Fat Freddy, July 11 at 9:58 am,

I read all of that, but it doesn’t say anything about what you think of the federal regulators having the power to limit the activities and even break up big banks through the Kanjorski Amendment. 

You seem to be solidly in the mind of putting the cows on the Che Guevera path:

http://www.youtube.com/watch?v=FQMbXvn2RNI

http://www.youtube.com/watch?v=a5s5qGg01nE

Is this what you mean?

Sorry, the link jumps to “comments”. Just scroll up to the the top of the page.

MarthaA

TBTF and systemic risk are a fabrication. The only amendment that was useful was the Paul/Greyson Amendment.

Here it is, put as simply as possible.

The Financial Con Of The Decade Explained So Simply Even A Congressman Will Get It

Fat Freddy, July 9 at 10:54 am,

“This [Kanjorski] Amendment was originally proposed by Congressman Paul Kanjorski (chair of an important House subcommittee on capital markets) during the fall.  Against the odds, it survived in the final House bill and now—probably because it has stayed mostly below the radar—remains in the reconciled legislation.

Kanjorski gives federal regulators the power and the responsibility to limit the activities or even break up big banks if they pose a “grave risk” to the financial system.

The Federal Reserve is in the hot seat on this issue—and it needs 7 out of the 10 members of the new systemic risk council to agree to any action.  But for the first time someone at the federal level must make a determination regarding whether an individual firm poses system risk.

And congressional committees can call upon the responsible people to explain how they determine whether a megabank is or is not dangerous.  What are the risk metrics they use?  To what extent do they take on board outside opinions?  How much do they consult with the bank itself?”

http://www.huffingtonpost.com/simon-johnson/the-kanjorski-surprise-no_b_640507.html?utm_source=DailyBrief&utm_campaign=070910&utm_medium=email&utm_content=FeatureMore

It looks like this Kanjorski Amendment could be used to straighten up all the mess if our democratic legislators really want to…. What do you think?

Anarcissie

However, with commodities, at the end of the day you wind up with a material object, a barrel of oil or a gold brick or whatever.

Not necessarily. In most cases you are trading on futures or ETFs. Even physical gold is traded in paper which has been leveraged as high as 100:1. The paper may say that you own an “unallocated” source of gold. And then they even charge you rent to store that gold. How do you store unallocated gold? A real gold certificate will give you a serial number(s) and a location, or you could just demand delivery and vault it yourself.

http://www.gata.org/

Fat Freddy, July 9 at 10:54 am,

A good start to a remedy for the problems you address in your post would be to institutionalize social capital and socialized capitalism, so that the incentives of private capital, privatized capitalism, and corporate welfare as regards the Federal Reserve would be diminished.

It seems that there is no commodity whose price is not manipulated, sometimes by governments, sometimes by large banks and other corporations, often by both.  Even with relatively small-timers like palladium someone’s thumb is on the scale.  It’s a tricky business.

However, with commodities, at the end of the day you wind up with a material object, a barrel of oil or a gold brick or whatever.  In the case of the stock market you wind up with the same kind of fiction you started out with—a share of something whose value is almost completely unknowable because its material manifestation lies off in the future, an ever-receding horizon.  Hence it is much more susceptible to the influence of fable and illusion.

Anarcissie

Most traders are well aware of market manipulations. Usually, though, its in the COMEX and FOREX (commodities and currency exchange markets). In fact, the COMEX has been dubbed the CRIMEX. The manipulation of the silver market by JP Morgan is very well documented and has been exposed to the CFTC (the SEC of the commodities market), yet, they have done nothing about it. It’s interesting to note, that JPM got their position in the precious metals market when they absorbed Bear Stearns. A deal put together by the NY Federal Reserve, where Jamie Dimon is on the Board. The Fed took all of the toxic assets off the books of Bear and placed them in Maiden Lane I, and backed them with a Federal Reserve 13(3) “emergency loan”. So, in effect, JPM got to pick and choose which assets they wanted, and which ones they didn’t. However, technically, JPM is on the hook for the loan. If the assets only sell for 20 cents, JPM must make up the difference, but God knows when that will be.

http://www.newyorkfed.org/markets/maidenlane.html

The Federal Reserve can also manipulate the FOREX directly, by issuing “liquidity swaps” to other foreign central banks. In 2008 there was half a trillion dollars worth. Liquidity swaps lower the value of the dollar.

http://www.federalreserve.gov/monetarypolicy/bst_liquidityswaps.htm

All anyone has to do is look at the Fed’s website, or the FDIC’s website. The fraud is right there in front of us, yet we allow it to continue. I mean, really, you just can’t make this shit up. If the general population had any clue, they would be tearing down the Federal Reserve brick by brick with their bare hands. But unfortunately, all the general population seems to care about is immigration, abortion, and gay marriage.

