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Fidel
Fulltime enMasse Member
Joined: 04 May 2006
Posts: 812
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 Posted: Fri Aug 12, 2011 3:22 am Post subject: |
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Here is a thought. What if, down the road, various countries realize after it's late and global economy turns to rust, that cancelling trillions of dollars of unrecoverable debt is the cure for what's dragging global economies down? Debts that can not be repaid won't be. And no one in the halls of power wants to admit this truth in front of their constituents namely rich people buying governments.
The superrich would surely like for their hirelings in government to continue propping up real estate and financial bubbles, but there is a point past which it becomes unsustainable for whole countries. There comes a time when the free lunch for rich ppl wants cancelling. It is biblical and even pre-biblical for debt jubilees to be declared. They knew a long time ago that debts grow exponentially and causing economies and livelihoods to suffer. There is a reason why it's not done today, and it's entirely political. The problem could be solved before week's end and millions more packing lunch pails by the following Monday.
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sparqui
Dog tired
Joined: 30 Apr 2006
Posts: 5152
Location: Winnipeg
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| Posted: Fri Aug 12, 2011 4:22 am Post subject: |
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Iceland seems to have the right idea.
In the real world of small business, declaring bankruptcy is not that huge a deal. It sucks but it's not the end of the world and most recover and build again. So what if the creditors get shafted? The whole global market and government financing has become a crap shoot. Why should we as workers stress over or suffer repercussions for bad gambling (not to mention that those same gamblers made out like thieves when the going was good).
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Raos
volatilis vir
Joined: 11 Apr 2006
Posts: 5472
Location: Petropolis
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| Posted: Fri Aug 12, 2011 6:43 am Post subject: |
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| Maestro wrote: | There's an old story about the city dweller who went out to the country to visit his cousin, who had a small hardware store.
The store owner showed the city slicker around his store, then told him that sales were good, but he had to sell his stock for 90 cents on the dollar.
"But how can you make any money that way?" asked the puzzled city cousin.
"I make a wrong entry in the books" was the store owners reply.
Someone told this story to Ron Paul. I guess he didn't realize it was a joke... |
I like it because it's not just a folksy swipe using humour, it's a substantive argument that address the points made by others.  |
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Maestro
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Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Fri Aug 12, 2011 7:43 am Post subject: |
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An indication that things are not yet all right with the financial world:
Four EU nations ban short-selling on banking stocks
| Quote: | France, Italy, Spain and Belgium have banned short-selling of the shares of banks and other financial companies.
It follows sharp gains and losses in bank stocks in recent days, especially in France, on the level of their exposure to eurozone government debt
...Short-sellers usually borrow shares or bonds, sell them, then buy them back when the stock falls - pocketing the difference.
"Naked" short-selling is when a trader sells financial instruments he has not yet borrowed.
All forms of short-selling are included in the ban.
...Societe Generale chief executive Frederic Oudea said the speculation about his bank was "absolutely rubbish".
Mr Oudea also spoke to France Info radio. "People are scared," he said, "so the tiniest information touches off irrational fears. To our clients, we have to tell them that these rumours are baseless and that they can have confidence in Societe Generale."
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Yes, I believe people are scared. Even people who have no stocks or bonds are scared. The wealthy are scared because they may lose their shirts. The poor because they know they'll be buying the new ones...
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Maestro
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Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Sun Aug 28, 2011 4:26 am Post subject: |
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Another indication the world economy is facing challenges...
"Act now" to save global recovery
| Quote: | The new head of the IMF on Saturday called on global policymakers to pursue urgent action, including forcing European banks to bulk up their capital, to prevent a descent into a renewed world recession.
..."The stakes are clear; we risk seeing the fragile recovery derailed. So we must act now," she said.
...The cost of insuring against bank defaults in Europe -- as indicated by the iTraxx senior financial CDS index -- has soared high above levels seen in early 2009 when the financial crisis was reaching its apex.
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Raising reserve requirements is one way, raising interest rates is another. Given the high rate of personal debt in the USA (and Canada, I might add) raising interest rates is not on the political agenda.
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Maestro
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Location: Vancouver
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| Posted: Mon Dec 26, 2011 8:31 am Post subject: |
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Hernando De Soto on the 2008 financial collapse.
