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Question for Liz Warren: How Many Subsidies Does a Zombie Bank Need?

rcwhalen's picture





 

 

"All right," thought the Devil. "We will have a tussle. I'll give you land enough; and by means of that land I will get you into my power."

“How Much Land Does a Man Need?”  (1886)

Leo Tolstoy

Last week, Senator Elizabeth Warren (D-MA) incurred the ire of the banking industry by suggesting that their cost of funds is subsidized to the tune of $80 billion annually.  Bloomberg News reports:

“Warren questioned Fed Chairman Ben S. Bernanke over what she said was a taxpayer subsidy worth $83 billion, citing an International Monetary Fund working paper on the funding advantage big banks get because of the market perception that they are protected by the government against failure. In their brief, the industry groups said the paper cited by Warren used data on banks’ borrowing costs before Dodd-Frank was passed.”

Unfortunately, neither Senator Warren nor the folks at the IMF have a full appreciation for the scope of the subsidies that run through the P&Ls of the US banking industry and, in particular, the top-four zombie banks -- C, WFC, BAC and JOM -- which account for more than two-thirds of the total assets in the industry. And you don't need to count any of the emergency programs and subsidies put in place after the 2007 subprime crisis in order to understand the subsidy flows to the zombie dance queens.   

By my conservative reckoning, the subsidies for the zombie banks total more than $3 annually for every dollar in income reported by the industry in profit.  The industry reported $35 billion in profits in Q4 2012, so we’ll call annual income about $150 billion annually. Let’s start with the broadest subsidies that affect all banks and work our way up the food chain to those subsidies that only impact the TBTF zombie queens.

First and to Senator Warren’s point, the Fed is currently subsidizing the cost of funds for the US banking industry to the tune of about $90 billion per quarter or $360 billion annually.  That is a tad higher than the $83 billion in supposed annual “spread” subsidy calculated by the IMF.  While I agree that the TBTF banks certainly get an absolute advantage in the market in terms of funding, the subsidy due to Fed market manipulation such as QE is much bigger and very tangible.  In Q4 2012, the interest expense for the entire US banking sector was just $15 billion vs. over $100 billion at the start of 2007, according to the FDIC’s Quarterly Banking Profile.

The second major subsidy for the US banking industry is federal deposit insurance.  In Q3 2012, all US banks paid $2.937 billion in FDIC assessments to unconditionally insure $7,405 billion in insured deposits or a premium of about 0.04% or just 4 bps vs. the insured balance.   Now the FDIC is a mutual insurance scheme backed by the income and capital of all insured banks, but behind the FDIC stands the US Treasury.  Having that backstop is worth serious money, far more than 0.04% or 4 basis points annually.  Specific assessment fees range between 2.5 and 45 bp, depending on the riskiness of the institution.  

http://www.fdic.gov/deposit/insurance/assessments/proposed.html

If we compare the FDIC deposit insurance premiums with, say, an FHA mortgage insurance premium, which is measured in points on the principal amount, the subsidy becomes clear. Were the FDIC insurance were closer to a “free market” price of 40bp per quarter, the quarterly cost would be close to $30 billion or just about the entire income for the industry.  Since banks are really not that profitable, however, instead we have federal subsidies. The lack of basic profitability, and not the avarice of bankers, is the reason for the subsidies.  

Next after federal deposit insurance on the subsidy hit parade we have government guaranteed loans.  The list of government loan guarantees is long and varied, including housing, small business and various other special needs groups and constituencies that are deserving of the support of the American people.  Chief among these is housing, a marvelous and very special industry.  Banks write loans, collect fees, retain servicing, and then sell the some or all of the credit risk to Uncle Sam.  

