Archive for the Banks and Banking System Category

Coups d’état, Bail Outs And Bail Ins:  Clio’s Diary/Chronology.  Oh, And Happy Constitution Day! (September 17, 2018)

Posted in Bailout/Bribe, Banks and Banking System on September 17, 2018 by e-commentary.org

. . .

K          “September 15 is the ten year anniversary of the Great Financial Coup d’état of 2018.”

J          “We. Just. Will. Not. Learn.”

. . .

Recent Coups d’état:

2000:  Political coup d’état – by the Republican judicial branch / Supreme Court, Inc. when it rejected the franchise / election and counting of votes by citizens, appointed Bush, Jr. as President, set in place subsequent coups d’état and cemented the dominion of the Kleptocracy to supplant a democracy.

1999 – 2008:  “Pogo” participation by the populace in the Economic coup d’état – by the ordinary people who lost their senses, judgment and perspective with considerable encouragement by the powers that be that be very powerful.  The populace invested money in companies that could not even promise blue sky, pursued returns that were inconceivable and “rented” homes they could never afford.  The people unwittingly participated in and ratified the insanity and criminality.  Blame is everywhere.

2008:  Economic coup d’état – by the Democrats and Republicans in the executive and legislative branches who cooperated in looting the public fisc for the benefit of the few / 1 % / Kleptocrats at a devastating cost to the public and in particular innocent and uninvolved future generations who must finance the at least 4.2 Trillion dollar ($4,200,000,000,000.00) giveaway.  Give or take.  Probably give another 1 Trillion dollars to the number that was given away.

2016:  Populist coup d’état – by a demagogue Republican President / executive branch buffoon and charlatan who fooled a genuinely angry, frightened and desperate public to vote for him and installed an oligarch and his oligarchy to run the Kleptocracy.

2017:  Judicial coup d’état – the Supreme Court, Inc. is now a wholly owned subsidiary of the Republican Party, Inc. occupied by Five Red Rich Republican “Catholic” Corporatist “White” Boys . . . And All By-Products Of The S.I.C.

2018:  Judicial coup d’état – the coup de grace in the making.

Recent And Projected Bail Outs And “Bail Ins”:

1998:  Banks/Wall Street bail out Long Term Capital Management

2008, September and October:  Federal Reserve bails out Banks/Wall Street.  See above.                                        

20__:  International Monetary Fund (IMF) bails out Federal Reserve; Taxpayers bail out or “bail in” the Banks/Wall Street.

20__:  God bails out the International Monetary Fund (IMF); No one bails out Taxpayers.

20__:  God files Chapter 11 Reorganization; Taxpayers file Chapter 7 Liquidation.

. . .

[See “In 2008, America Stopped Believing in the American Dream” in “New York” Magazine by Frank Rich dated August 6, 2018.]

[See the e-commentary at “Futile Efforts (September 29, 2008)”, “A Bleak Day:  The Trillion Dollar Tragedy (October 6, 2008)”, “Bailouts: Out; Bail Ins: In; Slowly Boilin’ The Frog (April 15, 2013)”, “Globalizing The Bail In (July 8, 2013)”, “September 15, 2008 – The Date That Should Live In Infamy (September 16, 2013)”,“‘Bail Ins’ Are Globalized; ‘Bail Outs’ Are Bailed Back In; No Bail For Bankers (December 29, 2014)”, “Punt, Pass And Kick:  The End Is Far (February 24, 2014)” and “They Can Print Money (November 2, 2015)”.]

Bumper sticker of the week:

So, help us God, so help us God.

To Be (In Debt), Or Not To Be (In Debt), what is the answer? (July 23, 2018)

Posted in Banks and Banking System, Debt/Deficits, Interest Rates, LIBOR, Wall Street on July 23, 2018 by e-commentary.org

. . .

K          “The argument and the aspiration is that there will be a debt jubilee relieving them of debt.  Acquire the debt now and be ready for the great debt reset.”

J          “Yet someone else expects to be paid on that debt and may not be jubilant if there is a jubilee.  Few will voluntarily release the debt of another.  That is the dreaded counterparty risk.” 