Who Owns This Mess?
| Quote: | Here we are, three years into the global financial crisis, and we’re still flying blind. We don’t even know what we don’t know. What we do know is that we’re stuck in a huge contraction of private credit; no one is making enough loans and investments to expand or start businesses and get the economy growing. The remedies applied by U.S. and European governments tried to treat the symptoms — bad debts, shaky banks, floundering businesses, people losing their homes, rising unemployment, currency wars — and not the disease.
...Mechanisms in the United States and Europe to record and signal the crucial knowledge that determines whether it is reasonable to grant private credit — who has the property rights over the assets, equity and liabilities, and therefore holds the risks, and what the opportunities are — are no longer reliable. The knowledge system is broken.
...Balance sheets that once clearly signaled facts, allowing outsiders to infer what that company owned — and owed — have too often been mutilated. Some companies in difficult financial situations can legally resort to “off balance sheet accounting”— transferring the bad news to less visible ledgers, called Special Purpose Entities (SPEs) — or to sweeping information regarding their debts into illegible footnotes. When Enron collapsed, it had 3,500 SPEs.
...This, then, is not your usual financial crisis. The plummeting economy is the symptom. Diminishing knowledge is the disease. Without property and transaction records that allow us to infer potential benefits and losses, markets can’t work.
...That’s what happened when the subprime crisis exploded. The derivatives that financed the nonperforming sub-prime mortgages were rapidly losing value, threatening to cause a run on the banks because there was — and remains— so little property knowledge about them.
When the United States tried to buy and remove them from the market with the Troubled Asset Relief Program (TARP), officials were unable to locate, classify and price them quickly. They too became a victim of the lack of knowledge. The government was forced to improvise, and the money was used instead to increase public credit, lower interest and shore upthe banks. That remedied the symptoms, but the disease remains.
...Once it is clear that this recession is about the organization of knowledge or, more precisely, the lack of organization, Western governments can step in to get the facts. |
Well, at least De Soto doesn't blame a tiny amount of US mortgages for the financial debacle. But he still gets it wrong.
Yes, it's true that knowledge is money, and despite the arguments that many economists have made, markets require knowledge in order to operate. That's why insider trading is not allowed.
But this particular crisis was specifically because credit derivatives allowed private companies to mint money. A quote from a Lehman Bros report from 2001 (which unfortunately I can't put my hand on at the moment) was clear that credit derivatives were of interest to their clients because "they allow banks and other financial institutions to avoid capital requirement regulations."
In other words, dumping a bunch of shaky transactions into a credit default swap allowed the banks etc. to loan out money again, without changing the amount required to satisfy requirements. As soon as they were allowed to do this, they just kept lending and lending like there was no tomorrow. Nominal value of credit derivatives went from almost nothing in 1997 to USD $1 trillion by the time of the Lehman report (2001).
By 2008 the nominal value had increased to USD $60 trillion. That's three times the total value of the US real estate market. Yet the numbskulls like Terence Corcoran, Peter Foster, and a host of other capital apologists still insist the problem was created by a tiny number of shaky mortgages in the US. They usually add that these mortgages were forced on the banks by a government intent on guaranteeing homes for everyone.
At least De Soto has put the lie to that. Too bad he can't bring himself to clearly state what really happened.
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thwap
Fulltime enMasse Member
Joined: 12 Apr 2006
Posts: 4564
Location: Hamilton
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| Posted: Mon Dec 26, 2011 4:37 pm Post subject: |
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Remember when Matt Taibbi mocked the shit out of that neo-con fellah who tried to pretend that poor people's mortgage defaults would be enough to sink the US financial sector?
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Maestro
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Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Mon Dec 26, 2011 6:58 pm Post subject: |
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Specifically this, from Matt Taibbi from your post, thwap:
| Quote: | | M.T.: Oh, come on. Tell me you're not ashamed to put this gigantic international financial Krakatoa at the feet of a bunch of poor black people who missed their mortgage payments. The CDS market, this market for credit default swaps that was created in 2000 by Phil Gramm's Commodities Future Modernization Act, this is now a $62 trillion market, up from $900 billion in 2000. That's like five times the size of the holdings in the NYSE. And it's all speculation by Wall Street traders. It's a classic bubble/Ponzi scheme. The effort of people like you to pin this whole thing on minorities, when in fact this whole thing has been caused by greedy traders dealing in unregulated markets, is despicable. |
The right-wing apologists are still trying to pin this on poor homeowners!
