Archive | Banksters

China stock market crash tweet

China stock market crashes, down 8.5% today

China stock market crash tweet

The Shanghai Composite got demolished today, dropping 8.5% in one day, triggering selloffs in European markets and here too. (US futures are down 4% before the open.) Chinese officials are calling it Black Monday. Government intervention in their market to boost prices has now failed completely.

“I think there is now growing realisation – domestically and offshore – that the Chinese leadership are not in control of the situation. Not only are they not in control of it, they don’t even seem to grasp the problems at times,” said Fraser Howie, the co-author of Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise

“The real casualty over the summer is the government’s credibility. When you look at the stock market intervention, when you look at the FX botch as I would call it a couple of weeks ago, and then you look at the Tianjin blasts, you see a government that is most certainly not in control. You look at this and it sends a very poor picture about China’s competency at the leadership level. Who else is responsible here? Xi Jinping seems invisible.”

When markets crash in such a spectacular way, there is little governments can do. The market forces are simply too ginormous. Still, China has been slow and plodding and its current ideas indicate they don’t really understand what’s happening or know what to do.

As per the WSJ, the PBoC is set to make another move to cut the RRR, possibly as soon as this week in a bid to flood the Chinese banking system with as much as $106bn in liquidity. Meanwhile, a second story doing the rounds is a report that China’s State Council has published a plan allowing for pension funds managed by local governments to invest in the stock markets for the first time. According to Reuters, the report suggests that pension funds will be allowed to invest up to 30% of their net assets in stocks, funds and balanced funds having only previously been able to invest in bank deposits and treasuries.

No pension fund will buy China stock now. The downside risk is clearly way higher than any possibility of a price bounce, which would only be short-term. It will take months for the China markets to stabilize. The worst part is their stock market is almost entirely small investors, cheered on by the government, many of whom were trading on margin and are now suffering catastrophic losses. This will result in anger against and mistrust of the government.

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indentured servants

College students. Now you can become an indentured servant!

indentured servants

Students: forget about those pricey student loans! Now you can pay for college by pledging shares of future income. Wow, what could possibly go wrong with that? Former Indiana governor and Purdue President Mitch Daniels thinks Income Share Agreements are a swell idea and the university will be offering them soon.

His hype is almost comical, pretending such loans are low-risk. Inquiring minds want to know, does Purdue get a cut of those future earnings?

“This no-debt, low-risk option is another way we can help keep our land-grant school within financial reach of all qualified students,” Daniels said in a press release. Students would be able to defer payment for years if they don’t reach a certain income threshold.

Low-risk? But what happens if you defer for a few years? Do Wall Street vultures then take a large percentage of your income? What if you’re still flipping burgers after several years and are under the income threshold. I’m guessing the jackals will come after you anyway. Especially since there are no rules yet.

There is legislation pending in Congress that would build a regulatory framework around the idea. The bill would set caps on things like the percentage of income collected and the time frame of the agreements.

Thus, there are no such regulations now, no caps, nothing to protect the gullible student. And Purdue wants offer them anyway. If this wretched idea catches on, greedhead banksters will undoubtedly securitize the income streams, leading to future financial disasters. And if students find their lives ruined because of such agreement, oh well, that’s no concern of the bankers or universities.

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unintended consequences

Mexico attempt to stop cartels shows why US strategy in Middle East doesn’t work

unintended consequences

Attempts by Mexico to stop drug cartels by taking out leaders is seriously backfiring because the unintended consequence is that cartels then split into pieces, with each piece generally more vicious and violent than its predecessor. So instead of a few big targets there are extremely virulent smaller ones. This process is similar to what has happened in the Middle East when the US tried to destroy Al Qaeda, an attempt that mostly worked, however it spawned Islamic State. Oopsie.

At least part of this is due to locals in the Middle East being sympathetic to Islamists, even as they perhaps pretend to be our friends and by corrupt local and federal government officials in Mexico who, sometimes openly, back one cartel. Defeating an adversary is difficult when you don’t know who their allies are and are fighting on their turf.

In Mexico, this has been a copy of the American antiterrorism strategy of high-value targets,” said Raúl Benítez Manaut, a professor at the National Autonomous University of Mexico who specializes in security issues. “What we have seen with the strategy of high-value targets is that Al Qaeda has been diminished, but a monster appeared called the Islamic State. With the cartels, it has been similar.”

The fracturing of the cartels into smaller gangs requires a very different approach from what is being pursued at the national level, analysts say.

