The state of the US economy

Worth a read. 

Paul Craig Roberts at his blog
The State of the Economy

The story line is going out that the economic boom is weakening and the Federal Reserve has to get the printing press running again.  The Fed uses the money to purchase bonds, which drives up the prices of bonds and lowers the interest rate.  The theory is that the lower interest rate encourages consumer spending and business investment and that this increase in consumer and business spending results in more output and employment. 

The Federal Reserve, European Central Bank, and Bank of England have been wedded to this policy for a decade, and the Japanese for longer, without stimulating business investment.  Rather than borrowing at low interest rates in order to invest more, corporations borrowed in order to buy back their stock.  In other words, some corporations after using all their profits to buy back their own stock went into debt in order to further reduce their market capitalization!  

Far from stimulating business investment, the liquidity supplied by the Federal Reserve drove up stock and bond prices and spilled over into real estate.  The fact that corporations used their profits to buy back their shares rather than to invest in new capacity means that the corporations  did not experience a booming economy with good investment opportunities. It is a poor economy when the best investment for a company is to repurchase its own shares.

Consumers, devoid of real income growth, maintained their living standards by going deeper into debt.  This process was aided, for example, by stretching out car payments from three years to six and seven years, with the result that loan balances exceed the value of the vehicles.  Many households live on credit cards by paying the minimum amount, with the result that their indebtedness grows by the month. The Federal Reserve’s low interest rates are not reciprocated by the high credit card interest rate on outstanding balances. 

Some European countries now have negative interest rates, which means that the bank does not pay you interest on your deposit, but charges you a fee for holding your money.  In other words, you are charged an interest rate for having money in a bank.  One reason for this is the belief of neoliberal economists that consumers would prefer to spend their money than to watch it gradually wither away and that the spending will drive the economy to higher growth.

What is the growth rate of the economy?  It is difficult to know, because the measures of inflation have been tampered with in order to avoid cost-of-living adjustments for Social Security recipients and the payment of COLA adjustments in contracts........

A prediction or just an opinion?

This is a very timely contribution. 

Chris Hedges at TruthDig

Conjuring Up the Next Depression

During the financial crisis of 2008, the world’s central banks, including the Federal Reserve, injected trillions of dollars of fabricated money into the global financial system. This fabricated money has created a worldwide debt of $325 trillion, more than three times global GDP. The fabricated money was hoarded by banks and corporations, loaned by banks at predatory interest rates, used to service interest on unpayable debt or spent buying back stock, providing millions in compensation for elites. The fabricated money was not invested in the real economy. Products were not manufactured and sold. Workers were not reinstated into the middle class with sustainable incomes, benefits and pensions. Infrastructure projects were not undertaken. The fabricated money reinflated massive financial bubbles built on debt and papered over a fatally diseased financial system destined for collapse.

What will trigger the next crash? The $13.2 trillion in unsustainable U.S. household debt? The $1.5 trillion in unsustainable student debt? The billions Wall Street has invested in a fracking industry that has spent $280 billion more than it generated from its operations? Who knows. What is certain is that a global financial crash, one that will dwarf the meltdown of 2008, is inevitable. And this time, with interest rates near zero, the elites have no escape plan. The financial structure will disintegrate. The global economy will go into a death spiral. The rage of a betrayed and impoverished population will, I fear, further empower right-wing demagogues who promise vengeance on the global elites, moral renewal, a nativist revival heralding a return to a mythical golden age when immigrants, women and people of color knew their place, and a Christianized fascism.

The 2008 financial crisis, as the economist and Truthdig columnist Nomi Prins points out, “converted central banks into a new class of power brokers.” They looted national treasuries and amassed trillions in wealth to become politically and economically omnipotent. In her book “Collusion: How Central Bankers Rigged the World,” she writes that central bankers and the world’s largest financial institutions fraudulently manipulate global markets and use fabricated, or as she writes, “fake money,” to inflate asset bubbles for short-term profit as they drive us toward “a dangerous financial precipice.”....

25 EU banks fail "stress test" ... don't you just love the newspeak!

Although the BBC piece below gives the number as "24"  ... the chart at ZeroHedge shows the number to be "25" and has a lot more info.
Wonder how the stock market manipulators will manipulate the EU market due to open in the next few hours.  Will they make this look like a good thing that only 25 banks out of 123 tested were a bit under the weather?  Yup ... I bet that's how it will be. You can trust the doctors doing the "stress test"  to doctor the patients in other areas too.  
Our brave new world!

From BBC:
Twenty-four European banks fail EBA stress test  
Twenty-four European banks have failed stress tests of their finances, the European Banking Authority has announced.
The banks now have nine months to shore up their finances or risk being shut down. No UK banks are included.
The review was based on the banks' financial health at the end of 2013.
Ten of them have taken measures to bolster their balance sheets in the meantime. All the remaining 14 banks are in the eurozone.
The health check was carried out on 123 EU banks by the EBA to determine whether they could withstand another financial crisis.
The list of 14 includes four Italian banks, two Greek banks, two Belgian banks and two Slovenian banks.
The worst affected was Italian bank Monte dei Paschi, which had a capital shortfall of €2.1bn (£1.65bn, $2.6bn)...........

From ZeroHedge:
As was leaked on Friday,  when the market surged on news that some 25 banks would fail the ECB's third stress test (because in the New Normal more bank failures means more bailouts, means the richer get richest, means more wealth inequality), so moments ago the ECB reported that, indeed, some 25 banks failed the European Central Bank's third attempt at collective confidence building and redrawing of a reality in which there is about €1 trillion in European NPLs, also known as the stress test.

The ECB's results as summarized by the central bank:

Capital shortfall of €25 billion detected at 25 participant banks

Banks’ asset values need to be adjusted by €48 billion, €37 billion of which did not generate capital shortfall

Shortfall of €25 billion and asset value adjustment of €37 billion implies overall impact of €62 billion on banks

Additional €136 billion found in non-performing exposures

Adverse stress scenario would deplete banks’ capital by €263 billion, reducing median CET1 ratio by 4 percentage points from 12.4% to 8.3%.........

Desperation of the banksters ....

it begins to show first in the decisions taken by Central Banks. Case in point, the recent ECB's mad, mad, mad decision which is clearly seen as nothing but pure desperation. 

James E. Miller writing at MisesInstituteCanada:
....Central bankers must be getting desperate. After the futile effort to boost the global economy via synchronized money printing en masse, they are doubling down on the same failed policy. Now it’s no longer enough to produce endless supplies of currency. The little people must be punished for having the gall to try and save their money in their personal bank accounts. Interest rates may be at an extraordinary low point, but it’s time to take them lower.

The control freaks in Europe are leading the charge, with the European Central Bank recently announcing a series of measures to lower the deposit rate of banks from zero to -.01%. That’s right; the ECB plans to charge banks for holding money in its vault. The goal is entice banks to lend money rather than let it sit, parked inside a repository. After all, the ECB is busy buying up government bonds from the same financial institutions with newly created cash. It would be a shame to not push that money forth into the economy. That way, the animal spirits will be given a dose of excitement and will begin consuming at the same rate as before the bust. That’s the theory anyway.

Per usual, the money printing enthusiasts are celebrating the move. James Pethokoukis of the American Enterprise Institute enjoys the “dovish intentions” behind the policy. Bill Gross of PIMCO believes the aggressive action is called for in order to boost price inflation. Major news outlets are describing the ECB’s maneuver as a “negative interest rate policy.” The phrase is being tossed around and called an unprecedented exercise that could have interesting ramifications.

Given that media outlets rarely have a firm grasp on economic principles, it should be asked: is there really such thing as a negative interest rate? Is it really possible to alter the cost of borrowing so that it’s essentially free?

Think again. The economic rule that there is no free lunch still holds true, even in a “negative” interest rate environment. There is no free money. Borrowing money .........

For the first time in banking history .... Savers will be charged for saving

Signs of our times!  The good is bad and the bad is good.

Only the rich know how to stash their holdings in order to make them grow.  You and me are being forced to either make do with what we have, not expect anything more but give from what we have to the banks instead. Either that or take a gamble and put our savings in the stock market or govt. bonds. That's what the govt. wants us to do by hook or by crook.  And, no ... that's not a conspiracy theory.  When all other reasons fall by the wayside, the only one remaining is the one a reasonable man refuses to touch...but touch he must. 
Wanna bet North America won't copy the European Central Bank's move?

ZeroHedge has a lot to say on this move. Very enlightening.

And, below is what's reported by the Financial Times:

Claire Jones writing at FinancialTimes:
...The European Central Bank has cut interest rates to a fresh record low and lowered one of its benchmark rates below zero in a radical move that policy makers hope will help the currency bloc to stave off the threat of deflation.
The ECB cut its main refinancing rate to 0.15 per cent, from 0.25 per cent, and its deposit rate from zero to minus 0.10 per cent, becoming the first major central bank to venture into negative territory.