Uncle Sam collects a fee for taking the credit risk when loans are bundled into securities and sold to investors.  In the case of the GSEs, such as Fannie Mae and Freddie Mac, the agencies share first loss risk with private mortgage insurers.  In the case of Ginnie Mae, the agency stands in fourth loss position behind the home owner, FHA, and most important, the issuer of the securities.  All of these subsidies are provided to stimulate home ownership, mind you, which allows Americans to think that a 3%, 30-year mortgage is a normal and natural occurrence.  The real, free market cost of a 30-year prime mortgage is closer to 6%.

The guarantee fees charged by Washington for mortgages are still far below rates where private investors would take first loss risk.  Revenue from loan origination, sale and servicing for FDIC insured banks selling into the agency markets total into the tens of billions of dollars annually.  Let’s be conservative and call the annual subsidy to banks from the federal housing agencies a hundred billion annually, but again, that is almost the entire income of the industry!  Thus we have subsidies.

So far, we have identified about half a trillion dollars in subsidies for the US banking industry as a whole, several times more that the industry reports in profits each year.  Now let’s narrow the focus to the zombie dance queens and add up a few of the special subsidies that make it possible for a zombie banks to survive.  Big banks are not, contrary to what you may have heard, more profitable or efficient than little banks.  As I noted in the recent Zero Hedge post about "true sale," the hidden leverage of off-balance-sheet or OBS vehicles was the greatest subsidy of all, but I digress. 

http://www.zerohedge.com/contributed/2013-02-26/zombie-love-true-sales-a...

One of the biggest subsidies enjoyed by the zombie dance queens is the oligopoly control these banks exert over the secondary market for home mortgages.  When a little bank makes a loan to help you buy a house it will often sell that mortgage to a federal agency to recoup its capital and be in a position to make another loan.  (See “It’s a Wonderful Life” with Jimmy Stewart if you don’t follow me.) When the little bank or non-bank lender wants to do business with Fannie Mae, Freddie Mac or the FHA, however, it must sell its loan to one of the zombie dance queens, who pocket half of the profit on the loan for their trouble. This is just one of the structural subsidies blessed by Congress and the Fed that make large banks look more profitable than they truly are.  In fact, the TBTF banks are not really profitable at all. 

A veteran banker opined to this writer during the now defunct American Securitization Forum conference in Las Vegas in January 2013: "The day that Wachovia was acquired, the yields in the TBA market in US mortgages moved up 75 basis points. The strength of the US economy is competition, but not in mortgage finance. The smaller players lived on the bleeding edge of the mortgage market, but they were also far more efficient lenders than the large banks. Now, care of the Fed, we have a highly inefficient oligopoly in the US mortgage market that is built around the largest banks."

The subsidy to the TBTF banks for the mortgage market oligopoly must be worth at least $100 billion per year in fees earned from smaller banks, gain on sale into the TBA market and servicing.  Let’s not forget that the Fed’s QE has handed the TBTF banks huge yield spread premiums on government guaranteed loans sold into the TBA market.  Just look at the price for the on-the-run agency security and that gives you a rough idea of the premium earned by a bank selling loans into that market.  

Fortunately for Elizabeth Warren and all of the other angry Calvinists in the audience, the new Basel III capital accord is going to force the largest banks out of the US mortgage market entirely.  As I wrote yesterday in The Institutional Risk Analyst:

“As the abortive Basel III accord kicks in this year, look for the largest banks to start actively discouraging their personnel from originating all but the highest quality mortgage loans. Why? Three reasons: 1) B III capital rules for mortgage loans, 2) B III liquidity rules which force banks to hold only short-duration assets and 3) B III treatment of capital and accumulated other comprehensive income (AOCI). Taken together, these three pieces of Basel III will sharply curtail bank lending for real estate in the future. Get used to it.”

http://us1.irabankratings.com/pub/IRAStory.asp?tag=566

While housing and other government subsidized loans are significant sources of subsidy for banks, the biggest subsidy of all for the TBTF banks is the OTC derivatives markets.  The lack of capital required in these transactions and other special dispensations from the Fed provide the zombie banks with unlimited leverage and almost no public scrutiny.  The fact that OTC contracts are exempt from the automatic stay in bankruptcy is a huge subsidy. The bilateral market structure is another.  All of these retrograde market configurations were supported by the Fed over the past several decades.  And because Basel III is chasing the banks, large and small, out of the mortgage business, the importance of OTC derivatives to the largest banks will only grow.  Let’s be conservative and figure that the subsidy for OTC derivatives is worth $100 billion annually. 

