Banks nab $400B in USTs for "Window Dressing"
“Increasing the Fed’s transparency, openness and accountability has been one of my top priorities as chairman.” -Fed Chairman Ben Bernanke on the 100th anniversary of the Federal Reserve Ben Bernanke is a big believer in transparency. Transparency, transparency, transparency. Hardly a day goes by that Bernanke doesn’t reiterate his commitment to transparency. He thinks the...
Read MoreAs I have pointed outbefore in this space, much of the most shocking evidence of America’s weakening position in the world these days gets swept under the rug in the mainstream press. We had another instance last week when a Japanese bank was found to have egregiously flouted the American-led financial embargo on Iran. The...
Read MoreHard Landing in China? It's Just a Matter of Time
An uptick in manufacturing activity in March has eased fears of a hard landing, but China is not out of the woods yet, not by a long-shot. The industrial powerhouse has succumbed to the same problems as its trading partners in the West who were thrust into crisis by soaring real estate prices, reckless credit...
Read MoreAlthough the aftershocks created by the botched Cyprus bank bailout are by no means over, the news this morning is on balance reassuring. At least we should be thankful for small mercies: the European banking system is still standing. While the crisis has precipitated bank runs in Cyprus, depositors elsewhere seem to have remained remarkably...
Read MoreHow Wall Street "Privatized" Money Creation
Regulators are worried about the explosive growth of shadow banking, and they should be. Shadow banks were at the heart of the last financial crisis and they'll be at the heart of the next financial crisis as well. There's no doubt about it. It's simply impossible to maintain a system where unregulated, non-bank financial institutions...
Read MoreCordray Fails to Protect
Richard Cordray might be the most powerful man in America today, and you've probably never even heard of him. As head of the new US Consumer Financial Protection Bureau (CFPB), Cordray can effectively set the clock back to 2005 and inflate another gigantic, economy-busting housing bubble without breaking a sweat. All he has to do...
Read MoreHow the Financial Lobbyists Carried the Day
Last Thursday, the Wall Street Journal ran an article titled "Burdened by Old Mortgages, Banks Are Slow to Lend Now", in which, author Nick Timiraos said that the reason that housing has been so slow to recover is because Fannie and Freddie "have been forcing banks to take back an increasing number of loans that...
Read MoreSkimming Profits Off Bad Loans
Didn't Ben Bernanke promise that another round of bond purchases would lower unemployment and boost economic growth? We think he did, which is why we're wondering why all the benefits from QE3 appear to be going to the banks. According to Bloomberg News: Well, how do you like that? That means that Mr. Bernanke's trickle...
Read MoreCounterPunch Diary
Since what is now going is being described as “the greatest financial scandal in the history of Britain” -- the Barclays imbroglio – I have a question to ask. Where are those tents outside St Pauls? Or ones in solidarity this side of the Atlantic? Where are the vibrant reminders that – as has happened...
Read MoreIf you are a contrarian like me, you probably hold a few bank stocks — so as the Libor scandal has gathered steam you may be wondering about your exposure. Daily newspaper reports have not been much help because they mention only a few of the more obvious names. As a reader service, I have...
Read MoreI Thought People Were Supposed to Rob Banks, Not Vice Versa
Over a year ago Vi was wondering where to put her family’s modest savings. The peso was erratic. Any contact with the US involved too many forms and regulations. A friend suggested Danskebank, which is Danish. We thought about it. The Danes were not too vivacious, entirely inadequate as party animals, but solid and respectable....
Read MoreGaming the Housing Market
It's the same everywhere. The banks are keeping houses off the market to trick people into believing that prices have hit bottom. But prices haven't hit bottom, in fact, they still have a long way to go. So, what's going on here; what do the banks hope to gain by withholding supply? Here's a clip...
Read MoreWhat a Mess!
A poor jobs report, higher than expected inflation in China, and another flare-up in the Eurozone sent stocks tumbling on Monday. US Treasuries rallied on news from the Labor Department that employers added just 120,000 non-farm payrolls in March, far below analysts most pessimistic predictions. The Dow Jones lost 130 points on the day, while...
