Perspectives on the global economic meltdown- (Nov 28 2010)

[svinayak]

The four biggest U.S. banks haven’t changed in the past 10 years. But a decade ago they accounted for 47% of the market share of the 50 biggest banks by assets. Today they are at 62%. Too big to fail? Try “few big to fail.” The giants have gotten so giant that if a single one of them fails, the entire global financial system could be at risk'.

http://blogs.wsj.com/totalreturn/2012/0 ... -remember/

[TSJones]

Virtually ALL Regulators (Treasury of State, FDIC,OCC,SEC,CFTC - you name it!)are captive to regulated and actively NEUTER any one rightly applying the RULE OF LAW.

Political Process and Regulatory apparatus in America is corrupt to the core. MSM is the silent partner b/c 90% of MSM is controlled by 6 mega Corporations.

http://www.nakedcapitalism.com/2013/03/ ... banks.html

Susan Webber(Yves Smith) feeds at the same trough that the other players do. Aurora Adivsors, Inc. She is also in derivatives, etc. Beware of critics who also supply the same services being critisized.

[svinayak]

JPM gets subsidy of nearly 14B from US Govt EVERY YEAR- aka you-Taxpayers! institutional fraud keeps going without being prosecuted. For many 2008 is a long memory!

If this DOESN'T bother ignore this and go business as usual.

http://www.nakedcapitalism.com/2012/06/ ... oyers.html

[TSJones]

The four biggest U.S. banks haven’t changed in the past 10 years. But a decade ago they accounted for 47% of the market share of the 50 biggest banks by assets. Today they are at 62%. Too big to fail? Try “few big to fail.” The giants have gotten so giant that if a single one of them fails, the entire global financial system could be at risk'.

http://blogs.wsj.com/totalreturn/2012/0 ... -remember/

Theyre not going to fail unless the Fed fails. If you think the Fed is going to fail then I really can't cognitively discuss financial acitivies with you. Nicolas Taleb assurs me that eventually everything fails (Black Swan) but hey, I can't live thinking doom and gloom 24x7.

[svinayak]

If Greenspan who believes in' Market self regulation' had taken some action against CDS/CDOs in '98-'99. we wouldn't be facing the current crisis.

http://www.washingtonpost.com/wp-dyn/co ... 02108.html

[svinayak]

http://www.rollingstone.com/politics/ne ... a-20120620

The Scam Wall Street Learned From the Mafia
How America's biggest banks took part in a nationwide bid-rigging
conspiracy - until they were caught on tape

Comment338
By MATT TAIBBI
June 21, 2012 11:20 AM ET

Illustration by Victor Juhasz
Someday, it will go down in history as the first trial of the modern
American mafia. Of course, you won't hear the recent financial
corruption case, United States of America v. Carollo, Goldberg and
Grimm, called anything like that. If you heard about it at all, you're
probably either in the municipal bond business or married to an
antitrust lawyer. Even then, all you probably heard was that a
threesome of bit players on Wall Street got convicted of obscure
antitrust violations in one of the most inscrutable, jargon-packed
legal snoozefests since the government's massive case against
Microsoft in the Nineties – not exactly the thrilling courtroom drama
offered by the famed trials of old-school mobsters like Al Capone or
Anthony "Tony Ducks" Corallo.

But this just-completed trial in downtown New York against three
faceless financial executives really was historic. Over 10 years in
the making, the case allowed federal prosecutors to make public for
the first time the astonishing inner workings of the reigning American
crime syndicate, which now operates not out of Little Italy and Las
Vegas, but out of Wall Street.

[Neshant]

Now Canada starting up with the bail-out culture. Except the terminology to describe a bail-out has become more sophisticated. Its now called a bail-in.

Banking goons are upgrading terminologies and hijacking countries left & right with their too-big-to-fail BS.

The Government proposes to implement a ― bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities (better known as junk collateral) into regulatory capital. This will reduce risks for taxpayers (expend billions buying garbage securities losing value is reducing risk?). The Government will consult stakeholders (meaning the bankers who want to put taxpayers in the firing line) on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

[paramu]

Assistant Attorney General Lanny Breuer on Whistleblowers and Prosecuting ...

