Helping Homeowners In Michigan
Archive for November 7th, 2011
Too Big to Fail: Championing the Slow Decline
November 7th, 2011 | 
Author:
The recent implosion of MF Global has reignited the debate over Too Big to Fail (TBTF) and the adequacy of U.S. regulatory safeguards. It has also contributed to a broader decline in investor sentiment, many of whom believe the market structure does not afford them sufficient protection and fair competition. Many MF Global clients still have assets frozen and even if they ultimately recover the money, the short-term consequences can be devastating.
Historically, when firms fail to generate a profit or when one division damages the revenue stream of the whole firm the unprofitable assets are divested. Companies that can’t operate under the weight of their own size end up spinning off the parts that caused the pain. This is normal in the business cycle. The government has disrupted the business cycle of creative destruction by championing TBTF firms over a more competitive market.
The Final Four
Is concentrating this much risk the hands of so few banks good for the market?
At its root, TBTF is a triumph of lobbying over market structure. When Congress passed the No Child Left Behind Act in 2001, no one expected it would create a perfect safety net. Fast forward to 2011 and the legislation is intensely criticized for its design flaws and implementation. In short, the Act failed to live up to its lofty title. Too Big to Fail is a similar misnomer. TBTF is nothing but a marketing ploy masquerading as a market reality, a costly illusion expedited by bank lobbyists and political insiders. If anything was really too big to fail, there would be no need to label it as such because it would be self-evident. No firm was too big to fail, and no firm is too big to fail. The future will prove this out.
The official (and unofficial) recognition of TBTF firms has led to a number of unsavory and unsafe business practices. Businesses overvalued balance sheets, and engaged in questionable practices to grow even bigger and support non-profitable divisions. The Federal Reserve tacitly encouraged these maneuvers through its monetary policies. The end result was consolidation upstream and a loss of diversity in financial counterparties. In the end the Federal Reserve will be the only counterparty, backstopping one huge bank or an exchange that is partially owned by the banks. When 80% of a firm’s business comes from 20% of its clients the business is too dependent on too few counterparties. The financial industry has been consolidating for the last decade, and the systemic risk is larger than ever before.
As the market continues to trend towards a small number of large, homogenous counterparties we will see OTC and floor locals go out of business and mid-sized firms over-leverage and struggle. Clients without political connections have assets frozen and lost. Liquidity will suffer.
The decreased liquidity is notable already and the CME Group recently lowered margin requirements in an attempt to facilitate an improvement. This is the equivalent of a central bank lowering interest rates and will create more volatility in exchange for liquidity (but does not reduce risk). Similarly, much like the infamous liquidity trap, it will also face a point of diminishing returns.
We expect the consolidation upstream to continue as championed firms eat the client books of their smaller counterparts.
FMX Connect for ZeroHedge
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Government, Money, Too Big To Fail | 
Tags: AIG, Bank of America, Citibank, Fail, Goldman Sachs, JPMorgan Chase, MF Global, Wells Fargo | 
Comments Closed
Inherent Autonomy: A True Greek Tragedy – Odyssey of the EU
I should rather labor as another’s serf, in the home of a man without fortune, one whose livelihood was meager, than rule over all the departed dead. — Homer
The cradle of democracy is under attack. The Inherent Autonomy of the human spirit is at stake. What was won at the Battle of Thermopylae, was lost in the banksters board rooms that control the EU. The fluidity of this definitive game of chicken, poses the beheading of the rooster and the scorching of all the hens. This journey into Land of the Lotus Eaters, not only needs to blind Polyphemus, but must destroy his New World Order father, Poseidon. The designed destruction of democratic authority is meant to eliminate any referendum on the EU despotism. The phony debt instruments caused the Greek default, that will soon spread the planetary misery, on the rest of us. Western civilization’s birth, owes homage to the Greek principle of individual autonomy. Its demise is a product of the inherent betrayal of humanity by the forces of financial exploitation, that exemplifies 1 Timothy 6:10, For the love of money is a root of all kinds of evils.
Prime Minister George Papandreou’s gambit calling for a Greek referendum on the draconian EU extortion is proof positive that state sovereignty is dead. It failed because the EU cabal would not allow self-determination. Servicing the debt is the supreme dictate. The analogy of the arrogant and obnoxious Antinous wooing Penelope as a right of entitlement, applies. The righteous outrage of Odysseus’ arrow shot through the throat of all the EU suitors, also applies. Today’s script does not fit the noble triumphs of Homer’s epic. The banksters are more powerful than the intervention of Athena.
How quickly the defiant Greeks were put back in line. The video Greece To Let The People Vote On EU Bailout turned into Greek Government Teeters, Lawmakers Urge PM to Resign.
“In an effort to avoid a financial catastrophe, Europe’s leaders persuaded Athens late Thursday to back away from a referendum, but the result, which involved threats to expel Greece from the euro zone, has destroyed any sense of democratic solidarity uniting them.”
