The Unz Review: An Alternative Media Selection
A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
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The LIBOR Rate-Fixing Scandal
More than a dozen of the world's top banks are currently being investigated for manipulating the London Interbank Offered Rate or LIBOR which is used to set interest rates on more than $360 trillion of securities, including mortgages, student loans, credit cards, and swaps. So far, Barclays is the only bank to be fined ($453... Read More
Transferring More Wealth to the 1 Percent
The stock market has been on an tear for over a month. While China readies itself for a hard landing, Japan struggles with another bout of deflation, and Europe slips deeper into a self-induced Depression, Wall Street has been flying-high buoyed by rising stock prices, steadily improving economic data and an ocean of liquidity provided... Read More
The Coming Credit Bubble
Last week, the experts were sure that, "The recovery is finally here". This week, not so much. The optimists pointed to manufacturing, retail sales and employment as signs of a strengthening economy, but what they were really jazzed about were the moves in the bond market where yields on 10-year Treasuries inched higher for 9... Read More
Financial Crisis, Round Two
Wall Street is at it again. In the last few months, the nation's biggest banks and investment firms have resumed the same perilous activities that crashed the financial system and plunged the economy into the deepest slump since the Great Depression. According to a number of recent reports, there's been a steady uptick in the... Read More
Why It May Not Mean What You Think It Does
Improving economic data has sent US Treasuries plunging as investors ditch low-yielding assets and load up on equities. This is the way the financial media is spinning the giant moves that have taken place in the bond market in the last week, but the media's got it wrong. While there have been improvements in employment,... Read More
Waiting for the Next Shoe to Drop
Last Tuesday, the Dow Jones finished above 13,000 for the first time since 2008. The DJIA has nearly doubled since March 9, 2009 when it touched bottom at 6,547. The index is now (roughly) 1,200 points from its all time high of 14,164. (The S&P 500 is presently 102 percent above its March 2009 low)... Read More
President Narcissus and the Faux Debt Crisis
Friday Morning: Just hours before Fed chairman Ben Bernanke delivered his much-anticipated speech on the state of the economy, 2nd Quarter GDP was revised down to 1.0 percent, lower than analysts expectations. The world's biggest economy is now growing at less than 1 percent for the first 6 months of 2011, not nearly enough to... Read More
Seeing the World Through Portfolios
Tuesday's 322 point surge on the Dow Jones must rank among the dumbest rallies of all time. The proximate trigger for the triple-digit moonshot was the feint hope that Fed chairman Ben Bernanke might pull another rabbit out of his hat at his Jackson Hole confab and announce another round of his bond purchasing program... Read More
Policymakers Have Made Another Depression Unavoidable
Equities markets have been battered all week by bad economic data sending investors piling into "risk free" Treasuries. The Dow Jones slipped 276 points on Wednesday followed by a 41 point loss on Thursday. The benchmark 10-year Treasury has ducked below 3 percent repeatedly signally a slowdown that could lead to another recession. On Wednesday,... Read More
The FCIC Report
Maybe "whitewash" is too bland of a term to apply to the Financial Crisis Inquiry Commission's (FCIC) report, but it certainly doesn't break any new ground. Nor does it achieve its real purpose, which is to figure out what triggered the financial meltdown and (hopefully) restore confidence in the system. It fails on both counts,... Read More
The Market is Rigged
Here's something to munch on from Dennis K. Berman in last week's Wall Street Journal: Berman traces the problem to its source, the "inscrutable interplay between myriad exchanges and high-frequency traders, whose volume now accounts for an estimated two-thirds of all trading"..."a market that many perceive as tainted and prone to gaming by a cadre... Read More
Volatility is Back With a Vengeance
Volatility is back and stocks have started zigzagging wildly again. This time the catalyst is Greece, but tomorrow it could be something else. The problem is there's too much leverage in the system, and that's generating uncertainty about the true condition of the economy. For a long time, leverage wasn't an issue, because there was... Read More
Computer-Driven Bloodletting on Wall Street
On Thursday, shares tumbled across all major indexes on fears that Greece's debt woes would spread to other vulnerable countries in the E.U.. What began as a down-day on Wall Street, quickly turned into a full-blown rout as blue chips, financials, techs and transports were all caught in a program-trading downdraft. The bloodletting was mind-numbingly... Read More
Was There a Plan to Blow Up the Economy?
