  49. Five Years After Lehman Brothers Fall, Big Banks Even Larger
    William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE,
    teaches economics and law at the University of Missouri Kansas City

    Part 1 –

    Part 2 –

    “…I’ve mentioned that we haven’t ended the systemically dangerous institutions, but it’s far worse than that, because think of the big entities in the United States that failed. So that would be Wachovia, Washington Mutual, Merrill Lynch, Countrywide, Bear Stearns, those types of entities. Every single one of those that I mentioned was acquired by a bank that was already systemically dangerous. And this made them much larger. And in the initial piece, you gave statistics on what a massive percentage of the global GDP these banks are. But here’s the bad news. That’s only talking about–that figure you gave was only based on the banks’ assets and the banks’ reported assets. The banks’ reported assets do not include, in general, massive positions on financial derivatives. And those positions on financial derivatives are not a 58 percent of the world’s GDP; they are more like five times the GDP of the world. And they are growing massively and they are overwhelmingly concentrated in just a few of the largest banks.”

  50. New York Times
    Staying the Course at the Fed
    Published: September 18, 2013

    The Federal Reserve did the right thing when it decided on Wednesday not to begin reducing the monthly, multibillion-dollar bond purchases that are a pillar of its efforts to spur the economy. To do otherwise would have violated the Fed’s own criteria for gradually withdrawing the support measures….

  51. Federal Reserve Program Is Socialism For The Rich
    By: DSWright Friday September 20, 2013

    If you have followed any economic news at all you will have heard the term quantitative easing, or QE, which is technocratic shorthand for the Federal Reserve shoveling funds into Wall Street banks to produce a phenomenon known as the “wealth effect.” The wealth effect relies principally on trickery. The hope being that people will see higher asset prices, and in a self-fulfilling prophecy, invest and produce more thinking the economy is better – which will make the economy better. So endeth the theory.

    The reality is the Federal Reserve’s QE program has made the rich a lot richer and done little to nothing for the poor and middle class – besides screwing people living on fixed incomes. In fact, it has now devolved into a redistribution scheme to take money from poor and middle class workers and give it to the rich – or so says billionaire investor Stanley Druckenmiller….

  52. NY Times
    When Wealth Disappears
    Published: October 6, 2013

    LONDON — AS bad as things in Washington are — the federal government shutdown since Tuesday, the slim but real potential for a debt default, a political system that seems increasingly ungovernable — they are going to get much worse, for the United States and other advanced economies, in the years ahead….

  53. October 20, 2013
    So How Big a Deal is the Pending “$13 Billion” JP Morgan Settlement?

    One of the big news stories of the weekend is that JP Morgan and the Department of Justice, brokering a settlement of liability across multiple Federal agencies, have reached a tentative $13 billion settlement on the bank’s mortgage-related conduct in the run-up to the crisis. The terms have not been finalized because a big open item is that JP Morgan will make an admission of some sort, and the deal could still founder over that.

    While the media is all agog over the prospect of the “biggest settlement evah” with a single company, concentration has risen greatly in a lot of industries, particularly banking, so bigger companies and even mild inflation means settlements should get larger over time. So size is not a metric of accomplishment. The question is what was the actual liability and is the settlement an adequate remedy? We have the same problem here as with the mortgage settlement: save for a couple of types of bad conduct, it looks as if not enough discovery was done to know the extent of the conduct and hence what an appropriate remedy would be.

    And the American public’s instinct, that even a really big-sounding number isn’t adequate given all the damage done in the financial crisis,has been confirmed, at least on a general basis, by one of the most highly respected economists in the world, Andrew Haldane, the executive director of the financial stability at the Bank of England. Haldane ascertained that no fine was big enough because the banks couldn’t begin to pay for the damage they’d done…..

  54. Harvard Business Review
    November 2013
    What We’ve Learned from the Financial Crisis
    by Justin Fox –

    Five years ago the global financial system seemed on the verge of collapse. So did prevailing notions about how the economic and financial worlds are supposed to function….

    In the early 1930s, policy errors by governments and central banks turned a financial crisis into a global economic disaster. In 2008 the financial shock was at least as big, but the reaction was smarter and the economic fallout less severe. We actually had learned something in the intervening three-quarters of a century about how the economy and the financial system fit together.

    But we hadn’t learned everything—and we still haven’t. In fact, macroeconomists and finance scholars clearly forgot some important lessons along the way. And the seeming success (compared with the 1930s, at least) of the 2008 bailouts and subsequent government and central bank actions may actually dilute the lessons of the recent crisis. In the 1930s and 1940s, the financial system was essentially built anew, with tight regulation and drastically changed attitudes about risk and
    responsibility. That approach surely had its costs, but it ushered in a financial-crisis-free era in the United States and Europe that lasted for decades. This time around, the system has survived more or less intact. That seems like a good thing, on balance; but it may also mean we’ll be having more learning experiences soon.

  55. The Federal Reserve Now in Uncharted Territory
    Global Economist, Yilmaz Akyüz, on the Crisis of Financial Crisis Management.
    October 20, 2013

    ….I see no Goldilocks scenario of the Fed to exit from this unusual ultra easy monetary policyit has been pursuing in the past five years without much effect on growth and unemployment…. They don’t know how to get out of it, when to get out of it. They cannot make a good assessment of the implication of getting out. This is why we have seen this jerky situation since May–we’re getting out, we’re not getting out. And I think we are all in trouble because of mismanagement of the crisis in the United States….

    Andrew Huszar: Confessions of a Quantitative Easer
    We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street.
    By Andrew Huszar
    Nov. 11, 2013

    I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time….

  57. The New York Times
    Message From Yellen Is Full Speed Ahead on the Stimulus
    Published: November 14, 2013

    When Janet L. Yellen speaks, Wall Street listens — and investors liked what they heard on Thursday.

    The stock market reversed an early loss and moved steadily higher in the morning as Ms. Yellen, President Obama’s nominee to head the Federal Reserve, testified at her Capitol Hill confirmation hearing. Monitoring her poised performance from desks around the world, traders concluded that she would stick with policies that have sent shares soaring. The Standard & Poor’s 500-stock index closed at yet another nominal highon Thursday, up 25.6 percent so far this year.

    Despite the run-up, Ms. Yellen also said that she did not believe that the trillions in stimulus money the Fed has injected into the financial system since the near collapse of the global economy had created a bubble, another very good sign of her supportive views as far as Wall Street is concerned….

  58. Nouriel Roubini
    Professor at NYU’s Stern School of Business
    Chairman of Roubini Global Economics
    NOV 29, 2013

    Back to Housing Bubbles

    NEW YORK – It is widely agreed that a series of collapsing housing-market bubbles triggered the global financial crisis of 2008-2009, along with the severe recession that followed. While the United States is the best-known case, a combination of lax regulation and supervision of banks and low policy interest rates fueled similar bubbles in the United Kingdom, Spain, Ireland, Iceland, and Dubai.

    Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the UK (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China, and Israel, and in major urban centers in Turkey, India, Indonesia, and Brazil…. Read more at

  59. The Washington Post
    SIGTARP proves that some bankers aren’t too big to jail
    By Danielle Douglas: December 6, 2013

    A bank executive in the Hampton Roads area of Virginia was sentenced to 23 years in federal prison. Another from Orlando received eight years. In Stockbridge, Ga., a top bank officer is serving 12 years.

