The Up and Down Theater did an original comedy routine for the Santa Fe Public Banking Conference on September 28th, which was added late to the post below. It’s here — very clever!!
Concerns are growing that we are heading for another banking crisis, one that could be far worse than in 2008. But this time, there will be no government bailouts. Instead, per the Dodd-Frank Act, bankrupt banks will be confiscating (or “bailing in”) their customers’ deposits.
That includes local government deposits. The fact that public funds are secured with collateral may not protect them, as explained earlier here. Derivative claims now get paid first in a bank bankruptcy; and derivative losses could be huge, wiping out the collateral for other claims.
In a September 24th article titled “5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives, Michael Snyder warns:
Trading in derivatives is basically just a form of legalized gambling, and the “too big to fail” banks have transformed Wall Street into the largest casino in the history of the planet. When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.
In the worlds of economic theory and “acceptable” economic discussion, the terms “Socialism” and “Marxism” acquired an anti-patriotic stain during the 20th Century, despite the significant social economic progress realized by early American populist movements. Noted economics professor Dr. Richard Wolff, who has taught at many esteemed universities, has been overlooked for decades because of his Marxist/Socialist specialties; but suddenly he is out and about making the rounds on major media outlets talking about the failures of Capitalism, how they helped bring about the collapse of the American middle class and set a stage for continuing economic decline. Ellen talks with Dr. Wolff about a way forward that marries American values and sensibilities with the goals of these maligned economic theories.
Listen here (archived).
The Santa Fe Public Banking Conference last weekend was a great success. The videotaped event can be seen here.
Our guest on “It’s Our Money” on PRN next Wednesday, October 8th, will be Richard Wolff, the keynote speaker in Santa Fe. Listen at noon PST/3 pm EST or on archive here.
The Praxis Peace Economics of Sustainability Conference is coming up next week in San Francisco. I’ll be speaking at 10:30 am on Wednesday the 8th. Details here.
The Philadelphia Public Banking conference is on October 18. Details here.
Would love to see you at one of these events! Ellen
Show #14: What’s the Alternative?
The broad-based economic destruction brought on by extractive private banking has gotten lots of people thinking hard about alternatives. The Scots came close to starting on a new path in recent weeks that could still materialize with some re-focusing on its banking options, while the possible recurrence of big bank failures has many Americans actively looking for alternatives. In this edition of “It’s Our Money” Ellen holds a
foundational conversation with globally-recognized economic theorist Christopher Cook about how a new world of monetary management could be realized for the benefit of all. Meanwhile, citizens are rallying their national public bank initiatives at the upcoming “Banking on New Mexico” symposium. Co-host Walt McRee speaks with project founder, author and diplomat Craig Barnes about what’s brewing in Santa Fe.
I’ll be speaking at the Philadelphia and Santa Fe conferences described in the press release below, as well as at the Economics of Sustainability conference in San Francisco Oct 6-9 and the Kilkenomics Festival in Kilkenny, Ireland, November 6-9. Should be fun! Ellen
Update: The Main Session of the Santa Fe event on September 27th will be streamed here from 1025a to 930p: https://new.livestream.com/streamingnm/bankingnmmain. The single Side Session will be streamed here from 1025a to 1200p: https://new.livestream.com/streamingnm/bankingnmside.
For immediate release –
Public bank advocates gather in Philadelphia: Seek to boost local banks over Wall Street
September 15, 2014 (Philadelphia) — Public bank advocates from the eastern U.S. will hold a one day conference in Philadelphia on October 18, to advance efforts to form public banks in U.S. cities and states.
Scottish voters will go to the polls on September 18th to decide whether Scotland should become an independent country. As video blogger Ian R. Crane colorfully puts the issues and possibilities:
[T]he People of Scotland have an opportunity to extricate themselves from the socio-psychopathic global corporatists and the temple of outrageous and excessive abject materialism. However, it is not going to be an easy ride . . . .
If Alex Salmond and the SNP [Scottish National Party] are serious about keeping the Pound Stirling as the Currency of Scotland, there will be no independence. Likewise if Scotland embraces the Euro, Scotland will rapidly become a vassel state of the Euro-Federalists, who will asset strip the nation in the same way that, Greece, Ireland, Portugal and Spain have been stripped of their entire national wealth and much of their national identity.
In an inscrutable move that has alarmed state treasurers, the Federal Reserve, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, just changed the liquidity requirements for the nation’s largest banks. Municipal bonds, long considered safe liquid investments, have been eliminated from the list of high-quality liquid collateral. assets (HQLA). That means banks that are the largest holders of munis are liable to start dumping them in favor of the Treasuries and corporate bonds that do satisfy the requirement. Continue reading
You can always count on Americans to do the right thing, after they’ve tried everything else. —Winston Churchill
When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.
The September/October issue of Foreign Affairs features an article by Mark Blyth and Eric Lonergan titled “Print Less But Transfer More: Why Central Banks Should Give Money Directly To The People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on? Continue reading
If Argentina were in a high-stakes chess match, the country’s actions this week would be the equivalent of flipping over all the pieces on the board.