K          “I remind others that foreclosures continued unabated throughout the First Great Depression.”

. . .

J          “Another observation is that the government’s only solution to debilitating debt and deficits is to keep printing money and then in desperation to inflate the economy and prices.  The debtors who can maintain their cash flow may be able to ride the government’s coat tails and pay their debts with dollars worth substantially less.”

K          “The dollars may be worth less, but the homeowner/renters will be forced to pay more dollars.  I am confident that even someone who has a fixed rate mortgage will discover that the interest rate is nonetheless cranked upward unilaterally by the financial players.  The scandalous LIBOR interest rate scheme is disappearing which may vitiate some loan agreements.  And sure enough, the courts will not offer any hope or redress to the homeowner.”

J          “But the judges will make their tee times.”

. . .

J          “Student loan debt is expressly not dischargeable in bankruptcy and serves to enslave the kids who may be the ones to spearhead a jubilee.”

. . .

K          “If you are in debt, you are in servitude to someone else.”

J          “No question.  But not everyone is free to make the choice to be debt free.”

. . .

[See the e-commentary at “National Financial Literacy Month: Teaching Financial Literacy In The ‘Debt Age’ (April 25, 2016)”.]

[See “The Most Important Number in Finance Is Going Away.  Wall St. Isn’t Prepared” in “The New York Times” by Matt Phillips dated July 19, 2018.]

Bumper stickers of the week:

Debt is not so good

“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”  Ogden Nash 

Economics And Finance:  Girls v. Boys (June 4, 2018)

Posted in Banks and Banking System, Bernanke, Federal Reserve, Gender, Greenspan on June 4, 2018 by e-commentary.org

. . .

K          “What do Nomi Prins, Terry Gross, Yves Smith, Lynette Zang, Catherine Austin Fitts, Nicole Foss, Ellen Brown, Danielle DiMartino Booth, Brooksley Born, Sheila Bair, Janet Tavakoli, Gail Tverberg, Gretchen Morgenson, Michelle Singletary and Lionel Shriver have in common?”

J          “ . . .  How many guesses?”

K          “Who’s counting?  Take your time.  The face-off does not fall for an hour.”

J          “ . . .  They all have vowels in their names.”

K          “To a person.  Nothing gets by you.”

J          “Nothing.  No.  a.  chance.”

. . .

J          “And consonants, too.  Two consonants, too.”

. . .

K         “No ‘Québec’ in any of the names.”

. . .

K          “What do Allan Greenspan, Philip Gramm, Larry Summers, Tim Geithner, Ben Bernanke, Hank Paulsen, and Robert Rubin have in common?”

J          “They too have vowels in their names, but they never should have been allowed to get near the bowels of the body politic.”

K          “They never should have been allowed to have any proximity to the bourse, the boardroom or the blackboard.”

. . .

[See the e-commentary at “The Kids (At The Fed) Are Not Alright (January 30, 2012)”.]

Bumper stickers of the week:

Girls are alright

From available sources, Ben Bernanke made the following statements and prognostications:

July 2005:  “We’ve never had a decline in house prices on a nationwide basis.”

November 2005:  “With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.”

March 2007:  “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”

October 2007:  “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.”

January 2008:  “The U.S. economy has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself.”

And last but definitely not least when it comes to misleading and dangerous drivel:

January 2008:  “The Federal Reserve is not currently forecasting a recession.”

Terrorized By Trumpi’s Tariffs (March 5, 2018)

Posted in Automobiles/Automobile Industry, Banks and Banking System, Blue States / Red States, Currency, Kleptocracy, South, Tariffs, Trumpi, War on March 5, 2018 by e-commentary.org

. . .

K          “In his latest Twitter tantrum, Trumpi announced that he is going to terrorize the world with tariffs.”

J          “He is a twit.  Everyone but Trumpi knows that tariffs are tarrible.”

. . .

K          “Trumpi may place tariffs on foreign cars.  The BMWs manufactured in the foreign country of South Carolina and the Volkswagens made in the foreign country of Tennessee and the Mercedes made in the foreign country of Alabama all will be tariffed.”

J          “The South is the New Germany.  Lindsay Graham is the Senator from South Carolina, New Germany.”

