World financial crisis Part 5

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A Record $31.5 Trillion Hoarded By Corporate Oligarchs

"In other words, a group of oligarchs equal in number to the population of Plano, Texas or Nottingham, England, own more than the poorest 80 percent of the world - some 5.6 billion people..."

Time for some serious global housecleaning and wealth redistribution

epaulo13 epaulo13's picture

To Stop the Next Financial Crisis, We Need Public Ownership of Banks—Now


Public ownership of banks is not as crazy as it may sound. It has been the default political response to financial crises around the world for decades—including in the United States 10 years ago when the government took controlling ownership positions in Fannie Mae, Freddie Mac, AIG, Citigroup, and GMAC, and provided capital injections to over 700 banks.

Almost all commentators who supported these bailouts and short-term nationalizations emphatically rejected long-term public ownership. Such offhand judgments, however, deliberately ignore the extensive, and often highly successful, experience with public banking both in the United States and around the world.

Across Europe, more than 200 public and semi-public banks account for roughly a fifth of all bank assets. In Germany, the Sparkassen, a network of around 400 publicly owned municipal savings banks, “[came] through the crisis with barely a scratch,” according to the Economist, unlike some of the country’s larger private banks. The nearly 100-year-old Bank of North Dakota, which has around $7 billion in assets and a loan portfolio of $4.9 billion, is widely credited with helping the state get through the 2008 crisis with the lowest foreclosure and credit card default rates in the country, and with no bank failures for more than a decade. The bank made loans while private banks were freezing credit, all while continuing to contribute revenue to the state’s budget.

Before the financial crisis, neoliberal economics and public policy dismissed publicly owned banks as a relic of the past, the prevailing wisdom being that they were inherently less efficient than private banks. However, the available research does not universally support that “wisdom.” For example, the Organization for Economic Cooperation and Development, in a 2014 summary of available research of publicly owned German banks, concluded that “savings banks appear to be at least as efficient as commercial banks.” Similarly, researchers in the United Kingdom found in 2010 that “the notion that governments [can’t] run banks effectively” was “not well founded” and “if anything, government ownership of banks has, on average, been associated with higher growth rates.”

Mr. Magoo

By a "publicly owned bank" do you mean publicly owned via the state?  I think the problem there would be that the state can only own one bank (or, go through the sham of owning four banks).  There would be no competition, and no options.

Or, do you mean a "co-op"model in which the bank is owned by its users?  In which case we don't need to invent these, or do anything really, because they already exist.

Funny thing, though:  when people have complained that workers' co-ops and other communally owned business endeavours cannot get financing through private banks (who hate them for their freedoms!) I've suggested going to co-ops -- basically a bank built on the exact same model as the worker's co-op -- but apparently they sometimes say "no" too!


But while out of control government spending is clearly a concern, an even bigger problem is what happens to not only the US debt, which recently hit $21.3 trillion, but to the interest on that debt, in a time of rising interest rates.

As the following chart shows, US government Interest Payments are already rising rapidly, and just hit an all time high of $538 billion in Q2 2018. 

Interest costs are increasing due to three factors: an increase in the amount of outstanding debt, higher interest rates and higher inflation. Needless to say, all three are increasing; furthermore, a rise in the inflation rate boosts the upward adjustment to the principal of TIPS, increasing the amount of debt on which the Treasury pays interest, turbocharging the amount of interest expense.

The bigger question is with short-term rates still just around 2%, what happens when they reach the mid-3% as the Fed's dot plot suggests it will?


Mr. Magoo

I thought public debt was a good thing, and we should not vote for those parties that won't heap more of it on us.


If you mean "the all-out collapse of the financial market, and the rise to power of citizens' collectives", I'm going to put my chips on "no".

But if you mean governments -- supported by their right-wing contingent who wants no debt, and also by you who is scaremongering it -- slashing spending, well, that I might put a few bucks on.