Fat Freddy, July 8 at 12:42 am:
‘Anarcissie

I’m not sure I know exactly what you are talking about. The so-called “circuit breakers” were first used in 1987 to halt trading to prevent a total crash. That whole mess was mostly blamed on poor computer trading programs.’

I’m talking about supplying a set of traders with effectively infinite credit in order to keep stock prices above a certain level.  The offer to the NYSE specialists was not publicized but it was not exactly concealed, either.  After all, even a person as ignorant and unconnected as I read about it, probably in the New York Times.

Obviously a measure like this changes the game profoundly.  It’s the first instance of this sort which I know of.

Halting trading temporarily is a different and much more limited tactic.

FRTothus

The “crime of Capitalism”? Please explain. Do you think the fraudulent practices of our banking system are an accurate representation of what Capitalism is supposed to be? Do you think what we have now is Capitalism? What system for the exchange of goods and services would you prefer over Capitalism?

The second shoe is about to drop:  The commercial
real estate market’s 5- and 10-year leases.  With a
majority of the offices vacant, what bankster is
going to re-finance these leases?  Answer: They all
will, because they know that they will, of course, be
bailed out with the promises to pay derived from the
(expected) future tax revenues from the shrinking
pool of wage slaves.  And the people will sit idly
by, accept shittier and shittier jobs for less and
less pay, no benefits, no pensions, no retirement,
and pay the taxes that support the corruption, blame
Jews or immigrants or a political party because the
corporate press agents tell them to, and meekly pray
that they will be left alone.  The majority of
Americans, I fear, would rather live on their knees.
For those that ask why the rich always get their way,
our well-financed Police State will bring out its
municipal and national goons, its agents provocateur
will provide the justification for repression
(problem-reaction-solution), and we will see more of
what we are already seeing: the third-world-ization
of the US. No decent person is safe from the crime of
capitalism.

“Americans cannot escape a certain responsibility for
what is done in our name around the world. In a
democracy, even one as corrupted as ours, ultimate
authority rests with the people. We empower the
government with our votes, finance it with our taxes,
bolster it with our silent acquiescence. If we are
passive in the face of America’s official actions
overseas, we in effect endorse them.”
(Mark Hertzgaard)

“Democracy is not about trust; it is about distrust.
It is about accountability, exposure, open debate,
critical challenge, and popular input and feedback
from the citizenry. It is about responsible
government. We have to get our fellow Americans to
trust their leaders less and themselves more, trust
their own questions and suspicions, and their own
desire to know what is going on.”
(Michael Parenti)

The Republicans and Democrats are the most lowdown of lowdown street walkers who will strip quick as lightning and lie on their backs on a bed of nails or white hot coals for anyone with a BIG campaign contribution.  They will do nothing - nothing - about unemployment except send directives to the National Guard to shoot to kill anyone who protests the situation.

Anarcissie

I’m not sure I know exactly what you are talking about. The so-called “circuit breakers” were first used in 1987 to halt trading to prevent a total crash. That whole mess was mostly blamed on poor computer trading programs.

America is spiritually, morally, & financially bankrupt. Soon these individuals that have had to adjust to ‘just basics’ & now losing there homes due to the ‘New Republican’s’ of NO, bullets will find their mark! Take ease for these will soon be referred to as ‘The Good Old Days’

I think it may be time for the old USA to realize that in almost all developed/industrialized nations the normal unemployment rate is around 10%.  The days of 3-5% unemployment are gone.  However, unemployment is the least of the worries.  Massive national debt will lead close to, if not, double digit inflation within two years and then the real hurt begins.

The reason 1987 fascinates me so much was that that was the moment when a stock market crash was averted by a promise, to the specialists of the NYSE, that the Federal government would loan them as much money as they needed to maintain prices—unlimited funds.  This meant that, although individual investors might fail, the class of investors could not fail.  In other words, much larger risks in the form of speculative adventures could be undertaken.  I don’t know of anything like that being done before.

In a sense, however, this move was part of a larger increment in government (or government-backed) credit which led to the remarkable bubbles in the ‘90s and the ‘00s.  What I find curious about the situation is that apparently the economy can’t function without this continuous generation and expansion of credit—of funny money.

Living high on the tab, and its unpleasant end, is something I do understand.