The De Soto article I posted was published on the op-ed page of the National Post directly above this from Charles Krauthammer:
| Quote: | | Our current economic distress is attributable to myriad causes: globalization, expensive high-tech medicine, a huge debt burden, a burst housing bubble largely driven by precisely the egalitarian impulse that Obama is promoting (government aggressively pushing “affordable housing” that turned out to be disastrously unaffordable) |
Over and over again you hear this crap from right-wing media. Unfortunately, there are not enough financially literate writers on the left to make a dent in this lie.
Interesting that it was a right-wing economist who had the access and the understanding to be able to put the lie to Krauthammer, et al.
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ronb
mocker
Joined: 11 Apr 2006
Posts: 2627
Location: Blackroof country, no gold pavement, tired starling
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| Posted: Tue Dec 27, 2011 3:37 pm Post subject: |
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This short piece in New Yorker goes at the housing bubble from the declaring bankruptcy angle.
| Quote: | It’s also possible that a wave of strategic defaults—a De-Occupy Your House movement—would get banks to take mortgage modification more seriously, which would be all for the better. The truth is that banks have been relying on homeowners to do the right thing. It might be time for homeowners to do the smart thing instead.
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Maestro
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Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Fri Feb 17, 2012 10:55 am Post subject: |
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I think this is the place to post this:
Foreclosure abuse rampant across U.S., experts say
| Quote: | A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.
The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.
...Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork.
Of those documents, created between January 2008 and December 2010, 4,500 showed signature irregularities, a telltale sign of the illegal practice of "robosigning" documents.
...John O'Brien, the register of deeds for Essex County in northwestern Massachusetts, conducted an audit of loans issued in 2010 and found 75 percent of the assignments to be invalid and a further 9 percent questionable. |
And the reason why?...
| Quote: | | In many cases during the housing bubble that burst in 2008, original mortgages were repackaged and sold to so many investors that it is now unclear who actually holds the loans. |
It is clear that the housing debacle in the USA was caused by the use of credit default swaps to monetize mortgages.
The nominal value of credit derivatives went from nearly zero dollars in 1997 to more than 60 trillion by 2008. Then the party was over, and the whole edifice came crashing down.
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Maestro
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Location: Vancouver
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| Posted: Fri Jun 29, 2012 9:56 am Post subject: |
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Apparently they never learn:
...losses from...credit-derivatives trade could be...$9 billion
| Quote: | On May 10 the bank's chief executive, Jamie Dimon, pegged the loss at $2 billion and warned the figure could rise by an additional "$1 billion or more." He has not raised the loss estimate since, but said in a congressional hearing last week that the company would be "solidly profitable" in the current quarter. The bank normally earns about $5 billion every three months.
The New York Times, citing people briefed on the situation, said the losses could be significantly more than the initial $2 billion estimated as the bank has unwound positions in recent weeks.
An internal report at the bank projected in April that the losses could reach $8 billion to $9 billion, assuming worst-case conditions, the newspaper said. |
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Maestro
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Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Sun Jul 01, 2012 9:14 am Post subject: |
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Man, those derivatives. They're great! But how do people decide what the monthly premium is? They use LIBOR (London Interbank Offered Rate).
| Quote: | | "... LIBOR underpins approximately $350 trillion in derivatives..." |
Yes, that's right. Trillion, not billion. And I've seen the figure given as $500 trillion elsewhere, but what's a $150 trillion or so?
In any case, apparently some are interested in manipulting LIBOR for their own benefit.
Barclays hit with £290m fine over Libor fixing
| Quote: | Barclays has been fined £290m for attempting to manipulate the world’s benchmarking borrowing rate...
...The Financial Services Authority fined Barclays a record £60m, saying staff at the bank had repeatedly made false submissions to help set the London Interbank Offered Rate (Libor). The rate is used to fix the cost of borrowing on mortgages, loans and derivatives worth more than $450 trillion (£288 trillion) globally.
Investigators from the FSA and the US Commodity Futures and Trading Commission said they had found evidence that Barclays had tried to manipulate Libor for several years in the run up to the financial crisis and in its aftermath. |
Note the figure for derivatives given above as USD $450 trillion. That figure bounces around like a clown on a trampoline. All we know for sure is that it's a huge amount of money. One might guess that the whole world isn't worth $450 - $500 trillion...
By lowering the rate, and implying things were more stable than they were, they may just have caused the UK bank crash...
UK crash 'worsened by Libor misquotes'
| Quote: | The rigging of the critical Libor bank lending rate may have prompted the financial crisis which cost taxpayers billions of pounds in bailouts, a former senior executive at Barclays has claimed.