The point of this exercise is to show that not only do banks receive huge subsidies from the federal government, but these subsidies are far greater than the stated income of the industry.  While you can argue that the largest banks receive a disproportionate share of the flow of largesse from Washington, it is also fair to say that the entire industry is heavily subsidized.   And keep in mind that the above points are only a partial list of the subsidies and other flows that allow the members of the banking industry to pretend to be profitable, risk-taking organizations in a free market economy.  The reality, sad to say, is that banks in 21st Century America are government sponsored enterprises, effectively loan production offices working for FDR’s socialist utopia.  Send your thank you notes to Paul Krugman at The New York Times.

 


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Wed, 03/13/2013 - 11:57 | Link to Comment neutrinoman
neutrinoman's picture

Elizabeth Warren is a fraud, an ignorant and befuddled ideologue. She worked her way up the academic totem pole to Harvard Law School with false claims that she is of native American descent. But the real kicker is the way that she shoplifts and misuses research done by actual social scientists to push twisted claims about the decline of American middle class and how they need to be "saved" by socialists such as herself. The American middle and working classes have been in trouble for a generation, no doubt. But the causes are weak growth and lack of jobs, higher state and local taxes, high rates of divorce and single parenthood, understated inflation, galloping medical and college costs, illegal immigration (in some places), and a radically widening education gap. The powers that be are getting better at hiding what's going on, shuffling people out of the labor force and on to food stamps and disability, publishing fake statistics, and inflating asset prices. Thanks to Zero Hedge and others, someone's paying attention.

The solutions pushed by the Democratic establishment -- that weird alliance of greedy public employee unions, ultraliberal academics, Wall Street's merchants of debt, and the Hollywood glitterati -- are more of the same, with the decline masked by a "democratization of credit" that Warren and others like her have pushed heedless of the consequences.

Ironically, one of those consequences is a bloated and heavily subsidized financial sector. Warren is not smart enough to get this. But Chris Whalen is. What he wrote at the end says it all:

"The reality, sad to say, is that banks in 21st Century America are government sponsored enterprises, effectively loan production offices working for FDR’s socialist utopia.  Send your thank you notes to Paul Krugman at The New York Times."

(Krugman -- a phony cult guru. But that's another story for another day.)

Tue, 03/12/2013 - 20:54 | Link to Comment thewayitis
thewayitis's picture

  A Credit Union tends to be More for the people ......

Tue, 03/12/2013 - 20:26 | Link to Comment working class dog
working class dog's picture

claw back the banc scum bonuses on bankrupt banks

 

Tue, 03/12/2013 - 16:48 | Link to Comment hooligan2009
hooligan2009's picture

mr whalen gets it....why doesn't the senate banking and finance committee or SEC or mainstream media pick this up? perhaps they like paying the subsidies and fees because they aren't very bright, dynamic or informed.

mr whalen should start a petition along the lines of "we the undersigned wish our representatives to enact legislation that removes all forms of government subsidies to banks, directly or indirectly, via existing government legislation and actions by the Federal Reserve".

unfortunately, lawyers, senators, representatives, judges and legislators have created a monster that is "too big to control", or TBTC.

any efforts to make the banking system controllable are beyond the ability of the "system" to implement. 

what is needed is a start from scratch approach that repeals all exisitng FIRE legislation and replaces it with something written in less than 200 pages of english with no word exceeding 10 letters is required, so that rehypothecation, cross-collateralization and sequestration are excluded. 

Tue, 03/12/2013 - 16:57 | Link to Comment The Heart
The Heart's picture

"mr whalen gets it....why doesn't the senate banking and finance committee or SEC or mainstream media pick this up?"

