Tag: banks

One weird sign of trouble in the banking sector

Guest Post by Simon Black

It was only a few generations ago that most people spent their entire lives within a few miles of where they were born.

They grew up, lived, worked, and retired, all in the same place. And that was normal.

Travel and relocation didn’t really become commonplace until after World War II. But even then, the most common reason people moved was because of a job.

And it has remained that way for decades; people tend to choose where they live because it’s close to the place that they work.

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Why you shouldn’t be able to drive to your bank

Guest Post by Simon Black

What is your favorite coffee shop or restaurant? Which doctor’s office and dentist do you prefer to go to?

I bet these are all within, say, 15 minutes of your home. That makes sense–who wants to drive three hours to get coffee, or take a plane to their dentist?

But what about your bank?

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WHY DO WE NEED BANKS?

Guest Post by Leonard Ruggiero

I’m sure someone has thought of this, but I ask the question, “Why do we need banks at all?”

With web based money exchange mechanisms, such as Transferwise, Veem, and Xe, money can be sent directly from one person to another, without paying exorbitant bank fees and at better exchange rates than banks.

But, here’s the key question: When that person receives their money, they turn right around and deposit it in their bank account. Why bother? Is it really necessary that money be sent to a bank?

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The Bank Is Being Robbed

Guest Post by Jeff Thomas

In 1903, the desperado in the image above appeared in an early film about a robbery. He was the classic guy in a black hat and, of course, he was eventually foiled by the guys in the white hats.

That was a simpler time.

Today, law enforcement is assisted so much by modern technology that the guys in the black hats rarely try to rob a bank, as they’ll almost surely be caught.

So, does that mean the end of bank robberies? Well, unfortunately, no. In the future, we’re likely to witness bank robberies on a scale such as we’ve never before witnessed.

The difference is that they’ll be robbed by the guys in the white hats. And, the kicker is that the laws of the land will be entirely in their favour. It will be legalized robbery.

In 2013, the world saw its first “bail-in,” in which the banks of Cyprus confiscated the deposits of many of their clients. There was no warning and there was little in the way of explanation, except to say that it was “necessary.” What that really meant was that the banks had been mismanaged to the point that, unless the deposits were confiscated, they would fail.

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QUOTES OF THE DAY

“We should ban banks from risk-taking because society is going to pay the price… It was obvious that their profits were simply cash borrowed from destiny with some random payback time.”

Nassim Nicholas Taleb

“The Gramm-Leach-Bliley Act makes the most important legislative changes to the structure of the U.S. financial system since the 1930s. Financial services firms will be authorized to conduct a wide range of financial activities, allowing them freedom to innovate in the new economy.

The Act repeals provisions of the Glass-Steagall Act that, since the Great Depression, have restricted affiliations between banks and securities firms. It also amends the Bank Holding Company Act to remove restrictions on affiliations between banks and insurance companies. It grants banks significant new authority to conduct most newly authorized activities through financial subsidiaries.

Removal of barriers to competition will enhance the stability of our financial services system. Financial services firms will be able to diversify their product offerings and thus their sources of revenue. They will also be better equipped to compete in global financial markets.”

William Jefferson Clinton, November 12, 1999

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QUOTES OF THE DAY

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”

Lord Acton

“Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good.”

John Adams

“The trade of the petty usurer is hated with most reason: it makes a profit from currency itself, instead of making it from the process which currency was meant to serve. Their common characteristic is obviously their sordid avarice.”

Aristotle

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”

Napoleon Bonaparte


A World of Problems

Guest Post by The Zman

Back when the Germans were threatening to shut down Greece and sell it off for parts, it was fairly obvious that there was no way to “fix” the Greek problem. Even it were possible to radically overhaul their public sector, the debt payments are too high to maintain the level of social services expected from a modern social democracy. Default was unthinkable because close to 80 percent of Greece’s public debt is owned by public institutions, primarily the EU governments and the ECB.

The “solution” was to kick the can down the road until a miracle happened, but now the problem is back.

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We Have Entered The Looting Stage Of Capitalism

Guest Post by Paul Craig Roberts

Having successfully used the EU to conquer the Greek people by turning the Greek “leftwing” government into a pawn of Germany’s banks, Germany now finds the IMF in the way of its plan to loot Greece into oblivion .

