Maggots of Wall Street

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Like a meth addict coming off their last hit, the US is slowly rolling back the free money to try and nudge Wall Street off its addiction after the spectacular collapse of deregulated financial markets in 2007/2008.

Those guilty of this meltdown have been allowed to mostly walk free of any of the consequences…

​JPMorgan, Morgan Stanley fined $1.8 bn for concealing pre-crisis mortgage risk
Morgan Stanley has agreed to pay $1.25 billion to the US government, and JPMorgan has been fined $614 million as a penalty for concealing the full risk associated with mortgage securities.

…that’s a $1.8billion fine on $10.58 billion of sales. The punishment is barely a commission cheque.

In only 10 years, the financial economy in 1997 went from being 15 times greater than the real economy to 70 times greater than the real economy. We have financial markets totally disconnected from the real economy. In 2012, High frequency trading firms accounted for 73% of all U.S. equity trades, yet  represent only 2% of the approximately 20,000 firms in operation. Wall St is now an electronic black box rigged casino which has grown to unregulated dominance in only a decade.

This build up of madness must rupture at some point. 2007 was the beginning and most of the world responded with bail outs and money charged so low to create a false confidence. How sustainable is that and will it simply lead to another crash…

IMF paper warns of ‘savings tax’ and mass write-offs as West’s debt hits 200-year high
Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.
The IMF working paper said debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, either negotiated 1930s-style write-offs or the standard mix of measures used by the IMF in its “toolkit” for emerging market blow-ups.

…and the trigger for the next collapse could be the spectacular looming meltdown in China’s financial markets, the pull back of cheap money in America or even the new brewing controversy in currency…

Foreign-Exchange Probe Widens
LONDON—A regulatory probe that flamed up in one corner of the vast foreign-exchange market is now engulfing the entire industry.

The latest conflagration: concerns about a type of foreign-exchange derivative that is widely used by financial institutions and companies world-wide, according to a person familiar with the matter.

Regulators started asking banks last April to hunt for signs their employees were colluding with traders at other banks to manipulate an important exchange-rate benchmark. The investigation has since morphed into a much further-reaching international inquiry that is raising troubling questions for one of the world’s largest financial markets.

…we’ve got 99 problems, neo-liberalism and financial deregulation are 98 of them.

6 COMMENTS

  1. Love the title.
    I watched Too Big too Fail on the weekend. Greed and incompetence all the way. Why are we still taking these fuckwits seriously? Their theories are bullshit the results chaos and exploitation of the planet and it’s people. Small is beautiful. Fuck global economics . Local and regulated. only way to go.

  2. But no! Apparently NZ has a “rockstar” economy, we are growing more, and economists are predicting more growth ahead. The world has recovered from the crash of 2008 and the recovery is here to stay.

    I’d really like all these idiot economists predictions to be strongly remembered.

    And I call them idiots because any group of people who propose we continue with an economic model which requires growth does not understand simple mathematics. It is impossible to have perpetual growth in a finite space.

    And finally, market analysis is what I do everyday. It looks like there may have been a turn in the US stock markets on 15th January. I expect it will continue to go down at least for a few weeks. It may be the start of something bigger though.

    • NZ’s “rock star economy” is predicated on the continuation of a debt-fueled binge, i.e. endless easy credit, permanently low interest rates, and the believe that house prices will never go down (i.e. that the perceived increase in capital value can be leveraged forever). Of course the ugly reality of mathematics (specifically the exponential function) will prove all those wrong EVENTUALLY. Of course when it ends (as it must), “no one saw it coming”. Incidentally, China now REQUIRES $3.40 in new debt for every $1.00 of GDP growth. What could possibly go wrong?

      • The economists are doing what I call a “straight line prediction”. If there is growth now then it will continue.

        But markets change. That’s the nature of them. Look at any chart of indicies, equities, commodities or currencies and you will see huge changes.

        There are a few people who see a huge crash ahead. At this stage I can see it is entirely possible, but I’ll not be sure of it for another couple of months. If we are seeing the start of a crash now then it could be absolutely massive.

        But the few who do see it coming don’t get coverage. The mainstream economists do. And we all know how accurate their predictions of stellar growth were back in 2007 don’t we.

  3. Thanks Bomber…it is quite a concern for people with disabilities as historically, it’s the disabled who are most affected. The same ideology is seen here in NZ with calls for sterilization of beneficiaries and policies of termination on expectant mums of disabledbabies.Capitalism…Facism….Eugenics

    DLANZ see the National led Coalition as like ”Oliver Twist” where the Board eat their flash dinner, while young Oliver has to ask for more…thats neo-liberalism mixed with self-centered bigotry.

    Keep smiling
    Doug Hay…Cordinator

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