    At a time when the government is being criticized for not holding senior bank executives liable for crisis-era crimes, a little-known federal agency is compiling a growing list of criminal convictions….

  60. Bloomberg
    Wall Street Unlocks Profits From Distress With Rental Revolution
    By Heather Perlberg and John Gittelsohn
    Dec 20, 2013

    Blackstone is at the vanguard of a historic move to centralize the business of renting single-family houses in the U.S. after the real-estate crash, which left in its wake more than 7 million foreclosed homes and families lacking the credit to buy again…. The creation of a rental home bond has triggered concern that Wall Street is re-inventing the same tactics that crippled the financial system five years ago….

  61. Wall Street On Parade
    PBS Drops a Bombshell on the Federal Reserve’s 100th Birthday Party
    By Pam Martens: December 22, 2013 –

    PBS promised a “debate” this past Friday night on the “benefits and dangers” of the Federal Reserve as the Fed marks its 100 years of existence tomorrow. Instead of a debate, two famous stock market historians made the same stunning announcement – that the Fed has decided its job is to push up the stock market….

    “The Fed seems to have, I think almost deliberately, is trying to push the stock market up. I’ve watched this stuff for 40, 50 years now and this is the first time in my memory when it seemed to be official U.S. government policy that the stock market goes up. And the Fed likes this because it thinks that when the stock market goes up, people who own stocks feel richer, they’ll go out and spend more money, and the unemployment rate will come down”….

    Is it possible that the Federal Reserve, with its economic wizards and differential equations, doesn’t know that the more it props up the stock market and Wall Street, the more it is undermining Main Street and exacerbating wealth inequality in America?

  62. Published on Monday, December 23, 2013 by Common Dreams
    100 Years Is Enough: Time to Make the Fed a Public Utility
    by Ellen Brown –

    December 23rd, 2013, marks the 100th anniversary of the Federal Reserve, warranting a review of its performance. Has it achieved the purposes for which it was designed?

    The answer depends on whose purposes we are talking about. For the banks, the Fed has served quite well. For the laboring masses whose populist movement prompted it, not much has changed in a century.

    The Federal Reserve Act was passed in 1913 in response to a wave of bank crises, which had hit on average every six years over a period of 80 years. The resultingeconomic depressions triggered a populist movement for monetary reform in the 1890s. Mary Ellen Lease, an early populist leader, said in a fiery speech that could have been written today:

    “Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master. . . . Money rules .. . .Our laws are the output of a system which clothes rascals in robes and honesty in rags. The parties lie to us and the political speakers mislead us. . . .”

    “We want money, land and transportation. We want the abolition of the National Banks, and we want the power to make loans direct from the government. We want the foreclosure system wiped out….”

    Obama Admin’s TPP Trade Officials Received Hefty Bonuses From Big Banks
    February 17, 2014

    Officials tapped by the Obama administration to lead the Trans-Pacific Partnership trade negotiations have received multimillion dollar bonuses from CitiGroup and Bank of America, financial disclosures obtained by Republic Report show.

    Stefan Selig, a Bank of America investment banker nominated to become the Under Secretary for International Trade at the Department of Commerce, received more than $9 million in bonus pay as he was nominated to join the administration in November. The bonus pay came in addition to the $5.1 million in incentive pay awarded to Selig last year….

    The controversial TPP trade deal has rankled activists for containing provisions that would newly empower corporations to sue governments in ad hoc arbitration tribunals to demand compensation from governments for laws and regulations they claim undermine their business interests. Leaked TPP negotiation documents show the Obama administration is seeking to prevent foreign governments from issuing a broad variety of financial rules designed to stem another bank crisis….

  64. RT
    Death finance: Bankers have never been so insecure
    By Patrick L Young
    February 24, 2014

    Conspiracy theories suggest a massive banking cover up leading to widespread murder in financial markets. Whatever is afoot, several high profile banker deaths raise questions about the sustainability of the system…. a remarkable uptick in banker suicides has raised questions with at least 6 suspicious deaths in recent weeks. Two men jumped from the top of JP Morgan skyscrapers alone (one each in London and Hong Kong).

    Modern investment banking is a hideously high pressure business. This is exacerbated by a rather juvenile macho culture where hours are long (even when markets are slow) and management is more akin to a caricature sergeant major on parade than anything approaching coherent, structured leadership….

    Ultimately, the financial system is in a parlous position and recent government changes have done little to ameliorate the situation. We can blame cowardice, incompetence, lack of vision, and plutocratic self-preservation amongst the banker-government-multinational socialist-corporatist nexus for many failings here. However, with the euro crisis festering, emerging markets in chaos and no clear understanding of western economic resilience to tapering…one thing ought to be clear: Bankers have never been more insecure.

  65. Janet Yellen commits Fed to boost still-weak US economy
    Jonathan Spicer New York: March 6, 2014

    Federal Reserve Chair Janet Yellen vowed on Wednesday to do all that
    she can to boost a US economy that is running well short of the central
    bank’s objectives.

    “The economy continues to operate considerably short of these objectives” of maximum employment and stable prices, Yellen said according to prepared remarks at a swearing-in ceremony at the central bank in Washington….

  66. State of Green Business 2014 Report
    from Joel Makower and the editors of

    The State of Green Business Report, seventh annual assessment of corporate sustainability trends and metrics, was released earlier this year. It paints a picture that is both optimistic and highly problematic — a perfect metaphor for the sector.

    First, the good news. The state of the art of corporate sustainability continues to evolve. What’s business as usual today was not that long ago innovative, even breakthrough: bio-based products, accounting systems that place a realistic value on water and carbon, smart supply chains that optimize transportation and energy, renewable energy ( ) that isn’t just for show, and more.

    In the free report ( ), we identify 10 key trends that point the way toward future advancements and progress in the year ahead.

    Now, the bad news. For all of the advancements and achievements — some of which are chronicled in the more than 1,200 articles ( that we run each year on — we’re not making much progress. When you actually measure year-on-year progress companies are making, it’s a disappointing state of affairs…. Are we sinking, swimming or just treading water? I’ll leave the conclusions up to you.

  67. Reuters
    JPMorgan whistleblower gets $63.9 million in mortgage fraud deal
    By Jonathan Stempel
    Mar 7, 2014 – ​
    ​ ​
    ​”​JPMorgan (Chase) ​admitted that for more than a decade it submitted thousands of mortgages for insurance by the Federal Housing Administration or the Department of Veterans Affairs that did not qualify for government guarantees.​”​

    ​”​Bank of America Corp​ was liable for fraud over defective mortgages sold by its Countrywide unit. The government is seeking $2.1 billion of penalties in that case.​”​

    March 13, 2014
    U.S. Criticized for Lack of Action on Mortgage Fraud

    Four years after President Obama promised to crack down on mortgage fraud, his administration has quietly made the crime its lowest priority and has closed hundreds of cases after little or no investigation, the Justice Department’s internal watchdog said on Thursday.

    The report by the department’s inspector general undercuts the president’s contentions that the government is holding people responsible for the collapse of the financial and housing markets. The administration has been criticized, in particular, for not pursuing large banks and their executives.

    “In cities across the country, mortgage fraud crimes have reached crisis proportions,” Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. “But we are fighting back.”

    The inspector general’s report, however, shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. In several large cities, including New York and Los Angeles, F.B.I. agents either ranked mortgage fraud as a low priority or did not rank it at all.

    The F.B.I. received $196 million from the 2009 to 2011 fiscal years to investigate mortgage fraud, the report said, but the number of pending cases and agents investigating them dropped in 2011….