Debt Threat Rises: The Government Will Soon Spend More On Interest Than On The Military

Authored by Mac Slavo via,

As debt and interest rates rise, the government is about to be in a disastrous situation. Very soon, they will spend more money paying interest on the national debt than they will on the bloated military budget.......

...and as the market rate and the Fed rate is expected to continue to rise? With the trade war with China, means increasing inflation of real goods imported to the US...with a continuing flight to "safety"? to US markets as the global financial collapse carries on? meaning high US dollars and uncompetitive export products? ad nauseum!

Major political upheavals as the economics and finances become unsustainable....strategic reexamination of our politics is essential!

Mr. Magoo

As debt and interest rates rise, the government is about to be in a disastrous situation. Very soon, they will spend more money paying interest on the national debt than they will on the bloated military budget.

Huh.  It's a shame that "balanced budgets" are such a right-wing conspiracy to de-fund things that could be funded by putting them on the People's Credit Card.

And now it's a problem?

Certainly if the battleship fleet doesn't get their new coat of "freedom paint" that's not a problem.  But we probably shouldn't act like national debt is worthy of concern, lest we give comfort and succour to the people who've consistently argued against it (not to mention pushing under the bus all those people who say "spend, spend, now is the time to borrow and spend and spend and borrow..."


Keiser Report: Helicopters in Demand as Empire Crumbles

"Max and Stacy discuss helicopter money being promised to rescue stock markets for the next crash and the helicopter rescue of reserve currency status as more and more nations, including Germany - reject the hubris of the hegemon..."


Professor Richard Wolff - Global Capitalism: Economic Nationalism

"As global capitalism changes, each country tries to grab gains from and shift losses onto others: nationalist hostility becomes the new 'spirit of the age'..."


Against Globalisation: Deciphering Geo-Political Games (podcast) *MUST HEAR*

"Professor Michael Hudson dismisses the globalisation fallout as new trading blocs distance themselves from US dollar-denominated trade. Will the US be able to maintain its imperialist tendencies in light of these trends? How much further can the rentiers push their free-for-all?"


Dow Jones Drops Almost 500 Points After Major Stock Market Declines in Europe & Asia

"Main US equities crashed after the opening bell on Wall Street. American stocks joined a global sell off that hit stock markets in Europe and Asia on Tuesday..."

epaulo13 epaulo13's picture

Unintended Consequences: US Sanctions on Russia and Iran Weaken Dollar’s Rule

As the US tries to keep countries such as India from dealing with Iran and Russia, it is driving more and more countries to seek alternatives to the US dollar, threatening the dollar’s hegemony, says Vijay Prashad


This critical area was addressed by Putin recently

"It's a typical mistake of empires..."


Mr. Magoo wrote:

As debt and interest rates rise, the government is about to be in a disastrous situation. Very soon, they will spend more money paying interest on the national debt than they will on the bloated military budget.

Huh.  It's a shame that "balanced budgets" are such a right-wing conspiracy to de-fund things that could be funded by putting them on the People's Credit Card.

And now it's a problem?

Certainly if the battleship fleet doesn't get their new coat of "freedom paint" that's not a problem.  But we probably shouldn't act like national debt is worthy of concern, lest we give comfort and succour to the people who've consistently argued against it (not to mention pushing under the bus all those people who say "spend, spend, now is the time to borrow and spend and spend and borrow..."

The right builds deficits through cutting taxes for the wealthy and then uses them as an excuse to cut public services. Ideally the deficit is stimulating growth so the debt to GNP drops even though in absolute termst he debt is larger. 


Stock Market Drops Again, Wiping Out 2018 Gains For the Dow and S&P 500

"The latest swoon, which knocked the S&P 500 down more than 3 percent Wednesday, signaled to many Wall Street pros that the decline was entering a new, more dangerous phase..."


Matt Taibbi on this:


In any trade war with China, the United States would seem to have an advantage. We import a lot more of their goods (last year, about $524 billion in Chinese products) than they import of ours (about $188 billion of U.S. exports). But all of this is moot if China suddenly stops buying U.S. debt, or even just slows down a bit.

