Buffett says banks are free of excess and pose no threat to U.S.

January 10, 2013 by · Leave a Comment
Filed under: Opinion 

The banks will not get this country in trouble, I guarantee it,” – Buffett, chairman and chief executive officer of Berkshire Hathaway Inc.

Maybe he knows something we don’t, likely.  I guess the hundreds of trillions of derivatives, home equity lines of credit on underwater mortgages and other off-balance sheet assets are just fine.  What I decode this message as truly saying that no matter what happens, the U.S Treasury in partnership with the Federal Reserve, will bailout and issue what ever amount of credit is needed so that none of our too big too fail banks,…fail.

Mr. Buffett, sir, our country is already in trouble, even in your own words, everyday we are mortgaging off a little bit of our country every day (Charlie Rose Interview).  We are backing bad money and bad debt and according to Gresham’s Law, bad money chases good money out of the market.   At the same time we have reduced interest rates to zero so we are burning anyone who has saved their money and instead, forcing them to speculate on riskier assets.   Too top it off, we have codified a two-tier legal system for influential people like yourself and everyone else, like myself.

Maybe you are right, banks do not pose any threat to the U.S.

Bloomberg - Warren Buffett, the billionaire investor who oversees stakes in some of the largest U.S. banks, said the nation’s lenders have rebuilt capital to the point where they no longer pose a threat to the economy.

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U.S. central bank reviews foreign banks derivatives deal

January 10, 2013 by · Leave a Comment
Filed under: Credit News 

This is interesting.  According to the article, with the Dodd-Frank regulation put through in 2010, it looks like the new rules now gives restrictions on U.S. banks that have access to the Federal Reserve discount window, in contrast, foreign banks that have U.S. branches do not get access to the discount window but “can” trade in derivatives.

This creates the issue on banking preference depending on your country of origin.  I do agree that banks that take part in derivatives trading, should not have access to u.s backstops reserved for deposit taking commercial banks.

CNBC (Financial Times) – The U.S. Federal Reserve is weighing a plan that would allow big foreign banks to avoid costly regulatory changes that were meant to prevent derivatives trading from being subsidized by U.S. taxpayers.

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Jack Lew tapped to replace Tim Geithner as Treasury secretary

January 9, 2013 by · Leave a Comment
Filed under: Industry News 

I don’t know too much about Jack Lew, I know he has been a Washington insider for decades.  At least from what has been reported, he is not as much of a Wall Street guy like other names that were floated by the media, example in Jamie Dimon. 

He will still need to go through Senate confirmation so who knows, they could block his confirmation and we could still get another Wall Street pedigreed Secretary.  He was part of the Clinton administration, and it being touting as playing a pivotal roles in the engineering of the balance budget during that presidency.  

I am still not convinced, Obama brought in Paul Volcker in the initial aftermath of our current financial crisis and he was quickly marginalized so this may be another dog & pony show.  We need to get serious about our tax code and spending or at some point people will lose confidence in our ability the repay our debts in kind and that will cause a serious dislocation in our market and large cracks in the American foundation. 

Politico - President Barack Obama will nominate White House chief of staff Jack Lew for Treasury secretary as soon as Thursday, according to a person briefed on the matter. In doing so, Obama is throwing Lew straight into the middle of an increasingly nasty budget war, the likes of which Washington hasn’t seen since the mid-1990s.

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Japan’s PM prepares to print money for the whole world

December 18, 2012 by · Leave a Comment
Filed under: Currency News 

Looks like the Japanese Yen carry-trade will be getting a fresh boost by Japan’s Prime Minister Shinzo Abe.  Instead of allowing deflation and defaults happen to get debt levels down to sustainable levels, instead we are going to crank them up to unprecedented levels.  In the end this will not work because your debasing your currency and it is a race to the bottom that ends in making a formerly valued currency, valueless.   Enter in, a new currency.

Here are a few interesting quotes I wanted to point out:

We think this could be the beginning of a fresh reflation cycle for the global system, combining with the US recovery to mark a turning point in the crisis

And

It is tremendously important for global growth, and markets are starting to take note

I read the second quote to say, we have to have more credit creation or we will face debt deflation which we want to avoid at all cost.  It will not be pretty when the music stops.

The Telegraph – Japan’s incoming leader Shinzo Abe has vowed to ram through full-blown reflation policies to pull his country out of slump and drive down the yen, warning Japan’s central bank not to defy the will of the people.

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HSBC “Too Big to Jail” – U.S. codifies “two” laws for powerful and non-powerful people

December 16, 2012 by · Leave a Comment
Filed under: Opinion 

I really took time to think about what I waited to say.  I want to start with that, the rule of law has failed in the United States.  With the HSBC settlement we have effective codified “two” sets of laws in America.  One with influence & power and another for the common citizen.

This bank the operates on sovereign American soil committed crimes are in defiance of all the major criminal activities we shed so much blood and sweat for, terrorism, drug cartels and trading with the enemy.  This wasn’t small sums of money or just a single incident.  This was systematic over a decade involving reports of up to $60 TRILLION DOLLARS.  Just take a second and let the set in.

The reasoning the Justice Department (what Justice?) gave was that HSBC:

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

What this means is that if your somehow vital to global or national interests, you do not need to follow criminal law and are basically untouchable.  Well there you have it, commoner law and elite law.  Once the rule of law fails it is not long when more institutions fail and general faith in the system sets in.  Once you have that, you will see more lawless behavior from more disenfranchised people, the precedent (I have talked about this many times) you set at the tops give other people a reason why they should do whatever they want because their is not enough incentive to follow the rules other than police action.  Problem is that their is not enough cops to walk that type of beat.
Our country and way of life is directly being threatened and I believe this will be looked upon and a watershed moment in history by future generations.   This is not isolated either, every major bank in our country has had to settle for some form of fraud or other criminal behavior.   We let them settle and it just supports this two-law system in the United States.   Maybe our country needs to fail for people to wake up and actually hold people to account and participate in this constitutional republic.  We have lost our way and we don’t seem to have enough spine to stand to say “NO MORE”.
Rolling Stones (Matt Taibbi) – If you’ve ever been arrested on a drug charge, if you’ve ever spent even a day in jail for having a stem of marijuana in your pocket or “drug paraphernalia” in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

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