Yay! So now our money is going to the 1% in other countries!

from each bank according to its ability
to each bank according to its need

Contents Under Pressure: Yay! So now our money is going to the 1% in other countries!

It's been doing that for a while.
It's called "Globalization" and it's why every economic summit turns into a battle in the streets, because people don't take getting farked lightly.

Did you guess that it props up bankrupt banks that made bad investment decisions?

We certainly wouldn't want the rich to face any consequences when they make bad investment decisions.

Why that would be Capitalism! Can't have that.

BullBearMS: We certainly wouldn't want the rich to face any consequences when they make bad investment decisions.

The rich never face consequences for their decisions.
That's rule number one in capitalism.
The government has always been necessary in capitalism to aid and abet it, and insulate the upper class from the fallout of their policies.
Capitalism needs government intervention of one type or another.
This is nothing new, just a different variation.

m2313: The rich never face consequences for their decisions.

The shareholders and clients of MF Global and Lehman Brothers might have something to say in that regard.

jjorsett: The shareholders and clients of MF Global and Lehman Brothers might have something to say in that regard.

If they wanted to be bailed out then they should be rich enough to buy a few Governments like every one else who matters.

m2313: BullBearMS: We certainly wouldn't want the rich to face any consequences when they make bad investment decisions.

The rich never face consequences for their decisions.
That's rule number one in capitalism.
The government has always been necessary in capitalism to aid and abet it, and insulate the upper class from the fallout of their policies.
Capitalism needs government intervention of one type or another.
This is nothing new, just a different variation.

You went to public school, didn't you?

m2313: BullBearMS: We certainly wouldn't want the rich to face any consequences when they make bad investment decisions.

The rich never face consequences for their decisions.
That's rule number one in capitalism.
The government has always been necessary in capitalism to aid and abet it, and insulate the upper class from the fallout of their policies.
Capitalism needs government intervention of one type or another.
This is nothing new, just a different variation.

Your describing crony capitalism, which isn't capitalism at all. In fact, crony capitalism is more of a threat against true free market capitalism than socialism. Under a free market capitalism system people regardless of their economic status are allowed to both succeed and fail miserably on their own merit. In other words, the market and the individual decides if a venture succeeds or not. Under crony capitalism, the government, controlled by the elite, decides who wins and who loses. China is an extreme example of this.

A social safety net, and reasonable and effective worker and environmental controls can coexist with a free market system. Germany is probably the best example of this in the world. Of course they have one thing that the US doesn't. And that's informed, educated, and disciplined voters. They will actually vote for someone who tells a hard truth. We on the other hand vote for the best liar.

And that's why we're screwed.

/Republican voter: I can have tax cuts and more spending? Wonderful! But can you kick out the brown people while your at it?
//Democrat voter: I get more free stuff, and the evil rich guy will pay for it all? I'm cool with that.

Thankfully European banks will be able to borrow vast sums of dollars for far less then you will ever be able to with the added benefit of the additional greenbacks sloshing around the economy raising the dollar denominated price of all commodities. So win-win, right?

I hate to break it to you, but there is no more money. It's just IOUs jumping through imaginary hoops like when your aunt Linda tried to keep the Monopoly game going.

all I see in here is derp.

The Central Banks' move is hard for me to understand but it seems "they" (the central banks) made a power grab to be the big lenders to all countries and national banks by allowing USD to be swapped between central banks for what amounts to low interest and in the process devalued the dollar which should cause inflation. Also, I think it is clear this did nothing to address the debt problem here and abroad but is a temporary fix for a liquidity problem, which I understand as Euro banks not willing to lend to each other, thereby stopping money flow and seizing up their/our economic system. Also heard rumors a big Euro bank was on brink of insolvency which is what prompted the move. So, now the Central banks are in charge, maybe it's always been that way, but does this move in anyway increase the power the central banking system has over sovereign nations?

asdfbeau: from each bank according to its ability
to each bank according to its need

Is that like an Ayn Rand quote, or something? Sounds bootstrappy

BigBooper: Under a free market capitalism system people regardless of their economic status are allowed to both succeed and fail miserably on their own merit.

Nice little naive description of "free market" that forgets to mention that there are ways to succeed that don't involve merit. In a "free market", there is no such thing as IP, so kiss innovation good-bye. In a "free market", there is no such thing as fraud either, or embezzlement or exploitation.

dragonchild: Nice little naive description of "free market" that forgets to mention that there are ways to succeed that don't involve merit. In a "free market", there is no such thing as IP, so kiss innovation good-bye. In a "free market", there is no such thing as fraud either, or embezzlement or exploitation.

Essentially, a truly "free market" would be market socialism.
Not capitalism.
The free market no-government capitalism is as much a utopian dream as government communism.

TrainingWheelsNeeded: The Central Banks' move is hard for me to understand but it seems "they" (the central banks) made a power grab to be the big lenders to all countries and national banks by allowing USD to be swapped between central banks for what amounts to low interest and in the process devalued the dollar which should cause inflation.

Not exactly. The central banks are covering for the US money market funds, which are rapidly pulling out of funding any European banks.



As the money market funds dry up, the Euro banks have moved to foreign exchange swaps (swaps aren't the same as directly trading on the foreign exchange, they're sort of short-term reversable loans: I'll "swap" you some Euros for some US dollars now, and promise that in 3 months we'll revert the swap, and I'll take Euros and give you dollars ... plus a bit extra, for your trouble.) As more banks move into the swap market, the cost is going up:


(The Aussie dollar swap is there 'cause I'm stealing the pics from a Reserve Bank of Australia article ... works as a comparison figure though.)

