Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19
US Tech Stock Sector Setting Up for A Momentum Breakout Move - 12th Feb 19
Key Support Levels for Gold Miners & Gold Juniors - 12th Feb 19
Socialist “Green New Deal” Points the Way to Hyperinflation - 12th Feb 19
Trump’s Quest to Undermine Multilateral Development Banks - 12th Feb 19
Sheffield B17 US Bomber Crash 75th Anniversary Fly-past on 22nd February 2019 Full Details - 12th Feb 19
The 2 Rules For Successful Trading - 12th Feb 19 -
Financial Sector Calls Gold ‘Shiny Poo.’ Are They Worried? - 11th Feb 19
Stocks Bouncing, but Will They Resume the Uptrend? - 11th Feb 19
EURO Crisis Set to Intensify: US Dollar Breakout Higher
Stock Market Correction Starting? - 10th Feb 19
Gold Stocks Gather Steam - 10th Feb 19
Are Gold Bulls Naively Optimistic? - 9th Feb 19
Gold, Silver Precious Metals Update - 9th Feb 19
The Wealthy Should Prepare to Be Soaked - 8th Feb 19
US Business Confidence Is Starting to Crack - 8th Feb 19
Top Myths and Facts about ULIP Plans - 8th Feb 19
A Major Stocks Bear Market in 2020? - 8th Feb 19
Gold Market Extremes Test Your Mettle - 8th Feb 19
The Venezuela Myth Keeping Us From Transforming Our Economy - 8th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Financial Crisis Meltdown Five Years After

Stock-Markets / Credit Crisis 2013 Sep 19, 2013 - 10:55 AM GMT

By: BATR

Stock-Markets

So appropriate that the architect of banking deregulation, Larry Summers pleads that he is not the right person to head up the Federal Reserve. No S$%#. Well, the Fed is certainly the hot seat under normal circumstances. What will it be like when the next crisis directly puts into play the reserve currency status of the dollar? Do not worry, anniversaries are supposed to look at the brighter side. Never mind, our benevolent government is hard at work presenting the public with the kind of assurance that would make anyone start singing happy birthday.


Your government money provides charts for inspection. However, what did all that TARP money do to correct the panic? According to Anthony Reyes writing in Treasury Notes comes to a laughable conclusion in The Financial Crisis Five Years Later: Response, Reform, and Progress In Charts.

"But putting out the fires of the crisis was not enough. To address the underlying causes of the crisis, we had to modernize our regulatory framework and put powerful consumer financial protections in place. That is why President Obama took up the mantle of financial reform by championing and enacting the Dodd-Frank Wall Street Reform and Consumer Protection Act?. Americans now have a dedicated consumer financial protection watchdog, financial markets are more transparent, and the government has more tools to monitor risk, and resolve firms whose failure could threaten the entire financial system.

As we approach the five-year anniversary of the height of the crisis, the financial system is safer, stronger, and more resilient than it was beforehand. We are still living with the broader economic consequences, and we still have more work to do to repair the damage. But without the government’s forceful response, that damage would have been far worse and the ultimate cost to repair the damage would have been far higher."

Sound so reassuring. However, Dodd-Frank ignored serious derivative overhaul. Forget about mere regulation of financial markets, what about the federal government taking on even more fiscal responsibility of last resort. Too big to fail is an empty phrase, when the full faith and credit of the Treasury is placed into question. Just whom do you trust?

"Hester Peirce, a scholar at the Mercatus Institute, told TheDCNF how Dodd-Frank’s placement of all financial derivatives into government-managed clearing houses could lead to poor investment decisions and possibly unbalance the financial markets.

Because derivatives are such a complicated and long-term investment, Peirce argues that investors should always pay close attention to who they’re dealing with. "What Dodd-Frank does is say, ‘Don’t worry about [your counterparty], because you’re going to be in this relationship now with a clearing house for a year, and the clearing house is safe, so don’t worry about it," she said.

"What we’ve done then is we’ve removed a whole layer of market scrutiny on counterparties," Peirce concluded."

Ah, the "so called" success of the Sugar Daddy rescue effort is that the final counterparty is the U.S. government, financed by the private Federal Reserve. Over at the Fiscal Times in an article, The 5 Best and 5 Worst Regulations in Dodd-Frank, provides the operative summary.

"The worst thing about Dodd-Frank is the misguided effort to remove risk from the system," said Dan Crowley, a partner at K&L Gates and head of the capital markets reform group. "Risk is essential to the capital formation process. Empowering the government to reduce risk in the system will inevitably increase compliance costs and decrease investor returns."

Oh, that nasty risk, raising its head again. After the toll in human suffering from the loss in capital value and income return, it is a rare person who can say that their wealth factor has recovered to pre 2008 conditions. So too, the government has taken a tremendous hit. The New York Times presents in their Business Day, Adding Up the Government’s Total Bailout Tab, a two year old list of additional guarantees that are part of the price of the Wall Street bailout.

"Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through April 30, the government has made commitments of about $12.2 trillion and spent $2.5 trillion — but also has collected more than $10 billion in dividends and fees. Here is an overview, organized by the role the government has assumed in each case."

Read the entire breakdown. Wonder what Mr. Reyes over at Treasury would say to this cost to the taxpayer? Does it not seem that the math just does not add up? The next summary from the same Treasury Notes has Mr. Reyes stating.

"The federal government’s crisis response was designed to stop the panic and stabilize the financial system with a series of measures, including government guarantees, emergency financial programs, and capital investments. It succeeded in doing so.

Estimates of the potential losses at the time exceeded $1 trillion dollars. By mid-2013, with most of the emergency programs wound down and most of the funds disbursed under the Troubled Asset Relief Program (TARP) recovered, we can more realistically measure the potential losses and gains on the overall effort."

Well, just ask anyone with a positive net worth before 2008 and inquire if they still consider themselves part of the middle class. The overview of the last five-year monetary architectural plan of providing costless money to the banksters, while starving the average worker and depleting individual investment coffers, is frightening. It is a hard sell for the Treasury. Putting a smiley face on a report, when the actual results are killing Main Street, is preposterous. Thanks Larry Summers, for designing the free rein, wheeler-dealer derivative house of cards that only partially broke in phrase one.

Just wonder what kind of improved government charts we might expect when the next government debt guaranteed bubble bursts wide open. Save the cost to the Treasury, your credit is zero.

Source : http://www.batr.org/negotium/091813.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2013 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules