Central banks are designed to be “independent,” and they shroud themselves in secrecy. But they have formidable and, when it comes to money, “unlimited” powers that they harness for the benefit of their clientele, banks. And hiding behind their veil of secrecy are shenanigans that rarely seep to the surface, but when they do, they just get worse and worse. The latest is a sordid bribery and kickback scandal at the Reserve Bank of Australia that appeared to be neatly contained to two subsidiaries, until now.
It must have been a nightmare for Neil Barofsky, former Inspector General overseeing TARP during the financial crisis. He was on CNBC this morning to hawk his new book, when all heck broke loose. An argument about TARP, the most despised law in the US … how it prevented the collapse of Wall Street or something. But they failed to mention that by the time TARP was handing out money, it had already become irrelevant. A much greater power had taken control.
Contributed by Chriss Street. During the “Great Recession,” the California private sector was forced to slash employment and spending, but the public sector made only modest cutbacks. Much of this state and local spending was funded by selling municipal bonds to elderly investor who were told the “muni” market was safe because the default rate was very low. But a Federal Reserve study debunks that myth and accuses the credit ratings agencies of “luring investors” into buying these bonds.
They only bubble up rarely, these scandals at the Federal Reserve System, but when they do, they’re doozies, involving huge amounts of money, massive conflicts of interest, all-out manipulation, collusion, favoritism, dizzying cronyism…. Over the 100 years the Fed has existed, it has done an excellent job in one of its other functions, maintaining the dollar, which has lost only 96% of its value—instead of 100%. Yet, it just doesn’t want to be audited.
Normally we see the gory details only after a firm collapses, like Enron or Lehman, when vultures tear open its guts to fight over shriveled assets that had appeared fat and healthy on paper, and some of them had been written up repeatedly to create—which our accounting system encourages us to do—paper income. Other outfits get bailed out. JPMorgan among them. Yet, they still hollow out their balance sheets. And JPMorgan’s soon-to-be $7 billion trading loss shows how.
The strongest and toughest creatures out there that no one has been able to subdue yet, the inexplicable American consumers, are digging in their heels though the entire power structure has been pushing them relentlessly to buy more and more with money they don’t have, and borrow against future income they might never make, just so that GDP can edge up for another desperate quarter. But it’s been tough.
My twelve-and-a-half minutes of conversation with Max Keiser on the Keiser Report—“Where Money Goes to Die”—aired today on RT. In the first half of the show, Max and Stacy with their tongue-in-cheek, pungent, and edgy manner tear into central banks, bankers, NIRP, the new Apartheid, the Libor scandal…. It’s quite a ride! My part starts in the second half (video).
I’m shocked and appalled that the Libor fiasco could even occur in our modern, highly ethical, and transparent financial sector. Banks misreporting anything…. unheard of. Nevertheless, it occurred. Not just once, but from get-go. And everyone and his dog, even Treasury Secretary Timothy Geithner, back in 2008 when he was still President of the New York Fed, knew about it.
Hilarious explanation of QE and how it works: big industrial-strength printers all facing the windows.
I love wine, but I’m leaning towards Californian wines; they’re awesome and grow in my extended neighborhood. More precisely, I love drinking wine, not keeping it locked up in a refrigerated vault, and certainly not investing in it. Hence, I have little sympathy for those who were buying high-dollar French wines for the purpose of investing in them, instead of drinking them, and I certainly don’t feel sorry for them in their plight. But a plight it is.