Wall Street buybacks: Another expression of parasitism

By Nick Beams
May 29, 2015
World Socialist Web Site

 

In the biological world, a parasite lives at the expense of the host, sucking out its nutrients and life forces, and sometimes killing it. Analogies of course have their limits, but nonetheless they can be suggestive. And this is certainly so in the case of the rampant financial parasitism that has become the dominant feature of the American economy and, by extension, the world economy as a whole.

An article published in the Wall Street Journal this week details some of the impact of hedge funds on the operations of major US corporations, and the way in which their insatiable drive for profit through financial manipulations is sucking the lifeblood out of the economy and contributing to its deepening breakdown.

The article is based on a study conducted for the newspaper by S&P Capital IQ. It found that companies in the S&P 500 index had “sharply increased their spending on dividends and [share] buybacks to a median 36 percent of operating cash flow in 2013, from 18 percent in 2003.” The doubling of this rate was accompanied by a fall in spending by those companies on plant and equipment, from 33 percent to 29 percent over the same period.

The study found that in companies targeted by so-called “activist investors”—that is, hedge funds that hold hundreds of millions and sometimes billions of dollars on behalf of their wealthy investors—the figures were even higher. Targeted companies reduced capital spending from 42 per cent to 29 percent of operating cash flow and increased spending on dividends and share buybacks to 37 percent of operating cash flow from 22 percent.

One of the main factors facilitating these operations has been the provision of ultra-cheap money by the US Federal Reserve, which has kept official interest rates at almost zero, leading to historically low interest rates in financial markets. Hedge funds are able to use borrowed money to acquire major share holdings in corporations and then push for share buybacks and the payment of increased dividends. The buybacks, in turn, can be financed through borrowed funds at low interest rates.

The aim is to produce a rise in the share price of the company or generate an increased dividend flow returning large profits for the “activists,” often accompanied by job cuts or the outright closure of parts of the targeted company deemed not to be making a sufficient contribution to “shareholders’ funds.” At the end of the process, vast profits have been pocketed, without a single atom of new wealth being created, while productive capacity has been curtailed.

The consequences of these vampire-like operations are most prominent in major industries. The US energy giants, which have splurged billions on buybacks, dividends and mergers, have refused for decades to invest in infrastructure, leading to a situation where workers are subjected to 16-hour days and increasingly unsafe working conditions. Likewise, the auto industry firms and telecoms are notorious for their resistance to wage increases, while engaging in the same financial manipulation.

The deeper the economic crisis, the more frenzied the speculation. The article noted that since 2010 the number of activist campaigns directed at securing buybacks and increased dividends had risen by 60 percent. Last year there were 348 such campaigns, the most since 2008, and a further 108 in the first quarter of this year. Hedge funds now control $130 billion in assets, more than double the amount they held in 2011. This means that once they leverage these funds through borrowing at ultra-low rates, they can target virtually any corporation.

Would-be reformers of the capitalist economy will no doubt argue that these dangers can be overcome through the development of mechanisms or increased regulations to promote the “good” side of corporate activity—research and development and real investment—while taking action to control the “bad” side—parasitism. But the question remains: Why has it emerged now?

Underlying tendencies at the very center of the capitalist economy are at work. The long-term downward pressure on the rate of profit, which has led to the continuous restructuring of the American and global capitalist economy over the past four decades, is the driving force behind the rise of speculation and parasitism.

Well-known voracious hedge-fund investor Carl Icahn, cited in the Wall Street Journal article, pointed to these trends saying the economy was “being dragged down by too many mediocre CEOs, and it’s dangerous if profitability is going down despite interest rates being at zero.”

However, his resort to a “bad man” theory of economics does not pass even a preliminary examination. The same tendencies are also clearly visible in Europe and throughout the world’s major capitalist economies where, despite ultra-low interest rates, investment remains at historically depressed levels, reflecting a lack of profitable outlets.

Furthermore, any attempt to separate out the “good” and the “bad’ sides of corporations runs up against the fact, as Marx explained at the time of the emergence of joint stock companies in the middle of the 19th century, that the origin of parasitism is lodged in their very structure. The formation of such companies, he wrote, “reproduces a new financial aristocracy, a new kind of parasite in the guise of company promoters, speculators and merely nominal directors: an entire system of swindling and cheating with respect to the promotion of companies, issuing of shares and share dealing.”

For a whole period of capitalist development, notwithstanding swindling and cheating, the corporation or joint-stock company facilitated the development of the productive forces through the aggregation of capital to finance large-scale developments, which sustained the living standards of the mass of the population. Those days have long gone.

The elevation of parasitism to the basic mechanism of profit accumulation is bound up with the objective crisis of capitalism and, connected to this, the absolute stranglehold of the financial aristocracy over every aspect of economic and political life. Swindling, cheating and the destruction of the productive forces—above all through the impoverishment of the most important productive force of all, the working class—is a symptom of the rot and decay of the entire socioeconomic order.

It establishes the unanswerable case for the taking into public ownership of the major corporations, the banks and the entire finance industry as part of the socialist restructuring of economic life. This is the perquisite for establishing a society where the productive forces, created by the labor of the working class, can be used for social advancement.

Banksters admit rigging markets since 2007, ‘fined’ 33% of 1 quarter’s income while looting tens of trillions tax-free

By Carl Herman
May 27, 2015
Washington’s Blog

hat tips: here, here, here, here, here, here, here, here, here

Asset-hole and so-called “too big to jail” banks admitted criminal looting through market manipulation and collusion last week, and will return a mere 33% of one quarter’s income without prison sentences (total “fine” of $5.7 billion from $15.5 billion 2015 1st-quarter combined incomes  – see below).

Please note that the US Department of Justice (sic) fails to communicate the amount looted by the banksters, only the “fines” without context of:

• this is a bankster operating expense for pretending to operate under law that will be paid by the shareholders,
• “regulators” serve in government “minor league” positions until “called up” to work for the banksters in the “big leagues,”
• requiring the banks to “fire” eight responsible executives without prison sentences just allows them to be rehired by other banksters to resume “business” as usual.

In Orwellian language, US Attorney General Loretta Lynch claimed the “fines” are “fitting” and “commensurate with the pervasive harm” of the banks.

“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers,” said Attorney General Lynch.  “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct.  It is commensurate with the pervasive harm done.  And it should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”

Of course, Attorney General Lynch is a criminal lying sack-of-spin because she ignores the massive trillions of looting every year:

• Banks creating what we use for money as debt owed to them, with the fundamental fraud that debt is “money” and somehow good for us.
• The .01% have already looted ~$30 trillion, placed in shell companies in tax havens. One to three trillion would end poverty forever on Earth, and save ~one million children’s lives every month from gruesome slow deaths while decreasing population growth rates.
• The US top seven banks have ~$10 trillion in these tax havens, according to the Federal Reserve.
• The top US banks gamble in ~$300 trillion in derivatives (awesome infographic here from Demonocracy).

