TARP - Bait and Switch

from Dr. John...

"...Europe is fast approaching the point at which every solution will be disruptive, and remains urgently in need of debt restructuring, particularly across its banking system. It is a pleasant but time-consuming fantasy to believe that governments that are already approaching their own insolvency thresholds can effectively bail out a banking system that has already surpassed them. To expect the ECB to simply print money to solve the sovereign debt problems of Spain, Italy and other members is also dangerous. This hope prevents these nations from taking receivership of insolvent institutions now, and allows them to continue to operate in a way that threatens much more disorderly outcomes later. The reality is that Europe is not a unified economic and political entity with a single national character and obligations that are mutualized among its members. It is instead a geographic region where the economic, political and cultural differences remain very distinct. While each country is willing to cooperate in setting common rules and practices that are to their own benefit, they are unlikely to cooperate when it comes to decisions that require the stronger economies to interminably subsidize the insolvent ones through direct fiscal transfers or permanent money creation that has the same effect...."




http://www.hussman.net/wmc/wmc120730.htm

Dark Side of the Lens

DARK SIDE OF THE LENS from Astray Films on Vimeo.

Calls to Breakup the TBTF Banks

By Washingtons Blog - July 27th, 2012, 5:30AM 

Numerous Top Bankers Call for Break Up of Giant Banks

The following bankers are calling for the big banks to be broken up:

• Former Citi CEO Sandy Weill

• Former Citi CEO John Reed

• Former Citi chairman Richard Parsons

• Former Merrill Lynch chairman and CEO David Komansky

• Former Morgan Stanley CEO Philip Purcell

• Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London- Nomi Prins

• Numerous other bankers within the mega-banks (see this, for example)

• Former Natwest and Schroders investment banker, Philip Augar

• The President of the Independent Community Bankers of America, Camden Fine

Top Economists and Financial Experts Agree

It’s not just bankers.

The following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:

• Nobel prize-winning economist, Joseph Stiglitz

• Nobel prize-winning economist, Ed Prescott

• Nobel prize-winning economist, Paul Krugman

• Former chairman of the Federal Reserve, Alan Greenspan

• Former chairman of the Federal Reserve, Paul Volcker

• Former Secretary of Labor Robert Reich

• Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard

• Former chief economist for the International Monetary Fund, Simon Johnson (and see this)

• Former 20-year President of the Federal Reserve Bank of Kansas City – currently FDIC Vice Chair - Thomas Hoenig (and see this)

• President of the Federal Reserve Bank of Dallas, Richard Fisher (and see this)

• President of the Federal Reserve Bank of St. Louis, Thomas Bullard

• Deputy Treasury Secretary, Neal S. Wolin

• The Congressional panel overseeing the bailout (and see this)

• The former head of the FDIC, Sheila Bair

• The head of the Bank of England, Mervyn King

• The Bank of International Settlements (the “Central Banks’ Central Bank”)

• The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz

• Economics professor and senior regulator during the S & L crisis, William K. Black

• Leading British economist, John Kay

• Economics professor, Nouriel Roubini

• Economist, Marc Faber

• Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales

• Economics professor, Thomas F. Cooley

• Economist Dean Baker

• Economist Arnold Kling

• Chairman of the Commons Treasury, John McFall

Too Big To Fail Reform

Ben Davies Speaks

Ben Davies, CEO of Hinde Capital in London, has put intellect, data, and graphs to work in the same vein in a presentation made last month at the Value Intelligence Conference in Munich, a presentation titled "Seeking Value in a World of Financial Repression."

Davies concludes:

"Unfortunately the criticisms leveled at capitalism's supposed failings are not a function of failed free markets but of state intervention in the supply of money. The failing of the banking system is the product of meddling in the true or real rate of interest which has distorted all pricing mechanisms in the production of credit, resource availability, manufactured goods, and services. This has been a global phenomenon. ...

"The repressive nature of finance today deters us from observing true prices that signal to us the true time preference of individuals to make purchases or sales and hence their assignation of value for assets.

"I may sound more like a philosopher or even a political reformer than an investment manager, but I make no apology. For me to achieve my fiduciary duty of protecting my clients' money I must protect its value first and foremost. Until such time as the monetary system resets or a new monetary order appears that fosters price and hence stability in the value of our numeraire, then I will have to fight what I see as infringement in free markets to perform their basic and fiduciary responsibility, which is price discovery. A true price discovery will enable value to be representative of buyers and sellers, where one can chose of one's own volition to reject or not the value offered."

Thus Davies echoes the British economist Peter Warburton, whose 2001 essay, "The Debasement of World Currency -- It Is Inflation, But Not as We Know It" --

http://www.gata.org/node/8303

-- perceived that the primary purpose of Western central banking had become to deprive the world of what he called "a stable numeraire," a constant measure of things financial. Of course that's what the gold price manipulation scheme is all about.

Davies' presentation is posted in PDF format at the Hinde Capital Internet site here:

http://www.hindecapital.com/attachments/reports/full/132/original/HindeS...