    “The inspector general’s report sheds light on what looks like an attempt by the Justice Department to pull the wool over the public’s eyes with respect to its efforts to go after the wrongdoers involved in mortgage fraud,” Senator Charles E, Grassley, Republican of Iowa and the ranking member on the Senate Judiciary Committee, said in a statement. “According to the inspector general, the department wasted time cooking
    the numbers about the cases it pursued, when it should have been prosecuting cases.”

  69. CNBC
    The Fed slipped this one past the market—what’s up?
    16 Mar 2014
    By: Michael Ivanovitch | President, MSI Global

    Amid all the “sound and fury” about the tightening monetary policy in the United States, the Federal Reserve slipped by the napping market vigilantes one of the largest monthly expansions of its balance sheet on record.

    In the course of February, the Fed’s monetary base expanded by a whopping $104.8 billion, the third-largest monthly increase since the beginning of its asset purchases.

    This month looks like it could well be more of the same. During the reserves reporting period between February 19 and March 5, the high-powered money soared by nearly
    $30 billion, bringing the year-over-year increase to an incredible 36 percent….

  70. TOP 1000 – March 28, 2014
    Regaining control: why investors must stand up to banks

    As the chief executive of a financial services media and events business, Colin Tate benefits from the growth in the banking sector. But at the same time he is perplexed by their bad corporate behaviour, large pay packets, and secret negotiations. It’s time, he says, for institutional investors to demand change.

    … Institutional shareholders must answer some serious questions. Are you caught up in a fantasy that some institutions literally are too big to fail, or even to question? Do you own shares in the parent, or run money with their investment management arm or have a custody mandate with the firm?…

  71. The changing face of global risk
    By Nouriel Roubini – April 1, 2014

    The world’s economic, financial, and geopolitical risks are shifting. Some risks now have a lower probability – even if they are not fully extinguished. Others are becoming more likely and important….

    For starters, there is the risk of a hard landing in China….

    There is also the risk of policy mistakes by the US Federal Reserve as it exits monetary easing….

    Third, the Fed may actually exit zero rates too late and too slowly (its current plan would normalize rates to 4% only by 2018), thus causing another asset-price boom – and an eventual bust….

    Fourth, the crises in some fragile emerging markets may worsen….

    Fifth, there is a serious risk that the current conflict in Ukraine will lead to Cold War II – and possibly even a hot war if Russia invades the east of the country….

    Finally, there is a similar risk that Asia’s terrestrial and maritime territorial disagreements (starting with the disputes between China and Japan) could escalate into outright military conflict….

    … as was the case with the global financial crisis, investors seem unable to estimate, price, and hedge such tail risks properly. Only time will tell whether their current nonchalance constitutes another failure to assess and prepare for extreme events.

  72. Jon Stewart on Latest Supreme Court Decision on Campaign $
    April 4, 2014

    Now that wealthy donors can write checks for the maximum allowable amount to as many candidates as they want, Stewart says, “the last great hope of preserving our democracy from the corrupting influence of money is carpal tunnel syndrome.” Thank goodness, America is “finally rid of the corrosive influence of not enough money in politics.” It’s a classic Stewart rant, and it gets at the absurdity of equating money with free speech, instead of the really nutty idea of treating money as money…—quid-pro-quo

    Guarding the global economy’s biggest risk
    PUBLISHED: 05 Apr 2014

    “… Negative equity, usually associated with Ireland or Florida, is a phenomena almost never seen in the 30-year history of private property ownership in China. Guan and the 700 other buyers in the “Noble Garden” development are in this situation because New Century began slashing prices on March 21, in a bid to clear excess stock.”

    “The oversupply in lower-tier cities is very obvious,” says Andy Chang, an associate director at Fitch Ratings in Hong Kong.

    “I wouldn’t be surprised to see more and more local developers collapse.” Yao Wei, an economist at Société Générale, is even more resolute. “Signs are mounting that the housing market in a number of cities is not just cooling but actually cracking,”

    Official figures hide true story

    This is the worry for investors – that the true picture is being hidden by the official figures. Equally, the government is trying to give the impression that prices are holding up, to avoid a buyers’ strike.

    But this is getting harder by the day, as reports trickle out about widespread discounting in third and fourth-tier ­cities. In Changzhou, north west of Shanghai, there are reports of a price war among developers, who are offering discounts of 36 per cent from December prices.

    In a bid to dampen fears of a steep correction, the local government ordered developers to stop using the words “price cut”; the discounts are now known as “huge preferential offers”…

  74. Financial Times
    Death knell sounds for Brazil’s economic strategy
    By Joe Leahy in São Paulo – April 6, 2014

    Until recently, the government of Brazil’s President Dilma Rousseff talked glowingly about a “new matrix” of economic policies that would revive the country’s faltering growth story.

    This strategy, consisting of historically low interest rates, a weakened exchange rate engineered partly through currency controls and temporary tax breaks for industry, was meant to restore Brazil to a 4 per cent growth rate.

    This month, however, the death knell seemed to sound on the new economic matrix…

  75. BBC
    The Greek experiment
    April 7, 2014

    In the past week the country’s minister for European Affairs, Dimitris Kourkoulas, was quoted as saying: “We have lost 25% of our GDP since 2008… we have been in seven consecutive years of recession. This has never happened in modern history. Even in the Great Depression of 1929, the American economy was in recession for just three years.”

    An anniversary approaches: Nearly four years ago, Greece was bailed out…

  76. Associated Press – Apr. 9, 2014
    Minutes show Fed struggled to agree on rate policy

    WASHINGTON (AP) — The Federal Reserve struggled last month over how to convey to investors the pace at which it will raise short-term interest rates once it increases them from record lows.

    Two weeks before the Fed’s regular meeting March 18-19, it held an unusual and previously unannounced videoconference to debate the issue, according to minutes of the meeting released Wednesday.

    In the end, the Fed settled on an open-ended approach: That even after employment and inflation are nearly back to normal, short-term rates may need to stay unusually low for a while because the economy isn’t fully healthy.

    Stock and bond investors read the minutes to signal that the Fed plans to favor low short-term rates longer than many had assumed. Stocks rose sharply after the minutes were released, and bond yields fell. The Dow Jones industrial average, which had risen modestly before the minutes were released, was up 154 points 30 minutes later.

    Investors have been intensely following the Fed’s guidance on rates because higher short-term rates would elevate borrowing costs and could hurt stock prices.

    The minutes covered the first Fed meeting at which Yellen presided as well as the March 4 videoconference. At both sessions, the issue of the language the Fed uses in its statements to signal the timing of future policy actions was a topic of extended debate….

  77. CounterPunch
    Why Half-Measures Only Preserve the Existing Order
    Economic Stagnation and the Stagnation of Economics
    by ROB URIE – April 11-13, 2014

    Six plus years after the onset of economic calamity in the West the pundit class and politicians continue to ‘debate’ economic policy in a self-enforced intellectual vacuum. The question of whether to ‘grow’ ‘the economy’ or not is followed by narrow disagreements over how to do so as if the mainstream ‘conversation’ were either honest or relevant. Currently being proffered by Larry Summers, the former chief economic advisor to President Barack Obama and demon spawn-nephew of Keynesian-lite economist Paul Samuelson— is the ‘secular stagnation’ hypothesis, the theory that the economies of the West, in particular the U.S., may have entered a period of persistent economic weakness. Left out of consideration is that economic growth of the sort Western economists tend to favor is producing environmental catastrophe, that Mr. Summers’ well-fed demeanor indicates that there is more than one economy to ‘discuss’ and that even academic economists can see what has long been clear to the rest of us when given enough time. Given his central role in creating current economic circumstance through bank de-regulation Mr. Summers’ continuing influence might be a bit of a mystery if it weren’t for his ability to so convincingly say one thing and do another, as is the favored tactic of the Obama administration…

  78. Naked Capitalism
    “It’s Not a Bubble,” Retail Investors Are Told As The Smart Money Bails Out
    Posted on April 13, 2014 by Lambert Strether

    …Farmland Has Been Hot for a Long Time

    Over the last 10 years, farmland prices in Iowa soared 282%, in Nebraska and South Dakota 326%. Over the last 6 months, prices still rose 7.2% in South Dakota, but in Nebraska they stalled, and in Iowa they started to fall, now down 2.8%.

    Farmland has been through this before: in the 1980s, the bubble burst, and farmers who’d borrowed against their land at nosebleed valuations ran into trouble because crop prices couldn’t make the equation work, and they couldn’t service their debts and had to sell, which triggered more bouts of forced selling which drove prices down
    further and took rural lenders down with them. The scenario of any bubble that is unwinding. It wreaked havoc on rural America.

    That Wall Street finally pushed a farmland REIT, willing to buy farmland at peak valuations, into the hands of retail investors, after a huge multi-year run-up in stocks and farmland, should send people scurrying out of the way.

    “But It’s Not a Bubble”

    That’s what Savita Subramanian, Head of US Equity and Quantitative Strategy BofA Merrill Lynch Global Research, wrote on March 21. Then she went on to describe what exactly it was, namely a bubble…

  79. TMP
    Matt Taibbi on “Too Big to Jail”
    Tom Kludt – April 15, 2014

    …If you go back to the savings and loan crisis in the late ’80s, which was an enormous fraud problem, but it paled in comparison to the subprime mortgage crisis, we put about 800 people in jail during—in the aftermath of that crisis. You fast-forward 10 or 15 years to the accounting scandals, like Enron and Adelphia and Tyco, we went after the heads of some of those companies. It wasn’t as vigorous as the S&L prosecutions, but we at least did it… Fast-forward again to the next big crisis, and how many people have we got—have we actually put in jail? Zero. And this was a crisis that was much huger in scope than the S&L crisis or the accounting crisis. I mean, it wiped out 40 percent of the world’s wealth, and nobody went to jail, so that we’re now in a place where we don’t even recognize the importance of keeping up appearances when it comes to making things look equal…

  80. SALON
    “We are in great danger”: Ex-banker details how mega-banks destroyed America
    Josh Eidelson – Apr 15, 2014

    “It no longer matters who sits in the White House,” former Goldman Sachs managing director Nomi Prins writes in her new book “All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.”

    “Presidents no longer even try to garner banker support for population-friendly policies, and bankers operate oblivious to the needs of national economies. There is no counterbalance to their power”…

  81. Bloomberg News
    Legal Team Exodus at Mortgage Firm Said to Prompt U.S. Review
    By Jesse Hamilton
    April 16, 2014

    As the rest of the housing industry recovers, a little-known firm with a key role in U.S. mortgage finance remains stuck in limbo, wrestling with regulators, lawsuits and the departures of senior employees.

    The turbulence feeds uncertainty about the fate of Mortgage Electronic Registrations Systems Inc., or MERS, which documents the ownership and resale of about half of U.S. home loans. A breakdown could force clients such as Fannie Mae (FNMA:US) and Bank of America Corp (BAC:US). to make costly changes to their loan businesses.

    … The biggest customers of MERS are also owners: Fannie Mae, Freddie Mac (FMCC:US) and Bank of America. Others with stakes include Wells Fargo Inc., Citigroup Inc. (C:US) and the Mortgage Bankers Association.

    “If the use of MERS is found not to be valid, we could be obligated to cure certain defects or in some circumstances be subject to additional costs and expenses,” Bank of America reported in a February filing. “Our use of MERS as nominee for the mortgage may also create reputational risks for us.”

    Fannie Mae, in its annual financial report filed in February, also noted the potential effects if the lawsuits or regulatory pressures force changes in MERS.

    “A large portion of the loans we own or guarantee are registered in MERS’s name and the related servicing rights are tracked in the MERS System,” Fannie Mae’s report said, adding that if the firm couldn’t function in the same way, lenders could be forced to go back to time-consuming and expensive methods of recording land transfers…

    1. naked capitalism

      Quelle Surprise! Ginnie Mae Says Bank of America Has Lots of Servicing Documents Missing; MERS Also in Hot Water
      April 17, 2014 by Yves Smith –

      ,,, Anyone who was paying attention to the mortgage beat in 2010 through
      2012 knew that mortgage securitization originators and servicers were
      playing fast and loose with critical documents like mortgage notes because they couldn’t be bothered to observe their own contracts and transfer them to the mortgage trust as stipulated.

      … Things at MERS are so bad that *gasp* observers as daring to suggest
      that banks might suddenly be forced to register mortgages the
      old-fashioned way, as in reliably:

      “If the use of MERS is found not to be valid, we could be obligated to cure certain defects or in some circumstances be subject to additional costs and expenses,” Bank of America reported in a February filing. “Our use of MERS as nominee for the mortgage may also create reputational risks for us.”

      … So here we are, years later, still seeing the same wound continuing to
      fester….and remarkably, people like Ted Tozer at Ginnie Mae are surprised to find how bad things are. It shows you how even people who really ought to know better have been taken in by bank and regulatory propaganda.

    The World According to Modern Monetary Theory
    By Rebecca Rojer

    Looking past money to the sovereign power that makes it valuable

    Too often the origins of our economic ills are cloaked by a mystical reverence for some autonomous money spirit. The economists behind Modern Monetary Theory (MMT) seek to lift money’s veil by studying the specific actions that occur as money is created, circulated, and destroyed…

    Volcker Rule: Swiss-Cheesed or Beefed Up?
    Posted April 22, 2014 by Yves Smith
    By Gerald Epstein, Professor of Economics and a founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst.

    When President Obama’s fortunes were tanking in the winter of 2010, he needed a way to come out punching at the bankers again in order to gain some more momentum on financial reform—and with the voters. So he turned to an unlikely “populist” symbol—Paul Volcker, former head of the Federal Reserve System from the 1980s…

  84. SALON
    Apr 23, 2014
    Massive new fraud coverup: How banks are pillaging homes — while the government watches
    When financial crimes go unpunished, the root problem of fraud never gets fixed — and these are the consequences
    David Dayen –

    … If you or I pick the lock on a house and try to steal everything in it, we’d probably go to jail. But if I were a bank, and I wrote down on a piece of paper that I simply owned that house, I’d get away with it. That’s the sad legacy of trying to cover up massive fraud instead of dealing with it.

    April 25, 2014
    Lessons from a rock-star economist
    By Gillian Tett –

    ‘Thomas Piketty has forced Americans to confront some of their contradictions’

    … Piketty’s work touches a very raw nerve about the reality of the modern American
    dream. Of course, as a cynic – or anthropologist – might note, a dream does not necessarily need to be “real” to work as social glue; all that is necessary is for enough people to believe in the illusion. But can the American dream now survive a shift towards oligarchy? Can the egalitarian myth still act as a social glue? These are the big questions
    implicit in his book; and if Piketty’s analysis is correct, they can only become more acute in the coming years as inequality fuels not just more inequality – but greater cognitive dissonance too.