Many people now believe that the financial crisis was not an accident. They think that the Bush administration and the Fed knew what Wall Street was up to and provided their support. This isn't as far fetched as it sounds. As we will show, it's clear that Bush, Greenspan and many other high-ranking officials understood... Read More
Where are the Regulators Who Will Regulate?
The Securities and Exchange Commission (SEC) knows that High-Frequency Trading (HFT) manipulates the market and bilks investors out of tens of billions of dollars every year. But SEC chairman Mary Schapiro refuses to step in and take action. Instead, she's concocted an elaborate "information gathering" scheme, that does nothing to address the main problem. Schapiro's... Read More
Shifting Loses From the Banks to Taxpayers
British economist John Maynard Keynes, believed in capitalism, but he was also sharply critical of its structural flaws. He summed it up succinctly like this: What Keynes was alluding to is the fact that mature capitalist economies tend towards stagnation. What happens, is that the rate of return on investment begins to dwindle as overcapacity... Read More
The Nightmare Scenario
The default in Dubai is not the beginning of Financial Meltdown 2.  Don't look for dominoes here. Yes, it does raise serious questions about the vast debt-overhang in emerging economies--particularly East Europe. But, this is not a "sovereign default" in the strict sense, nor is there any great risk of contagion. Oil-rich Abu Dhabi is... Read More
Is American Casino the Best Picture of the Year?
Andrew and Leslie Cockburn have produced the best movie of the year. American Casino tells the story of the financial crisis, which started with the meltdown in subprime lending and ended up triggering the deepest slump since the Great Depression. The Cockburns skillfully uncover the truth behind the headlines, shining a light on the negligent... Read More
We've Been Here Before
October 29, marks the 80th anniversary of the Stock Market Crash of 1929, the event which most historians point to as the beginning of the Great Depression. On Black Tuesday, traders dumped 16 million shares in one day, sending the markets into freefall.  In the months that followed, stocks rallied -- sometimes for long periods... Read More
Down the Rathole
The relentless financialization of the economy has resulted in a hybrid-system of credit expansion which depends on pools of loans sliced-and-diced into tranches and sold into the secondary market to yield-seeking investors. The process is called securitization and it lies at the heart of the current financial crisis. Securitization markets have grown exponentially over the... Read More
The Real Lesson of Lehman's Fall
Stephen Foley is on to something. Lehman Bros. didn't die of natural causes; it was drawn-and-quartered by high-ranking officials at the US Treasury and the Federal Reserve. Most of the rubbish presently appearing in the media, ignores this glaring fact. Lehman was a planned demolition (most likely) concocted by ex-Goldman Sachs CEO Henry Paulson, who... Read More
Chairman Milquetoast's Solutions
A recent poll shows that most economists now believe that the recession, which began in December 2007, will end in the third quarter of 2009. There's been an uptick in manufacturing and consumer confidence, and the decline in housing prices appears to be flattening out. Unfortunately, the return to positive GDP will likely be short-lived.... Read More
Drifitng Downward
There should be a modest uptick in GDP in either in the 4th quarter 2009 or the 1st quarter 2010. This will mark the end of the current 20 month-long recession, but not the end of the crisis. The blip in growth doesn't mean that the troubles are over or that the economy is on... Read More
Regulatory Capture
The trouble started 24 months ago, but the origins of the financial crisis are still disputed. The problems did not begin with subprime loans, lax lending standards or shoddy ratings agencies. The meltdown can be traced back to the activities of the big banks and their enablers at the Federal Reserve. The Fed's artificially low... Read More
The Perils of Securitization
Is it possible to make hundreds of billions of dollars in profits on securities that are backed by nothing more than cyber-entries into a loan book? It's not only possible; it's been done. And now the scoundrels who cashed in on the swindle have lined up outside the Federal Reserve building to trade their garbage... Read More
Bernanke's Pickle
