Free Republic

<p>The austerity obsession, even when borrowing costs are so low, is lunatic.</p> <p>If the fiscal authorities are unwilling to behave so sensibly -- and the signs, alas, are that they are not -- central banks are the only players. They could be given the power to send money, ideally in electronic form, to every adult citizen. Would this add to demand? Absolutely. Under existing monetary arrangements, it would also generate a permanent rise in the reserves of commercial banks at the central bank. The easy way to contain any long-term monetary effects would be to raise reserve requirements. These could then become a desirable feature of our unstable banking systems.</p>

J.P. Morgan Chase CEO Jamie Dimon is focused on building a so-called fortress balance sheet at his behemoth bank. To that end, he said the bank JPM, +0.04% has added around $500 million to its reserves against loans losses in the oil-and-gas sector in the first quarter of 2016. The move comes as crude-oil prices have fallen about 12% so far this year and have plunged 34% over the past 12 months, putting the finances of energy companies under pressure. Offering details about its balance sheet at an event for investors in New York on Tuesday, the sprawling bank said...

Big banks are cringing as crude oil is crumbling. Firms on Wall Street helped bankroll America's energy boom, financing very expensive drilling projects that ended up flooding the world with oil. Now that the oil glut has caused prices to crash below $30 a barrel, turmoil is rippling through the energy industry and souring many of those loans. Dozens of oil companies have gone bankrupt and the ones that haven't are feeling enough financial stress to slash spending and cut tens of thousands of jobs. Three of America's biggest banks warned last week that oil prices will continue to create...

Ever since the financial crisis, many outside the wealthy elite (sometimes referred to as populists) have argued that the largest banks are too big and too risky. Minneapolis Federal Reserve president Neel Kashkari recently echoed those beliefs.Yet if a new Federal Reserve proposal goes through, Wells Fargo and other large banks might get even bigger and riskier, adding billions to their balance sheets that could increase the banks’ risk profiles.The Federal Reserve says the proposal, which specifies the amount and kind of debt that systemically important large banks must hold, could help make sure that those banks can be wound...

SEOUL, Feb 22 (Reuters) - Chinese banks including a branch of China's biggest bank Industrial and Commercial Bank of China (ICBC) have frozen accounts belonging to North Koreans, a South Korean newspaper reported on Monday. Citing phone conversations with an unnamed employee of ICBC's office in the northeastern Chinese border city of Dandong, the Dong-A Ilbo reported that since late December it had suspended all deposits and transfers of foreign currencies in and out of accounts with North Korean names. "(The bank) had never told me why it was taking such measures, but it seems that they are related with...

Bernie Sanders, everyone's favorite socialist running for the American Presidency, has been exciting his urchins by telling them how the big, bad wolves of Wall Street are stealing their breakfast, lunch and dinner. The other night he stated "The business model of Wall Street is a fraud." Many people think Sanders is just a cute old Grandpa type. But since he just slandered everyone in the financial and banking business in America, I thought it might be a fine time to defend them and dispute the spurious statements he is making. I don't doubt that Sanders believes what he says....

NEW HAVEN - In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. First came zero interest rates, then quantitative easing, and now negative interest rates - one futile attempt begetting another. Just as the first two gambits failed to gain meaningful economic traction in chronically weak recoveries, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis. The adoption of negative interest rates - initially launched in Europe in 2014 and now embraced...

Harvard's Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation. I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption...

It’s not contained. There are over $1.8 trillion of US junk bonds outstanding. It’s the lifeblood of over-indebted corporate America. When yields began to soar over a year ago, and liquidity began to dry up at the bottom of the scale, it was “contained.” Yet contagion has spread from energy, metals, and mining to other industries and up the scale. According to UBS, about $1 trillion of these junk bonds are now “stressed” or “distressed.” And the entire corporate bond market, which is far larger than the stock market, is getting antsy. The average yield of CCC or lower-rated junk...

What if the bazooka is shooting blanks? Since the financial crisis, it has been gospel for many investors that some combination of actions by central banks — bond buying, bold promises or flirtations with negative interest rates — would be enough to keep the global economy out of recession. But investors’ distress over the latest volley by a major central bank, the surprise decision on Thursday by the Swedish central bank to lower its short-term rate to minus 0.50 percent from minus 0.35 percent, has heightened fears that brazen actions by central bankers are now making things worse, not better....

When European regulators created a new type of bank debt, the idea was to transfer risk from taxpayers to investors. Now bondholders are learning what that really means. Yield-starved investors bought $102 billion of the contingent convertible bonds, securities created to help troubled banks hang onto cash in times of stress by skipping coupon payments without defaulting and converting the debt to equity or writing it down. Even though neither of those has yet happened, investors are already feeling the pain, as yields on Deutsche Bank AG’s 4.6 billion euros of CoCos have soared and its shares have plummeted. “CoCos...