K          “The South is also the New Japan.  The Toyotas from the foreign country of Kentucky also will be tariffed.  Mitch McConnell is the Senator from Kentucky, New Japan.  Someone said that other countries may place a tariff on Kentucky bourbon.  That will get Mitch in a tither.”

J          “What if other nations boycott Harley-Davidson?  They are made in Paul Ryan country.”

. . .

K          “Makes you wonder if most of the Red States are actually foreign countries.  We may soon need a passport to visit and transit.”

. . .

J          “Tariffs are a toll that takes such a toll.”

. . .

K          “A boycott of Harley-Davidson . . . now them is fighin’ words.  And that’s the problem.  A trade war often becomes a war war.”

J          “Trade wars often become currency wars.  Currency wars often become trade wars.  A currency war combined with a trade war almost always becomes a war war.”

. . .

K          “Putin sent a message on March 1 to the U.S. that seems to have been lost in translation and buried in the cacophony of chaos.  If the U.S. attacks, Russia will respond.”

J          “No one is listening over the din.”

K          “No one is listening.  Too many hurricanes are hurling toward the house of cards.”

. . .

[March 8 – International Women’s Day]

[See the e-commentary at “Bankruptcy Auto Companies (December 8, 2008)” on the auto industry in the South.]

Bumper stickers of the week:

The chaos is getting even more chaotic.

Trade War -> Currency War; Currency War -> Trade War; Trade War + Currency War -> War War

Divas And Divos At Davos (January 29, 2018)

Posted in Antitrust, Banks and Banking System, Globalization, Kleptocracy, Rackets on January 29, 2018 by e-commentary.org

. . .

K          “I like their knife.”

J          “The common folk need a people’s Davos.”

. . .

K          “The world is not flat.  From afar, it is a mysterious big blue marble with swirling white clouds.  Up close, it is one long unlevel playing field with all the big players playing a game with the little players.”

J          “When you think about it, ‘globalization’ is an anagram derived from neo-colonialism and neo-imperialism and neo-capitalism and neo-consumerism.”

. . .

K          “When the one one-thousandths of one percent (.001 %) get together, you know they are up to no good.”

J          “They fix prices, but they do not fix problems.”

. . .

K          “They say that a conspiracy is two or more people working together for one end.”

J          “My theory is that they are conspiring to put the fix on us.”

. . .

[See the e-commentary at “Humanity’s Motto:  To Enslave And To Colonize (January 27, 2014)”, “The ‘Superfluous Consumer’ (July 27, 2015)” and “Is The American Consumer Irrelevant? (December 12, 2011)”.]

Bumper sticker of the week:

“Qu’ils mangent de la brioche”

One World Currency? (January 8, 2018)

Posted in Banks and Banking System, Cryptocurrency, Currency, Cyberactivities, Dollar - World's Reserve Currency, Magazine Reference, Money, Petrodollar, Special Drawing Rights (SDR), Universal Monetary Unit, World's Reserve Currency on January 8, 2018 by e-commentary.org

. . .

K          “Thirty years ago tomorrow, The Economist magazine uploaded an article titled ‘Get Ready for the Phoenix’ with a cover proclaiming ‘Get ready for a world currency’ and featuring a rising Phoenix.”

J          “Get ready.  The Phoenix, the Bancor, the S.D.R., the Universal Monetary Unit, the Bobcoin, the Something Else is likely to replace the PetroDollar in the near future.  Stay tuned.” 

. . .

K          “On a simple level, ‘cryptocurrencies’, etc. are digital and gold, etc. is analog.  Blockchain technology underlying ‘cryptocurrencies’ is likely to be supplanted by a fast, fair, sustainable, scalable, guaranteed Byzantine fault tolerant consensus digital technology using gossip protocols and virtual votes such as Hashgraph.  And Hashgraph is likely to be supplanted by even more advanced and sophisticated technologies.” 

J          “That’s what everyone is saying.  Get ready.  Stay tuned.”

. . .