  86. Washington Post
    Warning signs of a credit market that could go pop soon
    By Steven Pearlstein,
    Published: April 25, 2014

    … It’s only a matter of time before Yellen and her colleagues acknowledge that monetary policy has done as much as it can and rise toward a more normal level. And when that happens, given the forward-looking nature of financial markets, there will be a sharp downward adjustment in the price of stocks and bonds. It’s the unavoidable last stage of the recovery process that has involved the largest injection of monetary stimulus that the world has ever seen. And the sooner it is allowed to happen, the less damage it will cause to the real economy…

  87. National Real Estate Investor
    Property Prices Have Room to Grow in Core Markets
    Apr 21, 2014 – Bendix Anderson

    Just when you think prices can’t go any higher for properties in core markets, some experts say they haven’t yet reached their peak in cities like New York, Los Angeles, and Chicago. “The opportunity over the next 12 years is even stronger,” says John Sikaitis, managing director for Jones Lang LaSalle. “I think core real estate is better positioned today than it has ever been positioned.”

    The population in urban areas is growing quickly. And the larger a city or town is, the faster its population is growing, according to the latest Census data. If this trend continues, population growth will help the demand for properties in core markets and will raise the incomes such properties produce. That will in turn help support property prices that already seem sky high…

  88. Naked Capitalism

    Bill Black: Since When Does Refusing to Put Fraudulent Banks into Receivership Help the Economy?

    Posted on May 1, 2014 by Yves Smith

    Conservative economists love “creative destruction”… There is no more “creative destruction” conceivable than when we put a bank that has become a fraudulent enterprise into receivership, remove the controlling officers leading the fraud, and sell the bank through an FDIC-assisted acquisition. Indeed, the pinnacle of creative destruction would be doing this with a systemically dangerous institution (SDI) through a process that split the supposedly “too big to fail” bank into smaller components that (1) were no longer large enough to pose a systemic risk, (2) were more efficient than the bloated SDI, (3) no longer extorted a large (implicit) government subsidy that made real competition impossible, and (4) no longer had dominant political power via crony capitalism…

  89. Naked Capitalism
    Wolf Richter: Implosion of Housing Bubble 2 Hits Six Cities in the West
    Posted on May 1, 2014 by Yves Smith

    “Homes in more than 1,000 cities and towns nationwide either already are, or soon will be, more expensive than ever,” Zillow reported gleefully the other day. “National home values have climbed year-over-year for 21 consecutive months, a steady march upward….”

    Glorious recovery. Our phenomenal housing bubble that, when it blew up spectacularly, helped topple our financial system, threw the economy into the Great Recession, caused millions of jobs to evaporate, and made people swear up and down: never-ever again another housing bubble. Steps in the Fed, and trillions of dollars get printed and handed to Wall Street, and assets prices become airborne, and Wall Street jumps into the housing market and buys up hundreds of thousands of vacant single-family homes, drives up prices, and armed with free money, shoves aside first-time buyers and others who would actually live in these homes, and turned them instead into rental units. Now in over 1,000 cities, prices are, or soon will be, as high as they were at the peak of the last housing bubble. The difference? Last time, all that craziness was called a “housing bubble” with hindsight. This time, it’s called a “housing recovery”…

  90. Naked Capitalism
    Stampede of Elephants in the China Shop
    By Raúl Ilargi Meije – May 5, 2014

    … There can’t be much doubt that the cheap credit tsunami unleashed in the Middle Kingdom has turned into an extremely damaging phenomenon, as characterized by massive overbuilding, pollution, but the government and central bank have far less power to rein it in than people seem to assume. The shadow system has made so much money financing empty highrises and bridges to nowhere that it will try to continue as long as there’s a last yuan that can be squeezed from doing just that. And when that aspect stops, it will retreat back to where it came from, the shadows, leaving the Xi’s and Li’s presently in charge with the people’s anger to deal with.

    … once it’s clear that you’ve greatly overbuilt, overborrowed and overleveraged, the only way forward is down. The “water always seeks the least resistance” analogy holds up there as well. At some point, in economics like in physics, gravity takes over. And this time around the China avalanche as it moves down its slope has a good chance of burying the rest of the world in a layer of dirt and bricks and mud and mayhem too…

  91. Nomura: China’s property bust is on
    Posted by Houses and Holes in China Economy
    May 6, 2014

    … China’s great real-estate bust has begun, says Nomura. A combination of a huge oversupply of housing and a shortage of developer financing is producing a housing market downturn that could drive China’s GDP to less than 6% this year.

    “To us, it is no longer a question of ‘if’ but rather ‘how severe’ the property market correction will be,” three Nomura analysts wrote in a report released Monday. And there isn’t much the government can do to head off problems…


  92. Pieria
    The record amount being borrowed by investors is a worrying sign for markets
    by Jamie Lowry on May 14th 2014

    … Keen students of behavioural finance may not be too surprised to learn that, over time, margin debt levels have tended to be at their highest just before markets crash while, just before markets take off, investors tend to have net cash in their trading accounts. According to the New York Stock Exchange (NYSE), which publishes monthly data on the subject, net debt currently stands at record levels… They say a picture can be worth a thousand words but this one is arguably worth two. The Value Perspective leaves you to choose between ‘Be careful’ or ‘Uh oh’.

  93. Amazon Books
    The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It
    by Anat Admati and Martin Hellwig –

    The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would require sacrificing lending and economic growth. The Bankers’ New Clothes examines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid. Anat Admati and Martin Hellwig argue that we can have a safer
    and healthier banking system without sacrificing any of its benefits, and at essentially no cost to society. They seek to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms.

    Real Estate Goes Global
    by James Surowiecki
    May 26, 2014

    The most expensive housing market in North America is not where you’d think. It’s not New York City or Orange County, California, but Vancouver, British Columbia… Vancouver’s appeal consists of comfort and security, making it what Andy Yan calls a “hedge city.” “What hedge cities offer is social and political stability, and, in the case of Vancouver, it also offers long-term protection against climate change,” he said. “There are now rich people around the world who are looking for places where they can park some of their cash and feel safe about it.”

    Yellen Has Scant Power to Relieve U.S. Housing Slowdown
    By Rich Miller and Victoria Stilwell
    May 28, 2014 –

    The hesitant housing recovery has surprised and concerned Federal Reserve Chair Janet Yellen and her colleagues at the central bank. It’s not clear how much they can do about it. While the industry is rebounding from a weather-ravaged first quarter, the pickup will probably fall short of previous projections, according to economists at Goldman Sachs Group Inc. of New York and Macroeconomic Advisers LLC in St. Louis. As a result, they trimmed their forecasts for economic growth in the second half of 2014 to about 3.25 percent from 3.5 percent. “Housing is a growing worry,” said Macroeconomic Advisers’ senior economist Ben Herzon…

  96. Naked Capitalism
    Wolf Richter: The Big Hoax Of The Wall Street Hype Machine
    Posted on May 31, 2014 by Yves Smith

    Yves here. The issue that Wolf highlights, of weak earnings masked by expectations headfakery, has been an ongoing complaint of reader Scott for over a year, so it’s good to see someone else take notice of the disconnect between hype and reality…

  97. The Telegraph
    US money slump flashes warnings as economy contracts
    By Ambrose Evans-Pritchard
    29 May 2014 –

    The US economy contracted sharply in the first quarter and bond yields have been falling at the fastest rate since the recession scare two years ago, in signs that bond tapering by the Federal Reserve is biting more than anticipated. The slowdown comes as a key indicator of the US money supply flashes slowdown warnings… The concern is that this recovery may die of old age after five years, even though it has been the weakest expansion since the Second World War, failing to close the output gap or bring the long-term unemployed back into the workforce. The Fed fears it has exhausted its arsenal. “It is too awful to think about what will happen in the next recession, so nobody does”.