– David Dayen, Fiscal Times, August 22, 2014
Argentina is playing hardball with the vulture funds, which have been trying to force it into an involuntary bankruptcy. The vultures are demanding what amounts to a 600% return on bonds bought for pennies on the dollar, defeating a 2005 settlement in which 92% of creditors agreed to accept a 70% haircut on their bonds. A US court has backed the vulture funds; but last week, Argentina sidestepped its jurisdiction by transferring the trustee for payment from Bank of New York Mellon to its own central bank. That play, if approved by the Argentine Congress, will allow the country to continue making payments under its 2005 settlement, avoiding default on the majority of its bonds.
Argentina is already foreclosed from international capital markets, so it doesn’t have much to lose by thwarting the US court system. Similar bold moves by Ecuador and Iceland have left those countries in substantially better shape than Greece, which went along with the agendas of the international financiers. Continue reading
Argentina has now taken the US to The Hague for blocking the country’s 2005 settlement with the bulk of its creditors. The issue underscores the need for an international mechanism for nations to go bankrupt. Better yet would be a sustainable global monetary scheme that avoids the need for sovereign bankruptcy.
Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history. In 2005, it renegotiated its debt with most of its creditors at a 70% “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar. Continue reading
One thing to be said for the women now heading the Federal Reserve and the IMF: compared to some of their predecessors, they are refreshingly honest. The Wall Street Journal reported on July 2nd:
Two of the world’s most powerful women of finance sat down for a lengthy discussion Wednesday on the future of monetary policy in a post-crisis world: U.S. Federal Reserve Chairwoman Janet Yellen and International Monetary Fund Managing Director Christine Lagarde. Before a veritable who’s-who in international economics packing the IMF’s largest conference hall, the two covered all the hottest topics in debate among the world’s central bankers, financiers and economists.
Among those hot topics was the runaway shadow banking system, defined by Investopedia as “The financial intermediaries involved in facilitating the creation of credit across the global financial system, but whose members are not subject to regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.” Examples given include hedge funds, derivatives and credit default swaps. Continue reading
Here is Rudy Avizius’ latest video, posted on the PublicBankingTV YouTube Channel. Quite clever and clear!
For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.
In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage. Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time. Continue reading
Mortgage debt overhang from the housing bust has meant lack of middle-class spending power and consumer demand, preventing the economy from growing. The problem might be fixed by a new approach from the Fed. But if the Fed won’t act, counties will, as seen in the latest developments on eminent domain and litigation over MERS.
Former Assistant Treasury Secretary Paul Craig Roberts wrote on June 25th that real US GDP growth for the first quarter of 2014 was a negative 2.9%, off by 5.5% from the positive 2.6% predicted by economists. If the second quarter also shows a decline, the US will officially be in recession. That means not only fiscal policy (government deficit spending) but monetary policy (unprecedented quantitative easing) will have failed. The Federal Reserve is out of bullets.
Or is it? Perhaps it is just aiming at the wrong target. Continue reading
A flood of foreclosures in neighborhoods, cities and towns can cause everyone’s real estate equity to plunge. Some towns would like to step-in to protect their communities, but they can’t get the mortgage notes written down to affordable levels for contractual reasons. The solution: use eminent domain to claim the properties for the municipality, then renegotiate them on behalf of struggling homeowners. Ellen talks with the pre-eminent legal mind behind the emerging eminent domain stratagem, Cornell professor Robert Hockett, whose idea has been catching on in towns across America, including some of the biggest.
Read more here.
Ann Pettifor has written an excellent rebuttal to the full reserve banking solution proposed by Professor Richard Wolf and Positive Money, who are in most ways her allies. Her entree is the Bank of England’s recent acknowledgment that banks create the money they lend. She writes:
Because I am a vocal critic of the private finance sector, many assume that I would agree with Wolf and Positive Money on nationalising money creation. Not so. I have no objection to the nationalisation of banks. But nationalising banks is a different proposition from nationalising (and centralising) money creation in the hands of a small ‘independent committee’.
The full article is here:
Yves Smith has also commented, here:
Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? — Dr. Michael Hudson, Counterpunch, October 2010
When the US Federal Reserve bought an 80% stake in American International Group (AIG) in September 2008, the unprecedented $85 billion outlay was justified as necessary to bail out the world’s largest insurance company. Today, however, central banks are on a global corporate buying spree not to bail out bankrupt corporations but simply as an investment, to compensate for the loss of bond income due to record-low interest rates. Indeed, central banks have become some of the world’s largest stock investors.
Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. We are not allowed to peer into their books. It took a major lawsuit by Reuters and a congressional investigation to get the Fed to reveal the $16-plus trillion in loans it made to bail out giant banks and corporations after 2008.
What is to stop a foreign bank from simply printing its own currency and trading it on the currency market for dollars, to be invested in the US stock market or US real estate market? What is to stop central banks from printing up money competitively, in a mad rush to own the world’s largest companies? Continue reading