From Washington’s Blog also documenting rigged markets in derivatives, energy, commodities, gold, silver, interest rates, high-frequency trading, and more:

It has long been known that currency markets are massively rigged. And see this, this, and this.  Indeed, not only do the banks share confidential information with each other … they also shared it with a giant oil company.

… New York’s state financial regulator called it “a brazen ‘heads I win, tails you lose’ scheme to rip off their clients.” The formal admissions by the banks include a trader saying, “We trying to manipulate it a bit more in ny now . . . a coupld buddies of mine and I.”  And a vice president of a big bank said: “If you aint cheating, you aint trying.”

The “fines”:

• Barclays “fined” $2.3 billion; 2015 1st-quarter income of $2 billion.
• Citigroup: “fined” $1.3 billion; 2015 1st-quarter income of $4.8 billion.
• JPMorgan: “fined” $892 million; 2015 1st-quarter income of $5.9 billion.
• RBS: “fined” $669 million; 2015 1st-quarter loss of $687 million.
• UBS: “fined” $342 million; 2015 1st-quarter income of $2.1 billion
• Bank of America: “fined” $205 million: 2015 1st-quarter income of $3.4 billion

And to see what millions, billions, and trillions look like:

Current humans empowered with the facts are actively engaged to shatter humanity’s collective Emperor’s New Clothes deceptions. The general public would never consent to what’s being done to them if empowered with accurate comprehensive information of their conditions. The informed are motivated to create a new future of peace, technological advance, and cooperative happiness.

The ongoing costs of Earth’s history controlled by a .01% group of literal psychopaths (and here), extending to our world of the present, are annual war and poverty murders of millions, harm to billions, and looting of  trillions.

Our case is as clear as asserting a baseball pitch ten feet over everyone’s head is not even close to the definition of a “strike,” with video evidence for anyone’s independent review and analysis. Ironically, if we were discussing baseball rather than wars, money, and media, Americans would never allow their sacred game to suffer such Emperor’s New Clothes propaganda.

When enough people are willing to apply their educations to look, and exercise their integrity to state simple facts, humanity will be in position to seize the alternative of a brighter future for all Earth’s inhabitants:

• Peace, as the 99.99% realize they’ve been lied-into unlawful wars by the same nations who colonized every part of the planet, then engaged in two world wars among themselves.
• Prosperity, as what we use for money is created debt-free for direct payment of public goods and services, and as at-cost credit to allow good-faith transparent experimentation to optimize public benefits rather than oligarchic .01% looting in the tens of trillions.
• Truth, as media work to report on good-faith exploration of what’s possible for all the inhabitants of our beautiful and currently viciously dominated planet Earth (consider here, here, here, here, here, here, here, here, here, here, here, here for current good-faith work to reveal challenges and possibilities).

**

Note: I make all factual assertions as a National Board Certified Teacher of US Government, Economics, and History, with all economics factual claims receiving zero refutation since I began writing in 2008 among Advanced Placement Macroeconomics teachers on our discussion board, public audiences of these articles, and international conferences. I invite readers to empower their civic voices with the strongest comprehensive facts most important to building a brighter future. I challenge professionals, academics, and citizens to add their voices for the benefit of all Earth’s inhabitants.

**

Carl Herman is a National Board Certified Teacher of US Government, Economics, and History; also credentialed in Mathematics. He worked with both US political parties over 18 years and two UN Summits with the citizen’s lobby, RESULTS, for US domestic and foreign policy to end poverty. He can be reached at Carl_Herman@post.harvard.edu

Note: Examiner.com has blocked public access to my articles on their site (and from other whistleblowers), so some links in my previous work are blocked. If you’d like to search for those articles other sites may have republished, use words from the article title within the blocked link. Or, go to http://archive.org/web/, paste the expired link into the box, click “Browse history,” then click onto the screenshots of that page for each time it was screen-shot and uploaded to webarchive. I’ll update as “hobby time” allows; including my earliest work from 2009 to 2011 (blocked author pages: here, here).

JPMorgan’s Jamie Dimon Deals With His Bank’s Felony Charge – Badly

By Pam Martens and Russ Martens
May 22, 2015
Wall Street on Parade

 

JPMorgan Tries to Claim It’s a Felon Because of One Bad Apple

After more than 200 years of operation, yesterday JPMorgan Chase became an admitted felon. That action for foreign currency rigging came less than two years after the bank was charged with two felony counts and given a deferred prosecution agreement for aiding and abetting Bernie Madoff in the largest Ponzi fraud in history. The felony counts came amid three years of non-stop charges against JPMorgan Chase for unthinkable frauds: from rigging electric markets to ripping off veterans to charging credit card customers for fictitious credit monitoring and manipulating the Libor interest rate benchmark.

Against this backdrop of a serial crime spree on the part of employees on multiple continents and coast to coast in the United States, JPMorgan released a statement yesterday regarding the bank pleading guilty to a felony charge for engaging in the rigging of foreign currency trading, calling it “principally attributable to a single trader.” In the statement, Dimon says the bank has a “historically strong culture.”

Dimon is, if nothing else, a master of the grand illusion.

In 2012, when Dimon was asked about reports in the press that one of his London traders was making massive bets in derivatives, he called the matter a “tempest in a teapot.” That tempest, dubbed the London Whale scandal, cost JPMorgan Chase at least $6.2 billion in losses, over $1 billion in fines, and a scathing 306-page report from the U.S. Senate’s Permanent Subcommittee on Investigations. Senator Carl Levin, Chair of the Subcommittee at the time, said JPMorgan “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.”

Attempting to foster the illusion that there was simply one bad apple behind JPMorgan having to finally plead guilty to a felony is not only an insult to the public, it flies in the face of five regulators’ findings in the matter. JPMorgan’s involvement in the rigging of foreign currency has now been looked at by the Commodity Futures Trading Commission (CFTC), the Office of the Comptroller of the Currency (OCC), the U.S. Justice Department, the Federal Reserve, and the U.K.’s Financial Conduct Authority. Not one of these regulators alluded to the problem as being one bad apple.

The CFTC placed the blame squarely at the feet of management, writing: “This conduct occurred at various times over the course of the Relevant Period without detection by JPMC in part because of internal controls and supervisory failures at JPMC.”

Not only was the supervisor of Foreign Exchange at JPMorgan not fired, but as we reported last week, that individual, Troy Rohrbaugh, who has been head of Foreign Exchange at JPMorgan since 2005, is now serving in the dual role as Chair of the Foreign Exchange Committee at the New York Fed, helping his regulator establish best practices in foreign exchange trading.

Continue reading

The Horrors of Wall Street’s ‘New Libya’

By Caleb Maupin
April 29, 2015
New Eastern Outlook

 

The world, including the US press, is looking on in horror at recent events in Libya. Libya is now a center of human trafficking, with human beings packed into ships bound for Europe. Libyans are so desperate to escape their country, now wrecked with civil war and astounding levels of poverty, they are risking their lives. Ships filled with desperate human beings have crashed, and a number of corpses have washed up on Libya’s beaches.

Furthermore, the Islamic State organization, which has been terrorizing and murdering people in Iraq and Syria, is moving into action on the African continent. Libyan Christians are being executed by ISIS fighters.

