I have maintained since the so-called Greek Debt “crisis” began back in 2010, I believe it was, that the imposition of austerity on Greece could not possibly work and that the only solution was to write down the debt to a level that Greece could service and introduce reforms that loosen the hold the oligarchs have on the Greek economy. The current Greek government has taken the same position, and now the IMF has joined us. Continue reading
When investing becomes gambling, bad endings follow. The next credit crunch could make 2008-09 look mild by comparison. Bank of International Settlements(BIS) data show around $700 trillion in global derivatives. Continue reading
Slaying the euro minotaur is not easy. Greeks have been suffering for years now, having learned the hard way that prosperity with shiny euros in their hands was not miraculously just waiting around the corner. What was waiting was a hoard of German bankers, eager to buy up Greek islands for winter vacations, sleazy banks eager to syphon Greek earnings into offshore accounts, and more schemes by high financiers. Continue reading
Remember when Goldman Sachs—dubbed by Matt Taibbi the Vampire Squid—sold derivatives to Greece so the government could conceal its debt, then bet against that debt, driving it up? It seems that the ubiquitous investment bank has also put the squeeze on California and its school districts. Not that Goldman was alone in this; but the unscrupulous practices of the bank once called the undisputed king of the municipal bond business epitomize the culture of greed that has ensnared students and future generations in unrepayable debt. Continue reading
The sudden dramatic collapse in the price of oil appears to be an act of geopolitical warfare against Russia. The result could be trillions of dollars in oil derivative losses; and the FDIC could be liable, following repeal of key portions of the Dodd-Frank Act earlier this month. Continue reading
A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds. Continue reading
On December 11, 2014, the US House of Representatives passed a bill repealing the Dodd-Frank requirement that risky derivatives be pushed into big-bank subsidiaries, leaving our deposits and pensions exposed to massive derivatives losses. Continue reading
In a blatant and massive market intervention, the price of gold was smashed last Friday. Right after the Comex opened on Friday morning 7,008 paper gold contracts representing 20 tonnes of gold were dumped in the New York Comex futures market at 8:50 a.m. EST. At 12:35 a.m. EST 10,324 contracts representing 30 tonnes of gold were dropped on the Comex futures market. Continue reading
In a few days, the Swiss people will go to the polls to decide whether the Swiss central bank is to be required to hold 20% of its reserves in the form of gold. Polls show that the gold requirement is favored by the less well off and opposed by wealthy Swiss invested in stocks. These poll results provide new insight into the real reason for Quantitative Easing by the Federal Reserve and European Central Bank. Continue reading
As most Americans, if not the financial media, are aware, Quantitative Easing (a euphemism for printing money) has failed to bring back the US economy. Continue reading
While the financial sector of the core capitalist economies is enjoying escalating asset price inflation, the real sector of these economies, especially those of Europe and Japan, is suffering from deflation, that is, stagnation and high unemployment. Continue reading
A quadrillion figure seems far-fetched, one to be used only when referring to distances in the confines of intergalactic travel, and not the world of international finance. After all, Mars is just a measly 34 million miles away (at perihelion—when at its closest point to the sun); and the edge of our solar system barely reaches 9 or 10 billion miles. So, when talking about a quadrillion dollars, we need to reset our financial minds from the microscopic minimum wage to the mach-speed technology of the Enterprise; and leave behind the Good Ship Lollypop, where most of us uninitiated, financially-duped, yokels travel these days. Continue reading
In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement. Continue reading
Argentina is playing hardball with the vulture funds which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank. That play, if approved by the Argentine Congress, will allow the country to continue making payments under its 2005 settlement, avoiding default on the majority of its bonds. Continue reading
Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history. In 2005, it renegotiated its debt with most of its creditors at a 70% “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar. Continue reading
Former Assistant Treasury Secretary Paul Craig Roberts wrote last month that real US GDP growth for the first quarter of 2014 was a negative 2.9%, off by 5.5% from the positive 2.6% predicted by economists. If the second quarter also shows a decline, the US will officially be in recession. That means not only fiscal policy (government deficit spending) but monetary policy (unprecedented quantitative easing) will have failed. The Federal Reserve is out of bullets. Continue reading
Looking over the last few weeks of news, if you would seek a single headline that sums up the Hulk-like grip in which corporate America holds the US Congress, this might be it: “Eric Cantor’s Loss a Blow to Wall Street.” Continue reading
