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- Superior Biotechnology Leads to Superior Drugs
- The Delusion of Regulating Risk
- Talk of a Greek Exit Gets Louder
- Doug Casey on Taxes and Freedom, Part II
- Is Facebook the Rusty Hinge of the Stock Market?
- Fitch Downgrades Japan
- Doug Casey on Taxes and Freedom
- Greeks Run on Banks as Euro-Confidence Wanes
- To the Class of 2012
End The FED
Presented by Ron Paul at “Our Enemy, Inflation,” the Mises Circle in Houston, sponsored by Jeremy S. Davis. Recorded Saturday, 24 January 2009.
Special Report: The watchdogs that didn’t bark
(Reuters) – Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.
The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.
The government also hasn’t brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.
But this part of the financial system, a Reuters examination shows, is filled with potential leads.
Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge’s rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country.
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The Fed’s $16 Trillion Bailouts Under-reported
The media’s inscrutable brush-off of the Government Accounting Office’s recently released audit of the Federal Reserve has raised many questions about the Fed’s goings-on since the financial crisis began in 2008.
The audit of the Fed’s emergency lending programs was scarcely reported by mainstream media – albeit the results are undoubtedly newsworthy. It is the first audit of the Fed in United States history since its beginnings in 1913. The findings verify that over $16 trillion was allocated to corporations and banks internationally, purportedly for “financial assistance” during and after the 2008 fiscal crisis.
Sen. Bernie Sanders (I-VT) amended the Wall Street Reform law to audit the Fed, pushing the GAO to step in and take a look around. Upon hearing the announcement that the first-ever audit would take place in July, the media was bowled over and nearly every broadcast network and newspaper covered the story. However, the audit’s findings were almost completely overlooked, even with a number as high as $16 trillion staring all of us in the face.
Sanders press release, dated July 21st, stated:
“No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress… Continue reading
Lessons of the 1930s: There could be trouble ahead
In 2008 the world dodged a second Depression by avoiding the mistakes that led to the first. But there are further lessons to be learned for both Europe and America.
“YOU’RE right, we did it,” Ben Bernanke told Milton Friedman in a speech celebrating the Nobel laureate’s 90th birthday in 2002. He was referring to Mr Friedman’s conclusion that central bankers were responsible for much of the suffering in the Depression. “But thanks to you,” the future chairman of the Federal Reserve continued, “we won’t do it again.” Nine years later Mr Bernanke’s peers are congratulating themselves for delivering on that promise. “We prevented a Great Depression,” the Bank of England’s governor, Mervyn King, told the Daily Telegraph in March this year.
The shock that hit the world economy in 2008 was on a par with that which launched the Depression. In the 12 months following the economic peak in 2008, industrial production fell by as much as it did in the first year of the Depression. Equity prices and global trade fell more. Yet this time no depression followed. Although world industrial output dropped by 13% from peak to trough in what was definitely a deep recession, it fell by nearly 40% in the 1930s. American and European unemployment rates rose to barely more than 10% in the recent crisis; they are estimated to have topped 25% in the 1930s. This remarkable difference in outcomes owes a lot to lessons learned from the Depression.
Debate continues as to what made the Depression so long and deep. Some economists emphasize structural factors such as labour costs. Amity Shlaes, an economic historian, argues that “government intervention helped make the Depression Great.” She notes that President Franklin Roosevelt criminalized farmers who sold chickens too cheaply and “generated more paper than the entire legislative output of the federal government since 1789”. Her book, “The Forgotten Man”, is hugely influential among America’s Republicans. Newt Gingrich loves it.
A more common view among economists, however, is that the simultaneous tightening of fiscal and monetary policy turned a tough situation into an awful one. Governments made no such mistake this time round. Where leaders slashed budgets and central banks raised rates in the 1930s, policy was almost uniformly expansionary after the crash of 2008. Where international co-operation fell apart during the Depression, leading to currency wars and protectionism, leaders hung together in 2008 and 2009. Sir Mervyn has a point.
Look closer, however, and the picture is less comforting. For in two important—and related—areas, the rich world could still make mistakes that were also made in the 1930s. It risks repeating the fiscal tightening that produced America’s “recession within a depression” of 1937-38. And the crisis in Europe looks eerily similar to the financial turmoil of the late 1920s and early 1930s, in which economies fell like dominoes under pressure from austerity, tight money and the lack of a lender of last resort. There are, in short, further lessons to be learned.
Corzine Defends Tenure, Puzzles Over Missing Funds
Jon S. Corzine defended his tenure as chief executive of MF Global Holdings Ltd. before a House committee, but couldn’t explain an estimated $1.2 billion in missing customers’ money.
Visibly tense in the politically charged hearing, Mr. Corzine, 64 years old, on Thursday told the House Agriculture Committee that he has been “devastated by the enormous impact on many peoples’ lives” caused by MF Global’s collapse.
“I simply do not know where the money is,” he said in response to questions from the panel, noting that “there were an extraordinary number of transactions during MF Global’s last few days” and that he didn’t know everything that was going on.
Pressed for an answer as to what could have happened, he said it was possible, though unlikely, that underlings might have misunderstood an order and mistakenly dipped into customer funds. Mr. Corzine said he still expects that the money eventually will be found and recovered.
Mr. Corzine resigned as MF Global chairman and chief executive days after the firm’s Oct. 31 bankruptcy filing. Speaking in a deep, raspy voice, the former New Jersey senator and governor and Goldman Sachs Group Inc. chairman appeared as befuddled by what had happened to his firm as the regulators who have been attempting to resolve the matter for more than a month. It was his first public appearance since the firm’s collapse.
Frequently stroking his trademark beard and fumbling with his prepared testimony, Mr. Corzine argued that MF Global was felled not by its $6.3 billion bet on European debt, but rather by a sudden lack of confidence in its balance sheet by the broader market in October.
MF Global Swindle: House Committee Not Likely to Play Hardball with Corzine
Editor’s note: Following opening statement at Corzine’s House hearing, the video and audio feed on C-Span went mysteriously dead.
It looks like John Corzine’s appearance before a House committee will be little more than a formality. Corzine, the former Goldman Sach’s CEO, New Jersey governor, and boss of MF Global days before it went toes up and made off with $1.2 billion in customer money, is expected to say little or nothing and take the Fifth.
Corzine has retained Andrew Levander, a hired high-powered white-collar criminal defense lawyer, the New York Post reported yesterday. Sources told the newspaper Levander advised Corzine not to tell his side of the story during the House grilling today.
The former MF Global boss has apologized to customers swindled out of money.
The MF Global implosion is the largest since the 2008 bankruptcy of Lehman Brothers, in part triggered by $6 billion in gambling on European sovereign debt.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he declared in a written statement. He said he was not sure if there were “operational errors at MF Global or elsewhere, or whether banks and counterparties… Continue reading