400,000 people in Libya are declared by Human Rights Watch to be “internally displaced.” In 2014 alone, over 250 journalists, religious and political leaders, and judges have been assassinated.

Is there any rational human being, who can argue that the Libya of today is better off than the Libya that existed prior to 2011? Can any rational, logical case be made that funding the anti-government insurgents, and the eventual US NATO bombing campaign, improved the conditions of the Libyan people? 

While the US media has often played up false or exaggerated stories of Cubans fleeing to Miami on rafts, the whole world is seeing how thousands of Libyans are piling into boats, desperately trying to cross the Mediterranean. Just like Iraq, Afghanistan, and Syria, Libya has been destroyed by a campaign of western intervention.

Before the US/NATO Attack

Prior to the foreign backed war and bombing of 2011, Libya had the highest life expectancy on the African continent. The government that emerged from the 1969 revolution, led by Colonel Moammar Gaddafi had resulted in the development of nationalized oil resources.

Every Libyan was guaranteed an income, based on a personal share of the country’s oil profits. Food and housing were heavily subsidized. Libyans received free education and free medical care. The Libyan government constructed the worlds most efficient irrigation system, bringing water to an extremely dry country.

The huge economic achievements of Libya’s independent economic development were marveled at by people around the world. The “Green Book” that explained Gaddafi’s “Third Universal Theory” was studied around the world by people who were inspired by Libya’s achievements.

Libya funded other peoples who fought for their national liberation. Libyan money went to the Black Panther Party and the Nation of Islam. Libyan weapons and support went to the African National Congress, the Provisional Irish Republican Army, the Popular Front for the Liberation of Palestine, and many other anti-imperialist armed groups.

What has happened to Libya since 2011 is yet another illustration of the sinister intentions behind US foreign policy. The unfolding chaos in Iraq, the instability in Afghanistan, the continuing campaign of violence and terrorism in Syria, and the horrendous state of Libya are not the result of miscalculations or blunders by western governments.

An Intentional Policy of Destruction

Samantha Power, declared to be the architect of the Libyan intervention has been promoted to the rank of US ambassador to the United Nations. Many of the armed terrorists who fought to destroy Libya have been transported to Syria, and told to continue their efforts.

Libya’s oil exports are a mere 11% of what they were prior to 2011.

The state owned Libyan oil company has been removed from the world market, and what little remains of Libya’s oil infrastructure, is now controlled by western capitalists. Wall Street has retaken Libya for itself, overturning the 1969 revolution. Stability, development, and arguably the most prosperous society on the African continent, has been destroyed.

The results of US intervention are on display in Libya for the whole world to see. Whenever the US media whips itself into a frenzy, talking about “humanitarianism” and the need to “rescue innocent people”, the intervention that results always makes the situation worse. The people the US and its allies intend to rescue, end up far worse off than before.

We should all look at the horror of Libya, and realize that we can never trust US officials, and that all calls for foreign intervention by the United States and the European Union must be loudly opposed by progressive forces.

Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.
First appeared: http://journal-neo.org/2015/04/29/the-horrors-of-wall-street-s-new-libya/

American Politics: A House of Mirrors

By Ulson Gunnar
April 25, 2015
New Eastern Outlook

 

A house of mirrors is an immersive, highly distorted and intentionally confusing version of reality. Those walking its corridors are sometimes amused and sometimes frightened by the disorienting experience, but luckily for them, it is only temporary. There is an exit, and they will walk through it, back to reality.

But what if one existed their entire lives in such a distorted reality and knew of no exits? Would they convince themselves that these distorted images reflected back at them were in fact reality no matter how unnatural they appeared? Could they convince themselves to enjoy and even embrace this distorted reality?

One ponders such questions when looking from the outside-in on American politics. It too is a house of mirrors reflecting back a reality entirely distorted. Also like a house of mirrors, American politics have been intentionally constructed this way, to confuse, disorient and even frighten the American people when necessary to exercise mass persuasion over them. The final result is perpetual impunity granted to the powers that truly be, hiding behind the powers that allegedly were “elected,” and powers whose authority only exists in this house of mirrors and no further.

New Leaders, Old Wars 

Consider US President George Bush Sr. He launched the inaugural war of what he himself called a “New World Order.” Operation Desert Storm included multiple nations comprising of nearly a million soldiers who swept from the map one of the largest conventional armies (4th largest) in the world. Bush Sr., however, paused just ahead of sweeping the Iraqi leader Saddam Hussein from power. His successor, US President William Jefferson Clinton would keep Iraq subdued with periodic bombing campaigns and the imposition of both crippling sanctions and no-fly zones in the north and south of Iraq.

Clinton would serve 8 years in office and lock horns with Russia in Serbia in a proto-Ukraine-style conflict. In 2000, we should remember that George Bush Jr. ran on a platform opposed to global interventionism. For those trapped in the house of mirrors, this distortion of reality seemed very convincing. For those who understood the hegemonic mission of America’s special interests, those that transcend elections and political parties, they knew Bush Sr.’s desires for a “New World” endured and would manifest themselves in a yet revealed, muscular foreign policy that only needed the right impetus to be justified in the eyes of the American people.

Conveniently, the events of September 11, 2001 delivered just that. So began the 8 year “War on Terror.” So sick of wars were Americans at the end of those 8 years, that anyone promising to end them would likely win the 2008 elections. And so Barack Obama did and thus became “US President.” However, not only did the wars not end, and not only were they in fact expanded, new wars were begun. In fact, these new wars were all the planned wars Bush Sr., Clinton and Bush Jr. never got around to fighting.

Yet, no matter how unnatural this distorted reflection appeared in the American politics house of mirrors, those trapped perpetually within its mirrored walls found it perfectly acceptable for a Democratic president to continue Republican wars and start new wars the Republicans could only have dreamed of starting but couldn’t because of left-wing anti-war movements now silent because “their guy” was in office.

Hillary = Obama = Bush Jr. = Clinton = Bush Sr.  

With Hillary Clinton’s announcement that she is running for office in 2016 with President Obama’s full endorsement, those infected with neo-liberalism and wandering the corridors of this house of mirrors see yet another distorted, ghoulish image staring back, but one they are yet again ready to embrace.

Here is a woman who as US Secretary of State laughed and mocked the Libyan people upon hearing their leader had been murdered by terrorists in what constituted by all accounts a war crime. Before that, she played an active role in selling the war upon Libya in 2011 to the American left (as the American right had already desired such a war for years and needed no convincing). By 2016 we may have yet another Clinton in office, and a Clinton fully dedicated to carrying on the wars of both the Democrats and Republicans that came before her.

To say this is continuity of agenda is a bit of an understatement. American foreign policy has been so singular in purpose and focus for the past several decades that it is clear that behind the distortions of this house of mirrors, something singular and very nasty has been there the entire time. Who or what could it be?

