Skip to main content

Home/ Socialism and the End of the American Dream/ Group items tagged deposits

Rss Feed Group items tagged

Filter: All | Bookmarks | Topics Simple Middle
Gary Edwards

Doug Casey: All Banks Are Bankrupt - Casey Research - 1 views

www.caseyresearch.com/...g-casey-all-banks-are-bankrupt

Doug-Casey Banksters Cyprus Casey-Research

shared by Gary Edwards on 04 Apr 13 - No Cached
  • Gary Edwards on 04 Apr 13
     
    This interview should be must reading for every citizen of this world.  Doug Casey lays it out, explaining in the simplest of terms the problem of corrupt governments and banksters.  Put this RSS feed right next to Sir Charles' Priced In Gold" blog as essential to start your day with reading. excerpt: "Anyone with any sense should withdraw whatever cash they have in European banks, whether in euros or any other currency, immediately. Cyprus demonstrated that governments are quite willing and able to confiscate money sitting in a bank account in order to preserve the banking system. We live in Bizarro World. L: Why would it spread? Cyprus was said to be particularly vulnerable because of its strong Greek connections; Cypriot banks had bought of lot Greek debt. Would people in Luxembourg be as exposed? Doug: All banks are in effect creatures of the state at this point. They all own a lot of government bonds, which are considered the most secure form of capital. Of course, that's the opposite of the truth; all these governments are bankrupt as well. The Greek government is just more overtly bankrupt than most. Actually, we should take a minute here to discuss what a properly run banking system looks like. Historically, banks offered two types of accounts: demand deposits and time deposits. Demand deposits are what we call checking accounts today, but the original idea was that you'd pay your bank to store your money securely, and you had the right to "demand" your deposit back immediately, and to transfer funds via check. The idea of time deposits, which became savings accounts, was that the bank would pay you interest when you deposited your money with them for a specific period of time. That's why it's called a "time" deposit; you lent the bank your money for a given time, as did other depositors, and the banks would always know how much money they could lend out - at higher interest rates. Furthermore, loans made against time deposits were always short term
Paul Merrell

It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors | WEB OF D... - 0 views

webofdebt.wordpress.com/...anned-for-us-and-uk-depositors

financial-collapse Cyprus banksters U.S. confiscation

shared by Paul Merrell on 12 Apr 13 - No Cached
  • Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  
  • Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.
  • No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .”
  • ...7 more annotations...
  • The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state: An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.
  • If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.  That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives.  She writes: In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.
  • Smith writes: Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011. Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg: . . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . . That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
  • $75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion).
  • Smith goes on: . . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman failed over a weekend after JP Morgan grabbed collateral. But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors. Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities.
  • An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on taxpayers to pay government expenses. The government’s debt is at least arguably the people’s debt, since the government is there to provide services for the people. But when the banks get into trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of the profits. Taking depositor funds is simply theft. What should be done is to raise FDIC insurance premiums and make the banks pay to keep their depositors whole, but premiums are already high; and the FDIC, like other government regulatory agencies, is subject to regulatory capture.  Deposit insurance has failed, and so has the private banking system that has depended on it for the trust that makes banking work.
  • The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor and middle class. Wealthy Americans don’t keep most of their money in bank accounts.  They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth. Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank.  Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.
  • Paul Merrell on 12 Apr 13
     
    Time to get your money out of the bank and into gold or silver, kept somewhere other than in a bank safety deposit box. 
Paul Merrell

EXCLUSIVE: Chase to Charge Customers Fees For Handing Cash Deposits - Top US World News... - 0 views

www.occupycorporatism.com/...e-customers-fees-cash-deposits

economy banksters savings-accounts

shared by Paul Merrell on 10 Jun 14 - No Cached
  • Beginning August 1st of this year, JP Morgan & Chase Co. will charge their customers for depositing cash into their accounts. According to an internal document sent to account holders, in less than a month from now “the fee for all types of Cash Deposit Processing (CDP) will be $0.25 per $100 [deposited]. The CDP fee will only apply after you exceed your account’s cash deposit limit.” One reason for Chase to charge their customers a fee on cash deposits may reside in the fact that the major banks are “charging customers who deposit lots of cash.” Wherein Chase is charging customers for every $100 in cash deposited, other banks are charging on every cash deposit of $10,000; or $0.20 on every $100 deposited. Kris Dawsey, economist for Goldman Sachs, warned about banks charging customers fees for simply depositing cash into their account in 2013.
  • When asked about a meeting of the Federal Reserve (Fed) Board and the Federal Open Market Committee (FOMC), wherein it was revealed that the 0.25% annual interest rate on money that the banks keep in the Fed would be reduced, Dawsey said: “One risk is that the move could prompt charges … on bank deposits.” Last November, Kristin Lemkau, spokesperson for JP Morgan & Chase Co said: “We have no intention of charging for retail customer deposits.” However this promise has not been kept. David George, analyst for Robert W. Baird & Co, explains that the financial institutions “would need to find alternative revenue sources to compensate” because of this decline in the Fed’s interest rate and fees on deposits “would be the most likely” option.
  • George said: “Having a bank account is a service, like the water and electric bill. And it has become less and less profitable.” Wayne Abernathy, executive vice president of the American Bankers Association confirmed: “Banks could respond to a drop in the Fed’s interest rate by charging a fee to large business customers that hold millions of dollars in savings accounts. Banks must bear the expense of managing that money.” Analysts say the Durbin Amendment within the Dodd Frank Act which limited fees imposed by merchant retailers onto banks who issue debit cards “has effectively hit consumer-banking revenues pretty hard.” When accessing debits, banks view checking accounts as high-risk and costing “a lot of money” to the banks.
  • Paul Merrell on 10 Jun 14
     
    Remember the days when banks' only source of money to lend was customer deposits?
Paul Merrell

