Category Archives: Financial Crisis

Is Wall Street Still “Untouchable”? | The Untouchables | FRONTLINE | PBS

Posted by on May 22, 2013 Comments Off

This fall will mark the five-year anniversary of Lehman Brothers filing for bankruptcy, sparking the biggest financial crisis since the Great Depression. When the anniversary hits, many legal experts agree, any chance federal prosecutors will have had to hold Wall Street accountable will have come and gone with the passing of the statute of limitations.

So is Wall Street breathing a sigh of relief?

In The Untouchables, which re-airs tonight on FRONTLINE (check local listings), correspondent Martin Smith examines why not one major Wall Street executive has been prosecuted for fraud tied to the sale of bad mortgages.

Many of the same issues examined in the film will take center stage tomorrow during a hearing of a House Financial Services Subcommittee. Among the questions expected to come up is which outside experts the Justice Department consults with when considering whether to prosecute large financial institutions.

That question first drew the attention of lawmakers shortly after the The Untouchables premiered. A week after the film, Senators Sherrod Brown (D-Ohio) and Chuck Grassley (R-Iowa) sent a letter to Attorney General Eric Holder asking whether the “too big to fail” status of some banks undermines the government’s ability to prosecute wrongdoing.

The letter cited remarks made in the above excerpt from the film by Lanny Breuer, the former head of the Justice Department’s criminal division. Breuer told FRONTLINE:

Is Wall Street Still “Untouchable”? | The Untouchables | FRONTLINE | PBS

Watch The Untouchables on PBS. See more from FRONTLINE.

It appears that Japan is on an unstoppable path to financial Armageddon

Posted by on May 14, 2013 Comments Off

Japan’s rescue attempt is already self-destructing their economy. The battle to raise inflation is killing what little appeal Japanese Government Bonds once had, while Japan’s dependency on debt means it has little choice but to pay the higher cost. Over 55% of the Japanese government’s expenditures goes to service debt or pay for social security. With a debt dependency ratio close to 50%, Japan essentially must borrow just to pay for these non-discretionary expenses. As rates rise and the population ages these non-discretionary expenses are expected to rise, thereby increasing the amount of debt required.

Accelerating inflation expectations, rising debt costs, growing social expenditures, declining investor appetite and high dependency on borrowed money could lead to a spiral in which Japanese bond yields rise very quickly, borrowing rises dramatically and the Yen falls precipitously. This situation would be financial Armageddon for Japan as it would no longer be able to pay for its basic obligations without fully monetizing its debt. The country would default on its debt and obligations to its citizens, either outright or by way of hyperinflation. The country’s economy would implode and massive financial institutions would likely collapse.

4 Scary Charts Warning Of The Next Financial Crisis – Seeking Alpha

10 Scenes From The Economic Collapse That Is Sweeping Across The Planet

Posted by on May 14, 2013 Comments Off

When is the economic collapse going to happen?  Just open up your eyes and take a look around the globe.  The next wave of the economic collapse may not have reached Wall Street yet, but it is already deeply affecting billions of lives all over the planet.  Much of Europe has already descended into a deep economic depression, very disturbing economic data is coming out of the second and third largest economies on the globe (China and Japan), and in most of the world economic inequality is growing even though 80 percent of the global population already lives on less than $10 a day.  Just because the Dow has been setting brand new all-time records lately does not mean that everything is okay.  Remember, a bubble is always the biggest right before it bursts.  The next major wave of the economic collapse is already sweeping across Europe and Asia and it is going to devastate the United States as well.  I hope that you are ready.

The following are 10 scenes from the economic collapse that is sweeping across the planet…

10 Scenes From The Economic Collapse That Is Sweeping Across The Planet

MARC FABER: ‘Something Will Break Very Bad’

Posted by on May 13, 2013 Comments Off

Faber: “What was the trigger of the ‘87 crash when markets fell 21 per cent in one day? What was the trigger of the Nasdaq crash in 2000? What was the trigger of Japanese crash of 1989? What was trigger of 2007 crash that brought global stocks down 50 per cent? We don’t know these things ahead of time, but something will always move markets up and something will always move them down. I would guess at the present time, given markets from the 2009 lows have in many cases increased by as much as 100 per cent, that they are no longer very cheap. …. Something could come along, geopolitically or otherwise. I would be very careful being overweight equities. I still have 25 per cent in equities and 25 per cent in corporate bonds.”

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“In the 40 years I’ve been working as an economist and investor, I have never seen such a disconnect between the asset market and the economic reality … Asset markets are in the sky and the economy of the ordinary people is in the dumps, where their real incomes adjusted for inflation are going down and asset markets are going up.

“Something will break very bad.”

Marc Faber: Something Will Break – Business Insider

ALBERT EDWARDS: The Party Is Over, The US Is Just One Recession Away From Japan-Style Doom – Business Insider

Posted by on May 2, 2013 Comments Off

Here’s your happy thought of the day from SocGen strategist Albert Edwards:

Over the last 15 years most investors have refused to contemplate that events in the West are playing out in a similar fashion to Japan in the 1990s. But the latest inflation data out of both the US and eurozone should ram home the fact that we are now only one short recession away from Japanese-style outright deflation. Similarly, investors refuse to believe that equities can fall in an environment of rampant QE. They are wrong.

