Tag: banks

Irony

Perhaps if he had said something to this effect back in 2008, the problem might have been addressed, if not necessarily averted:

George Soros, the billionaire investor, believes the banking sector is a “parasite” holding back the economic recovery and an “incestuous” relationship with regulators means little has been done to resolve the issues behind the 2008 crisis.

“The banking sector is acting as a parasite on the real economy,” Mr Soros said in his new book “The Tragedy of the European Union”.

“The profitability of the finance industry has been excessive. For a while 35pc of all corporate profits in the United Kingdom and the United States came from the financial sector. That’s absurd.”

Mr Soros outlined how the problems that caused the Eurozone economic crisis remain largely unresolved.

“Very little has been done to correct the excess leverage in the European banking system. The equity in the banks relative to their balance sheets is wafer thin, and that makes them very vulnerable. The issue of “too big to fail” has not been solved at all.”

I don’t recall Mr. Soros opposing the 2008 banking bailout. It’s not as if the intrinsically parasitical nature of the finance industry is news to anyone of Mr. Soros’s stature and occupation. No economy can expect to grow as long as a significant percentage of the profits produced are skimmed by the monetary middlemen, for the obvious reason that the middlemen produce nothing.

Why Putin invaded

It’s not too hard to understand once you realize that the anti-democratic coup in Ukraine had nothing to do with the Ukrainian people.

Arseniy Yatseniuk; born May 22, 1974 is a Ukrainian politician,
economist and lawyer who is the Prime Minister of Ukraine following the
parliament’s 2014 removal of Viktor Yanukovych from power. He was born to in a family of
Jewish-Ukrainian professors of the Chernivtsi University.  From September until November 2001, Arseniy served as an “acting” Minister of Economy of Crimea, and from November of the same year until January 2003, served as the official Minister of Economy of the Autonomous Republic of Crimea.

From November 2003 to February 2005, Yatsenyuk served as the first vice-president of the head of the National Bank of Ukraine under Serhiy Tyhypko. After Tyhypko left the National Bank, Arseniy Yatsenyuk was put in charge of the National Bank.

This is as if Obama was chased from the White House after a few weeks of demonstrations and it was announced that Alan Greenspan was now the president. This marks the second time in two years that a banker has been placed directly in power without being elected, first Italy and now Ukraine.

Well, this should end well. We all know how Eastern Europeans just love rich unelected Jews ruling over them. (Yatseniuk is actually Greek Orthodox, however.) I don’t know Russian or Ukrainian history well enough to know if this is supposed to be revenge for the pogroms or the sort of madness that led to the pogroms in the first place.

“So, everybody buckled?”

Asked the Fed. “All right, then, let’s do this thing!”

Goldman Sachs, JPMorgan and Citigroup are among the banks that have successfully completed trial runs using their own models to assess risk and capital requirements. The announcement by the Federal Reserve and the Office of the Comptroller of the Currency on Friday gives those banks clarity on what methods they can use to calculate their capital requirements.

During the trial run, banks had to show they could comply with a more tailored approach to meeting capital requirements for four consecutive calendar quarters before they could officially rely on that method.

The Fed announced that eight bank holding companies, eight national banks, and four state member banks had satisfactory trials, ending a more than five-year limbo period for the largest US banks that had been waiting to hear the results.

In other words, they’ve been getting ready. Now they’re all just about ready. For what, one might wonder?

The bassline thickens

Have we approached the point of statistical unlikelihood yet?

Yet another banker has committed suicide, with a JP Morgan forex trader leaping to his death from the top of the firm’s Chater House headquarters in Hong Kong.

Over the past few weeks at least seven bankers have died under mysterious circumstances, including another JP Morgan senior manager who jumped off the top of a skyscraper in London last month.

Speculation is rife that the series of deaths are connected to some kind of looming financial crisis or a huge legal case targeting bankers for malfeasance, although no definite link has been established.

Not that I’m any fan of bankers, but this is getting a little weird. Especially the suicide by nail gun.

