Big Banks Committing Financial Terrorism?

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Tuesday May 11, 2010 · 7:37 AM PDT

2010/05/11 · 07:37

Last Thursday afternoon at around 2:35 pm, the US stock market plummeted in a sudden panic that has yet to be fully explained. The Dow Jones fell by almost 1000 points, and shares of some stocks fell to just one penny. Within minutes, the market surged, recovering most of the immediate loss, nonetheless ending the day substantially in the red.

The event has been popularly blamed on a "fat-fingered" trader who supposedly mis-entered a trade, perhaps substituting a billion shares for a million. While a trading error may have caused the selloff, no responsible party has yet been identified.

Today in The Financial Oligarchy Reigns: Democracy’s Death Spiral From Greece to the United States, David DeGraw and Max Keiser allege that big banks engineered the meltdown to coincide with debate on the financial reform amendment seeking to break up the "too big to fail" banks.

hrtrader

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Tuesday June 23, 2009 · 8:16 AM PDT

2009/06/23 · 08:16

Read Karl Denninger. Today he tells us how large Wall Street companies systematically loot the American taxpayer, discussing a recent report by Christopher Whalen to The Senate Committee on Banking, Housing and Urban Affairs. Denninger quotes Whalen:

It is my view and that of many other observers that the CDS market is a type of tax or lottery that actually creates net risk and is thus a drain on the resources of the economic system. Simply stated, CDS and CDO markets currently are parasitic. These market subtract value from the global markets and society by increasing risk and then shifting that bigger risk to the least savvy market participants.

...Seen in this context, AIG was the most visible "sucker" identified by Wall Street, an easy mark that was systematically targeted and drained of capital by JPM, GS and other CDS dealers, in a striking example of predatory behavior. Treasury Secretary Geithner, acting in his previous role of President of the FRBNY, concealed the rape of AIG by the major OTC dealers with a bailout totaling into the hundreds of billions in public funds.

hrtrader

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Friday June 19, 2009 · 7:34 AM PDT

2009/06/19 · 07:34

Regarding the $134.5 billion in bearer bonds seized by the Italians at the Swiss border, the US has declared that they are counterfeit:

U.S. government bonds found in the false bottom of a suitcase carried by two Japanese travelers attempting to cross into Switzerland are fake, a Treasury spokesman said.

“They’re clearly fakes,” Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington, said yesterday. “That’s beyond the fact that the face value is far beyond what’s out there.”

But what are the implications...?

hrtrader

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Tuesday June 16, 2009 · 6:59 AM PDT

2009/06/16 · 06:59

Last week there was considerable media attention to China's stockpiling of commodities, as traders look to determine reasons for recent price increases, and also discern the impact on future price trends. Many commentators assert that the Chinese commodities buildup is unsustainable, which is probably true. But looking underneath the surface, we should ask whether China is merely taking advantage of a perceived advantageous price environment, or whether something else is at play. Future prices for commodities will be affected by the broader Chinese goals, including those that relate to currencies.

hrtrader

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Sunday April 19, 2009 · 9:32 AM PDT

2009/04/19 · 09:32

Yesterday's diary provoked some debate on the relative costs and benefits of putting insolvent banks into receivership (and subsequently re-privatizing at some point), as opposed to providing them with bailout funds and allowing them to continue in their current form. There were a wide range of excellent points and questions. Which scenario will ultimately cost more? Who wins and who loses in either case? What is the impact of receivership/nationalization on pension funds? Is the government capable of operating the banks under receivership? Is receivership or nationalization of banks politically feasible? Are the large banks on the road to some form of nationalization in any event, and is the current bank plan merely an interim step?

Economist, and former savings and loan regulator, William Black says, "We have failed bankers giving advice to failed regulators on how to deal with failed assets. How can it result in anything but failure?" Black, and several others, say the current approach risks destroying the Obama presidency, and prolonging the crisis. Are they right? What evidence is available for each side of the debate?

hrtrader

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Saturday April 18, 2009 · 8:34 AM PDT

2009/04/18 · 08:34

As banks surprise Wall Street with profitable quarters, the stock market has continued its rally that started in early March. Meanwhile, the Obama administration looks forward to further implementation of the Geithner-Summers bank plan, and stress tests for 19 major financial institutions. Against this backdrop, there is growing criticism coming from both the left and the right regarding economic policy, particularly the bank plan. The more populist form of criticism has come from the right, led by Fox News-inspired tea parties protesting excessive government spending (and the expected taxation to come as a result). From the left, we have seen substantive criticism coming from some of our most esteemed economic minds, including Paul Krugman, Joseph Stiglitz, and Jeffrey Sachs.