Anarcissie,

Trust me when I say that they all know what needs to be done. The problem is, they are trying to dance around it. No politician wants to be responsible for a major crash, not with such a short election cycle. So, we keep dancing, or should I say, walking around the chairs. One of these times, when the music stops, there will be no chairs. Hell, no politician wants to be responsible for a minor recession. But Keynesian economics tells us, that after a recession has subsided, and we are in a recovery, interest rates must be raised, and the supply of money be tightened. But no politician in history has been able to do it. Volker only did it in ‘79 because inflation was so high.

Austrian economists believe that a large expansion of credit and money will almost always lead to mal-investments. Recession, is just the market responding to all of those bad investments. (Think we have a few of them, huh?). Once the bad investments are all flushed out, the economy can begin to recover. The government and the Federal Reserve have been trying to cover-up those bad investments, at least, since the dot com bust. But what’s going on now is 100 times worse. Even according to Bernanke we are in “uncharted territory”.

It’s been a lot longer than 1987. Some economists are saying our current problems date back to 1944 and the Bretton Woods agreement, and the creation of the IMF. The US insisted, and got its wish, to have the USD serve as the world’s reserve currency. That has created huge trade imbalances. It was actually against the wishes of JM Keynes that any national currency be used as the world’s reserve currency. I believe he suggested a basket of commodities or gold/silver. (Keynes himself would not be a “Keynesian” by today’s standards). Here’s why the US “may have” wanted the US dollar as reserve currency:

Issuing the reserve currency gives domestic policy makers an advantage by making it easier to finance either domestic budget deficits or foreign trade deficits because there always is a ready bidders’ market for any financing instruments from that issuer. Issuing the reserve currency enables the domestic population to consume more goods and services from whatever source than otherwise would be feasible. And issuing the reserve currency gives foreign policy officials of that nation the upper hand in determining multilateral approaches to either diplomacy or military action.

Sound familiar? Economist Robert Triffin identified this in 1960. Yes, 1960, yet here we still are, only now, with less gold in our vaults, limited production capacity, and huge fiscal and trade deficits. In 1960 the US was a net creditor, now we are a net debtor, and all for what?

http://www.aier.org/research/briefs/975-triffins-dilemma-reserve-currencies-and-gold

http://www.zerohedge.com/article/guest-post-original-dollar-crisis-and-how-it-led-todays-crisis-part-1

Do we really even have a government anymore? I beginning to wonder.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

PATRICKHENRY: I’ve thought for a while now that the main reason we are still in the Middle East is that there is nowhere else for our soldiers to go.

If we bring them home, how will they get paid? If they are not in a war zone, we can’t get Congress to approve any “emergency spending” measures.

Face it, if the economy was robust and booming where would our all volunteer military find recruits?

Fat Freddy, July 6 at 8:47 am:

‘New home sales, down 33%.
Pending home sales, down 30%.

This is all you need to know. If you want a “recovery”, this is where you need to look.

I wish people like Paul Krugman and Tim Geithner and Ben Bernanke would stop trying to blow smoke up my ass. ...’

Hey, that’s their job.

But, seriously, I think it may not be so easy to get figures like that to recover.  The U.S. economy has been tremendously distorted by Federal interventions at least since 1987.  (For instance, credit expansion caused, among other things, a lot of speculative building.  Those houses have to be sold before more building takes place.)  As far as I can tell, Mr. O is carrying on the general policy, although it is becoming somewhat more extreme as it runs out of gas.  Everyone in the ruling class is fiddling because they really don’t know what to do next.

The American Aristocracy and the Professional Middle Class are not only “Fiddling While The Economy Burns”, the American Aristocracy and the Professional Middle Class are fiddling while a “crisis of confidence” burns and grows in the United States that perceives life, liberty, and the pursuit of happiness with freedom and justice for all as nothing more than selective democracy and benefit for the American Aristocracy and the Professional Middle Class that intentionally excludes the American Populace, the 70% Majority Common Population of the United States from benefit in the making and enforcing of legislated law and order that is in the best interest of the American Populace, the 70% Majority Common Population of the United States.

We are the American Populace, the 70% Majority Common Population of the United States, and we have the Voting Strength as a United Class and Culture to take and hold power over the Government, the Congress, and the Judiciary of the United States.

You, the American Aristocracy and the Professional Middle Class, say that we, the American Populace, are mean, vile, and vulgar, because we are not enlightened; but, enlightened or not, we have the voting strength to seize control over all levels of government in the United States and it is necessary that we do so; otherwise, we will not be represented by legislated law and order in the government of the United States.