“This is obviously a decision the Greeks have to make,” French President Nicolas Sarkozy said, “but I think the strong preference of everybody around the G20 table would be for progress to be made toward the package the European Union put together last week,” rather than a referendum. “I think that’s a strong preference.”
In one rare spark of insight, the progressive statist proponent Robert Reich actually asks the proper question, Greece’s Choice — and Ours: Democracy or Finance?
“Shouldn’t Greek citizens make this decision for themselves?
Of course, if Greek defaults on its loans, global investors (fearing that a default in Greece sets a dangerous precedent) may yank their money out of Italy. This would almost certainly bust several big European banks – and generate panic on Wall Street. That’s why Tim Geithner has been pressing Europe to bail out Greece.”
Patrick Henningsen writes in the article, Another military coup in Greece – can you blame them?
“If the government is in danger of collapse, then Greece could be looking at a genuine military coup d’etat.
This theory has gained credence since Athens announced a wild reshuffle, sacking its military leaders in every branch of the forces on Tuesday. The defense ministry confirmed that Greece’s state Security Council replaced the heads of the general staff, the army, navy and air force, and discharged a score of army and navy officers.”
Alas, the gallant crew of Odysseus are all dead at the hands of a vindictive Poseidon. The EU cannot tolerate adventurism and needs to make kings into beggars.
Press TV viewpoint and the video on the Greek PM wins vote of confidence, is revealing.
Papandreou gave an address to parliament for more than half an hour, saying that “immediate elections will be catastrophic,” but he would be prepared to negotiate a power-sharing settlement, the state-run BBC reported.
Papandreou said the economic bailout deal for Greece currently on offer by the European Union had to be accepted, and it would be “historically irresponsible” to lose it, though he is “past caring about his power and post.”
Greg Hunter of USA Watchdog forecasts, “You cannot tell millions of Greeks there will be a vote on a massive debt deal and then say just kidding, not going to happen. You can’t put that genie back in the bottle. I predict there will be a vote by the Greek people one way or another. It will be a nice, neat nationwide referendum or protests in the streets.”
To worship Dionysus, the Chorus sings, followers need only to crown themselves with ivy, wear deer skins lined with goat hair, carry the branches of oak and fir trees, delight in the bounty of the vine, and make ritual animal sacrifices. If they do, the land will overflow with natural beauty and riches—fawns and goats, wine and honey.
Contrary to the characterization that the Greeks are lazy, need to suck it up, institute higher taxes, start embracing thrift, restraint and frugality; the central banksters are the true dispensers of greed and drunken lust of power. The four horsemen of the Acropolis hangs over all of the EU, not because of Greek defiance, but because they will not yield to the armies of the financiers.
In the article, EU Bonds Rollover Debt with a Chinese Bailout, published on September 18, 2011 predicted, “Greece is the Sarajevo in the start of the next currency world war. A containable matter ready to snowball into a full-scale mobilization of competing factions, poses the unwinding of world markets.” Now you see this confrontation erupting into open warfare, not through a face off from phalanx corps, but in the struggle to prevent the collapse of the global debt created fiat currency model.
Learn the lesson that Euripides taught in Bacchae. Pentheus, the king of Thebes, stands as a symbol in the play for all those who opposed the cult of Dionysus and denied the erratic, emotional, uninhibited longings within all human beings. The criminal banking institutions that want to exemplify Dionysus’ god like supremacy, needs to be defeated. In ancient times, a Pentheus or an Odysseus could wield the sword and destroy the beasts. Today, only the strength of a united world body of individual citizens, exercising civil disobedience, can bring down the evil banking system.
Those corrupt uninhibited longings exist in all of us, because of our fallen nature. However, the globalists have weaved a system of universal slavery based upon their manipulation of money. They can be defeated. Have the courage of a Greek hero and take control of your own destiny. This tragedy is an existential test. Appreciate the absurdity of compliance with the New World Order, and apply comic relief, to those who follow commends of the EU Poseidon ship of state.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, EU, Europe, European Union, Financial System, Fraud, Government, Money |
Comments Closed
How Does The Mainstream Media Work?
The elites who run this country exercise power in two ways, one private, one public. Politicians and policy are manipulated through registered lobbyists on Capitol Hill, and in private meetings at lavish fundraisers. It’s all about money and access. All of this takes place behind closed doors, out of the public’s sight. The manipulation of American citizens is carried out through the corporate owned media (image left, click to enlarge). There’s nothing private about it; it’s right there in front of you on the TV. How does this work?
