The Mess That Greenspan Made - Part 19

Still, Just the Cost of Doing Business

It’s hard to think of the many billions of dollars in fines that big banks have paid over the last few years or so as anything other than the cost of doing business. Here’s Matt Taibbi with Nermeen Shaikh and Amy Goodman of DemocracyNow to explain why.

Taibbi notes:

What’s humorous about this is that virtually all of these so-called too-big-to-fail banks have been embroiled in scandals of varying degrees of extreme seriousness since 2008. So for them to say, “Oh, it’s just a few bad apples in this one instance,” is increasingly absurd. They have been dinged for everything from bribery to money laundering, to rigging Libor, to mass fraud in subprime mortgages and now the forex markets. It’s one mass crime over—you know, after another, and there’s no consequence.

See also Banks Will Keep Doing FX Stuff That Got Them in Trouble at Bloomberg if you feel you’ve not been sufficiently disappointed by the above.

Friday Morning Links

MUST READS
Bank of Japan Chief Cheers On Tokyo’s Surging Stocks – WSJ
Hong Kong Investors Want More Oversight After $35B Wipeout – Bloomberg
China says U.S. actions in South China Sea ‘irresponsible, dangerous’ – Reuters
How China stealthily built a ‘kill chain’ in the South China Sea – The Week
Lower the temperature in South China Sea – Straits Times
Islamic State Now Controls Half of Syria After Seizing Palmyra – Vice News
Merkel Warns ‘Whole Lot Left’ to Do on Greece Bailout Talks – AP
Schaeuble Said to Cite Option of Greek Parallel Currency – Bloomberg
German and Greek leaders MOVED AWAY from each other at EU dinner – Express
Rand Paul Filibuster: ‘You Do Have a Right to Privacy’ – reason.com
The grand jury has indicted all 6 officers in Freddie Gray’s death – Vox
‘Shale-ionaires’ Suffering from Wave of Bankrupt Oil Drillers – Bloomberg
Banking should not be boring – Coppola Comment

MARKETS/INVESTING
China stocks hit 7-year high, Europe muted ahead of Fed – AP
Despite Fed’s warning, bond investors keep buying – USA Today
The 13 New Stocks on Goldman’s List of Hedge-Fund Favorites – WSJ
It’s time to dispel the myth of the summer rally in stocks – MarketWatch
Bubble trouble? Why frothy markets may not be ready to pop – Financial Post
OPEC may condemn the world to an oil glut for years – MarketWatch
Gold set for biggest weekly drop in four despite dollar stall – Reuters
LBMA: Trading Activity in Gold And Silver Drop Sharply In April – Kitco
Russia’s Central Bank Buys Another 9 tonnes of Gold – GoldSilver.com
Chinese Gold Leasing Not What It Seems – BullionStar

ECONOMY/WORLD/HOUSING/BANKING
Dueling Views on the First-Quarter Slump – NY Times
Why the US can’t shake off the Great Recession – CNBC
EU agrees 1.8bn-euro loan to cash-strapped Ukraine – BBC
China, India likely to be biggest shareholders in AIIB – Reuters
Draghi calls for reform, points to Europe’s modest prospects – Reuters
Why Housing-Market Panic Is Overblown — For Now – The Motley Fool
When the Current Housing Bubble Finally Bursts – of two minds
Inflation Mystery Risks Making Central Bankers Bystanders – Bloomberg
Has the Fed got a grasp on economic reality? – CNBC
A Backdoor Way to End the Fed – Bloomberg

 

Groupthink at the Fed

Take away the regional bank presidents from this chart (said presidents being physically removed from the center of power in Washington D.C. and not being political appointments) and there are virtually no dissenting votes at any Federal Reserve policy meeting going back two decades, a point that should be cause for concern as detailed in this Bloomberg story.

Fortunately, unlike the executive branch of government, the central bank has no military to dispatch when enacting its chosen policy course, so, this is clearly a case where groupthink will have only limited (though still quite important) negative repercussions.

Thursday Morning Links

MUST READS
Banks hit by record fine for rigging forex markets – Guardian
Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor ‘Meh’ – Bloomberg
Greek optimism about imminent deal not justified: Schaeuble – Reuters
Fed Signals June Liftoff Unlikely Amid Headwinds to Growth – Bloomberg
The Taking of Ramadi: Behind ISIS’s Bloody Assault – Fiscal Times
Sunnis and Shias Hate Islamic State More Than Each Other – Vice News
Bin Laden’s Surprising Taste in Literature – Atlantic
Call to wipe away student debt grows louder – MarketWatch
Record gap between rich and poor: OECD – ET
Why Governments Prefer Inflation to Taxation – Mises
Fun With Charts – Paul Krugman Edition – PragCap
Global Warming — So Now What? – DOTE
David Letterman signs off – AP

MARKETS/INVESTING
World stocks uneven after China, eurozone data – AP
Oil Could Drop to $45 a Barrel By October – Fiscal Times
This American VC Thinks He’s Getting Out of China Just in Time – Bloomberg
Why the stock market is unsafe for the average investor – MarketWatch
Gold steadies as dollar falls, June rate rise prospects dim – Reuters
Indian gold monetisation scheme a temporary solution – Perth Mint
Will China go for a gold standard? The jury is out! – Mineweb
PBOC Gold Purchases: Separating Facts from Speculation – BullionStar
Demand for physical gold remains strong – Mineweb

ECONOMY/WORLD/HOUSING/BANKING
The U.S. Underestimates Growth – WSJ
What’s Wrong With ‘Mathiness’ in Economics? – Bloomberg
America’s Risky Recovery – Feldstein, Project Syndicate
China Unleashes Bonds to Tackle Local Debt – Caixin Online
China flash PMI shrinks for third month, more stimulus seen – Reuters
Germany Loses Further Momentum as Manufacturing, Services Weaken – Bloomberg
Robust U.S. housing data offers hope for second quarter growth – Reuters
Too Much Deference to Fed Chairmen is Stunting Policy Debates – Bloomberg
5 bubbles that Draghi’s QE is already blowing – MarketWatch
The Definitive Monetary Policy Statement – Alhambra Partners

 
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