As the cost of US dollar funding goes up, Euro banks are starting to refuse to make US dollar loans. That is a problem for the US. Random European companies aren't borrowing US dollars to spend in Europe (dollars are just bits of green paper over there), they want dollars to invest in US-located subsidaries.

However, that said, this is mostly a roll-over issue. Let's say a Euro company borrowed $10 million dollars 5 yrs ago (on a 10yr business loan). The bank itself got the dollars on a short-term loan, probably 3-months or so (after 3 months is up, they borrow a new $10 million & pay off their old loan, etc etc). The company has already spent that money, it's been sloshing around the economy for the last 5 years, so it's not going to cause inflation now.

The potential for inflation actually lies with the spare dollars the money market is sitting on. If the cental banks step up, cover for the money markets and lend dollars to Euro banks, that's fine ... until the money market relaxes again and wants to invest those spare dollars. In theory, at that stage, the central banks stop lending out dollars: thus, no inflation. (Whether they'll actually get the timing right is up for debate.)

Also, I think it is clear this did nothing to address the debt problem here and abroad but is a temporary fix for a liquidity problem, which I understand as Euro banks not willing to lend to each other, thereby stopping money flow and seizing up their/our economic system. Also heard rumors a big Euro bank was on brink of insolvency which is what prompted the move.

Euro banks would be mostly lending to each other in Euros. The problem is US banks (and other US money markets) not lending US dollars to European banks. But yes, it is a liquidity problem/solution, it's not about overall levels of debt.

It's possible a big Euro bank or two are in trouble ... but it's a self-fulfilling prophecy: if the money markets won't lend (for fear of default), costs go up dramatically, and a bank that was actually doing okay will suddenly be in trouble.

So, now the Central banks are in charge, maybe it's always been that way, but does this move in anyway increase the power the central banking system has over sovereign nations?

Uh, no? It's always been that way. But would it really be a bad thing if central banks had more power? (Admittedly, I'm biased because I'm an Aussie, and our central bank has done an amazing job: it's now been more than 20yrs since our last recession ... I might be concerned about the US Fed having more power.)

The problem here is that the ECB (European Central Bank) was set up with farked-up rules, whereby it's not supposed to print Euros. If it wasn't a European problem (or the ECB didn't have that dumb rule), the relevant central bank would just print off a pile of local currency, and lend THAT to the local banks. The local banks would then spend the local currency on the foreign exchange to buy dollars (devaluing the local currency). That's how it's supposed to work. Since the ECB is broken, the other central banks are side-stepping it to inject liquidity with US dollars.

It's not totally original though. The central banks set-up US dollar swaps during the GFC (at that time the US money markets were more worried about local US banks, but they still pretty much panicked and stopped lending to anyone.)



If you look really, really closely, you can see a tiny spec about 1/2 a centimetre after the 2011 ... that's the 1.4 billion from the last sale in October. So, all in all, it worked pretty well last time - banks used it when the money markets dried up, but went back to the normal system once the credit-crunch was over. Did you notice the central banks having significantly more power in 2008? No? Then there's no need to worry if/when the use of swaps goes up again.

Let's look at how this worked the last time.

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."

Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.

Your average chimpanzee couldn't fark up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the OWS protesters go to sign up for their interest-free billion-dollar loans?

Then there's this old chestnut:

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's their own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want "something for nothing."

This is ironic because, as one of the Rolling Stone editors put it last week, "something for nothing is Wall Street's official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

This sort of thing seems to happen every time the banks do something dumb with their money. Just recently, the French and Belgian authorities cooked up a massive bailout of the French bank Dexia, whose biggest trading partners included, surprise, surprise, Goldman, Sachs and Morgan Stanley. Here's how the New York Times explained the bailout:

To limit damage from Dexia's collapse, the bailout fashioned by the French and Belgian governments may make these banks and other creditors whole - that is, paid in full for potentially tens of billions of euros they are owed. This would enable Dexia's creditors and trading partners to avoid losses they might otherwise suffer...

When was the last time the government stepped into help you "avoid losses you might otherwise suffer?" But that's the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn't whine about being put on the street.

But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to "suck it in and cope" when that bet failed, the banks instead went straight to Washington for a bailout -- and got it.

BullBearMS: Then there's this old chestnut:

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's their own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want "something for nothing."

This is ironic because, as one of the Rolling Stone editors put it last week, "something for nothing is Wall Street's official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.

Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.

The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.

This sort of thing seems to happen every time the banks do something dumb with their money. Just recently, the French and Belgian authorities cooked up a massive bailout of the French bank Dexia, whose biggest trading partners included, surprise, surprise, Goldman, Sachs and Morgan Stanley. Here's how the New York Times explained the bailout: To limit damage from Dexia's collapse, the bailout fashioned by the French and Belgian governments may make these banks and other creditors whole - that is, paid in full for potentially tens of billions of euros they are owed. This would enable Dexia's creditors and trading partners to avoid losses they might otherwise suffer...When was the last time the government stepped into help you "avoid losses you might otherwise suffer?" But that's the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn't whine about being put on the street.

But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to "suck it in and cope" when that bet failed, the banks instead went straight to Washington for a bailout -- and got it.

and the point of this drivel was?

/some banks, such as JP Morgan didn't want TARP
//TARP was not free
///what happened yesterday was not akin to whatever it is you are babbling about

dumbobruni: and the point of this drivel was?

dumbobruni: all I see in here is derp.

Huh, all I see are meaningless, dismissive clichès.

bunner: dumbobruni: all I see in here is derp.

Huh, all I see are meaningless, dismissive clichès.


Don't forget the witless portmanteaux!

Contents Under Pressure: bunner: dumbobruni: all I see in here is derp.

Huh, all I see are meaningless, dismissive clichès.


Don't forget the witless portmanteaux!