The Surprising Way to Stop Bankers From Robbing the American People

Pernicious cultural norms inside American banks and regulatory agencies crowd out basic ethics. This post originally appeared on the blog for the Institute for New Economic Thinking. Does morality have a place in the realm of banking and regulation? That it feels awkward to even raise the issue is convenient for bankers who engage in reckless and harmful activities every day without fear of punishment. Ed Kane, professor of finance at Boston College, believes it’s vital to discuss moral questions, in plain English, without abstractions. Following his own advice, he is blunt in characterizing some of the behavior in the banking industry in recent years: “Theft is a forced taking of other people’s resources,” he says. “That’s what’s going on here.” Kane urges a deep inquiry into our culture to understand why bankers so commonly get away with crimes in the United States. In 2007, just before the housing […] Read More

The Last 16 Times This Happened There Was A Recession…

By Michael Snyder Something has just happened that has signaled a recession every single time that it has occurred since World War I. 16 times since 1919 there have been at least 8 month-over-month declines in industrial production during the preceding 12 month period, and in each of those 16 instances the U.S. economy has plunged into recession.  Now that it has happened again, will the U.S. economy beat the odds and avoid a major economic downturn?  I certainly wouldn’t count on it. As I have written about repeatedly, there are a whole host of other numbers that are screaming that a new recession is here, and global financial markets are crumbling.  It would take a miracle of epic proportions to pull us out of this tailspin, and yet there are many people out there that are absolutely convinced that it will happen. John Hussman is not one of […] Read More

Jail the Banksters? Bernanke Now Claims “Wall Street Execs Should’ve Been Held Accountable”

It is not uncommon to hear people in the streets, on blogs or on talk radio arguing that the gangs of Wall Street should have been jailed — or even hung — for their crimes against the American people. But to hear that kind of talk from a former Federal Reserve chairman is surprising… even if it is well after the fact. Though you could be forgiven for assuming most politicians and bankers have no conscience at all, there are apparently many in the halls of power who carry a guilty conscience for their role in selling out the country, and undermining its recovery at every level. Few have more guilt to carry than the functionaries at the Federal Reserve, the quasi-governmental central bank that now looms so large over the economy, and has so much to do with why the financial world is facing devastating failure all over […] Read More

Big Banks Claim Reform Will Hurt the Economy. Here’s Why That’s Bullsh*t.

If we don’t fix this house of cards, it will fall on us again. Anat Admati, who teaches finance and economics at the Stanford Graduate School of Business, is co-author of The Bankers’ New Clothes, a classic account of the problem of Too Big to Fail banks. On May 6th she will address the “Finance and Society” conference sponsored by the Institute for New Economic Thinking, featuring influential women who have challenged the status quo, like Federal Reserve Chair Janet Yellen, IMF Managing Director Christine LaGarde, and Senator Elizabeth Warren. Admati will join Brooksley Born, former chair of Chair of the Commodities Futures Trading Commission, to discuss how effective financial regulation can make the system work better for society. Seven years after financial hell broke loose, Admati warns that we are far from fixing a bloated and dangerous financial system —and that the system can’t fix itself. Why should you care? This […] Read More

The Six Too Big To Fail Banks In The U.S. Have 278 TRILLION Dollars Of Exposure To Derivatives

The very same people that caused the last economic crisis have created a 278 TRILLION dollar derivatives time bomb that could go off at any moment.  When this absolutely colossal bubble does implode, we are going to be faced with the worst economic crash in the history of the United States.  During the last financial crisis, our politicians promised us that they would make sure that “too big to fail” would never be a problem again.  Instead, as you will see below, those banks have actually gotten far larger since then.  So now we really can’t afford for them to fail.  The six banks that I am talking about are JPMorgan Chase, Citibank, Goldman Sachs, Bank of America, Morgan Stanley and Wells Fargo.  When you add up all of their exposure to derivatives, it comes to a grand total of more than 278 trillion dollars.  But when you add […] Read More

19 Surprising Facts About The Messed Up State Of The US Economy

Submitted by Michael Snyder of The Economic Collapse blog, Barack Obama and the Federal Reserve are lying to you.  The “economic recovery” that we all keep hearing about is mostly just a mirage.  The percentage of Americans that are employed has barely budged since the depths of the last recession, the labor force participation rate is at a 36 year low, the overall rate of homeownership is the lowest that it has been in nearly 20 years and approximately 49 percent of all Americans are financially dependent on the government at this point.  In a recent article, I shared 12 charts that clearly demonstrate the permanent damage that has been done to our economy over the last decade.  The response to that article was very strong.  Many people were quite upset to learn that they were not being told the truth by our politicians and by the mainstream media.  […] Read More

“There Is No Honest Pricing Left” – The Epochal Error Of Modern Central Banking

Submitted by David Stockman of Contra Corner blog, David Stockman, Director of the Office of Management and Budget under Reagan, former Congressman, and author of the bestseller The Great Deformation: The Corruption of Capitalism in America, discusses his book, the gold standard, bailouts, and the problems the American economy faces today. Mises Institute: In the book, you oppose Bernanke’s view of the Great Depression, which you point out relies heavily on the views of Milton Friedman. David Stockman: Bernanke has cultivated this idea that he is a brilliant scholar of The Great Depression, but that’s not true at all. What Bernanke did was basically copy Milton Friedman’s misguided and very damaging theory that the Federal Reserve didn’t expand its balance sheet fast enough by massive open market purchases of government debt during the Great Depression. Bernanke therefore claimed that monetary stringency deepened and lengthened the depression, but in fact interest […] Read More

The Size Of The Derivatives Bubble Hanging Over The Global Economy Hits A Record High

The global derivatives bubble is now 20 percent bigger than it was just before the last great financial crisis struck in 2008.  It is a financial bubble far larger than anything the world has ever seen, and when it finally bursts it is going to be a complete and utter nightmare for the financial system of the planet.  According to the Bank for International Settlements, the total notional value of derivatives contracts around the world has ballooned to an astounding 710 trillion dollars ($710,000,000,000,000).  Other estimates put the grand total well over a quadrillion dollars.  If that sounds like a lot of money, that is because it is.  For example, U.S. GDP is projected to be in the neighborhood of around 17 trillion dollars for 2014.  So 710 trillion dollars is an amount of money that is almost incomprehensible.  Instead of actually doing something about the insanely reckless behavior […] Read More

Tim Geithner Admits “Too Big To Fail” Hasn’t Gone Anywhere (And That’s The Way He Likes It)

Submitted by Mike Krieger of Liberty Blitzkrieg blog, But it is now clear that Geithner never believed his own talking points. To him, too-big-to-fail and the so-called moral hazard, or safety net, that it would create can’t really ever be fully taken away. During his lecture to Summers’s class, one student asked a question about “resolution authority,” a provision of the reform laws that is supposed to let the government wind down a complex financial institution without creating a domino effect. The question prompted Geithner onto a tangent about too-big-to-fail. “Does it still exist?” he said. “Yeah, of course it does.” Ending too-big-to-fail was “like Moby-Dick for economists or regulators. It’s not just quixotic, it’s misguided.” – From The New York Times Magazine article, What Timothy Geithner Really Thinks Never in a million years did I think I’d ever use an article by Andrew Ross Sorkin as the basis […] Read More