More and more people around the world are 'getting it' and the landslide towards shining the light on these criminals is advancing faster and faster. What is glaringly ridiculous is, besides sites like ZH, people now have to get their truthful news from countries like Iran and Russia.

http://www.presstv.ir/Program/272398.html

Wed, 03/13/2013 - 14:00 | Link to Comment imbtween
imbtween's picture

I wonder if he realized, as he was sitting there discussing the central banking system, that he was being watched by the giant illuminati pyramid over his left shoulder. I lold.

Tue, 03/12/2013 - 21:43 | Link to Comment Radical Marijuana
Radical Marijuana's picture

I thought that this was a relatively accurate overview article:

http://www.veteranstoday.com/2013/03/07/killing-america/

Killing America By Preston James, March 6, 2013.

Tue, 03/12/2013 - 22:12 | Link to Comment hooligan2009
hooligan2009's picture

you do know that only 1 in one hundred banks in london are british right? the largest when you reflect derivatives are american and gemran banks based in london. there are just four high street banks in britain..hsbc, rbs, lloyds and barclays...rbs is 82% government owned and in the process of being broken up, lloyds is 43% owned and is downsizing as fast as it can...hsbc derives most of its income from asia/south and latin america and barclays is a poodle for bank of america, but is trying to get back to its roots of high street banking following its part in all the scandals of the last decade under bob dimond (an american). 

anyway..the truth is out there and one day we will have the wikipedia history of it..until then..we are writing it now.

Tue, 03/12/2013 - 17:38 | Link to Comment hooligan2009
hooligan2009's picture

hmmm..i guess im now being monitored for watching iranian tv..not a bad half hour show..

i get the feeling that if the BIS didn't exist, someone would have to invent it.

credibility is a big issue...calling some a a rocky fellow and a city BayZeel doesn't help...nor does spelling "mony" the way the site has.

i think this is propaganda; it blends truth with conspiracy to portray a, not entirely, accurate position.

index funds own the largest shares of all companies, including banks, not the rothschilds. i am sure that family is wealthy and i am also sure that if it did have wealth of 100 trillion dollars, it would have to deploy that wealth in a way that manifested itself as ownership of assets, listed or unlisted.

the global market cap of all listed companies is going to be around 60 trillion dollars. of course, wealth can be parked in government bond markets and once you go past your first trillion, i suggest there is zero utility in another 99 trillion.

anyway, i watched it. would contest 95% of it, leaving the other 5% to be historical fact (which it hink has been manipulated to suit by the station).

Tue, 03/12/2013 - 21:52 | Link to Comment disabledvet
disabledvet's picture

i've never understood the value of propaganda. as Eisenhower famously stated "i knew i had him when he believed in his own lies." facts "on the ground" are just that: facts. the folks who were shorting housing in 2008 ("the Big Short") clearly had crunched the numbers every which way...not the "moral numbers" of course...but no one could argue with the math they were espousing...and Goldman had no qualms about being their banker either. now that everyone is screaming about "market manipulation" when their short positions are getting crushed...save for gold of course "which can never be worth less than it is today" (shall we talk energy? no to that as well in this article i see)...i really fail to see what the advocacy is in this article. what type of "subsidy" does a bank get when you get "zero recovery"? i say NEGATIVE actually. i do agree "if they all look like a bunch of losers why are we giving them money." trust me "Goldman is wondering the same thing" having contract killed them all. (as in "why are they still alive? that strikes me as dangerous!" hehehehehe.) the fact of the matter is TPTB are all in same boat...and that's why the banks "get all those supposed goodies"...namely "they're all long recovery." you all tell me...what other choice is there? "but my buddies make a killing only when things go south" doesn't in fact "make the trains run on time." unless of course you believe the trains...nor anything else...should run at all. no..."that's not the banks." and with Government spending 400 billion a year on interest...and rising...i fail to see how that's Government either. as someone who has already "war gamed" the end of the dollar well over four years ago deciding who benefits is simply not an issue for me. no it's not Russia in case you're wondering. i would not short Texas though. "and i've thought of more than just a few more" in that vein as well. there is certainly one name i would like to see on top of that list actually...and i look forward to mentioning it once it has "ripened" as the diplomats say.

