Run on the bank

[cyu]

http://www.bbc.co.uk/news/business-25861717

HSBC customers were stopped from withdrawing amounts ranging from £5,000 to £10,000.

the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

http://www.zerohedge.com/news/2014-01-24/bank-run-fears-continue-hsbc-restricts-large-cash-withdrawals

Following research last week suggesting that HSBC has a major capital shortfall, news that HSBC is imposing restrictions on large cash withdrawals raising a number of red flags.

[Marshal of the People]

http://www.bbc.co.uk/news/business-25861717

HSBC customers were stopped from withdrawing amounts ranging from £5,000 to £10,000.

the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

http://www.zerohedge.com/news/2014-01-24/bank-run-fears-continue-hsbc-restricts-large-cash-withdrawals

Following research last week suggesting that HSBC has a major capital shortfall, news that HSBC is imposing restrictions on large cash withdrawals raising a number of red flags.

HSBC is technically stealing people money if they refuse to give it back to them when they ask, capitalism!

[argeiphontes]

It warms my heart to see a big bank fail. It's like looking at pictures of baby animals. ;)

[Sinister Intents]

HSBC is technically stealing people money if they refuse to give it back to them when they ask, capitalism!

All banks essentially steal money haha, fuck banks I hate banks.


It warms my heart to see a big bank fail. It's like looking at pictures of baby animals. ;)

Indeed ^-^

[Trap Queen Voxxy]

It warms my heart to see a big bank fail. It's like looking at pictures of baby animals. ;)

For a bank to fail means the misery of thousands if not millions of people. Only way that situation would "warn my heart," is if the story ends like "...then the people overwhelmed with rage stormed the banks, held up the board meeting and after a collective vote and stroke of genius, the honest citizens killed and ate the bankers."

[Marshal of the People]

It warms my heart to see a big bank fail. It's like looking at pictures of baby animals. ;)
What about the people who lost all their money and become destitute and homeless and die?

[argeiphontes]

Consumer bank deposits are insured by the government. Sorry, maybe that's not true in the UK.

[tallguy]

Consumer bank deposits are insured by the government. Sorry, maybe that's not true in the UK.
No they're not. A "government backed bank deposit guarantee" only has value in terms of persuading people they do not need to use it. In other words, it's a confidence trick. If it ever came to the point where they did need to use it on a large scale, the game would be up.

[tuwix]

It warms my heart to see a big bank fail. It's like looking at pictures of baby animals. ;)

Your joy is premature. I'm afraid they are "too big to fail"...

[cyu]

http://www.zerohedge.com/news/2014-01-28/russian-bank-halts-all-cash-withdrawals

It would appear the fears of a global bank run are spreading. From HSBC's limiting large cash withdrawals to Lloyds ATMs going down, Bloomberg reports that 'My Bank' - one of Russia's top 200 lenders by assets - has introduced a complete ban on cash withdrawals until next week. While the Ruble has been losing ground rapidly recently, we suspect few have been expecting bank runs in Russia.

Interestingly, Russia's biggest lender Sberbank has seen a 8.7% rise in deposits in December... it seems Russians are realizing that bank deposits are nothing more than risky loans to highly levered entities

[cyu]

http://www.talkmarkets.com/content/news/why-are-banking-executives-in-london-killing-themselves?post=40082

A vice president at JPMorgan's European headquarters in London plunged to his death after jumping from the top of the 33rd floor. He fell more than 500 feet, according to eyewitnesses. This comes on the heels of news that a former Deutsche Bank executive was found hanged in his home in London on Sunday. markets have gone down a little bit recently but they certainly have not crashed yet. Could there be more to these deaths than meets the eye?

Last week, a U.K.-based communications director at Swiss Re AG died last week. The cause of death has not been made public.

[Lenina Rosenweg]

Capitalism in the developed would is simply displacing its crisis. In plain terms a"developing world" bubble has been created by the US Fed's and other central banks qualitative easing.The bubble looks like it is now bursting.


A good article on what's happening

http://www.counterpunch.org/2014/01/28/the-new-wave-of-financial-instability/


The Fed was warned early on that its uber-accommodative monetary policy was spilling over into emerging markets and creating conditions for another financial crisis. Take a look at this excerpt from an article in Bloomberg back in 2010 where Nobel prize winning economist, Joseph Stiglitz, explicitly warns the Fed of the dangers of QE.


From a more Marxist perspective
http://roarmag.org/2014/01/david-harvey-theory-capitalist-crisis/


You may not have read about it in the regular media yet, but the financial press is full of it: financial markets are currently experiencing a “bloodbath” over the deepening turmoil in the global periphery. As I wrote on Friday, five years since the collapse of Lehman Brothers, we may now find ourselves at the start of a new phase in the global financial crisis. Just when European leaders were boasting about their debt problem finally being “under control”, investors are losing their cool over a Chinese slowdown and the Federal Reserve ‘tapering’ its stimulus program. The fear is that the resultant liquidity crunch and commodity slump will negatively affect the ability of some developing countries to pay back the debts they accrued over the past decade of cheap credit.

[ckaihatsu]

Markets see biggest two-day drop in seven months

http://www.revleft.com/vb/markets-see-biggest-t186669/index.html


China on verge of meltdown

http://www.revleft.com/vb/china-verge-meltdown-t185980/index.html

[Ocean Seal]

For a bank to fail means the misery of thousands if not millions of people. Only way that situation would "warn my heart," is if the story ends like "...then the people overwhelmed with rage stormed the banks, held up the board meeting and after a collective vote and stroke of genius, the honest citizens killed and ate the bankers."
I disagree with you here. If our friend is excited at the thought of a bank failing, then we should encourage him. I mean come on banks have failed before and people have gotten their money back, And secondly, this is like the whole "we should feel sad when companies collapse when people lose their jobs" most people who were are interested in, have very little stake in the banks prospering. In the grand scheme of things a couple hundred dollars don't matter, in the same way that a job doesn't.

[cyu]

http://www.talkmarkets.com/content/novice/third-banker-former-fed-member-found-dead-inside-a-week?post=40175

Russell Investments' Chief Economist (and former Fed economist) Mike Dueker was found dead at the side of a highway in Washington State. Police said the death appeared to be a suicide.

Pierce County Detective Ed Troyer said Dueker was having problems at work, without elaborating.

He published dozens of research papers over the past two decades, many on monetary policy, which ranks him among the top 5 percent of economists by number of works published.

[cyu]

A bunch of still-thinks-capitalism-works claptrap in here, but interesting to see a millionaire advocate a run on BofA: http://www.pbs.org/newshour/making-sense/is-your-money-safe-at-the-bank-an-economist-says-no-and-withdraws-his/

Why am I getting in line to take my money out of Bank of America? Why do I risk starting a run on Bank of America by withdrawing my money and presuming that many fellow depositors will read this and rush to withdraw too? Because they pay me zero interest. Thus, even an infinitesimal chance Bank of America will not repay me in full, whenever I ask, switches the cost-benefit conclusion from stay to flee.

They will not be able to return my money if:

•Many other depositors like you get in line before me. Banks today promise everyone that they can have their money back instantaneously, but the bank does not actually have enough money to pay everyone at once because they have lent most of it out to other people — 90 percent or more. Thus, banks are always at risk for runs where the depositors at the front of the line get their money back, but the depositors at the back of the line do not. Consider this image from a fully insured U.S. bank, IndyMac in California, just five years ago.

http://www.pbs.org/newshour/wp-content/uploads/2014/01/IndyMac-bank-run-300x200.jpg

•Some of the investments of Bank of America go bust. Because Bank of America has loaned out the vast majority of depositors’ money, if even a small percentage of its loans go bust, the firm is at risk for bankruptcy. Leverage, combined with some bad investments, caused the failure of Lehman Brothers in 2008 and would have caused the failure of Bank of America, AIG, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Stearns, and many more institutions in 2008 had the government not bailed them out.

