The Federal Reserve Bank of Boston discovered in a recent analysis of credit card fees in the U.S. that they amount to a huge transfer of wealth from low-income to high-income households, accomplished through rewards given to big-spending cardholders. On top of that, merchants increase their prices to pay an interchange fee of 1% to 2% but don't compensate consumers who pay with cash. "As a result, cash customers are subsidising credit-card users," The Economist notes. "And because credit-card users tend to be richer, the transfer of wealth is regressive." The Economist
Pretty interesting stuff.
Showing posts with label credit crisis. Show all posts
Showing posts with label credit crisis. Show all posts
Thursday, July 29, 2010
Tuesday, June 29, 2010
Crisis of Capitalism?
Here it is in a nutshell: the economic problems we face today are a failure of capitalism ....and we should explore a new order.
I am NOT a socialist but this animation is engaging and thought provoking.
I am NOT a socialist but this animation is engaging and thought provoking.
Friday, May 22, 2009
Is Mr. Geithner speaking today?
Thank to Jack Crooks. This is a MUST READ RANT!
http://www.blackswantrading.com/files/articles/5b3a61794823258ee9df38f59319d335bsccc052209.pdf
FX Trading – Dollar Shrug! No surprise. Is Mr. Geithner speaking today? He is becoming such a joy for dollar bears, as John Ross mentioned in his closing to CC yesterday. And the dollar doom and gloom crowd is smelling blood in the water; rightly so! There are a lot of short dollar trades on it seems. We surmise Pimco has a big dollar short position given Bond King Bill Gross’s recent public musing about the US may lose its AAA rating. Comments like that shouldn’t be a surprise to anyone given the US government’s desire to take on the role of global stimulus King instead of just worrying about getting its own house in order—pathetic! Mr. Geithner says the US depends on other countries to grow and chastises them for not throwing enough of their taxpayers’ money into the “stimulus” program. Maybe he should take a look at that before he speaks…Of course the crony insiders tell us how “smart” Mr. Geithner is, and we don’t doubt his intelligence. Anyone that can avoid paying personal income taxes and still pull-off an appointment to Treasury Secretary (and run the IRS) is pretty smart. But our gripe is the fact that the guy instills negative confidence in the market place not because he lacks “leadership qualities,” as some have suggested, but because his economics seems all screwed up in my most humble opinion. We are in a gut wrenching transition in the global economy because the wildest orgy of debt the world has ever seen is over. Thus, excesses across all sectors, especially financial, must be removed from the marketplace in order for real quality long-term globally balanced growth to take hold. Instead, day after day we witness dinosaur saving from Geithner and friends, while stunningly they tell us this with a straight face (as straight as any government official possibly can) that we need to put more debt into the market in order to solve the problem of too much debt being in the market. Mr. Orwell call your office!
Now granted, few of us have toiled away at the top economic Ivy League institutions and rubbed elbows and other things against the top seers. Granted, we don’t have the luxury of feeding our ideas and inputs into the most sophisticated econometrics models imaginable built of course by the “best and brightest.” But it seems our angst grows from something the power elites don’t have—common sense. Putting more debt into a system desperately working to alleviate debt is just plain stupid no matter how the Neo-Keynesians slice or dice it. Is it any wonder why the globe is losing confidence in the dollar? It seems the guys that are supposed to be on our side consistently cow-tow to the other side. And of course, you know where I’m going here—China. It is farcical when China criticizes the US for overconsumption and not saving enough. They were enriched precisely because of the overconsumption, besides playing our multi-national “leaders” like a violin by offering cheap labor and short-term riches in turn for giving them technology which sooner or later will lead to the wiping out western business and sunk shareholder value as we know it. But that is another story for another day. The symbiotic game of China shipping containers full of stuff to the US for Federal Reserve Notes dwindling in value ended with the credit crunch. And guess which of the two formerly symbiotic players is getting crunched harder—if you said China you would have been right. But, in their Orwellian world of global chess, the Chinese pretend they are outperforming anything that moves. And their noises and lies and bluffs and fake economic numbers cannot deny the fact that if Mr. US Consumer does not get this symbiotic game of dollars for stuff going again, the Politburo may be out of a job—literally thrown out of a job, if you know what I mean. So, instead of realizing this upper hand of consumer demand the US possesses, the US government economic “leaders” agree with China that yes—it is highly important to stimulate the globe, we want 2001 again. If successful it would mean China continues to add global market share to their manufacturing behemoth and can avoid the dirty hard job of developing a domestic market.