Dum-dum-dum

And another one’s down:

Ordinarily we would ignore the news of another banker’s death – after all these sad events happen all the time – if it wasn’t for several contextual aspects of this most recent passage. First, the death in question, as reported by the Stamford Daily Voice is that of Ryan Henry Crane, a Harvard graduate, who is survived by his wife, son and parents at the very young age of 37. Second, Ryan Henry Crane was formerly employed by JPMorgan – a bank which was featured prominently in the news as recently as two weeks ago when another of its London-based employees committed suicide by jumping from the top floor of its Canary Wharf building….The circumstances surrounding his death are scarce, but what is most
notable is that not only is Crane the second very young JPMorgan banker
to pass in recent days, but is also the fourth banker death in under a month.

Curiouser and curiouser….

That makes foursix

This sounds rather like an Arkansas suicide:

The founder and CEO of American Title Services in Centennial was found dead in his home this week, the result of self-inflicted wounds from a nail gun, according to the Arapahoe County coroner.

Richard Talley, 57, and the company he founded in 2001 were under investigation by state insurance regulators at the time of his death late Tuesday, an agency spokesman confirmed Thursday. It was unclear how long the investigation had been ongoing or its primary focus.

A coroner’s spokeswoman Thursday said Talley was found in his garage by a family member who called authorities. They said Talley died from seven or eight self-inflicted wounds from a nail gun fired into his torso and head.

As Zerohedge points out, this “suicide” follows “the jumping deaths of 2 London bankers and a former-Fed economist in the US”. This seems a little strange considering how the financial companies are presently sitting very fat and happy. There have also been two suicides in Switzerland; the CFO of Zurich Insurance and the CEO of Swisscom.

The dark side of income inequality

Republicans, Libertarians, and Any Rand aficionados like to talk about income inequality as if it is an intrinsically socialist concept. And there is some truth to that. Socialists and other distributionists often appeal to income inequality in order to violate private property rights and rob from Peter in order to pay Paula, DaPaul and Pedro. Income equality can be, and has often been used to justify socialism.

However, superior talent, hard work, and luck combined with a capitalist system are not the only source of income inequality. Income inequality also comes from theft, fraud, government corruption and other evils. And that is the very sort of income inequality that is not only indefensible, but is ever bit as problematic economically as it is morally.  Zerohedge explains the dark side of income inequality:

This brings us to the second undesirable and unjustified source of income inequalities, i.e., the creation of money out of thin air, or legal counterfeiting, by central banks. It should be no surprise the growing gap in income inequalities has coincided with the adoption of fiat currencies worldwide. Every dollar the central bank creates benefits the early recipients of the money—the government and the banking sector — at the expense of the late recipients of the money, the wage earners, and the poor. Since the creation of a fiat currency system in 1971, the dollar has lost 82 percent of its value while the banking sector has gone from 4 percent of GDP to well over 10 percent today.

The central bank does not create anything real; neither resources nor goods and services. When it creates money it causes the price of transactions to increase. The original quantity theory of money clearly related money to the price of anything money can buy, including assets. When the central bank creates money, traders, hedge funds and banks — being first in line — benefit from the increased variability and upward trend in asset prices. Also, future contracts and other derivative products on exchange rates or interest rates were unnecessary prior to 1971, since hedging activity was mostly unnecessary. The central bank is responsible for this added risk, variability, and surge in asset prices unjustified by fundamentals.

The banking sector has been able to significantly increase its profits or claims on goods and services. However, more claims held by one sector, which essentially does not create anything of real value, means less claims on real goods and services for everyone else. This is why counterfeiting is illegal. Hence, the central bank has been playing a central role as a “reverse Robin Hood” by increasing the economic pie going to the rich and by slowly sinking the middle class toward poverty.

One need not be a socialist, or oppose capitalism, to oppose the income equality that is the result of theft. With the assistance of the Federal Reserve and Congress, the banks have financially raped the American economy and the American people through fraud and political corruption. A reckoning is overdue. Everything that has been done in the last five years has been done in order to postpone it. And yet, a reckoning is coming nevertheless, because that which cannot continue will not continue. The rich simply cannot consume enough to substitute for more equitable consumption; how many cars can a man drive? In how many homes can a man dwell?

Wall Street loses Krugman

Wow, I have to admit that I didn’t expect to see this out of the former Enron advisor:

Normal people take it in stride; even if they’re angry and bitter over political setbacks, they don’t cry persecution, compare their critics to Nazis and insist that the world revolves around their hurt feelings. But the rich are different from you and me.