[pankajs]

'We're Not Cyprus,' Luxembourg Asserts

PARIS — Don’t look at us!

That was the message Wednesday from Luxembourg, which has come under increasing scrutiny as the debacle unfolding in Cyprus leads investors to wonder if other euro zone nations with outsized financial sectors might be vulnerable to banking troubles.

The Grand Duchy of Luxembourg, a landlocked country sandwiched between Germany, Belgium and France, has a population of just over half a million people. The assets of its banking sector relative to gross domestic product — at more than 22 times — are far and away the largest in the euro zone, according to Lombard Street Research in London. Cyprus’s financial sector, by way of comparison, is less than eight times G.D.P.

More than simple calculations of the size of the financial sector relative to gross domestic product, it said, are the “quality and solidity of the financial sector,” and the size of that sector relative “to the euro area or single market as a whole.”

And it pointed to the “very high solvency ratios” of its financial sector as being grounds for confidence.

For the sake of perspective, Luxembourg hardly figures among the most unbalanced economies. The Cayman Islands, an offshore extension of the City of London in all but name, has a gross domestic product of about $2.3 billion, but financial sector assets of around $1.75 trillion, according to the International Monetary Fund. That gives it a financial sector more than 750 times as large as its economy.

[svinayak]

an entirely different perspective on the US $ as a global Currency subjected to INTERNATIONAL demand and supply, currency itself as an export to 'lube' the Global trade and NO OTHER currency to replace it in quantity and perception. It ignores the expanding FED balance sheet!

In a recession or a market crash, demand for US $ will outstrip the supply. It challenges all the main stream concepts, out there!

http://www.financialsense.com/contribut ... lar-higher

To take the dollar out of its misery around 2015 they will have to force the economy down

[pentaiah]

This is based on the assumption that the capacity of US domestic consumption continues to expand linearly and continuously without interruption, enabling it to so called "export" dollars.

It also assumes that US is the only source of agricultural commodities and staple food supplies.

The agriculture in Africa once it takes off for which it is now poised will change that assumption as well.

Canada, Australia, Thailand , etc are all there as well to export staple food.

As long as US govt sustains deficits which the republicans oppose this way may work out.

As it is the middle class is shrinking and the US population is also balancing their incomes and expenditures. The slow but steady rise in individual savings is a pointer

[TSJones]

an entirely different perspective on the US $ as a global Currency subjected to INTERNATIONAL demand and supply, currency itself as an export to 'lube' the Global trade and NO OTHER currency to replace it in quantity and perception. It ignores the expanding FED balance sheet!

In a recession or a market crash, demand for US $ will outstrip the supply. It challenges all the main stream concepts, out there!

http://www.financialsense.com/contribut ... lar-higher

To take the dollar out of its misery around 2015 they will have to force the economy down

The Fed has been trying to raise demand by lowering the discount rate to the banks at the Fed window (I wish I had access to the Fed window. Sigh.) So far, it hasn't worked all that great but it has stopped the prospect of a Great Depression. So what to do? The Fed is currently buying Fannie Mae and Freddie Mac bonds from the public to the tune of $85 billion per month! So far, it's kinda sorta working. The problem is, US congress is working against it with the sequester. Yeah sure it's only an $85 billion dollar budget cut this year but that means a lot to the public perception about the economy. That also means fewer US Treasury bonds being sold at public auction and thus slowing down the growth of the debt. And right now, the world is insatiable for these bonds. The bonds pay practically nothing on interest rate as it is but still they come for them. And, as the US economy slowly grows(if the sequester doesn't stop it), the US Treasury debt will be a smaller percentage of the US economy over the next ten years. This will also bolster the public perception of reduced availability of US money. The Fed, who's job it is to see that the US banking system remains solvent and promote US employment, has a mighty job to accomplish. Especially when congress is at odds with it.

[Gerard]

Money fled Cyprus as president fumbled bailout

Monetary Geopolitics: Have The Russian Oligarchs Withdrawn All Their Cash From Cyprus?

