Economic Articles from 2015
$900 Million Payday Is Billionaires’ Reward For Crushing Twinkie-Maker’s Labor Unions
by Tyler Durden
Posted July 24, 2015
The Hostess company sought to crush labor unions who “refused to negotiate in good faith”, and as a result the company went bankrupt, thereby ending all of its legacy labor agreements once and for all. Sure enough, freed of its cash-draining labor obligations, Hostess suddenly became a very attractive target and not only did it survive but it fourished when in 2013 Private Equity titan Apollo Global Management and billionaire investor C. Dean Metropoulos acquired the maker of Twinkies from liquidation.
Very shortly thereafter, the equity investors did everything they could to reward themselves for an investment in the newly labor union-free company, which was quite viable as a standalone entity because demand for its products was as high as ever (the US will never have a problem with lack of obesity) and tried first to sell the company and then to take it public. They were unable do achieve either, so they decided to take a third route, one which takes advantage of the unprecedented debt bubble.
As Bloomberg reports, “Hostess is selling $1.23 billion of term loans. Of that, $905 million will be used to pay a dividend to its shareholders, according to Standard & Poor’s. That’s more than double what they paid for the business.” Translated: after investing $410 million in March 2013, two billionaires are about to make a $500 million return an investment they have held just over two years, with the blessing of a whole lot of debt investors. And all they had to do was pick up the carcass of a company which did nothing more than crush its unions. More…
The Confiscation of Bank Savings to “Save the Banks”: The Diabolical Bank “Bail-In” Proposal
By Prof Michel Chossudovsky
Posted July 20, 2015
Bail ins have been envisaged in numerous countries. What this means is that the money confiscated from bank accounts would be used to meet the failed bank’s financial obligations. In return, the holders of the confiscated bank deposits would become stockholders in a failed financial institution on the verge of bankruptcy.
Bank savings would be transformed overnight into an illusive concept of capital ownership. The confiscation of savings would be adopted under the disguise of a bogus “compensation” in terms of equity.
What is envisaged is the application of a selective process of confiscation of bank deposits, with a view to collecting debt while also triggering the demise of “weaker” financial institutions. In the US, the procedure would bypass the provisions of the Federal Deposit Insurance Corporation (FDIC) which insures deposit holders against bank failures. More…
by Robert Koehler
Posted July 19, 2015
We cannot bring about a change in humanity without a change in our economic system, which asks for sacrifice only from those who already have next to nothing and has no language that values generosity, except the sort that flows from the poor to the rich (but then it’s called “interest”). The present system does not acknowledge our connectedness to one another or to the planet or in any way understand that true, lasting prosperity emerges from sharing and giving, not exploitation.
This economic system is a relic of the Industrial Age, or perhaps it’s a relic of the Agricultural Revolution. It’s imbued with deep prejudices — human beings can be bought and sold, the nurturing of human life (women’s work) has no monetary value whatsoever — and reinforces our place outside the circle of life, separated from one another and from our deepest values. More…
Greece: Sound and Fury Signifying Much
by Paul Craig Roberts (Assistant Secretary of the Treasury under Ronald Reagan)
Posted July 18, 2015
All of Europe, and insouciant Americans and Canadians as well, are put on notice by Syriza’s surrender to the agents of the One Percent. The message from the collapse of Syriza is that the social welfare system throughout the West will be dismantled.
The Greek prime minister Alexis Tsipras has agreed to the One Percent’s looting of the Greek people of the advances in social welfare that the Greeks achieved in the post-World War II 20th century. Pensions and health care for the elderly are on the way out. The One Percent needs the money.
The protected Greek islands, ports, water companies, airports, the entire panoply of national patrimony, is to be sold to the One Percent. At bargain prices, of course, but the subsequent water bills will not be bargains. More…
The 75 Trillion Dollar Shadow Banking System Is In Danger Of Collapsing
By Michael Snyder
Posted July 12, 2015
Keep an eye on the shadow banking system – it is about to be shaken to the core. According to the Financial Stability Board, the size of the global shadow banking system has reached an astounding 75 trillion dollars. It has approximately tripled in size since 2002. In the U.S. alone, the size of the shadow banking system is approximately 24 trillion dollars.
At this point, shadow banking assets in the United States are even greater than those of conventional banks. These shadow banks are largely unregulated, but governments around the world have been extremely hesitant to crack down on them because these nonbank lenders have helped fuel economic growth. But in the end, we will all likely pay a very great price for allowing these exceedingly reckless financial institutions to run wild. More…
“Guerrilla Warfare Against a Hegemonic Power”: The Challenge and Promise of Greece
by Ellen Brown
Posted July 12, 2015
Banks create money when they make loans. Greece could restore the liquidity desperately needed by its banks and its economy by nationalizing the banks and issuing digital loans backed by government guarantees to its ailing businesses. Greece could provide an inspiring model of sustainable prosperity for the world. But it is being strangled by a hegemonic power in a financial war that is being waged against us all.
On July 4, 2015, one day before the national vote on the austerity demands of Greece’s creditors, it was rumored in the Financial Times that Greek banks were preparing to “bail in” (or confiscate) depositor funds to replace the liquidity choked off by the European Central Bank. As reported in Zerohedge, the government was prepared to pursue three “nuclear options” to protect the deposits of the Greek people. More…
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