Bankers versus People

The Future of Democracy

S&P index drops by 7.1% on 23rd Sept 2011.

Biggest fall since the crash of Sept 2008

This despite

$10 Trillion + pumped in globally to save the ‘Big Banks’

Did QE1 and QE2 help grow the US Economy?

NO

http://www.guardian.co.uk/business/2011/jul/29/us-economic-growth-slows-down-sharply

Did the liquidity push help reduce unemployment?

NO

So what did it do?

It empowered Wall Street Banks and hedge funds to grab commodities!

US Corn jumped by 78%, and globally Maize was up 45%

http://af.reuters.com/article/commoditiesNews/idAFN1E77A0E820110811

Wheat was up by 25% and Livestock prices rose by 20%

http://www.guardian.co.uk/business/2010/nov/05/wholesale-food-prices-soar

Texas crude rose by 22% and copper by 26%

http://www.forbes.com/sites/greatspeculations/2011/07/08/metal-warehousing-pays-off-for-goldman-sachs/

Goldman Sachs, J.P. Morgan and Deutsche Bank set up ETF’s, bought warehouses from Detroit to London to hoard commodities.

The big question.

Did Fed action help the average citizen?

The number of poor in US rose over 15%, the highest in OECD

http://uk.reuters.com/article/2011/09/14/uk-usa-economy-poverty-idUKTRE78C45220110914

Income disparity between Bankers & the rest grew rapidly.

The Gini’s disparity index for US rose to 45, much higher than UK 34 or even India 36.8

In Europe Italy’s sovereign debt joined the Eurozone nations as a high risk commodity.

http://blogs.wsj.com/marketbeat/2010/02/01/are-greek-bonds-the-new-subprime/

CDO market of Eurozone economies rose with strong rumors of Greek default.

http://online.wsj.com/article/SB10001424052970204479504576634933293244342.html

Bond yields become volatile. Punters jubilant !

When Greece, Spain, Portugal became sick IMF,ECB squeezed out liquidity

…… Why ?

Fed pumped in liquidity when Banks were sick

As a result

Greece witnessed an acute liquidity crunch and a negative growth of 5 %.

http://www.guardian.co.uk/business/2010/jan/03/credit-crunch-iceland-ireland-greece-dubai-spain

Spain tightened belt and unemployment soared to over 20%

http://www.guardian.co.uk/world/blog/2011/oct/16/stoical-spanish-soul-hardship

•As growth suffered and cash disappeared from the market, default looked imminent.

http://www.nytimes.com/roomfordebate/2011/10/10/is-europe-sliding-into-a-double-dip-recession

Greece, Spain, Italy…… The Glamorous tourist destinations!

With pristine beaches and exotic historical wealth!

Could fall prey to the vultures of financial markets

The hedge funds, the Wall Street banks ……

….. And the distress investment specialists like Wilbur Ross, Mark Mobius and George Soros

………. Those very same people who have continuously shorted municipal bonds from Athens, California, Madrid and Rome.

So…How did it happen?

Financial Markets work in tandem

First come the hawks who hover and spot the weak assets

Then come the alarm raisers, like jackals who create the din and market panic..... The analyst, the advisor, the rating agencies.

They downgrade credit rating often prematurely. Raise borrowing costs and make debt recycling difficult.

http://www.bbc.co.uk/news/business-15222803

Once the die is cast the market debt becomes high cost and difficult.

http://www.bloomberg.com/news/2011-02-01/whitney-municipal-bond-apocalypse-is-short-on-default-specifics.html

In come the spin doctors. ……The IMF, ECB and the Institute of International Finance (Bank Lobby)

They focus on debt repayment raising taxes and costs in malnourished nations

As the last lifeline of liquid cash is choked off, the nations are devoid of liquidity to run the economy

This leads to slowdown and negative growth. Deficits rise to enhance the debt crisis.

Finally they are forced to sell off assets for repayment.

http://www.guardian.co.uk/business/2010/mar/04/greece-sell-islands-german-mps

The big hungry banks now step in to gnaw into the assets.

J.P. Morgan, Bank of America, Wells Fargo, HSBC and BNP Paribas occupy the top spots in the Forbes 2000 lists.

