HOW BROKERS BECAME BOOKIES: THE INSIDIOUS TRANSFORMATION OF MARKETS INTO CASINOS

“You all are the house, you’re the bookie. [Your clients] are booking their bets with you. I don’t know why we need to dress it up. It’s a bet.”
- Senator Claire McCaskill, Senate Subcommittee investigating Goldman Sachs (Washington Post, April 27, 2010)

Ever since December 2008, the Federal Reserve has held short-term interest rates near zero. This was not only to try to stimulate the housing and credit markets but also to allow the federal government to increase its debt levels without increasing the interest tab picked up by the taxpayers. The total public
U.S. debt increased by nearly 50% from 2006 to the end of 2009 (from about $8.5 trillion to $12.3 trillion), but the interest bill on the debt actually dropped (from $406 billion to $383 billion), because of this reduction in interest rates.

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Letting Corporate Criminals Rule

It seems clear that BP can’t seem to fix the catastrophic gusher the press calls a “leak,” and that President Obama can’t fix the economy because its problems are structural and won’t respond to soaring rhetoric emanating from his bully pulpit.

Meanwhile, most of the world’s people really don’t get the fix we are all in. I take that back; the million Americans who have just lost their benefits probably do. The deficit hawks voted that down without doing anything about the growing deficit of jobs.

Forty-three members of the Congress and the Senate are tinkering with an increasingly diluted financial “reform bill.”

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Senate Passes Faux Financial “Reform” Bill

The Senate passed a financial “reform” bill today by a 59-39 vote which won't fix any of the core problems in the financial system, and won't prevent the next financial crisis.

The bill doesn’t include the Volcker Rule (it wasn’t even debated), doesn’t break up or even substantially rein in the too big to fails, and doesn’t force transparency in the derivatives market.

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“Things Are Never Going To Get THAT Bad”

Our recent article, “20 Things You Will Need To Survive When The Economy Collapses And The Next Great Depression Begins“, has drawn some intense criticism from those who believe that the U.S. economy is so strong that it could never completely and totally collapse. In fact, this blog is being accused of officially going off the deep end. Why? It’s not because we are pointing out that the economy is bad. After all, according to a recent Pew Research national poll, 88 percent of Americans rate national economic conditions as only fair or poor. No, rather it is because we are projecting the eventual complete and total collapse of the U.S. economy. There still seems to be a belief among a large number of Americans “that things are never going to get THAT bad”. But they are going to get that bad. It's just that most people do not realize it yet.

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JP Morgan Chase to gets another reward for their theft

Most people are under the false assumption that the taxpayer bailout of Wall Street banks began and ended with TARP. They couldn’t be more wrong.
The Wall Street bank bailout began with Federal Reserve subsidies in December 2007, and has continued in one form or another right up to now.

J.P. Morgan Chase & Co. is nearing a deal that would allow it to benefit from a tax refund of as much as $1.4 billion, becoming the latest company to tap a little-noticed plank in an economic stimulus bill.

That law let companies apply losses from 2008 or 2009 against taxes paid in the previous five years, instead of the previous two years.

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Junk Economics and the middle class: Where we went wrong

I’m not so arrogant as to believe that I know the perfect solution to our economic problems. Anyone that tells you they know is either a fool or a liar.

However, that doesn’t mean we can’t discover where we went wrong once you apply a little logic and data to the situation.

For instance, if you realize you have taken a wrong turn, it makes more sense to turn around and go back to the corner where the mistake was made, than it does to drive in a general direction and hope you can find your way home.

When it comes to the economy, its pretty easy to discover when the wrong turn was made – 1972.

1972 was a mildly interesting year. We had the Watergate break-in, the end of American involvement in the Vietnam War, Bloody Sunday in Northern Ireland, The Godfather came out in theaters, and the Rolling Stones released Exile on Main Street.

In contrast, 1972 was a paradigm shift in the world of economics.

September 1972 was the high-water mark for Real Weekly Earnings for the American worker. American paychecks would shrink from then on.

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The OTHER Reason that the U.S. is Not Regulating Wall Street

Sure, American politicians have been bought and paid for by the Wall Street giants. See this, this and this.

And everyone knows that the White House and Congress – while talking about cracking down on Wall Street with strict regulation – have actually watered down some of the most important protections that were in place.

For example, Senator Cantwell says that the new derivatives legislation is weaker than the old regulation. And leading credit default swap expert Satyajit Das says that the new credit default swap regulations not only won’t help stabilize the economy, they might actually help to destabilize it.

But the U.S. is not being sold out in a vacuum.

On March 1, 1999, countries accounting for more than 90 per cent of the global financial services market signed onto the World Trade Organization’s Financial Services Agreement (FSA). By signing the FSA, they committed to deregulate their financial markets.

For example, by signing the FSA, the U.S. agreed not to break up too big to fails. The U.S. also promised to repeal Glass-Steagall, and did so 8 months after signing the FSA.

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