Russell Napier Declares November 16, 2014 The Day Money Dies | Zero Hedge - 0 views

www.zerohedge.com/...ovember-16-2014-day-money-dies

banksters G20-summit deposits Cyprus bail-ins

shared by Paul Merrell on 02 Dec 14 - No Cached
  • It is with regret and sadness we announce the death of money on November 16th 2014 in Brisbane, Australia
  • On Sunday in Brisbane the G20 will announce that bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure. With deposits then subjected to a decline in nominal value following a bank failure, it is self-evident that a bank deposit is no longer money in the way a banknote is. If a banknote cannot be subjected to a decline in nominal value, we need to ask whether banknotes can act as a superior store of value than bank deposits? If that is the case, will some investors prefer banknotes to bank deposits as a form of savings? Such a change in preference is known as a "bank run."
  • Each country will introduce its own legislation to effect the ‘ bail-in’ agreed by the G20 this coming weekend. The consultation document from the UK’s Treasury lists the following bank creditors who will rank ABOVE depositors in a ‘failing’ financial institution:
  • ...4 more annotations...
  • The above list makes it clear that deposits larger than GBP85,000 will rank ahead of the bond holders of banks, but they will rank above little else. Importantly, both borrowings of the banks of less than 7 days maturity from other financial institutions and sums owed by banks in their role as counterparties to OTC derivatives will rank above large deposits. Large deposits at banks are no longer money, as this legislation will formally push them down through the capital structure to a position of material capital risk in any "failing" institution. In our last financial crisis, deposits were de facto guaranteed by the state, but from November 16th holders of large-scale deposits will be, both de facto and de jure, just another creditor squabbling over their share of the assets of a failed bank.
  • If we have another Lehman Brothers collapse, large-scale depositors could find themselves in the courts for years before final adjudication on the scale of their losses could be established. During this period would this illiquid asset, formerly called a deposit and now subject to an unknown capital loss, be considered money? Clearly it would not, as its illiquidity and likely decline in nominal value would make it unacceptable as a medium of exchange.
  • From November 16th 2014 the large-scale deposit at a commercial bank is, at best, a lesser form of money, and to many it will cease to be money at all as its nominal value can fall and it could cease to be accepted as a medium of exchange.
  • As the world’s smartest lawyer Charlie Munger is fond of saying, "Show me the incentive and I will show you the outcome." Some simple mathematics reveals that the November 16th announcement will create a very major incentive for investors to change deposits into banknotes.
Paul Merrell

It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors - 0 views

www.informationclearinghouse.info/article34442.htm

banksters confiscation financial-collapse FDIC

shared by Paul Merrell on 29 Mar 13 - No Cached
  • Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.  
  • One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes: Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011. Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:
  • The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state: An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.
  • ...7 more annotations...
  • No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.
  • If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.  That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives.  She writes: In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.
  • Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.
  • . . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . . That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show. $75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion).
  • Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank.  Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.
  • Another alternative was considered but rejected by President Obama in 2009: nationalize mega-banks that fail. In a February 2009 article titled “Are Uninsured Bank Depositors in Danger?“, Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in which Wood wrote: It is . . . amazing that Obama does not understand the political appeal of the nationalization option. . . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the realities of the situation will demand it. The result will be shareholders wiped out and bondholders forced to take debt-for-equity swaps, if not hopefully depositors.
  • President Obama acknowledged that bank nationalization had worked in Sweden, and that the course pursued by the US Fed had not worked in Japan, which wound up instead in a “lost decade.”  But Obama opted for the Japanese approach because, according to Ed Harrison, “Americans will not tolerate nationalization.” But that was four years ago. When Americans realize that the alternative is to have their ready cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into the public sector may start to have more appeal.
Paul Merrell

New G20 Rules: Cyprus-style Bail-ins to Hit Depositors AND Pensioners | nsnbc internati... - 0 views

nsnbc.me/...-ins-hit-depositors-pensioners

banksters G20-summit deposits Cyprus bail-ins

shared by Paul Merrell on 02 Dec 14 - No Cached
  • On the weekend of November 16th, the G20 leaders whisked into Brisbane, posed for their photo ops, approved some proposals, made a show of roundly disapproving of Russian President Vladimir Putin, and whisked out again.
  • It was all so fast, they may not have known what they were endorsing when they rubber-stamped the Financial Stability Board’s “Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution,” which completely changes the rules of banking. Russell Napier, writing in ZeroHedge, called it “the day money died.” In any case, it may have been the day deposits died as money. Unlike coins and paper bills, which cannot be written down or given a “haircut,” says Napier, deposits are now “just part of commercial banks’ capital structure.” That means they can be “bailed in” or confiscated to save the megabanks from derivative bets gone wrong.
  • Rather than reining in the massive and risky derivatives casino, the new rules prioritize the payment of banks’ derivatives obligations to each other, ahead of everyone else. That includes not only depositors, public and private, but the pension funds that are the target market for the latest bail-in play, called “bail-inable” bonds. “Bail in” has been sold as avoiding future government bailouts and eliminating too big to fail (TBTF). But it actually institutionalizes TBTF, since the big banks are kept in business by expropriating the funds of their creditors. It is a neat solution for bankers and politicians, who don’t want to have to deal with another messy banking crisis and are happy to see it disposed of by statute. But a bail-in could have worse consequences than a bailout for the public. If your taxes go up, you will probably still be able to pay the bills. If your bank account or pension gets wiped out, you could wind up in the street or sharing food with your pets.
  • ...1 more annotation...
  • In theory, US deposits under $250,000 are protected by federal deposit insurance; but deposit insurance funds in both the US and Europe are woefully underfunded, particularly when derivative claims are factored in. The problem is graphically illustrated in a chart from a March 2013 ZeroHedge post. OCC Chart (Image, upper left).
  • Paul Merrell on 02 Dec 14
     
    With commercial banks overloaded by investment bank derivative debt, a bank is the very last place one should park their money. See http://tinyurl.com/3oj7vbs and http://tinyurl.com/3ovf6ze FDIC insurance is now of value only to senior debtors, not to deposit account holders.
Paul Merrell

The Money Changers Serenade: A New Bankers' Plot to Steal Your Deposits | Global Research - 0 views

www.globalresearch.ca/...5359018

banksters fraud electronic-currency Summers

shared by Paul Merrell on 25 Nov 13 - No Cached
  • Writing in the Wall Street Journal (“Confessions of a Quantitative Easer,” November 11, 2013), Andrew Huszar confirms my explanation to be the correct one. Huszar is the Federal Reserve official who implemented the policy of QE. He resigned when he realized that the real purposes of QE was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.” (See: www.paulcraigroberts.org) This vast con game remains unrecognized by Congress and the public. At the IMF Research Conference on November 8, 2013, former Treasury Secretary Larry Summers presented a plan to expand the con game. Summers says that it is not enough merely to give the banks interest free money. More should be done for the banks. Instead of being paid interest on their bank deposits, people should be penalized for keeping their money in banks instead of spending it. To sell this new rip-off scheme, Summers has conjured up an explanation based on the crude and discredited Keynesianism of the 1940s that explained the Great Depression as a problem caused by too much savings. Instead of spending their money, people hoarded it, thus causing aggregate demand and employment to fall.
  • Summers says that today the problem of too much saving has reappeared. The centerpiece of his argument is “the natural interest rate,” defined as the interest rate at which full employment is established by the equality of saving with investment. If people save more than investors invest, the saved money will not find its way back into the economy, and output and employment will fall. Summers notes that despite a zero real rate of interest, there is still substantial unemployment. In other words, not even a zero rate of interest can reduce saving to the level of investment, thus frustrating a full employment recovery. Summers concludes that the natural rate of interest has become negative and is stuck below zero. How to fix this? The way to fix it, Summers says, is to charge people for saving money. To avoid the charges, people would spend the money, thus reducing savings to the level of investment and restoring full employment. Summers acknowledges that the problem with his solution is that people would take their money out of banks and hoard it in cash holdings. In other words, the cash form of money provides consumers with a freedom to save that holds down consumption and prevents full employment. Summers has a fix for this: eliminate the freedom by imposing a cashless society where the only money is electronic. As electronic money cannot be hoarded except in bank deposits, penalties can be imposed that force unproductive savings into consumption.
  • for Summers, the plight of the consumer is not the problem. The problem is the profits of the banks. Summers has the solution, and the establishment, including Paul Krugman, is applauding it. Once the economy officially turns down again, watch out.
  • Paul Merrell on 25 Nov 13
     