Neither the Federal Reserve, Bank of Japan nor Bank of England have tried this. The ECB hopes the move will lift inflation by weakening the euro and spurring lending in the bloc’s more troubled periphery.
Both decisions were widely expected following hints from policy makers that, after more than six months of standing firm, the ECB would act this month. A lower-than-expected figure for May inflation, which at a rate of 0.5 per cent per year is well below the central bank’s target of just under 2 per cent, had cemented expectations that the governing council would act...............

World's 16 largest banks being sued for rigging interest rates...

and that list will grow.  At long last someone is taking some action .... even if it's a token gesture,  it tells us what we all know but are averse to admit.  The banksters and the super-rich control the world. The "we are the 99%" Occupy crowd is absolutely right.  I will never again criticize that group.  It's lunacy for interest rates to remain at the non-existent level that they are for this many years. They are kept that low to garner more borrowers and get people addicted to borrowing and in the long run the benefactors are the banks and only the banks. The people who saved their money in fixed or term-deposits are the losers. What a Mafia-like racket the banking industry happens to be.

From Reuters:
....The Federal Deposit Insurance Corporation sued 16 of the world's largest banks on Friday, accusing them of colluding to suppress interest rates.

The lawsuit, filed in the federal district court in New York, was the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate.

The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

"The closed banks' losses flowed directly from, among other things, the harm to competition caused by the fraud and collusion alleged in the complaint," the FDIC said in the lawsuit.

The banks named as defendants include Bank of America Corp, Barclays PLC, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings PLC, JPMorgan Chase & Co, the Royal Bank of Scotland Group PLC and UBS AG.

The lawsuit also named the British Bankers' Association, the U.K. trade organization that during the period at issue administered Libor......

.......Other defendants in the lawsuit include Rabobank, Lloyds Banking Group plc, Societe Generale, Norinchukin Bank, Royal Bank of Canada, Bank of Tokyo-Mitsubishi UFJ and WestLB AG......

Canada's Finance Minister in stealth plot to commit Cyprus-like seizure of our money IF.....

a Cyprus-like scenario would happen here too.  Saving big banks who give away credit cards like confetti and beg even kids just out of their teens to start borrowing without giving two hoots about how  they will make good on loans, is more important to Jim Flaherty and his boss Stephen Harper, than the stupid citizens who have voted them to power.

Yup .... your Conservative govt. in action, stealth action .... against YOU !!!



Brian Lilley writing at his blog:  
.....I started asking on Monday, and again on Tuesday, whether the confiscation of money from private bank accounts could happen in Canada the way it has happened in Cyprus. My argument was that yes it could, especially given that Cyprus is a modern European nation and that the decision to dip into accounts was made by finance ministers and officials from countries such as Germany, France and Italy.

This was not a Robert Mugabe theft of cash. If it can happen there then it can happen here.

Little did I know that the answer was already in the budget on page 145 (155 of the PDF) ...................

.....“Bail-in” is exactly how Eurozone officials described what happened in Cyprus (details here and here). In order for the country to get the bail-out from the EU, the banks needed to get a bail-in from their depositors. At first this meant every depositor and then just those with deposits over €100,000.
I asked officials from Finance Minister Jim Flaherty’s for comment on what this section means to them, here is the response from Flaherty’s Director of Communications Dan Miles.

“Bail-in arrangements are NOT ‘bail-out’ arrangements∙
Under a ‘bail-out’ arrangements, taxpayers money has to be used to save a failing financial institution∙
Under a ‘bail-in’ arrangements, a failing financial institution has to tap into their own special reserves or assets (which they have been forced to put aside) to keep their operations going∙
This keeps the financial institution in tract, without risking taxpayer money. This is what Canada is doing, in line with recent international agreements.”

No denial in there that depositors will be asked to pay up if Canadian banks fail. Some think that is a probability that will never happen but obviously the Finance Department thinks it could happen or it would not devise rules. The Big Six Banks were also recently told to ................

Banking scandal .... 250 Billion Dollars worth

US should shut down all the branches of  the UK's Standard Chartered Bank in the USA.  Just threatening to strip them of their license is not sending a loud enough message to other banks. I wonder how many others are doing the same kind of thing. This kind of  criminal activity that the British banks were engaged in  is largely because that country has been Islamized.    Did we expect to find honest bankers in UK banks, banks which are now staffed by probably that magic %  of Muslims?  Fraud, bribe taking, bribe giving  and all criminal activities are second nature to these people.

 In a rare move,   New York's top bank regulator threatened to strip the state banking license of Standard Chartered Plc, saying it was a "rogue institution" that hid $250 billion in transactions tied to Iran, in violation of U.S. law.