Last week's ructions in the bond market leave little doubt that the financial crisis has entered a new and more lethal phase. Of particular concern is the spike in long-term Treasuries which are used to set interest rates on mortgages and other loans. On Thursday, the average rate for a 30-year fixed loan jumped from... Read More
Credit Where Credit is Due
The financial channels are abuzz with talk of a recovery, but we're not out of the woods yet. In fact, the deceleration in the rate of economic decline is not a sign of recovery at all, but proof that the economy is resetting at a lower level of activity. That means the recession will drag... Read More
Geithner's Charade
The good news is that Obama's economics team understands the fundamental problem with the banks and knows what needs to be done to fix it. The bad news is that Bernanke, Summers and Geithner all have close ties to the big banks and refuse to do what's necessary. Instead, they keep propping up failing institutions... Read More
How Securitization Lit the Fuse
This isn't a normal recession. In a normal recession aggregate demand declines, economic activity slows, and GDP shrinks. While those things are taking place now, the reasons are quite different. The present slump wasn't brought on by a downturn in the business cycle or a mismatch in supply and demand. It was caused by a... Read More
Rubin Clones and Other Fakers
Things are getting crazier by the day. On Tuesday, Treasury Secretary Henry Paulson announced that the Fed would commit another $800 billion to fight the financial crisis which has spread to the broader economy and is causing sharp declines in consumer spending. The Fed plans to buy $600 billion of mortgage-backed securities (MBS) from Fannie... Read More
Enter Geithner and Summers
Obama hasn't even been sworn in yet, and already the Wall Street cheerleaders are celebrating his first great triumph. According the pundits, the stock market staged a surprise 494 point rally on Friday because--get this--it was announced that Timothy Geithner would be appointed Obama's Treasury Secretary. What nonsense. The sudden turn-around in stocks had a... Read More
The Winter of Global Economic Discontent
The global economy is being sucked into a black hole and most Americans have no idea why. The whole problem can be narrowed down to two words; "structured finance". Structured finance is a term that designates a sector of finance where risk is transferred via complex legal and corporate entities. It's not as confusing as... Read More
The Failed G-20 Summit
As expected, the G-20 Economic Summit in Washington turned out to be a total bust. None of the problems which have pushed the global economy to the brink of disaster were resolved and none of the main players who gamed the system with their toxic securities was held accountable. Instead, the visiting dignitaries settled on... Read More
The Self-Inflicted Crisis
Henry Paulson's time at Treasury has been one pratfall after another. Even so, on Tuesday he managed to outdo himself. Paulson held a "surprise" press conference where he announced that the $700 billion Troubled Asset Relief Program (TARP) wouldn't be used to buy troubled assets after all.  Instead, the money will used to bail out insurance giant... Read More
Turn Them Into Public Utilities
The credit markets have begun to thaw. Interbank lending is beginning to ease and the financial system has begun to function a bit more like it should. Overnight Libor (London Interbank Offered Rate) dropped 27 basis points to 1.67 percent, the lowest level since September 2004. Three month Libor shed 40 basis points this week... Read More
Run on the System
Stock markets across the world are in a state of hysteria. The tidal wave of sell-offs, which began when Henry Paulson announced the Bush administration's $700 billion bailout plan for the sinking banking system, has swelled into a global tsunami racing round the globe. Shares fell sharply across Europe and Asia for the fifth straight... Read More
Bernanke,  Europe's Central Banks  Throw in Everything They've Got
Stocks fell sharply across Europe and Asia last night following another down day on Wall Street where the Dow Jones lost 508 points and the S&P 500 slipped below the 1,000 mark for the first time since 2003. Japan's benchmark index, the Nikkei, lost nearly 10 percent while shares in London at one point slumped... Read More
French Premier François Fillon: "We're on the edge of the abyss” Years from today, when the current financial crisis is over, historians are likely to agree that it would have been far better if the Bush administration had declared a state of emergency earlier in the process so that the necessary steps could have taken... Read More
Not One Dime!
