Tag: Financial Crisis

Remember Dodd-Frank?

Does anyone remember the days around 2008?

The financial collapse….remember now?

Well after the collapse Congress did all they could to make things better for the society and spawned the rooks on Wall Street…..it was called Dodd-Frank.

In case you have no damn idea what I am talking about…..

Dodd-Frank is also geared toward protecting consumers with rules like keeping borrowers from abusive lending and mortgage practices by banks.

It became the law of the land in 2010 and was named after Senator Christopher J. Dodd (D-CT) and U.S. Representative Barney Frank (D-MA), who were the sponsors of the legislation.

But not all of the provisions are in place and some rules are subject to change, as we’ll see.

The bill contains some 16 major areas of reform and contains hundreds of pages, but we will focus here on what are considered the major rules of regulation.

https://www.cnbc.com/id/47075854

Basically the Congress allowed the industry to write the bill and then makes it look like someone is protected……you are NOT!

The pandemic has created a similar situation,,,,and Congress is doing what it always does….bails out the crooks as a solution to the problem….

Big business and banks are just as corrupt and eager to shovel profits to senior executives 10 years after the landmark banking reform legislation known as Dodd-Frank as they were during the 2008 crisis, a new report warns, because the bill’s regulations on executive pay remain unimplemented.

“White collar crime pays, and until Congress enacts the rules to change it, we’ll continue to see top executives raking in off catastrophes of their own making,” report author Bartlett Naylor, financial policy advocate at Public Citizen, said in a statement.

The report lists billions in bonus cash paid out to executives over the past decade despite Dodd-Frank’s regulatory framework banning such cash-outs.

“It’s 2008 all over again,” said Naylor. “Congress is bailing out Big Business and enriching CEOs while workers scrape by as the economy lurches downward in a pandemic.”

https://www.commondreams.org/news/2020/07/21/white-collar-crime-pays-decade-after-dodd-frank-executives-still-lining-their

Once again the Congress is only protecting their donors……. they care NOTHING for the “people”……and yet we are to believe that they have our best interests at heart……

Time for them to have a wake up call….and the people take back the government that began with them in mind and has gone so far off the original track.

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Closing Thought–17Apr20

One of the sad things around the Covid-19 is the loss of small businesses….here I am talking about the Mom and Pop operations that are being hit the hardest by the pandemic.

But not to worry the government is here to help…..with some stim money and interest free loans and I am sure something other or else…..

But sadly all is not going well for the help these businesses need…..

Millions of small businesses are barely staying afloat amid the coronavirus pandemic, and the feds are offering help—but getting that help is another thing, the New York Times reports. Two federal efforts, the Paycheck Protection Program and the Economic Injury Disaster Loan program, are both low on funds and swamped with requests. The Paycheck program is embroiled in a partisan political battle on Capitol Hill over how to add another $250 billion, per the Washington Post, while applicants to both programs are fighting red tape or waiting for their funds. It’s a huge topic, but here’s a primer and a few tips for applicants:

  • The Paycheck Protection Program has $349 billion to incentivize banks to grant small-business loans. The loans need to be repaid at an interest rate of 1% over two years unless certain metrics are met for retaining employees—at which point a loan is forgiven by the feds, per the Times.
  • The Economic Injury Disaster Loan Program is designed to offer loans up to $2 million, but recent applicants say the cap is now $15,000 as requests flood the program. According to a fact sheet, the interest rate is 3.75% for small businesses without available credit elsewhere, and 2.75% for non-profits.
  • The Times advises Paycheck applicants to apply in off hours and remember two things: It might be better for companies with workers who are higher-paid or can work at home; and worse for businesses that don’t know when they can re-open, like restaurants and bars.
  • Forbes gives hard-hitting advice “to avoid going to prison” over a Paycheck program loan. Stung by fraud related to Katrina, TARP, and other programs, the feds will prosecute scammers.
  • At BizJournals, expert James Lozano suggests asking a bank or credit union for advice before proceeding with either program—and says “larger small businesses” might want to apply to both.
  • My biggest advice is take away the fear,” Tennessee realtor Matt Golley tells WAAY TV. “Let someone else walk you through the process and tell you what you need and make sure it’s submitted correctly. I don’t know how to submit documents like that to the government and the bank took care of that for me.” Golley says he’s been approved with the Paycheck program but hasn’t seen the money.
  • Whatever path is taken, expect frustrating delays. “Essentially, there’s a massive bottleneck in trying to get this money, incredible demand and not the ability to get it out,” says a reporter on PBS Newshour.