Wall Street Is Too Big to Regulate

By GAR ALPEROVITZ

Published: July 22, 201

College Park, Md.

THE Barclays interest-rate scandal, HSBC’s openness to money laundering by Mexican drug traffickers, the epic blunders at JPMorgan Chase — at this point, four years after Wall Street wrecked the global economy, does anyone really believe we can regulate the big banks? And if we broke them up, would they really stay broken up?

Most liberals in Washington — President Obama included — keep hoping the banks can be more tightly controlled but otherwise left as is. That’s the theory behind the two-year-old Dodd-Frank law, which Republicans and Wall Street are still working to eviscerate.

Some economists in and around the University of Chicago, who founded the modern conservative tradition, had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was tonationalize the largest ones, which defied regulation.

This notion seems counterintuitive: after all, the school’s founders provided the intellectual framework for the laissez-faire turn against market regulation over the last half-century. But for them, “bigness” and competition could easily become mutually exclusive. One of the most important Chicago School leaders, Henry C. Simons, judged in 1934 that “the corporation is simply running away with our economic (and political) system.”

Simons (a hero of the libertarian idol Milton Friedman) was skeptical of enormity. “Few of our gigantic corporations,” he wrote, “can be defended on the ground that their present size is necessary to reasonably full exploitation of production economies.”

The central problem, then as now, was that very large corporations could easily undermine regulatory and antitrust strategies. The Nobel laureate George J. Stigler demonstrated how regulation was commonly “designed and operated primarily for” the benefit of the industries involved. And numerous conservatives, including Simons, concluded that large corporate players could thwart antitrust “break-them-up” efforts — a view Friedman came to share.

Simons did not shrink from the obvious conclusion: “Every industry should be either effectively competitive or socialized.” If other remedies were unworkable, “The state should face the necessity of actually taking over, owning, and managing directly” all “industries in which it is impossible to maintain effectively competitive conditions.”

At the height of the Depression, eight major economists (including Frank H. Knight) put forward a “Chicago Plan” that called for outright ownership of Federal Reserve Banks, the nationalization of money creation, and the transformation of banks into highly restricted savings-and-loan-like institutions.

To be sure, Simons later revised some of his views, and in the main he and others weren’t focused on financial crises. After all, in the mid-20th century, banks were far less concentrated than they are today, when the five biggest — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs — dominate the industry, with combined assets amounting to more than half of the nation’s economy.

It’s also true that not all Chicago School economists (not to mention their descendants) agreed with Simons, especially on the controversial issue of nationalization. But the logic of his argument remains: With high-paid lobbyists contesting every proposed regulation, it is increasingly clear that big banks can never be effectively controlled as private businesses. If an enterprise (or five of them) is so large and so concentrated that competition and regulation are impossible, the most market-friendly step is to nationalize its functions.

What about breaking up the banks, as many on the left favor? Recent history confirms another Chicago School judgment: while a breakup might work in the short term, the most likely course is what happened with Standard Oil and AT&T, which were broken up, only to essentially recombine a few decades later.

Nationalization isn’t as difficult as it sounds. We tend to forget that we did, in fact, nationalize General Motors in 2009; the government still owns a controlling share of its stock. We also essentially nationalized the American International Group, one of the largest insurance companies in the world, and the government still owns roughly 60 percent of its stock.

Of course, it would probably take another financial meltdown to make banking nationalization politically tenable. But given how the sector has behaved since the last crisis, a repetition seems inevitable, and sooner rather than later. When it comes, we would do well to keep the work of Henry C. Simons and his acolytes in mind when we contemplate how to rebuild a more equitable economy.

Gar Alperovitz, a professor of political economy at the University of Maryland, is the author of “America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy.”

http://www.nytimes.com/2012/07/23/opinion/banks-that-are-too-big-to-regulate-should-be-nationalized.html?_r=1&smid=tw-share

@JamesGRickards Interviewed 25:40...

Euro, China, Russia...Li(e)bor...etc...

Li(e)bor Fraud

http://finance.yahoo.com/blogs/daily-ticker/tim-geithner-aided-abetted-libor-crimes-jim-rickards-131709068.html

Goldman Sachs steps back from casino banking

The Vampire Squid launches a private bank for wealthy clients

BY ALEX HERNPUBLISHED 17 JULY 2012 11:52

Goldman Sachs is building an in-house bank to lend money to wealthy people and companies, in a significant shift that underlines the harsh business climate facing Wall Street since the financial crisis.

The New York securities firm, known for its aggressive trading and big corporate deal-making, is ramping up its activities to become a private bank to serve wealthy customers around the world. The new unit will also lend more directly to corporations, some of whom already make investments and do business with Goldman. Executives have set a goal of $100 billion in loans, up from $12 billion at the end of March.

Ever since the financial crisis, so-called "casino banking" has been a very unpopular area to be in. The actual practice itself was frequently condemened, for causing unsustainable booms in food and oil prices, as well as leading to the sort of attitude which caused the crash, where complex financial instruments were traded with little regard to fundamentals causing spiralling valuations which eventually got out of control.