  98. The Guardian
    Bank of England governor: capitalism doomed if ethics vanish
    Mark Carney issues strong critique of City behaviour and warns of growing sense that basic social contract is breaking down
    Angela Monaghan
    27 May 2014 –

    Capitalism is at risk of destroying itself unless bankers realise they have an obligation to create a fairer society, the Bank of England governor has warned. Mark Carney said bankers had operated a “heads-I-win-tails-you-lose” system. He questioned whether traders met ethical standards and said that those who failed to meet high professional standards should face ostracism…

  99. Contra News and Views
    Four More Signs That A Market Top Is Nigh
    June 3, 2014

    For US stocks — and by implication most other equity markets — the danger signals are piling up to the point where a case can be made that the end is, at last, near. To take just a few examples of indicators that should scare the hell out of anyone with a big stock portfolio.

    … One could make the case that the financial markets are responding rationally to the prospect of trillions of new dollars looking for a home in stocks and bonds (and high-end real estate and fine art and the other preferred assets of the 1%). But the case can also be made that all of this manipulation hasn’t really affected fundamentals and that more of the same is unlikely to make much of a difference.

    What we’re witnessing, in short, is a truly fascinating attempt by the world’s major governments to suspend the laws that have, thus far in human history, governed
    economics. And the signs of their imminent failure are spreading.

  100. Bloomberg –
    Ex-Bankers Upgrade the Good Life; Got to Have the Stradivarius-Shaped Pool
    By Max Abelson
    Jun 3, 2014

    The wealth chronicled in Piketty’s best-seller “Capital in the Twenty-First Century” creates business opportunities, according to Wilkinson, a former UBS AG economist. The number of people with at least $100 million increased 62 percent globally to 37,104 compared with 2003, according to a March study by property broker Knight Frank LLP.

    “There’s incredible inequality, but there’s also incredible demand at the high end of the market,” Wilkinson said. “That’s just a reality of the world we live in.”

  101. Reuters
    Fed’s Bullard says macroeconomy much closer to normal
    Jun 9, 2014

    The U.S. macroeconomy is much closer to a normal state than it has been in five years, a Federal Reserve official said on Monday, adding that weak labor markets and low inflation are what is keeping accommodative monetary policy in place.

    “The FOMC (Federal Open Market Committee) is much closer to its macroeconomic goals than it has been in the past five years,” said James Bullard, president of the St. Louis Federal Reserve Bank, speaking at a conference in Palm Beach, Florida…

    A Citizen Guide to Wall Street
    A Disappeared Book on Wall Street History Provides a Dead Serious Warning
    By Pam Martens: June 11, 2014 –

    … Now, in his quest to return disappeared books to inquiring minds, NYU Media Studies Professor, Mark Crispin Miller, has stumbled upon a potential landmine for Wall Street. In conjunction with Open Road Media, Miller has unearthed and is bringing back to life important vanished books under the imprint “Forbidden Bookshelf.” One of those books is The Lords of Creation: The History of America’s 1 Percent by Frederick Lewis Allen.

  103. Stockman’s Corner
    The Keynesian End Game Is Near: No Escape Velocity This Year, Either
    by David Stockman • June 27, 2014

    The economic releases of the past few days are putting the lie to the Keynesian escape velocity myth. The latter is not just around the corner—-and 2014 is now virtually certain to mark the fifth year running when the boom predicted by Wall Street economist at the beginning of the year fizzled as actual results unfolded. In that context, yesterday’s punk number on personal consumption expenditures during May was the inflection point. Not only did American consumers not come bounding out of their winter ice caves as predicted by virtually every “sell side” economist, the number actually embodied a case of groundhog economics…

  104. Stockman’s Corner –

    The Implosion Is Near: Signs Of The Bubble’s Last Days
    by David Stockman • July 14, 2014

    The central banks of the world are massively and insouciantly pursuing financial instability. That’s the inherent result of the 68 straight months of zero money market rates that have been forced into the global financial system by the Fed and its confederates at the BOJ, ECB and BOE.

    … At the end of the day, the Fed and its fellow traveling central banks have systematically dismantled the natural stability mechanisms of financial markets. Accordingly, financial markets have now become dangerous casinos in which speculative bubbles are guaranteed to build to dangerous extremes as the central bank driven financial inflation gathers force. That’s where we are now. Again.

  105. Yellen Tells Whoppers to the New Yorker
    Posted on July 16, 2014 by Yves Smith

    A Nicholas Lemann profile of Janet Yellen in the New Yorker, based on interviews with her, is creating quite a stir, and for many of the wrong reasons. The article verges on fawning, but even after you scrape off the treacle, it’s not hard to see how aggressively and consistently the Fed chair hits her big talking point, that’s she’s on the side of the little guy. As correspondent Lee put it:

    1) She’s simultaneously Mother Teresa (spent her whole life caring about the poor without actually meeting any poor people) and Forrest Gump (present when all bad deregulatory polcies were made, but miraculously untainted by them).

    2) Puh-lease! She’s Bernanke in a granny package, without the history lessons.

    In fact, as we’ll discuss, Yellen’s record before and at the Fed shows she’s either aligned herself with banking/elite interests or played two-handed economist to sit out important policy fights. Even if she actually harbors concern for ordinary citizens, she’s never been willing to risk an ounce of career capital on it…

  106. You Can’t Taper a Ponzi Scheme: Time to Reboot
    Monday, 28 July 2014
    By Ellen Brown, The Web of Debt Blog | News Analysis

    … All the king’s horses and all the king’s men could not rein in the growth of the shadow banking system, despite the 828-page Dodd-Frank Act. Instead, the derivatives pyramid has continued to explode under its watch, to a notional value now estimated to be as high as $2 quadrillion.

    At one time, manipulating interest rates was the Fed’s stock in trade for managing the money supply; but that tool too has lost its cutting edge. Rates are now at zero, as low as they can go – unless they go negative, meaning the bank charges the depositor interest rather than the reverse. That desperate idea is actually being discussed. Meanwhile, rates are unlikely to be raised any time soon. On July 23rd, Bloomberg reported that the Fed could keep rates at zero through 2015…

  107. New York Fed Worried About Gambling in Casablanca, Um, Ethics Problem at Big Banks
    Posted on July 29, 2014 by Yves Smith

    This story would be funny if it weren’t so pathetic. Yesterday, the Financial Times reported that the New York Fed woke up out of its usual slumber and realized that the crisis has changed nothing and that banks still are still in the business of looting and have unaddressed ethics issues….

  108. Signs Of The Top: The Dwindling Quality And Efficacy Of America’s Mountainous Debt
    by Charles Hugh Smith • July 29, 2014

    Before you jump on the Bull market bandwagon of “don’t fight the Fed,” perhaps you should take a look at the quality of the debt the Fed has enabled and the diminishing returns on all that debt…

  109. Bloomberg
    Greenspan Says Stocks to See ‘Significant Correction’
    By Christopher Condon
    Jul 30, 2014 –

    Former Federal Reserve Chairman Alan Greenspan said equity markets will see a decline at some point after surging for the past several years.