Tue, 03/12/2013 - 16:09 | Link to Comment imbtween
imbtween's picture

ahhh now I understand Basel III. Cause a collapse in housing, snatch whatever equity you can while you claw back all the housing and then set the bar so high that the debt slaves are left to scrape by in low wage jobs as permanent renters who will never threaten to take anything from the top's table again.

Clever.

Tue, 03/12/2013 - 15:33 | Link to Comment newengland
newengland's picture

And it gets worse than that: the FDIC is helping domestic and foreign banks hide their fraud and negligence:

http://www.latimes.com/business/la-fi-fdic-settlements-20130311,0,588235...

No publicity to deter others. No prosecutions to punish wrongdoers.

We're being stitched up like a kipper...

Tue, 03/12/2013 - 16:14 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"the Fed is currently subsidizing the cost of funds for the US banking industry to the tune of about $90 billion per quarter or $360 billion annually."

Ah, but The Fed is an "independant body" and "doesn't cost taxpayer dollars".  "They even returned a record profit for the US government last quarter!" they exclaim.    

See how that works? 

Tue, 03/12/2013 - 14:59 | Link to Comment IamtheREALmario
IamtheREALmario's picture

Banks are subsidized as a means of policy in creating the global crony central banking empire (Why did we attack Iran, Libya and Syria ... duh, no BIS tied crony central bank). The sad part of it is that the subsidizing of the global crony central banking empire allows self-righteous blankety blanks to claim that they are doing gods' work or that they are more wealthy than the next guy ... AS IF THEY DESERVE TO BE CONSIDERED AS EITHER. Talk about delusional!!!

Tue, 03/12/2013 - 13:46 | Link to Comment rhinoblitzing
rhinoblitzing's picture

One Sentence Summary = The Banks Were Nationalized and there is nothing you can do about it. Except to...

Impeach Obama Now!

Tue, 03/12/2013 - 16:21 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"Impeach Obama Now!"

To be replaced by Joe Biden.  Now we're cookin'!  Oh, wait.

I'll even anticipate your next statement:

"Impeach Biden Now!"

To be replaced by John Boehner.  And freedom is restored.  Right?

Take your pick, all the way down the line of succession.  See anybody appealing?

http://en.wikipedia.org/wiki/United_States_presidential_line_of_successi...

But hey, we still have 2016 to look forward to.  I hear the early favorites for the Republicans are:

Chris Christie

and

Jeb Bush

Ain't democracy grand?  

Tue, 03/12/2013 - 11:45 | Link to Comment williambanzai7
williambanzai7's picture

Does Home Depot sell guillotine kits?

Tue, 03/12/2013 - 23:43 | Link to Comment steelrules
steelrules's picture

Banzai, your looking for restaurant supplies not hardware.

http://www.madcowcutlery.com/store/pc/F-Dick-14-Small-Beef-Splitter-74p1890.htm

Tue, 03/12/2013 - 21:50 | Link to Comment ajax
Tue, 03/12/2013 - 15:54 | Link to Comment Joebloinvestor
Joebloinvestor's picture

Better to get a trebuchet and start collectin big ass rocks or some of those dead pigs from China for launching.

Tue, 03/12/2013 - 12:40 | Link to Comment SmittyinLA
SmittyinLA's picture

No kits (liability too high) but these guys could cut you a nice blade http://www.industrialmetalsupply.com/ and you could get everything else at the home depot including laborers.

 

Tue, 03/12/2013 - 12:13 | Link to Comment monad
monad's picture

Just rope, and a decent selection of products to deal with vermin.

