Archive for the Volker Category

“Bail Ins” Are Globalized; “Bail Outs” Are Bailed Back In; No Bail For Bankers (December 29, 2014)

Posted in Bail In, Bailout/Bribe, Bankruptcy, Banks and Banking System, Congress, Dodd-Frank, National Defense Authorization Act / FY 2012, Volker on December 29, 2014 by

. . .

J          “Dodd-Frank (July, 2010) said ‘no’ to more ‘bail outs’ by the public for the ‘too-big-to-fail-and-too-big-to-jail’ Banks and then the Federal Reserve (December, 2012) said ‘yes’ to ‘bail ins’ by the depositors and then the G20 Nations (November, 2014) said ‘heck yes’ to ‘bail ins’ by the depositors and then Citicorp-Congress (December, 2014) said ‘hell yes’ to more ‘bail outs’ by the public for derivatives and other junk.  So many Christmas gifts, so little time.”

K          “Back to a ‘bail out’ of the Wall Street Bankers including all the junk bonds . . . that fuel the American shale oil boom.  That did not take long to cover them for their exposure in the Great Gas War.  The people, the pensioners and the depositors will suffer existential losses when the derivatives collapse.”  

J          “Citicorp-Congress also delayed implementation of the ‘Volker Rule’ that would provide for increased capital ratios and mark-to-market valuations.  Citicorp-Congress gave the ‘one-two punch’ to the public.”

K          “K.O.’d for Christmas.  All I got for Christmas is my two front teeth.  Knocked out.  By Congress.”

. . .

J          “The plaque proclaims that your deposit is insured up to $250,000 by the FDIC.  Everyone is fooled, yet no one is protected by the plaque in a serious financial plague.  When the Big Banks and their partners in crime on Wall Street fail, the FDIC will not be able to provide insurance for the depositors who are now on the hook.  Line and sinker.  Now on the line, the bottom line is that the depositors must ‘bail in’ the Big Banks and the public must ’bail out’ Wall Street.”

. . .    

[See the e-commentary at Bailouts: Out; Bail Ins: In; Slowly Boilin’ The Frog (April 15, 2013) and Globalizing The Bail In (July 8, 2013).]

Bumper stickers of the week:

We should be doing something to make the bankers worry about getting bailed out.

18 T Debt; 18 K Dow

Plus 4 T “Federal Reserve Debt” = 22 T “Federal Debt”

Plus 9 G (Gazillion) in Derivatives = some trouble

The Capitol Building on Jenkins Hill is now renamed the “Citicorp Dome”

And then take a look at the National Defense Authorization Acts of 2012 and 2014. 

Financial History:

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

2008:           Federal Reserve bails out Banks/Wall Street

201_:            International Monetary Fund bails out Federal Reserve; Taxpayers bail out Banks/Wall Street

201_:            God bails out the International Monetary Fund; No one bails out Taxpayers

201_:            God files Chapter 11 Reorganization; Taxpayers file Chapter 7 Liquidation

So, help us God, so help us God.

Rational Fear: Still “Unusually Uncertain” (November 8, 2010)

Posted in "L" Shaped Economy, Bailout/Bribe, Banks and Banking System, Bernanke, Depression, Federal Reserve, Greenspan, Kleptocracy, Technology, Unemployment, Volker with tags on November 8, 2010 by

. . .

K         “Think about it.  Some maintain the blind conviction that the business cycle is ordained by nature like the tides to rise after it falls.”

J          “Faith in nature.  This season is bad so that the next season will be good because that is the way it is.  Good luck.”

K         “Some desire to return to unrestrained personal consumption and unbridled economic growth.  Even if it is attainable at this time it is not sustainable over time.”

J          “Faith in unchecked consumption.  With oil peaking and a world population that has not peaked, the prospects are not promising.  America had its opportunity to consume.  Other countries, particularly China and India, now want and have earned their opportunity to consume.  If the oil holds out.  And if the coal does not kill us.”

K         “Some believe that new technology will be pulled out of the hat and pull us out of this mess.”

J          “Faith in technological salvation.  The technology sector likely will continue to grow but not enough to propel the entire economy.  The tech world is producing some sexy developments and neat gadgets.”

K         “I’ve always supported free trade when it is truly free.  Decades ago, I could see that globalization would shift massive numbers of American jobs overseas.  They said the solution is to train and retool the America workforce.  The workforce is not retrained and retooled and may not be retrainable and retoolable.  Not many commentators in academic economics or in the financial press have a clue.”

J          “It is one thing to listen to Greenspan and know that everything he says is wrong, yet who is getting it right.  Knowing which way not to go in a maze is not the same as knowing which way to go.  Volker has a clue, yet he is on the sidelines.”

K         “Bernanke* has a clue.  Now that monetary policy has effectively failed, he is enacting what is effectively fiscal policy.  Fiscal policy is the province of the legislature, the Congress.  But Congress is broken.  The Humphrey-Hawkins Full Employment Act, an act of Congress, requires the Fed to promote full employment.  Perhaps he is actually trying to stimulate employment.”

