Tag Archives | Finance

Greece’s Choice, And Ours: Rule By Democracy or Finance?

GreeceBank575A number of nations, including Greece and the United States, are in the process of deciding between being governed by democracy or by finance, Bill Clinton’s Secretary of Labor Robert Reich writes:

Greek Prime Minister George Papandreou decided in favor of democracy yesterday when he announced a national referendum on the draconian budget cuts Europe and the IMF are demanding from Greece in return for bailing it out.

(Or, more accurately, the cuts Europe and the IMF are demanding for bailing out big European banks that have lent Greece lots of money and stand to lose big if Greece defaults on those loans—not to mention Wall Street banks that will also suffer because of their intertwined financial connections with European banks.)

If Greek voters accept the bailout terms, unemployment will rise even further in Greece, public services will be cut more than they have already, the Greek economy will contract, and the standard of living of most Greeks will deteriorate further.

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Five Demands To Rein In Wall Street

99marchIf we want a country in which the most powerful financial institutions may longer hold our political process hostage, where do we start? Via Rolling Stone, Matt Taibbi puts forth his list of five demands for anti-Wall Street protesters to push for:

1. Break up the monopolies. The so-called “Too Big to Fail” financial companies – now sometimes called by the more accurate term “Systemically Dangerous Institutions” – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled; a good start would be to repeal the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.

2. Pay for your own bailouts. A tax of 0.1 percent on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives would generate enough revenue to pay us back for the bailouts, and still have plenty left over to fight the deficits the banks claim to be so worried about.

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“Monetizing” Electoral Politics: TV Networks Are Out To Sell, Not Tell

CampaignPinsAlready the projections are in—not for who is going to win the election in 2012—but for how much it is likely to cost.

Public Radio International concludes: “Campaign spending in the 2012 US election could reach $6 or 7 billion dollars as outside groups pay for electoral influence.”

Here we are in the middle of a deep recession that’s getting deeper by the day, with austerity the unofficial slogan du jour while Republican scheme up new ways to trim, cut and decimate government spending, and parties are spending billions on political horse races.

They decry government spending but they don’t talk much about their own spending, do they?

And neither do the Democrats who are also backing an orgy of spending cuts if only to show their opponents how “responsible” they are.

As both parties slash spending that benefits people, they are in a manic overdrive effort to raise more for themselves and their campaigns.… Read the rest

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Systems Collapse When The Irrational Is Considered Rational

Panneau_à_l'intersection_William_St_et_Wall_St

Photo: Agamisudo (CC)

Oh thank you, Wikipedia, for this definition:

“Irrationality is cognition, thinking, talking or acting without inclusion of rationality. It is more specifically described as an action or opinion given through inadequate reasoning, emotional distress, or cognitive deficiency. The term is used, usually pejoratively, to describe thinking and actions that are, or appear to be, less useful or more illogical than other more rational alternatives.”

And what about this one? Market Psychology?  This term is defined in the Investopedia this way:

“The overall sentiment or feeling that the market is experiencing at any particular time. Greed, fear, expectations and circumstances are all factors that contribute to the group’s overall investing mentality of sentiment.”

Q: What do we have when we put the two together?

A: The current madness and market mayhem.

S&P’s downgrade is being blamed for the market panic even though all the business media expected a downgrade and initially minimized its potential impact.… Read the rest

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Who Rules America? Breaking Down the Top 1%

Here's an excerpt from an article by G. William Domhoff on Global Research. This may not exactly be news to some of us, but it certainly re-affirms a lot:
...the bottom line is this: A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic.
(Full Article Here)
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‘Herd-Like’ Financial Reporting Could Predict Stock Market Bubbles

NasdaqVia ScienceDaily:

When the language used by financial analysts and reporters becomes increasingly similar the stock market may be overheated, say scientists.

After examining 18,000 online articles published by the Financial Times, The New York Times, and the BBC, computer scientists have discovered that the verbs and nouns used by financial commentators converge in a ‘herd-like’ fashion in the lead up to a stock market bubble. Immediately afterwards, the language disperses.

The findings presented at the International Joint Conference on Artificial Intelligence, Barcelona, Spain, on July 19, 2011, show that the trends in the use of words by financial journalists correlate closely with changes in the leading stock indices.

