Economic Articles from 2018
No justice for consumers in Equifax probe?
by Alexandra Jacobo
Posted February 16, 2018
The head of the Consumer Financial Protection Bureau , Mick Mulvaney, has decided to retreat from a full-scale probe of Equifax’s inability to protect the personal data of U.S. consumers.
According to Reuters, government and industry sources CFPB efforts to investigate Equifax have “stuttered” since Mulbaney took over from previous CFPB direction Richard Cordray, who resigned in November.
CFPB claims that they have “The desire, expertise, and know-how in-house to vigorously pursue hypothetical matters such as these.” Yet, sources for Reuters say Mulvaney has “not ordered subpoenas against Equifax or sought sworn testimony from executives,” normally these are routine steps when launching a full-scale probe. More…
California Is Pondering a New Kind of Bank
by Kevin Drum
Posted February 12, 2018
States can legalize marijuana all they want, but it’s still a federally prohibited Schedule I drug. This presents legal marijuana dealers with a problem: where do they keep their money? Banks are under federal supervision, and few of them want to take the chance of knowingly accepting drug money that might later get them in trouble with the feds. California, as always a bellwether for the nation, thinks it might have an answer:
California’s treasurer and attorney general will study whether the state should create its own publicly owned bank to serve the state’s now-legal cannabis industry….There are numerous obstacles to creating such an institution, especially if the plan is for the bank to openly work with cannabis companies.
John Chiang and other public officials have said the lack of banking access for cannabis companies, which has left the industry largely reliant on cash, poses public safety risks and makes it more difficult for the state and local agencies to monitor the industry and ensure businesses are paying their taxes. More…
2018: Yearly Forecasts for Systemic Breakdown
By Jim Willie CB
Posted February 9, 2018
The magnificent event that occurred ten years ago has been called the Global Financial Crisis, centered and triggered by the Lehman Brothers failure as a firm. It was actually a suffocation event with killjob, whereby both Goldman Sachs and JPMorgan bought several $billion in Lehman mortgage bonds and never paid for them, thereby killing Lehman from a very severe sudden liquidity drain. What happened in 2007 (initial bust symptoms) and 2008 (final crisis unfolding) was horrible and quite devastating. What comes in 2018 in the systemic breakdown and global crisis will be triple in magnitude of damage and triple in breadth with range of extended wreckage. This year will see sovereign bonds enter failure, in an unprecedented manner.
Since the Lehman failure, all insolvent structures have become more insolvent, fortified with more leverage, flushed with more funny money, and been kept in place as the power center for the USGovt istelf. The Wall Street banks stole the $700 billion in TARP Funds as a launching pad for sacking Washington DC in a grand fascist display.
The broken silos of financial corruption have grabbed political powers, and written US legislation. In the last ten years, nothing has been fixed, or event attempted toward remedy. Nothing has been liquidated due to deep insolvency and rot. No amplified credit or monetary spigots have been turned off or even turned down. No power control rooms have been put to pasture and removed from the corrupt helm despite their failures. No economic development in the West has even been attempted. All the broken elements have been ramped up with bloated largesse. Wreck, wash, rinse, repeat, but with greater volume and emphasis, while the propaganda blasts on. What was seen in 2008 with Lehman failure will next be seen on a systemic level, since instead of remedy, the entire system has been subjected to same abuses that led to the mortgage finance and housing bust. More…
How $10,000 of original student loan debt turned into a repayment scheme of 30 plus years
by Lynn Petrovich
Posted February 8, 2018
Between 1984 and 1987 Monica took out $10,000 in student loans. Over the next 30 years she made payments totaling over $24,000, yet she still owes more than $3,000 on her loans.
Monica, like most students entering college right after high school, was a teenager when she signed her student loan contracts. It is apparent she had no idea what kind of indenture she’d “agreed to.” This can be said for the majority of student loan borrowers.
Financial education at the high school level is seriously lacking, if existent at all. Student loans are originated between borrower (student) and lender without much scrutiny, oversight, awareness, or repayment considerations (seriously, what sane person could have thought up this repayment scheme?)
Over the past decade, through tax preparation work – both pro bono and paid – I’ve seen many student loan borrowers who, like Monica, have struggled not only to make ends meet, but also try to understand what’s happening with regard to their student loans. I’ve watched as refundable credits in the thousandsof dollars have been seized by federal and state agencies year after year to pay for student loan debt. More…
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…
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