Category Archives: Financial

The Anger of the Unprivileged Is Rising Globally

PrivilegesCharles Hugh Smith – The righteous disgust with the status quo that spawned the broad-based campaigns of Bernie Sanders and Donald Trump is not unique to the U.S.Globally, those disenfranchised by the status quo–the unprivileged, or in Peggy Noonan’s phrase, the unprotected— are starting to express their discontent in the streets, in social media and in elections.

Why are people around the world angry? It’s obvious to everyone in the unprivileged classes and a mystery to the “we’re doing just fine here, what’s your problem?” privileged classes: The system is rigged to benefit the protected few and marginalize the unprotected many.

The problems are not just political; they are structural. As I outline in my new book, Why Our Status Quo Failed and Is Beyond Reform, there are two structural engines of disorder at the heart of the system:

1. Automation, software and the forces of globalization are disrupting jobs and wages everywhere.

2. Centralized hierarchies and the forces of financialization have extended the power of privilege globally so the few are benefiting at the expense of the many, as revealed in this chart of global wealth:

Privileges

The growing concentration of wealth and power in the privileged elites is evidenced by the fact that 8% of the world’s populace owns 85% of its wealth.What is driving this increasing concentration of wealth and power? In a word:Privilege.

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Criminal Bankers Threaten Entire World Economy [Video]

ChaitmanGreg Hunter – Helen Davis Chaitman was the lead attorney representing the victims of the $65 billion Bernie Madoff scam. Madoff had help form JP Morgan Chase Bank, and what she found out was stunning.  Chaitman explains, “JP Morgan Chase was the subject of a criminal complaint . . . it was charged with a criminal violation of the Bank Secrecy Act, which is a felony violation.  JP Morgan Chase disgorged a small percentage of the profits it made on the Madoff relationship, and the government called it quits.  Nobody was fired.  Nobody disgorged bonuses, they just went on doing other crimes.”

Chaitman, who wrote a book called “JP Madoff,” documented that JP Morgan Chase paid nearly $36 billion in fines for various crimes just in the last four years. Chaitman says all the big banks are basically criminal organizations, and “all of them regularly engage in fraud.” Chaitman also says, “I could have written this book about HSBC, Bank of America or Citi Group.  All the banks, and the government encourages them to do this, all of the banks have been operating like criminal enterprises. . . . The bankers have become such criminals it threatens the entire world economy.”

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The System Won’t Survive the Robots

Paul Rosenberg – It’s really just a matter of time; the working man’s deal with his overseers is half dead already. But there’s still inertia in the system, and even the losers are keeping the faith. Hope dies slowly, after all.

Nonetheless, the deal is collapsing and a new wave of robots will kill it altogether. Unless the overseers can pull back on technology – very fast and very hard – the deal that held through all our lifetimes will unwind.

We All Know the Deal

We usually don’t discuss what the “working man’s deal” is, but we know it just the same. It goes like this:

If you obey authority and support the system, you’ll be able to get a decent job. And if you work hard at your job, you’ll be able to buy a house and raise a small family.

This is what we were taught in school and on TV. It’s the deal our parents and grandparents clung to, and it’s even a fairly open deal. You can fight for the political faction of your choice and you can hold any number of religious and secular alliances, just as long as you stay loyal to the system overall.

This deal has been glamorized in many ways, such as, “Our children will be better off than we are,” “home ownership for everyone,” and of course, “the American Dream.” Except that it isn’t working anymore, or at least it isn’t working well enough.

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Fed Up with the Fed

Charles Hugh Smith – Is anyone else fed up with the Federal Reserve? To paraphrase Irving Fisher’s famous quote about the stock market just before it crashed in 1929, we’ve reached a permanently high plateau of Fed mismanagement, Fed worship and Fed failure.

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The only legitimate role for a central bank is to provide emergency liquidity in financial panics to creditworthy borrowers. Once the bad debt (credit extended to failed enterprises and uncreditworthy borrowers) is written off, the system resets as asset valuations adjust to reality–how ever unpleasant that might be for the credulous participants who believed the ever-present permanently high plateau shuck and jive.

Just to state the obvious: Fed policies are not just insane, they’re destructive:

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The War on Cash Is a War on Your Freedom to Opt Out

Charles Hugh Smith – I’ve covered the war on cash i.e. the proposed elimination of cash, a number of times, for example, The War On Cash: Officially Sanctioned Theft (June 13, 2015)

Our first question should be: just how big a share of our financial universe is cash? The answer is: vanishingly small. Look at this chart of total credit in the U.S. economy–$63 trillion–and total cash: $1.45 trillion. Cash is the thin red line at the bottom of the chart–it barely registers.

cash

Meanwhile, total household/non-profit-sector financial assets total $70.3 trillion (net $55.8 trillion minus liabilities of $14.5 trillion).

Total money (currency in circulation and demand deposits) is over $10 trillion.

If cash is such a small share of money and assets, why are governments so keen to ban cash?

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We’re in the Eye of a Global Financial Hurricane

Charles Hugh Smith – The Keynesian gods have failed, and as a result we’re in the eye of a global financial hurricane.

Keynesian

The Keynesian god of growth has failed.

The Keynesian god of borrowing from the future to fund today’s consumption has failed.

The Keynesian god of monetary stimulus / financialization has failed.

Every major central bank and state worships these Keynesian idols:

1. Growth. (Never mind the cost or what kind of growth–all growth is good, even the financial equivalent of aggressive cancer).

2. Borrowing from the future to fund today’s keg party, worthless college diploma, particle board bookcase, stock buy-back, etc. (oops, I mean “investment”)–a.k.a.deficit spending which is a polite way of saying this unsavory truth: stealing from our children and grandchildren to fund our lifestyles today.

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