Experts claim to think this is unlikely, given China’s own dependence on U.S. Treasuries as a safe destination for its trillions in foreign exchange reserves.

Bloomberg over the summer wrote, “Treasuries are nearly as crucial an underpinning to China’s economic plumbing as America’s.” They quoted a Goldman Sachs analyst who added: “We don’t see any evidence that China is planning to use Treasuries as part of its trade negotiations.”

But what if Trump’s big populist gambit announced in September — slapping 10 percent tariffs on $200 billion of Chinese products — hurts the Chinese economy to the point where they can’t afford to keep subsidizing our exploding debt? What if it just dulls their enthusiasm for doing so?"


Former Fed Chair Warns of New Financial Crisis

"In the midst of increasing volatility on global financial markets, the former chair of the US Federal Reserve, Janet Yellen, has pointed to a potential source of major instability with 'systemic risks'. The warnings by Yellen and major financial institutions point to the undeniable fact that ten years after the global financial crisis, none of the contradictions of the global economy and financial system have been resolved. Indeed the very measures enacted by the Fed and other central bankers in propping up the system through the injection of trillions of dollars have only created the conditions for an even bigger disaster..."


Rescuing the Banks Instead of the Economy (audio)

Prof Michael Hudson: 2018 marks the 10th anniversary of the stock market crash of 2008. 

Sean in Ottawa

The point obvious from a few posts is that the economy has ben in crisis for a while. The stock market is catching up. The policies that make the stock market do well often make the economy most people live in fail.

There is a degree of uncertainty drive by US elections and so the stock market tends to perform badly before them and well after. However, the real economy of everyone else is decided by other factors. of which this is only a small part of it.


Unprecedented "Desperation" Lending Directive Sends Chinese Stocks Reeling



by Tyler Durden

Fri, 11/09/2018 - 08:27


¨On November 8, China shocked markets with its latest targeted stimulus in the form of an "unprecedented" lending directive ordering large banks to issue loans to private companies to at least one-third of new corporate lending, said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission. The announcement sparked a new round of investor concerns about what is being unsaid about China's opaque, private enterprises, raising prospects of a fresh spike in bad assets.

Guo’s comments were the latest attempt by authorities to try to improve funding access for China’s non-state companies, which have been struggling to get bank loans in the aftermath of China's crackdown on shadow lending. More importantly, it was the first time financial regulators had given targets on private lending, confirmation that earlier efforts hadn't sparked the necessary credit activity.

More importantly, this is the first time China set formal goals for private lending, a step it refrained from even during the financial crisis of 2008 according to BloombergThe stimulus package it implemented at the time swelled bad debt levels, which now threaten to swallow any new money poured into private companies. Non-state firms defaulted on 67.4 billion yuan ($9.7 billion) of local bonds this year, 4.2 times that of 2017, while the overall Chinese market is headed for a year of record defaults in 2018

...I can´t remember the exact percentage drop of the China and Asian stock markets.....but this is where the financial collapse has been expressing itself most recently....It´s a chain reaction of falling dominos, first with the ¨emerging markets¨, Argentina, Turkey, Brazil well into the collapse of Asia...the stagnating western imperialist markets along with its deteriorating real estate bubbles is another sign of the worse to come for us...we are well into the final collapse of industrial oligarchic capitalism, globally.....


November 9 - Bloomberg (Saijel Kishan): "After beleaguered hedge fund managers had their worst month in seven years, many are bracing for an industry D-Day: Nov. 15. That's the deadline for investors to put managers on notice to get some -- or all -- of their money at year end. If history is any guide, the rush for the exits will be swift and accelerate. Clients have already pulled $11.1 billion even before funds fell into the red for the year. The last time the industry careened toward annual losses was in 2015…The fallout: clients withdrew $77.2 billion between the fourth quarter of that year and the first quarter of 2017 -- the biggest withdrawals since the global financial crisis.