The Real President of the United States Lives on Wall Street, not Pennsylvania Avenue 

How about we look at the people who pay for the political campaigns to put these various spokesmen and women-in-chiefs into office in the first place? Or the immense interests driving lobbying efforts that target and control both sides of the political aisle in American politics? A single Fortune 100 corporation has enough money to buy out every relevant politician on Capital Hill and still finish up the fiscal year bloated with billions in profits. And what happens when these interests converge across various think-tanks they themselves have set up and created to generate the singular foreign and domestic policies we see carried forward from presidency to presidency, from congressional session to session?

We see complete control exerted over American politics as well as across the media, allegedly charged to serve as watchdogs and a check and balance, but instead turned into an echo chamber and instrument of mass persuasion by those who have clearly consolidated the summation of American politics in their pockets.

While policy might be debated over by these special interests, and groups moved in one direction or another to exert influence against competing special interests among this exclusive club, one thing is for sure, the American voter is the last voice considered in this process.

Since the American voter is incapable of seeing that they are in fact in a house of mirrors to begin with, and think they are “outside” in reality making real decisions, their decisions are completely irrelevant to those who really do live outside in reality and are actually making real decisions.

We must understand that for special interests that collectively control trillions of dollars in assets, profits and infrastructure all over the planet, the last thing they are willing to do is allow for the existence of a system that might actually put into power a form of authority above their own, that would set policy predicated upon the interests of the people, rather than their own. They have the money, the power and the ability to ensure policy is set to suit them, and them alone, and they clearly have done just that.

This is why US troops are still in Afghanistan and Iraq, wars are still being waged either directly or indirectly against Libya, Syria, Yemen, Iran and Russia and destabilization targeting China and other targets of Washington and Wall Street’s special interests continues unabated, albeit distorted within the house of mirrors, regardless of who is president.

So Americans may think they are voting for Hillary Clinton in 2016, and those infected with neo-liberalism the world over may think another enlightened champion of their progressive cause has taken the reins of the free world, but they might as well have voted for another Bush. The reality is, that as along as Americans and those who look to America from abroad for leadership dwell in this house of mirrors, the special interests that intentionally built this carnival called “democracy” will have their way back in actual reality.

Instead of fumbling through another four years trapped inside this carnival attraction, let’s find the exits. Let’s leave this house of mirrors and breathe a breath of fresh air. Are we really going to listen to another round of campaign promises, holding our breath hoping that this time they mean it? Or will we begin divesting from this system and building our own, one that might actually truly represent us this time, far from the mirrored walls that held us for so long?

Ulson Gunnar, a New York-based geopolitical analyst and writer, especially for the online magazine “New Eastern Outlook”.

 

Are Leading Economists Corrupt, or Just Mind-Blowingly Ignorant?

By Eric Zuesse
April 24, 2015
Global Research

 

[This article pertains to political economists in the United States.]

Conservative economists favor Republican candidates because it’s the way for them to rise in power themselves, but what about ‘progressive’ economists: are they psychopaths, too; or do they instead blindly favor ‘Democratic’ candidates because of a sincerely oblivious belief that the mere ‘Democratic’ Party-label indicates that the given politician is actually progressive?

Apparently, the answer is the latter, if one is to judge from assertions by the most-famous ‘progressive’ economists. Even so-called ‘progressive’ economists say that corrupt ‘Democratic’ candidates who have clear records of lying should be judged on the basis of what they say they will do, not on what their conservative record shows they’ve actually done and the interests they have actually been serving and paid by.

For example, Joseph Stiglitz is trumpeted by economists and by the newsmedia as being a ‘progressive’ economist, and he was recently asked in a Huffington Post interview, regarding Hillary Clinton,

“Some people are skeptical as to whether she is really genuine, … whether or not this is a woman who is too cozy with Wall Street?”

And he answered, “Well, she’s clearly much better than the Republican candidates,” and he cited as supposed evidence for that, not just what she is saying to him, but what she is saying to Democratic Party voters in a Democratic Party primary campaign to attract liberal voters and so to win the Democratic Party’s Presidential nomination. He compares to that, such things as the Republican candidate Marco Rubio’s (who, of course, doesn’t consult with such ‘progressive’ economists) campaign statements, which are aimed to appeal to conservative voters and so to win the Republican nomination — as if the task for either candidate (Clinton or Rubio) at present is actually to win, instead, the general-election campaign and so to appeal to the entire electorate, both conservative and liberal. Is Stiglitz really that stupid? Of course not. He knows the difference between a primary campaign and a general-election campaign.

He simply ignored Hillary Clinton’s already established and lengthy record, which is that of a conservative in ‘Democratic’ rhetorical garb, just like Barack Obama (the continuer of George W. Bush’s Wall Street bailouts and most of his other substantive policies), or, for that matter, her own husband, Bill Clinton, who had ended the great Democratic President Franklin Delano Roosevelt’s progressive legacy of the Glass-Steagall Act, which placed a firewall between, on the one hand, government taxpayer-insured bank-deposits and checking and savings accounts, versus, on the other hand, Wall Street’s risky gambles and bets to win high profits with proportionally higher risks — and, so, FDR basically blocked any continuation of Wall Street’s then-existing ability to gamble with Regular Joes’ money and so to leave the gambling losses to Regular Joes, while still reaping the outsized gambling profits, which then go to Wall Street’s banksters, alone.

The ‘Democratic’ President Bill Clinton in 1999 helped Republicans ram through Congress the Gramm-Leach-Bliley, all-Republican, bill (which is one of the most corrupt laws in U.S. history), to terminate the Glass-Steagall Act in order retroactively to legalize Citibank’s takeover of Travelers Insurance; and his Treasury Secretary (Robert Rubin) was then hired by Citigroup to help to lead this very same Wall Street firm that had lobbied the hardest for this Republican law to legalize that merger, which violated FDR’s progressivism and violated the American public. If this action by Clinton wasn’t corrupt, then nothing is, except perhaps Wall Street’s continuing lavish spending on the Clinton Foundation and on Hillary Clinton’s political career, first as Wall Street’s junior U.S. Senator, and then as an aspiring U.S. President.

A good summary of the reality about Hillary Clinton was Ben White and Maggie Haberman’s Politico article, on 28 April 2014, “Wall Street Republicans’ dark secret: Hillary Clinton 2016,” which noted that, “The darkest secret in the big money world of the Republican coastal elite is that the most palatable alternative to a nominee such as Sen. Ted Cruz of Texas or Sen. Rand Paul of Kentucky would be Clinton.” It’s not that the fundamentalist Cruz or the populist Paul would fail to treat Wall Street fairly; it’s instead that Hillary Clinton would be even more subservient to that big-money than either Cruz or Paul would be — that she’s more corrupt. And she is.

