Financial Regulation

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Guest Post: Coming To Terms With A Borderless World Economy





Wealth has become stateless, and as a consequence it is becoming increasingly less accountable to any state’s laws or tax codes. Over the last quarter century it has become increasing easier to transfer large sums of money, what is more, large financial institutions find it far easier today to relocate to a different legal and tax jurisdiction than at any previous time, because it is easier to re-establish the necessary business infrastructure, the cost of relocation has lessened. Recognising this trend over the last quarter century, and being desirous of any slice of revenue they can get their hands on, governments around the world have competed with each other, to provide the ‘best business environment’ for those financial institutions. Let’s not delude ourselves about this, the ‘best business environment’ is the least regulation and the most advantageous tax breaks. And by competing with each other in this way, governments around the world created the regulatory environment which was, in part, responsible for the current financial crisis. And then there are the ‘Tax Havens’

 
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Frontrunning: June 8





  • Obama Seeking Ally on Europe Finds Merkel a Tough Sell (Bloomberg) - but he has an election to win
  • China rate cut sparks fears of grim May data (Reuters)
  • China faces stimulus dilemma  (FT)
  • Papademos warns of Grexit vortex (FT)
  • China’s Shipyards Fail to Win Orders as Greek Owners Shun Loans (Bloomberg)
  • Rajoy Holds Bank Talks With EU Leaders as Fitch Downgrades Spain (Bloomberg)
  • Capital Rule Is One Size Fits All (WSJ)... now the modest question of where to get the $3.9 trillion in capital
  • Merkel Pokes at Cameron With Backing for Two-Speed Europe (Bloomberg)
  • City safeguards set Britain at odds with EU (FT)
  • Bernanke says Fed to act if Europe crisis deepens (Reuters)
 
Tyler Durden's picture

The 'Big Reset' Is Coming: Here Is What To Do





A week ago, Zero Hedge first presented the now viral presentation by Raoul Pal titled "The End Game." We dubbed the presentation scary because it was: in very frank terms it laid out the reality of the current absolutely unsustainable situation while pulling no punches. Yet some may have misread the underlying narrative: Pal did not predict armageddon. Far from it: he forecast the end of the current broken economic, monetary, and fiat system... which following its collapse will be replaced with something different, something stable. Which, incidentally, is why the presentation was called a big "reset", not the big "end." But what does that mean, and how does one protect from such an event? Luckily, we have another presentation to share with readers, this time from Eidesis Capital, given at the Grant's April 11 conference, which picks up where Pal left off. Because if the Big Reset told us what is coming, Eidesis tells us how to get from there to the other side...

 
Tyler Durden's picture

The Keynesian Emperor, Undressed





The standard Keynesian narrative that "Households and countries are not spending because they can’t borrow the funds to do so, and the best way to revive growth, the argument goes, is to find ways to get the money flowing again." is not working. In fact, former IMF Director Raghuram Rajan points out, today’s economic troubles are not simply the result of inadequate demand but the result, equally, of a distorted supply side as technology and foreign competition means that "advanced economies were losing their ability to grow by making useful things." Detailing his view of the mistakes of the Keynesian dream, Rajan notes "The growth that these countries engineered, with its dependence on borrowing, proved unsustainable.", and critically his conclusion that the industrial countries have a choice. They can act as if all is well except that their consumers are in a funk and so what John Maynard Keynes called “animal spirits” must be revived through stimulus measures. Or they can treat the crisis as a wake-up call and move to fix all that has been papered over in the last few decades and thus put themselves in a better position to take advantage of coming opportunities.

 
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On The Goldman Path To Complete World Domination: Mark Carney On His Way To Head The Bank Of England?





Back in November we penned "The Complete And Annotated Guide To The European Bank Run (Or The Final Phase Of Goldman's World Domination Plan)" in which we described what the long-term reality of Europe, not that interrupted by the occasional transitory LTRO cash injection and other stop-gap central bank measure, would look like. And yet there was one piece missing: after Goldman unceremoniously set up its critical plants in Italy via Mario Monti and the ECB via Mario Draghi, one key target of Goldman domination was still missing. The place? Why the center of the entire modern infinitely rehypothecatable financial system of course: England, which may have 1,000x consolidated debt/GDP, but at least it can repledge any asset in perpetuity thus giving the world the impression it is solvent (no wonder AIG, MF Global, and now the CME are scrambling to operate out of there). Which is why we read with little surprise that none other than former Goldmanite, and current head of the Bank of Canada, is on his way to the final frontier: the Bank of England.

 
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No Hints Of QE In Latest Bernanke Word Cloud





Addressing his perception of lessons learned from the financial crisis, Ben Bernanke is speaking this afternoon on poor risk management and shadow banking vulnerabilities - all of which remain obviously as we continue to draw attention to. However, more worrisome for the junkies is the total lack of QE3 chatter in his speech. While he does note the words 'collateral' and 'repo' the proximity of the words 'Shadow, Institutions, & Vulnerabilities' are awkwardly close.

 
tedbits's picture

Tedbits: 2012 Outlook, Part 1 - When Leverage Fails





The saga continues as we head into 2012.  That saga is the demise of Ponzi finance

 
Tyler Durden's picture

Frontrunning: March 19





  • There is no Spanish siesta for the eurozone (FT)
  • Greece over halfway to recovery, says PM (FT) - inspired comedy...
  • Sarkozy Trims Gap With Rival, Polls Show (WSJ) - Diebold speaks again
  • IMF’s Zhu Sees ‘Soft-Landing’ Even as Property Slides: Economy (Bloomberg)
  • Obama Uses Lincoln to Needle Republicans Battling in Illinois (Bloomberg)
  • Three shot dead outside Jewish school in France (Reuters)
  • Osborne Seeks to End 50% Tax Spat With Pledge to Aid U.K. Poor (Bloomberg)
  • Monti to Meet Labor Unions Amid Warning of Continued Euro Crisis (Bloomberg)
 
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Frontrunning: February 2





  • Merkel Seeks to Reassure China (FT)
  • German-IMF Rift Stalls Greece Deal (WSJ)
  • Survey of Banks Shows a Sharp Cut in Lending in Europe (NYT)
  • Bernanke to testify on economy and deficit (AP)
  • House votes to freeze congressional, federal pay (WaPo)
 
Tyler Durden's picture

Is The CBO Merely Another Manipulated Front For Wall Street To Dictate Washington Policy?





In the past, when discussing the goalseeking C-grade excel jockeys at the Congressional Budget Office (or CBO), we have not been technically full of reverence. After all when one uses a phrase such as this one: "What do the NAR, Consumer Confidence and CBO forecasts have in common? If you said, "they are all completely worthless" you are absolutely correct", it may be too late to worry about burned bridges. We do have our reasons: as we pointed out last year, following the whole US downgrade fiasco when the Treasury highlighted the CBO's sterling work in presenting a US future so bright, Timmy "TurboTax" G had to wear shades, we said "according to the same CBO back in 2001, net US indebtedness in 2011 would be negative $2.436 trillion, the ratio of debt held by the public to GDP would be 4.8%, total budget surplus would be $889 billion, and GDP would be $16.9 trillion." As we know now they were off only by a modest $17.5 trillion on that debt forecast. Yet we never attributed to malice and bias and outright corruption, what simple stupidity and gross incompetence could easily explain. Until today that is, when following a WSJ article, we are left wondering just how deep does the CBO stench truly go and whether its employees are far more corrupt than merely stupid?

 
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