Wolf Richter, Tom Haugh, and Kathy Dervin discuss this problem
Italy’s biggest bank, Monte dei Paschi di Siena, is bankrupt. There is no money anywhere for a rescue, so Italy risks tearing the Eurozone apart. The bank’s shares, despite a major management shakeup, sank to their lowest point ever this week — just 21 cents above zero — and, once again, they had to be halted by Italy’s stock exchange authorities.
Britain isn’t leaving the EU any time soon as confusion grips parliament. Angela Merkel will see to that. Make no mistake though, Britain voting to ‘leave’ on a high 72% turnout in the Brexit referendum is a devastating blow to the current international order, the entire structure of which will have to change. The British public has Molotov cocktailed the Westminster and Washington élites.
Tom Ewing writes
Brexit is insular but not wholly British. You hardly have to try and see parallels, across the Channel or the Atlantic. Better thinkers than me have addressed this crisis, the arrogance of neoliberal elites in constructing a politics designed to sideline and work around democracy while leaving democracy formally intact. Democracy becomes a potential weapon, a trigger you can vote to pull. But weapons don’t fire themselves, and the genius of Farage and Johnson and Gove (and Trump, potentially) is to get people to focus on the target, not on the one holding the gun.
David Haggith writes
The Fed’s plane called Recovery is disintegrating slowly, rather than in one huge blow-up. Six months out from lift off, it is clear that the forces against another rate increase are growing worse month by month.
The Fed’s chances of pulling up any higher are getting rapidly smaller. Globally, there is talk of Brexit and Grexit, and China is looking like a mountainside that could slide any day now. Japan’s one-hundredth attempt at economic recovery through quantitative easing has failed completely. Much of the world had descended into Alice’s Wonderland of negative interest rates for the first time in world history, as a last-ditch attempt to recover from the Great Recession (and to recover from their central banks’ failed recovery attempts). Two major European banks are failing, and Venezuela and Brazil have collapsed into economic chaos. (And those are just a few current headlines.)
Yet, the worst news for the Fed is right at home. The Fed’s plane never made it more than a few feet above the runway, when this week the illusory jobs recovery flew like a goose into the Fed’s left engine just as Captain Yellen was hoping to pull back on the stick for one more attempt to gain some interest altitude….
It’s not the poor immigrants , it’s the bankers stupid!
On this note…
David Haggith writes
Have you ever wondered why politicians make some immigration illegal and then turn a blind eye to illegal immigration wherever it is happening? What about why they talk so much about building walls to keep out the vast hoards, rather than simply arresting the much smaller number of people who hire illegal immigrants?
Have you also wondered why politician make it illegal for millions of people to enter the country and then eventually support naturalizing those people who broke the laws these very politicians made? This article will answer that, too.
Immigration is largely about economics; and by that I do not simply mean that people are coming to the U.S. to gain economic opportunity, though, of course, they are. Nor do I simply mean immigrants are taking jobs away from Americans, though, of course, they are. Or that they cost a lot in welfare and education expenses, though, some of them do.
There is an elephant in the room that no one is talking about, and it’s not just a GOP elephant. Immigration economics has a dark underbelly that neither party will ever bring up. Since immigration reform is one of the major planks of the Republican’s top candidate for the presidency, there is no time like the present to talk about the elephant….
read full article
Research from no other place than Wall Street, itself, indicates that almost all of the returns since 2009 have been due to stock share buybacks!
Liz Ann Sonders, chief investment strategist and perma-bull at Charles Schwab, recently acknowledged that “… there has not been a dollar added to the U.S. stock market since the end of the financial crisis by retail investors and pension funds….” Since every buyer has a seller (and vice versa), what group or groups had enough of a buying presence to push the S&P 500 14.2% off of the February closing lows? Corporations. (Seeking Alpha <http://seekingalpha.com/article/3968290-stock-buyback-conundrum-will-companies-keep-much-longer>)
Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks…. The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. (Fortune <http://fortune.com/2016/04/25/buybacks-stock-market/>)
Over the past five weeks, the value of shares bought back has fallen 42% (yoy). The number of scheduled buybacks has fallen off substantially this year (35% below last year’s pace). So, we can anticipate the market will lose some of the hot air that once kept it aloft. Buybacks aren’t yielding the returns they once were, and the corporations have already taken on a load of debt for past buybacks that is even threatening the credit rating of some. Earnings have declined steadily as money spent on building for the future has dropped dramatically. It looks like the golden years when companies buy themselves are winding down, and we shall all convalesce together.
With so many American corporations convalescing, it’s a good thing we have Obamacare…
read the full article at
Don Quijones writes
TTIP, the once super-secret transatlantic trade deal that is now broadly despised on both sides of the Atlantic, may not be alive yet but it could soon be dead. And all thanks to leaks which confirm a longstanding suspicion in Europe that the ultimate goal of TTIP is to pry open European markets for big U.S. corporations, with little offered in the way of reciprocity.
The UK Independent reports that the 248 pages of documents released by Greenpeace show that the “hated” deal would grant US corporations “unprecedented powers” over any new public health or safety regulations to be introduced in the future:
If any European government does dare to bring in laws to raise social or environmental standards, TTIP will grant US investors the right to sue for loss of profits.
It is iron-clad confirmation that many of our biggest fears were well-founded. At long last the treaty that should not be named is being exposed to the harsh light of day, all its darkest intentions splashed across the front pages of Europe’s biggest selling newspapers. As the European Green party notes, “every single publicly voiced suspicion concerning the lack of transparency in these TTIP negotiations has been justified by the revelations stemming from the leak.”
read full article on
David Haggith writes
The question begs for conspiracy theories to satisfy it, but one might more aptly say that central banks beg for conspiracy theories to explain them, since they operate in the shadows while being given charge of all the financial systems of all the world’s greatest economies. Central bankers have the unchaperoned power to create the greatest fortunes ever known to mankind at will and to invest those fortunes wherever they want. With trillions of dollars at their disposal and trillions more whenever they want to conjure it into existence, what is to stop them from cornering every market on earth … including particularly oil?
Why would we even think central banks wouldn’t manipulate all markets to the benefit of their own member banks when two Fed officials have stated that by intention the Fed’s FOMC was front-running the stock market to create a “wealth effect”? Anything is justifiable if it necessary for “the recovery.” Central banks now run their national economies unsupervised; why not international micro economies like oil market, too?
see full article on