 ¨However, the real economy of everyone else is decided by other factors. of which this is only a small part of it.¨

i.e. Sean´s reference to the bursting financials.....the Dow stands on its financial manipulators and e.g. its MBS or Mortgage Backed Securities....the flight from these will seriously impact the real estate market...

The US corporate bond market is in serious many of our favourite corps and their prices in the markets depend of their capacity to borrow from their collaborating big banks...but with bond rates reaching junk status for most? The cost of borrowing will bury them into bankruptcy!



"The Collapse Has Begun" - GE Is Now Trading Like Junk  by Tyler Durden,

GE of course is a major player in the world of mafiosa like finance, an anchor to the Dow Index and a major player in mortgage backed securities...the collapse beginning with the bursting of the Emerging Market bubble late February, is now picking up steam, with the Dow on target!


Rubino: Elites Are Terrified Of 1930's Depression Or Weimar Hyperinflation


Financial writer John Rubino says everywhere you look, debt is exponentially mounting.......from zerohedge some point, somewhere, we must be talking about our alternatives....



These Banks Now Have A $41 Billion Problem In GE by Tyler Durden Wed, 11/21/2018 - 09:23

As reiterated so many times now...we are in the final phase of the collapse of the global financial system...what with GE now having to borrow at higher interest costs, what with the collapse of its credit rating, and the banks with obligations to bailout a failing giant...the banks likewise willgo down, taking its depositers along with them.....


Credit "Death Spiral" Begins As Loan ETF Sees Massive Outflows, Liquidates Quality Paper  by Tyler Durden

...clearly the collaps of the global financial system has hit its into the highly leveraged investment grade and junk bonds....the death spiral of the system has become generalized...surely a time for a few brave souls to pull together a transition to a sustainable alternative


Bank stocks fall the most in more than a year, enter bear market

  • The SPDR S&P Regional Banking ETF lost 5 percent and fell into bear market territory, more than 20 percent off its all-time high notched in June.
  • Shares of SunTrust, Citizens Financial Group, Fifth Third Bancorp and Regions Financial all fell more than 5 percent in afternoon trading.
  • Larger national banks including Bank of America, Morgan Stanley and Citigroup all dropped more than 4 percent.


epaulo13 epaulo13's picture

..i remember a while back i made a comment in the dakota pipeline thread about the us governments being as crooked as any organized crime organization..only much better at it. and more powerful. people should give this a listen. it reminds me of the show deadwood where we saw this crookedness in it's formative years. unfortunatelly no transcript.

Institutionalizing Lawlessness: Systematically Subverting Markets

Consumer advocate Ralph Nader gives the closing talk at the forum, “Destroying the Myths of Market Fundamentalism,” held in Washington DC, on October 19, 2018




Worse, there is no sign the pain will end in the near term as there has been a significant exodus from loan mutual funds and ETFs in recent weeks, and the market is braced for more: on Thursday afternoon, Lipper reported that US Loan Funds just saw a record $2.5 billion outflow in the past week....from zerohedge....

the news is just too scary to even report!
We are entering a decades long collapse!


On Contact: The History of Debt Forgiveness

"Economist and author Michael Hudson in  his new book 'And Forgive Them Their Debt', shares with journalist Chris Hedges how ancient cultures forgave debt cyclically to prevent debt."


More Hudson: Excellent...

Guns & Butter: The Vocabulary of Economic Deception (and vid)

Bonnie Faulkner interviews economist and historian Dr Michael Hudson. How the world economy really works.


This isn't a Bear Market, We're in a House of Cards that the Fed Built, Says Peter Schiff

"...I'm watching the US economy implode from the beach. We're in a lot of trouble,' Schiff said in a phone interview with MarketWatch. 'This isn't a bear market, we're in a house of cards that the Fed built. Markets are starting to crack as this debt is getting more expensive to service..."



