Tag Archives: Too Big To Fail

How to Rate Bernie Sanders?

Thursday, 23 July 2015 04:22

This article was published by The McAlvany Intelligence Advisor on Wednesday, July 22, 2015:

Bernie Sanders, U.S. Senator from Vermont

Bernie Sanders, U.S. Senator from Vermont

The National Taxpayer Union rates the performance of Vermont’s Senator Bernie Sanders, candidate for the Democrat Party’s nomination for president in 2016, at a lowly five percent out of 100. The American Conservative Union rates his performance barely higher, at 6.2 out of 100.

The National Rifle Association (NRA) has rated Sanders over the years at between a C- and F. And this despite the NRA’s dalliance with Sanders in 1990 that put him into the House, replacing a RINO, Peter Smith.

Wayne LaPierre, vice president of the NRA, wrote to the group’s 12,000 Vermont faithful in 1990 that

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On Gun Control, Bernie Sanders Is a Conundrum

Wednesday, 22 July 2015 05:13

This article appeared online at TheNewAmerican.com on Tuesday, July 21, 2015:

U.S. Senator Bernie Sanders of Vermont

U.S. Senator Bernie Sanders of Vermont

Vermont Senator Bernie Sanders reflects the bifurcation evident in his state almost from its very beginning. One of only two states to vote against Franklin Roosevelt in all four of his presidential campaigns, Republicans dominated Vermont’s politics from 1854 until the mid-1970s. Since then it is one of the most reliably blue states in the union. In 2013, it became the 17th state to decriminalize marijuana, while in 2014, it was the first state to call for a constitutional convention to overturn the Supreme Court’s decision in the Citizens United case, wherein the court decided that Americans didn’t lose their right to financially support political candidates just because the Americans form a corporation. That same year it also became the first state to require GMO labeling.

It is also known for being the state that allows its citizens to carry sidearms without

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Will Money-laundering Scandal Derail Lynch Nomination?

Wednesday, 18 March 2015 06:08

This article first appeared online at TheNewAmerican.com on Tuesday, March 17, 2015:

View image | gettyimages.com

Friday’s news that French state financial prosecutors were joining with the Swiss government in pursuing charges that HSBC’s Swiss banking division was engaging in illegal tax dodges for their wealthy clients may have spelled the end of the nomination of Loretta Lynch (shown) to replace Eric Holder as U.S. Attorney General.

Three years ago, Lynch caved in and let HSBC off the hook with a modest fine and a slap on the wrist following its investigation into the bank’s money-laundering activities that helped fund Middle East terrorists and Mexican drug cartels. Lynch’s agreement insulated guilty parties from criminal prosecution while allowing the bank’s money laundering activities to continue despite its agreeing to a “cease and desist” order.

The current head count in the Senate gives

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GM Bailout Cost Taxpayers far more than just $11 Billion

Friday, 02 May 2014 07:34

General Motors HydroGen4

General Motors HydroGen4 (Photo credit: Wikipedia)

The Detroit Free Press’ announcement on Wednesday that taxpayers lost more on the General Motors bailout in 2009 than originally thought was brief, to the point, and missed most of the real story behind the GM bailout. Taxpayers lost $11.2 billion following the government’s sale of the last of the stock it held in GM following the company’s government-assisted bankruptcy and restructuring, according to the announcement.

The key quote from a Treasury spokesman, however, was revealing. Said Adam Hodge:

The goal of Treasury’s investment in GM was never to make a profit, but to help save the American auto industry, and by any measure that effort was successful.

Not if one was a bondholder in GM. Not if one believed that

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Presidential Debate Questions from Light from the Right

Wednesday, 03 October 2012 13:28

George Will – Debate questions for the presidential candidates

The spectacles we persist in dignifying as presidential “debates” — two-minute regurgitations of rehearsed responses — often subtract from the nation’s understanding. But beginning Wednesday, these less-than-Lincoln-Douglas episodes might be edifying if the candidates could be inveigled into plowing fresh ground.

George Will

George Will (Photo credit: Keith Allison)

Will has some suggestions for Presidential Debate questions for Obama and Romney. And so do I. Here is one from Will on the Supreme Court:

Do you rejectthe Kelo v. New London decision, in which the Supreme Court deferred to governments’ desire to seize private property and give it to wealthier private interests who would pay higher taxes?