Here is the list of top career donors to Hillary Clinton:

That’s Wall Street and the firms which serve it. The ‘feminist’ EMILY’s List is also included, of women who still vote for Hillary for the same reason that Blacks still vote for Obama (despite their being pounded the worst by his economic policies), which has to do with gender or racial identifications instead of any progressive (or even practical) ideology at all, but Hillary is almost entirely Wall Street’s property — bought and paid for, and committed to delivering to them what they have paid for (advantages to big international firms at the expense of small firms and at the expense of consumers and of workers and of the environment), which is the types of services that such ‘Democrats’ as she, and her husband, and Barack Obama, have privately promised to them, and delivered to them. (Actually, Obama is the very worst: During his Presidency, the top 1% income share has soared, and he has been President in the years following an economic crash, which is precisely the period in the economic cycle when the norm has instead been for economic inequality to decrease, not increase. In order for a President Hillary Clinton to outperform his lousy record on inequality, she’d need to reject his policies and turn radically against Wall Street, which has financed her own rise. What you’ve just now read is all documented right there, at that link; any intelligent voter will want to examine it.)

America has become a corrupt country in a corrupt world, nothing unusual in this regard. The first step to America’s becoming less corrupt would be for its voters to recognize that they have been and are fooled by the decades-long big-money indoctrination into “the free market” (actually crony capitalism), and that their top priority should thus be to vote against it — to vote against (i.e., in the exact opposite direction from) the advertisements and ‘news’ media that pump what the super-rich want to be pumped into politics and into government, and so pump the popular votes that enable it all to be legal and ‘democratic,’ no mere oligarchy that mocks America’s anti-aristocratic Founders.

Stiglitz wants to be part of the game that Hillary Clinton, as Obama’s Secretary of State, was playing: working for Wall Street while pretending to be their enemy. He wants to be on Hillary’s team, perhaps even inside the White House. (Like President Obama himself told the banksters in secret, at the start of his Presidency, on 27 March 2009: “My Administration is the only thing between you and the pitchforks. … I’m not out there to go after you. I’m protecting you.” And, he fulfilled on that promise. But he doesn’t fulfill on the big ones to the contrary, that he makes in public, and to the public.)

If President Obama were sincere about his opposition to increasing economic inequality, he wouldn’t deceive people by saying that, as The New York Times summed up his propaganda in a headline on 3 February 2014, “In Talk of Economy, Obama Turns to ‘Opportunity’ Over ‘Inequality’.” He would instead acknowledge that equality of opportunity cannot increase while inequality of incomes is increasing, because opportunity depends very largely upon income: the bigger a person’s income is, the more economic opportunities that person tends to have. Instead of acknowledging this basic crucial economic fact, Obama, and the Clintons, and economists, hide it.

The lying permeates not only all of the Republican Party, but also the very top, the national, level of the Democratic Party. Democratic voters were especially deceived by Obama, and by Hillary, and by John Edwards, in the 2008 Democratic Presidential primaries, to think that their plan (it was all basically the same plan) for health insurance would produce “universal health care,” but all three knew that it couldn’t possibly deliver any such result. The percentage of Americans who had insurance then was 85.4% insured; 14.6% uninsured. Currently, it’s 87.1% insured, 12.9% uninsured. Their plan thus increased the insured rate by 87.1%/85.4%, or merely 2% above what it had been when they all started promising “universal coverage,” something which already exists in all other developed countries (100% of the population having health insurance). That’s how corrupt our country is. And they all promised also a public option, something which would enable anyone to opt out of the for-profit corporate model of provisioning healthcare services. But, Obama never really intended to deliver on that promise, either.

Leading economists are not mind-blowingly ignorant.

Perhaps the main reason why the turnout of Democrats at the polls is so poor is that the Democratic Party has sold out so much to Republican Party values, so that the Democratic Party’s voters are giving up hope and giving up on the Party itself as representing them and their interests. The reality now in the United States, has become that there is, now, a choice only between two conservative parties, with the only differences between them being ethnic and gender preferences in order to keep up the fraud that there exists a real political choice and not just a one-party, actually fascist, government, decorated, around the edges, with differences about how deeply into conservatism this nation ought to go.

And, so: what can be expected of the Democratic Party’s economists, except the hope that their next career-move will be upward, instead of downward?

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity, and of Feudalism, Fascism, Libertarianism and Economics.

The Mother of All Margin Calls! The Derivatives Chain May Create “A Domino Effect” which “Locks Up” the Entire Credit System

By Bill Holter
April 21, 2015
Global Research

 

This past Friday, Dave Kranzler of Investment Research Dynamics put out a very thoughtful article and chart regarding the spike in “reverse repurchase agreements”

RRP’s held at the Fed http://investmentresearchdynamics.com/tag/reverse-repo-agreement/. 

The chart in question shows three very distinctive spikes:

The first was Sept. of 2008, again in 2011 and the current spike. It is Dave’s contention that something behind the scenes has or is blowing up financially.

Let me explain what I believe is happening, I do not disagree with his theory but I think he may have stopped just one step short of the full story.   By adding one more chart in a moment, I’ll try to explain.  Please read the above article as it is a good explanation of “reverse repurchase agreements” and saves me the need for a long winded rehash.

For years I have described the current financial situation as a “giant margin call” waiting to happen.  The derivatives market is a zero sum game where someone wins and someone loses, the danger of course is someone losing so badly they become insolvent and cannot make payment to the “winner” …which would make all parties a loser in the game.  This is the fear, the derivatives chain breaks somewhere along the way and creates a domino effect both upstream and downstream causing the entire credit system to lock up.

Think about what has happened over just the last six months alone. We have seen unprecedented FOREX movements. The dollar has strengthened close to 30% over this timeframe while oil has dropped about 50%.  The cross between the euro and the Swiss franc saw an almost 30% move in less than 10 minutes oneMonday morning in January.  There have been some very big gains AND some very big losses which would explain the need for “more collateral” which is exactly what these reverse repo’s provide.

  Please look at the following chart:

I believe this is “the rest of the story” as I mentioned above.  You can clearly see the spikes in 2008, 2011 and again currently but “this time is different”.  It is different because of both size and the long lasting duration!  The first chart that Dave put out on Friday was of RRP’s with “Foreign Official and Institutional Accounts” whereas the chart you just looked at are “ALL” RRP’s.

It is my belief the first chart’s movements are a function primarily of international FOREX movements and represents “collateral demand” from the likes of Deutschebank, SocGen, Barclays etc. …AND from The Bank of England, the ECB and other central banks.  The second chart is of ALL players, not just foreign.  This chart in my opinion is “how” the Fed has aided and abetted the system as a whole in “hiding” the losses from derivatives!  The Fed places collateral into the system which gets lent out over and over (rehypothecated) many times and “pledged” as collateral by the loser in derivatives trades… thus the system continues “unbroken” because the collateral is put up to meet the margin calls.

Do you see?  For well over a year I have wondered and even written in disbelief and amazement that no one ever admits to any large losses when in fact there had to be losses well into the multiple $ trillions!  Think about it, there are almost $10 trillion worth of “dollar derivatives” outstanding, a 30% move means someone won and someone else lost about $3 trillion.  I don’t know of any firms that could lose even 5% of this and remain solvent, do you?  And this is just “dollars”, not oil, not interest rates, not equities, not iron ore, copper, gold or anything else!

