Posts Tagged ‘federal reserve transparency act

17
May
10

good schtuff from dr. paul

if only all his TV appearences were this concise…..

14
May
10

finally someone breaks down how banks make money in 2010

anybody that could get a deal like this could make millions overnight….

“The latest quarterly reports from the big Wall Street banks revealed a startling fact: None of the big four banks had a single day in the quarter in which they lost money trading.
For the 63 straight trading days in Q1, in other words, Goldman Sachs (GS), JP Morgan (JPM), Bank of America (BAC), and Citigroup (C) made money trading for their own accounts.
Trading, of course, is supposed to be a risky business: You win some, you lose some. That’s how traders justify their gargantuan bonuses–their jobs are so risky that they deserve to be paid millions for protecting their firms’ precious capital. (Of course, the only thing that happens if traders fail to protect that capital is that taxpayers bail out the bank and the traders are paid huge “retention” bonuses to prevent them from leaving to trade somewhere else, but that’s a different story).
But these days, trading isn’t risky at all. In fact, it’s safer than walking down the street.
Why?
Because the US government is lending money to the big banks at near-zero interest rates. And the banks are then turning around and lending that money back to the US government at 3%-4% interest rates, making 3%+ on the spread. What’s more, the banks are leveraging this trade, borrowing at least $10 for every $1 of equity capital they have, to increase the size of their bets. Which means the banks can turn relatively small amounts of equity into huge profits–by borrowing from the taxpayer and then lending back to the taxpayer.
Why is the US government still lending banks money at near-zero interest rates? Ostensibly, for the same reason that the government bailed out the banks in the first place: So the banks will lend money to small businesses, big businesses, and other participants in the “real economy.”
But the banks aren’t lending money to the real economy: Private sector lending has fallen off a cliff.
And one reason private sector lending has fallen off a cliff is that lending money to the private sector is risky. Lending money to the government, meanwhile, is nearly risk-free. So the banks are just lending money back to the government (by scarfing up US Treasuries), collecting a nearly risk-free 3% spread, and then leveraging up this bet 10-15 times.

Image: St Louis Fed
THAT’s how the big banks made money 63 days in a row. Importantly, doing this required no special genius: If you had the good fortune of working at a big bank, you would be making money every day, too. And then you’d get to take half of that money home as a bonus!
No wonder everyone wants to work on Wall Street.
The government’s zero-interest-rate policy, in other words, is the biggest Wall Street subsidy yet. So far, it has done little to increase the supply of credit in the real economy. But it has hosed responsible people who lived within their means and are now earning next-to-nothing on their savings. It has also allowed the big Wall Street banks to print money to offset all the dumb bets that brought the financial system to the brink of collapse two years ago. And it has fattened Wall Street bonus pools to record levels again.

Read more: http://www.businessinsider.com/henry-blodget-wall-street-2010-5#ixzz0nrYBA1Tn

08
Apr
10

Ratigan on Godfather Al Greenspan

great little summation of the joke that is american ponzi-finance.
Vodpod videos no longer available.

more about “Ratigan on Godfather Al Greenspan“, posted with vodpod
25
Feb
10

ron paul ties fed to saddam hussein in the 1980’s

maybe farfetched but wouldn’t friggin’ surprise me….

http://blogs.wsj.com/economics/2010/02/24/ron-paul-on-watergate-saddam-hussein-and-the-federal-reserve/

here’s henry waxman backing up RP’s claim:

from dailypaul.com

22
Feb
10

ron paul interviewed by fox’s raddow maddow copy

18
Feb
10

another great taibbi article hammering ponzi wall street

excerpt:

This may sound far-fetched, but the financial crisis of 2008 was very much caused by a perverse series of legal incentives that often made failed investments worth more than thriving ones. Our economy was like a town where everyone has juicy insurance policies on their neighbors’ cars and houses. In such a town, the driving will be suspiciously bad, and there will be a lot of fires.

http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print

17
Feb
10

can’t wait to stop hearing about these golddam derivatives….

excerpt:

The banking lobby is resisting efforts to overhaul the $605 trillion market for derivatives that don’t trade on exchanges. Although a lack of transparency and hidden leverage in this over-the-counter market fueled systemic weakness in 2008, regulators and politicians haven’t delivered some basic improvements.