The source, who was close to Barclays’ Libor-setting operation, said that by faking their borrowing costs banks ‘gave an illusion of stability’ and ‘masked the severity of the crisis’.
Last week regulators in Britain and America fined Barclays a record £290 million for rigging its contribution to the crucial London Interbank Offered Rate (Libor) |
Barclay's fines actually add up to roughly half-a-billion (USD $490 million), but who's counting?
Now the taxpayers of the industrialized nations are paying - via 'austerity' - for the theft perpetrated by international banks. Governments are quite literally robbing from the poor to maintain the wealthy in the style to which they have grown accustomed.
Party on, dudes! 
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Maestro
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Location: Vancouver
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| Posted: Sun Jul 08, 2012 6:44 am Post subject: |
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The nominal value of all of the derivatives existing in the world today is USD $800 trillion. That's roughly $110,000 for every man, woman, and child on the planet. It also represents an increase of roughly $30,000 per capita since 2008, the year of the crash.
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Maestro
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Location: Vancouver
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| Posted: Mon Jul 23, 2012 10:08 am Post subject: |
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The powers that be, in a fit of jurisprudence, look as though they may actually arrest the odd banker. Tsk, tsk, tsk.
Prosecutors, regulators close to making Libor arrests
| Quote: | U.S. prosecutors and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rigging scandal.
...The prospect of charges and arrests means prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets.
..."The individual criminal charges have no impact on the regulatory moves against the banks," said a European source familiar with the matter. "But banks are hoping that at least regulators will see that the scandal was mainly due to individual misbehavior of a gang of traders." (ha, ha, ha, that's rich - Maestro)
...Among other details, the Fed documents included the transcript of an April 2008 telephone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest Libor." |
They can prosecute, but can they get a conviction? The fact is, LIBOR was always a made up number, which everyone knew. There didn't have to be any actual loans with real interest rates behind the submitted figures. It was only used unofficially by various traders.
LIBOR is in fact a completely private enterprise fiction. Those who used it - or accepted it's use - did so on a totally volunteer basis. Proving fraud is going to be very difficult.
A bit more:
| Quote: | | Beyond regulatory penalties and criminal charges, banks face a growing number of civil lawsuits from cities, companies and financial institutions claiming they were harmed by rate manipulation. Morgan Stanley recently estimated that the 11 global banks linked to the Libor scandal may face $14 billion in regulatory and legal settlement costs through 2014. |
What, only USD $14 billion? I doubt that. Lawyers will be working on this one for many, many years. The dupes that bought LIBOR as a 'good' benchmark have no choice but to sue. Proving the cost to themselves of this creative fiction will be very difficult in individual cases. That is, it may be true that individual banks submitted phony numbers, but the individual will need to prove first, that LIBOR was altered by an individual input, and second, that it cost them a verifiable amount of money. Good luck with that. In fact only the middle half of the submitted numbers was used. The top quarter and the bottom quarter were cut off before the calculation was made. An individual bank may have submitted a wrong number, but that number may well have had no effect at all on the overall number.
However it will keep various legal departments going for a couple of centuries or so.
Meanwhile, what are they using for a number now? Probably still using LIBOR, because even though it has no credibility...well, it never did have credibility, did it? What's different now?
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Raos
volatilis vir
Joined: 11 Apr 2006
Posts: 5472
Location: Petropolis
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| Posted: Mon Jul 23, 2012 3:31 pm Post subject: |
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| Maestro wrote: | | That is, it may be true that individual banks submitted phony numbers, but the individual will need to prove first, that LIBOR was altered by an individual input, and second, that it cost them a verifiable amount of money. Good luck with that. In fact only the middle half of the submitted numbers was used. The top quarter and the bottom quarter were cut off before the calculation was made. An individual bank may have submitted a wrong number, but that number may well have had no effect at all on the overall number. |
Minor quibble, but even a false number in the dropped bottom or top quartiles can have an effect; the process mitigates the effect of outliers and attempts to artificially inflate/deflate the statistics, but it doesn't eliminate them. |
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Maestro
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| Posted: Mon Jul 23, 2012 5:51 pm Post subject: |
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I would be interested to know how a number which is removed from a list before the list is calculated could have an effect on the outcome of the calculation. Proving that proposition might be a bit difficult. Then of course there is the problem that all submitted numbers could be 'estimates'. Rates quoted did not have to be from an actual contract. They could be whatever the bank estimated loans would cost them.