Another clusterf*c k this pandemic has created and the government has little solution……

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It Only Works For The Wealthy

We now have a new stim plan that will help (supposedly) all aspects of society……and yet I have my doubts.

You know some of the rhetoric and the actions taken during this trying time smacks a lot like the 2008 crash “solutions”…..

Seriously! It all sounds too damn familiar.  Think back to 2008…..

From December 2007 to November 10, 2011, the Federal Reserve, secretly and without the awareness of Congress, funneled $19.6 trillion in cumulative loans to bail out the trading houses on Wall Street. Just 14 global financial institutions received 83.9 percent of those loans or $16.41 trillion. (See chart above.) A number of those banks were insolvent at the time and did not, under the law, qualify for these Fed loans. Significant amounts of these loans were collateralized with junk bonds and stocks, at a time when both markets were in freefall. Under the law, the Fed is only allowed to make loans against “good” collateral.

Six of the institutions receiving massive loans from the Fed were not even U.S. banks but global foreign banks that had to be saved because they were heavily interconnected to the Wall Street banks through unregulated derivatives. If one financial institution in this daisy chain of derivatives failed, it would set off a domino effect.

The Dark Secrets in the Fed’s Last Wall Street Bailout Are Getting a Devious Makeover in Today’s Bailout

The article sounds all too familiar.  The wealthy gets the bailout and protection and the people get crumbs and lies.

The American people are now starting to think that maybe the wealthy will get the good news more so than them…..

New polling out Wednesday backdropped by the continuing coronavirus outbreak shows that most of the country believes the U.S. political system works only for the wealthy and elite rather than for working people.

In a survey of 1,002 Americans taken by The Hill/HarrisX, 57% of respondents said they believe the political system serves the interests of the wealthy and powerful versus 32% who said it works for all Americans.

Low-income Americans were more likely than people who are well-off financially to say the system works for wealthy insiders—61% to 55%. Women were 12% more likely than men, and Democratic and independent voters were more likely than Republicans to say the U.S. government is designed to serve elites.

https://www.commondreams.org/news/2020/04/01/coronavirus-spreads-poll-shows-nearly-60-us-believe-political-system-designed-solely

Really?

Bloggers like myself have been telling the American people this very thing for, in my case 14 years, and now they see it…..better late than never, as they say.

Sad part is when all this is over those same people will return to voting for the spineless slugs that work for the corporations and wealthy…..what does that say about the voter?

More sad news waiting to happen…..

Critics slammed the Trump administration for considering “rewarding vulture capitalists profiting off a crisis.”

As desperate workers, the unemployed, and small businesses struggle to obtain benefits authorized under the multi-trillion-dollar coronavirus stimulus package President Donald Trump signed into law late last month, the White House is reportedly considering an additional slate of aid measures that critics say would disproportionately favor the wealthy while providing little relief for those most in need.

The Washington Post, citing two anonymous officials familiar with White House discussions, reported late Sunday that the Trump administration is weighing “a payroll-tax cut, a capital-gains tax cut, creating 50-year Treasury bonds to lock in low interest rates, and a waiver that would clear businesses of liability from employees who contract the coronavirus on the job.”

https://www.commondreams.org/news/2020/04/06/smash-and-grab-economics-trump-white-house-weighing-tax-cut-rich-investors-workers

Yet more help for the wealthy while us peasants struggle to pay bills and eat……but what can you expect from capitalism?

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Coronomics (A New Term)

This damn virus, the Covid-19, has brought about a whole bunch of new thinking and responses to a crisis……even some new terms for the analysis…..Coronomics is the one that I wish to introduce to my reader.

Economics is not something that most people will want to read about….but maybe they should because this virus is playing fast and loose with their economic future.

The ugly side of the economics of the pandemic……

The chart shows that 9.9 million initial unemployment insurance claims have been made over the last two-week period, creating a graphic described as "difficult to stomach" by economic analysts. (Source: The Block/FRED)

That extension of the Unemployment insuarnce has its dark side as well…..