If you see the buildup of RRP’s over the last year+, this I believe is how the margin calls have been met and the losses hidden …but is it even legal?  In a technical and practical sense, no it is not.  However, from a practical sense, if this is what is being done then we now know how no one has been declared a loser and no one has had to “book” their losses.  The margin calls have been met, the positions stay open and no one is the wiser right?  I do want to point out that under the rule of law, if the Fed “knows” this, it is without a doubt a criminal act.  If they are doing business with bankrupt institutions, one which they know or should have knowledge of as being bankrupt, the Fed is flat out fraudulently and blatantly breaking all banking laws on the planet.

Going just a step further, if this is the case, what does it say about the Fed’s own balance sheet?  If they are doing swaps or RRP’s with bankrupt institutions, will the Fed ever get their collateral back?  As Dave Kranzler so aptly tied together, this is why the “failures to deliver” have spiked.  The collateral which was originally lent out has been re lent 10 times more, or even 100 times more, who knows?

Please walk away from reading this piece with one understanding, the chart above is telling you something very big has changed and been changing for over a year.  I believe it shows the system is in and has been fraudulently meeting a systemic margin call.  Maybe I am wrong but I wouldn’t bet on it.  The chart does however give you proof beyond any doubt that “stress” of some sort has been and is building up “somewhere”.  The stress is now multiples of what we saw in late 2008 …when we were only hours from the system seizing up in a giant meltdown.

I bounced this theory off of Jim Sinclair over the weekend and received a short but very enlightening reply.  He said “The concept is correct.  We have another OTC derivative explosion at hand but no practical way to expand liquidity.  Bad derivatives never die, they just get larger”.   Think about what Jim is saying here, we again have an Autumn of 2008 event triggering …only bigger!  And no way to actually meet the margin calls.  Each episode of QE was used to meet the margin calls and hide the losses.  Each one expanded the risk while pulling more and more collateral out of the system until we reached a tipping point, NOW!

Let me finish with this one point, when this era is looked at in hindsight, “it will all be about counterparty risk”.  Do you know of anything without counterparty risk?  Can you say G O L D?

Economic stagnation, financial parasitism dominate IMF-World Bank meeting

By Nick Beams and Barry Grey
April 18, 2015
World Socialist Web Site

 

The spring meeting of the International Monetary Fund and World Bank being held in Washington this weekend takes place under conditions of continuing stagnation in the real economy, combined with unprecedented levels of financial parasitism and social inequality.

Stock prices in the US, Europe and Asia have hit record highs and global corporations have amassed a cash hoard of some $1.3 trillion, fuelled by cheap credit from central banks and government-corporate attacks on workers’ wages and living standards. Yet the IMF warns in its updated World Economic Outlook published this week that the world economy will remain locked in a pattern of slow growth, high unemployment and high debt for a prolonged period.

In a marked shift from previous economic projections, the IMF acknowledges that there is little prospect of a return to the growth levels that prevailed prior to the 2008 financial crash, despite trillions of dollars in public subsidies to the financial markets. This amounts to a tacit admission that the crisis ushered in by the Wall Street meltdown nearly seven years ago is of a fundamental and historical character, and that the underlying problems in the global capitalist system have not been resolved.

A sample of headlines from articles published in the past week by the Financial Times gives an indication of the deepening malaise. They include: “An economic future that may never brighten,” “IMF warns of long period of lower growth,” “Europe’s debtor paradise will end in tears,” “QE raises fears of euro zone liquidity squeeze,” and “Global property bubble fears mount as prices and yields spike.”

The IMF report focuses on a sharp and persistent decline in private business investment, particularly in the advanced economies of North America, Europe and Asia. It concludes that “potential growth in advanced economies is likely to remain below pre-crisis rates, while it is expected to decrease further in emerging market economies in the medium term.”

It goes on to note, “Unlike previous financial crises, the global financial crisis is associated not only with a reduction in the level of potential output, but also with a reduction in its growth rate… Shortly after the crisis hit in September 2008, economic activity collapsed, and more than six years after the crisis, growth is still weaker than was expected before the crisis.”

This is a stunning confirmation of the analysis of the 2008 crash made by the World Socialist Web Site and the International Committee of the Fourth International. On January 11, 2008, nine months before the Lehman Brothers bankruptcy, the WSWS published a statement that began:

2008 will be characterized by a significant intensification of the economic and political crisis of the world capitalist system. The turbulence in world financial markets is the expression of not merely a conjunctural downturn, but rather a profound systemic disorder which is already destabilizing international politics.

The IMF report adds, “These findings imply that living standards may expand more slowly in the future. In addition, fiscal sustainability will be more difficult to maintain as the tax base will grow more slowly.” The meaning of this euphemistic language is that there is no end in sight to the global assault on the living standards and democratic rights of the working class.

The policies of austerity that have already thrown countless millions into poverty are not temporary. They will continue as long as capitalism continues.

The IMF’s updated Global Financial Stability Report, also released this week, acknowledges that central bank policies of holding interest rates close to zero and pumping trillions of dollars into the banking system by means of “quantitative easing,” i.e., money-printing, are having little impact on the real economy. Rather, they are increasing financial risk. According to the report, financial risks have risen in the six months since the last assessment in October 2014.

The IMF’s World Economic Outlook devotes an entire chapter to the slump in private investment. It notes that private investment in the major capitalist economies—the fundamental driving force of global growth—remains at historic lows. As a percentage of gross domestic product, it is below the level experienced in the aftermath of any recession in the post-war period.

But the report, setting the tone for the discussions this weekend among world finance ministers, central bankers and their myriad economic advisers, skirts the colossal role of financial speculation and parasitism in the investment slump and the crisis as a whole. All over the world, banks and corporations are using their massive profits and cash holdings to increase stock dividends and jack up their share prices by buying back their own stock, rather than investing in production. The speculative frenzy is compounded by near-record levels of corporate buybacks and mergers.

All of these activities are entirely parasitic. They add nothing to man’s productive forces. On the contrary, they divert economic resources from productive activity to further enrich a tiny global aristocracy of bankers, CEOs and speculators.

The IMF-World Bank meeting takes place amidst an exponential growth of financial parasitism, the likes of which has never been seen in the history of the capitalist system. In the past year alone, according to an article published this week in the Financial Times, some $1 trillion has been handed back to shareholders—many of them multi-billion dollar hedge funds and investment houses—in the form of buybacks and increased dividends.

Over the past decade, S&P 500 companies have repurchased some $4 trillion worth of shares. Major companies, including Apple, Intel, IBM and General Electric, play a central role in the ongoing buyback frenzy.

Last week alone, three corporate takeovers totalling over $105 billion were announced, including Royal Dutch Shell’s purchase of Britain’s BG Group. The value of all takeovers announced this year to date is more than $1 trillion, setting the pace for 2015 to be the second biggest year for mergers and acquisitions in history.

The result is massively inflated stock prices, the proceeds from which go overwhelmingly to the rich. Over the past year, the German DAX index has risen by 24 percent, the French CAC has increased 16 percent and Japan’s Nikkei has soared 36 percent.

Bank profits are also up. This week, JPMorgan Chase, Citigroup and Goldman Sachs all beat market expectations, announcing near-record profits for the first quarter of 2015, mainly on the basis of speculative trading activities.

