Podcast: Paradigm Shift

In my latest Panzner Insights podcast, "Paradigm Shift," I discuss one of the week's big developments:

Most people knew that Bernanke & Co.’s grand experiment would end one day, but that notion has largely been seen on Wall Street (and elsewhere) as a vaguely distant possibility. However, things have changed following this week’s publication of the minutes from the Federal Reserve’s December policy meeting. In fact, I believe we’ve witnessed a paradigm shift that has important implications for markets, economies, and society overall, as I discuss in today’s broadcast.

As a special treat, this 30-minute program is also available to non-subscribers. To listen now or download, please click here.

Comments

[roger]

The metamorphosis proceeds in spite of ideology. The Fed is learning....adapt or perish! however the Fed. is but an ripple on the surface of the ocean,it will dissipate
in the crashing surf along with the dollar.

[Shift to sucker class]

Secrets and Lies of the Bailout: One Broker's Story

This is the real problem with the bailouts, and the issue we tried to underscore with the "Secrets and Lies" piece. With their hide-and-seek policies, bogus stress testing and stubborn insistence on calling failing banks healthy and publicly endorsing other such fibs, the architects of the federal rescue (from both the Bush and Obama administrations, as well as from the Federal Reserve) created a two-tiered market. The new economy has two classes of investors: those who know the real numbers, and those who don't.

So while the proponents of the bailout will argue they were a success, and the covert and overt federal support helped bring the Dow all the way back from below 7,000 to above 13,000 – seemingly a good thing no matter how you look at it – there's another bitter reality, which is that the bailouts officially created a sucker class.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/secrets-and-lies-of-the-bailout-one-brokers-story-20130108#ixzz2HWpVh9xx

[same players....party on]

Democracy Now on Jack Lew's Appointment as Treasury Secretary

http://jessescrossroadscafe.blogspot.com/2013/01/democracynow-on-jack-lews-appointment.html

[skimmy dipping]

The Neoliberal Financial Skim (January 14, 2013)

The perfection of the Neoliberal order is a parasitic financial sector protected by the Central Bank and State.

Precisely what benefits from this gargantuan parasitic skim flow to the general good? Into whose pockets does this gargantuan parasitic skim flow? Hint: not the lower 90% of the American populace.

The perfection of the Neoliberal order is a parasitic financial sector protected by the Central Bank and State. That is the U.S. Status Quo in a nutshell.

http://www.oftwominds.com/blogjan13/financial-skim-01-13.html

[Status quo]

Jack Lew, Tim Geithner: the treasury's new boss, same as the old boss

But what wasn't done, and Geithner never even tried to do, is equally telling.

No purge of the senior managements and boards of directors of the financial sector, not even those, such as Citigroup and Bank of America, which were totally dependent on federal support for their existence (Citigroup was nearly 40% owned by Geithner's department). No curtailment of bonuses, no attempt even to tax them. No breaking up of too-big-to-fail institutions, some of which were and remain so complex that they are, as my colleague Charles Morris has said, too big to succeed. No attempt to curtail the toxic lobbying and revolving-door hiring of those same institutions – once again, including several that would not exist except for federal aid. No attempt to develop an evidentiary record to support criminal prosecution for the massive criminality that accompanied the bubble. No attempt to develop an evidentiary record for asset seizures under Rico, the law routinely used to seize the assets of criminal organizations. No serious attempt to rescue millions of homeowners facing foreclosure, or imprisoned in houses that they will never be able to sell for as much as they owe. No attempt to rein in the deeply entrenched culture and incentives that produce toxic financial "innovations" and increasingly frequent crises. A pattern of hiring truly dreadful people, ranging from Goldman Sachs lobbyists to private equity executives who worked with banks to bet against their own securities.

And so, now we have, indeed, "succeeded" in returning to something roughly like the status quo. What is that status quo?