It’s worth noting that UI claims do not include many workers who are out of work due to the virus, including independent contractors, those who don’t have long enough work histories, those who had to quit work to care for a child whose school closed, and more, so the actually number of people out of work is higher than today’s’ data show us. One of the most effective parts of the CARES ACT, the relief and recovery act that Congress passed last week, is a $250 billion expansion of unemployment insurance, including an increase in the level of benefits and the creation of a Pandemic Unemployment Assistance (PUA) program which will be available to many workers who are not eligible for regular unemployment insurance. These provisions are very important and will help millions. However, the broader stimulus package contains many weaknesses that reduce its effectiveness, which is regrettable because the job loss we have seen so far is just the tip of the iceberg. Based on new GDP forecasts, we project that nearly 20 million workers will be laid off or furloughed by July, with losses in every state. And importantly, the GDP forecasts these projections are based on include the impact of the CARES Act and they assume that Congress will pass another relief package focused on aid to states. That implies that far more than 20 million workers will be laid off or furloughed if there is not another meaningful relief and recovery bill.

(commondreams.org)

Small businesses are suffering because of this shelter in place orders and there are those that will take advantage of the situation…..those crooks in the “pay day loan” business…..

…

one industry, which offers an obscure form of financing to small businesses called Merchant Cash Advances (MCA), has seemingly taken a different approach.

“There’s lots of talk about helping small businesses. But in the last few days, lawyers running lawsuit mills are suing small businesses to extract cash,” Federal Trade Commission member Rohit Chopra tweeted on March 19 about the MCA industry. “The lawyers work for lenders that offer pricey payday-style loans using sketchy contract terms to restaurants and businesses.”

MCAs are a form of financing typically leveraged by small businesses that don’t have access to traditional loan options. MCAs are not loans, rather, they’re the sale of a portion of a business’s future income at a discount. Typical MCA agreements require businesses to make payments every business day of a set dollar amount until the agreement is settled.

MCA agreements often include “confessions of judgment,” clauses that force businesses to plead liable if the MCA provider alleges that the agreement has been breached, which can occur if the business misses just one or two of their daily payments. The agreements typically grant providers the immediate right to the outstanding balance from the business in the event of a breach.

https://dailycaller.com/2020/03/30/itria-ventures-merchant-cash-lawsuits/

Your ordinary economic solutions will be as worthless as the promises from the White House……

We have seen crashes before, recessions and depressions, but nothing like this. Our fear of coronavirus has hindered and halted every aspect of daily life. We look out of our windows and barely recognise the country we’re in: police film dog-walkers and pour black dye into lagoons to deter swimmers. We wait in queues for empty-shelved supermarkets. The stock market collapses, surges, then collapses again. None of the old rules make sense. Welcome to the world of Coronomics.

If this were a normal recession, the remedy would be simple: encourage people to go out, spend money and boost the economy. But today’s public health concerns require the government to repress the economy, while trying to keep it afloat at the same time. Streets are quiet, hotels are empty, restaurants, pubs and high-street shops are shuttered. To tackle the virus, the economy must hibernate.

https://www.spectator.co.uk/article/coronomics-ordinary-remedies-wont-be-enough-for-a-surreal-crash

The Atlantic has offered up 4 Rules for the economics of this pandemic……

Rule 1: “Save the economy or save lives” is a false choice.

Last week, a group of economists from the Federal Reserve and MIT published a paper on the 20th century’s most murderous flu, the 1918 outbreak. Because the federal government in 1918 offered little if any economic assistance to suffering Americans, the local response from city leaders varied widely. Some places, such as New York and St. Louis, quickly ordered social distancing and other interventions, while others, such as New Haven and Buffalo, allowed public gatherings even weeks after the flu reached crisis levels. This variance gave researchers the ability to see which cities recovered the fastest after the outbreak.

https://www.theatlantic.com/ideas/archive/2020/04/new-laws-pandemic-economics/609265/

These small businesses pay their taxes (or they should be) and if the government needs to step in and protect them from failing then I have NO problem with that solution.

I ask just one thing….please stop jumping down my throat when I write about socialism for this solution is socialism 101….

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The Markets Made Me Do It!

Christmas is in the rear view mirror…..shopping has replaced religious thoughts with the dreams of “deals”….so what has this world wrought?

In case you were too busy trying to decide what to buy for Uncle Cletus…..the financial markets have taken a beaten…..down 1600+ points just last week….and the news does not look any better for this week….

So much for the Santa rally on Wall Street. The stock market tanked again Monday in a short trading day, making for one of its worst Christmas Eves on record, per the Washington Post. The Dow fell 653, or 2.9%, to 21,792; the S&P 500 fell 65, or 2.7%, to 2,351; and the NASDAQ fell 140, or 2.2%, to 6,192. The day’s selloff worsened after President Trump took to Twitter to blast the Fed as “the only problem our economy has,” notes the Wall Street Journal. The bleak numbers also came after Treasury chief Steven Mnuchin tried to soothe the markets before they opened, but his reassurance might have backfired.