As the real economy is starved of resources, leading to lower wages, declining job opportunities, rising unemployment and the substitution of casual and part-time employment for full-time jobs, fabulous fortunes are being accumulated on the financial heights of society.

The unprecedented degree to which the world economy is wedded to financial parasitism is an expression of the moribund state of the capitalist system.

There is another significant aspect to this weekend’s gathering that points to future developments. For seven decades, the IMF and the World Bank have formed two pillars of the economic hegemony of the United States. But the post-war regime is now cracking.

This week, Chinese authorities announced that some 57 countries—37 from Asia and 20 from the rest of the world—had signed up to the Beijing-backed Asia Infrastructure Investment Bank. The Obama administration bitterly opposed its strategic allies joining the bank, but the floodgates opened after Britain decided to join despite objections from Washington that the bank would undermine US-backed global financial institutions.

The fracturing of the global post-war economic order under conditions of deepening crisis is a sure sign that the major capitalist powers are determined to assert their own economic interests, if necessary against the US. Not only are the economic conditions of the 1930s returning, so are the political and economic divisions that led to world war.

 

 

The Six Too Big to Fail Banks in the U.S. Have 278 Trillion Dollars of Exposure to Derivatives

By Michael Snyder
April 15, 2015
The Economic Collapse, April 13, 2015

 

The very same people that caused the last economic crisis have created a 278 TRILLION dollar derivatives time bomb that could go off at any moment.  When this absolutely colossal bubble does implode, we are going to be faced with the worst economic crash in the history of the United States.  During the last financial crisis, our politicians promised us that they would make sure that “too big to fail” would never be a problem again.  Instead, as you will see below, those banks have actually gotten far larger since then.  So now we really can’t afford for them to fail.  The six banks that I am talking about are JPMorgan Chase, Citibank, Goldman Sachs, Bank of America, Morgan Stanley and Wells Fargo.  When you add up all of their exposure to derivatives, it comes to a grand total of more than 278 trillion dollars.  But when you add up all of the assets of all six banks combined, it only comes to a grand total of about 9.8 trillion dollars.  In other words, these “too big to fail” banks have exposure to derivatives that is more than 28 times greater than their total assets.  This is complete and utter insanity, and yet nobody seems too alarmed about it.  For the moment, those banks are still making lots of money and funding the campaigns of our most prominent politicians.  Right now there is no incentive for them to stop their incredibly reckless gambling so they are just going to keep on doing it.

So precisely what are “derivatives”?  Well, they can be immensely complicated, but I like to simplify things.  On a very basic level, a “derivative” is not an investment in anything.  When you buy a stock, you are purchasing an ownership interest in a company.  When you buy a bond, you are purchasing the debt of a company.  But a derivative is quite different.  In essence, most derivatives are simply bets about what will or will not happen in the future.  The big banks have transformed Wall Street into the biggest casino in the history of the planet, and when things are running smoothly they usually make a whole lot of money.

But there is a fundamental flaw in the system, and I described this in a previous article…

The big banks use very sophisticated algorithms that are supposed to help them be on the winning side of these bets the vast majority of the time, but these algorithms are not perfect.  The reason these algorithms are not perfect is because they are based on assumptions, and those assumptions come from people.  They might be really smart people, but they are still just people.

Today, the “too big to fail” banks are being even more reckless than they were just prior to the financial crash of 2008.

As long as they keep winning, everyone is going to be okay.  But when the time comes that their bets start going against them, it is going to be a nightmare for all of us.  Our entire economic system is based on the flow of credit, and those banks are at the very heart of that system.

In fact, the five largest banks account for approximately 42 percent of all loans in the United States, and the six largest banks account for approximately 67 percent of all assets in our financial system.

So that is why they are called “too big to fail”.  We simply cannot afford for them to go out of business.

As I mentioned above, our politicians promised that something would be done about this.  But instead, the four largest banks in the country have gotten nearly 40 percent largersince the last time around.  The following numbers come from an article in the Los Angeles Times…

Just before the financial crisis hit, Wells Fargo & Co. had $609 billion in assets. Now it has $1.4 trillion. Bank of America Corp. had $1.7 trillion in assets. That’s up to $2.1 trillion.

And the assets of JPMorgan Chase & Co., the nation’s biggest bank, have ballooned to $2.4 trillion from $1.8 trillion.

During this same time period, 1,400 smaller banks have completely disappeared from the banking industry.

So our economic system is now more dependent on the “too big to fail” banks than ever.

To illustrate how reckless the “too big to fail” banks have become, I want to share with you some brand new numbers which come directly from the OCC’s most recent quarterly report (see Table 2)…

JPMorgan Chase

Total Assets: $2,573,126,000,000 (about 2.6 trillion dollars)

Total Exposure To Derivatives: $63,600,246,000,000 (more than 63 trillion dollars)

Citibank

Total Assets: $1,842,530,000,000 (more than 1.8 trillion dollars)

Total Exposure To Derivatives: $59,951,603,000,000 (more than 59 trillion dollars)

Goldman Sachs

Total Assets: $856,301,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,312,558,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,106,796,000,000 (a little bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $54,224,084,000,000 (more than 54 trillion dollars)

Morgan Stanley

Total Assets: $801,382,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $38,546,879,000,000 (more than 38 trillion dollars)

Wells Fargo

Total Assets: $1,687,155,000,000 (about 1.7 trillion dollars)

Total Exposure To Derivatives: $5,302,422,000,000 (more than 5 trillion dollars)

Compared to the rest of them, Wells Fargo looks extremely prudent and rational.

But of course that is not true at all.  Wells Fargo is being very reckless, but the others are being so reckless that it makes everyone else pale in comparison.

And these banks are not exactly in good shape for the next financial crisis that is rapidly approaching.  The following is an excerpt from a recent Business Insider article…

The New York Times isn’t so sure about the results from the Federal Reserve’s latest round of stress tests.

In an editorial published over the weekend, The Times cites data from Thomas Hoenig, vice chairman of the FDIC, who, in contrast to the Federal Reserve, found that capital ratios at the eight largest banks in the US averaged 4.97% at the end of 2014, far lower than the 12.9% found by the Fed’s stress test.

That doesn’t sound good.

So what is up with the discrepancy in the numbers?  The New York Times explains…

The discrepancy is due mainly to differing views of the risk posed by the banks’ vast holdings of derivative contracts used for hedging and speculation. The Fed, in keeping with American accounting rules and central bank accords, assumes that gains and losses on derivativesgenerally net out. As a result, most derivatives do not show up as assets on banks’ balance sheets, an omission that bolsters the ratio of capital to assets.

Mr. Hoenig uses stricter international accounting rules to value the derivatives. Those rules do not assume that gains and losses reliably net out. As a result, large derivative holdings are shown as assets on the balance sheet, an addition that reduces the ratio of capital to assets to the low levels reported in Mr. Hoenig’s analysis.

Derivatives, eh?

Very interesting.

And you know what?

The guys running these big banks can see what is coming.