Global Economy Teeters on the Brink of a Recession that will Transform Geopolitics

"As we approach 2019 the global economy teeters on the brink of yet another recession which will plunge geopolitical relations into a period of great global and regional change. In 2019 global stock markets will continue to face unprecedented volatility and gigantic losses as the Ponzi scheme pumped up by the cartel of central banks comes crashing down..."


Feds Fund Rate Down Amid Stratospheric Valuation (and vid)

"Max and Stacy discuss the 'worst December since the Great Depression' for financial markets. How much longer can the global Ponzi scheme continue?"


Free Fall: Oil Slips To Lowest Since 2017 as Fears Over Economic Slowdown Rattle Market

"What's happening in the stock market is raising fears that the economy is grinding to a halt and thereby will basically kill any future oil demand..."


Yanis Varoufakis: The Euro Has Never Been More Problematic

"Yanis Varoufakis is an economist, author and politician who served as the Greek Minister of Finance in 2015. Since then, Varoufakis has launched the pan-European 'Democracy in Europe Movement 2025."

Michael Moriarity Michael Moriarity's picture

That's an interesting video, but I believe the organization is Democracy in Europe Movement 2025.


Thanks, corrected.


Dow Dumps 400Pts, Below Key Technical Support As Bond Yields, Dollar Plunge

Something finally snapped in market sentiment...

After a 4 month respite, with the US fed changing direction to full back up of the markets, whatever the costs to accelerating financial and real estate asset bubble, the bankster rescue of the Financial system has run its course....what bag of tricks will they try this time to stem the run in the US...meanwhile the collapse of the Asian including China markets is full on!

Will this time be the end time? What with little amunition left?



Markets Tumble, S&P Below 2,800, Bond Yields Crater As Traders Brace For Impact


Wed, 05/29/2019 - 07:41


It's going from bad to worse for global equity market and US stock futures, which again are a sea of red as Sino-U.S. trade tensions continue to escalate - with a rare earth boycott by China now virtually assured - while fears of an Italy-EU confrontation are growing again, accelerating a global bond rally on Wednesday, as investors dumped shares and scurried for the safety of government debt, the dollar and gold.......

...since the collapse and bailout to the tune of 23 trillions US in 2008, there have been serious near collapses, continuously, the last threat being end of December 2018.....every time again bailouts by the US Fed, Europe Central Bank and the Japanese, with promises of money printing and guaranteed backup...again we are into another such threat of financial collapse (meanwhile the real economies continue their deterioration into recessions)...

But with interest rates still near zero or negative (given inflation, far greater than the cooked numbers), and the US Fed no longer so accommodating, what will save the system this time?


from junk bond collapse?)

Here’s how this probably plays out. As low-quality borrowers’ interest costs soak up an ever-larger share of their earnings, they’ll start dropping into junk status. This will lead investors to demand higher yields for the remaining BBB bond issuers. Higher borrowing costs will then push more iffy companies into junk, and so on, until lenders stampede for the exits, shutting off access to capital for all but the top corporate borrowers.

(not to mention that so much of the borrowings are just to prop up their market prices! with loss of loan capital, their prices will collapse!)

Credit-starved companies will start dying, spooking the stock market, and that will be that for this expansion.

The new problem this time around is that potentially bad debts are everywhere, from emerging market dollar-denominated bonds to Italian sovereign debt, Chinese shadow banks, US subprime auto loans, and US student loans. All are teetering on the edge, just waiting to be nudged into the abyss by some external crisis.....

( 2 things to be done! build your personal survival on non corporate a non corporate sovereigntist and decentralist politics!...Iyra)


May 31 – Bloomberg: “Holders of bankers’ acceptances worth more than 50m yuan ($7.2m) issued by Baoshang Bank will be repaid at least 80% of the principal............

....The Chinese Government takeover of this failed bank with significant losses for the international investment community, coupled with collapsing global interest rates is a gurantee that the global financial community is preparing for financial chaos and expecting serious Central Bank (US Fed) bailouts and rate cuts...