Our dynamite Sec Treasury….that Mnuchin dude tried to soothe the savage economic beast by calling around…..

Treasury chief Steven Mnuchin made an unusual move over the weekend in an attempt to soothe rattled financial markets. But based on the stock market’s open, it appears that Mnuchin’s call to the CEO of the six largest US banks didn’t help. In fact, one financial analyst tells CNN that the call—meant to reassure the banks that all was well—might have actually spooked markets even more. Whatever the reason, the Dow plunged more than 400 points in the first hour of trading, threatening to dip below 22,000. As of 10:20am, the Dow was down 332, or 1.5%, and the S&P 500 (1.5%) and Nasdaq (1.1%) were similarly in the red. (The market woes reportedly have President Trump wondering about firing the Fed chief.)

It appears that the blame is Fed Chair and now the Sec Treas Trump is ranting that these people are to blame…..

Treasury Secretary Steven Mnuchin could become the latest White House official to get the boot. President Donald Trump has been souring on Mnuchin for some time now and the continued decline in the stock markets could be the final straw, reports Bloomberg. One source told Bloomberg that the president has considered firing Mnuchin while another said that whether he stays on or not will depend in large part on what happens to the markets.

https://slate.com/news-and-politics/2018/12/trump-is-reportedly-considering-firing-mnuchin-over-stock-market-declines.html

Mnuchin is not someone that I would ever support but in this case this toad is NOT to blame…..it is the disgusting economic policies of a person that tells everyone he is a genius…..and the markets do not trust him either……his attempt to calm things cost the markets another 600 points.

And if that does not work then he is considering firing the Fed Chair…..another person that did not create a terrible market atmosphere…..

I love when egocentric slugs blame people around him for the problems the fool created…..

The markets will be a telling story….

How fast can Mr. Trump tap dance?

A Ticking Time Bomb

Surely the myopic population of this country can remember back to 2008, right?  I know it is a stretch for most so-called conservs to think back that far….

2008?  Mindless drones that was the year of the Wall Street meltdown lead by the illegal practices of our biggest banks….does it ring any bells in that thick skull now?

Guess what?  The Trumpian bullshit is about to set the wheels of yet another meltdown in motion…..

The Senate passed bipartisan legislation Wednesday designed to ease bank rules that were enacted to prevent a relapse of the 2008 financial crisis that caused millions of Americans to lose their jobs and homes. The Senate voted 67-31 for a bill from Republican Senator Mike Crapo of Idaho that would dial back portions of the law known as Dodd-Frank, the AP reports. The legislation would increase the threshold at which banks are considered so big and plugged into the financial grid that if one were to fail it would cause major havoc. Those banks are subject to stricter capital and planning requirements.

“The bill provides much-needed relief from the Dodd-Frank Act for thousands of community banks and credit unions, and will spur lending and economic growth without creating risks to the financial system,” the White House said in a statement after the vote. Republicans unanimously supported the bill, while Democrats splintered into two camps. One included several senators from rural states who worked out the compromise with Crapo. The other, led by Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, said the bill catered too much to the banks that contributed to the financial crisis and would increase the likelihood of future taxpayer bailouts. (President Trump complained that Dodd-Frank made it hard for friends to borrow money.)

It is amazing how when Repubs are in charge they kill regulation and then things go to shit and a Dem usually has to clean up their economic messes…..looks like that trend will not end with this president…who is still dick deep in the financial world and I am guessing that this will benefit him and his buds on Wall Street.

This is why Democrats have a problem with message…..

Bought and paid for by Wall Street…..TRAITORS!

Nothing Learned In A Decade

A decade ago one of the worse financial crisis hit the world…..a crisis that could have been avoided….a sadly nothing has been learned from this collapse…

Ten years ago this month, the French bank BNP Paribas decided to limit investors’ access to the money they had deposited in three funds. It was the first loud signal of the financial stress that would, a year later, send the global economy into a tailspin. Yet the massive economic and financial dislocations that would come to a boil in late 2008 and continue through early 2009 – which brought the world to the brink of a devastating multi-year depression – took policymakers in advanced economies completely by surprise. They had clearly not paid enough attention to the lessons of crises in the emerging world.

Anyone who has experienced or studied developing-country financial crises will be painfully aware of their defining features. For starters, as the late Rüdiger Dornbusch argued, financial crises can take a long time to develop, but once they erupt, they tend to spread rapidly, widely, violently, and (seemingly) indiscriminately.