[See a related and more recent article “One world, one money” in The Economist magazine dated September 24, 1998.  First published as a five-part series punctuated with reprints of paintings by Gustave Courbet, “Bitcoin Doesn’t Exist – The Full Story” written by “Dr. D” for “The Automatic Earth” project/site provides some perspective on the phenomenon known as ‘cryptocurrencies’.  The comments to the series and the comments on the sites that reprint the series provide some robust ideas and opinions.  Much is happening quickly.]

[See the e-commentary titled “‘Bitcoin’, ‘Ethereum’ . . . ‘Blockchain Technology’  Say What? (July 3, 2017)”, “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “USA + FRN/PD — > IMF + SDR — > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)”.]

Bumper stickers of the week:

Want to improve your love life?  Change your handle to “Blockchain”

. . .

The Economist, January 9, 1988, Vol. 306, pages 9-10; Cover:  “Get ready for a world currency”; Title of the article:  “Get Ready for the Phoenix”

THIRTY years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency.  Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix.  The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much disruption to economic life in the last twentieth century.

. . .

At the beginning of 1988 this appears an outlandish prediction.  Proposals for eventual monetary union proliferated five and ten years ago, but they hardly envisaged the setbacks of 1987.  The governments of the big economies tried to move an inch or two towards a more managed system of exchange rates – a logical preliminary, it might seem, to radical monetary reform.  For lack of co-operation in their underlying economic policies they bungled it horribly, and provoked the rise in interest rates that brought on the stock market crash of October.  These events have chastened exchange-rate reformers.  The market crash taught them that the pretence of policy co-operation can be worse than nothing, and that until real co-operation is feasible (i.e., until governments surrender some economic sovereignty) further attempts to peg currencies will flounder.

. . .

The new world economy

The biggest change in the world economy since the early 1970’s is that flows of money have replaced trade in goods as the force that drives exchange rates.  As a result of the relentless integration of the world’s financial markets, differences in national economic policies can disturb interest rates (or expectations of future interest rates) only slightly, yet still call forth huge transfers of financial assets from one country to another.  These transfers swamp the flow of trade revenues in their effect on the demand and supply for different currencies, and hence in their effect on exchange rates.  As telecommunications technology continues to advance, these transactions will be cheaper and faster still.  With unco-ordinated economic policies, currencies can get only more volatile.

. . .

In all these ways national economic boundaries are slowly dissolving.  As the trend continues, the appeal of a currency union across at least the main industrial countries will seem irresistible to everybody except foreign-exchange traders and governments.  In the phoenix zone, economic adjustment to shifts in relative prices would happen smoothly and automatically, rather as it does today between different regions within large economies (a brief on pages 74-75 explains how.)  The absence of all currency risk would spur trade, investment and employment.

. . .

The phoenix zone would impose tight constraints on national governments.  There would be no such thing, for instance, as a national monetary policy.  The world phoenix supply would be fixed by a new central bank, descended perhaps from the IMF.  The world inflation rate – and hence, within narrow margins, each national inflation rate – would be in its charge.  Each country could use taxes and public spending to offset temporary falls in demand, but it would have to borrow rather than print money to finance its budget deficit.  With no recourse to the inflation tax, governments and their creditors would be forced to judge their borrowing and lending plans more carefully than they do today.  This means a big loss of economic sovereignty, but the trends that make the phoenix so appealing are taking that sovereignty away in any case.  Even in a world of more-or-less floating exchange rates, individual governments have seen their policy independence checked by an unfriendly outside world.

. . .

As the next century approaches, the natural forces that are pushing the world towards economic integration will offer governments a broad choice.  They can go with the flow, or they can build barricades.  Preparing the way for the phoenix will mean fewer pretended agreements on policy and more real ones.  It will mean allowing and then actively promoting the private-sector use of an international money alongside existing national monies.  That would let people vote with their wallets for the eventual move to full currency union.  The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today.  In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power.

. . .

The alternative – to preserve policymaking autonomy – would involve a new proliferation of truly draconian controls on trade and capital flows.  This course offers governments a splendid time.  They could manage exchange-rate movements, deploy monetary and fiscal policy without inhibition, and tackle the resulting bursts of inflation with prices and incomes polices.  It is a growth-crippling prospect.  Pencil in the phoenix for around 2018, and welcome it when it comes.