The real problem was that contracting parties accepted LIBOR as a benchmark, knowing full well it was a fictional number.
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Raos
volatilis vir
Joined: 11 Apr 2006
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Location: Petropolis
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| Posted: Mon Jul 23, 2012 6:08 pm Post subject: |
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| Maestro wrote: | | I would be interested to know how a number which is removed from a list before the list is calculated could have an effect on the outcome of the calculation. Proving that proposition might be a bit difficult. |
Not as difficult as you might think, since the numbers that don't make the list have an effect on which numbers do make the list. Throw a bunch of extra numbers into the top quartile, and the cutoffs at the bottom and top of the included middle quartiles get bumped up and the overall list goes up.
For example, take a set from 1-100 with each number included once. Your dropped bottom quartile is 1-25, the included middle set is 26-75, and the dropped top quartile is 76-100. Take the same set, but add the number 80 an extra 4 times, and your bottom quartile is now 1-26, the included middle is now 27-78, and the dropped top quartile is 79-100(with 5 iterations of the number 80).
Adding 4 numbers that didn't end up on the list nonetheless shifted the list from 26-75 to 27-78. |
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Maestro
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Location: Vancouver
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| Posted: Tue Jul 24, 2012 2:18 am Post subject: |
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Yes, you're quite right. I thought more about this after making the last post, and realized that a 'changed' input could push another number either in to, or out of, the list of used numbers.
Still I think it would be next to impossible to prove damages. Especially within a context where apparently all of the inputs were something less than credible. In other words, an entity seeking damages may be able to prove that a specific number was deliberately wrong (very unlikely), but then would have to prove that number had a material effect on LIBOR, and that they lost money because of it. That's a lot of proving.
In that no single entity is responsible for the veracity of LIBOR, and that it's use (as a benchmark) was completely voluntary, I really doubt anyone will be able to prove damages.
On the other hand, those who believe they lost money will almost certainly have to sue regardless of cost. We are speaking of pension funds, etc., whose mandate may force them to sue for recoverable damages, even when recovery is almost impossible.
Meanwhile, the question of how you can have USD $800 trillion worth of derivatives on a planet that isn't worth that much is passed by. So also is the question of where this growing amount of derivatives will lead. Worldwide total derivatives grew by USD $200 trillion in the four years since the crash. I think people should be asking whether there is an upper limit on derivatives. If there can be USD $800 trillion, why not USD $800 quadrillion?
Is there some kind of limiting factor, or are we doomed to repeat the crash of '08 in a future where the numbers are hundreds or thousands of times higher than they are now?
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bshmr
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Location: Central USA, Earth
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| Posted: Wed Jul 25, 2012 2:19 am Post subject: |
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A word to start with:
col·lu·sion [kuh-loo-zhuhn] Show IPA noun
1. a secret agreement, especially for fraudulent or treacherous purposes; conspiracy: Some of his employees were acting in collusion to rob him.
2. Law . a secret understanding between two or more persons to gain something illegally, to defraud another of his or her rights, or to appear as adversaries though in agreement: collusion of husband and wife to obtain a divorce.
http://dictionary.reference.com/browse/collusion
Unjust enrichment and all that anti-trust rot <g> is in play, too.
Seems to me, over-simplifying to more or less a one-on-one civil suit for real damages is a 'straw arm and leg'. . |
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Maestro
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Location: Vancouver
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| Posted: Thu Jul 26, 2012 2:46 am Post subject: |
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More LIBOR:
BBA 'warned weekly' about Libor says former rate-compiler
| Quote: | The British Bankers Association was given weekly warnings in 2008 that the process of setting the Libor interest rates was being distorted.
A former member of the Libor compilation team at Thomson Reuters says it regularly warned senior BBA staff about the problem.
...The warning reports from the Libor team were passed to John Ewan, the BBA's head of Libor, who now works for Thomson Reuters.
The former member of the rate-compilation team - who wishes to remain anonymous - told the BBC that Mr Ewan was given weekly reports, detailing the oddities.
...The member of the Libor compilation team told the BBC that, for six months in 2008, it became very obvious that something fishy was going on.
"Definitely, it was a daily thing," he said.
...The process of checking the implausible rates even threatened to disrupt the normal publication of the Libor data, with the normal 11:00am deadline slipping to as late as midday.