Jack Crooks, Black Swan Capital LLC
www.blackswantrading.com
Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
Please read the whole article here:http://www.blackswantrading.com/files/articles/5b3a61794823258ee9df38f59319d335bsccc052209.pdf
http://www.blackswantrading.com/files/articles/5b3a61794823258ee9df38f59319d335bsccc052209.pdf
FX Trading – Dollar Shrug! No surprise. Is Mr. Geithner speaking today? He is becoming such a joy for dollar bears, as John Ross mentioned in his closing to CC yesterday. And the dollar doom and gloom crowd is smelling blood in the water; rightly so! There are a lot of short dollar trades on it seems. We surmise Pimco has a big dollar short position given Bond King Bill Gross’s recent public musing about the US may lose its AAA rating. Comments like that shouldn’t be a surprise to anyone given the US government’s desire to take on the role of global stimulus King instead of just worrying about getting its own house in order—pathetic! Mr. Geithner says the US depends on other countries to grow and chastises them for not throwing enough of their taxpayers’ money into the “stimulus” program. Maybe he should take a look at that before he speaks…Of course the crony insiders tell us how “smart” Mr. Geithner is, and we don’t doubt his intelligence. Anyone that can avoid paying personal income taxes and still pull-off an appointment to Treasury Secretary (and run the IRS) is pretty smart. But our gripe is the fact that the guy instills negative confidence in the market place not because he lacks “leadership qualities,” as some have suggested, but because his economics seems all screwed up in my most humble opinion. We are in a gut wrenching transition in the global economy because the wildest orgy of debt the world has ever seen is over. Thus, excesses across all sectors, especially financial, must be removed from the marketplace in order for real quality long-term globally balanced growth to take hold. Instead, day after day we witness dinosaur saving from Geithner and friends, while stunningly they tell us this with a straight face (as straight as any government official possibly can) that we need to put more debt into the market in order to solve the problem of too much debt being in the market. Mr. Orwell call your office!
Now granted, few of us have toiled away at the top economic Ivy League institutions and rubbed elbows and other things against the top seers. Granted, we don’t have the luxury of feeding our ideas and inputs into the most sophisticated econometrics models imaginable built of course by the “best and brightest.” But it seems our angst grows from something the power elites don’t have—common sense. Putting more debt into a system desperately working to alleviate debt is just plain stupid no matter how the Neo-Keynesians slice or dice it. Is it any wonder why the globe is losing confidence in the dollar? It seems the guys that are supposed to be on our side consistently cow-tow to the other side. And of course, you know where I’m going here—China. It is farcical when China criticizes the US for overconsumption and not saving enough. They were enriched precisely because of the overconsumption, besides playing our multi-national “leaders” like a violin by offering cheap labor and short-term riches in turn for giving them technology which sooner or later will lead to the wiping out western business and sunk shareholder value as we know it. But that is another story for another day. The symbiotic game of China shipping containers full of stuff to the US for Federal Reserve Notes dwindling in value ended with the credit crunch. And guess which of the two formerly symbiotic players is getting crunched harder—if you said China you would have been right. But, in their Orwellian world of global chess, the Chinese pretend they are outperforming anything that moves. And their noises and lies and bluffs and fake economic numbers cannot deny the fact that if Mr. US Consumer does not get this symbiotic game of dollars for stuff going again, the Politburo may be out of a job—literally thrown out of a job, if you know what I mean. So, instead of realizing this upper hand of consumer demand the US possesses, the US government economic “leaders” agree with China that yes—it is highly important to stimulate the globe, we want 2001 again. If successful it would mean China continues to add global market share to their manufacturing behemoth and can avoid the dirty hard job of developing a domestic market.
Jack Crooks, Black Swan Capital LLC
www.blackswantrading.com
Black Swan Capital’s Currency Currents is strictly an informational publication and does not provide individual, customized
investment advice. The money you allocate to futures or forex should be strictly the money you can afford to risk. Detailed
disclaimer can be found at http://www.blackswantrading.com/disclaimer.html
Please read the whole article here:http://www.blackswantrading.com/files/articles/5b3a61794823258ee9df38f59319d335bsccc052209.pdf
Wednesday, January 21, 2009
A wave of bank failures soon?
The January 9 cover of American Banker said eight out of 12 Federal Home Loan Banks (FHLBs) would have less than the minimum regulatory capital if losses from mortgage-backed securities were deducted.
Dan Ferris makes this argument:
On Friday, the Pittsburgh FHLB said permanent losses could exceed the bank's retained earnings – which has never happened in the FHLBs' 76-year history.
This is a big deal because, like with Fannie and Freddie, FHLB securities are owned by all FHLB member banks. There are currently more than 8,000 members, all of which own shares in their regional FHLB. When the FHLB fails – which is inevitable – thousands of banks holding FHLB securities will take writedowns. That'll bring many banks already weakened by losses in Fannie and Freddie preferred stock closer to insolvency.
Understanding government's role in the financial crisis is a test. If you don't understand the crisis happened not in spite of government "insurance" schemes and regulation, but rather was aided, abetted, and compounded by government interference in mortgage and banking, you fail the test.
Dan Ferris makes this argument:
On Friday, the Pittsburgh FHLB said permanent losses could exceed the bank's retained earnings – which has never happened in the FHLBs' 76-year history.
This is a big deal because, like with Fannie and Freddie, FHLB securities are owned by all FHLB member banks. There are currently more than 8,000 members, all of which own shares in their regional FHLB. When the FHLB fails – which is inevitable – thousands of banks holding FHLB securities will take writedowns. That'll bring many banks already weakened by losses in Fannie and Freddie preferred stock closer to insolvency.
Understanding government's role in the financial crisis is a test. If you don't understand the crisis happened not in spite of government "insurance" schemes and regulation, but rather was aided, abetted, and compounded by government interference in mortgage and banking, you fail the test.
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