    Paul Craig Roberts exposes Larry Summers formula for the banksters to grab money from everyone: eliminate all but electronic-currency and penalize savings. Not mentioned by Roberts, but much of the infrastructure for this is already in place. For example, late last year all recipients of Social Security and VA benefit checks were notified that after March 1, 2013, they would be in violation of the law if they continued to receive paper checks. They were required to enroll in approved electronic deposit programs, all of which are offered by banks. Until about two years ago, people could merely state in writing that they didn't want it and could continue receiving paper checks. But Congress closed that loophole.  (I remain out of compliance.) Debit card is now mandatory, although they have not yet enacted penalties for non-compliance.  So the banksters now get the "float" on virtually all federal SS and VA benefit payments until spent. That's as opposed to the prior Treasury Department drafts whose funds were not in the banking system.   More to the point, the web portal for the federal "Go Direct" program to sign up for direct deposit is in place and debugged. It wouldn't take much beyond a bigger data set to issue debit cards for everyone in the U.S. during a transition to a cashless economy.  The Constitution says gold and silver only for payment of debts; paper currency paved the way for financial abuse of the economy by banksters. Now Summers wants to do away with cash entirely in favor of digital currency with penalties for saving? My life savings must be surrendered to a bank so I can be penalized for saving? And of course moving to all-digital currency would give the spy agencies a much more detailed record of your purchases to work with. The location where you bought that last cup of coffee is instantly available to the NSA? Gimme a break!    
Paul Merrell

Clinton IT aide answered zero questions in deposition | TheHill - 0 views

thehill.com/...d-zero-questions-in-deposition

Auction 2016 Hillary email-scandal Pagliano 5th-Amendment FOIA litigation

shared by Paul Merrell on 30 Jun 16 - No Cached
  • A former IT expert who was previously responsible for Hillary ClintonHillary Rodham ClintonTrump warns against Syrian refugees: 'A lot of those people are ISIS' Overnight Finance: Senate sends Puerto Rico bill to Obama | Treasury, lawmakers to meet on tax rules | Obama hits Trump on NAFTA | Fed approves most banks' capital plans Bush World goes for Clinton, but will a former president? MORE’s private email server answered virtually no questions during a roughly 90-minute deposition as part of an open records lawsuit this week.Aside from stating his name and saying three times that he understood procedural rules of the sworn-oath interview, Bryan Pagliano declined to say a single word other than to plead his Fifth Amendment right against self-incrimination.
  • The extensive reliance on the Fifth Amendment, which was first reported by Fox News on Wednesday, was expected; Pagliano’s lawyers had previously notified the court about the IT consultant’s plans.But it nonetheless could reflect poorly on Clinton, the former secretary of State and presumed Democratic presidential nominee, whom the judge in the case has said could be forced to answer questions herself.Pagliano’s refusal to talk ensures that key details about her email system remain unsettled and may raise the chances that she is asked to be interviewed herself as part of the case.
  • Pagliano has been granted limited immunity as part of the FBI’s ongoing investigation of Clinton’s email setup and the possibility that classified information was mishandled. In court documents filed ahead of his Wednesday morning deposition, lawyers for him and the federal government refused to outline the terms of the agreement or say how he might be assisting the investigation.However, lawyers did warn that the limited nature of his deal could leave him open to prosecution for incriminating information he divulged outside of protected sessions.The federal court ruled last week that Pagliano's immunity deal could remain secret.
  • ...1 more annotation...
  • Judicial Watch has interviewed multiple former aides of Clinton as part of its lawsuit, which is one of several pending before a federal court in Washington.Next week, it is expected to conduct the final depositions as part of the case, with longtime deputy Huma Abedin and Undersecretary for Management Patrick Kennedy. 
Gary Edwards

The Daily Bell - Doug Casey on the Continuing Debasement of Money, Language and Banking... - 0 views