•They each have mammoth assets over $2 Trillion, ten times that of big oil Exxon, Shell or BP.

Joseph Ackerman Deutsche Bank CEO and ex-boss of IIF refused haircuts on Greek loan more than the agreed 21 %. AndSaid Banks won’t take haircut for any other Eurozone economy.

http://www.emergingmarkets.org/Article/2906503/Banks-rule-out-further-eurozone-debt-haircuts.html

This after Deutsche Bank and the consortium of Banks under IIF got bailout of over $10 Trillion by the global taxpayer’s, not so long ago..

Now that nations struggle

……Bankers do not agree that it is payback time

• Rather, for the Banks the Eurozone crisis provides opportunities to strengthen their portfolio by buying into distressed assets.

http://www.time.com/time/business/article/0,8599,1916998,00.html

…… after cornering oil, food grains, metals and commodities, sovereign nations are a prime target.

So soon Banks not elected leaders will hold the destiny of nations.

http://www.irishtimes.com/newspaper/frontpage/2011/0912/1224303946844.html

It is true that Europe’s democracies have lacked fiscal discipline, but so have Dexia and Max bank, BOA and Wells Fargo.

Vote and coalition politics have often made elected leaders of democracies pamper to populism.

Spain, Ireland, Portugal and Italy, allhave missed the EU Maastricht treaty fiscal deficit targets by a mile.

http://www.guardian.co.uk/business/2011/mar/11/eurozone-agree-debt-limit-laws-bailout-deal

Greece deficit surged from 4% to 15% on discovery of accounting oversight.

.

Since debt was 1.7 times GDP it was not possible to fix the Greek debt crisis with short term measures.

Despite knowing this Greece was put on a short lease with IMF & ECB making no long term commitment ..

.

Speculation mounted and Greek debt rating was repeatedly downgraded.

http://online.wsj.com/article/SB10001424053111904265504576568693911614726.html

.

Fund squeeze led to successive years of negative growth making recovery impossible and default imminent

.

So the aged Greek pensioner who paid taxes throughout her life has been handed down a hair cut of 40% of her monthly pension to facilitate the repayment of the Banks. http://online.wsj.com/article/BT-CO-

20110919-704332.html

Now the IMF, the ECB and IIF the bank lobby want to manage the economy and virtually dictate public policy in Greece.

http://www.bbc.co.uk/news/world-europe-15147855

They are not interested that hospital services and educators in Greece have not received payment for services since 1 year.

http://www.guardian.co.uk/world/2011/aug/05/greece-healthcare-brink-catastrophe

They are not interested in structural reforms of the antiquated licensing policy in Greece that throttles competition.

They only want to control the fund flow and the disinvestment process, so that prize assets flow their way.

It is obvious that Mr. Papandreou will not be able to stop that

So a big question arises for the democracies around the world.

http://www.guardian.co.uk/commentisfree/2010/feb/14/greece-uk-european-union-euro

Will Banks takeover control if our elected leaders fail?

http://www.guardian.co.uk/business/2011/aug/11/berlusconis-partners-grow-restive-over-ecbs-prescription-for-italy

If that be so, will the Fed, the ECB, the IIF and the IMF work for the benefit of the citizen or only for the Banks?

Prophetic words from US President Thomas Jefferson who said that if private Banks controlled monetary policy, they would make the citizen penniless and homeless.

References : Our Blog : Economy to Ecology: Our goal is to help promote clean, safe and better practices in economy and ecology worldwide. BThis presentation is based on my 4th October article in business section of Technorati San Francisco http://bit.ly/oZEaWz and a little more sustainable. Kindle Blog Ecothrust ASIN: B0029ZAUAY For non kinwww.ecothrust.blogspot.com

Our Blog at What Happens If ? Risk Management blog Economic Times. New Delhi If http://blogs.economictimes.indiatimes.com/Whathappensif/

Follow us a www.twitter.com/ecothrust Acknowledgements:o Google images , flickr photolibrary and other image sources.For any queries or request for download, mail to Sandip Sen For Queries contact : sen.sandip@gmail.com

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