This week was quite a tumultuous one for banks, and especially Europe's champion of the 'best in class' TBTF institutions, Deutsche Bank (NYSE:DB). Here's what happened in a nutshell. Deutsche's 6 percent perpetual bonds, CoCos (more on this below), with expected maturity in 2022, used to yield around 7 percent back in January. Having announced massive losses for fiscal year 2015 (first time full year losses were posted by the DB since 2008), Deutsche was under pressure in the equity markets. Rather gradual sell-off of shares in the bank from the start of 2015 was slowly, but noticeably eroding bank's...

Two of Europe's most powerful central bankers have called on the eurozone to form its own treasury and push forward with a quantum leap in integration to secure the single currency's future. Germany's Jens Weidmann and France's newly-appointed Francois Villeroy de Galhau urged member states to move towards a "comprehensive sharing of sovereignty" which would include a common 19-member treasury and an "independent fiscal council" with a eurozone parliament. [...] Their comments are a rare sign of unity from the EU's most powerful founding member states, which have often diverged on their visions for the future of the eurozone. Germany...

Will the crash of 2016 be worse than 2008? Central banks have failed to solve the crisis, and instead have taken on more debt than any time in history. At the same time, western institutions are welcoming in Islamic money. Does this mean Sharia-compliant finance? Listen here: http://usatransnationalreport.org/2016/02/13/usa-transnational-report-february-13-2016-guest-charles-ortel/ While European banks, such as Deutsche Bank, falter, what does this mean for the U.S. economy? And what does the future look like? Charles Ortel is an investor and writer interested in economics, geo-politics, history, travel and just, lasting peace. He has done extensive research on the fraudulent activities of the Clinton...

According to the latest White House budget projections, the government's interest costs are expected to more than triple to $787 billion by 2026, as interest rates rise, from $223 billion in 2015. By 2025 and 2026, the government will spend more on interest costs than all non-defense discretionary outlays. Under the White House budget, the national debt will increase from $19 trillion to more than $27 trillion over the next decade.

"I Don't Trust Deutsche Bank" David Stockman Unleashes Truth Bomb: "When The Crunch Comes, Bank CEOs Lie" Following this morning's proclamation by Deutsche Bank co-CEO John Cryan that Germany's largest bank is "rock solid," David Stockman exposed the ugly truth that everyone appears to have forgotten from just 7 years ago... "in my experience is that when the crunch comes, bank CEOs lie" Stockman details the Morgan Stanley, BofA, Lehman, and Bear Stearns bullshit that occurred before exclaiming... "I don't trust Deutsche Bank. I don't trust what they're saying. And there's reason why the banks are being sold all across...

The global economy seems trapped in a "death spiral" that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned. Some analysts -- including those at Citi -- have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S. "The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday. "Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global...

The president has nominated attorney J. Mark McWatters for the bank board. However, Sen. Richard Shelby (R-Ala.), chairman of the Committee on Banking, Housing and Urban Affairs, has said he's "in no hurry" to hold a hearing or a vote on the nomination. Other pending confirmations take precedence, he said.The last of the 2015 lobbying reports are in, and the top corporate spender turns out to have been the Boeing Company, at $21.9 million. Not coincidentally, the aerospace giant also outranks thousands of other firms in profiting from the subsidies doled out by the Export-Import Bank. Last year, Boeing benefitted...

There is so much chaos going on that I don't even know where to start. For a very long time I have been warning my readers that a major banking collapse was coming to Europe, and now it is finally unfolding. Let's start with Deutsche Bank. The stock of the most important bank in the "strongest economy in Europe" plunged another 8 percent on Monday, and it is now hovering just above the all-time record low that was set during the last financial crisis. Overall, the stock price is now down a staggering 36 percent since 2016 began, and...

So It Begins: Bloomberg Op-Ed Calls For An End Of Cash http://www.zerohedge.com/news/2016-01-31/bloomberg-op-ed-calls-end-cash So It Begins: Bloomberg Op-Ed Calls For An End Of Cash Submitted by Tyler Durden on 01/31/2016 In a moment of curious serendipity, a little over 90 minutes after we showed what a dystopian, centrally-planned, cashless society unleashed in a negative interest rate world would look like ("by forcing people and companies to convert their paper money into bank deposits, the hope is that they can be persuaded (coerced?) to spend that money rather than save it because those deposits will carry considerable costs"), and briefly after we...