Given our justifiable relief and pleasure at recently electing Barack Obama as President, how should we react to these criticisms?

hrtrader

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Friday April 17, 2009 · 6:31 AM PDT

2009/04/17 · 06:31

During the past week, several large financial corporations have significantly beat expectations with their quarterly earnings. This includes Wells Fargo with $3 billion, JP Morgan at $2.1 billion, and Goldman Sachs at $1.8 billion. Today Citigroup came in with $1.6 billion in quarterly profits. The financial markets have responded by extending the sharp rally that started in March. CNBC pundits tell us (for the umpteenth time) that we are seeing the light at the end of the tunnel, or, as Ben Bernanke put it, the "green shoots" of the recovery.

But how should we interpret these banking numbers? If banks are in crisis, why are they reporting stellar quarters? As we examine the truth behind the numbers, we are left with a much less rosy scenario for the economy. Even more troubling is the relationship between Wall Street and Washington, and the degree to which banking interests are influencing policy for their own benefit, and to the detriment of the US taxpayer.

hrtrader

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Wednesday November 12, 2008 · 6:33 AM PST

2008/11/12 · 06:33

Many market commentators have been arguing that recent bailout policies will exacerbate the US government's already tenuous fiscal situation, which will result in a severe devaluation of the US dollar and the emergence of hyper-inflation. While there has been a massive injection of liquidity into the market, and the US government is indeed on very shaky financial footing, most signs are now pointing to a prolonged period of deflation. Essentially we are now undergoing a period of frozen credit markets, cratering demand, rising unemployment (which drives labor costs down), and massive destruction of wealth throughout the global economy.

hrtrader

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Friday October 31, 2008 · 4:47 AM PDT

2008/10/31 · 04:47

In recent news, we learn that AIG "is rapidly running through $123 billion in emergency lending provided by the Federal Reserve, raising questions about how a company claiming to be solvent in September could have developed such a big hole by October." Credit default swaps are at the heart of AIG's difficulties. Shah Gilani, in The Credit Crisis and the Real Story Behind the Collapse of AIG, comments:

...Credit default swaps are creating a downward spiral in the capital markets, driving up the cost of capital, and squeezing out all manner of borrowers. And these speculative bets run amok are undermining all U.S. Federal Reserve and U.S. Treasury Department efforts to "liquefy" the system. If this keeps up, the credit default market could sink the U.S. economy into a recession/depression that will make the Great Depression look like a day at the beach.

hrtrader

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Sunday October 19, 2008 · 3:21 AM PDT

2008/10/19 · 03:21

Lost in the news shuffle these days is the expanding conflict in Pakistan. The increased military action is a combination civil war and new front of the United States war on terror, as Pakistani and US forces fight Islamists in the North West Frontier. With nuclear weapons, extreme poverty, an economy in crisis, and an unstable, highly corrupt government, Pakistan currently tops the list of world security threats.

hrtrader

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Tuesday October 14, 2008 · 3:37 AM PDT

2008/10/14 · 03:37

As the public strives to understand the root causes of the economic crisis, politicians and partisan media have refined their talking points. Unfortunately, many are looking to create a wedge political issue, truth be damned. The most reprehensible talking point, pushed recently by such commentators as Charles Krauthammer, Neil Cavuto, and Rush Limbaugh, attributes the crisis to the Community Reinvestment Act, passed during the Carter administration. The CRA sought to increase home ownership among low income Americans. Undoubtedly, CRA placed pressure on commercial banks and thrifts to extend loans that they would have otherwise avoided. However, for a variety of reasons, this talking point is factually wrong, intellectually dishonest, and is designed to create divisions among Americans during one of our most challenging periods as a nation.

RSS

Big Banks Committing Financial Terrorism?

How Wall Street Systematically Picks Our Pockets

The Latest Regarding $134.5 Billion in Seized Bearer Bonds

A Meeting of World Powers, Without the US

On the Bank Nationalization/Receivership Debate

Critics from the Left and Right: Krugman, Stiglitz, Sachs, and the Tea Parties

On Banking Profits and the Power of Oligarchs

Inflation vs. Deflation

Understanding the Credit Default Swap Issue

War in Pakistan

The CRA Talking Point