Just consider the words that JPMorgan Chase chairman and CEO Jamie Dimon wrote to his shareholders not too long ago…

Some things never change — there will be another crisis, and its impact will be felt by the financial market.

The trigger to the next crisis will not be the same as the trigger to the last one – but there will be another crisis. Triggering events could be geopolitical (the 1973 Middle East crisis), a recession where the Fed rapidly increases interest rates (the 1980-1982 recession), a commodities price collapse (oil in the late 1980s), the commercial real estate crisis (in the early 1990s), the Asian crisis (in 1997), so-called “bubbles” (the 2000 Internet bubble and the 2008 mortgage/housing bubble), etc. While the past crises had different roots (you could spend a lot of time arguing the degree to which geopolitical, economic or purely financial factors caused each crisis), they generally had a strong effect across the financial markets

In the same letter, Dimon mentioned “derivatives moved by enormous players and rapid computerized trades” as part of the reason why our system is so vulnerable to another crisis.

If this is what he truly believes, why is his firm being so incredibly reckless?

Perhaps someone should ask him that.

Interestingly, Dimon also discussed the possibility of a Greek exit from the eurozone…

“We must be prepared for a potential exit,”  J. P. Morgan Chief Executive Officer Jamie Dimon said. in his annual letter to shareholders. “We continually stress test our company for possible repercussions resulting from such an event.”

This is something that I have been warning about for a long time.

And of course Dimon is not the only prominent banker warning of big problems ahead.  German banking giant Deutsche Bank is also sounding the alarm…

With a U.S. profit recession expected in the first half of 2015 and investors unlikely to pay up for stocks, the risk of a stock market drop of 5% to 10% is rising, Deutsche  Bank says.

That’s the warning Deutsche Bank market strategist David Bianco zapped out to clients today before the opening bell on Wall Street.

Bianco expects earnings for the broad Standard & Poor’s 500-stock index to contract in the first half of 2015 — the first time that’s happened since 2009 during the financial crisis. And the combination of soft earnings and his belief that investors won’t pay top dollar for stocks in a market that is already trading at above-average valuations is a recipe for a short-term pullback on Wall Street.

The truth is that we are in the midst of a historic stock market bubble, and we are witnessing all sorts of patterns in the financial markets which also emerged back in 2008right before the financial crash in the fall of that year.

When some of the most prominent bankers at some of the biggest banks on the entire planet start issuing ominous warnings, that is a clear sign that time is running out.

Hillary Clinton announces presidential campaign

By Andre Damon
April 13, 2015
World Socialist Web Site

Former First Lady Hillary Clinton officially announced Sunday she would seek the Democratic nomination for president of the United States in the 2016 election.

In addition to being the Democratic frontrunner, Clinton, having served as Secretary of State under Obama, is the candidate most closely tied to the incumbent administration. Given the centrality of the Clinton campaign to the 2016 election and the American political system, the announcement sets the tone for the entire election.

Eschewing a traditional speech at a campaign rally, Clinton made her announcement in a two-minute online video that is almost entirely devoid of political content and noteworthy for its striking banality, even by the standards of American politics.

The first minute and a half of Clinton’s announcement video consists of actors (or people who seem to be actors) portraying “ordinary” Americans speaking about their plans in the coming years. This includes one anonymous couple declaring, “We’ve been doing a lot of home renovations, but most importantly we just want to keep our dog from eating the trash.”

Three quarters of the way through the video, Clinton makes her first appearance, declaring, “I’m getting ready to do something too. I’m running for president.”

In other words, Clinton is declaring her bid for an office from which she could, at virtually her sole discretion, incinerate most of mankind in a nuclear apocalypse, in almost the same breath as random people talking about their dogs.

That the most significant candidate in the election chooses to announce her candidacy in such entirely vacuous fashion is an expression of the well-advanced decay of democratic norms in the United States, and the enormous chasm that exists between official politics and the sentiments and concerns of the great majority of the population.

That her candidacy is announced without calling for any particular policies underscores the fact that the election is not about the American people deciding the course of policy, but rather the vetting of candidates to serve the interest of the financial oligarchy.

Indeed, the utter lack of political content in the announcement is a testament to how little voters actually mean in an election decided by a handful of billionaires, together with the military/intelligence apparatus.

The purpose of the saccharine video is not to convince the population that Clinton represents their interests, but rather to mobilize her base among the affluent upper-middle class while making no statements that would draw criticism from the Republican right.

The remaining content of Clinton’s campaign announcement, in its entirety, is as follows: “Americans have fought their way back from tough economic times, but the deck is still stacked in favor of those at the top. Everyday Americans need a champion, and I want to be that champion.

“So you can do more than just get by, you can get ahead. And stay ahead, because when families are strong America is strong. So I’m hitting the road to earn your vote, because it’s your time, and I hope you’ll join me on this journey.”

There is, of course, no acknowledgment that Clinton was part of an administration that oversaw and continues to oversee the greatest transfer of wealth from the bottom to “those at the top” in US history.

Clinton’s new campaign website is equally empty. There is not a single word on the entire site about what the nominee stands for, only a brief biography of Clinton with personal and family photos and forms to donate and volunteer.

Referencing the content of video, Politico commented that Clinton “is under intense scrutiny, however, to show that she has learned lessons from her unsuccessful prior run, in which she was seen as out-of-touch with middle-class sensibilities.”

In June 2014, Clinton told the Guardian she is “unlike” the “truly well off,” despite the fact that she had made $5 million in speaking fees over the previous 15 months, putting her within the top 0.1 percent of income earners.

Earlier that month, Clinton told ABC News she and her husband Bill Clinton “came out of the White House… dead broke.” Yet between 2000 and 2007, Bill and Hillary Clinton earned a combined $109 million in speaking fees, charging as much as $300,000 per appearance.

The video fails to note Clinton’s record as Obama’s secretary of state between 2009 and 2013. But as Time magazine wrote last year: “As Secretary of State, Clinton backed a bold escalation of the Afghanistan war. She pressed Obama to arm the Syrian rebels, and later endorsed air strikes against the Assad regime. She backed intervention in Libya, and her State Department helped enable Obama’s expansion of lethal drone strikes. In fact, Clinton may have been the administration’s most reliable advocate for military action. On at least three crucial issues—Afghanistan, Libya, and the bin Laden raid—Clinton took a more aggressive line than Gates, a Bush-appointed Republican.”

The benign, motherly posture of Clinton in the video does not quite square with the cold-blooded character of the former secretary of state who upon hearing of Libyan President Muammar Gaddafi’s lynching by US-backed Islamic fundamentalist forces laughingly told a reporter, “We came, we saw, he died.”

Among the main aims of the video announcement is to portray Clinton, a multi-millionaire who is well-connected with the highest echelons of the military and intelligence apparatus, as an “ordinary” American, who is “in touch” with the “middle class.” It is entirely telling that Clinton attempts to convey this phony message without addressing any of the realities of American life, from mass unemployment to falling wages, police killings and the danger of war.

The end result is something that resembles a life insurance commercial more than a political statement, and stands as a testament to the sclerotic character of American politics.