In recent days, the chances for trouble at Bank of America have become more salient because of woes in the emerging markets, particularly Argentina, Turkey, Russia and China. The emerging market fears caused the Dow Jones Industrial Average to lose more than 500 points over the last week.

The market turmoil could threaten “BofA” with bankruptcy today as it did in 2008, and as banks have experienced again and again over time.

The FDIC currently has far less money in its fund than it has insured deposits: as of Sept. 1, about $41 billion in reserve against $6 trillion in insured deposits. (There are over $9 trillion on deposit at U.S. banks, by the way, so more than $3 trillion in deposits is completely uninsured.)

when the FDIC fund risks running dry, as it did in 2009, it can go back to other parts of the federal government for help. Remember that Congress voted against the TARP bailout in 2008 before it relented and finally voted for the bailout.

Thus, even insured depositors risk loss and/or delay in recovering their funds.

Bank of America and other big banks are fragile — and vulnerable to bank runs — because the Fed has set interest rates to zero. If a run gathers momentum, the government will take steps to stem it. But I am convinced they have limited ammunition and unlimited problems.

[tallguy]

Be afraid, be very afraid.

http://www.golemxiv.co.uk/2014/01/on-death-and-derivatives/

[cyu]

Be afraid, be very afraid.

http://www.golemxiv.co.uk/2014/01/on-death-and-derivatives/

Well, at least pro-capitalists should be afraid ;)

[tallguy]

Well, at least pro-capitalists should be afraid ;)
And everyone who has a pension or savings.....

But yes, in the long run, we all benefit from the whole stinking pile of debt ridden corruption collapsing.

Here's hoping

[cyu]

everyone who has a pension or savings
In some ways, yes - especially if the ruling class allows the money of the working class to be wiped out, while doing all they can to save the money of plutocrats (see also TARP / austerity).

However if the ruling class does not get their way, if large fortunes are wiped out, the result would be an equalization of economic power. Once plutocrats lose what gives them disproportionate power, then the working class will finally have room to breathe again.

But anyway, this might be of interest: https://web.archive.org/web/20010417014827/http://infoshop.org/rants/yu1.html

[ckaihatsu]

Be afraid, be very afraid.

http://www.golemxiv.co.uk/2014/01/on-death-and-derivatives/





When the next blow out comes I think it is very likely we will find that it is the pension and insurance companies that turn to us and say ‘bail us or watch everything you saved disappear’.


But right now the Fed is *tapering off* its "quantitative easing" -- bailouts -- to the detriment of 'emerging markets', and we're seeing the effects in Turkey's lira, Argentina's peso, and others.

Put this into the larger, post-2001 period of bailouts of major-industry companies, and we're basically at Stalinism (bureaucratic collectivism).

I'm thinking that the USSR was destroyed only to see the U.S. (etc.) become the very thing it fought so hard to defeat -- (!)

[ckaihatsu]

Markets fall as currency turmoil continues - economy

http://www.youtube.com/watch?v=nW__OP8Dtbs


Eurozone inflation drops in January, unemployment stays near record high - economy

http://www.youtube.com/watch?v=pSQBvnSpn4o


Is U.S. economic growth sustainable

http://www.youtube.com/watch?v=O9lM8F6Pm3o


Federal Reserve new head Yellen faces many of the same challenges as Bernanke - economy

http://www.youtube.com/watch?v=pJh2CDFVBzI


Robust household spending boosts US economic growth - economy

http://www.youtube.com/watch?v=fyuyh8n0Ti4


Korean government says Fed's stimulus taper will have limited impact on economy

http://www.youtube.com/watch?v=5NmEWeE5EtY


Breakingviews - Humility lessons for bankers

http://www.youtube.com/watch?v=k3FU3O9FXBg


Turkey seeks stronger economic ties with Iran

http://www.youtube.com/watch?v=mYEdltKnGxE


Turkish interest rate boost only stalls lira's plunge - economy

http://www.youtube.com/watch?v=EjlNXYanmh4


Emerging market jitters hammer Europe's stock markets - economy

http://www.youtube.com/watch?v=N6F_zJ9TfU0


European plan to tackle 'too big to fail' banks criticised - economy

http://www.youtube.com/watch?v=VkD3nPKGX9w


Turkish central bank raises lending rate to 12%

http://www.youtube.com/watch?v=UnPqBnkEz4c


Turkey stuns investors with massive interest rate hike

http://www.youtube.com/watch?v=fsPgjULa-vY


India - Back from the brink

http://www.youtube.com/watch?v=gVd973MUvZY


Breakingviews - ECB may trump the big central banks

http://www.youtube.com/watch?v=TCCRnrL4DRc


Fed set for more stimulus tapering - economy

http://www.youtube.com/watch?v=M-tri_6KRhg


Asian shares rebound Tuesday

http://www.youtube.com/watch?v=kM3ECnjB0UI


UK economy power ahead, raising questions on interest rate - economy

http://www.youtube.com/watch?v=UZ_3CKGx0CQ


Emerging markets on the brink of a repeat of 1990s crisis

http://www.youtube.com/watch?v=Hbjpi5JKa9s


Breakingviews - Emerging markets face 'import-lite' trap

http://www.youtube.com/watch?v=g9kA9GIIk1M


Turkey's central bank to hold emergency meeting after lira hits record lows - economy

http://www.youtube.com/watch?v=E8O0Ib3jN1Y


Asian shares tumble following global uncertainty

http://www.youtube.com/watch?v=X41QPcBHQ8A


Emerging market anxiety threatens Japan's revival plans

http://www.youtube.com/watch?v=p0inmKo6uyo


Korea's exports to China hit record high of 26% in 2013

http://www.youtube.com/watch?v=HIp-rn12etY


Breakingviews - How to play the great China rate game

http://www.youtube.com/watch?v=F1t6bEE41xk


China's countryside suffers as factories march inland

http://www.youtube.com/watch?v=XlfB8VI3zOY


Stock sell-off due to emerging market slow down

http://www.youtube.com/watch?v=cINpnShByoE

[cyu]

http://wallstreetonparade.com/2014/02/a-rash-of-deaths-and-a-missing-reporter-%E2%80%93-with-ties-to-wall-street-investigations/

In a span of four days last week, two current executives and one recently retired top ranking executive of major financial firms were found dead. Both media and police have been quick to label the deaths as likely suicides. Missing from the reports is the salient fact that all three of the financial firms the executives worked for are under investigation for potentially serious financial fraud.

two days after Broeksmit’s death, Gabriel Magee, a Vice President at JPMorgan, plunged to his death from the roof of the European headquarters of JPMorgan. Magee’s parents, Bill and Nell Magee, are not buying the official story according to press reports and are planning to travel from the United States to London to get at the truth. One of their key issues, which should also trouble the police, is how an employee obtains access to the rooftop of one of the mostly highly secure buildings in London.

Nell Magee was quoted saying her son was “a happy person who was happy with his life.” His friends are equally mystified, stating he was in a happy, long-term relationship with a girlfriend.

The case of David Bird, the oil markets reporter who had worked at the Wall Street Journal for 20 years and vanished without a trace on the afternoon of January 11, has this in common with the other three tragedies: his work involves a commodities market – oil – which is under investigation for possible manipulation. The FBI is involved in the Bird investigation.

An intentional disappearance is incompatible with the fact that he left the house wearing a bright red jacket and without his life-sustaining medicine he was required to take daily as a result of a liver transplant.

[Vilhelmo]

No they're not. A "government backed bank deposit guarantee" only has value in terms of persuading people they do not need to use it. In other words, it's a confidence trick. If it ever came to the point where they did need to use it on a large scale, the game would be up.

That simply is NOT true.
Even if everyone withdrew their deposits, the government would have no problem providing banks with the needed liquidity.

[Vilhelmo]

In the grand scheme of things a couple hundred dollars don't matter, in the same way that a job doesn't.

Maybe for you but not for myself & a few billion others.