And yes, that’s partly because they have more money, and the power that goes with it. They can and all too often do surround themselves with courtiers who tell them what they want to hear and never, ever, tell them they’re being foolish. They’re accustomed to being treated with deference, not just by the people they hire but by politicians who want their campaign contributions. And so they are shocked to discover that money can’t buy everything, can’t insulate them from all adversity.

I also suspect that today’s Masters of the Universe are insecure about the nature of their success. We’re not talking captains of industry here, men who make stuff. We are, instead, talking about wheeler-dealers, men who push money around and get rich by skimming some off the top as it sloshes by. They may boast that they are job creators, the people who make the economy work, but are they really adding value? Many of us doubt it — and so, I suspect, do some of the wealthy themselves, a form of self-doubt that causes them to lash out even more furiously at their critics.

Nice call-out to F. Scott Fitzgerald there on the part of the quasi-Nobel winner too. But Krugman fails to notice that there is an amount of truth to Perkins’s complaint about the coming Kristallnacht of the so-called One Percent, especially given that a disproportionate amount of the parasitical One Percent are Jewish.

It’s not paranoia when someone really is out to get you. And self-doubt is more than justified when you know damn well that you eminently deserve to have people out to get you. The financial skimmers of Wall Street not only don’t make the economy work, they have destroyed the wealthiest economy history has ever known through the massive malinvestments their massive credit bubble has created. And they have made matters worse by coopting the federal government into making good their losses at the expense of the American people.

When the final crash comes, I expect a considerable portion of the One Percent to be wiped out by an angry and well-armed populace. And no one should shed a tear for them, because they eminently deserve their such bitter desserts. The wolves of Wall Street who preyed upon the helpless for decades will become the hunted.

China: two stories

First, this Forbes report is NOT true: “The People’s Bank of China , the central bank, has just ordered commercial banks to halt cash transfers.” The false report was particularly worrisome in light of the way it appeared to coincide with HSBC’s recent attempt to crack down on all withdrawals of more than 3,000 pounds in the UK. (HSBC appears to have backed down on that following widespread outrage.) However, that does not mean that all is well with the Chinese economy, which you will recall has been engaged in much bigger credit inflation and government spending stimulus programs since 2009 than the USA or the European governments. From Zerohedge two weeks ago:

the big problem in big China remains that of an out-of-control credit creation process that is blowing up. As we previously noted, instead of crushing credit creation, the PBOC’s liquidity rationing has forced distressed companies into high-interest-cost products in the shadow-banking world. Investors on the other side of “troubled shadow banking products” had assumed that ‘someone’ would bail them out but this evening Reuters reports that ICBC has confirmed that it will not rescue holders of the “Credit Equals Gold #1 Collective Trust Product”, due to mature Jan 31st with $492 million outstanding.

A single $492 million default sounds very small compared to the overall size of the shadow banking market, but the problem is that what expands by the multiplication effect will contract even faster. There are many multiples of credit dollars stacked upon each actual dollar, so a default has a domino effect that is one or two orders of magnitude greater than the size of the default itself.

It’s probably not a coincidence that the banks appear to be a little nervous leading up to this default, because it’s not possible to know exactly what the effects of the Friday default will be. I expect next weekend will be a very busy one throughout the financial industry as the markets position for the fallout on Monday; I imagine the central banks’ printing presses will be smoking.

It’s not your money

In case you were wondering why a bank can refuse to give you “your money” when you ask for it, it is because the terms of the loan you provided them permit it.

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother. A year before, he had withdrawn a larger sum in cash from HSBC without a problem.

But this time it was different, as he told Money Box: “When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved.”

Mr Cotton says the staff refused to tell him how much he could have: “So I wrote out a few slips. I said, ‘Can I have £5,000?’ They said no. I said, ‘Can I have £4,000?’ They said no. And then I wrote one out for £3,000 and they said, ‘OK, we’ll give you that.’ “

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.He wrote to complain to HSBC about the new rules and also that he had not been informed of any change.

The bank said it did not have to tell him. “As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change,” HSBC wrote.

The only way you can be certain to get your money back is by calling the
loan, or to put it in more common terms, closing your account.