Why has Moscow gone silent about Russian money in Cyprus?

Rich Russians Who Got Their Money Out Of Cyprus Are Taking It To New York's Real Estate Market

[TSJones]

Money fled Cyprus as president fumbled bailout

Monetary Geopolitics: Have The Russian Oligarchs Withdrawn All Their Cash From Cyprus?

Why has Moscow gone silent about Russian money in Cyprus?

Rich Russians Who Got Their Money Out Of Cyprus Are Taking It To New York's Real Estate Market

If the Cyprus government said the banks are closed, who said it was OK for the Russians to withdraw their money?

[V_Raman]

they must create an environment of increasing housing prices for the economy to grow. the only difference is PMI seems to be a must these days. low interest rates, increasing real estate prices, lending with PMI included will be the new flavor.

[pankajs]

Satyajit Das - The end of ponzi prosperity (~1 hr 20 min, start @ 9:00 mins)

From before the Obama's re-election last year. Missing last minutes. There are other recording but in one you cannot see the presentation and in one the sound is not that clear. He appears to have given the same presentation elsewhere too.



For the rest use the following video (starting @ 1 hr 21 min 30 sec)
https://www.youtube.com/watch?v=VgrQsc2bRaM

[Neshant]

Ellen Brown author of the book Web of Debt describes how Cyprus deposit robbery is a trial balloon of what is to come in other nations. Apparently depositors are considered unsecured creditors. 100k deposit insurance is thus insurance in name only.

Looks like the First National Mattress Bank is the only safe place for deposits.. and that assumes attempts to devalue or destroy the currency do not succeed.

[pankajs]

Some Savers in Cyprus May Lose 60 Percent

Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity, with the rest remaining as a frozen, non-interest-bearing deposit that they would be able to access in the future.

If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that.

Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.

Projections of an economic slump of 3 percent that were once seen as a worst case now seem wildly optimistic, with most economists expecting the economy to plunge between 5 and 10 percent this year.

While many of the Bank of Cyprus’ largest depositors are wealthy Russians, numerous Cypriot businesses and wealthy individuals also had significant amounts of capital in the bank. Economists believe that wiping out such a large amount of savings will be devastating — not just on the economy but on Cyprus’s future as a center for financial services.

[Singha]

Amazing...and this is being done by the "law abiding" EU which never fails to lecture anyone else on human rights and sickularism!

I never thought this kind of thing can happen but apparently it can.

our old time member JEM is based out of cyprus btw...hope he salvaged his kit in time.

[Neshant]

Eventually even those with under 100k euro will be put into the net.

A tax on withdrawl totalling 10 or 20 or 30% of the withdrawl amount will be instituted.

Its the only way the limit on withdrawl amounts can be lifted without a massive bank run.

But even if they took 30% of my money, i'd still eat the loss and get the rest of the 70% out.

Anyone who waits long enough will find they will lose all 100%.

Get your money out of small "financial center" countries bhai-log. Inevitably they turn out to be scam centers. e.g. London, Singapore, Luxberg, Hong Kong, Cayman Islands, Switzerland, UAE. All these places are traps that at the behest of foreign powers will be robbed just like Libya was robbed of its oil, gas & gold.

Banking & financing is a fraud of an industry that relies on draining money out of suckers.

[pankajs]

Eventually even those with under 100k euro will be put into the net.

Rarely if ever a crisis of this sort is resolved after a single write-down. With 60-70 % already confiscated very little is left for a future write-down. So you may be right.

The problem is whatever has been spared stands frozen and a daily withdrawal limit of euro 300 has been imposed.

[pankajs]

Another version of the expected losses

Big depositors in Cyprus to lose far more than feared

Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus BOC.CY will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back.

This version of the plan means 100% of the deposit over 100,000 euros stands confiscated! The shares of BOC.CY may fetch you some money in future but you cannot expect a single euro from it now given the shape the bank is in.