Read MoreThe 50-State Foreclosure Settlement
Under the terms of the 50-state mortgage foreclosure settlement, US taxpayers could end up paying billions in penalties that were supposed to be paid by the banks. That's the gist of a front-page story which appeared in the Financial Times on Thursday, February 17. The widely-cited article by Shahien Nasiripour notes that the 5 banks...
Read MoreWhat will their future be – and what is the government’s proper financial role?
The inherently symbiotic relationship between banks and governments recently has been reversed. In medieval times, wealthy bankers lent to kings and princes as their major customers. But now it is the banks that are needy, relying on governments for funding – capped by the post-2008 bailouts to save them from going bankrupt from their bad...
Read MoreThe Derivatives Flap
Why is Bank of America moving derivatives from Merrill Lynch to an insured subsidiary? Is it because the derivatives could blow up at any time leaving Merrill with gigantic, unsustainable losses? If that's the case, then it would make perfect sense to shift them into a depository institution that's covered by the FDIC. That way,...
Read MoreThe Next Shoe to Drop
The deepening debt crisis in the eurozone and increasingly poor economic data in the US, have overshadowed rapidly deteriorating conditions in the world's second biggest economy. The China miracle is quickly becoming a nightmare as credit default swaps (CDS) spike parabolically to 3-year highs and stocks plunge "dragging the Hang Seng Index to its biggest...
Read MoreLe Tarp?
On Thursday--exactly 3 years after Lehman Brothers defaulted igniting the greatest financial crisis in 70 years--the world's most powerful central banks launched a massive intervention to staunch a liquidity squeeze in the eurozone that threatened to wreak havoc on the EU banking system. The European Central Bank --acting in cooperation with the Federal Reserve, the...
Read MoreDebt Ceiling Doomsday
Okay, so we all knew that the cultists and screwballs who run the GOP were going to take this to the 11th hour, right? But who knew that once they got us out on the ledge, they wouldn't know how to cut a deal? Instead, Tea Party confederates seem determined to make sure the US...
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After a tense week with world markets teetering on the edge of collapse Angela Merkle finally met with her French counterpart Nicholas Sarkozy and they ended the seventh month chill in their once cozy relationship. According to The Independent, they faced a serious impasse regarding bank haircuts in the "déjà vu all over again" Greek...
Read MoreHanky-Panky at the Fed
It's the biggest flim-flam in the nation's history. But, thanks to the Congressional Research Service, the scam has been exposed and the public can now get a good look at the type of swindle that passes as monetary policy. Here's the scoop: When Fed chairman Ben Bernanke initiated the first round of Quantitative Easing (QE),...
Read MoreMore Trouble in Squanderville
Bob, Frank and Freddie all bought identical houses in the same neighborhood in 2004. Each man paid $300,000 for his home. Bob paid the whole $300,000 in cash. Frank put down 10% (or $30,000) and took out a $270,000 mortgage. Freddie paid $0-down on a 100% mortgage. In 2005, home prices rose by 10% which...
Read MoreHow to Make $4 Trillion Vanish in a Flash
On August 9, 2007, an incident took place at a bank in France that touched-off a financial crisis that that would eventually wipe out more than $30 trillion in capital and thrust the world into the deepest slump since the Great Depression. The event was recounted in a speech by Pimco's managing director Paul McCulley,...
Read MoreMr. Insubordination Makes His Exit
Stuart Levey, the United States official in charge of unilateral financial sanctions against Iran and North Korea, is resigning as Assistant Secretary of State for the Office of Terrorism and Financial Intelligence. Levey was apparently fondly regarded in the Obama White House as a key player in the "smart power" strategy, and highly regarded by...
Read MoreAn Emerging Bubble Alert
Counterfeiting is an effective way to stimulate the economy, but the costs can be quite high. For example, if trillions of dollars in fake cash was injected into the financial system (undetected), we'd probably see the same type of thing that we see when a credit bubble is inflating; asset prices would rise, unemployment would...
Read MoreAll It Has to Do is Vote "No"
Wednesday's press conference with ECB President Jean-Claude Trichet turned out to be a real jaw-dropper. While Master illusionist Trichet didn't commit himself to massive bond purchases (Quantitative Easing) as many had hoped, he did impress the gathering with his magical skills. The Financial Times recounts Trichet's what happened like this: Nice trick, eh? So while...
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