In the background of both IS and drug cartels are dirty banks and hedge funds worldwide, including in the US, who launder money for them. But no mass media really ever talks much about that, even if it’s where major criminals are. There are financial interests that do not want drug trafficking in Mexico and human slavery, oil theft, and extortion of entire cities in the Middle East to end because they profit mightily from it.

If we what the madness to end, criminally prosecute the dirty big banks, breaking them up if needed, would be a major first step.

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secret-bank-bailout

European bailouts save banks, not people or countries

secret-bank-bailout

What a surprise. EU bailouts primarily benefit big banks who knowingly made dicey loans and bought garbage bonds. They get bailed out. Little if any of the money helps economies of the supposedly bailed-out countries. If this was actual capitalism, not socialism for the rich, the banks would have taken huge write-downs on the bonds. But no, instead they get bailed out. We are looking at a nearly totally corrupted system. The same thing happens in the U.S. too.

In his 2013 documentary “The Secret Bank Bailout,” German investigative journalist Harald Schumann documents how the peoples of Ireland, Cyprus and Spain were not bailed out. The biggest recipients of the Irish bailout that saved Anglo-Irish Bank were British, French and German banks, including Union Investment Privatfonds, Rothschild et Compagnie Gestion, and Deutsche Bank.

German and French banks accounted for 50 out of the 80 bondholders. Without the clandestine bailouts these banks received, they would have almost certainly gone under.

Meanwhile, Greek banks, which aren’t being bailed out in any significant way, are collapsing. Bankster vultures await the carnage, hoping to buy banks and national assets for pennies. None of this helps the people of Greece. It only helps EU big banks.

Complete annihilation:” A Greek banker’s verdict on last week’s market meltdown

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Addicted to War

US orders airstrikes against Syria if our pathetic 50 person “army” threatened

Addicted to War

The Pentagon has labored mightily to train Syrians to fight Assad. The result is a bizarre little 50 person contingent, which just had its leader kidnapped by al-Nusra. Rather than admit the obvious, which is the U.S. hasn’t a clue what is happening in Syria and attempts to intervene invariably backfire, Obama is now huffing and puffing, saying any Syria attempts to threaten this wee little ragtag army will be met by airstrikes.

This would be comical except Pentagon attempts to intervene make things worse for the U.S. because, wait for it, the locals don’t like being bombed. The “plan” here, if it can even be called a plan, is clearly to oust Assad. Then U.S. conquerors will be greeted with sprinkled rose petals in their paths when they enter Damascus to liberate it. Oh wait, isn’t that exactly what the neocons said would happen in Baghdad too? It didn’t turn out quite that way, did it?

We as a country are Addicted To War. That’s why we have so many of them. And why they generally don’t turn out well. Addicts have terrible judgement. They do it because they must. Our war machine profits mightily from this, the rest of the country and the world, not so much.

It goes without saying that covert US efforts to aid the multifarious groups vying for control of the country have met with disastrous consequences so far, but if there’s anything Washington is particularly adept at, it’s making bad foreign policy outcomes worse, which is why we weren’t at all surprised to learn that the commander of the Pentagon’s new Syrian “force” was captured, along with his deputy, by al-Qaeda affiliate al-Nusra last week near the border with Turkey.

This makes the Keystone Cops look like grizzled professionals.

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Grexit

Grexit requires immense software changes. It took EU 11 years

Grexit, with a return to drachma, cannot be done overnight or even within months, especially not for a financially devastated country like Greece that has no extra money. A primary reason is ancient software needs to be studied line-by-line to look for references to euros and then to make sure the code will reflect the new drachmas. This, to non-coders, may seem easy. It’s anything but. References to euros may be hardcoded or difficult to find because the programmer used cryptic variable names.

Worse, if there is data in tables referring to euros, then the data may need to be converted to drachmas. Or not. Maybe it should stay as euros with the new data as drachmas. Then you have to know which currency is being referred to, which makes things even more convoluted. Or you store both values, which would require database structure changes in very old data tables. Greece was able to convert to euros in 2002, along with all the other EU counties. Presumably thousands of coders were helping each other and huge resources were available. Greece has none of that now.

It has been surprising to see how much resistance readers voice to the fact that making large-scale IT changes within major financial firms is extremely time consuming and that most large scale projects fail. That means the difficulty of converting IT systems to incorporate drachma is a major process not just at single institutions, but even more so across complex and fragmented systems like electronic point of sale devices, like credit card terminals, and ATMs. That is why it took eight years of planning and three years of conversion for the introduction of the euro to go smoothly. And the size of the code base and the volume of transactions running over these systems has increased, while most of the legacy code on mainframes from that era remains in place.