Tue, 03/12/2013 - 11:52 | Link to Comment falak pema
falak pema's picture

is your visual combat gal going to change her weaponry?

Move from samurai blade to good doctor's razored variety?

Tue, 03/12/2013 - 11:16 | Link to Comment Axenolith
Axenolith's picture

Were the FDIC insurance were closer to a “free market” price of 40bp per quarter, the quarterly cost would be close to $30 billion or just about the entire income for the industry.  Since banks are really not that profitable, however, instead we have federal subsidies. The lack of basic profitability, and not the avarice of bankers, is the reason for the subsidies.

Interesting wording on the parts "Since banks are really not that profitable" and "the lack of basic profitability".  On first parsing the paragraph, the not-well-read reader would conclude that there is some concept here of "facilitating banking for the general good" when in fact the banks are actually highly profitable and that this system is set up as it was exactly designed to work.

Government as it stands now is merely the gun toting mediator of the environment the banks operate in.  The average citizen may believe that the government can "reign in out of control banks" but the reality of the situation is that with the stroke of a bankers pen on a check any given major political player can be eliminated from the game either by support of an opposition candidate acceptable to them, or in the case of a popular person, via assault on them by their owned media systems.

Obviously, there are those politicians (very few and far between) that fall through the cracks, but the notion that populist revulsion at the status quo will lead to liberty enhancing reforms is a panacea that has repeatedly yielded only dissappointment and further erosion of liberty.

While the line may be able to be held, or at the least ground yielded slowly, on the political front, the main "theater of conflict" for defeating the technocracy of the elites (TOE for brevity) will always remain at the base economic level, the supreme effort of each and every individual on his own to channel as much of the rewards of the sweat of his brow AWAY from any institutions feeding the TOE and to continue to educate his fellows toward the same goals.

Tue, 03/12/2013 - 10:47 | Link to Comment moneybots
moneybots's picture

What it all boils down to is trying to paper over a massive fraud.  A fraud to cover a fraud.

Tue, 03/12/2013 - 10:44 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

If anyone wants to have some fun with Mr. Holder since he thinks these zombies are TBTF and therefore TBTJ.

http://exposed.su/US_Attorney_General_Eric_Holder.html

http://exposed.su/US_Attorney_General_Eric_Holder_Credit_Report.pdf

Addresses and credit history (which not surprisingly is pretty much spotless and more humor than any real informational interest).

Nothing major but I am sure some of you would love to send Mr. Holder some fan mail....

 

Tue, 03/12/2013 - 10:18 | Link to Comment yabyum
yabyum's picture

Walked in to a big bank(US Bank) to cash a 200$ check for my 92 Y.O. mother so she could have some cash at her retirement place. The guy behind the counter said there was a five dollar charge, I told to go piss up a rope. I then talked to the manager about it, my mom has had a account there since 1954! He said so! I told him he was not running a bank but a glorified pay day loan scam. Long story short, went to MY credit union and cashed the the check...no fee, and a smile and Thanks Yabyum! Fuck the banks...fuck the bankers.

Tue, 03/12/2013 - 13:25 | Link to Comment SKY85hawk
SKY85hawk's picture

New meaning for TBTF, for Bank Regulators and Prosecuters and CONgress

TOO BOUGHT TO FUNCTION

 

Is it time to do some shorts against Financials because of the Basel rule changes?

 

Tue, 03/12/2013 - 12:24 | Link to Comment nofluer
nofluer's picture

Close the account - move it to a credit union.

Tue, 03/12/2013 - 10:48 | Link to Comment Cheyenne
Cheyenne's picture

Very similar experience: I walked into a bigger bank (BAC) to deposit cash into a friend's account.

"There's a fee for that."

"For CASH? Jesus, fuck me to tears. How much is it?"

"We're not allowed to disclose that."

"Well is it less than $100?"

"Sir, we can't disclose that. Would you like to make the deposit."