For nearly a year, we have been asking ourselves why the investors and foreign banks that bought up hundreds of billions of dollars of worthless mortgage-backed securities (MBS) from US investment banks have not taken legal action against these same banks or initiated a boycott of US financial products to prevent more people from getting... Read More
House and Global Investors Vote "No" on Paulson Bailout
Today the US House rejected Treasury Secretary Paulson's $700 billion Emergency Economic Stabilization Act of 2008. Paulson said he has the votes, but Paulson was wrong. The House bucked the Paulson's claim that buying up the illiquid mortgage-backed assets from the nation's banks would be enough to save the financial system from an impending meltdown.... Read More
500 Trades Away from Armageddon
The financial system is blowing up. Don't listen to the experts; just look at the numbers. Last week, according to Reuters, "U.S. banks borrowed a record amount from the Federal Reserve nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial... Read More
Fallout Over Mainstream
These are dark times. While you were sleeping the cockroaches were busy about their work, rummaging through the US Constitution, and putting the finishing touches on a scheme to assert absolute power over the nation's financial markets and the country's economic future. Industry representative Henry Paulson has submitted legislation to Congress that will finally end... Read More
Full-Spectrum Breakdown
On Friday morning, Senator Christopher Dodd, the head of the Senate Banking Committee, was interviewed on ABC's “Good Morning America.” Dodd revealed that just hours earlier at an emergency meeting convened by Secretary of the Treasury Henry Paulson and Federal Reserve chairman Ben Bernanke, lawmakers were told that "We’re literally maybe days away from a... Read More
Harry Reid: "No One Knows What to Do"
Following another erratic day of trading on the stock market, Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke convened an emergency meeting of the Senate Banking Committee and other congressional leaders to request fast-track authority for a sweeping plan to buy back illiquid assets and other complex securities from distressed and under-capitalized banks.... Read More
Lehman Gone; Merrill Lynch Swallowed Up; AIG Going… Who’s Next for Madam Defarge?
Bank of America is buying Merrill Lynch for $45 billion, AIG needs an emergency $40 billion bail-out from Uncle Sam to stay afloat, and Lehman Bros is kaput. Whew! The financial world has been turned upside-down overnight. It'll be a rough day of trading ahead." The news of Wall Street's Sunday night massacre sent foreign... Read More
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An Interview with Economist Michael Hudson
Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JP Morgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr.... Read More
An Interview with Michael Hudson How the Chicago Boys Wrecked the Economy
Michael Hudson is a former Wall Street economist specializing in the balance of payments and real estate at the Chase Manhattan Bank (now JP Morgan Chase & Co.), Arthur Anderson, and later at the Hudson Institute (no relation). In 1990 he helped established the world’s first sovereign debt fund for Scudder Stevens & Clark. Dr.... Read More
Will the Fall of an Aussie Bank Rock Wall Street? Apocalypse Down Under
Monday's trading on the New York Stock Exchange (NYSE) was a real humdinger. It started off with the White House announcing that this year's fiscal deficit would soar to a new record of nearly $500 billion. That was followed by news of rising oil prices, weak quarterly earnings and a slowdown in consumer spending. By... Read More
The Road to Perdition
Last Wednesday, at an improvised press conference, George Bush gave what may have been the most comical performance of his eight year presidency. Looking like the skipper on the flight-deck of the Hindenburg, Bush tried his best to reassure the public that "all's well" with the economy and that everyone's deposits were perfectly safe in... Read More
Eulogy for the Ownership Society
The Fed's emergency rescue plan for the financial markets is hopelessly flawed. It's a scattershot approach that doesn't address the real source of the problem; an unregulated, unsustainable structured finance system that emerged in full-force after 2000 and spawned a shadow banking system that creates trillions of dollars of credit without sufficient capital reserves. This... Read More