As an example:

It is good practice to define an external variable such as $threshold but in practice Cobol programmers (the language of choice in most financial applications) tend to take shortcuts because they are always under the gun to meet a deadline. So instead of defining an external variable that can be modified in a single location, they will test for ’10000’ or whatever. Since the software in Greek banks is likely to be decades old, I doubt that the “good programming” practices hailed in computer science classes find much reflection within them.

On top of the IT uissues, Greece would also need to find billions to print drachmas.

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March of tyranny

Potemkin Party. Republocrats squabble about sex, ignore economy, war

March of tyranny

Lifelong Democrat James Kunstler has a fine rant about the uselessness of the Democratic Party and its lack of discernible leadership. No one, except Sanders, has new ideas. Apparatchiks within the party will almost certainly try to destroy his candidacy. No mainstream candidate in either party is talking seriously about the economy, endless war, and helping main Street unless, of course, a pollster tells them too. Battleground issues are about sex and gender. When it comes to continuing wars and enriching the already wealthy, the two parties walk in lockstep, using social issues like sex and gender as diversion.

I hugely resent the fact that the Democratic Party puts its time and energy into the stupid sexual politics of the day when it should be working on issues such as re-localizing commercial economies (rebuilding Main Streets), reforming agriculture to avoid the total collapse of corporate-industrial farming, and fixing the passenger rail system so people will have some way to get around the country when happy Motoring dies (along with commercial aviation).

Oh, by the way, notice that the lead editorial in Monday’s New York Times is a plea for transgender bathrooms in schools. What could be more important?

Well surely allowing SJW s to put trigger warnings on everything taught in colleges is at least as important as who uses what bathroom, wouldn’t you say?

So, you fellow disaffected Democrats — those of you who can’t go over to the other side, but feel you have no place in your country’s politics — look around and tell me who you see casting a shadow on the Democratic landscape. Nobody. Just tired, corrupt, devious old Hillary and her nemesis Bernie the Union Hall Champion out of a Pete Seeger marching song.

I’ve been saying for a while that this period of history resembles the 1850s in America in two big ways: 1) our society faces a crisis, and 2) the existing political parties are not up to the task of comprehending what society faces. In the 1850s it was the Whigs that dried up and blew away (virtually overnight), while the old Democratic party just entered a 75-year wilderness of irrelevancy. God help us if Trump-o-mania turns out to be the only alternative.

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1185d094e4fde4ce_640_crater

Puerto Rico bonds implode, collateral value set to zero

crater photo

$72 billion in now-toxic Puerto Rico bonds are stashed away in supposedly conservative bond funds and retirement accounts. Moody’s says the probability of default is now 100%. Some of the bonds have no legal protection and their recovery rate might be 33 cents on a dollar. Bonds with better protection will still get clobbered. Recovery on those will be 65-85%.

That’s not the worst of it. UBS (and probably lots of other banks too) underwrote some of the bonds and put them in their own closed-end funds. These funds are not traded. UBS sets the price. Some investors bought these bond funds with money borrowed from UBS and may have used them as collateral for more “investing.” However, UBS just decreed the collateral value on their very own Puerto Rico closed-end funds is now zero. That’s right zero. UBS is saying their own bonds are worthless. Expect a festive number of lawsuits.

Clients were warned that they can no longer use these funds as collateral for loans, even those loans they used to buy these funds with in the first place.

Thus, they will have to come up with new collateral very quickly or UBS may sell the bonds and come after them for the balance. Let’s be clear. Some of them are retirement accounts. All of them will take big hits.

Of course, banks made lots of money by underwriting slop everyone knew was risky then foisting it off on customers and clients. It’s all just terribly tragic. There will be investigations. UBS will promise to sin no more. The government will levy a stiff fine (or is this a protection racket.) No one will go to prison. Lots of people’s retirement accounts will drop in value. None of the banks care what happens to Puerto Rico.

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Donald-Trump-Bane

Donald Trump is a dangerous demagogue, say conservative libertarians

Donald-Trump-Bane

Liberals and lefties giggle at Donald Trump. “He’s just not serious”. Perhaps they should listen to conservative libertarians who think Trump is downright dangerous, a 21st century fascist, and not a clown at all, more like a rough beast slouching.