[Vilhelmo]

Why am I getting in line to take my money out of Bank of America? Why do I risk starting a run on Bank of America by withdrawing my money and presuming that many fellow depositors will read this and rush to withdraw too? Because they pay me zero interest. Thus, even an infinitesimal chance Bank of America will not repay me in full, whenever I ask, switches the cost-benefit conclusion from stay to flee.

They will not be able to return my money if:

•Many other depositors like you get in line before me.

•Some of the investments of Bank of America go bust.


Deposits up to a certain amount are insured in the US.
They will ALWAYS be able to return the insured amount.

[Vilhelmo]

Put this into the larger, post-2001 period of bailouts of major-industry companies, and we're basically at Stalinism (bureaucratic collectivism).

I'm thinking that the USSR was destroyed only to see the U.S. (etc.) become the very thing it fought so hard to defeat -- (!)

I fail to see the similarity.
Could you elaborate.
I'm not the sharpest knife in the drawer...

[cyu]

Even if everyone withdrew their deposits, the government would have no problem providing banks with the needed liquidity.


How would you recommend they do it? Printing money? Tax collection? Do you believe such actions happen in a vacuum, with no effects on the people willing to use that money or willing to pay the ruling class?

[Vilhelmo]

How would you recommend they do it? Printing money? Tax collection?

By lending them the cash.
All spending is "money printing".


Do you believe such actions happen in a vacuum, with no effects on the people willing to use that money or willing to pay the ruling class?

Obviously not.
There is no increase in Private Sector financial assets only a change in their composition (exchanging bank credit for cash (money)).
Whether an individual or firm holds its money as a bank deposit or cash has no impact on their spending proclivity.

[cyu]

Let's say there's a "hypothetical" situation in which the currencies of "emerging economies" were crashing.

Let's say those emerging economies decided to not only spend all of their own currency that they hold, but also all other currencies and mediums of exchange, including US dollars and "precious" metals. Let's say these emerging economies purchased the "means of production": raw materials, equipment, technology, etc.

Let's say for every emerging economy, they managed to spend all of their own currency, their "precious" metals, as well as any foreign currency reserves, in order to buy things they could use to produce things for domestic consumption (and maybe a little production for their closest friends).

What do you believe will be the impact of such measures on the global financial markets?

[Vilhelmo]

What do you believe will be the impact of such measures on the global financial markets? I'm not a genie. I'm a poor, uneducated & disabled rube.

[cyu]

I would say that it would depend on the number of emerging economies involved. If the economies were small and fringe, global financial markets wouldn't be affected much. Instead the results would mainly be felt locally in those emerging economies, in that they will have more means of production than they did before, allowing them to produce more than they could before - which would be useful immediately if they were producing for domestic consumption. (If they were producing mainly for upper class consumers in Western nations, that would not be something I would suggest.)

However, if the number of emerging economies doing this were large, or if it becomes a "contagion" that spreads to BRIC and beyond, then I would predict that any foreign currencies or "precious" metals that they hold (or used to hold) in reserve, would come crashing down in value.

[tallguy]

That simply is NOT true.
Even if everyone withdrew their deposits, the government would have no problem providing banks with the needed liquidity.
If, by this you mean that the government could put some numbers into a banks database such that if you went to a bank and demanded those numbers be transferred to some other bank's database, then no, it is not true. If, however, you are trying to suggest that everyone, simultaneously, could go to their bank and demand their money as hard currency to be withdrawn and removed, then no it is not true.

It doesn't exist. Or, at least, the vast proportion of does not. It's "exists" merely as an entry on the positive side of a bank's accounting ledger.

It's called double accounting fraud. But, in the banking system, it's legalized double accounting fraud. You may have heard of it by its more popular euphemism of "fractional reserve banking".

[Vilhelmo]

If, however, you are trying to suggest that everyone, simultaneously, could go to their bank and demand their money as hard currency to be withdrawn and removed, then no it is not true.

Yes, I'm saying that it is indeed possible for everyone to simultaneously withdraw their insured deposits from private banks in cash.
The government is the monopoly issuer of the currency & there is no limit to the amount of money it creates. As long as there is paper, the government can supply banks with cash.


It doesn't exist. Or, at least, the vast proportion of does not. It's "exists" merely as an entry on the positive side of a bank's accounting ledger.

What doesn't exist, national currency in cash or in general?
I think what you are referring to is the fact that the vast majority of the money supply is composed of bank credit.
But banks do NOT create national currency, they create bank credit.


It's called double accounting fraud. But, in the banking system, it's legalized double accounting fraud. You may have heard of it by its more popular euphemism of "fractional reserve banking".

It is not double accounting. Double accounting is when a transaction is counted more than once.
This is not the case with bank credit creation.
Bank lending creates a deposit in the borrower's name (bank liability) & a corresponding IOU of the borrower (bank asset).
Assets = Liabilities.

[ckaihatsu]

Put this into the larger, post-2001 period of bailouts of major-industry companies, and we're basically at Stalinism (bureaucratic collectivism).

I'm thinking that the USSR was destroyed only to see the U.S. (etc.) become the very thing it fought so hard to defeat -- (!)





I fail to see the similarity.
Could you elaborate.
I'm not the sharpest knife in the drawer...


No prob.

Well, how are the major sectors of the U.S. economy addressed when they face insolvency -- ?

(Recall the saying and real-world practice of 'Too big to fail.')

I'm asserting that, as financial contingencies arose for the U.S. economy's major players, the U.S. has used a command-type authority over both monetary policy (federal funds rate) *and* fiscal policy (bailouts, quantitative easing), to prevent a loss of investor confidence in those, respective beleaguered entities.

This is the behavior of a technocracy, basically, which -- by definition -- *implies* a mode of bureaucratic collectivism (Stalinism) for governance, including in a de facto way over the economy, as much as it is obligated-to, and capable-of, doing.

[ckaihatsu]

That simply is NOT true.
Even if everyone withdrew their deposits, the government would have no problem providing banks with the needed liquidity.




By lending them the cash.
All spending is "money printing".


While this is *empirically* accurate, the other half of it would be one resulting *implication* in particular -- that such an increase in the money supply would *profoundly affect* that country's economic standing, and its ability to attract capital (bond buyers) in the future.

The United States is in a special position since it is looked-to as the grand enforcer for the world's bourgeois (property-rights) order -- its currency, the dollar, is seen as the index for all others, and its (ballooning) debt is still treated as-good-as-gold, more or less.

All other governments do not enjoy this privilege, and any runaway money-printing -- as may soon be the case with Turkey -- would potentially cause a government's economy to collapse. (Think Cyprus.)

[tallguy]

Bank lending creates a deposit in the borrower's name (bank liability) & a corresponding IOU of the borrower (bank asset).
Assets = Liabilities.
I didn't say that banks created base money. What I am pointing out to you is that base money now represent a minuscule fraction of the money that is in circulation and a minuscule fraction of the money that is on banks' balance sheets, You basically don't understand the multiplier effect. In FRB, the lent into existence debt from the liability side of one banks books is then deposited onto the asset side of another bank's books (or, even, the asset side of the same bank's books) and so may then, as if by magic, be treated as if it is base money. When that happens it can then be re-applied to the asset side of a given bank's fractional reserve and so be re-lent out again as if it is base money.

In other words, lent into existence debt can be used as the source for new lent into existence debt. All of which, of course, makes a very nearly complete mockery of any so-called fractional reserve. The only thing that eventually brings this process of multiple accounting fraud (because that is what it is) to a halt is the actual, specific fractional reserve that has been set. However, it does still mean that the same debt gets re-lent out many, many times into the system until infinity is approached, at which point all practical returns will have been wrung from it.