But as well as casino banking being unpopular for what it is, it's unpopular for its relationship to regular banking. The idea is similar to that of "too big to fail", but the fear is that casino banks which also take consumer deposits are thus underwritten by the taxpayer, in the form of deposit insurance. It is for this reason that there are calls, in both Britain and the US, to split the former from the latter, or to allow banks to gamble, but not with customers' money. This latter requirement, the Volcker Rule, is what JP Morgan is suspected to have been bending in their disastrous "London Whale" trade.

Goldman Sachs' private bank is unlikely to fall on the retail side of any such divide, however. It's customers' deposits will be well in excess of the amount covered by insurance, so there will be little incentive for it to hamstring its activities. But its a long way to go to rehabilitate the Vampire Squid.

http://www.newstatesman.com/blogs/business/2012/07/goldman-sachs-steps-back-casino-banking

ECRI's Lakshman Achuthan is back

Red Pill - Blue Pill: ECRI's Achuthan, again

May 12, 2012

ECRI's Achuthan, again. Posted by Wes at 8:15 AM · Email ThisBlogThis!Share to TwitterShare to Facebook. Labels: Economy. 0 comments: Post a Comment. Newer Post Older Post Home. Subscribe to: Post Comments ...

http://red-pill-blue-pill.blogspot.com/

Red Pill - Blue Pill: ECRI Reiterates Recession Call

Apr 21, 2012

Saturday, April 21, 2012. ECRI Reiterates Recession Call. Posted by Wes at 5:33 AM · Email ThisBlogThis!Share to TwitterShare to Facebook. Labels: Economy. No comments: Post a Comment. Newer Post Older Post Home. Subscribe to: ...

http://red-pill-blue-pill.blogspot.com/

Red Pill - Blue Pill: ECRI Maintains Recession Call

Feb 27, 2012

Pages. Home. Monday, February 27, 2012. ECRI Maintains Recession Call. Posted by Wes at 5:33 AM · Email ThisBlogThis!Share to TwitterShare to Facebook. Labels: Central Banks, Economy. 0 comments: Post a Comment ...

http://red-pill-blue-pill.blogspot.com/

Red Pill - Blue Pill: ECRI - sticks by call on the economy...

Dec 11, 2011

ECRI - sticks by call on the economy... Posted by Wes at 5:33 AM · Email ThisBlogThis!Share to TwitterShare to Facebook. Labels: Economy, Markets. 0 comments: Post a Comment. Newer Post Older Post Home. Subscribe to: ...

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Red Pill - Blue Pill: ECRI - Sticks with Forecast of Impending US ...

Nov 09, 2011

ECRI - Sticks with Forecast of Impending US Recession .... Surfer Rides 90 ft Wave · Thursday Morning Jazz (Flamenco-style) · ECRI - Sticks with Forecast of Impending US Recess... RP-BP is Apolitical - The System is Totally ...

http://red-pill-blue-pill.blogspot.com/

The United States of America use to be

Ned Naylor-Leyland on Gold Price Manipulation

Gold is manipulated just as LIBOR was and for same reason, Naylor-Leyland tells CNBC

Roubini - 2013 to be worse than 2008

Another roof top - Jefferson Airplane

More Bankster Fraud

Posted on July 4, 2012 by WashingtonsBlog

Libor Manipulation Is Only One of MANY Types of Fraud Committed by the Big Banks

The Libor scandal seems to be waking people up to manipulation and fraud by the big banks.

There are many other types of fraud they’ve engaged in as well …

Here is a partial list:

• Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)

• Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this

• Cheating homeowners by gaming laws meant to protect people from unfair foreclosure

• Charging veterans unlawful mortgage fees

• Engaging in mafia-style big-rigging fraud against local governments. See this, this and this

• Cooking their books (and see this)

• Bribing and bullying ratings agencies to inflate ratings on their risky investments

• Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this

• Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this

• Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this

• Otherwise manipulating markets. And see this

• Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here,here, here, here, here, here, here andhere

• Participating in various Ponzi schemes. See this, this and this

• Charging “storage fees” to store gold bullion … without even buying or storing any gold . Andraiding allocated gold accounts

• Laundering money for drug cartels. See this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis)

• Owning and largely running the Federal Reserve … which is itself arguably a Ponzi scheme

But at least the big banks do good things for society, like loaning money to Main Street, right?

Actually:

• The big banks no longer do very much traditional banking. Most of their business is from financial speculation. For example, less than 10% of Bank of America’s assets come from traditional banking deposits. Instead, they are mainly engaged in financial speculation and derivatives. (and see this)

• The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this

• A huge portion of the banks’ profits comes from taxpayer bailouts. For example, 77% of JP Morgan’s net income comes from taxpayer subsidies

• The big banks are literally killing the economy … and waging war on the people of the world

• And our democracy and republican form of government as well

http://www.washingtonsblog.com/2012/07/the-many-ways-banks-commit-criminal-fraud.html