Basically, we’re so close to deflation, that all it will take is another downturn, and we’ll be toast.

ALBERT EDWARDS: The Party Is Over, The US Is Just One Recession Away From Japan-Style Doom – Business Insider

What could cause the next financial crisis – CNN Money

Posted by on May 2, 2013 Comments Off

Too big to fail. Interest rates. Borrowing. Fire-sales. The Flash Crash. Risky loan deals. Libor. Cyber attacks. Europe. Japan. China.

Cattle plague was not on the list.

On Thursday, the super council of bank regulators created after the financial crisis put out a list of their best guesses as to what could cause the next financial crisis. The most surprising thing about the list: It’s length.

That alone should be enough to rattle your faith in Dodd-Frank, the set of banking regulations that were passed in 2010. Nearly three years later, the number of things that could blow up the financial system still seems way too high.

What could cause the next financial crisis – The Term Sheet: Fortune’s deals blogTerm Sheet

The Debt Jubilee: An Old Testament solution to a modern financial crisis?

Posted by on April 30, 2013 Comments Off

The overhang of debt in Europe and the US has made recovery from the global financial crisis particularly tenuous.

Is there a dramatic and simple way out of all this? Some argue that there is: a “debt jubilee”. Drawn from the Old Testament book of Deuteronomy, the concept derives from the biblical injunction for a day of rest one day out of every week, a “sabbath” day that reflects the teaching the God rested on the seventh day after creating the world in six.

There is another injunction for a sabbath year every seventh year, in which people are to not work and on the year after the seventh of those sabbatical years , i.e. the 50th, (one year after the 49th) there would be a jubilee year during which any slaves would be emancipated and everyone would return to their land and family to live off of natural providence. A clear implication of this teaching is that all obligations, including debt obligations, would be forgiven in the process.

The debt jubilee: an Old Testament solution to a modern financial crisis?

A debt jubilee is equivalent to democratic elections in the economy. Both represent controlled burns or controlled collapses. Since collapses will always happen in societies, the best way to handle them is regular controlled collapses. In governance that would be elections. In the economy that would be automatic debt release at timed intervals.

I cover this issue in more detail here: How to Build a Better Economic Model | 1913 Intel.

Schiff: 2/3 of America to Lose Everything Because of This Crisis

Posted by on April 29, 2013 Comments Off

“I think we are heading for a worse economic crisis than we had in 2007,” Schiff said.  “You’re going to have a collapse in the dollar…a huge spike in interest rates… and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it.”

Schiff says that, despite “phony” signs of an economic recovery, the cancer destroying America stems from a lethal concoction of our $16 trillion federal debt and the Fed’s never ending money printing.

Money Morning

In 2006 Peter Schiff tells over 1000 mortgage brokers they are about to be out of jobs. Watch how he completely nails the coming real estate/mortgage debacle before anyone else even realized it was coming.

See the rest of the parts in this video series here: Predicting the Economic Mess in 2008 | 1913 Intel

Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense | TIME.com

Posted by on April 24, 2013 Comments Off

The euro-zone crisis has slipped off the radar screen during the past couple of weeks as gun control and the Boston bombers have dominated U.S. news. But none of the euro zone’s problems have gone away. Political crises beset France, Italy and Spain. Smaller countries, from Portugal to Cyprus, face even more pressing financial troubles. Germany grows less and less willing to foot the bill for bailouts. And for the first time, serious public figures in Europe have begun openly discussing the pros and cons of allowing countries to default on their national debt.

There is, in fact, a historical case for tolerating default. …

Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense | TIME.com

BBC News – Big thinkers still stumped on global economic crisis

Posted by on April 22, 2013 Comments Off

More than five years after the onset of the financial crisis, you might have thought economic policy makers would know what to do next.

Well they don’t. Or at the very least, there is nothing like the kind of consensus that prevailed before the financial crisis.

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One of the other organisers – the Nobel Prize winner George Akerlof of the University of California – had a vivid analogy for the state of uncertainty the economics profession now faces.

“It’s as if a cat has climbed this huge tree – the cat of course is this huge crisis. My view is ‘oh my God the cat’s going to fall and I don’t know what to do’.”

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The trouble for the economics profession is, according to the last of the conference hosts and another Nobel Prize winner, Joseph Stiglitz: “There is no good economic theory that explains why the cat is still up the tree”.

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“We don’t have a sense of our final destination… Where we end I really don’t have much of a clue.”

BBC News – Big thinkers still stumped on global economic crisis

Notice the analogy given – a cat up a tree. Their analogy is crap and shows these economists are clueless. I told you we were stuck and why many years ago. I also told you there is only one way out – collapse. Check out the following articles:

How to Build a Better Economic Model
Stop Looking for Reason at the Edge of Chaos – CNBC
Our Social Crises — From Breakdown to Breakthrough

The solution is found in choas theory. Societies are subject to self-organizing criticality. The solution to big crises is many smaller crises, but once the big crisis has arrived then only a big collapse will solve the problem. That translates into automatic debt release every seven years, plus immediate debt release to get the cat down from the tree. Of course, that starts an immediate crash.