Too Big To Fail
In a larger sense, the Fed is already intervening in the oil sector via its zero interest rate policy (ZIRP) and its unlimited liquidity for financial speculation.Should the Fed turn the dial of intervention up by buying futures and oil-based bonds, it is not a new policy--it is simply a matter of degree. The intervention has been going on in every sector since 2008. The implosion of the oil sector is simply the latest outbreak of consequence following cause.
George Orwell once said that “during times of universal deceit, telling the truth becomes a revolutionary act“. That perfectly describes the era that we are currently living in. The truth does not bring fear and despair. Rather, the truth brings hope and it sets people free.
Yellen doesn’t care about the economy. She cares about the US’s massive debt load AKA the BOND BUBBLE.
It's a wonderful life on Wall Street, yet here is a holiday wish list to make it even better...
Are much lower oil prices good news for the U.S. economy? Only if you like collapsing capital expenditures, rising unemployment and a potential financial implosion on Wall Street.
Not long ago, we wrote Ten Reasons Why High Oil Prices are a Problem. If high oil prices can be a problem, how can low oil prices also be a problem? In particular, how can the steep drop in oil prices we have recently been experiencing also be a problem? In our view, a rapid drop in oil prices is likely a symptom that we are approaching a debt-related collapse. Underlying this debt-related collapse is the fact that we seem to be reaching the limits of a finite world. There is a growing mismatch between what workers in oil importing countries can afford, and the rising real costs of extraction, including associated governmental costs. This has been covered up to date by rising debt, but at some point, it will not be possible to keep increasing the debt sufficiently. At some point the debt situation will eventually reach a breaking point.
As Day 2 of Carl Levin's Senate hearing on the fact that banks did indeed corner and rig the physical commodity markets - with the erosion of the line separating banking from commercial activities leading to the detriment of consumers and the financial system - we thought the world needed a 'dummy's guide' to why the biggest banks should not be allowed to do this... or in legalese, here are the four most negative effects of allowing FHCs to engage in Complementary Commodity Activities.
With gold already moving today on rumors of an increasingly positive tone towards Switzerland's referendum on the Gold Initiative, Axel Merk notes that it appears widely misunderstood and discusses implications for gold, the Swiss franc and Switzerland as a whole. "Gold is the people’s money, not the government’s money to splurge...gold is a store of value that ought to back the currency in circulation." Ultimately, people should never rely on their government to pursue a gold standard, but consider pursuing their own, personal gold standard.
We finally have the answer, courtesy of the FCA's partial and very much selective disclosure of FX rigging findings by "The Cartel", the "Bandits" and so on, as part of its wrist-slapping settlement, just how the big boys make millions in FX on every single fix. Hopefully one day the regulators, who are as corrupt and conflicted as the banks they quote-unquote police, will reveal all the documents in their possession and let the public decide what is important and what isn't. But in the meantime, for all those curious just why the Too Big To Fail are also Too Big To Prosecute, here is the blow by blow.
- No Sign of Thaw in Obama’s Brief Encounters With Putin (BBG)
- Japan Lawmakers Prepare for Snap Elections as Abe Mulls Tax (BBG)
- Global stocks rise, Brent crude hits four-year low (Reuters)
- U.S., China to Drop Tariffs on Range of Tech Products (WSJ)
- ‘Too-Big-to-Fail’ Rule Would Raise Bar for Bank Capital (WSJ) ... and mean even bigger taxpayer bailouts
- Pot in New York: $100 Ticket. No Charges. No Record. No Nothing (BBG)
- Microsoft unveils first Lumia smartphone without Nokia name (Reuters)
- Davos-Man Ackermann Lured to Cyprus Bank by Billionaires (BBG)
- Alibaba, Apple Talks on Payments Tie-Up Focused on China (WSJ)
The risks unleashed by central bank funding of massive carry trades, policy-driven devaluations and currency crises have yet to manifest. When they do, we'll rediscover why traders consider the FX market the 800-pound gorilla that stomps on the stock and bond markets without even noticing the squishing sound.
By continuously intervening in all of the markets, the Fed has destroyed the information transmission system that is built into freely trading markets. Time is starting to run out for ability of the U.S. to keep kicking the can of collapse down the road. We’ve come full circle, only with China in the Midas throne this time around. Eventually the world is going to revert back to a gold-backed currency system. When this happens, the U.S. will be required to demonstrate that it possesses the amount of gold that it reports to own. The only caveat here is that we believe that the U.S. will start WW3 before it’s forced to reveal the truth about its empty gold vault. That’s how broken our system really is…
"Solutions to the world's problems are not produced in a meeting between Bill Gates and George Soros... Renewal has to come from below... Limiting the influence [of the richest] is of the utmost importance... so that today's upper-class, high-finance capitalism can once again revert to being a capitalism of the real economy and the societal center."