USA + FRN/PD – – > IMF + SDR – – > NDB + UMU? The “Universal Monetary Unit” . . . Coming To a Planet Near You (January 2, 2017)

Posted in AIIB, Banks and Banking System, Book Reference, BRICS, CFETS, CIPS, Dollar - World's Reserve Currency, Gold, Gold Standard, Hyperdive Economic Collapse, International Finance, International Monetary Fund, Money, Petrodollar, SDR - Special Drawing Rights, Special Drawing Rights (SDR), Trade, Universal Monetary Unit, World's Reserve Currency on January 2, 2017 by e-commentary.org

. . .

K          “Remember way back on October 1 when the International Monetary Fund (IMF) implemented the modified composition of the Special Drawing Rights (SDR) that includes for the first time the Chinese Renminbi (RMB) along with the United States Dollar (FRN/PD), the Euro (€), the British Pound Sterling (£) and the Japanese Yen (¥) in the Great Valuation Basket?”

J          “Couldn’t forget.  To celebrate the transition, we got the entire day off.”

K          “The Federal Reserve Note/PetroDollar maintained its percentage share of the portfolio with the Euro, Pound and Yen yielding room for the new kid on the block.  The way I see it, the evolution of the SDR may be too slow for Brazil, Russia, India, China and South Africa (the BRICS countries) and other countries (the BRICS+ countries) and still leaves the FRN/PD as the world’s reserve currency.”

J          “They say more countries are getting cranky that the FRN/PD remains the mandatory currency peg for trade on the global market.  Last Thursday, the China Foreign Exchange Trade System (CFETS), the foreign exchange trading platform operator, announced that it is adjusting the way it calculates the CFETS Yuan Index which is a critical measure of the Yuan against a basket of currencies, starting yesterday.”

K          “And you got the entire day off.” 

J          “And today, for good measure.  They say that the USA will not allow the IMF to revisit the composition of the SDRs again for years.  The problem for the BRICS+ countries is that the United States has veto power over the composition of the SDR and will block any attempt to accelerate the transition to incorporate other currencies.”

K          “Think about this possible scenario.  The BRICS+ countries may make an end run and expand the mandate and activities of what is now known as the New Development Bank (NDB) and create a Universal Monetary Unit (UMU) constituted of the Chinese RMB, Russian Ruble, Indian Rupee, South African Rand, Brazilian Real, good old gold (Alpha uniform) and a smorgasbord of other currencies.”     

J          “While they are at it, the South African Kruggerand could supplant the Rand and serve as the gold component or part of the gold component.”

K          “Who knows, when they do that, you may get the week off of work.”

J          “Count me in and count me off.  And to provide for a smoother transition, include in the new generation UMU the current currencies in the SDR in diluted amounts.  A measured and gradual approach is prudent.  Interdependent economies and unintended consequences, you know.”

K          “While they are at it, they could go full in.  The Cross-Border Inter-Bank Payment System sometimes known as the China Interbank Payment System (CIPS) could develop into a comparable transnational multilateral payment system as a complement to and to compete with the Society for Worldwide Interbank Financial Telecommunication (SWIFT).”

J          “That’s exactly what I was going to suggest.  An economy needs a ‘thing’ to serve as money/currency/chits/script/wampum and a means to reconcile payments.  The BRICS+ countries have no reason to wait another half decade when they can do it themselves.”

. . .

J          “Or the BRICS+ countries may force the issue at the IMF meeting in Rome, District of Columbia on April 21 – 23.”

K          “And you will get at least two days off of work.”

J          “Can’t forget.  Stay tuned.”

. . .

K          “Someone surely has thought and wondered about these possible developments.”

J          “You think?  I wonder if anyone cares.  What’s on tv?”

. . .

[See the e-commentary at “The Mandibles, FRNs, SDRs, IMF, G20, WTD! (September 5, 2016)” and “Dollar – World’s Reserve Currency”.]

Bumper stickers of the week:

The “Universal Monetary Unit” . . . Coming To a Planet Near You

Paper [Money] Is Patriotic

Fight the War on Cash