At Bank of Cyprus, about 22.5 percent of deposits over 100,000 euros will attract no interest, the source said. The remaining 40 percent will continue to attract interest, but will not be repaid unless the bank does well.

Those with deposits under 100,000 euros will continue to be protected under the state's deposit guarantee.

The government initially said the controls would stay in place for seven days, but Foreign Minister Ioannis Kasoulides said on Thursday they could last "about a month".

On Friday, easing a ban on cheque payments, Cypriot authorities said cheques could be used to make payments to government agencies up to a limit of 5,000 euros. Anything more than 5,000 euros would require Central Bank approval.

The bank also issued a directive limiting the cash that can be taken to areas of the island beyond the "control of the Cypriot authorities" - a reference to Turkish-controlled northern Cyprus which considers itself an independent state. Cyprus residents can take 300 euros; non-residents can take 500.

Under the terms of the capital controls, Cypriots and foreigners are allowed to take up to 1,000 euros in cash when they leave the island.

[pankajs]

I never thought this kind of thing can happen but apparently it can.

This is just the trailer and the real show has yet to start!

One view (Satyajit Das - Video posted a few post back) is that the crisis will finally peak with Germany loosing between euro 800 billion to euro 1.4 trillion, around 40% of the German GDP or Savings..I don't remember which...

[pankajs]

Roubini: Euro crisis a "slow motion train wreck"

[Suraj]

The Europeans will apparently never learn. They spend centuries fighting and killing each other, and it all culminates in two world wars with Germany the main protagonist in both instances. Then they all get together and form an organization to make everyone collaborate and be so interdependent that war could not happen again.

Instead, half of them end up kicking back and enjoying the cosy free ride paid for by the hard work of the Germans, and the whole roadshow turns into a financial crisis where the Germans are on the hook to lose their shirts while the hanger-ons try to cling on to the gravy train.

Prediction - EU will evolve into Northern EU, i.e. Greater Germany/Scandinavia, and Southern EU, i.e. the basket cases.

[JE Menon]

>>our old time member JEM is based out of cyprus btw...hope he salvaged his kit in time.

No worries GD. No money Typical yindu rat decamped from sinking ship in Jan. 2012. Still visit regularly though. In fact, landed there early Saturday morning of March 15th, and woke up to the news of the haircut and faced the full brunt of it until March 24th.

Guys, don't go by what you read in the media much. People keep saying Cyprus was a shit economy, false economy, fake economy, and all kinds of crap. Au contraire.

There is only one reason why this happened, and that was the purchase of Greek government bonds when that shithole was collapsing. And the purchase was not something the Cypriot people decided but which the banks did under pressure from the government which was itself under pressure at the time from the EU to chip in Nice eh? Then the Greek bonds collapsed, and the EU turned around and told the Cypriot banks,"fu(k you Brutus". So if these Cypriot banks fu(ked up, it was in going to the support of the Greeks (which they may not have done, at least on that scale, if the EU hadn't nudged them on). Note that after the bonds were bought, the EU authorities passed the Cypriot banks in TWO subsequent "stress tests". In 2011 and 2012 if I remember right.

As for the question of a "tax free banking and financial haven"... please recall that Cyprus is a full fledged member of the EU. In fact, it was in the Troika until a few months ago if I remember right. So Cyprus had to fall in line with ALL the EU regulations, and it did. Russian money laundering? Don't make me laugh. About a trillion dollars escaped Russia in the 2000s, of which only €20 bn came to Cyprus - the rest are in the UK, Germany and other European countries as well as the US. Yes it did have a favourable corporate tax rate of 10%, and why not? Cyprus does not have any other resources other than beaches (and tourism is its main revenue earner). And it was doing a reasonable job... it's offshore sector is not that big, nor that flamboyant. It was sufficient, however, to provide some employement to the populace of 700,000.

This was a country, and still is, really, that was relatively effectively run. There are no phantom schools, or ghost bureaucrats. This is a country where the public school systems work, the single Greek language university is a pretty good one (certainly better than 99% of those in Greece itself), and the English language colleges and universities teach students from the Middle East, India, China etc... It is also a democracy, with the usual bitching and moaning by various parties. Safe, and with excellent infrastructure. No major inefficiencies.