On a fractional reserve of, say, 20%, the above process will lead to £1000 of base money being transformed into £4000 of debt in circulation acting precisely as if it is base money, plus the original £1000 of base money tied up as deposits at the bank along with all of the other deposits of debt based money which temporarily reside there before being lent back out again, taken out by depositors and used in the economy etc. In other words, apart from the now very small proportion of money in circulation that exists as physical cash, all money being transacted out in the economy is in fact lent into existence debt. However, it's worse than that. In the UK, for example, there is not even a reserve requirement to speak of and so the multiples are many times higher.

All of which has not even touched upon the problem of the requirement for even more debt to be lent into existence in the future than even exists presently in order to cover the interest payments on the debt. In other words, there is not even enough debt based money in circulation today to pay down the existing debts. This also means that 4/5 of the money you have sat on deposit in your bank account is not base money. but is, instead, debt based money. Or, to put it another way, (on a fractional reserve of, say, 20%) 4/5 of your salary that just got paid into your account this month does not actually exist except as a fraudulent entry on an accounting ledger. It's fraudulent because it exists on the asset side of that ledger as if it was real base money, when in fact it is nothing of the sort. This is why, if only a reasonable fraction of depositors went to get their money out of the bank as physical base money, they would find it was literally not there. It never was.

In the days when all debt based money could only be transacted as cheques or bank draft etc, it was reasonably easy to keep track of which money in circulation was actual, real base money (M1) and which was debt based money (M2). However, since the advent of electronic forms of money transaction and the use of debit cards and the like, this distinction has been functionality eradicated. It is only when there is a serious risks of deflation of the debt based money supply due to rapid, mass debt default leading to, amongst other things, runs on banks that the underlying distinction (in other words, the underlying fraud) becomes potentially exposed.

[Prometeo liberado]

That simply is NOT true.
Even if everyone withdrew their deposits, the government would have no problem providing banks with the needed liquidity.

If I am not mistaken it is the House of Wellington that, through archaic laws of debt, are to repay the U.K. banks in time of state crisis? Having, at its inception borrowed huge amounts of gold and silver to solidify its crown from the money lenders, could not repay the debt. Instead the "right to print money" was given to a few bankers while P&I was left to accrue. Calling in this debt in would in essence bring down the whole house of cards.

[ckaihatsu]

Let's say there's a "hypothetical" situation in which the currencies of "emerging economies" were crashing.

Let's say those emerging economies decided to not only spend all of their own currency that they hold, but also all other currencies and mediums of exchange, including US dollars and "precious" metals. Let's say these emerging economies purchased the "means of production": raw materials, equipment, technology, etc.

Let's say for every emerging economy, they managed to spend all of their own currency, their "precious" metals, as well as any foreign currency reserves, in order to buy things they could use to produce things for domestic consumption (and maybe a little production for their closest friends).

What do you believe will be the impact of such measures on the global financial markets?


I know you're aiming at more of a 'post-capitalist' scenario here, but, to address this trajectory in the context of *capitalism*, the financial markets would *punish* the country/ies for failing to service their debt payments.





I would say that it would depend on the number of emerging economies involved. If the economies were small and fringe, global financial markets wouldn't be affected much. Instead the results would mainly be felt locally in those emerging economies, in that they will have more means of production than they did before, allowing them to produce more than they could before - which would be useful immediately if they were producing for domestic consumption.


'Producing for domestic consumption' is a euphemism for not being competitive in the global arena -- this is exactly where China is at right now, btw.





(If they were producing mainly for upper class consumers in Western nations, that would not be something I would suggest.)

However, if the number of emerging economies doing this were large, or if it becomes a "contagion" that spreads to BRIC and beyond, then I would predict that any foreign currencies or "precious" metals that they hold (or used to hold) in reserve, would come crashing down in value.


This is the economic equivalent of *parliamentarism*, unfortunately -- it reminds me of the Non-Aligned Movement of countries in the '70s. It would be no real threat to U.S. / Western hegemony, in other words.

[ckaihatsu]

Why emerging market exodus has JPMorgan 'outright bullish'

http://www.youtube.com/watch?v=2mxFtkiv_4k


Breakingviews - Beware of emerging markets mismanaging booms

http://www.youtube.com/watch?v=LDFH0hNUJho


Stocks

http://www.youtube.com/watch?v=9fY886C-zlY


Wall Street Slammed Driving Big Drop

http://www.youtube.com/watch?v=L1Qk6u-tJFw


Dow plunges after weak manufacturing report, slow growth in China

http://www.youtube.com/watch?v=bitBSc1AL98


Storms brew as Yellen takes charge of Fed

http://www.youtube.com/watch?v=NK6yBJtkln8


Stocks Plunge on Global Growth Concerns

http://www.youtube.com/watch?v=0DiYc6C9Sq8


Head of Korea's financial regulator says Fed tapering effect could be greater than expected

http://www.youtube.com/watch?v=vq-sIVukuH4


Market turmoil overseas causes concern for Wall Street

http://www.youtube.com/watch?v=3TnaFqam5Fw


Venture Capital - Strike while Iran is hot (E26)

http://www.youtube.com/watch?v=ITJZ_dj1gdA


Is U.S. economic growth sustainable

http://www.youtube.com/watch?v=O9lM8F6Pm3o

[cyu]

It would be no real threat to U.S. / Western hegemony

If enough nations with US dollar reserves started dumping US dollars (in exchange for the means of production), I would expect that the value of the US dollar would crash - what's important, of course, is the actual amount of dollars being dumped. If my grandma dumps $1000, that's not going to affect much, but as that number increases, then it will.

What's interesting with the massive disparity of wealth that currently exists, is that "market forces" determining the value of the dollar, should more correctly be termed "plutocratic forces" - it's not like everybody's grandma participating in the market to help determine the value of the dollar - rather the wealthier you are, the more impact your moves will have on the value of the dollar.

Ultrawealthy investors may fear that emerging economies are crashing, and start selling their emerging currency holdings for dollars (or gold), and people suddenly start thinking that dollars (or gold) are a safe investment. However, cause and effect are reversed in scenarios of vast wealth disparity. It's not that dollars and gold that are safe investments, it's that the ultrawealthy *think* they are safe investments that then results in their values going up as emerging currencies crash.

Just another symptom of how silly market valuations have gotten under extreme wealth disparities.

[cyu]

http://www.zerohedge.com/news/2014-02-07/4th-financial-services-executive-found-dead-self-inflicted-nail-gun-wounds

Richard Talley, founder and CEO of American Title, was found dead in his home from self-inflicted wounds - from a nail-gun. Talley's company was under investigation from insurance regulators. They said Talley died from seven or eight self-inflicted wounds from a nail gun fired into his torso and head.

Talley's 1989 wedding announcement in the Chicago Tribune noted he was "a member of the 1980 U.S. Olympic swimming team." A spokeswoman for USA Swimming said Talley was not on the team.

http://www.reddit.com/r/economy/comments/1xb65u/bank_suicides_continue_4th_financial_services/

Not believable at all. Nailguns would cause way more damage and pain than necessary, and this guy could probably afford to go out and get a large amount of sedatives or an actual gun.

If I were to take myself out I would start firing a nail gun into my torso and head. That seems about right.

[thunk] have [thunk] been [thunk] a [thunk] bad [thunk]boy, I [thunk] must [thunk]be [thunk] punished.. aghhhhhhhhh
yeah right, totally believable a suicde.

How did he manage to shoot himself 7 or 8 times in the head and torso? Seems like he could have taken an easier route..

[ckaihatsu]

Breakingviews - FX fines could inflict big pain on EU banks

http://www.youtube.com/watch?v=SObOOXhwYQI


China set to 'muddle through' emerging market turbulence

http://www.youtube.com/watch?v=0cU9WwsrPss


ECB holds rates at record low, Draghi talks down deflation risk - economy

http://www.youtube.com/watch?v=cW3-z3ZpWGc


Kyiv tries to dampen currency fear as Fitch downgrades Ukraine - economy

http://www.youtube.com/watch?v=3UPpW7D0xKs


Eurozone crisis - Why does Europe need a banking union - Talking Europe

http://www.youtube.com/watch?v=nwlDiU0_Nig

[cyu]

http://wallstreetonparade.com/2014/02/suspicious-death-of-jpmorgan-vice-president-gabriel-magee-under-investigation-in-london/

An intense investigation is now underway into the details of exactly how Magee died and why his death was so quickly labeled “non suspicious.”