The Club-Med meltdown may persuade them to act. For years, Greece wrote large derivatives contracts with banks, mostly associated with sovereign-bond issues. These derivatives likely have a feature that now makes them particularly worrying for banks, lax “margin” requirements

http://online.wsj.com/article/SB10001424052748704431404575066982745810158.html?mod=WSJ-hpp-LEFTWhatsNewsCollection

15
Feb
10

goldman sachs implications in greece collapse continue to grow

http://baselinescenario.com/2010/02/14/goldman-goes-rogue-%E2%80%93-special-european-audit-to-follow/

excerpt:

At 9:30pm on Sunday, September 21, 2008, Goldman Sachs was saved from imminent collapse by the announcement that the Federal Reserve would allow it to become a bank holding company – implying unfettered access to borrowing from the Fed and other forms of implicit government support, all of which subsequently proved most beneficial.  Officials allowed Goldman to make such an unprecedented conversion in the name of global financial stability.  (The blow-by-blow account is in Andrew Ross Sorkin’s Too Big To Fail; this is confirmed in all substantial detail by Hank Paulson’s memoir.)

We now learn – from Der Spiegel last week and today’s NYT – that Goldman Sachs has not only helped or encouraged some European governments to hide a large part of their debts, but it also endeavored to do so for Greece as recently as last November.  These actions are fundamentally destabilizing to the global financial system, as they undermine: the eurozone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets.  When the data are all lies, the outcomes are all bad – see the subprime mortgage crisis for further detail.

A single rogue trader can bring down a bank – remember the case of Barings.  But a single rogue bank can bring down the world’s financial system.

14
Feb
10

cash will be king in post-volcker-rule era

if volcker is able to break up too big to fail (via the current unlimited fed backstop of banks like goldman sachs) get ready for another market crash and the dollar to rally. long term we’re gonna be better off but its going to be painful for usa + world in short term.

goldman’s special ‘bank holding company’ status gives them the following: As a result of the Global financial crisis of 2008, many traditional investment banks and finance corporations such as Goldman Sachs, American Express, CIT Group and General Motors Acceptance Corporation[3] successfully converted to bank holding companies in order to gain access to liquidity and funding. This arrangement allows them access to the Federal Reserve’s discount window and benefit from the Troubled Asset Relief Program, but the companies are now subject to more regulation and their ability to have exposure to risk will be limited.

excerpt from volcker article 1:

Goldman Sachs and other banks should give up their bank status if they want to avoid the ban on proprietary trading proposed by the White House, Paul Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, said.

“The implication for Goldman Sachs or any other institution is, do you want to be a bank?” Mr Volcker said in a video interview with the Financial Times. “If you don’t want to follow those [banking] rules, you want to go out and do a lot of proprietary stuff, fine, but don’t do it with a banking licence.”

http://www.ft.com/cms/s/0/121fe9d0-1753-11df-94f6-00144feab49a.html

interview with volcker: http://www.ft.com/cms/s/0/780d9d64-175d-11df-87f6-00144feab49a.html?nclick_check=1

02
Feb
10

larry kudlow grills paulson on mark-to-market accounting

great grilling of hank paulson by larry kudlow around causes of crisis. specifically, larry’s theory is that “conveniently timed” changes to mark-to-market accounting in 2007 sowed seeds of the 2008 collapse. Markets collapsed over 2007/2008, and then and only then rallied when mark-t-market accounting was changed in March 2009(day that market bottomed and then went on 60% rally).

you could also take a gander that golden sachs probably bet against the whole market knowing that mark-to-market changes in 2007 would lead to issues down the road.

no matter what caused crisis, paulson again looks like a freaking bumbling idiot that shouldn’t be calling any shots….Vodpod videos no longer available.

more about “larry kudlow grills paulson on mark-t…“, posted with vodpod

 




rss feed (click icon below)