The primary functions of the mainstream media (MSM) are to make money by catering to their advertisers and to maintain the socioeconomic status quo. Each goal reinforces the other, i.e. they are mutually supporting. Special interests seek to maintain their privileged status. This is accomplished by 1) narrowing the frame of debate; 2) omission of crucial information; 3) taking the political system seriously when it obviously should not be taken seriously; 4) propaganda telling us how well we’re doing; and 5) distracting citizens with ever dumber (and ever more insidious) entertainments of various sorts—sitcoms, “news” shows, “reality” shows, gladitorial contests, and so on, all interspersed with advertising so manipulative and shallow that one is constantly embarrassed to be a member of our species.
But the dumbing-down process through which harmless docility is encouraged and reinforced is subtle. In this conversation with David Talbot, Salon’s Glenn Greenwald explains how it works, using the Occupy protests as an example. We’ll have to overlook the fact that Salon also features many glowing reviews of various TV shows which serve the functions just described, regardless of their story-telling or entertainment value.
I should also note for the record that many TV shows or movies nowadays feature—
- bloodsucking vampires or flesh-eating zombies (e.g. The Walking Dead)
There are vampires or zombies spawned by an alien invasion. There are vampires or zombies in some dystopian future. There are vampires or zombies of unknown provenance. And so on. No one seems to tire of vampires or zombies, although hoards of zombies are far more common.
You have a few bloodsucking vampires (America’s elites) preying on the mass of ordinary people, who must fend them off by any means available. Just like real life. Or you have a few “normal” people (the elites again) fending off an army of marauding, mindless zombies (the American people). Just like real life. Sigmund Freud or Carl Jung would have had a field day with this stuff.
The Greenwald video is 6 minutes long. Watch it first, and then I’ll make a few concluding remarks. There will be of course a short advertisement at the start.
Greenwald: OWS Media Coverage Biased by Elite Media from Salon on FORA.tv
Thus we find that those in the mainstream media are merely servants of the ruling elites. The media stars have internalized the values of those elites, thus they need not be told explicitly what to say or do. (The “conspiracy” interpretation of the MSM.) Indeed, these well-heeled folks imagine themselves to be part of the ruling class, and sometimes they are (e.g. CNN’s Erin Burnett, formerly at CNBC).
The Occupy protesters are threatening to the elites, and must be relentlessly marginalized until they are rendered harmless. Alternatively, if that doesn’t work, they must be swallowed up by that co-optation monster called the Two Party System. In the case of the Occupy protests, marginalizing them failed, so now every method is being applied to co-opt them. (They are the Democratic version of the Republican Tea Party.)
Some of the flesh-eating zombies woke up. The bloodsucking vampires are fighting back
Bonus Video — They’re Made Out Of Meat
More Willful Ignorance: Health Care “Reform”
Some day people will demand that commentary have some sort of intelligent basis behind it.
Yet, the current system is falling apart. Medicaid, which funds almost half of all paid long-term care, is under immense financial pressure. Few Americans have saved for their long- term-care needs in old age — half of retirees have less than $55,000 in financial assets, barely enough to pay for nine months in a nursing home, or two years of limited daily help from a home health aide. And hardly anyone buys private long- term-care insurance — only 7 million Americans own policies.
Despite the death of CLASS, the challenge of long-term care financing is not going away. So, how can we fix a badly broken system?
The best way is probably through universal long-term care insurance. Every major developed country on the planet — except for the U.S. and the U.K. — has already gone this route. Here, insurance could be offered by the government, or by private carriers in a regulated national marketplace (much like the Medicare Part D drug benefit or Medicare Advantage managed-care plans).
Utter nonsense. Here we are with another “plan” to simply play ponzi for a few more years.
Health care has expanded in cost at an average of 7.9% from 1990 through 2010 for individual “coverage.” Family coverage has expanded at 8.2%.
This is what you’re trying to “provide”, assuming the “young person” buys at age 25 and continues through age 65, a period of 40 years. We will assume that the care today costs $4,000/month, which is well under the average actual cost, or $48,000/year. In short I’m being “polite” about the numbers, giving you the maximum benefit of the doubt.
To Bloomberg: Would you please stop publishing utter and complete crap under the rubric of “opinion”, when said “opinion” is an argument for that which is mathematically impossible?
Alternatively you can explain how we’re going to pay (through any mechanism) $931,274 annually for each insured person 40 years hence to cover this “long-term care.”
The claims of “solutions” that are in fact the incessant selling of Ponzi Schemes must end right now.
Further, any government or private party setting up, maintaining or promoting such a scheme must face immediate prosecution as Ponzi schemes are illegal under existing law.
Posted in Economic Crisis, Economy, Fraud, Government, health care, health care reform, Medicaid, Medicare, Money, ponzi scheme |
Comments Closed
proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
PDF PowerPoint Congressional Patriots Federal Reserve Balance Sheet Paulson's Lies Bernanke's Lies FedUpUSA Archive Mathematics of Failure Media Kit Door Hanger Corruption Flier Bank Flier Made In America A list of products and services made right here in the USA. Choosing to buy American made products preserves and creates American jobs.