Source: The Lost Lesson of the Financial Crisis by Mohamed A. El-Erian – Project Syndicate

With no lesson learned then this will repeat itself…..only a matter of time.

Puerto Rico: Trouble In Paradise?

If you have never been to Puerto Rice then get off your ass and visit……it is the tropics, gorgeous beaches, friendly people and you do NOT need passport……..BTW it is a girl watchers paradise….just saying……

But what brought me out to post on Puerto Rico?  It seems they are having a bit of a monetary problem…..

There’s something about Puerto Rico that has caused many commentators to describe it as “America’s Greece,” and it definitely isn’t yogurt. Instead, it’s the terrible state of the US commonwealth’s economy, which has caused Gov. Alejandro Garcia Padilla to admit that its $72 billion debt is “not payable,” the New York Times reports. “This is not politics, this is math,” he says. The island’s rate of debt to GDP is higher than that of any US state, and its government could run out of cash as soon as July, triggering a government shutdown and other measures, reports the Wall Street Journal, which notes that Puerto Rico’s deep recession began after corporate tax breaks expired in 2006 and manufacturers started to leave the island.

The governor says Puerto Ricans are already struggling with issues such as government austerity, rising crime, and high unemployment and that it’s time for creditors to share the pain by deferring repayments. “If they don’t come to the table, it will be bad for them,” he tells the Times. “What will happen is that our economy will get into a worse situation and we’ll have less money to pay them. They will be shooting themselves in the foot.” Some 24% of Puerto Rico’s bonds are held by so-called “vulture funds” that specialize in high-risk efforts and have opposed efforts to restructure the debt, the Guardian reports. The Times notes, though, that many Americans may have Puerto Rican investments tied up in mutual funds and not be aware of it.

Wait a minute!  Is Puerto Rico a US “territory”?

This country can force feed our cash and stuff to Israel but it cannot find a way to help to help out in Puerto Rico?  Wassup with that?  We accepted this “territory” after the Spanish American War so we are responsible for its upkeep and security.

Time for this country to start acting like the country we were promised back in 1776 and stop helping only those countries that think killing is the only answer……or cut them loose and let them be their own nation.

Use Iceland As An Example

Surely everybody remembers the economic crisis of 2008………can you remember all the debate of whether to let the thieving banks to go bust of not?  There was also a debate on whether the CEOs of said banks should be held responsible…….how about the term “too big too fail”?

I have written about what Iceland decided to do in the past……and today it looks like their plan was far superior to any plan we had here in the states……

Maybe we should take a good long look at what Iceland did…….and learn from their example…..

 

Three charts that show Iceland’s economy recovered after it imprisoned bankers and let banks go bust – instead of bailing them out – Business News – Business – The Independent.

France May Criminally Indict a Big Bank, Why Can’t the US?

Think back to 2008……you will recall the panic that set in because banks were about to crap all over the economy……and then we elected a new prez and he set about making banks “too big to fail”…..they got massive influxes of cash and we saved to go about their business of rigging the economy.

Does any of that sound familiar?

And the next question is how did these thieves manage to avoid prosecution?

Personally, I want these people to either do time or commit suicide for what they have done.

What kind of sick society rewards people that did that much damage to the economy?

Europe is trying to hold these people accountable……why cannot the US?

 

France May Criminally Indict a Big Bank, Why Can’t the US?.

 

As long as we are talking about France sand laws…..the are setr to possibly make mews again….this time in the Fashion world……..

France is expected to pass legislation to outlaw ultra-skinny fashion models, reports the CBC. The legislation now being debated would set up minimum weights based on body-mass index, a formula that would require a woman 5-foot-7 to weigh 120 pounds. And the measure wouldn’t just bar such models from runways, it would make it a criminal offense for fashion houses and agents to use them in ad campaigns or in any professional capacity. Those in violation would face six months in prison and fines of up to $79,000.

“This is an important message to young women, young women who see these models as an aesthetic ideal,” says the French health minister, Marisol Touraine, as quoted at France24. The lawmaker who wrote the legislation is a doctor who estimates that up to 40,000 people in France have anorexia, most of them teens. Israel, Italy, and Spain already have similar laws on the books, but the New York Times notes that France’s legislation would likely be far more influential. “It would almost certainly raise the debate to a new level, especially in Paris, the spiritual capital of the fashion world,” writes Alissa Rubin.

BRILLIANT!  Looks like models may once again have shape……..I could not be more pleased.

What say you?