Big Banks |

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.

Why Warren Will Run

From this item at The Hill comes a pretty interesting take on the 2016 Presidential election cycle in general and a potential Elizabeth Warren (D-MA) run in particular…

Why Warren will run against Clinton in 2016

By John LeBoutillier, contributor

State of the 2016 Race
A weekly column for The Hill analyzing the current state of the 2016 presidential race.

The Democratic race: Why Sen. Elizabeth Warren (D-Mass.) will run in 2016 against former Secretary of State Hillary Clinton.

1. Warren is the only national politician today from either party who conveys a sense of outrage over our current — deteriorating — national situation. Her passion is her signature calling card in a time when all the other candidates for president seem to have passion only for themselves and their candidacies.

2. At a recent 12-person in-depth focus group in Denver conducted by Peter Hart and reported in The Washington Post by Dan Balz, the only national politician who was viewed favorably was Warren — even by some of the Republican voters in the focus group.

3. Why? Because she is the only politician who is even talking about the powerlessness of the average person — and the seemingly too powerful corporate and Wall Street entities.

4. This issue cuts across all political lines. It is the issue that catapulted President Teddy Roosevelt into the political hall of fame. His trust busting led to today’s anti-trust regulations and the belief that the federal government’s role is to act as a neutral referee to ensure a fair playing field. But no one today believes the feds are neutral — or fair. Instead, big government is seen as corrupt and as “rigged” as big business.

5. Indeed, there isn’t that much that separates Occupy Wall Street from the Tea Party. One blames big business while the other blames big government for our problems. But more and more, people see the two as in bed with each other in a cynical game to line their own pockets and to preserve their power — all at the expense of the average American.

6. This underlying fear is the hidden issue in the 2016 race — and so far, only Warren is even talking about it.

Tagged with:  

The IMF’s latest report on slowing growth in the global economy makes it easy for a skeptical reader to connect a few dots regarding the latest round of central bank sponsored malinvestment in general (a word that clearly doesn’t exist in the modern economists’ lexicon) and the shale oil boom/bust cycle in particular.

From this Reuters story we get the following summary about what’s ailing the world::

“New factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,” Olivier Blanchard, the IMF’s chief economist, said in a statement.

The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation.

If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy “through other means”.

Left unsaid was that cheap money gushing from the Federal Reserve in Washington and big banks on Wall Street was a major factor driving the shale oil boom that played a key role in recently plunging energy prices that, now, are raising the specter of world wide deflation that – you guessed it – should be countered by even more cheap money.

Vicious cycle anyone?

It seems former Bank of England governor Mervyn King is on to something in this report at the Telegraph when he notes the following:

We have had the biggest monetary stimulus that the world has ever seen … The idea that monetary stimulus after six years is the answer doesn’t seem (right) to me.

Why is it that central bankers suddenly seem to make much more sense when they are no longer central bankers? King joins suddenly lucid former Fed Chief Alan Greenspan who has recently been famously fond of a barbarous relic and makes you wonder where the heck central bankers still employed by central banks are steering the ship.

History Doesn’t Repeat, But it Often Rhymes

Via this item at Dealbook comes the graphic below that goes a long way in explaining how cheap money from the Fed and reckless lending by big Wall Street banks has teed up another asset bubble that now appears to be in the early stages of bursting.

Then again, this bubble may prove resilient and it might be a completely different asset bubble that ends up bursting (that’s the thing about asset bubbles – you can’t really spot them in real time). But, one thing seems certain – it won’t be too much longer until we’re in the bust phase of the boom-bust cycle and we’re lamenting how we got there.

A more sanguine view can be found in the Dealbook story:

Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis.

Banks have been lending hand over fist to companies in the nation’s energy industry, underwriting bonds, advising on mergers…

At least this time around, we’ll probably be spared of any references to “the Fed’s mopping up strategy” as that early-2000’s characterization of the central bank’s handling of asset bubbles (popularized by former Fed Chief Alan Greenspan) seems to have fallen out of favor.

And … the Big Banks Win Again

Senator Elizabeth Warren (D-MA) details the ongoing, outsized influence that big Wall Street banks have on the Washington D.C. sausage factory as another last-minute provision favoring said big banks is inserted into a “must-pass” spending bill last week.

Also see Matt Taibbi’s take on the further dilution of the Dodd-Frank financial market reform (a.k.a. the “Citigroup provision”) and Ms. Warren at Rolling Stone.

Page 1 of 3412345102030...Last »
© 2010-2011 The Mess That Greenspan Made