www.thedailybell.com/...-and-Banking-in-the-Modern-Age

Banksters

shared by Gary Edwards on 09 Jul 15 - No Cached
  • This isn't going to last because the way you get wealthy is by producing more than you consume and saving the difference – not by consuming more than you produce, and borrowing the difference. With the Fed keeping interest rates at artificially low levels, hoping to increase consumption, they're making it very foolish to save – when you get ½% or 1% on your savings. So people are saving less and they're borrowing more than they otherwise would. This is a formula for making things worse, not better.
  • They are, idiotically, doing exactly the opposite of what they should be.
  • In point of fact, the Fed should be abolished; the market, not bureaucrats, should determine interest rates. We wouldn't be in this pickle to start with if the government wasn't involved in the economy.
  • ...35 more annotations...
  • The Chinese, the Japanese – everybody is selling, trying to pass the Old Maid card of US Government debt, which represents return–free risk. Nobody other than the Fed is buying, and interest rates would skyrocket if they stopped. The more QE there is, the more distortions it will cause, however, making for a bigger disaster the longer it goes on.
  • Will the Fed continue to inflate the money supply? Doug Casey: They have to, because with the huge amount of debt in the world – and the amount of debt in the world has increased something like 40 or 50% just since the Greater Depression started – if they don't keep increasing the amount of money in the world then nobody's going to be able to service the huge amount of debt that is out there. So I don't see anything changing in the years to come. They've truly painted themselves into a corner. They're caught between Scylla and Charybdis, and we don't have Odysseus steering the ship of state.
  • Let me say, again, that the Fed serves no useful purpose and it should be abolished. Central banks create "super money" by buying government or other debt with new currency units that they credit to the sellers' accounts at commercial banks. That's the actual engine of inflation.
  • But it's greatly compounded in the commercial banking system through fractional reserve lending – which would not be possible without a central bank. Fractional reserve lending allows banks to multiply the money supply several times.
  • If $100 of Fed super money, freshly created, is deposited in a commercial bank like Chase or Citibank, then $90 can be lent out with a 10% reserve, the current number. That money is redeposited. They'll then lend out 90% of that $90, or $81, and then 90% of that $81, so it multiplies.
  • Central banking and fractional reserve lending go hand-in-hand.
  • Without a central bank, any bank that engaged in fractional reserve banking would be considered guilty of fraud and, when discovered, would be punished by a bank run, followed by criminal charges. The point to be made here is that the entire banking system today is totally unsound and totally corrupt.
  • In a sound banking system you have two types of deposits – checking account (or demand) deposits, and savings account (or time) deposits. They are completely different businesses. With demand deposits, you pay the bank to store your money securely, and write checks against it. A bank should no more lend out demand deposit money than Allied Storage should lend out the furniture you're paying them to store.
  • Savings accounts are completely different. Here you lend money to a bank, perhaps at 3%, and they relend it at 6%, making 3% to cover costs, risks and profits. A sound bank not only has to match the maturities of its deposits with the maturities of its loans, but must insure loans are both highly secured and self-liquidating.
  • These principles have been totally lost. Today banks operate as hedge funds.
  • As an aside, if someone were to set up a well-capitalized 100% reserve bank in a tax haven, especially using gold as an alternative currency, it would be immensely successful in the years to come – when most all conventional banks will fail.
  • By all historical, normal parameters, the stock market is greatly overvalued.
  • The trillions of new currency units that the Fed is creating are creating bubbles, and one of them is in the stock market. The biggest bubble, of course, is in the bond market – that's a super bubble.
  • Not only does the dollar have no real value but the banks you keep it in are all insolvent.
  • There are few sound investments out there. Today there are no investments; there are only speculations.
  • From the economist's point of view, the bubbles created by central banking are a disaster, but from a speculator's point of view they're a godsend. It's becoming harder and harder to be an investor; I define an investor as someone who allocates capital to productive business. It's hard to be an investor because you now have to spend more money on lawyers than on engineers and workers if you want to produce something. You're increasingly forced to be a speculator in today's climate.
  • Stock and bond markets all over the world are overpriced – with the exception of Russian stocks right now; they could be a very interesting speculation. I wouldn't touch anything in China yet, because all the Chinese banks are going to go bust.
  • The Chinese have been more profligate inflating the yuan than the Americans have been with the dollar. It's fantastic what the Chinese have done since Deng liberalized the economy in the early '80s, but now's not a time to be in their markets.
  • You've got to remember there are two types of people in the world: people who want to control material reality and people who want to control other people.
  • It's that second type who go into politics. They play games – here it's called the Great Game, which dignifies it in a way it shouldn't be – with other people's lives and property. It's been this way ever since the state was created about 5,000 years ago, and I don't think you should play games with other people's lives.
  • On the bright side, there are more scientists and engineers alive today than in all of human history put together, and so technology is advancing more rapidly than ever for that reason. That's a huge plus.
  • The second good thing is that the average person, at least those who aren't on welfare, tries to produce more than he consumes. That creates capital.
  • But I'm afraid that Western civilization reached its peak before World War I. World War I destroyed a huge amount of capital and, more importantly, it changed the moral bases of so many things.
  • Then World War II institutionalized the State as the most important part of society – which is perverse, because the state is actually the enemy of civil society.
  • I think Western civilization reached its peak in 1913, when it reached its maximum geographical extent. That was coincidental with the peak of its technological and philosophical influence on the world, much the way the Roman Empire reached its peak at about the end of the first century, then went down, slowly at first and then quickly. That's what's happening to the West.
  • Relative to the rest of the world, and contribution to world production, our piece of the economic pie is getting smaller and smaller. If we have another serious war it would be absolutely smaller, and the final nail in the coffin. Meanwhile, the US, with its bloated military, is just itching for another war. It's out of control, and unlikely to change at this point. That's a big trend that is in motion that I think is going to stay in motion.
  • Europe is in particularly bad shape. The place is a fascist/socialist disaster.
  • It was possible for the average European to keep his head above water through tax evasion in the past, but now those governments have broken bank secrecy everywhere, and it will destroy a lot of capital.
  • The "nation-state" is a really stupid and dysfunctional idea, and I'm glad it's on its way out.
  • That said, even the US, which from a cultural point of view is as much of a country as any place in the world, should actually break up into at least five or six regions.
  • Canada should break up into at least five or six regions initially.
  • I don't think politically; politics is the problem, not the solution. I think that the ideal solution is for every individual to opt out of the current system. When they give a war, you don't come. When they give a tax, you don't pay. When they give an election, you don't vote. You even try not to use their currency and their banking system. T
  • he ideal thing is to let the system collapse under its own weight as opposed to starting a new political party and then continuing to act politically, which is to say to use force on other people.
  • Market risk is huge today, but political risk is even bigger. One indication of that was, when the banks in Cyprus went bust some months ago, the government essentially confiscated everybody's account above 100,000 euros, in what they called a "bail-in."
  • You need several options. It seems like people haven't learned anything from what happened in Russia in 1917, Germany in 1933, China in 1948, Cuba in 1959, or Vietnam in 1975. Rwanda, Cambodia, Yugoslavia, Zimbabwe, Ukraine, Syria ... there are lots of examples and these things can and will eventually happen almost everywhere. When the chimpanzees go crazy, you don't want to be where they are. You've got to have a Plan B. You've got to have a crib out of that political jurisdiction. Acting like a plant, and staying put, isn't a good survival strategy for a human.
  • Gary Edwards on 09 Jul 15
     
    "Doug Casey: I don't see a real recovery until they stop debasing the currency, radically cut government spending and taxation and eliminate most regulation. In other words, cease doing the things that caused this depression. And that's not going to happen until there's a collapse of the current order. Things have cyclically improved since the height of the crisis of 2008-09. The trillions of currency units created by the Federal Reserve have jammed the stock market higher and kept the big banks from going under. What surprises me is that retail prices have not moved as significantly as I would have expected. The reason, I believe, is that most of that money is still sitting in financial institutions. It has gone into cash out of fear, into stocks because they represent real wealth with earning power and into various speculative assets like artwork and collectible cars. Real estate has recovered somewhat, not because of strong fundamentals but strictly because of money creation. This isn't going to last because the way you get wealthy is by producing more than you consume and saving the difference - not by consuming more than you produce, and borrowing the difference. With the Fed keeping interest rates at artificially low levels, hoping to increase consumption, they're making it very foolish to save - when you get ½% or 1% on your savings. So people are saving less and they're borrowing more than they otherwise would. This is a formula for making things worse, not better. They are, idiotically, doing exactly the opposite of what they should be. Although, I hasten to add, I hate to pontificate on what the Fed "should" do. In point of fact, the Fed should be abolished; the market, not bureaucrats, should determine interest rates. We wouldn't be in this pickle to start with if the government wasn't involved in the economy. In fact, if it wasn't for the state, I suspect we'd all have a vastly higher standard of living, and would be colonizing the Moon, Mars and
Gary Edwards