J          “But there are no jobs, now or in the future.  Quantitative Easing II is nothing more and nothing less than TARP II implemented by the Fed rather than Congress.  The Fed’s purchase of bonds is nothing more and nothing less than a slick way to provide another bribe and bailout to Wall Street.”

K          “That is hard to dispute unless there are a few random hires here and there.  And he continues a tradition at the Fed of lying or at least deceiving the public.  He can do something.  He and the Fed regularly issue ‘Remarks’ and ‘Speeches’ on all manner of topics.  He should direct the Fed to issue a finding that a single bank with deposits and assets of more than 100 billion is a clear and present danger to the American economy and to the security and well-being of the Republic.  If a bank or other financial institution does not enter into an Enforcement Action with the Fed, close the resources of the Federal Reserve to the bank or financial institution.  In effect, require banks to downsize to manageable sizes.  They must be small enough to fail and to play well with others.”

J          “Won’t happen.  Our democracy is now a kleptocracy.”

K         “That won’t help employment, however.  But he could pull it off.  He can be bold.  He would have to play all his capital.  But for us citizens, however, the only things we have to fear are so many very real fears.”

. . .

Bumper stickers of the week:

The only things we have to fear are so many very real fears.

Don’t end the Fed, mend the Fed.

“And as things fell apart/Nobody paid much attention.”  “(Nothing But) Flowers” – Talking Heads

“This country’s hard on people, you can’t stop what’s coming.”  No Country for Old Men movie (2007)

An Economic Tsunami?: The Road Ahead (Dec. 14, 2009)

Posted in Bernanke, Depression, Dollar - World's Reserve Currency, Economics, Volker on December 14, 2009 by

. . .

“Log this road map in the back of your mind.  The M3 money supply is no longer even reported. The world currently has reservations about the world’s reserve currency – our handy-dandy trusty dollar.  Petrodollar implodes; gold explodes.  Residential housing market, commercial real estate, and criminally over-leveraged corporations (LBOs) start really diving precipitously.  Fire employees; productivity/profits increase.  U6 unemployment up to 20% or more.  Fired employees decrease purchases; profits decrease.  Murdoch (Dow) down to 6K or less.  Gazillions of no good dollars spewed by the Fed; no goods are produced nor services provided by plundered economy.  Imagine unimaginable inflation exploding.  A great, catastrophic and unanticipated economic surprise surprises us.  And you get the Great Depression 2.0.  We are on the road.”

“To ruin?  To perdition?  To serfdom?  We’re Americans, we always do something.  We demand success and we expect success.  We can just decree that it not happen.”

“The problem is that nothing can be done effectively or efficiently to stimulate the economy when the economy at core is so fundamentally broken.  O’Bama inherited this imploding and exploding economy.  However, other than possibly some insights from Paul Volker and Warren Buffett, O’Bama has failed miserably in selecting his economic advisers.  He is now in control of an economy that is out of control and out of his control.  Many members of the public are angry, anxious, frightened, and desperate.”

“And there is nothing you can do about it.  Nothing.”

. . .

[The Murdoch (Dow) could go to 6,000 or 4,000 or 5,000 but not likely 36,000.  See the “e-ssay” dated Oct. 12, 2009 entitled “Dow: 10,000 To 5,000: The ‘FUBAR’ bubble” and the “e-ssay” dated May 11, 2005 entitled “The Coming Depression Is Not Depressing.”]

(O’Bama in Oslo.  “Si vis pacem, parati para bellum.”  Strong speech; right message.)

Bumper stickers of the week:

Next stop – Pottersville

Great Economic Tsunami 2010; Great Depression 2.0

The Republicans are part of the problem; the Democrats are not part of the solution.

Pass the Terrorist Tax

Bernanke 2.0 (August 31, 2009)

Posted in Bernanke, Economics, Federal Reserve, Greenspan, Volker on August 31, 2009 by

Bush’s best appointment is one of O’Bama’s better reappointments.  Bernanke is not the best choice yet is the right choice at this time.  Yet there should be some reservation about and reflection on the entire Federal Reserve scheme.

The Founding Fathers as they are known could not agree on the creation of a central bank.  The issue was at the heart of many early presidential elections.  Every sovereign nation needs a central bank.  The bankers created a central bank in 1913 and filled the vacuum.  America must examine the role of the Federal Reserve and incorporate it into our constitutional system characterized by a separation of powers and accountability to the populace.

The central bank has a history of competent and independent chairmen such as Paul Volker who pursued some harsh policies with painful but necessary consequences without any significant political intervention.

Alan Greenspan, a conservative Republican, acted as the “central planner” of the economy for far too may years with devastating consequences.  At least he has enough integrity and self-awareness to admit some mistakes.  Some thoughtful political intervention was appropriate and necessary during his tenure.

Faith in the Fed. has dissuaded Congress from taking more direct control and dictating policy.  Legislation such as the Humphrey-Hawkins Full Employment Act does set some guidelines and parameters.  However, the Fed cannot and should not attempt to establish full employment.

At this time, Ben Bernanke is determining both “monetary policy” and “fiscal policy.”  Fiscal policy has been and should be the province of Congress.  Monetary policy should focus on price stability.

Who should address these matters?  The politicians.  That should give one pause and yet motivate us to act.

Bumper sticker of the week:

Price stability