The Cypriot people are highly educated. The largest percentage of post-graduates among any population of the EU I think. This is why you did not see any radical action or mad rush after the banks re-opened. Even when the ATMs didn't work, a bunch of people would usually gather around them, curse the EU, and then move on to Starbux - I kid you not. I was among them in that surreal week. BBC was trying its best yesterday to show some sort of anger or fracas near ATMs - no such luck; as they themselves pointed out, it appeared there were more media crews outside central banking branches than angry customers...

So the question is why did the EU then throw this country to the dogs? It says much more about the EU as it has become than it does about Cyprus. They found a small population unable to get support from any other EU economy (Greece was remarkably restrained in its commentary on the subject - having its mouth full of various EU big country genitals), and a few at the top (not just the Germans) considered it an ideal opportunity for a test run on a "new" solution the banking crisis - (rob the depositors). And guess what, their play was that the depositors mainly being Russians, no one in the EU would complain much. In all these assessments, it appears they were right. But they have set a precedent.

The consequences will not be felt by Cyprus, however. I assure you this little country (about 1/5th the size of Kerala) will bounce back in no time. People are resourceful and not lazy. Even before, most were easily working two jobs to get their kids into expensive private schools and out into Europe for University. This will not end. There will be some belt tightening (i.e. less time at Starbux, Costa, Beanery, Gloria - we love that shit here) but that's about it. Mark my words: 18 months - and you'll start hearing nothing about Cyprus, which means they will have recovered broadly speaking. Many men and women will disappear into the EU and other areas and earn and send back, just as they did after the Turkish occupation of 1974. The population is only around 700,000 - you don't need more than 200,000 jobs to keep this bunch happy.

But Spain, Italy, Portugal better watch out. And the EU project, with Germany and France smirking now, has taken a significant kick in the nuts. It won't show on the surface, but every European knows now what the "Euro" and the EU really means.

That French monkey Pierre Muscovici called Cyprus a "casino economy" - probably the idiot did not know that casinos are banned in Cyprus; but if Cyprus is a "casino" economy, then what is France - which is more than $2 trillion in debt, and which is owed well over half a trillion by other countries in the EU which are in no position to pay back. Looking forward

Of course, my many friends in Cyprus are now telling me how "farsighted" I was to see this shit coming and actually do something about it (get out). I had warned them that the EU would throw this little bit of paradise to the wolf-pack, because the Germans and the French are running out of imagination - and desperation is getting more intense. In fact, it was largely dumb luck that I got out - and a little voice somewhere inside that tells me how to "survive"; and we Indians, Hindus in particular, are masters at that. No one comes close, except perhaps the Jewish people. Still, just hanging on for now. There is consolidation to be done before future expansion.

I will definitely go back and live in Cyprus; the place will thrive. Plus I dearly love the place, have spent more than half my life there. My 2 kids are half-Cypriot. It is home to me.

One more point: a good friend of mine, Indian, but living in Cyprus like me, has successfully secured VC to set up a banking software company operating out of Cyprus and providing jobs to Cypriots. Both of us have lived there for a long time, and we will do our best to support the place and its people.

[member_20292]

dayum....

menon saab and others.

I always thought that max junta was US based.

turns out that menon saab is in cyprus of all the places.

learn something new everyday....

[RamaY]

Good to hear JEM garu.

All the best for Cypriots. They better watch their back...

[JE Menon]

Mahadevbhu Macha, I spend a lot of time in a large variety of countries. Ridiculous eggspojure in Europe, ME & Africa...Almost like a 15th century adventure story when I think of it sometimes. Physical time in Cyprus is limited... But it is home-base.

Ashes will, however, be scattered in Mallustan, inshallah.

RamaY - thanks for the wishes. The Cypriots will thrive in no time. Zero doubt. I know them well.

[habal]

Eventually even those with under 100k euro will be put into the net.

others too got inside some net.

the London branches of those 2 banks were still open and functioning throughout. It seems whoever had to withdraw the big bucks just went to London and did so. Tremendous run happened on their London branches.

