Friday, January 1, 2010

So many ways to stealth-transfer taxpayer wealth to the banksters

Lining up for the Wall Street gravy train

He sketches the process of the complete de-coupling of finance from the real economy. Fewer jobs, more billionaires.

Posted by icarus @ 05:46 PM (1514 views)
Please complete the required fields.



24 thoughts on “So many ways to stealth-transfer taxpayer wealth to the banksters

  • From the article…

    “Quantitative easing (QE) … has been hyped as a way to get the banks to increase lending to businesses and consumers by creating over $1 trillion of excess bank reserves. But instead of increasing lending, QE does the exact opposite; it creates generous incentives for not lending. The banks who qualify have been taking the Fed’s zero-rate reserves and exchanging them for safe, 10-year Treasury bonds which yield 3.5%. What a deal! Fed chairman Ben Bernanke has promised to maintain this policy for “an extended period” which means the banks will continue to reap the benefits of this stealth bailout for the foreseeable future.”

    I hope mark wadsworth reads this;he has said on a number of occasions that QE is not a form of bank bailout.

    Or perhaps United States QE is different from UK QE?

    Reply
    Please complete the required fields.



  • QE doesn’t change the net sum of financial assets in the private sector (MW’s point?) but it swaps long-term bonds for reserve balances, so there is maturity substitution, which affects yields, keeping long-term IRs low. This, allied to lending facilities to banks, has kept asset prices high and minimised the need for deleveraging in the financial sector.

    Reply
    Please complete the required fields.



  • @2 icarus

    QE is temporarily propping up the the whole economy.

    Is that what you meant?

    Then why didn’t you say so?

    Reply
    Please complete the required fields.



  • Does this mean that central banks can threaten to withhold QE funds if the recipient banks don’t use a proportion of it to lend to businesses?

    So QE serves 2 purposes :

    1) Restores a banks balance sheet.
    2) Increases lending to businesses.

    Isn’t this what is needed to stabilise the economy? Or are there better ways of doing it?

    Reply
    Please complete the required fields.



  • 4. alan_540

    If QE stops, the financial system is revealed as the ponzi/pyramid scheme it is.

    Reply
    Please complete the required fields.



  • @4 It does (1) but not (2).

    @3 Your second question presupposes a positive response to your first. Since you’re the one making the assertion why don’t you explain what you mean?

    Reply
    Please complete the required fields.



  • What alternatives exist to QE though? Or is it the best of a bad bunch of options?

    Reply
    Please complete the required fields.



  • 6. icarus said… why don’t you explain what you mean?

    Specialists in any field feel obliged to couch their message in flowery language in a misguided attempt to demonstrate their credentials and/or massage their egos.

    Reply
    Please complete the required fields.



  • WTF?

    Reply
    Please complete the required fields.



  • What alternatives exist to QE though? Or is it the best of a bad bunch of options?

    Bad banks would fail and the good, competent, banks would take over.

    Reply
    Please complete the required fields.



  • I’m just wondering if there is a better way out of the financial mess the world economy finds itself in other than what has been done to date.

    If the US/UK economies are fundamentally knackered (Ponzi schemes) why not just de-globalise, clear all debts and start again from scratch?

    Or does that way mean upsetting the nations we owe money to, such as China. And if we upset them too much then it’s out with the guns?

    Reply
    Please complete the required fields.



  • @hpwatcher

    But if banks all owe money to each other, letting one fail (one of the big ones cf. Lehmanns) could bring others down domino fashion and the whole system implodes. Wasn’t it just this scenario that QE was meant to (and has?) prevented?

    Reply
    Please complete the required fields.



  • 12. alan_540 said… But if banks all owe money to each other, letting one fail (one of the big ones cf. Lehmanns) could bring others down domino fashion and the whole system implodes. Wasn’t it just this scenario that QE was meant to (and has?) prevented?

    That’s my understanding also.

    I have yet to read a convincing argument as to how QE can be anything other than a temporary fix. Once it is removed, then look out below!

    Reply
    Please complete the required fields.



  • happy mondays says:

    @ devo, for my own confirmation! Are you saying that the debt hole is to massive to fill ? Can they not continue to print there way out ? Can you, in simple man’s terms explain why please ? May help me get my head around this mess..

    Reply
    Please complete the required fields.



  • If QE stabilises things then it’s back to business as usual I guess. Albeit in a fundamentally flawed system. The other option is to write off all debt and start again. But the consequences of that would be possible global war.

    That’s my understanding of things. Feel free to put me right if I’m way off course.

    Reply
    Please complete the required fields.



  • I can only do simple man’s terms icarus – that should be obvious

    I’ll be back later.

    (Don’t expect any great revelations)

    Reply
    Please complete the required fields.



  • @14 Happy Mondays, listen to this. It is long but very interesting and Peter Schiff explains fiat currency and the folly of “money printing” in simple English.

    http://www.youtube.com/watch?v=eksf2ScG6yU&feature=related

    Listen to the whole thing, you will be glad you did.

    Reply
    Please complete the required fields.



  • @happy mondays

    Yes, I am saying that the debt hole is too massive to fill. A quadrillion dollars+ is an impossible amount to deleverage.

    As to whether it’s possible to print their way out – at a UK level, no. A debt Jubilee seems the only solution to me.

    Reply
    Please complete the required fields.



  • 15. alan_540 said… The other option is to write off all debt and start again

    As a rule of thumb, take the lack of response from the ‘experts’ as an affirmation that you’re on the right lines.

    Reply
    Please complete the required fields.



  • I’m interested to know if there are better options than what has been done already.

    If you look at the Dow going back to 1920 it’s basically a flat line up to the 70s and then it takes off like a rocket to where we are now.
    What changed then? How can it be sustainable? I don’t see how it can be. When we are unable to meet the interest payments on outstanding debts (let alone repaying them) what happens? Maybe it doesn’t actually matter. Maybe the system can be kept going indefinately by QE measures and other such methods yet to be used. Maybe it’s all just a big game that doesn’t really matter.

    I agree that the silence is deafening. But I suppose most contributors are nursing hangovers today!

    Reply
    Please complete the required fields.



  • “If you look at the Dow going back to 1920 it’s basically a flat line up to the 70s and then it takes off like a rocket to where we are now.”

    That’s what’s known in the financial world as a ‘bubble’.

    Reply
    Please complete the required fields.



  • It’s the scale of it today that’s scary – 1929 looks like a very minor correction by contrast.

    Reply
    Please complete the required fields.



  • 22. alan_540 said… It’s the scale of it today that’s scary – 1929 looks like a very minor correction by contrast.

    That’s right

    The financiers are slowly beginning to realise the true meaning of ‘it’s different this time’.

    When the history books don’t help…… that’s scary.

    Reply
    Please complete the required fields.



  • Why is that that no new banks that offer good retail banking and lending to small businesses are starting up. I would think this would be a great time to start as I think a mojority of people would support them.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>