Those who consider themselves to be enlightened that do not want to be ruled by what they consider to be the mean, vile, and vulgar American Populace had best start doing all that they can to bring the enlightenment of the 17th and 18th Centuries, that they have built upon for 400 years at the present time at the start of the 21st Century, to maintain their own power, control, and benefit to the American Populace, or prepare to gradually cede power to the American Populace as a mean, vile, and vulgar unenlightened majority common population that is awakening and realizing that its communal wealth is being used for the benefit of the American Aristocracy and the Professional Middle Class while the American Populace is being excluded from benefit from its own communal wealth, and being intentionally excluded from participation in legislated law and order and governance that can remedy the problem.

A good place to start is the elimination of “Savant Education” in the Public School System of the United States and replacement of “Savant Education” with “Causal Education”, so that the American Populace do not continue to be programmed by all levels of U.S. Governance to be unenlightened mean, vile, and vulgar tools that are trained like monkeys from the Cradle to the Grave to be nothing more than tools of the American Aristocracy and Professional Middle Class, and distracted by entertainment in the same manner in order to perpetuate an unenlightened work force that does not share in the benefit of its own labor.

Here’s to you Mr. Robinson,

Again you hit on the crux of the problem and we need to stop voting these uncaring pols in until they take action to help average people and not just military contractors and oil companies. And no, it’s NOT a partisan issue, it’s a humankind issue.

Thanks.

Peace,
Tex Shelters
texshelters.com

All the numbers thrown out there claiming this and that, mean nothing and what is one to believe?

My personal budget is so tight it squeaks when I walk.

Screw the alleged experts, what! did they have cards printed ? Nothing proves they are good at experting.

New home sales, down 33%.
Pending home sales, down 30%.

This is all you need to know. If you want a “recovery”, this is where you need to look.

I wish people like Paul Krugman and Tim Geithner and Ben Bernanke would stop trying to blow smoke up my ass. The GOP is blowing smoke as well, but not quite as much. I sat and watched Krugman on This Week, I believe, saying how extending unemployment benefits, and another Stimulus is going to “save” the economy. Is this guy clueless, or is he flat out lying? The problem lies in the financial sector. Until politicians are willing to take on the big banks, we will just continue kicking the can down the road, and wasting a shitload of money in the process.

The so-called “recovery” we experienced is nothing more than flat out legalized accounting fraud. The same accounting fraud that got Enron in trouble. Sure, the S&P 500, GDP, and CPI all “look good”, but it’s all smoke and mirrors. Extend and pretend.

Here’s what the banks say regarding accounting standards 166 and 167 (moving off-balance sheet transactions):

Citi:

Banks should be given three years to raise capital for offsetting assets and liabilities that must be brought onto their balance sheets, Citigroup Chief Financial Officer John Gerspach said yesterday in a letter to regulators. Requiring banks to “assume the risk-based capital effects immediately, or even over one year, is an undeniably severe penalty”

JP Morgan:

  The capital requirements “will have a significant and negative impact on the amount of consumer-conduit funding that will be made available by U.S. banks,” said the letter from JPMorgan, the New York-based bank that this week reported its biggest quarterly profit since the subprime-mortgage market collapsed in 2007.

  “We strongly support a phase-in period for the rule changes,” according to JPMorgan’s letter, which was signed by Managing Director Adam Gilbert. The change would take effect for annual reports after Nov. 15.

Wells:

  The rule “could lead to the result that every $1 billion of additional capital held from newly consolidated assets ‘crowds out’ more than $15 billion in loans,” Paul Ackerman, Wells Fargo’s treasurer, wrote in a letter yesterday to the Fed, FDIC, Office of the Comptroller of the Currency and Office of Thrift Supervision. The comment period ended yesterday.

Citi (again):

  Citigroup, the New York-based bank that yesterday reported a third-quarter profit of $101 million, argued that bringing off-balance vehicles onto its books would lead the bank to cut financing for securitizations that fuel credit-card lending, residential mortgages and student loans. Additional consumer loans will be cut as well, Citigroup said.

  “We do not plan to reduce lending in only those businesses specifically impacted by the incremental regulatory capital requirements,” Gerspach wrote.

Now, don’t forget, this is in addition to the suspension of accounting standards 157, which is mark-to-market. All of the on-balance sheet toxic assets are marked to face value, not actual value, which is probably 20 cents on the dollar.

It is absolutely clear who runs this country. Any attempt to force banks to accurately account for all of their assets and liabilities by regulatory agencies, results in threats from the banks to the politicians, who then order the agencies to back off. But here we are, arguing about extending unemployment benefits and another ditch digging Stimulus Bill. What a fucking joke.

http://www.zerohedge.com/article/big-banks-you-will-cancel-fasb-166-so-we-can-continue-pretending-all-good-or-we-will-kill-le

Meanwhile, for the month of May, new home sales down 32%, pending home sales down 30%. Somebody tell me why we are helping these insolvent, Zombie banks?