[JE Menon]

Unlikely. There was a withdrawal limit from March 15th onwards. Money has oozed out rather than rushed out. I don't doubt that some people obviously heard of this in advance and moved money out before March 15th. ATM withdrawals were permitted almost every day after March 15th. Only the amounts were limited. So people were withdrawing patiently daily. But once the fear that those with deposits under €100k would not be hit (the bulk of despositors), people simply took things in stride.

[habal]

So is this report not credible ..

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

reuters

[JE Menon]

The report says they placed no limits on withdrawals in London and Russia. To put it mildly, this would defeat the purpose of the whole exercise, given that depositors with less than 100K would not be hit. It's like closing the door and leaving the main windows open. Maybe they did.

The report also says "credit card transactions stopped". They didn't. I used my Laiki Bank debit card through the week from March 15 (as I had no Euros cash). Everywhere. On the morning when the rumour of the bank never opening again broke, there were some shops (in my case a grocery) which initially refused the card but that was because they thought it would be pointless; but he used it eventually after a bit of discussion, and the card worked. It still works. I used it in Cairo two nights ago. Limit on that is €5K/month. So I'm skeptical about the Reuters report.

[member_20292]

^^^ Menon saab you are a CIA spy onlee....or RAW agint.

egypt, middle east, north africa....either Oil business or funny business. ( but again, what you do, is in the end nobodys business )

[member_20292]

Roubini: Euro crisis a "slow motion train wreck"

i tend to believe this guy. It is a slow motion train wreck.

It would be inapprppriate for a young guy right now, to move to the EU for studies/job etc. as compared to the US.

[vishvak]

Any light on a trillion dollars from Russia disappearing into Europe? Also how European countries made to 'contribute' to Greece bonds first and then Greek bonds losing its value?
Important to learn all things of dollars' movement-global currency as well as all things of European bond market.
Thanks.

[TSJones]

Roubini: Euro crisis a "slow motion train wreck"

i tend to believe this guy. It is a slow motion train wreck.

It would be inapprppriate for a young guy right now, to move to the EU for studies/job etc. as compared to the US.

The guy is nothing but doom and gloom. I don't see how he physically functions w/o taking a long walk off a short pier. Seriously. Yeah he predicted 2008 but heck even a stopped clock is right twice a day.

Personally, I think the Euros are idiots following the Austrian school but then I'm a Keynesian. Yee, Gads! The negativity! Taleb is right, everything fails eventually, but what the heck, eventually we're gonna get smacked by a giant asteriod too.

[subhamoy.das]

I believe that the root cause for this crisis is basically demographic in nature. Europe has become grey haired and hence the jobs are leaving in hoards towards places where the population is green. To make matter worse they have a lot of debts to be paid also. It is like all members of a household has retired and they have long queue of collection agents at the door. The fate of the household is very predictable and that is what is playing out in EU right now. First their assets will be impounded by the debtors. Next they will look for some friends with deep pockets to bail them out for some time. And lastly their homes will be auctioned and they will come on the street. EU will become full of job less and home less folks. Mark my words.

[svinayak]

America is collapsing because the gov is not allowing capitalism to function....china is, that is why they are doing so good....its the lack of free capitalism that is the problem...

Funny comment

I believe that the root cause for this crisis is basically demographic in nature. Europe has become grey haired and hence the jobs are leaving in hoards towards places where the population is green. To make matter worse they have a lot of debts to be paid also. The fate of the household is very predictable and that is what is playing out in EU right now.

Satyajit Das on his Battle of Big Thinking talk ' The End of Growth'

He says that they have to change the lifestyle. Less people and more spending has created this problem

[subhamoy.das]

Abosultely on the nail. Less people = less jobs. So they did not have jobs to sustain their spending and hence borrowed to fill the gap. And now they have less working people = even lesser jobs. So the only way out is to cut back on consumption. This will screw export driven economies. Only those with a healty % of economy is driven by local jobs will rise....