“Our analysis shows that trends in the use of words by financial journalists correlate closely with changes in the leading stock indices — the DJI, the NIKKEI-225, and FTSE-100,” says Professor Mark Keane, Chair of Computer Science in University College Dublin, who was involved in the research.

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Sacred Economics

SacredEconomicsThis is the introduction to Sacred Economics: Money, Gift, and Society in the Age of Transition, by Charles Eisenstein, courtesy of Evolver Editions/North Atlantic Books and Reality Sandwich.

The purpose of this book is to make money and human economy as sacred as everything else in the universe.

Today we associate money with the profane, and for good reason. If anything is sacred in this world, it is surely not money. Money seems to be the enemy of our better instincts, as is clear every time the thought “I can’t afford to” blocks an impulse toward kindness or generosity. Money seems to be the enemy of beauty, as the disparaging term “a sellout” demonstrates. Money seems to be the enemy of every worthy social and political reform, as corporate power steers legislation toward the aggrandizement of its own profits. Money seems to be destroying the earth, as we pillage the oceans, the forests, the soil, and every species to feed a greed that knows no end.… Read the rest

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Kill Bill 2011: The Ongoing Sabotage Of Financial Reform

U.S._currency_iconSome years back Thomas Franck nailed it in his book, The Wrecking Crew. It was subtitled “How Conservatives Rule” and showed how narrow self-interest and well practiced cynicism in the service of partisan warfare has crippled our political system resulting in a deep paralysis despite the threat of a collapse.

I call it sabotage, a tactic that goes way back and involves deliberate effort to insure that reforms are effectively undermined.

When the book came out, Publishers Weekly praised it and criticized it in the same breath, writing,

“Frank paints a complex and conspiracy-ridden picture that illuminates the sinister and controversial practices of the Republican Party in the 20th and 21st centuries. While Frank’s assessments and interpretations of key events, players and party doctrines is accurate and justifiable, his overwhelming blame of the Republican Party as the source of everything that’s wrong with this county and as the emblem of self-destructing government denies the Democrats and the citizenry their roles in a decaying democracy”

How true!… Read the rest

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7 Ways The Hedge Fund Industry Is Built On Fraud, Lying, And Stealing

matthew-tannin-in-handcuffs-accompanied-by-federal-agent-getting-placed-into-black-carCould the entire hedge fund industry rest upon tens of thousands of instances of lying, cheating, and stealing? Well, at least they’re immensely generous (with their political donations). Via Guernica:

1. Insider Trading. If the Feds could tape every hedge fund we’d get an earful of how hedge funds use “expert networks” to transfer bits of illegal information that provide hedge fund managers with knowledge of events that are sure to move markets and make them a bundle.

2. Ponzi Schemes. Madoff isn’t the only one. Hedge funds and Ponzi schemes are made for each other since the funds are designed to evade so many disclosure regulations. It’s virtually a sure thing that every new year will reveal another Ponzi scheme through which a hedge fund steals money from investors and then uses new investor money to pay returns to the old investors.

3. Tax Evasion. No surprise here. Wherever you find billionaire financiers, you’ll find schemes to move money around the globe to dodge taxes.

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Bank Of America Pays $410 Million To Settle Accusations Of Charging Illegal Overdraft Fees

2845694549_b181546fc7Can we charge Bank of America an overdraft fee?  The San Francisco Gate writes:

Bank of America has agreed to pay $410 million to settle a lawsuit in which the lender is accused of manipulating debit transactions to maximize overdraft fees. The agreement is believed to be the first financial settlement by a large bank in a case alleging deceptive overdraft practices. It may presage the outcome of related claims against 30 other lending institutions, including Wells Fargo, Citibank, Chase, Union Bank and U.S. Bank.

San Francisco’s Wells Fargo is embroiled in a separate lawsuit in federal court in San Francisco brought by California customers. That case started before the multistate legal action, but has not concluded because Wells has filed an appeal.

In August, U.S. District Judge William Alsup issued a scathing ruling ordering Wells Fargo to pay its California clients $203 million. He said the bank’s goal was to “maximize the number of overdrafts and squeeze as much as possible” out of customers.

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