    “The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction… Where that is, I do not know.”

  110. The New York Times
    Fears of Renewed Instability as Fed Ends Stimulus
    AUG. 15, 2014

    After a nearly uninterrupted five-year rally in stocks and bonds, some investors seem to be getting nervous. On July 31, the Dow Jones industrial average dropped 317 points, wiping out the year’s gains. Last week, junk bond funds experienced record withdrawals and junk bond interest rates spiked.

    Such gyrations may be healthy, a reminder that there are risks and that markets go down as well as up. But they could also be the harbinger of something more worrisome, which would be renewed financial instability as the Federal Reserve brings to an end its extraordinary easy money policy. The Federal Reserve has said it expects to raise interest rates in 2015 for the first time since the financial crisis.

    “There’s no real precedent for ending anything of this magnitude,” said Jeremy Stein, who left the Fed’s Board of Governors at the end of May…

  111. The World Financial System Is Rife With “Stimulus” Junkies
    by David Stockman • September 3, 2014

    … The financial market stimulus chorus is now universal—-virtually identical from Hong Kong to London to New York, despite ostensibly deep differences in policy regimes. At the end of the day, however, there is not really a dimes worth of difference between the Bush/Obama/Bernanke model and the economic model employed by the politburo overlords in Beijing. Its all about insensible, contagious, addictive credit expansion, and the phony wealth and temporary prosperity which it breeds…

  112. Naked Capitalism
    The Fed Fails, Um, Does Irony
    Posted on September 11, 2014
    By Richard Alford –

    “The economic and financial systems are complex and dynamic. The fact that the Fed did not achieve all the goals that it set out for itself is not surprising. However, it is more than just ironic that the Fed made decisions and pursued policies which resulted in it achieving the opposite of its stated goals and forecasted outcomes.”

  113. Alhambra Partners
    Home Construction Still Moving Down
    By Jeffrey P. Snider • September 19, 2014

    “… Again, the timing of the slowdown in apartment construction alongside household formation speaks very clearly about the lack of income and real growth. Instead of weak credit “pushing” the assumed “surge” in otherwise profoundly optimistic new employees into at least new apartments, instead there is no rush to either new homes or apartments in 2014, more than suggesting they have no wherewithal to do much of anything toward further economic expansion downstream.”

  114. Washington Post
    Study: Iraq, Afghan war costs to top $4 trillion
    By Ernesto Londoño March 28, 2013

    The U.S. wars in Afghanistan and Iraq will cost taxpayers $4 trillion to $6 trillion, taking into account the medical care of wounded veterans and expensive repairs to a force depleted by more than a decade of fighting…

  115. Stockman’s Corner
    Wall Street Is One Sick Puppy—–Thanks To Even Sicker Central Banks
    by David Stockman • October 21, 2014

    Last Wednesday the markets plunged on a vague recognition that the central bank promoted recovery story might not be on the level. But that tremor didn’t last long.

    Right on cue the next day, one of the very dimmest Fed heads—James Dullard of St Louis—-mumbled incoherently about a possible QE extension, causing the robo-traders to erupt with buy orders. By the end of the day Friday, with the market off just 5% from its all-time highs, the buy-the-dips crowd was back, proclaiming that the “bottom is in”. This week the market has been energetically retracing what remains of the October correction. And its no different anywhere else in the central bank besotted financial markets around the world. Everywhere state action, not business enterprise, is believed to be the source of wealth creation…

  116. Federal Reserve bank of New York
    Enhancing Financial Stability by Improving Culture in the Financial Services Industry
    October 20, 2014 –
    William C. Dudley, President and Chief Executive Officer

    Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, Federal Reserve Bank of New York, New York City

    … In conclusion, if those of you here today as stewards of these large financial institutions do not do your part in pushing forcefully for change across the industry, then bad behavior will undoubtedly persist. If that were to occur, the inevitable conclusion will be reached that your firms are too big and complex to manage effectively. In that case, financial stability concerns would dictate that your firms need to be dramatically downsized and simplified so they can be managed effectively. It is up to you to address this cultural and ethical challenge. The consequences of inaction seem obvious to me—they are both fully appropriate and unattractive—compared to the alternative of improving the culture at the large financial firms and the behavior that stems from it. So let’s get on with it.

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  118. Merk Insights
    Greenspan: Price of Gold Will Rise
    Axel Merk, Merk Investments
    October 29, 2014 –

    Greenspan: “The Fed’s balance sheet is a pile of tinder, but it hasn’t been lit … inflation will eventually have to rise.”

    We now have a “box of tinder” and an admission that the Fed is merely there to enable the government. We are not trying to scare anyone, but summarize what we heard. My own takeaway from Greenspan’s talk was that anyone who isn’t paranoid isn’t paying attention. Did I mention he said the promises made by the government cannot be kept? Mathematically, he said, it’s impossible.

    1. Zero Hedge
      The Economy Is So “Strong” It Just Cost Obama The Senate
      by Tyler Durden on 11/05/2014

      Based on the ridiculous, seasonally-adjusted data released day after day by the various US “Departments of Truth”, also known as the BLS, the Census, the Dept of Commerce, UMichigan, ADP, the Conference Board and so on, the US economy is so strong and consumer confidence is so resurgent, America is on the verge of a second golden age. Sadly, for Obama, and last night’s epic rout for Democrats, it was all a lie – a lie perpetuated by a manipulated S&P500 which now hits daily record highs on unprecedented central bank liquidity injections which have now terminally disconnected the “markets” from the economy, and the welfare of the vast majority of the common “folk” – and said “folk” saw right through it…

  119. Why the Financial and Political System Failed and Stability Matters
    By Nomi Prins

    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…

  120. Rolling Stone
    The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare
    Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking
    By Matt Taibbi | November 6, 2014

    … And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history”…

  121. The Washington Post
    The Gruber Confession
    By Charles Krauthammer Opinion writer November 13, 2014

    … This October 2013 video shows MIT Professor Jonathan Gruber, a principal architect of Obamacare, admitting that, in order to get it passed, the law was made deliberately obscure and deceptive. It constitutes the ultimate vindication of the charge that Obamacare was sold on a pack of lies…

  122. New Economic Perspectives
    Everyone Questions the NY Fed’s Motives – For Good Reasons
    Posted on November 20, 2014 by William Black

    …The regional Feds should be stripped of all examination, supervision, and enforcement powers. That job should be done by federal employees who answer to the people of the United States rather than the bank CEOs that they are supposed to examine, supervise, and regulate. People in positions that require them to regulate should reconsider their career choice if they are unable to rise above their self-interest on an issue this clear…

    1. New Economic Perspectives
      NYC: Aggressive “Broken Windows” Policing but Carte Blanche for Banksters
      December 6, 2014 by William Black –

      New York City exemplifies two perverse criminal justice policies that drive many criminologists to distraction. It is the home of the most destructive epidemics of elite financial frauds in history… The most extraordinary facts about the catastrophic fraud epidemics, however, is New York City’s reaction to the fraud epidemics. Not a single Wall Street bankster who led the fraud epidemics has been prosecuted or had their fraud proceeds “clawed back.” Not a single Wall Street bankster who led the fraud epidemics is treated as a pariah by his peers or New York City elites… The “strategy” of ignoring or even praising the banksters’ enormous frauds while aggressively arresting the poor for the most minor of property offenses is obviously indefensible on every conceivable basis. The strategy is grotesquely unfair and the elimination of the rule of law for banksters has caused catastrophic harm and will cause even greater harm in the future…

    Sell, Sell, Sell…….The Central Bank Madmen Are Raging
    by David Stockman • November 21, 2014

    The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.

    Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070… Stated differently, last night’s central bank announcements were the starting guns for a monetary implosion that will soon shock financial markets and real production, trade, employment and incomes on a world-wide basis…

    1. The QE Madness Has Failed—–“Markets” Are Coming Back To Life, Turbulently
      by Raúl Ilargi Meijer • January 15, 2015 –

      … That the QE madness ended with the decapitation of the price of oil seems only fitting. Our economies need oil the way people – and animals – need water. If its price falls the way it has, that’s a sure sign something is profoundly amiss. At this point, we don’t yet know the half of it. It’ll take time for price discovery to work its way through, and for people to recognize what things are really worth. For now there’s really only one that’s certain: everything is overvalued, including you.

      … Isn’t it better to have price discovery back than to have so-called ‘investors’ trip on Bernanke blue pills? Oh well, never mind, oil made that decision for us.

  124. December 9, 2014
    Senator Elizabeth Warren on Managing the Economy

    Senator Elizabeth Warren (D-MA) talked about the influence Wall Street has on Congress through their hundreds of lobbyists and criticizing the “revolving door” between Wall Street executives and the Treasury Department. She related this to the 2008 financial crisis. Senator Warren also repeated her opposition to President Obama’s nomination of Wall Street investment banker Antonio Weiss as Treasury undersecretary for domestic finance, saying his international investment banking dealings did not make him the best candidate to oversee domestic finances.This was the keynote address at the conference “Managing the Economy: Wall Street, Main Street and Federal Reserve” held in the Hart Senate Office Building by Americans for Financial Reform, the Economic Policy Institute, and the Roosevelt Institute’s Financialization Project…

    1. MSNBC
      Warren wins: Treasury nominee Antonio Weiss surrenders
      01/12/15 – By Alex Seitz-Wald

      Progressives are claiming victory in a confrontation with the White House over a Treasury Department nominee whose work for Wall Street sparked sharp opposition from some in President Obama’s own party.

      Financial executive Antonio Weiss has asked Obama not to re-nominate him for the No. 3 position at the Treasury Department, where he would have regulated the financial services industry, as first reported by Politico Monday.

      The victory is partially symbolic, however, as Weiss is instead taking another top job at the Treasury Department as counselor to Secretary Jack Lew, which does not require Senate confirmation.Liberal Democrats, led by Massachusetts Sen. Elizabeth Warren, took on their own president over the nomination, throwing up resistance to confirming the nomination when their party controlled the Senate last year…

      1. Senator Warren and America Win in a Skirmish in a Long Struggle Against Wall Street’s Coup
        Posted on January 14, 2015 by Yves Smith
        By Bill Black, the author of The Best Way to Rob a Bank is
        to Own One and an associate professor of economics and law at the
        University of Missouri-Kansas City…

  125. Financial Times – December 15, 2014
    Bankers, like alcoholics, must first admit they have a problem
    The temptation to circumvent the rules might prove irresistible
    By Philip Augar

    They really can’t help it, can they? Like alcoholics in a liquor store, the investment banks cannot resist an illicit swig whenever they think nobody is looking. That is the conclusion from the fines imposed on 10 US investment banks last week for breaking the rules designed to manage conflicts of interest in initial public offerings…

  126. Financial Times – December 19, 2014 –
    Volcker lambasts Wall Street lobbying

    by Tom Braithwaite and Richard Blackden

    Paul Volcker, the former Federal Reserve chairman, has lambasted the “eternal lobbying” of Wall Street after regulators granted the industry more time to comply with a rule designed to prevent them from owning hedge funds…

    Mr Volcker said: “It is striking, that the world’s leading investment bankers, noted for their cleverness and agility in advising clients on how to restructure companies and even industries, however complicated, apparently can’t manage the orderly reorganisation of their own activities in more than five years.”

  127. Scientific American
    Banking Culture Encourages Dishonesty
    What is it about the financial sector that encourages bad behavior?
    December 30, 2014 | By Francesca Gino

    … A paper recently published in Nature magazine found that the financial sector’s culture encourages dishonesty… The authors conclude that the prevailing business culture in the banking industry weakens and undermines honesty…

  128. Bill Black: Obama’s Vain Search for a TPP “Legacy”
    Posted on January 9, 2015 by Yves Smith

    “One thing to bear in mind is that opposition to the Trans-Pacific Partnership, and its ugly sister, the Transatlantic Trade and Investment Partnership, do not split on simply party lines.”

  129. CNN
    JPMorgan’s Dimon says bank is ‘under assault’ by regulators
    By Paul R. La Monica – January 14, 2015

    Banking giant JPMorgan Chase used to be the golden child of Wall Street. But the company disappointed investors Wednesday by reporting fourth quarter profits and revenue that were below forecasts — largely due to increased legal costs. And CEO Jamie Dimon continues to show resentment about how much scrutiny his bank has come under from various government agencies…

  130. Mario Draghi: Charlatan Of The Apparatchiks
    by David Stockman • January 22, 2015 –

    Well, he finally launched “whatever it takes” and that marks an inflection point. Mario Draghi has just proved that the servile apparatchiks who run the world’s major central banks will stop at nothing to appease the truculent gamblers they have unleashed in the
    casino. And that means there will eventually be a monumental crash landing because the bubble beneficiaries are now commanding the bubble makers.

    …So now begins the greatest heist since Bernanke bailed out Wall Street in September 2008.

  131. Financial Times
    Eurozone alarm grows over Greek bailout brinkmanship
    February 1, 2015
    Anne-Sylvaine Chassany in Paris and Peter Spiegel in Brussels

    Eurozone officials are increasingly worried that Greece’s brinkmanship over its bailout will plunge the country into financial chaos after its finance minister said on Sunday that it would take up to four months to agree a “new contract” with creditors.

    Yanis Varoufakis, Greece’s newly appointed finance minister, said Athens would reject any further loans under its international rescue plan, despite Greece’s €172bn bailout
    expiring at the end of the month. He also said he expected the European Central Bank to prop up the country’s weakened banking system until a longer-term settlement could be reached…

    Bank of America’s Government-Backed Subsidiary Used to Finance Trades
    By Jenny Strasburg
    Feb. 11, 2015 –

    Bank of America Corp. for years used its government-backed U.S. banking subsidiary to finance billions of dollars in controversial trades that helped hedge funds and other clients avoid taxes, according to internal documents and people familiar with the matter…

    The practice dates back to at least 2011, when senior Bank of America investment-bank officials in London started pushing subordinates to adopt the policy in order to take advantage of the lower funding costs enjoyed by the U.S. unit called Bank of America National Association… Experts said it is inappropriate for Bank of America to tap the entity holding federally insured deposits to finance risky investment-banking trades.

    “I don’t think it’s an appropriate use,” said Sheila Bair, the former chairman of the Federal Deposit Insurance Corp. “Activities with a substantial reputational risk… should not be done inside a bank. You have explicit government backing inside a bank. There is taxpayer risk there”…

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