"GO PISS UP A ROPE," I said. Preferred nomenclature on my part.

I went to my credit union and wired it for $6.

Tue, 03/12/2013 - 14:30 | Link to Comment nofluer
nofluer's picture

If time permits:

USPS money orders cost -

$0.01 to $500.00 .......................$1.20

$500.01 to $1,000.00 ................$1.60

Postal Military Money Orders…..$0.35 (issued by military facilities) International Money Orders…… $4.50 What do you need to buy one? Cash, debit card, or traveler's check for payment.

Tue, 03/12/2013 - 12:40 | Link to Comment Pool Shark
Pool Shark's picture

 

 

Why do you guys even have bank accounts?

Tue, 03/12/2013 - 10:11 | Link to Comment Overdrawn
Overdrawn's picture

True socialism only happens at the 'top' of society, that is where the undeserving rich and powerful are given massive tax breaks, subsidies and bailouts. True capitalism is what is inflicted on the masses, it is they who are at the mercy of manipulated market forces and who suffer for the God of profit.

 

Tue, 03/12/2013 - 11:34 | Link to Comment Axenolith
Axenolith's picture

"True Capitalism" and "Manipulated Market Forces" is a contradiction of itself in the same sentence.  True socialism is the ultimate manipulation of market forces; sold to the masses as compassion and entrenching the ultimate elite in a near unassailable fortress of armed government and bureaucracy.

In TRUE capitalism, the attempted market manipulators and the rich are always at risk of losing everything.  Under those circumstances the disarticulated remains of their empires are picked over by the new wave of entrepeneurs and stoic savers.

Societies choice was, from the historical standpoint, to heed the siren call of honey lipped politicians and bankers that they could protect them from the vagaries of a vibrant and free market.  We see where that gets humanity every time.  The answer should be to insure that whatever institution educates a societies youth instill in them respect for the product of labor and thought and warn them severely of the consequence of ill thought risk taking with that product.

In a nutshell, if there was ever a basic something that people should be required to have a certain level of competence in, or a degree for, it should be "borrowing".

Tue, 03/12/2013 - 12:00 | Link to Comment nofluer
nofluer's picture

Debt = income/surpluses of the remaining productive years of your life.

If you borrow 1,000 and have a "weekly surplus of income" of $10 with which you can make payments, you have sold yourself into slavery for a period of 100 weeks - or two years plus the time required to pay the interest.If you have $20 a week, you have still indentured over half of the net proceeds of your labor to the lender's benefit.

So "Debt" = voluntary slavery.

The kids should be taught that, lest they borrow their lives away while they are yet young, and so end up with no life at all.

Any college loan that is made without FULL disclosure of this principle should be invalidated.

Tue, 03/12/2013 - 16:47 | Link to Comment WTFx10
WTFx10's picture

Thomas Jefferson:

“The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.”

 

IT BEARS REPEATING BECAUSE MILLIONS OF DUMB FUCKERS STILL DON"T SEEM TO GET IT.

Including the US Military, a volunteer civilian Military no less.

"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin!

Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."

From the original minutes of the Philadelphia bankers sent to meet with President Jackson February 1834, from Andrew Jackson and the Bank of the United States (1928) by Stan V. Henkels

AS THE US NAVY SO PROUDLY EXCLAIMS "A FORCE FOR GOOD" Declare war on the Banks if you get tired of killing Muslims.

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." John Dalberg Lord Acton

The only just World War 3? "A FORCE FOR GOOD"

Tue, 03/12/2013 - 13:40 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

I was talking to an in-law who is a teacher (I'd say her strengths are Womens History and English, and weaknesses/total blindspots are History and Finance), and we got to criticizing the education system (atleast I was critical).  I said there are some things that should be taught in school, that currently aren't, with "How money works and where it comes from" being right at the top of the list.   She argued that somethings just can't be fit into the curriculum. 