It’s becoming clear that when JPMorgan tells us “nothing to see here, move along,” that’s the precise time we need to bring in the blood hounds and law enforcement with the guts to get past this global behemoth’s army of lawyers who have a penchant for taking over investigations and producing their own milquetoast reports of what happened.

Jamie Dimon’s so-called “tempest in a teapot” in the London Whale matter morphed into $6.2 billion in bank depositor losses, $1 billion in fines to JPMorgan, 300 pages of scandalous details, and resulted in criminal charges against two of the men involved.

According to numerous sources close to the investigation of Gabriel Magee’s death, almost nothing thus far reported about his death has been accurate. This appears to stem from an initial press release issued by the Metropolitan Police which may have been a result of bad communications between it and JPMorgan or something more deliberate on someone’s part.

police have yet to produce a single witness who saw Magee jump from the rooftop of this building, let alone “thousands of horrified commuters.” Magee did not land on the sidewalk; his body was found on a rooftop 9 floors above street level.

There is no concrete proof that Magee fell, jumped or was ever on the 33-story rooftop. No solid evidence exists currently to suggest that the death was a suicide. In fact, there is a strong piece of evidence pointing in the opposite direction. Magee had emailed his girlfriend, Veronica, to say that he was about to leave the office and would see her shortly.

Magee may have been involved in providing subpoenaed material for the London Whale investigation and the myriad other investigations that JPMorgan has been sanctioned and fined for over the last year. There are two serious open investigations into foreign exchange rigging and potential manipulation of commodities markets.

[Vilhelmo]

All other governments do not enjoy this privilege, and any runaway money-printing -- as may soon be the case with Turkey -- would potentially cause a government's economy to collapse. (Think Cyprus.)

False.
Japan has a debt/GDP ratio of 240% with zero rates & no inflation (asset price deflation).
In the 90's Turkey had high deficits, high interest rates, high inflation & instead of Economic Collapse they had incredibly HIGH Economic Growth.

Cyprus & other Euro nations do not issue their own currency & therefore are subject to default. They are Currency Users not Currency Issuers.

A Monetarily Sovereign Nation that issues its own currency, that denominates all its debts in its currency & that imposes taxation payable solely in its currency can NEVER involuntarily default or "go broke".
It is ALWAYS able to pay.

[Vilhelmo]

I didn't say that banks created base money. What I am pointing out to you is that base money now represent a minuscule fraction of the money that is in circulation and a minuscule fraction of the money that is on banks' balance sheets

Yes, the vast majority of the Money Supply is bank credit.


You basically don't understand the multiplier effect.

Because it doesn't exist.
It is loans that create deposits.


In FRB, the lent into existence debt from the liability side of one banks books is then deposited onto the asset side of another bank's books (or, even, the asset side of the same bank's books) and so may then, as if by magic, be treated as if it is base money.

No.
When a loan is granted by a bank it creates a new deposit in the borrower's name (bank's liability/ borrower's asset) & an IOU in the borrower's name (bank's asset/borrowers liability).

It is NOT treated as if it is base money (cash/reserves).
If the borrower wished to withdraw their deposit, the bank would need cash.
If the borrower wish to pay taxes the bank would need reserves to settle final payment.
Only reserves can settle final payments.



When that happens it can then be re-applied to the asset side of a given bank's fractional reserve and so be re-lent out again as if it is base money.

In other words, lent into existence debt can be used as the source for new lent into existence debt.

This is NOT true.
Only CB reserves & cash count towards a banks RR.


The only thing that eventually brings this process of multiple accounting fraud (because that is what it is)

It is NOT!

[ckaihatsu]

While this is *empirically* accurate, the other half of it would be one resulting *implication* in particular -- that such an increase in the money supply would *profoundly affect* that country's economic standing, and its ability to attract capital (bond buyers) in the future.

The United States is in a special position since it is looked-to as the grand enforcer for the world's bourgeois (property-rights) order -- its currency, the dollar, is seen as the index for all others, and its (ballooning) debt is still treated as-good-as-gold, more or less.

All other governments do not enjoy this privilege, and any runaway money-printing -- as may soon be the case with Turkey -- would potentially cause a government's economy to collapse. (Think Cyprus.)





False.
Japan has a debt/GDP ratio of 240% with zero rates & no inflation (asset price deflation).


Okay, acknowledged -- I'll amend my statement, then, to be about all *First World* countries' economies:





[A]ny runaway money-printing [...] would potentially cause a [non-First-World] government's economy to collapse.





In the 90's Turkey had high deficits, high interest rates, high inflation & instead of Economic Collapse they had incredibly HIGH Economic Growth.

Cyprus & other Euro nations do not issue their own currency & therefore are subject to default. They are Currency Users not Currency Issuers.

A Monetarily Sovereign Nation that issues its own currency, that denominates all its debts in its currency & that imposes taxation payable solely in its currency can NEVER involuntarily default or "go broke".
It is ALWAYS able to pay.


Okay, acknowledged -- but I'll note potential knock-on geopolitical ramifications, not to mention the havoc caused to the domestic population(s).

[Crabbensmasher]

Your joy is premature. I'm afraid they are "too big to fail"...

Isn't that what they said about Rob Ford?

Yeah, in reality though, I have my money in a bank, most of you have your money in a bank. Stuffing all my cash under the mattress, as appealing as it sounds, isn't a great alternative. When banks fail, everybody hurts

[cyu]

When a company fails, all the employees hurt as well. However, I would not say the solution to that is to bail out the capitalist with more money. There are a lot of ways to ensure a company (or economy) continues to operate without giving more money to union-busting lawyers.

[tallguy]

Isn't that what they said about Rob Ford?

Yeah, in reality though, I have my money in a bank, most of you have your money in a bank. Stuffing all my cash under the mattress, as appealing as it sounds, isn't a great alternative. When banks fail, everybody hurtsBurying money in mattresses takes it out of circulation, which is to effectively say that it causes the currency supply to deflate. Which is the stuff of central banker nightmares. In which case, they simply print up some more to replace it. In turn causing that money under your mattress to devalue.

There is no escape from the matrix

[ckaihatsu]

When a company fails, all the employees hurt as well. However, I would not say the solution to that is to bail out the capitalist with more money. There are a lot of ways to ensure a company (or economy) continues to operate without giving more money to union-busting lawyers.


This is a very good point and shows us the knife-edge we're on when it comes to immediate realities vs. the plans of a principled (revolutionary) politics:

So, besides the health of an employer's business, or 'the (capitalist) economy' that we're all stuck in, we could look at any social welfare program and say, sure, we're for a greater piece of the economic pie going to working-class people, in whatever form, but we're *not* for public services as a be-all-and-end-all system, permanently, in lieu of a full proletarian revolution.

I think it's easy for us types to *freak out* at the prospect of a lowered ceiling in the near-term, and not-recall that we're all in this together, at some level, and need to emphasize our political-interests-in-common and working class independence.

[ckaihatsu]

Anger as Barclays cuts jobs and pays bigger bonuses to investment bankers - economy

http://www.youtube.com/watch?v=fOQDpRUfl6E


Kazakhstan surprises with big devaluation of its currency - economy

http://www.youtube.com/watch?v=lnBUJUJHnYM


Korea is least vulnerable of 15 emerging nations - U.S. Fed report

http://www.youtube.com/watch?v=1QN4H1iWttY


New U.S. Fed chief Janet Yellen says stimulus cuts will continue

http://www.youtube.com/watch?v=APkdxKI6cEA


Jobs still big concern for Yellen

http://www.youtube.com/watch?v=04GCw2jZ9cQ


Fed Chair Yellen says no major policy change, on track to keep trimming stimulus - economy

http://www.youtube.com/watch?v=P9A6nB3gc1U


In cautious testimony, Fed's Yellen says labor recovery far from complete

http://www.youtube.com/watch?v=299-XW6FnCc

[cyu]

http://www.reuters.com/article/2014/02/12/china-trust-default-idUSL3N0LH1L320140212

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday

Chinese markets were on edge last month when a similar product created by China Credit Trust Co Ltd warned investors that it might not pay off on time when it matured. In the end, however, investors in China Credit Trust's "Credit Equals Gold" product recovered their principal when an unnamed investor stepped in to purchase collateral assets.

