Economic Articles from 2018
How a Gang of Hedge Funders Strip-Mined Kentucky’s Public Pensions
by Gary Rivlin
Posted November 12, 2018
Kentucky’s willingness to gamble massively on high-risk alternative investments for its pensions has made the state an easy mark for Wall Street hucksters.
In April 2008, a longtime investment adviser named Chris Tobe was appointed to the board of trustees that oversees the Kentucky Retirement Systems, the pension fund that provides for the state’s firefighters, police, and other government employees. Within a year, his fellow trustees named Tobe to the six-person committee that oversees its investments, becoming the only member of the committee with any actual investment experience. It was an experiment in fiduciary responsibility that ended badly. “I started asking questions when things weren’t sounding right,” Tobe said. “And a secret session was held where they voted to kick me off.”
Several weeks after he was removed, the remaining members of the committee approved a $200 million investment in a hedge fund called Arrowhawk Capital Partners. Tobe, though he remained a trustee, only learned about the deal after the fact, while reading the magazine Pensions & Investments. More…
Wall Street Is Spending Big to Protect Its Ability to Jack Up Rents in California
by David Dayen
Posted November 09, 2018
For some on Wall Street, the financial crash of 2008 represented a once-in-a-lifetime opportunity. Homeowners who’d been walloped by the very crisis Wall Street had created were struggling to pay their mortgages, so financiers swooped in and bought up foreclosed homes, knowing the assets would eventually rise in price again.
But with so many people foreclosed on and out of work, selling the homes was difficult, so Wall Street hit on a different approach: renting them out. Now, the biggest practitioner of this gambit is spending heavily to make sure it stays lucrative.
Blackstone Group, a private equity giant that is also now the world’s largest real estate management firm, has pumped in $6,859,747 so far to battle a ballot measure in California that would allow cities to re-establish rent control laws, including on single-family homes. That figure constitutes $1 out of every $7 supporting the “No on Prop 10″ campaign and is part of a $45.5 million assault, mostly from corporate landlords and property developers, on the right of cities to determine their own rental laws. More…
The Public Banking Revolution
by Ben Hauck
Posted November 3, 2018
Public banking is not a new concept. Countries across the world have used public banking to finance and power their economies for years. Economic powerhouses like Germany continue to feature public banking as a cornerstone of their society. Public banking even exists here in the United States with the nearly 100 year-old Bank of North Dakota, a bank more profitable than Goldman Sachs and with a better credit rating than JPMorgan Chase.
Historically, the public banking movement has expanded significantly during times of financial crisis, including a massive surge in popularity after the economic destruction from the Great Recession. However the idea of public banking is still relatively unknown by the general populace, especially outside of financial and political circles. That is changing. More…
The Three Tribes of Austerity
by Yanis Varoufakis
Posted October 26, 2018
No policy is as self-defeating during recessionary times as the pursuit of a budget surplus for the purpose of containing public debt – austerity, for short. So, as the world approaches the tenth anniversary of the collapse of Lehman Brothers, it is appropriate to ask why austerity proved so popular with Western political elites following the financial sector’s implosion in 2008.
The economic case against austerity is cut and dried: An economic downturn, by definition, implies shrinking private-sector expenditure. A government that cuts public spending in response to falling tax revenues inadvertently depresses national income (which is the sum of private and public spending) and, inevitably, its own revenues. It thus defeats the original purpose of cutting the deficit. More…
Yes, James Freeman, We Do Know How Bad the Federal Reserve Is
By Pam Martens and Russ Martens
Posted October 25, 2018
Earlier this week, James Freeman, the Assistant Editor of The Wall Street Journal’s editorial page, wrote an opinion piece headlined as “We’ll Never Know How Bad the Federal Reserve Is.” Freeman is also a Fox News contributor so one might be prone to suspect there is that typical right-wing bias to bash the Fed.
Most people, even those paying close attention to the Fed’s bailouts of Wall Street, think that the big banks were fine until the 2008 crash. But the public will never really know because Wall Street got another secret bailout from the Fed after the terror attacks of September 11, 2001. (Read our previous report here.) There is the forgotten history that Wall Street was already heading for a crash before the planes struck on 9/11. In fact, on the day before 9/11, the Nasdaq stock market had lost 66 percent of its market value over the preceding months and had evaporated $4 trillion in wealth. The economy had contracted for two consecutive quarters and was facing another quarter of negative growth. More…
The China Threat – Global Crisis Hot Spots & Pressure Points
Posted October 21, 2018
The global financial reset has begun.
Let it be known that the resolution of the financial crisis in Turkey can be regarded as the first critical step in the Global Financial RESET, which has already begun. This is according to consensus among the Jackass colleagues. The introduction to critical steps has been the ongoing Deutsche Bank rescue and Italian banking system life support, in the West. The introduction to critical steps has been the creation of the Gold-Oil-Yuan futures contracts in the East.
THE GLOBAL RESET BEGAN A FEW MONTHS AGO, WITH NO MARQUEE SIGNS, NO FLASHING LIGHTS, NO BANDS, NO HOOPLA. The banker cabal prefers that the public is ill-prepared, since the elites among them are busily preparing their positions for tremendous profits in the $trillions, equal to the losses expected by the clueless public. More…
Of course the tax cuts are good for the banks
By Emily Stewart
Posted October 18, 2018
Even without the Republican tax cuts, United States banks would have made $49.4 billion in the first three months of 2018 alone. But thanks to their reduced tax bill, they got an extra $6.6 billion, bringing in $56 billion in total. And there are plenty of signs the banking industry’s tax-bill boom is on track to continue — take Bank of America, which saw its tax bill fall to $1.7 billion in the second quarter of this year from $3 billion last year, a 43 percent drop.
It’s not a bad time to be in the banking industry, and the GOP tax bill has made it even better. More…
What Keeps Them Up At Night?
by Jim Quinn
Posted October 18, 2018
The tenth anniversary of the Wall Street created financial catastrophe brought back some bittersweet memories this week. I wrote my first articles during the summer/fall of 2008 for Seeking Alpha. I was full of piss and vinegar. I was outraged by the actions taken by Paulson, Bernanke and Bush in bailing out criminal bankers with our money. This ensemble of accurate and acerbic articles led to requests for appearances on Glenn Beck’s CNN show, Neil Cavuto’s show, and several others. My need for my day job led me to turning down the invitations. I did several radio interviews, but kept a relatively low profile.
Ten years later, I’m running low on piss and vinegar. Irrationality reigns. Abnormal is the new normal. Delusions and new paradigms rule the day. During manias it is virtually useless to try and use facts and rational arguments against propaganda, misinformation and hype. The delusional will have to be clubbed like a baby seal once again to regain some sense of reality. More…
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