The spectacle of insanely authoritarian policing in Ferguson, as well as media jitters over ISIS and ongoing reports of action in Gaza and Ukraine, has shifted attention a bit away from simply lousy economic results from Europe. That fragility could play in a nasty way into blowback from sanctions against Russia.
Read more...J.D Alt examines how far a community could get without private banks….and it’s less far than you probably think.
Read more...Yves here. In contrast with the way that political repression is gradually becoming the new normal in America, Don Quijones chronicles how rapidly it is being put in place in Spain to curb protests against austerity and bank-favoring policies. The extreme form of shredding democracy to protect commercial interests was Chile, where as a writer put it, “People died so markets could be free.”
Read more...NC contributor Michael Crimmins flagged a Bloomberg article yesterday that described the proliferation of complex synthetic structures, depicting it as return to some of the bad risk-shifting of the blowout phase of the last credit bubble.
The amusing bit is the headline was toned down after the post was launched (you can tell by looking at the URL, which almost certainly tracks the original). The current version is the anodyne “JPMorgan Joins Goldman in Designing Derivatives for a New Generation.” But the very first paragraph flags the troubling resemblance to the last hurrah of the pre-crisis credit mania:
Read more...Your humble blogger must confess to being partly wrong about the Fed’s recent realization that banksters had learned the right lesson from the crisis: crime pays. We were incredulous that the central bank had missed the fact that financial firm employees were unrepentant and their executives saw no reason to make real changes (hence all the howling about reform measures that are pretty minor relative to the damage done). From a recent post:
Read more...This story would be funny if it weren’t so pathetic.
This is a terrific and very accessible interview with Boston College professor Ed Kane, who is a long-standing critic of the failure to rein in financial firms that feed at the taxpayer trough. At one point in the talk, Kane and his interviewer Marshall Auerback discuss how casinos are well aware of the fact that the house can lose and they monitor gamblers intensively to make sure that no one is engaging is sleight of hand. Thus if we treated our banking system like the financial casino that it has become, we’d be much better off than we are now.
Read more...The spectacle of banks wring their hands about how low volatility is leading them as well as investors to take on too much risk bears an awfully strong resemblance to a child who has killed his parents asking for sympathy for being an orphan.
Read more...With the Argentine default, we are seeing a replay of a strategy that established Naked Capitalism readers will remember from the crisis: use a complex structure to disguise risk so that short sellers can place their wagers at far lower prices than they would be able to otherwise. And that raises the interesting question of how large a net short position Paul Singer, the instigator of the litigation that has undone Argentina’s restructuring deal and put the country in default, took against Argentina, as well as the relationship among the parties that put on the positions on behalf of short sellers.
Read more...Yves here. Ilargi uses strained messaging in response to recent market upsets, the Argentine default, and the failure of Banco Santo Espirito to address one of NC’s pet topics, propagandizing. Most people think of propaganda as the deliberate crafting of false or misleading messages, or the simple Big Lie. However, there’s also the variant of the deeply vested partisan. As Upton Sinclair stated, “It is difficult to get a man to understand something when his salary depends on his not understanding it.” And a lot of those salaried-by-the-status-quo folks have access to media megaphones.
Read more...Mirabile dictu, it looks like Elizabeth Warren’s grilling of Janet Yellen on the Fed’s failure to make progress on Dodd Frank resolutions, also known as living wills, has had some impact. From the Wall Street Journal:
Read more...This week marks the 100th anniversary of a nearly forgotten yet critical moment in global finance. As the looming outbreak of World War I appeared more and more imminent when Austria made an ultimatum to Serbia in the last week of July 1914, the resulting fear in global markets set off a massive financial panic. Investors, fearing unpaid debts, pulled out of stocks and bonds in a scramble for cash, which at this point in history meant gold. The London Stock Exchange reacted by closing on July 31 and staying closed for five straight months. The U.S. stock exchange, which witnessed a mass dumping of securities by European investors in exchange for gold to finance the war, would also close on the same day, for about four months. Britain declared war while on a bank holiday. Over 50 countries experienced some form of asset depletion or bank run. Here’s an incredible statistic: “For six weeks during August and early September every stock exchange in the world was closed, with the exception of New Zealand, Tokyo and the Denver Colorado Mining Exchange.”
Read more...Banks and their allies have been using every opportunity possible to blame regulations for changes in their business models after the crisis, particular if they can make it sound like the broader public, as opposed to their bottom lines, is what is suffering. Normally this messaging effort stays at the background noise level, but sometimes the lobbyists succeed in getting their message treated as a story in its own right.
A recent example is a Financial Times story early this week…
Read more...Yves here. This post on the Administration’s efforts to justify its official policy of murder by drone shows how due process is dead in America. That may seem a bit far afield of Naked Capitalism’s beat. But the systematic assault on the Constitution is another, even more troubling, manifestation of what we see operating in the financial sphere: that hard-won protections for ordinary citizens are being stripped away, so that those who have access to resources (whether via personal wealth or institutional authority) can operate unfettered, to increase their power and ability to plunder even more.
Read more...A shot across the Fed’s bow from Simon Johnson, former IMF chief economist and bank critic, on the surface looks to be a good bit of news. Johnson, in a recent Project Syndicate article, warns that the notoriously cloistered central bank is overly confident about its political position.
Read more...Michael Hudson and James Henry discuss the legal and practical issues surrounding the battle between vulture fund NML and Argentina.
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