The popularity of investment trusts and other so-called wealth management products has exploded in recent years, with banks and trust firms marketing them as a high-yielding alternative to traditional bank deposits.

[ckaihatsu]

Doubts over China's strong January trade performance - economy

http://www.youtube.com/watch?v=BPzAH2rzF-k


China trade surge more loophole than real recovery

http://www.youtube.com/watch?v=0FE71UaZfLk


House Votes to Raise America's Debt Limit

http://www.youtube.com/watch?v=iN02QLXUUOY

[ckaihatsu]

Eurozone recovery still slow, but Germany and France doing better than expected - economy

http://www.youtube.com/watch?v=PZdJiQuCQ3Q


Eurozone growth helped by stronger-than-expected expansion by Germany and France - economy

http://www.youtube.com/watch?v=Qvt7C1-HMRo


Chinese inflation tame, producer prices fall again - economy

http://www.youtube.com/watch?v=jwaDQrr1E30


Abenomics - Will foreign investors keep the faith

http://www.youtube.com/watch?v=tt8ESvARpmU


Korea to set up system allowing local governments to declare bankruptcy

http://www.youtube.com/watch?v=xz8XtCpjpzU


China Tea Leaf Index - Growth built on shaky foundations

http://www.youtube.com/watch?v=yFCNVU-4ckg


Joining the euro club - real economy

http://www.youtube.com/watch?v=Abkp2ZGDksU

[ckaihatsu]

Extreme winter weather causes widespread economic disruption

http://www.youtube.com/watch?v=LBJCqXYgTdI

[ckaihatsu]

Protesters arrested in Kazakhstan after demonstration against currency devaluation

http://www.youtube.com/watch?v=lnBtGsFUIAM


£1 House - UK offers bargain homes in return for renovation, live-in contract

http://www.youtube.com/watch?v=DdIlzTCNtAM


Record flight cancellations cost big bucks

http://www.youtube.com/watch?v=FQu6Kzt7u38

[cyu]

Finding out how the capitalist's sausage is made

http://www.zerohedge.com/news/2014-02-17/china-folds-reforms-bails-out-2nd-shadow-banking-default-after-last-drop-blood-threa

First, Chinese authorities bailed out the relatively small CEG#1 Trust (for fear of contagion). now thanks to a CNY 2bn loan (to an entirely insolvent coal company), Chinese authorities have bailed out a 2nd wealth-management product - this time even smaller.

China Development Bank loaned CNY 2bn to the verge-of-bankruptcy Liansheng coal company, and thus bailed out investors in the trust - piling on the moral hazard.

Investors in the Jilin Trust product are demanding that CCB also take responsibility for compensating investors. Though banks are not legally responsible for repaying investors in such cases, they may face pressure to do so in order to maintain their reputations and uphold social stability.

Largely because Chinese borrowers tend to cross-guarantee each other’s debt, squeezing even a relatively small number of borrowers could produce a cascade of default.

[cyu]

http://www.zerohedge.com/news/2014-02-18/third-jpmorgan-banker-jumps-his-death-hong-kong-said-be-33-year-old-fx-trader

After the first suicide in JPM's London headquarters, ending the life of 39 year old Gabriel Magee, a vice president in the investment bank’s technology department, next it was 37 year old Ryan Crane, an executive director in the firm's program trading division, who died under still unknown circumstances.

Moments ago a third JPMorgan banker committed suicide, this time at the JPMorgan Charter House Asia headquarters in central Hong Kong, where a 33 year old man who was said to have been an FX trader for JPM, just jumped to his death.

the man was involved with FX trading: it is expected to be the next Libor-manipulation like bonanza for regulators and enforcers.

[ckaihatsu]

Dollar Domination - US military boosts presence in Africa

http://www.youtube.com/watch?v=Cg6wDEnM7s0


Breakingviews - FX market isn't fit for purpose

http://www.youtube.com/watch?v=3lZOfMbyH9g


Japan's central bank holds fire - but under the gun

http://www.youtube.com/watch?v=8YKSqkod-Y8


Wealth Strategies - Gold regaining its glitter

http://www.youtube.com/watch?v=c1vAMf52HHU


Korea's producer prices fall for 16th straight month in January

http://www.youtube.com/watch?v=ZEoPu84vufY

[ckaihatsu]

Breakingviews: Global banking gets even more fractured

http://www.youtube.com/watch?v=9pbkjLk91wc


Asia Day Ahead: A checkup on China's factories

http://www.youtube.com/watch?v=HP4TayqQzV8


Breakingviews: Are China's investors too trusting?

http://www.youtube.com/watch?v=AfbhItu-tfQ


Trade volume to increase by $1 billion a year from Korea-Iran B2B

http://www.youtube.com/watch?v=8YVL95LkQSY

[Vilhelmo]

Burying money in mattresses takes it out of circulation, which is to effectively say that it causes the currency supply to deflate.

A number of issues:
Taking money out of circulation does decrease the Money Supply (Ceteris paribus) but a decrease is not the same as deflation.
A persistent removal of money, burying more & more money in mattresses, (Ceteris paribus - meaning no other credit creation or destruction) over time would be deflation.

In reality, the amount of money taken out of circulation in such a manner is insignificant & never the cause of currency deflation.
The primary cause is Debt Deflation, when the amount of bank money destroyed by loan repayment exceeds the amount of bank money created by new lending.


In which case, they simply print up some more to replace it. In turn causing that money under your mattress to devalue.

Federal spending "money printing" does NOT necessitate inflation. It depends on whether the spending is productive or not.
Spending to build a canal that cuts transportation costs & lowers the cost of doing business, that creates productive capacity, would NOT cause inflation.
Spending to dig up roads or fill in canals, that destroys productive capacity, would almost certainly cause inflation.

[ckaihatsu]

China survey shows a job market under strain

http://www.youtube.com/watch?v=RXCYcOHl2G4


EximBank: U.S. Fed's tapering will not have negative impact on Korea's exports

http://www.youtube.com/watch?v=WyS3RnRA9HI

[cyu]

http://www.zerohedge.com/news/2014-02-19/guest-post-does-trail-dead-bankers-lead-somewhere

What are we to make of this sudden rash of banker suicides?

one thing is for certain - dead bankers don't talk.

Everyone knows that there is a massive amount of corruption in our banking system. If the truth about all of this corruption was to ever actually come out and justice was actually served, we would see a huge wave of very important people go to prison.

it is an open secret that Wall Street has been transformed into the largest casino in the history of the world over the past several decades. big banks have become more reckless than ever, and trillions of dollars are riding on the decisions that are being made every day.

In the final analysis, there is really not that much difference between how mobsters operate and how Wall Street operates.

If you cross the line, you may end up paying a very great price.