One of the biggest puzzles in the financial markets this year has been the considerable fall in interest rates, despite the Fed’s program of tapering or cutting back the Fed’s bond purchases known as Quantitative Easing. A year ago, when Fed Chairman Bernanke announced the possibility of tapering QE on May 22, 2013, the 10-year Treasury yield was 2.03%. The yield quickly moved up close to 3% after Bernanke’s taper comments, forcing the Fed to retract or “clarify” them. Since January 2014, however, when the Fed actually began tapering, the 10-year yield has steadily declined from over 3% to it’s current yield of just over 2.5%. Continue reading
Funding infrastructure through bonds doubles the price or worse. Costs can be cut in half by funding through the state’s own bank. Continue reading
The JOBS Act is a “game changer” that would allow “ordinary Americans . . . to go online and invest in entrepreneurs they believe in,” says President Obama. Continue reading
In response to our account of the mysterious large rise in Belgium’s Treasury purchases, The Fed is the great deceiver, it was suggested that the transaction would show up on the Fed’s balance sheet. However, the Fed is under no obligation to show the transaction. Continue reading
Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three-month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them. Continue reading
Sixteen of the world’s largest banks have been caught colluding to rig global interest rates. Why are we doing business with a corrupt global banking cartel? Continue reading
One might argue against the sale of Development Corporation for Israel bonds, aka Israel bonds, to government entities in the USA because the proceeds fund Israeli violations of international law, particularly the colonization of the West Bank, and other activities which violate internationally accepted norms, to include maintaining Gaza as a vast open air prison. But although these policies are likely to have a negative impact on Israel’s credit rating in the future, it is the characteristics of the bonds themselves, chiefly their illiquidity, which should put them off limits for states and municipalities in the first place. Treasurers and pension fund managers who buy these toxic, illiquid obligations are putting taxpayers and retirees at risk. Continue reading
The credit card business is now the banking industry’s biggest cash cow, and it’s largely due to lucrative hidden fees. Continue reading
The Federal Reserve’s announcement on December 18 that beginning in January its monthly purchases of mortgage-backed financial instruments and US Treasury bonds would each be cut by $5 billion is puzzling, as is the financial press’s account of the market’s response. Continue reading
Inflation is, in fact, nothing more than taxation of everyone at a rate not announced by the government but estimated by its citizens. This inflationary process of printing money out of nothing and then using it to pay debts is camouflaged by calling it monetizing the debt. [1]. It is illegal for individuals to do it. Continue reading
The political coma of the U.S. government induced by Congress and its failure to represent those who elect it can ultimately be traced to the unfair and complex system of income taxation. Better for the country and more equitable for its taxpayers would be a toll tax on the movement of all money along the nation’s economic highway. Continue reading
The Irish have a long history of being tyrannized, exploited, and oppressed—from the forced conversion to Christianity in the Dark Ages, to slave trading of the natives in the 15th and 16th centuries, to the mid-nineteenth century “potato famine” that was really a holocaust. The British got Ireland’s food exports, while at least one million Irish died from starvation and related diseases, and another million or more emigrated. Continue reading
When Naomi Klein published her ground-breaking book The Shock Doctrine (2007), which compellingly demonstrated how neoliberal policy makers take advantage of overwhelming crisis times to privatize public property and carry out austerity programs, most economists and media pundits scoffed at her arguments as overstating her case. Real world economic developments have since strongly reinforced her views. Continue reading
Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why? Continue reading
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None so blind as we sail over the fiscal cliff
Posted on August 19, 2013 by Philip A Farruggio
I am writing this to not only all the city council members throughout the towns of my county of Volusia, Florida, but to you, its citizens out there. Look around you. See that, since 2006, the fine and important library system of our county has had its budget cut by nearly 33%! All of the services: firefighting, policing, hospital care, education . . . everything we need more of is going down, not up! City and County governments think that the best, most viable solution is to privatize more and more. They think that this will help ease the pain of fiscal shortfalls. Oh yes, why not just sell the library system off to big corporations and our firefighting and policing, too? Why not just make this society into one big corporate fiefdom, like the great film Rollerball portrayed? Continue reading →