Economic Articles from 2018
The day I found out it was all rigged
by Simon Black
Posted February 5, 2018
Several of the largest banks had developed autonomous software that was capable of trading billions of dollars without the need for human beings.
On May 6, 2010 at 2:45PM, their software started to fail… inexplicably selling stocks to the point that prices collapsed nearly 10% in minutes. They called it the Flash Crash, and, even though stocks had largely recovered by the end of the day, the banks lost an enormous amount of money.
Then something interesting happened. Within a few days, the major exchanges announced that they would CANCEL many of the trades that took place during the Flash Crash window. In other words, they were handing the banks their money back.
They were canceling a profitable trade that I had placed during the Flash Crash window, effectively giving it back to the banks. When the banks’ trading algorithms performed well and they all made money, the profit was theirs to keep. More…
How the banks won over Washington again
By Zachary Warmbrodt
Posted January 28, 2018
Less than a decade after being blamed for fueling the worst financial crisis since the Great Depression, banks are winning again in Washington.
The rebound for the lenders has been so remarkable that Republicans and Democrats in Congress are pushing to scale back financial regulations imposed in the wake of the meltdown — one of the few areas where the two parties agree.
President Donald Trump, who once vowed not to let Wall Street “get away with murder,” has dropped the demonizing campaign rhetoric and recruited industry veterans to his administration. His Treasury Department has drawn up a series of recommendations for trimming the post-crisis rule book. Even the Federal Reserve, the top banking regulator, is working to relax safeguards. More…
The Coming Financial Crisis
Interview by Doug Casey
Posted January 27, 2018
Earlier this year, Fed Chair Janet Yellen explained how she doesn’t think we’ll have another financial crisis “in our lifetimes.” It’s a crazy idea. After all, it feels like the U.S. is long overdue for a major crisis.
Listening to the silly woman say that made me think we’re truly living in Bizarro World. It’s identical in tone to what stock junkies said in 1999 just before the tech bubble burst. She’s going to go down in history as the modern equivalent of Irving Fisher, who said “we’ve reached a permanent plateau of prosperity,” in 1929, just before the Great Depression started.
I don’t care that some university gave her a Ph.D., and some politicians made her Fed Chair, possibly the second most powerful person in the world. She’s ignorant of economics, ignorant of history, and clearly has no judgment about what she says for the record. More…
The Growing Movement To Create City-Run Public Banks
By Adele Peters
Posted January 24, 2018
As activists pressure governments to remove their deposits from banks that back bad policies, cities are considering a new option: become their own financial institution that serves the needs of the citizens, not investors.
When the movement to push the city of Los Angeles from keeping its money at Wells Fargo grew in 2017–as in other cities that decided to pull money from the bank because of its fake accounts scandal and funding of the Dakota Access Pipeline–organizers of the campaign realized that they faced a challenge: Where to put the money next.
The largest city accounts are too big for small community banks to handle, so divestment from one major bank typically means moving money to another major bank that likely has social responsibility issues of its own. In addition, even ethical smaller banks aren’t directly accountable to the public. L.A., along with other U.S. cities, is now considering another option: a public, city-owned bank that would keep money inside the community, and follow a socially and environmentally responsible charter. More…
Runaway Train Towards Full Digitization of Money and Labor
by Peter Koenig
Posted January 24, 2018
The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?
This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large – as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines – your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out. More…
By Dean Baker
Posted January 23, 2018
With the Republicans having just passed a $1.5 trillion tax cut, the bulk of which goes to the richest 1 percent, it was inevitable that the generational warriors would come out of the woodwork and resume the attack on Social Security and Medicare. Generational warriors try to divert attention away from how our economy has redistributed income upwards over the last four decades, and convince a large portion of today’s workers that their real problems stem from their parents’ and grandparents’ overly generous retirement benefits.
The opening shot in this new round of generational warfare showed up earlier this month in The Atlantic Magazine. It told the classic story about how seniors are getting too much money back from Social Security and Medicare, the same thing we’ve been seeing for decades. (There is little expectation of originality if you’re in the business of promoting generational warfare.) More…
How a Tiny Village Became the First Place in the World to Ban All Synthetic Pesticides
by Philip Ackerman-Leist
Posted January 17, 2018
The Italian village of Mals has set an international precedent—and a model for other communities to follow.
For hundreds of years, the people of Mals—a tiny village in the South Tirol province of northern Italy—had cherished their traditional foodways and kept their local agriculture organic. Yet the town is located high up in the Alps, and the conventional apple producers, heavily dependent on pesticides, were steadily overtaking the valley below.
Aided by climate change, Big Apple (i.e., large corporate, industrialized apple growers) crept further up the region’s increasingly warmer valleys and mountainsides, its toxic sprays drifting with the valley’s ever-present winds and falling on the farms and fields of Mals—endangering their health, biodiversity, organic certifications, and their thriving tourism economy. More…
The Washington Post Says That Fedcoin Will Be ‘Bigger’ Than Bitcoin
By Michael Snyder
Posted January 15, 2018
The Federal Reserve and other global central banks could just leave us alone and allow us to create our own currencies. The cryptocurrency revolution is moving along just fine, and there is no need for any sort of interference.
But I have a feeling that the powers that be will eventually manufacture some sort of a “cryptocurrency crisis” if one does not happen naturally. In the aftermath, they will attempt to introduce some version of “fedcoin”, and many in the general public will be very thankful for the “solution” that the government has provided.
And that day may be closer than we think. In fact, the U.S. government has already invested millions into cryptocurrency research: More…
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