[ckaihatsu]

The Bank of Japan: Investor friend or foe?

http://www.youtube.com/watch?v=WOpDqc4wxy4


Breakingviews: Telco bets investors can overlook Thai unrest

http://www.youtube.com/watch?v=aKv8bynp2yY


Why China's steel sector needs to slim down

http://www.youtube.com/watch?v=9Od2Lw4U0FE


Asia Week Ahead: Is China's property bubble still inflating?

http://www.youtube.com/watch?v=0OiDgJOW-_0

[ckaihatsu]

Thai protests hit a paralyzed government in the wallet

http://www.youtube.com/watch?v=NPR2D2KHbSg


Obama Looks to Governors for Help With Economy

http://www.youtube.com/watch?v=8YqxMMCsCSs


Global dividends top record - economy

http://www.youtube.com/watch?v=bKAPjvryn2U

[ckaihatsu]

Asia Day Ahead: A health check for Hong Kong Exchanges

http://www.youtube.com/watch?v=gDfm3wPkoDE


Major Bitcoin Exchange Said to Be Insolvent

http://www.youtube.com/watch?v=SAtzCgGDqYE


Tough troika talks over latest Greek bailout loan tranche - economy

http://www.youtube.com/watch?v=EQ0T6fo_31k


'We can't help now!': Europeans question Brussels' plan to bail out Ukraine

http://www.youtube.com/watch?v=p201JFRrFuI


Hungry for risk? Let Europe whet your appetite - real economy

http://www.youtube.com/watch?v=of4sgYO3Oao


'Show me the money' plead bitcoin holders as trader Mt. Gox goes dark - economy

http://www.youtube.com/watch?v=vzhM-2Wbdnk


More job cuts at largest US bank JPMorgan Chase - corporate

http://www.youtube.com/watch?v=1lKLVtfELho


Modest but uneven eurozone recovery seen by European Commission - economy

http://www.youtube.com/watch?v=fjgjYzRIOc4

[ckaihatsu]

Digital doubts after Bitcoin debacle

http://www.youtube.com/watch?v=D-QhHaMp9F0


Triple Trouble: Trust in Troika wavers as loans fail to revive economies

http://www.youtube.com/watch?v=P9bMGHOnzvU


Bitcoin future in jeopardy as trading site collapses

http://www.youtube.com/watch?v=YCDJEAvBPZE

[Sea]

Finding out how the capitalist's sausage is madeYou've been reading the 18th Brumaire recently, eh?

[ckaihatsu]

Fed watching emerging markets, weather impact -Yellen

http://www.youtube.com/watch?v=4Wz8W57-MK0


Breakingviews: RBS asks investors to take long view, again

http://www.youtube.com/watch?v=AROt0YMTpXk


Wealth Strategies: Yuan fall may creep past China's borders

http://www.youtube.com/watch?v=VPNrhfCJDNk


China mall developers gamble on a 'field of dreams'

http://www.youtube.com/watch?v=Em5eTia14qE


Breakingviews: How to run an emerging market health check

http://www.youtube.com/watch?v=WROCDl4fgiM


Yellen: Fed Monitors Recent Weaker Economic Data

http://www.youtube.com/watch?v=7ouo43EeCYQ


World Economic Forum names top 10 emerging technologies of 2014

http://www.youtube.com/watch?v=DniRTZx1FCw


Korea's current account surplus slumps to 11-month low in January

http://www.youtube.com/watch?v=Q_X4NKSUt2s


Korea's consumer sentiment dips in February

http://www.youtube.com/watch?v=FWD5Q9OfANs

[cyu]

http://www.zerohedge.com/news/2014-03-25/deutsche-bank-er-explains-why-he-committed-suicide

an executive who worked in Deutsche Bank's risk function and advised senior leadership hanged himself in his home in late January. we now know why this poor man felt compelled to take his own life: he was "anxious about various authorities investigating areas of the bank where he worked"

While a Deutsche Bank spokeswoman said "Bill was not under suspicion of wrongdoing in any matter," according to statements read at a coroner's inquest, the former senior executive was concerned about investigations into the bank.

[cyu]

http://www.zerohedge.com/news/2014-04-07/ceo-liechtenstein-bank-frick-murdered

Over the weekend the world was gripped by the drama surrounding the mysterious murder-homicide of the former CEO of Dutch bank ABN Amro and members of his family, and whether there is more foul play than meets the eye.

that is nothing compared to what just happened in Lichtenstein, where the CEO of Bank Frick & Co. AG was shot dead in the underground garage of the bank.

Based on preliminary reports, the murder is the result of a disgruntled fund manager.

The escape vehicle was found in the village of Ruggell, 25 kilometers (16 miles) north of Balzers, police said.

until now it was mostly banker suicides. With the first open bank CEO murder, one wonders if there will be a change in the pattern.

[cyu]

http://www.zerohedge.com/news/2014-04-20/bnp-banker-his-wife-and-nephew-murdered-belgium

In the beginning it was banker suicides. Then about two weeks ago, suicides were replaced by outright murders after the execution-style killing of the CEO of a bank in tax evasive Lichtenstein.

on Friday another execution-type murder in Belgium, where a Director at BNP Paribas Fortis was murdered alongside his wife and a 9 year old nephew in a premeditated and orchestrated drive-by shooting.

According to witnesses, a car waiting outside their house. When the victims' car is back in the driveway, shots were fired from the car that waited patiently.

was it truly some atrocious act by bankers that caused their clients to take justice into their own hands, or is it becoming the norm that when dealing with members of the banker class, the population - disenchanted with a legal system that is largely in the pocket of the financial system - is increasingly resorting to vigilante justice.

[tallguy]

A number of issues:
Taking money out of circulation does decrease the Money Supply (Ceteris paribus) but a decrease is not the same as deflation.
A persistent removal of money, burying more & more money in mattresses, (Ceteris paribus - meaning no other credit creation or destruction) over time would be deflation.

So, to paraphrase you, if enough people take their money out of circulation over time, this causes a deflation of supply. That's what I said. What are you on about?


In reality, the amount of money taken out of circulation in such a manner is insignificant & never the cause of currency deflation.If only a few people do it, obviously. But, the principle stands. If only one person does it, it represent a minuscule deflation of supply. But it does represent a deflation of supply, no matter how small. If a lot of people do it, it is not insignificant.


The primary cause is Debt Deflation, when the amount of bank money destroyed by loan repayment exceeds the amount of bank money created by new lending.Debt deflation is another cause, yes, and is usually the more common one.

And?


Federal spending "money printing" does NOT necessitate inflation. It depends on whether the spending is productive or not.
Spending to build a canal that cuts transportation costs & lowers the cost of doing business, that creates productive capacity, would NOT cause inflation.
Spending to dig up roads or fill in canals, that destroys productive capacity, would almost certainly cause inflation.When money is spent into an economy by a government agency, where do you think the money goes? It doesn't just disappear. It goes into the banking system where it is lent out multiple time via the magic of double accounting fraud otherwise known as FRB. However, even if you don't understand how FRB works, you can still understand that the original money that was spent into the economy by the government agency goes into circulation and so increases the overall supply of money. In other words, it inflates the money supply and, in doing so, in the absence of a commensurate increase in economic activity, devalues it.

[Prof. Oblivion]

Am I on a conspiracy theory forum now? What's with the ridiculous vibe in this thread about banker suicides/murders?

[Vilhelmo]

So, to paraphrase you, if enough people take their money out of circulation over time, this causes a deflation of supply. That's what I said. What are you on about?

My apologies.
I meant that inflation/deflation requires a persistent or more than one time, increase/decrease.

[Vilhelmo]

If only a few people do it, obviously. But, the principle stands. If only one person does it, it represent a minuscule deflation of supply. But it does represent a deflation of supply, no matter how small. If a lot of people do it, it is not insignificant.

Technically, no.
Money horded in such a fashion is only temporarily unavailable for spending.
Only a small percentage of the Money Supply is physical currency.

[Vilhelmo]

When money is spent into an economy by a government agency, where do you think the money goes? It doesn't just disappear. It goes into the banking system where it is lent out multiple time via the magic of double accounting fraud otherwise known as FRB.

The Federal Government spends by crediting bank reserves.
But banks do NOT lend reserves.
Banks create bank credit. Loans create deposits.


However, even if you don't understand how FRB works, you can still understand that the original money that was spent into the economy by the government agency goes into circulation and so increases the overall supply of money. In other words, it inflates the money supply and, in doing so, in the absence of a commensurate increase in economic activity, devalues it.