Jeffrey Tucker, conservative libertarian and past editor at Mises.org, recently heard Trump speak and found the experience unsettling.

I just heard Trump speak live. It was an awesome experience, like an interwar séance of once-powerful dictators who inspired multitudes, drove countries into the ground, and died grim deaths.

His speech at FreedomFest lasted a full hour, and I consider myself fortunate for having heard it. It was a magnificent exposure to an ideology that is very much present in American life, though hardly acknowledged.

The ideology is a 21st century version of right fascism — one of the most politically successful ideological strains of 20th century politics. Though hardly anyone talks about it today, we really should. It is still real. It exists. It is distinct. It is not going away. Trump has tapped into it, absorbing unto his own political ambitions every conceivable bourgeois resentment: race, class, sex, religion, economic. You would have to be hopelessly ignorant of modern history not to see the outlines and where they end up.

For now, Trump seems more like comedy than reality. I want to laugh about what he said, like reading a comic-book version of Franco, Mussolini, or Hitler. And truly I did laugh, as when he denounced the existence of tech support in India that serves American companies (“how can it be cheaper to call people there than here?” — as if he still thinks that long-distance charges apply).

Let’s hope this laughter doesn’t turn to tears.

Liberty Blitzkreig says Trump is a demagogue. Zero Hedge agrees, reprinting the article.

The main reason I chose to start this blog in the first place, was rooted in my deep fear of what might emerge after the current paradigm collapses. I have no doubt something very different is coming, I just desperately want that thing to be freedom, free markets and prosperity as opposed to the disaster that a $2 despot like Trump would bring. His ascension in the polls is very troubling, and makes me wonder whether the public will ultimately choose to rally behind some statist-demagogue wrapped in an American flag when things get bad enough, as opposed to something far more difficult: Liberty. I fear they may eventually choose someone like Donald Trump.

From the comments on Zero Hedge:

I’m not a Trump supporter (for my own reasons, not those stated in the article), but if you’re a leftist and think he’s just some carnival freak show you are in for a very rude awakening.

Lemme ask one question:

If this scumbag does make it (insane how many even here are rushing back into the system) then will y’all give up your rights to object to how bad we get fucked by this guy?

Insane how many people clamor for a leader, even those who are supposed to know that it is the system that is the problem, not who sits in the white house.

Blah, blah, blah…

And what about the FED? Wall Street fraud and corruption? Regulatory capture at the SEC and CFTC? Corporate lobbyists hijacking DC? Illegal and immoral wars overseas?

Indeed.

The image is from Tucker’s post, Trump as Bane, the despot in Batman who would rule Gotham.

Or, if you prefer pop culture, think of Bane, the would-be dictator of Gotham in Batman, who promises an end to democratic corruption, weakness, and loss of civic pride. He sought a revolution against the prevailing elites in order to gain total power unto himself.

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banana-gun

Greece brought no weapon at all to Eurozone gun fight

banana-gun

Syriza was so addled-brained it didn’t make contingency plans to leave the euro and print a new currency even when Eurozone adversaries make it clear there could be a Grexit. Yesterday, it faced completely insane demands by Germany at al to capitulate completely and become a vassal colony or leave the euro. Greece agreed to the slavery. Yet the terms of the surrender say even if Greece meets all its current demands there could be many more demands before financial help is given.

It is almost quaint to recall just a few months ago Syriza was seen as the great scrappy hope for a beleaguered country.

This is as bad as we’ve feared. We regularly warned that there were no signs that Greece was preparing in a meaningful way for a Grexit (high level discussions like “first we seize the Bank of Greece building” don’t cut it), but sources close to Syriza have said in public what amounted to the same thing, that the government was completely preoccupied with the tactics of the negotiations and was not thinking or acting beyond that.

Mish says, and I agree, Greece needed to default and tell the EU to go screw themselves. But that’s not what happened.

Tsipras would be a fool to accept this proposal.

As I have said all along, Greece’s best chance is to default, not pay back a cent, and initiate the reforms it needs to grow over the long haul.

Greece does not need the euro. No country does.

Instead, Greece has agreed to economic servitude for decades to come.

From Facebook.

I get a lot of ‘haha told you so!’s from anarchists.

From journalist /author John Wight in Scotland, also on Facebook:

The reduction of Greece and the Greek people to de facto colonial status is a seminal moment, heralding the beginning of the end of the EU.

I will find it hard to vote Yes now at next year’s EU referendum. What they have done to Greece is indefensible and should never be forgotten.

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