Again...will this save the system one more time....or the lack of their effective tools may spring more chaos, panic and drastic measures?


'In Gold We Trust': Waning Confidence in US Sends World's Central Banks on Buying Spree

"Governments around the world have recently been on a gold buying spree. 'The reign of the US dollar must end..."


China Buys Most Gold In Over 3 Years Amid "Determined Diversification" From Dollar

China continued its renewed (public) gold-buying spree in May adding almost 16 tons of the precious metal to its reserves - the biggest monthly increase since January 2016....... this the essence of the gold buying spree by China? Why now?

Yes the markets made a spectacular recovery this past week, thanks to the interventions of Jerome Powell, guaranteeing to do whatever to maintain the momentum of the markets, as I and so many predicted.

What this means in essence is that the Global central bankers have given up trying to reduce the mountains of debt, nationwide, municipal, corporate, mortgage debt, personal ad nauseum...and by not raising rates, guaranteed to a massive QE when the next crisis comes...or is it now?

While the West markets have been climbing as of late, the Chinese markets, bonds and banks have been in steaedy decline...I recently mentioned one bank that has been taken over, with losses to the ingvestor class (worldwide)...but 2 more this past week are now in trouble, with a list of at least another 16, refusing to provide audits to their accounts....

Is this why China is buying gold now, in such quantities, expecting a massive deterioration to their currency? And along with expected QE, massive multi trillion QE, a currency war in the works?

Is China in fact the catalyst for the financial collapse?

Does anyone out there really believe we can just all go into debt in perpetuity? Even at these low interest rates? Is this in fact what is going on in China? its bank loan portfolios (financial assets) are not repayable...meaning junk?



Keiser Report: Deutsche Bank's Death Spiral

Deutsche Bank's new 'bad bank' for all of their toxic derivatives. EU debt crisis looms. 


Deutsche Bank Mass Firings First Domino in Global Downturn

"Deutsche Bank lays off thousands sparking global economic fears. 'Deutsche Bank is the biggest bank in Germany. It is one of the biggest banks in Europe and the world. If it has serious troubles these troubles are also affecting other banks."



Retail Apocalypse: 12,000 Stores Are Forecasted To Close This Year 


by Tyler Durden

Sat, 07/13/2019 - 10:40



As the economy cycles down through summer, there is new, alarming data that shows retail store closings are accelerating.

Coresight Research says there have already been 20% more store closings announced in the first six months of 2019 than in all of 2018.


The research firm examined figures and retailers' earnings reports, found that more than 7,000 are expected to close this year with many locations already shut down.

Bankrupted Payless ShoeSource closed its remaining stores last week, accounts for 37% of the closing this year.

Coresight estimates closures could hit at least 12,000 stores by the end of 4Q19. The firm already tracked 5,864 closings in 2018, which included all Toys R Us, Kmart and Sears.

The retail apocalypse reared its ugly head in 2017 when a record 8,139 store closures were reported......

......As the case of the smaller banks in trouble and being bailed by the Chinese Government, ultimately the financials will collapse when there is just too much bad debt around, personal, government and corporate...due to recessonary economics.....


Something just broke in China.......zerohedge

I've been trying to follow where the catalyst to collapse the global financial system will ignite

...hopefully people are now well prepared for the consequences.....

This creeping "Ice Nining" of China's banking system, and its closest encounter with the proverbial "Lehman moment" yet, came overnight when, inexplicably, the four-day repo rate on China’s government bonds (i.e., the cost for investors to pledge their Chinese government bond holdings for short-term funding) on the Shanghai exchange briefly spiked to 1,000% in afternoon trading!


MUST WATCH: US Dollar is the Strongest Currency?....No More

"US lawmakers have passed a two-year budget deal which will allow the government to raise spending by [printing] hundreds of billions of dollars to cover its [$22 TRILLION] debts..."