ALL WARS ARE BANKERS' WARS! | WHAT REALLY HAPPENED - 1 views

whatreallyhappened.com/...allwarsarebankerwars.php

banksters

shared by Gary Edwards on 01 Apr 15 - No Cached
  • Gary Edwards on 01 Apr 15
     
    "ALL WARS ARE BANKERS' WARS! Click here for PDF version of this article By Michael Rivero "Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits." -- Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain I know many people have a great deal of difficulty comprehending just how many wars are started for no other purpose than to force private central banks onto nations, so let me share a few examples, so that you understand why the US Government is mired in so many wars against so many foreign nations. There is ample precedent for this. The United States fought the American Revolution primarily over King George III's Currency act, which forced the colonists to conduct their business only using printed bank notes borrowed from the Bank of England at interest."
Gary Edwards

A Crisis Worse than ISIS? Bail-Ins Begin - nsnbc international | nsnbc international - 0 views

nsnbc.me/...worse-than-isis-bail-ins-begin

Banksters

shared by Gary Edwards on 31 Dec 15 - No Cached
  • Propping Up the Derivatives Scheme Dodd-Frank states in its preamble that it will “protect the American taxpayer by ending bailouts.” But it does this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debtholders, and other unsecured creditors. That includes depositors, the largest class of unsecured creditor of any bank.
  • Title II is aimed at “ensuring that payout to claimants is at least as much as the claimants would have received under bankruptcy liquidation.” But here’s the catch: under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured.
  • The over-the-counter (OTC) derivative market (the largest market for derivatives) is made up of banks and other highly sophisticated players such as hedge funds. OTC derivatives are the bets of these financial players against each other. Derivative claims are considered “secured” because collateral is posted by the parties. For some inexplicable reason, the hard-earned money you deposit in the bank is not considered “security” or “collateral.” It is just a loan to the bank, and you must stand in line along with the other creditors in hopes of getting it back. State and local governments must also stand in line, although their deposits are considered “secured,” since they remain junior to the derivative claims with “super-priority.”
  • ...12 more annotations...
  • Under the old liquidation rules, an insolvent bank was actually “liquidated” – its assets were sold off to repay depositors and creditors. Under an “orderly resolution,” the accounts of depositors and creditors are emptied to keep the insolvent bank in business.
  • The point of an “orderly resolution” is not to make depositors and creditors whole but to prevent another system-wide “disorderly resolution” of the sort that followed the collapse of Lehman Brothers in 2008.
  • The concern is that pulling a few of the dominoes from the fragile edifice that is our derivatives-laden global banking system will collapse the entire scheme. The sufferings of depositors and investors are just the sacrifices to be borne to maintain this highly lucrative edifice.
  • At first glance, the “bail-in” resembles the normal capitalist process of liabilities restructuring that should occur when a bank becomes insolvent. . . . The difference with the “bail-in” is that the order of creditor seniority is changed. In the end, it amounts to the cronies (other banks and government) and non-cronies. The cronies get 100% or more; the non-cronies, including non-interest-bearing depositors who should be super-senior, get a kick in the guts instead. . . . In principle, depositors are the most senior creditors in a bank. However, that was changed in the 2005 bankruptcy law, which made derivatives liabilities most senior. Considering the extreme levels of derivatives liabilities that many large banks have, and the opportunity to stuff any bank with derivatives liabilities in the last moment, other creditors could easily find there is nothing left for them at all.
  • A study involving the cost to taxpayers of the Dodd-Frank rollback slipped by Citibank into the “cromnibus” spending bill last December found that the rule reversal allowed banks to keep $10 trillion in swaps trades on their books. This is money that taxpayers could be on the hook for in another bailout; and since Dodd-Frank replaces bailouts with bail-ins, it is money that creditors and depositors could now be on the hook for.
  • As of September 2014, US derivatives had a notional value of nearly $280 trillion
  •  Citibank is particularly vulnerable to swaps on the price of oil. Brent crude dropped from a high of $114 per barrel in June 2014 to a low of $36 in December 2015.
  • What about FDIC insurance? It covers deposits up to $250,000, but the FDIC fund had only $67.6 billion in it as of June 30, 2015, insuring about $6.35 trillion in deposits. The FDIC has a credit line with the Treasury, but even that only goes to $500 billion; and who would pay that massive loan back? The FDIC fund, too, must stand in line behind the bottomless black hole of derivatives liabilities
  • You can move your money into one of the credit unions with their own deposit insurance protection; but credit unions and their insurance plans are also under attack.
  • In short, the goal of the bail-in scheme is to place losses on private creditors. Alternatives that allow them to escape could soon be blocked.
  • The Dodd Frank Act and the Bankruptcy Reform Act both need a radical overhaul, and the Glass-Steagall Act (which put a fire wall between risky investments and bank deposits) needs to be reinstated.
  • Meanwhile, local legislators would do well to set up some publicly-owned banks on the model of the state-owned Bank of North Dakota – banks that do not gamble in derivatives and are safe places to store our public and private funds.
  • Gary Edwards on 31 Dec 15
     
    Excellent analysis of the coming banking crisis anw how our politicians have put the citizens on the hook for risky bank derivative gambling.  Thanks Marbux! Ellen H. Brown (nsnbc) : While the mainstream media focus on ISIS extremists, a threat that has gone virtually unreported is that your life savings could be wiped out in a massive derivatives collapse. Bank bail-ins have begun in Europe, and the infrastructure is in place in the US.  Poverty also kills.
Paul Merrell

A Loophole Allows Banks - But Not Other Companies - to Create Money Out of Thin Air Was... - 0 views

www.washingtonsblog.com/...ies-create-money-thin-air.html

banksters money-creation

shared by Paul Merrell on 18 Jan 16 - No Cached
  • The central banks of the United States, England, and German – as well as 2 Nobel-prize winning economists – have all shown that banks create money out of thin air … even if they have no deposits on hand. The failure of most governments and most mainstream economists to understand this fact – they instead believe the myth that people make deposits at their bank, and these deposits are then lent out to new borrowers – is the main cause of our rampant inequality and economic problems. But how do banks actually make loans before they have sufficient deposits on hand?
Paul Merrell