We have an even more dangerously concentrated, politically even more powerful, still highly corrupt, unproductive financial sector; a clear message sent that even a horrific crisis caused by massive criminality yields no punishment whatsoever; insufficient, weak regulatory laws and institutions; an administration largely managed by people who were, and remain, part of the problem; a massively corrupt political system in which opaque, uncontrolled contributions yielded a $3bn presidential election; and even greater economic inequality than when Obama and Geithner took office.
Tim Geithner, upon returning to private life, will surely be rewarded in the typical ways.

http://www.guardian.co.uk/commentisfree/2013/jan/13/jack-lew-tim-geithner-us-treasury-boss

[Cuckoo]

Tim Geithner, the King of Cloud Cuckoo Land
On January 25, Timothy Geithner will step down as US Treasury Secretary. A lot of people will say and write a lot of things about him at that point, and it sounds like a good idea to be ahead of the game and provide some perspective.

There are voices claiming (there will be many more, promise) that Geithner pulled us out of the recession and the crisis, and saved the economy. That seems presumptuous. It may just as well be true that Geithner has fooled us into thinking that. Just because the stock markets are pulling through so far doesn't mean, let alone prove, that the economy has recovered or been saved. You would need something better, more substantial than that. While acknowledging that relatively strong stock market numbers are at least in potential a great way indeed to fool people about the economy.

And going forward we can wax nostalgically about everything Tim has done, and about where the economy is now compared to 4 years ago, but when all else is said and done, there is still just one question that counts: what happened to the debt? What has Geithner done when it comes to debt? As long as you don't know what happened to the debt, you won't know the true state of the economy.

Well, Americans still have higher personal debt levels than they ever had before (in fact, the best anti-gun law would be to ban paying for them with credit) and government debt has grown exponentially. Those things at least we know to an extent; when it comes to bank debt, we don't know much of anything. Tim has made sure of that. He's handed trillions of dollars in our money to Wall Street and we haven't received anything in return. Well, yes, we have the semblance of a somewhat stable stock market, but is that worth all that extra debt? Moreover, we still don't know what happened to the debt that caused the crisis in the first place, because Tim made sure it has been kept hidden from view. And how's that a good thing again?

That says much more about Obama than it does about Geithner. The reality is that Obama will go down as one of the worst American presidents in history. Because four more years of the above will sink the US economy to levels not even imagined today, and Obama will be seen as an accomplice if not the main perpetrator of a whole series of - financial - crimes against the people. The president that brought the country to its knees.

That is inevitable precisely because Geithner and Obama have done nothing at all for four years to restructure bank debt. All they've done in that time is keep the existing financial system, which was then and is now as bankrupt as any industry has ever been, standing upright. Or more correctly: appear to be standing upright. What the president and his Treasurer have done is feed zombies. With - future - human flesh. WIth the future prospects of our children. Obama has said that what Wall Street did was unethical but not illegal, but that is up to the courts to decide, not the president, and not Congress.
http://www.theautomaticearth.com/Finance/tim-geithner-the-king-of-cloud-cuckoo-land.html

[power-struggle]

On the power-struggle between ‘money’ and debt.

A concluding thought.

Credit/debt backed ‘money’, the type which banks ‘print’ and control makes up the bulk of the present global money supply. This is power. As it was before the great Depression so it is again today. It is power that thought it was ascendant. Until the brittleness of their debt backed model of fiat, free-market debt backed money, imploded in on itself in 2008-09.

The crisis made one thing clear – debt backed, market fiat money, is not yet robust enough to survive without a central bank to issue national money in times of crisis of market confidence. Or to put it another way the markets – mainly the big financial players, the banks, funds and insurance companies - suddenly realized that what their system, their currency did not have but in times of crisis badly needed, was a system of central, back-stop banks.

Well they have them now.

One way of looking at event of the last two years is to see the role and allegiance of the central banks changing. Ask yourself – who do the central banks work for? Is it you and your welfare that they concern themselves with primarily? Or have the central banks come to see their role as defending the integrity, profit and power of the system of banks which preside over the markets and the market’s debt backed wealth?
I suggest it is at least worth considering who ‘our’ central banks now work for. I personally think they no longer work for us, for the nations and peoples whose names they still carry, but are now increasingly a part of a non-national, global system. Is this so ridiculous? Well who runs the central banks? How many of them are former employees of the big banks?
http://www.golemxiv.co.uk/2013/01/some-small-thoughts-on-the-power-struggle-between-money-and-debt/

[Paradigm fully in place]

MUST SEE TV: The Untouchables

FRONTLINE investigates why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages.

http://www.ritholtz.com/blog/2013/01/must-see-tv-the-untouchables/

[tutalib]

Am not getting through with the download