I have a better one:

Do you support the Supreme Court’s decision to uphold Obamacare on the basis that a tax – any tax – is ok as long as Congress intended it to be a tax?

Will has one on foreign policy:

On Oct. 7, we begin the 12th year of the war in Afghanistan, and 51 recent NATO fatalities have been at the hands of our supposed Afghan allies, causing U.S. commanders to indefinitely suspend many joint operations. Why are we staying there 27 more months?

I have a better one (or three):

Why are we there in the first place? What is your take on the War on Terror, which is a war against a strategy and not a war against an aggressor? And why didn’t Congress get involved in declaring war, as the Constitution demands?

Will has one on domestic policy:

Do you agree that a financial institution that is too big to fail is too big to exist? If not, why not? The biggest banks emerged from the Great Recession bigger. At the end of 2011, the five biggest (JPMorgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs) held more than $8.5 trillion in assets, which is 56 percent of the 2011 gross domestic product. Why should they not be broken up?

I have a better one:

Since the Federal Reserve is essentially a cartel designed from its beginning to protect big banks from the consequences of their own folly, why shouldn’t the Fed be abolished?

I won’t be holding my breath Wednesday night to see if any of mine make it.

JPMorgan Chase’s $2 Billion Trading Loss Results in Calls for More Regulation

Wednesday, 16 May 2012 04:14

Last week’s revelation by JPMorgan Chase’s CEO Jamie Dimon that the bank’s trading desk has suffered a $2 billion loss was followed on Monday by the resignation of three key players involved in the trade that went bad. The Chief Investment Office (CIO), Ina Drew, along with two of her associates, announced their retirements from the bank.

It was just two months ago that questions about risky trades being undertaken at JPM were passed off by Dimon as a “tempest in a teapot,” but on Sunday, on NBC’s Meet the Press, Dimon admitted that he “was dead wrong” and added:

We made a terrible, egregious mistake. There’s almost no excuse for it. [We] hurt ourselves and our credibility [and expect to] pay the price for that.

Dimon and JPM are used to paying the price for their past errors and misdeeds. In December 2002, the bank paid $80 million as part of a $1.4 billion settlement involving 10 banks that deceived investors with biased research.

In 2003, the bank paid more than $2 billion in fines and settlements to investors and the Securities and Exchange Commission (SEC) for their role in fraudulently financing Enron Corporation that collapsed in 2001.

In March 2005, the bank paid another $2 billion following its involvement in underwriting some $15 billion of WorldCom’s bonds.

There’s more: In November 2009, JPM agreed to a $722 million settlement with the SEC over their involvement in a “pay to play” scheme where Jefferson County, Alabama, was brought to the brink of bankruptcy through fraud and excessive fees to be charged on refinancing the county’s sewer bonds.

And more: In January 2011, JPM admitted that it deliberately overcharged some 6,000 active-duty military families for their mortgages and illegally foreclosed on 18 of those families. At the time Dimon apologized for the “error” and sent one of his associates, chief lending officer Dave Lowman, packing.

Dimon was deliberately opaque in discussing the trade that went sour, saying only that it came from trading in derivatives that were designed to

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Iceland Says “No” to Bank Bailouts, Enjoys Economic Growth

Thursday, 26 April 2012 04:17

To look at the streets of Reykjavik, Iceland, an alien would be hard-pressed to see any aftereffects of the banking crisis that nearly bankrupted the country in 2008. The capitol of the 40,000-square-mile island just below the Arctic Circle between Greenland and the United Kingdom is the country’s largest city where nearly two-thirds of the island’s 320,000 inhabitants reside. Unemployment is down, economic growth is positive, and its streets are calm.

But it was the center of the financial crisis precipitated in 2008 when one of its three largest banks had a big loan payment coming due and couldn’t come up with enough krona to make it.

As Iceland’s President, Olafur Ragnar Grimsson, said in an interview with Business Insider International:

If a collapse in the financial sector can bring one of the most stable and secure democracies and political structures to [its] knees as happened [here] in Iceland, then what could it do in [other] countries?