Warning: Get Your Money Out: 'All Legal Bank Deposit Protections Are Now Offi... - 0 views

www.informationclearinghouse.info/article32180.htm

banksters financial-collapse bankruptcy

shared by Paul Merrell on 15 Aug 12 - No Cached
  • Former money manager Ann Barnhardt, who in November of 2011 made the decision to cease operations of her brokerage firm and return funds to her customers citing “systemic” problems within the entire financial industry, has issued a new warning about the stability of US banks and the safety of individual deposit accounts. The warning, stemming from a recent federal appeals court ruling surrounding customer funds lost during the 2007 collapse of Chicago futures broker Sentinel, indicates that individuals who lose deposited funds because a financial institution improperly manages that money, even if those funds are supposed to be “segregated” from other operations of the firm, are essentially left with no recourse if the firm goes belly-up. According to the court, a misallocation of those customer funds, “is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud’ its customers.”
  • The implications of the ruling, according to Barnhardt, will affect the monies of all private individuals who have seen their deposit accounts wiped out in the collapse of firms like John Corzine’s MF Global and put all deposit account holders in the country at risk should their bank be faced with a financial windstorm: The NFA in collusion with the banksters, government and judiciary have achieved their goal. The entire concept of “customer segregated funds” is officially, completely, legally dead. Guys, it is OVER. I know that many of you are still cowering in normalcy bias, unable to deal with reality, unable to face the world as it is, but you have GOT to snap out of it. The marketplace is DESTROYED. You CANNOT be in these markets. All legal protections are now officially gone.
Gary Edwards

A Victory for All of Us - Liberty in the Breach - 0 views

www.paulcraigroberts.org/...a-victory-for-all-of-us

Paul-Craig-Roberts Liberty-Tryanny Liberty-in-the-breach NDAA

shared by Gary Edwards on 11 Jul 12 - No Cached
  • Gary Edwards on 11 Jul 12
     
    Details of how a federal Judge came to rule that the insideous NDAA law is un Constitutional. excerpt: Posted on May 18, 2012 By Chris Hedges In January, attorneys Carl Mayer and Bruce Afran asked me to be the lead plaintiff in a lawsuit against President Barack Obama and Defense Secretary Leon Panetta that challenged the harsh provisions of the National Defense Authorization Act (NDAA). We filed the lawsuit, worked for hours on the affidavits, carried out the tedious depositions, prepared the case and went to trial because we did not want to be passive in the face of another egregious assault on basic civil liberties, because resistance is a moral imperative, and because, at the very least, we hoped we could draw attention to the injustice of the law. None of us thought we would win. But every once in a while the gods smile on the damned. U.S. District Judge Katherine Forrest, in a 68-page opinion, ruled Wednesday that Section 1021 of the NDAA was unconstitutional. It was a stunning and monumental victory. With her ruling she returned us to a country where-as it was before Obama signed this act into law Dec. 31-the government cannot strip a U.S. citizen of due process or use the military to arrest him or her and then hold him or her in military prison indefinitely. She categorically rejected the government's claims that the plaintiffs did not have the standing to bring the case to trial because none of us had been indefinitely detained, that lack of imminent enforcement against us meant there was no need for an injunction and that the NDAA simply codified what had previously been set down in the 2001 Authorization to Use Military Force Act. The ruling was a huge victory for the protection of free speech. Judge Forrest struck down language in the law that she said gave the government the ability to incarcerate people based on what they said or wrote. Maybe the ruling won't last. Maybe it will be overturned. But we and other Americans are
  • Paul Merrell on 12 Jul 12
Paul Merrell

The truth is out: money is just an IOU, and the banks are rolling in it | David Graeber... - 0 views

www.theguardian.com/...-iou-bank-of-england-austerity

banksters Bank-of-England report

shared by Paul Merrell on 20 Mar 14 - No Cached
  • To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
  • The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.
  • It's this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say "there's just not enough money" to fund social programmes, to speak of the immorality of government debt or of public spending "crowding out" the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" … "In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."
  • ...7 more annotations...
  • When banks make loans, they create money. This is because money is really just an IOU.
  • What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there's no question of public spending "crowding out" private investment. It's exactly the opposite.
  • The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There's really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again.
  • So for the banking system as a whole, every loan just becomes another deposit. What's more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity.
  • In other words, everything we know is not just wrong – it's backwards.
  • Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
  • Why did the Bank of England suddenly admit all this? Well, one reason is because it's obviously true. The Bank's job is to actually run the system, and of late, the system has not been running especially well. It's possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.
  • Gary Edwards on 20 Mar 14
     
    Okay. The Bank of England finally fesses up and tells the truth about banking and government. Incredible!
Paul Merrell

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit - Bloomberg - 0 views

www.bloomberg.com/...-derivatives-to-bank-unit.html

banksters toxic-derivatives BoA JPMorgan FDIC Dodd-Frank too-big-to-fail

shared by Paul Merrell on 13 Nov 13 - No Cached
  • Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation. The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.
  • Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms. “The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”
  • Moody’s Investors Service downgraded Bank of America’s long-term credit ratings Sept. 21, cutting both the holding company and the retail bank two notches apiece. The holding company fell to Baa1, the third-lowest investment-grade rank, from A2, while the retail bank declined to A2 from Aa3.
  • ...5 more annotations...
  • The Moody’s downgrade spurred some of Merrill’s partners to ask that contracts be moved to the retail unit, which has a higher credit rating, according to people familiar with the transactions. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody’s decision, said a person familiar with the matter. Bank of America estimated in an August regulatory filing that a two-level downgrade by all ratings companies would have required that it post $3.3 billion in additional collateral and termination payments, based on over-the-counter derivatives and other trading agreements as of June 30. The figure doesn’t include possible collateral payments due to “variable interest entities,” which the firm is evaluating, it said in the filing.
  • Derivatives are financial instruments used to hedge risks or for speculation. They’re derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates. Dodd-Frank Rules Keeping such deals separate from FDIC-insured savings has been a cornerstone of U.S. regulation for decades, including last year’s Dodd-Frank overhaul of Wall Street regulation. The legislation gave the FDIC, which liquidates failing banks, expanded powers to dismantle large financial institutions in danger of failing. The agency can borrow from the Treasury Department to finance the biggest lenders’ operations to stem bank runs. It’s required to recoup taxpayer money used during the resolution process through fees on the largest firms.
  • Bank of America’s holding company -- the parent of both the retail bank and the Merrill Lynch securities unit -- held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades. That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
  • Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law. “Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said. The discount window has been open to banks as the lender of last resort since 1914. As a general rule, as long as transactions involve high- quality assets and don’t exceed certain quantitative limitations, they should be allowed under the Federal Reserve Act, Omarova said.
  • In 2009, the Fed granted Section 23A exemptions to the banking arms of Ally Financial Inc., HSBC Holdings Plc, Fifth Third Bancorp, ING Groep NV, General Electric Co., Northern Trust Corp., CIT Group Inc., Morgan Stanley and Goldman Sachs Group Inc., among others, according to letters posted on the Fed’s website. The central bank terminated exemptions last year for retail-banking units of JPMorgan, Citigroup, Barclays Plc, Royal Bank of Scotland Plc and Deutsche Bank AG. The Fed also ended an exemption for Bank of America in March 2010 and in September of that year approved a new one. Section 23A “is among the most important tools that U.S. bank regulators have to protect the safety and soundness of U.S. banks,” Scott Alvarez, the Fed’s general counsel, told Congress in March 2008.
  • Paul Merrell on 13 Nov 13
     