Yes credit creation spent on existing assets bids up their price.
The vast majority of the Money Supply (~90%+) is bank credit.

[cyu]

What's with the ridiculous vibe in this thread about banker suicides/murders?


On the one hand, we know organized crime exists. We also know there are various entities that operate legally in theory, but border on actually being organized crime. What separates the victims of organized crimes from others? I would suggest that the more an institution is viewed as corrupt, the more likely organized crime would see those who operate those institutions as "valid" targets.

[Prof. Oblivion]

On the one hand, we know organized crime exists. We also know there are various entities that operate legally in theory, but border on actually being organized crime. What separates the victims of organized crimes from others? I would suggest that the more an institution is viewed as corrupt, the more likely organized crime would see those who operate those institutions as "valid" targets.

Okay, so you believe there is a conspiracy theory targeting "rogue bankers" or some shit?

[cyu]

Would you consider those who engage in organized crime a "conspiracy"?

Would you consider those who engage in price fixing a "conspiracy"?

Would you consider the contents of Wikileaks descriptions of "conspiracy"?

[Prof. Oblivion]

Would you consider those who engage in organized crime a "conspiracy"?

Would you consider those who engage in price fixing a "conspiracy"?

Would you consider the contents of Wikileaks descriptions of "conspiracy"?

I think the idea of people murdering bankers all over the world at different firms, in different roles, and covering them all up as suicides (successfully) is a conspiracy theory. I think all of your posts have hinted in this direction without saying as much because when you come right out and say it it sounds downright silly. Suicides in finance are probably less common than the overall rate.

[cyu]

Would you say http://en.wikipedia.org/wiki/Libor_scandal is a conspiracy?


I think all of your posts have hinted in this direction without saying as much

Those are reposts from Zero Hedge. I'm not the reporter.

Would you say those involved in financial scandals are incapable of murder? Would you claim this http://www.revleft.com/vb/showpost.php?p=2712597&postcount=30 is impossible?

[cyu]

http://www.reuters.com/article/2014/07/04/us-bulgaria-banking-insight-idUSKBN0F90SG20140704

One worker at Bulgaria’s Corporate Commercial Bank knew panic was setting in when she spotted colleagues among the anxious depositors lined up to withdraw cash.

The run quickly spread to another bank and saw Sofia announce a protective $2.3 billion credit line.

Corpbank had been adjudged safe and secure. At the end of the 2013 financial year, its books were audited by KMPG, who found less than one percent of its loans were non-performing. KPMG declined to comment.

just days before the run on Corpbank, the International Monetary Fund had praised the country's financial sector as "stable and liquid". A senior IMF official has since said the problems at the two Bulgarian banks did not reflect any underlying problems in the system.

"For five days we managed to withstand the withdrawals that were like an avalanche,” said the worker at Corpbank who had seen her colleagues withdrawing money.

On June 17, the central bank issued a statement saying all Bulgarian banks, including Corpbank, had high liquidity, were adequately capitalized and were functioning normally.

As the problems at Corpbank gathered pace, regional branch managers phoned Sofia headquarters worried about large withdrawals, according to the bank employee. Depositors, some of them in tears, were desperate to take out their savings, as were some state companies.

By June 20, more than a fifth of the bank's assets had been withdrawn. That’s when the central bank acted, temporarily nationalizing Corpbank.

Bulgarian officials went on a visit to London as part of a European road show to drum up investment in a 1.5 billion euro bond.

http://media-cache-ec0.pinimg.com/736x/63/80/c0/6380c0fd8d246ab069ab4346430f14ed.jpg

[cyu]

...although a run on the bank doesn't help much if the currency is collapsing anyway - unless then money is used to buy up the means of production...

http://www.zerohedge.com/news/2015-01-15/bank-america-misses-revenue-2-billion-trading-revenue-collapses-fires-thousands

Following disappointing results from JPM and Wells Fargo yesterday, it was Bank of America's turn. reporting a 50% collapse in its sales and trading from Q3. it was the Revenue of $18.96 billion, which missed expectations of $21.03 billion by over $2 billion (!) and down $2.7 billion from a year ago, that was truly a showstropper and shows that without the Fed's visible hand manipulating markets every day, banks are a ticking time bomb just waiting to blow.

The good news is that the criminal enterprise that is BofA only had to pay $393 million in litigation expenses, far below the $2.3 billion a year ago. Then again, putting in context, BofA paid up $16.4 billion and $6.1 billion in 2014 and 2013, respectively, in "cost of doing business as a criminal enterprise."

[cyu]

http://www.zerohedge.com/news/2015-01-15/greek-bank-runs-have-begun-two-greek-banks-request-emergency-liquidity-assistance

The first time Emergency Liquidity Assistance, or ELA, was used in the context of Greece was in August 2011, when Greece was imploding, when its banking sector was on (and past) the verge of collapse, and just before the ECB had to unleash a global coordinated bailout with other central banks to preserve the Eurozone.

this is what happened back then: "It is an obscure tool that is supposed to be temporary and one of the last resorts for indebted banks... The activation of the so-called ELA looks to be the last stand for Greek banks and suggests they are running alarmingly short of quality collateral usually used to obtain funding."

as Kathimerini reported moments ago:

Two Greek systemic banks submitted the first requests to the Bank of Greece for cash via the emergency liquidity assistance (ELA) system on Thursday, in response to outflow of deposits.

ELA is particularly costly as it carries an interest rate of 1.55 percent, against just 0.05 percent for ECB funding.

[cyu]

Mere asset shell games or actual use on productive capacity?

http://www.zerohedge.com/news/2015-01-16/greek-bank-run-spreads-all-four-largest-banks

now the other two of Greece's largest banks have also succumbed to reserve depletion after the Greek bank run appears to have gone viral. As Greek Capital.gr reports, now all four Greek banks have requested ELA assistance.

the Alpha Bank has submitted a request to the Bank of Greece for stimulating fluid through the ELA.

Eurobank submitted a request for precautionary line of the ELA.

[cyu]

Can you imagine borrowing $1000 from the bank and receiving $10 per year interest from the bank? The Swiss, Swedish, and Danish governments and the food multinational Nestle are now borrowing money from lenders who are happy to pay them for the privilege. In what may signal the beginning of the end of the current financial system, we have moved beyond zero percent interest rates to negative interest rates.

Why are negative interest rates now making an appearance? They are a natural consequence of the rampant money creation undertaken by central banks in response to the global financial crisis.

investors who bought a Swiss government bond for 1000 francs would only get back 990 francs a year later, which makes one wonder why buy bonds at all? Why not just buy Swiss currency notes and keep them under your mattress? Asking this question gives some insight into the future of the global financial system.

As Switzerland has gone, so too will go Japan, the EU, the US and every other country that has engaged in reckless monetary expansion since 2008. For the past 6 years, monetary authorities have created trillions of dollars, yen and euro in order to sustain an illusion of stability and recovery.

there is a lot more newly-created money floating around the financial system than there are safe places to put it. As negative interest rates become steeper, people will begin closing their bank and investment accounts in order to hold cash.

http://www.zerohedge.com/news/2015-03-08/time-some-mattress-padding

On the other hand, what good is official money conjured into existence by QE?

[ckaihatsu]

On the other hand, what good is official money conjured into existence by QE?


The *rhetoric* is appreciated, of course, cyu, but I'm sure you know as well as anyone that quantitative easing -- empirically -- is just for the balance sheets. The side-effect is that it creates *so* much liquidity that the future begins to look too diluted to stay afloat on anything *but* a mattress, as you're noting with the excerpt.

Really we're seeing the existential crisis for neoliberalism if today's capitalists really believe / subscribe-to the implementation-ideology that monetary values must always be propped-up, even with repeated hijackings of public funds -- we're now seeing the inevitable results, being that even the economic *future* is being sacrificed on this altar.

For the record, I've been steadily posting here at RevLeft since 2008. (grin)