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Citigroup Offers New “Pick Pocket” Derivative
Cross posted from Bankster
By Mary Bottari
According to trade magazine RiskNet, “specialists” at Citigroup are considering launching the first derivatives intended to pay out in the event of a financial crisis. These types of derivatives function like an insurance policy, allowing parties to hedge against risk. “I believe it will reduce the systemic risk in the industry, akin to how the advent of swaps means people don’t worry about interest-rate exposures any more — they just pay a fee to hedge it,” said a Citi spokesperson. In truth, such a derivative is only as good as the institution selling it. Fancy derivatives called “credit default swaps” sold by AIG were critical to bringing down the global economy in the 2008 crisis. Citi is…
Break Up The Big Banks Green Screen Challenge
Want to put your editing skills to the test and help put a stop to the big banks? It’s the Break Up The Banks green screen challenge. Just take the video, add whatever you want, and our favorites will be featured at moveyourmoney.info and breakupthebigbanks.com. Got something to say? Say it! Go to town, and make this video a tool to get people to break up with their bank.
A Call for Fiscal Responsibility (with a twist)
You’ve heard all the dire statistics: the current national debt is equal to $35,000 for every man woman and child in America. At the rate we are going, in just a few years, the whole of the federal government’s annual tax revenues will be insufficient to finance, let alone pay down our debt. China could crush our economy tomorrow simply by refusing to lend any more.
If anything is clear, it is that maintaining our current course will lead to ruin.
So I am calling today for a renewed focus on fiscal responsibility in Washington. However, before my small govt’ readers get too excited, I say we must recognize our obligations (not our limitations) and take decisive action to create the financial…
Happy Holidays
The holidays are upon us, and unfortunately for many, this season can be very stressful. While some deal with the normal, last-minute gift shopping trauma, an increasing amount of Americans can no longer afford to buy gifts for their families and loved ones.
There are so many other things that people should be focusing on right now instead of layoffs, debt and foreclosure.Sure, news of the recession’s impact is becoming normal but, lest we forget, financial security shouldn’t be a problem for people who work hard and play by the rules.
These times are meant to be merry. The only ones in the news that appear merry are the big banks. Last week, despite tanking the American economy and turning a profit from it, they received nice Christmas…
Where does the Republican Party stand on banking reform?
It is becoming abundantly obvious that Obama’s domestic agenda will have to come on the back of partisan support if it has any hopes of passing. This is particularly true for banking reform. In the past month or so we have seen a groundswell of support for breaking up the big banks starting in the most unlikely of sources – free-market evangelist Alan Greenspan. The banks, expectantly, have fired back with how this will be irresponsible and put the economy at further risk. Main Street has countered with appropriate anger as news of bonuses going to bailed out bankers flash dominate headlines while they struggle with an unemployment rate of 9.5%.
Of course there have been other voices, Senator Chris Dodd (D-CT) has…
Geithner Is “Obama’s Rumsfeld”: Replace Him With Robert Reich
Geithner, like Larry Summers inside the White House, has failed to respond to main street’s needs directly and powerfully, and failed to stand up to Wall Street interests when they are inimical to sustained stability. Whether it was home foreclosures, or credit card reform, or financial reform, the measures were compromises rather than strong policy prescriptions. It has taken a popular website, www.breakupthebigbanks.com, and Senators such as Dorgan and Sanders, and House members such as Kanjorski, to push the issue of breaking up the big banks so they can never hurt us again.
My Response to JP Morgan’s Jamie Dimon: More to Life Than Efficiency
Even in economics, life is not all efficiency, or supply and demand, or even the lowest cost. Safety, security and stability matter too. Without those, confidence suffers, and without confidence, so does both investment and consumption. Thus, it is arguable that the economy as a whole benefits when it is widely appreciated that the miscalculation, or misfeasance, of a few, can eliminate millions of peoples’ entire life’s work.
The Ghost of Glass-Steagall
There are valuable ideas in these proposals, but what they all seek to do is address the symptoms of a larger problem. Regulating derivatives, creating ‘moral hazard’ for failing big banks, protecting consumers from predatory practices, and making the industry more transparent are all worthwhile and needed reforms. And none of them will prevent the kind of abuses that destroyed our economy from happening again.
Larry Summers’ Genius Clouds His Judgment: Regulating the Banks Will Not Work
Wall Street has far more power even than the very powerful insurance + pharmaceutical industries. Good evidence for this is that, despite the enormous loss of wealth and heightened insecurity suffered by almost everyone in this economy–i.e., that keeps the matter roiling in everyone’s consciousness–Wall Street has been able to have its way with Congress, reducing new regulations to a joke, awarding themselves enormous bonuses while still owing tens of billions to the Treasury and while the rest of the economy is still reeling from the damage it caused.
There Is Nothing ‘Collateral’ About It When You Suffer the Damage
It is not that the big banks themselves are “too big to fail”. They are too big because they can cause all of us to fail. In the military terms, that tragedy is cleansed by the use of the innocuous sounding term, “collateral damage”.
The problem is this: One is just as dead from collateral damage as from a targeted hit.