    So according to Bloomberg, JPMorgan's commercial bank was the recipient of 99 percent of JPMorgan's $79 trillion (face value of derivatives) in bad bets. So adding JPMorgan's $78 trillion or so to the $75 trillion in bad bets Bank of America unloaded on its FDIC insured subsidiary, we arrive at $153 trillion in bad bets moved by two investment banks alone under the FDIC umbrella. Meanwhile, FDIC has authority under Dodd-Frank to liquidate these insolvent banks but doesn't, despite several successful lawsuits to recover the value of toxic derivatives that they sold to smaller banks that failed (which implies that FDIC could tell JPMorgan and BoA's investment banksters that they've got to pay off the toxic assets they transferred to their commercial banks, rather than diluting the insurance for normal depositors. Problem: the two big investment banks don't have sufficient assets to absorb those losses, so the too-politically-connected-to-fail factor kicks in. Note that I have not done any legal research in regard to these issues and am basing these observations on what has been stated about legal requirements in various media articles.
Gary Edwards

Seize First, Question Later: The Institute for Justice's New Report on the IRS' Abusive... - 0 views

www.cato.org/...busive-civil-forfeiture-regime

IRS CATO-Institute Libertarian

shared by Gary Edwards on 07 Feb 15 - No Cached
  • Gary Edwards on 07 Feb 15
     
    "Federal civil forfeiture laws give the Internal Revenue Service the power to clean out bank accounts without charging their owners with any crime. Making matters worse, the IRS considers a series of cash deposits or withdrawals below $10,000 enough evidence of "structuring" to take the money, without any other evidence of wrongdoing. Structuring-depositing or withdrawing smaller amounts to evade a federal law that requires banks to report transactions larger than $10,000 to the federal government-is illegal, but more importantly, structured funds are also subject to civil forfeiture. Civil forfeiture is the government's power to take property suspected of involvement in a crime. Unlike criminal forfeiture, no one needs to be convicted of-or even a charged with-a crime for the government to take the property. Lax civil forfeiture standards enable the IRS to "seize first and ask questions later," taking money without serious investigation and forcing owners into a long and difficult legal battle to try to stop the forfeiture. Any money forfeited is then used to fund further law enforcement efforts, giving agencies like the IRS an incentive to seize. Data provided by the IRS indicate that its civil forfeiture activities for suspected structuring are large and growing…"
Paul Merrell

Forex Flash: Capital flight abounds in Eurozone - UBS - 0 views

www.nasdaq.com/...ounds-in-eurozone-ubs-cm232768

financial-collapse euro Cyrpus

shared by Paul Merrell on 04 Apr 13 - No Cached
  • According to Research Analyst Gareth Berry at UBS, "We expect that the theme of capital flight out of the Eurozone will continue to run for some time in the wake of the Cyprus bailout." The immediate focus, of course, is on deposit flight but capital controls will be expected to do their job for now. Of course, the images of bank runs and deposit flight are powerful, but we expect capital flight in the form of investment outflows is even more pernicious. Deposit flight exposes funding gaps on a banking-sector level, but capital outflows, be they via portfolio flows or FDI reversals, tend to expose the funding gaps of an entire nation, a fact that emerging markets can strongly attest to. As timely data is still rather difficult to come by, we use our Equity Flow monitor from last week to see if asset managers are now liquidating underlying investments in the Eurozone, especially taking into account that our FX Flow Monitor has been showing such trends for several weeks.
  • Unsurprisingly, the Eurozone suffered the most out of all G10 markets we track, but the distribution of selling was even more troubling. Eurozone-based clients actually registered flat net flow - i.e. repatriation back to the Eurozone offsets their overseas interest. However, for non-Eurozone based investors it was one way: the US and UK both registered strong inflows last week but almost all of the buying came from their own clients leaving the Eurozone. "If past history is anything to go by, the Eurozone's funding gap may widen further and it's the real economy, beyond the banks, that will suffer." Berry warns.
Paul Merrell

Amend the Federal Reserve: We Need a Central Bank that Serves Main Street | Global Rese... - 0 views