When Iceland’s legislature decided to take over the country’s three largest banks—Glitner, Landsbanki, and Kaupthing—it was discovered that, despite all four credit rating agencies giving them A or better credit ratings, the banks owed an amount that approached six times Iceland’s gross domestic product (GDP). Grimsson, who has been President of this parliamentary republic since 1996, had a decision to make: pump government (taxpayer) funds into them to keep them afloat, or

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“Too Big to Fail” Banks Wouldn’t Survive the Free Market

Saturday, 21 April 2012 06:24

Just two days separated a letter from Matt Taibbi of Rolling Stone magazine and a report from the president of the Dallas Federal Reserve, each remarkably calling for the end of “too big to fail” banks.

Taibbi wrote his letter to Occupy Wall Street (OWS) supporters on March 27, giving a short talk to them about the worst of the banks—the Bank of America—and then handing out copies of it to the demonstrators. In typically lurid prose, Taibbi said that Bank of America

has systematically defrauded almost everyone with whom it has a significant business relationship, cheating investors, insurers, homeowners, shareholders, depositors, and the state. It is a giant, raging hurricane of theft and fraud, spinning its way through America and leaving a massive trail of wiped-out retirees and foreclosed-upon families in its wake….

But Bank of America hasn’t gone out of business, for the simple reason that our government has decided to make it the poster child for the “Too Big To Fail” concept. Because it is considered a “systemically important institution” whose collapse would have a major, Lehman-Brothers-style impact on the economy, two consecutive presidential administrations have taken extraordinary measures to keep Bank of America in business, despite a staggering recent legacy of corruption schemes.

In addition, Taibbi wrote,

This bank is like the world’s worst teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt’s funeral.

He concluded that the only way to solve the Bank of America “too big to fail” problem is to let it be subject to free-market forces: “It would be a great sign of America’s return to healthier capitalism if we could

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The Eurozone Continues to Unravel

Thursday, 10 November 2011 04:02

With Greece’s Prime Minister George Papandreou agreeing to step down in order to secure more bailout funds from the ECB, attention turned immediately to Italy’s financial problems that dwarf those of Greece’s. The Greek PM’s decision now clears the way for an interim government to agree formally to the new austerity measures demanded by the European Union as a condition of receiving additional financing by the end of the month. Those funds are needed to pay Greece’s bills through January 2012.

The bond market shifted its attention to Italy on Monday, driving interest rates on its 10-year bond to a record-high 6.66 percent, the highest since the country entered the union in 1999 and perilously close to

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Big Banks Gamble on Derivatives at Taxpayers’ Risk

Friday, 28 October 2011 13:12

When Bank of America announced that it was moving its derivatives-laden portfolio at its subsidiary Merrill Lynch over to its bank holding company, it said it was merely responding to pressure from some of its partners to take advantage of the holding company’s higher credit rating. It would also reduce the need for the bank to post an additional $3.3 billion in collateral because of the recent downgrade it suffered at the hands of Moody’s last month.

But the real reason, according to Bloomberg, is that the FDIC insures the bank but not Merrill Lynch, and in the event of a failure in

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A Hyper-Inflation Horror Story at Home

Friday, 28 October 2011 03:10

David Galland’s article for the Daily Reckoning painted a picture of imminent collapse of America’s monetary system, which was followed four days later by Clive Maund’s possible scenario of bank failures following on the heels of a eurozone collapse. Mamta Badkar raised the specter of hyperinflation in his Business Insider article by reviewing the “10 Worst Hyper-Inflation Horror-Stories of the Past Century,” reflecting interest in whether, or how, the economic disaster of hyperinflation would affect the United States.

According to Badkar, the runaway inflation of Germany in the early 1920s is one of the worst cases in history, where, at its nadir, the monthly inflation rate reached 29,500 percent in October 1923. In post-World War II Greece, inflation peaked at

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S&P Downgrades Japan: Harbinger for US

Tuesday, 01 February 2011 15:40

Japanese 10,000 Yen Note, Macro Photo

Image by Ivan Walsh via Flickr

Standard and Poor’s gave plenty of reasons for its downgrade of Japan’s credit rating yesterday such as increasing annual deficits and soaring national debt, an aging population, shrinking workforce, and a government in gridlock. With their national debt approaching $11 trillion and a gross domestic product of just under $5.5 trillion, Japan’s ratio of debt to GDP is now

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Conjuring Magic To Cover States’ Debts

Wednesday, 25 August 2010 11:10

SACRAMENTO, CA - JULY 21: A sign stands in f...