The IMF’s rules prevent the organization from lending to countries that cannot repay the loan. The IMF has concluded on the basis of facts and analysis that Greece cannot repay. Therefore, the IMF is unwilling to lend Greece the money with which to repay the private banks.

The IMF says that Greece’s creditors, many of whom are not creditors but simply bought up Greek debt at a cheap price in hopes of profiting, must write off some of the Greek debt in order to lower the debt to an amount that the Greek economy can service.

The banks don’t want Greece to be able to service its debt, because the banks intend to use Greece’s inability to service the debt in order to loot Greece of its assets and resources and in order to roll back the social safety net put in place during the 20th century. Neoliberalism intends to reestablish feudalism—a few robber barons and many serfs: the One Percent and the 99 percent.

The way Germany sees it, the IMF is supposed to lend Greece the money with which to repay the private German banks. Then the IMF is to be repaid by forcing Greece to reduce or abolish old age pensions, reduce public services and employment, and use the revenues saved to repay the IMF.

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The Fed Responds To Zero Hedge: Here Are Some Follow Up Questions

Tyler Durden's picture

Submitted by Tyler Durden on 01/18/2016 13:06 -0500

Over the weekend, we gave the Dallas Fed a chance to respond to a Zero Hedge story corroborated by at least two independent sources, in which we reported that Federal Reserve members had met with bank lenders with distressed loan exposure to the US oil and gas sector and, after parsing through the complete bank books, had advised banks to i) not urge creditor counterparties into default, ii) urge asset sales instead, and iii) ultimately suspend mark to market in various instances.

Moments ago the Dallas Fed, whose president since September 2015 is Robert Steven Kaplan, a former Goldman Sachs career banker who after 22 years at the bank rose to the rank of vice chairman of its investment bank group – an odd background for a regional Fed president – took the time away from its holiday schedule to respond to Zero Hedge.

This is what it said.

Dallas Fed

✔ @DallasFed

No truth to this @zerohedge story. The Dallas Fed does not issue such guidance to banks. https://twitter.com/zerohedge/status/688441021986959361 …

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Happy New Year — Bail-In Passed for Europe’s Banks

Guest Post by

ECB

The mainstream media is not extensively reporting on the “experimental” bail-in that the EU imposed on Cyrus. The bail-in, that they swore would never be applied to Europe, will officially begin in January. This new power will be in the interest of taxpayers as they will no longer be forced to pay for failed banks that were created by the childish structure of the euro that was created by lawyers who never understood the economy. But wait a minute — aren’t taxpayers the people with deposits in banks? Hm. Moving to electronic money is also about preventing bank runs. The bottom-line here is that they will just take your money to save bankers. Eliminating cash accomplishes two things: (1) they get to tax everything, and (2) you cannot withdraw money from banks.

The bail-in directive was agreed upon on January 1, 2015, and the bail-in system will take effect on January 1, 2016. So here we are, just in case you missed this one. Their website states:

Parliament and Council Presidency negotiators reached a political agreement Wednesday on the draft bank recovery and resolution directive, the first step towards setting up an EU system to deal with struggling banks. This directive will introduce the “bail-in” principle by January 2016, thereby ensuring that taxpayers will not be first in line to pay for bank failures.

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A Question of Money – Interest – Bankers

Guest Post by Martin Armstrong

INTR-CCON

The problem in so many areas is that we can focus on one issue, but the answer is a complexity of variables. The history of interest rates has been provided on this site. Interest rates in a developed economy reflect the “option” value on the expected decline in purchasing power of money. If I expect it to decline by 5%, then I expect a profit and say want 8%. You in turn will pay the 8% only if you think you also can make a profit above 8% perhaps 10%+.

In an UNDEVELOPED economy, we transpose the depreciation risk of money with risk in general. Lacking any developed economy, one will lend only based upon the risk of getting repaid. Therefore, without a legal system, the risk is either the person or the political climate. When we look at the history of interest rates, I demonstrated that the rate of interest even within the Roman Empire increased the further you moved away from Rome. Hence, the lowest interest rates are in the dollar and they rise in other countries based upon perceived political risk. Greece’s interest rates are significantly higher than those in Germany. This is a reflection of political risk, not simple the future inflation rate in the Euro.

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