The New York State Department of Financial Services (DFS) on Monday said the British bank "schemed" with the Iranian government and hid from law-enforcement officials some 60,000 secret transactions to generate hundreds of millions of dollars in fees over nearly 10 years.
At the same time, it exposed the U.S. banking system to terrorists, drug traffickers and corrupt states, the department said.

The loss of a New York banking license would be a devastating blow for a foreign bank, effectively cutting off direct access to the U.S. bank market. Standard Chartered processes $190 billion every day for global clients, the New York bank regulator said.

In an unusual look inside a bank, the regulator described how Standard Chartered officials debated whether to continue Iranian dealings. In October 2006, the top official for business in the Americas, whom the regulator did not name, warned in a "panicked message" that the Iranian dealings could cause "catastrophic reputational damage" and "serious criminal liability."

A top executive in London shot back: "You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians." The reply showed "obvious contempt for U.S. banking regulations," the regulator said.

Standard Chartered is the third British bank to be ensnared in U.S. law-enforcement probes this summer. Barclays Plc agreed to pay $453 million to settle U.S. and UK probes that it rigged a global benchmark in June. A month later, a U.S. Senate panel issued a scathing report that criticized HSBC Holding Plc's efforts to police suspect transactions, including Mexican drug traffickers.....

How "savers" are punished by governments of the world but "borrowers" are rewarded.

 Doesn't this attitude  from the Central Banks and our blasted governments remind you of the story 'the prodigal son"  from the Bible where the nasty son was foremost in his father's affections, whereas. the good, hard-working and loving son was neglected?   Maybe, our government is indirectly telling those of us who don't borrow to go do exactly that and keep going for more and in the end all the debt will be forgiven ... just like in the Bible story.

It's about time "savers" started an "occupy" of some sort. ....   or better still, let's all go and apply for loans with every intention of never paying it back.   Yeah .... let's do that !!!!!!!!!

How Canadian banks are becoming sharia finance compliant ......... Part I

I don't know about you, but in my books I consider the powers-that-be within the banks that cooked up the sharia related products as "betrayers" and I think of those individuals and institutions as being" traitors".  Am I going too far by labelling them thus?  No..... I don'ttttttttt think soooooooo!!!

Remember the saying "Give an inch and they will take a mile" .... many a time I feel that whoever it was that coined that phrase, had muslims in mind.  You might think of sharia finance as just "one of the products that the banks are  offering"  but just like the "give an inch" phrase, this is only the beginning.  The Saudi Arabia govt and other oil rich nations are bribing our bankers by dangling the smell of billions of dollars under their noses and lo and behold  the betrayers amongst us  are taking the bait.  Does the Minister of Finance and the Governor of the Bank of Canada, do they  know about these products that the Canadian banks are offering or have they given their blessings for the first step towards the islamization of Canada ?

TD Bank, Bank of Nova Scotia, Royal Bank of Canada, Bank of Montreal... what do they all have in common? They are all lovers of sharia finance. I am still doing research on this subject, so bear with me. My eagle eyes are sure to find many other financial institutions where patriots like you  have your RRSPS, your savings, your fixed deposits and what not, and unbeknowest to you, those bankers have betrayed  you and are  working  over-time  to turn your country into a haven for islam.

Watch and listen to these weasels and you will realize how much traction sharia finance has already gained in Canada. Get your heads out of the sand folks, we don't have much time.

TD Bank's Ameritrade loves sharia finance   They don't give two hoots about the evilness of it all.

.... "If you understand what Shariah is, you understand that it is a pretty awful system. Not something that you'd want insinuated in your society and becoming a major feature of your economic system," Gaffney said.

"Shariah (Islamic law as dictated by the Koran) governs all aspects of life, from the personal practice of the faith to how you relate to your family to how you relate to your business partners, to your community ... all the way up to how the world is run, and it is all one seamless program. You can't say 'I'll take the personal pietistic practice ... and skip the beheading and the flogging and the stoning and the global theocracy,'" he said.....

And, this below is from May, 2007:

Bank of Nova Scotia and Toronto-Dominion Bank are quietly considering whether to start offering sharia-compliant products, as part of the big banks' strategy to reach out to a growing immigrant population. Representatives at Canada's second- and third-largest banks by market capitalization were among the 200 delegates at the Islamic Finance World conference.

"I can confirm it's something we're tentatively looking at," said Frank Switzer, Scotiabank's spokesman, without providing further detail. TD spokeswoman Kelly Hechler said "it's something we're looking at and we're interested in."

Dear readers ... the fate of your country is in your hands and in the power of your pen.  Write to the Minister of Finance, write to your local MP, write, write, write,  talk, talk, talk.  If you set yourself a task of educating just one person a week on the dangers of islam at our doorstep, you will have done something to save your country.