...The rate-compiler said it became obvious to quite a few money-market traders that something was fishy, because he would receive calls from traders querying the quotes submitted by other banks.
...With international investigations continuing into other banks, the former Libor rate-compiler confirmed that the authorities are on the right track.
He told the BBC that about four or five banks seemed to be consistently submitting suspicious rate estimates.
"Other individual banks were at it. A good half were playing the game [by the rules], the others were doing false submissions," he said.
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Then there's Terence Corcoran of the Financial Post who can always be counted on to follow that old legal dictum, "When you have the facts on your side, argue the facts. When you have the law on your side, argue the law. When you have neither, holler."
Terence Corcoran: The Libor fixes that weren’t
| Quote: | | The picture of the Libor scandal that emerges in British House of Commons committee testimony and in public documents is that of bank regulators and central bankers attacking bankers, purging CEOs, firing up a major financial scandal and threatening banks with US$22-billion in penalties over the petty doings of traders and submitters. To some degree, it also looks like British and other regulators are attempting to paper over their own failure to acknowledge and repair a flawed Libor. |
LIBOR was (and is) the property of the British Banker's Association, and had nothing to do with any public body. So 'British and other regulators" had no duty to repair LIBOR.
Corcoran quotes (Lord) Adair Turner, head of the British Financial Services Authority (FSA) giving testimony to a parliamentary committee:
| Quote: | Question: Lord Turner, have you attempted to identify whether Barclays derivatives traders were successful in benefiting their book from their rogue trading activities, or rogue submissions of Libor? If not, will you be attempting to find out whether they benefited individually and personally?
Answer: The essence of the answer is no. We brought a set of cases that did not require us to prove that there had been effective manipulation, and did not require us to work out precisely what the Libor would have been if there had not been this attempted manipulation. That would be a very complicated thing to do, because you would have to work out what they would have put in when they did not put this in, and then you have to work out what that would have done to the average. [The focus was] on getting the case that they thought was the clearly provable case, which was on attempted manipulation, rather than on actual effective manipulation. |
Of course, a failed attempt to rob a bank is just as criminal as a successful one. There is such a thing as criminal conspiracy, in which even discussing the proposition is criminal. Not so for Corcoran, it's always the fault of regulators and governments.
In any case, Lord Turner's answer to the committee shows how difficult it will be for plaintiffs to seek damages.
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Maestro
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| Posted: Mon Jul 30, 2012 7:47 am Post subject: |
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Nice to know Ben Bernanke agrees with me:
Bernanke, Geithner response to Libor scandal rings hollow
| Quote: | Bernanke said last week he had been largely unable to directly address problems with Libor, or the London interbank offered rate, which he said he learned of in 2008.
"We are and need to continue advocating for reforms to the Libor process.It is constructed by a private organization in the UK, and so our direct ability to influence that is limited," Bernanke said in congressional testimony.
Timothy Geithner, who oversaw Wall Street as president of the New York Fed for five years before he became Treasury Secretary in 2009, has delivered much the same message.
He told lawmakers this week that he informed regulators "early on" about the problems and made recommendations to the Bank of England on how to reform the system.
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'Course not everyone agrees with him.
Further from same source:
| Quote: | "Seriously? They did all that they could do? I mean, come on," said Alan De Rose, managing director of government and trading finance at Oppenheimer in New York.
"Answers like those, they strain credibility," said De Rose, formerly a trader at a U.S. primary dealer, the selected large banks that do business directly with the Fed.
Legislators are similarly skeptical, at a time when the Fed is already taking heat in Congress for its regulatory failings that contributed to the financial crisis. |
However, I think everyone agrees the consequences will be large and long-term. Especially given the large part of UK GDP accounted for by the financial services industry.
Further:
| Quote: | Robert Shapiro, a former undersecretary of the U.S. Commerce Department who now runs Sonecon, an advisory firm in Washington, says the scandal is vast and will continue to grow.
"Barclays is not some lone, bad apple. This could well turn into the largest consumer fraud ever seen," Shapiro said.
Barclays last month admitted to giving false information as part of setting the interest rate in a record $453 million settlement with U.S. and UK authorities.
Dozens of big banks, including JPMorgan Chase & Co, are under investigation. An internal probe at Deutsche Bank found two former traders may have been involved in colluding to manipulate global benchmark interest rates but suggested top managers were unaware of the fraud. |
Party on, party on... 