Image by Getty Images via @daylife

The first warning about the possible bankruptcy of the town of Vallejo, California, was reported by the Associated Press on February 28, 2008, when Councilwoman Stephanie Gomes said, “Our financial situation is getting worse every single day. No city or private person wants to declare bankruptcy, but if you’re facing insolvency, you have no choice but to seek protection.”

Marci Fritz, vice president of the California Foundation for Fiscal Responsibility, blamed the action on promises made earlier by the council to the city’s employees concerning salaries and retirement benefits that the city no longer can afford. According to Fritz, these were promises made during economically flush times, and were due to the city council’s unrealistic expectations that those times would continue indefinitely.

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Fannie and Freddie De-listed From NYSE: Now What?

Friday, 09 July 2010 06:49

Fannie Mae headquarters

Image by futureatlas.com via Flickr

When ABC News announced that Fannie Mae and Freddie Mac would be de-listed by the New York Stock Exchange on July 8, writer Rich Blake said that “these once mighty enterprises will trade alongside stocks on the Over-The-Counter Bulletin Board, a place where many companies go to die.”

As a eulogy Blake expressed the usual statist paean: “It’s difficult to contemplate how the U.S. mortgage market could function without the nearly $6 trillion in funding they provide to this market and the institutions that comprise it…The housing sector would be in even worse shape if not for those twin…enterprises.”

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Financial Reform: Expanding Hubris, Limiting Freedom

Tuesday, 06 July 2010 08:46

Chris Dodd

Image via Wikipedia

When the House passed the 2,319-page Dodd-Frank financial reform bill by a vote of 237-192, all it did was confirm for many the extraordinary hubris of legislators believing they could in fact “fix” the problems they themselves created which resulted in the Great Recession of 2008.

John B. Taylor, professor of economics at Stanford University says, “The main problem with the bill is that is based on a misdiagnosis of the causes of the financial crisis…the presumption that the government did not [already] have enough power to avoid the crisis.”

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Free Markets, Deregulation, and Blame

Friday, 19 March 2010 08:01

Quarterly Journal of Austrian Economics

Image via Wikipedia

Free markets, in the full sense of the phrase, exist only in the minds and imaginations of free-market economists from the Austrian School, such as Ludwig von Mises and Murray Rothbard.

The classic definition is simply a market without intervention or regulation by government. In truth, commerce in any developed country is always controlled to some extent by government. A free market requires the right to own property, which means that the wages, earnings, profits, and gains obtained by providing products and services to others belongs to the individual generating them. The assumption is that an individual with this kind of freedom would only make an exchange that gained him a benefit.

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Obama, Dems Slip Sharply in Polls

Sunday, 20 December 2009 09:51

Nearing the end of his first year in office, President Obama and his Democratic Party are taking a beating in polls by NBC News/Wall Street Journal and the Washington Post/ABC.

After defying the laws of political gravity for much of his first term, Obama and his party’s poll numbers are starting to reflect increasing public unhappiness over the economy, healthcare, and Afghanistan.

For the first time in his presidency, Obama’s overall approval rating has fallen below 50% to 47%. More of those polled also see the Democrat party in a negative light, and believe the country is “on the wrong track”, with a negative 55% rating, the highest since inauguration.

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Bernanke Claims Economy Recovering

Thursday, 10 December 2009 06:21

Federal Reserve Chairman Ben Bernanke told the Economic Club of Washington that the economy is recovering, even as it confronts “formidable headwinds.”

He also promoted the Federal Reserve, and the job he is doing as head of the Fed) in an op-ed piece he wrote recently in the Washington Post where he assured readers (and Congress) that “the Fed played a major part in arresting the [financial] crisis, and we should be seeking to preserve [the Fed’s] ability to foster financial stability and to promote economic recovery without inflation.”

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