www.globalresearch.ca/...5360637

banksters federal-reserve Federal-Reserve-reform

shared by Paul Merrell on 11 Dec 13 - No Cached
  • December 23rd marks the 100th anniversary of the Federal Reserve. Dissatisfaction with its track record has prompted calls to audit the Fed and end the Fed.  At the least, Congress needs to amend the Fed, modifying the Federal Reserve Act to give the central bank the tools necessary to carry out its mandates. The Federal Reserve is the only central bank with a dual mandate. It is charged not only with maintaining low, stable inflation but with promoting maximum sustainable employment. Yet unemployment remains stubbornly high, despite four years of radical tinkering with interest rates and quantitative easing (creating money on the Fed’s books). After pushing interest rates as low as they can go, the Fed has admitted that it has run out of tools. At an IMF conference on November 8, 2013, former Treasury Secretary Larry Summers suggested that since near-zero interest rates were not adequately promoting people to borrow and spend, it might now be necessary to set interest at below zero. This idea was lauded and expanded upon by other ivory-tower inside-the-box thinkers, including Paul Krugman. Negative interest would mean that banks would charge the depositor for holding his deposits rather than paying interest on them. Runs on the banks would no doubt follow, but the pundits have a solution for that: move to a cashless society, in which all money would be electronic. “This would make it impossible to hoard cash outside the bank,” wrote Danny Vinik in Business Insider, “allowing the Fed to cut interest rates to below zero, spurring people to spend more.”
  • Business Week quotes Douglas Holtz-Eakin, a former director of the Congressional Budget Office: “We’ve had four years of extraordinarily loose monetary policy without satisfactory results, and the only thing they come up with is we need more?” Paul Craig Roberts, former Assistant Secretary of the Treasury, calls the idea “harebrained.” He is equally skeptical of quantitative easing, the Fed’s other tool for stimulating the economy. Roberts points to Andrew Huszar’s explosive November 11th Wall Street Journal article titled “Confessions of a Quantitative Easer,” in which Huszar says that QE was always intended to serve Wall Street, not Main Street.  Huszar’s assignment at the Fed was to manage the purchase of $1.25 trillion in mortgages with dollars created on a computer screen. He says he resigned when he realized that the real purpose of the policy was to drive up the prices of the banks’ holdings of debt instruments, to provide the banks with trillions of dollars at zero cost with which to lend and speculate, and to provide the banks with “fat commissions from brokering most of the Fed’s QE transactions.”
  • Bernanke created debt-free money and bought government debt with it, returning the interest to the Treasury. The result was interest-free credit, a good deal for the government. But the problem, says Lounsbury, is that: The helicopters dropped all the money into a hole in the ground (excess reserve accounts) and very little made its way into the economy.  It was essentially a rearrangement of the balance sheets of the creditor nation with little impact on the debtor nation. . . . The fatal flaw of QE is that it delivers money to the accounts of the creditors and does nothing for the accounts of the debtors. Bad debts remain unserviced and the debt crisis continues.
  • ...2 more annotations...
  • Bernanke delivered the money to the creditors because that was all the Federal Reserve Act allowed. If the Fed is to fulfill its mandate, it clearly needs more tools; and that means amending the Act.  Harvard professor Ken Rogoff, who spoke at the November 2013 IMF conference before Larry Summers, suggested several possibilities; and one was to broaden access to the central bank, allowing anyone to have an ATM at the Fed. Rajiv Sethi, Barnard/Columbia Professor of Economics, expanded on this idea in a blog titled “The Payments System and Monetary Transmission.” He suggested making the Federal Reserve the repository for all deposit banking. This would make deposit insurance unnecessary; it would eliminate the need to impose higher capital requirements; and it would allow the Fed to implement monetary policy by targeting debtor rather than creditor balance sheets. Instead of returning its profits to the Treasury, the Fed could do a helicopter drop directly into consumer bank accounts, stimulating demand in the consumer economy. John Lounsbury expanded further on these ideas. He wrote in Econintersect that they would open a pathway for investment banking and depository banking to be separated from each other, analogous to that under Glass-Steagall. Banks would no longer be too big to fail, since they could fail without destroying the general payment system of the economy. Lounsbury said the central bank could operate as a true public bank and repository for all federal banking transactions, and it could operate in the mode of a postal savings system for the general populace.
  • The Federal Reserve Act was drafted by bankers to create a banker’s bank that would serve their interests. It is their own private club, and its legal structure keeps all non-members out.  A century after the Fed’s creation, a sober look at its history leads to the conclusion that it is a privately controlled institution whose corporate owners use it to direct our entire economy for their own ends, without democratic influence or accountability.  Substantial changes are needed to transform the Fed, and these will only come with massive public pressure. Congress has the power to amend the Fed – just as it did in 1934, 1958 and 2010. For the central bank to satisfy its mandate to promote full employment and to become an institution that serves all the people, not just the 1%, the Fed needs fundamental reform.
  • Paul Merrell on 11 Dec 13
     
    In my view, the Fed is beyond salvage. It needs abolition, not a new role. The Constitution grants Congress the power to mint and coin money, not a group of rent-seeking banksters. 
Paul Merrell

12 Banks Reveal 'Living Wills' That Hint Toward a Future Bail-in | nsnbc international - 0 views

nsnbc.me/...t-hint-toward-a-future-bail-in

banksters major-U.S.-banks bail-ins living-wills too-big-to-fail

shared by Paul Merrell on 07 Jul 15 - No Cached
  • Twelve major banks have made their living wills open to the public in response to US regulators pushing for more “convincing plans” for self-dismantling should their operations fail.
  • The purpose of living wills is a way “to give bankers and regulators a clearer understanding of a bank’s operations and its assets and liabilities [and] map out the steps the banks would take to distribute large losses among stakeholders.” The Federal Reserve Bank (FRB) and the Federal Deposit Insurance Corp (FDIC) are overseeing the bank’s contingency plans, ensuring that no bank is “too big to fail”. This includes financial institutions with more than $50 billion in assets; as well as non-financial firms that are considered systemically important as understood by the US Department of Treasury (USDT) Financial Stability Oversight Council (FSOC). The banks participating in this exercise include:
  • • JPMorgan Chase & Co • Morgan Stanley • Bank of America • Credit Suisse Group AG • Goldman Sachs Group • Wells Fargo & Co • State Street Corp • Bank of New York Mellon Corp • UBS Group AG • Deutsche Bank AG • Barclays Plc Should another financial crisis rear its head again, these revelations provide investors and traders a better sense of the standing of banks.
  • ...4 more annotations...
  • Collectively, the banks divulged that they have “stockpiled long-term debt” within holding companies (or the parent company that owns the bank) to make their portfolios appear to be “less complex”. In other words, banks have placed their derivatives (or stockpiled long-term debt) within the main corporation that owns their subsidiaries. The only problem is that if the parent fails, so do its “children”. The bank’s assets could be placed into receivership with the intention of being split up and auctioned off; however some corporations abuse receivership and bankruptcy to make investors and creditors think they are dead in the water only to pull out at the last minute and enjoy large primary debt write-offs. This is a sort of corporate version of playing possum.
  • This classic con tactic would provide the unique advantage of not having to go to the Senate and demand a taxpayer bailout. The banks could simply file for bankruptcy and exert social pressure via public outcry, protests and demands of the people that Congress consider another bailout. In this scenario, the parent company gets saved and not the subsidiaries. This tactic is a reserve version of what happened after the crash in 2008. Regarding the bank’s contingency plans, JPMorgan’s “hypothetical death”would see the bank downsize by a 3rd and provide a resolve for the bank “without systemic disruption or taxpayer support”. Citigroup has proposed shrinking by selling off $300 billion in corporate assets and “cut US retail banking to about $200 billion”; as well as get rid of broker-dealers.
  • Mark Costigilo, spokesperson for Citigroup, explained that should Citigroup go into bankruptcy, their living will “demonstrates that we can do so without the use of taxpayer funds and without adverse systemic impact.” And Bank of America (BoA) stated that their rise out of bankruptcy would involve the unloading of $1.2 trillion in assets; as well as “shedding most of … non-bank operations”. Last year, the major banks were told to revise previously submitted living wills because their plans did not provide a “credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support.” All of this adds up to a bail-in, as predicted by economic analyst Jim Sinclair who said: “Bail-ins are coming to North America without any doubt, and will be remembered as the ‘Great Leveling,’ of the ‘great Flushing’ (of Lehman Brothers). Not only can it happen here, but it will happen here. It stands on legal grounds by legal precedent both in the U.S., Canada and the U.K.”
  • Sinclair pointed out: “Bail-ins do not require a crisis to occur and can surface one bank at a time, spread out over years. The major situation is deposits above insurance levels in banks too big to fail. Those deposits are directly in harm’s way.”
1 - 20 of 94 Next › Last »
Showing 20▼ items per page