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DSquared
aka Aristotleded24
Joined: 11 Apr 2006
Posts: 5570
Location: Winnipeg
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| Posted: Mon Aug 27, 2012 7:23 pm Post subject: |
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An unlikely challenge to Wall Street?
| Quote: | Under the proposal, towns would essentially be seizing and condemning the man-made mess resulting from the housing bubble. Cooked up by a small group of businessmen and ex-venture capitalists, the audacious idea falls under the category of "That’s so crazy, it just might work!" One of the plan’s originators described it to me as a "four-bank pool shot."
Here’s how the New York Times described it in an article from earlier this week entitled, "California County Weighs Drastic Plan to Aid Homeowners":
Desperate for a way out of a housing collapse that has crippled the region, officials in San Bernardino County … are exploring a drastic option — using eminent domain to buy up mortgages for homes that are underwater.
Then, the idea goes, the county could cut the mortgages to the current value of the homes and resell the mortgages to a private investment firm, which would allow homeowners to lower their monthly payments and hang onto their property. |
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This is pre-eminently the time, to speak the truth, the whole truth, frankly and boldly. Let me assert my firm belief that the only thing we have to fear is fear itself-Franklin Delano Roosevelt |
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Maestro
Fulltime enMasse Member
Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Thu Mar 21, 2013 9:07 am Post subject: |
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A fascinating little story about derivatives...
Is JPMorgan a farmer?
| Quote: | Imagine you’re a finance lobbyist and want to move deregulation and other industry-friendly policies through Congress. While you might think the House Financial Services Committee would be the logical place to do it — since it has jurisdiction over financial issues, naturally...
...You may be asking yourself why some bills on financial regulation run through the House Agriculture Committee. It turns out that the Agriculture Committees have held jurisdiction over derivatives since the mid-19th century, when farmers used derivatives to achieve stability over future prices.
...one advantage the finance lobby gains by working deregulation through the Ag Committee is that they can work in relative anonymity. The Ag Committees simply garner less attention from the press and the public at large, making it easier for Big Finance to operate.
... Wall Street and their allies in Congress hope you forget this lesson, turn away from what’s happening in the House Agriculture Committee today, and let them roll back any restrictions on the very activities that could cause another financial crisis. And they really hope you’ll think that all the Agriculture Committee does all day is talk about agriculture. |
House Agriculture Committee responsible for derivatives regulation in the USA...now there's a load of fertilizer.
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Slumberjack
Fulltime enMasse Member
Joined: 13 Jul 2010
Posts: 919
Location: squelch~~big waves and high smiles from the stomach and intestine of capital.
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| Posted: Thu Mar 21, 2013 4:35 pm Post subject: |
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No surprise here. This is the equivalent of backroom dealing and handshakes.
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Maestro
Fulltime enMasse Member
Joined: 11 Apr 2006
Posts: 2356
Location: Vancouver
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| Posted: Thu Apr 04, 2013 4:32 pm Post subject: |
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Another one of those leaks:
Massive data leak exposes offshore financial secrets
| Quote: | Hundreds of Canadians named in tax-haven records shared exclusively in Canada with CBC News.
...An unprecedented leak of documents is revealing the closely guarded investment information of more than 100,000 people around the world, including hundreds of Canadians.
...In what is believed to be one of the largest ever leaks of financial data, the Washington, D.C.-based International Consortium of Investigative Journalists has received nearly 30 years of data entries, emails and other confidential details from 10 offshore havens around the world.
...The files contain information on over 120,000 offshore entities — including shell corporations and legal structures known as trusts — involving people in over 170 countries. The leak amounts to 260 gigabytes of data, or 162 times larger than the U.S. State Department cables published by WikiLeaks in 2010.
...In many cases, the leaked documents expose insider details of how agents would incorporate companies in Caribbean and South Pacific micro-states on behalf of wealthy clients, then assign front people called "nominees" to serve, on paper, as directors and shareholders for the corporations — disguising the companies' true owners.
Often the companies were set up through intermediary law and accounting firms, as well, adding a further layer of anonymity for investors
...Worldwide, the Tax Justice Network estimates that between $21 trillion and $32 trillion of private wealth is held offshore, out of reach of national treasuries (a more conservative estimate by the Boston Consulting Group puts the figure at $8 trillion). The international organization says that translates to up to $280 billion a year in lost taxes — twice what the world's richest countries spend combined on foreign aid... |
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