There's too much key material already, no room for that, sorry.  Everything they are being taught now is important, everything that is taught later is still being taught, so whats the problem, was her view.  Well... When you only learn about finance AFTER you are $50,000 in debt, it could have made a big difference to your decision! 

And then there are the kids who will never go to college, from poorer families obviously.  So they will never learn about finance, and they will be stuck in the 'serf cycle, the 'debt trap', their entire lives.  Accident?  Unhappy coincidence?  I think not.

Tue, 03/12/2013 - 23:35 | Link to Comment neutrinoman
neutrinoman's picture

And, undoubtedly, keep voting for dimwits like Elizabeth Warren.

Tue, 03/12/2013 - 17:15 | Link to Comment chdwlch1
chdwlch1's picture

I was an Economics and Business major in college. Learned all about Keynes, Adam Smith's invisible hand, etc.  Never was I shown the mechanics involved with creating money in our current fiat monetary system...not once!  You'd think that would be covered on Day 1!?!?!?

Tue, 03/12/2013 - 22:16 | Link to Comment Vendetta
Vendetta's picture

I took micro & macro economics in college, the corporate quarterly report we had to do for an exam really was the kicker.  We tucked expenses under categories that only looked to me as fairly arbitrary and the 'rule/regulations' regarding that stuff change pretty much depending on who successfully lobbied for some 'regulatory' change.  Changed majors to engineering and found real science not pseudo science.   The past 10 years have told me exactly why I thought economics in college was pure bullshit ( a little truthiness was thrown in for plausible deniability purposes by the bought academics who planned the curricula)

Tue, 03/12/2013 - 10:37 | Link to Comment DOT
DOT's picture

So in your sick little world "manipulated market" is the essense of capitalism?

Tue, 03/12/2013 - 10:00 | Link to Comment Downtoolong
Downtoolong's picture

banks in 21st Century America are government sponsored enterprises

Which is why I've been saying since the crash of 2008 that all the bankers making seven figure bonuses should actually be working on the GS pay scale.

Good examples in the post. TARP was a drop in the bucket compared to all of this, yet the banks go around championing themself for paying it back with interest. I paid my electric bill and taxes last month too, but, I don't go around demanding a bonus from the government for it. 

 

Tue, 03/12/2013 - 10:30 | Link to Comment DOT
DOT's picture

No bonus for you when you pay your "hunk" !

LOL  I think we need Justice Roberts to see if giving a hunk is charity, a penalty, or a tax.

Tue, 03/12/2013 - 09:36 | Link to Comment Unwashed
Unwashed's picture

What commissions do the primary dealers make from the Treasury sales due to quantitative easing?

That might be worth a couple of billion a month for basicaly electronic transfers.

Tue, 03/12/2013 - 09:30 | Link to Comment Scro
Scro's picture

And there it goes.

Tue, 03/12/2013 - 09:28 | Link to Comment Hulk
Hulk's picture

Well, there it is...

Tue, 03/12/2013 - 09:33 | Link to Comment falak pema
falak pema's picture

Liz Warren is a fighter, she won't throw in the towel...unless she gets stymied by her crooked colleagues.

Tue, 03/12/2013 - 12:26 | Link to Comment Rattling Bones
Rattling Bones's picture

Liz Warren is a fraud that used the past suffering of the Native American people for personal gain. A disgraceful cultural thief.

Tue, 03/12/2013 - 12:48 | Link to Comment Gold Dog
Gold Dog's picture

Annbriar is a great course!!

Tue, 03/12/2013 - 11:48 | Link to Comment falak pema
falak pema's picture

yae, I'm globally green on Liz support! 

God will punish those who frack women's ass!...I mean who frack mother earth's ass; by searching for frack gas...

Heres what awaits you if you drill holes in wrong places : this is becoming a repeat thingie! 

 

Illinois Golfer Swallowed By Sinkhole - Business Insider

Yikes, even Tiger Woods could end up here! He loves to drill...in the wrong places! 

Hell hath no fury like a woman's ass scorned! 

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