Thursday, September 29, 2011

 Bernanke admits jobs problem is a national crisis - and the FED can't do much

 Bernanke admits jobs problem is a national crisis - and the FED can't do much — RT 

Speaking from Cleveland, Ohio this week, Federal Reserve Chairman Ben Bernanke fielded questions from a crowd and opened up on the critical situation that is continuing to impact millions of Americans. "This unemployment situation we have, the jobs situation, is really a national crisis," Bernanke said from the InterContinental Hotel. "We've had now close to 10 percent unemployment for a number of years. Of the people who are unemployed, about 45 percent have been unemployed for six months or more.” And while Bernanke acknowledged that the Fed has attempted to do what they can to correct the problem, he also said that only so much can be done on his side to switch things up. "Monetary policy can do a lot but it's not a panacea. It can't solve all of the problems," Bernanke said on Wednesday.

This is a Suspicious News Brief.

The Invention Of Money

For those of you like me who don't really understand economics, this episode of This American Life from January might be the best 30 minutes of your life. It explains in simple terms how central banking works and how the Fed "went to crazytown" to try to avoid financial meltdown in 2007 and 2008. If your time is limited, click here to jump to Act II and listen to the rare and candid interview with members of the Fed who bought $1.25 Trillion in toxic assets.

Source: Public Radio International - This American Life
Ira Glass speaks with several members of the Planet Money team, who all found themselves—in the course of their reporting—independently asking the same stoner-ish question: What is money? Ira and Planet Money producer Jacob Goldstein discuss a pre-industrial society on the island of Yap that used giant stones as currency. The book that Jacob read about Yap is called The Island of Stone Money. (10 minutes)

A trip to a country where the fiction that is money completely fell apart. And in this same country, through a truly incredible piece of policy making, the government tricked a 150,000,000 people into believing their money had value again. Chana Joffe-Walt reports. (16 minutes)

Though the name of the Federal Reserve includes the word "federal," it's not actually part of the government. It's an independent institution tasked with something very simple, but very huge: Creating money out of thin air. And during this last financial crisis, the leaders of the Fed did things that they would never have considered doing in the past. Alex Blumberg and David Kestenbaum report on what the Fed usually does, and how, since 2008, it's taken a trip to what amounts to Fed Crazytown. (26 minutes)

This is a Suspicious News Brief. You can find the original story at Public Radio International - This American Life.

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure

Source: ZeroHedge

The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaringformat the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies, a mere 5 banks account for 95.9% of all derivative exposure. The top 5 banks:

  • JP Morgan Chase with $78.1 trillion in exposure
  • Citi with $56 trillion
  • Bank of America with $53 trillion
  • Goldman with $48 trillion
  • HSBC with $3.9 trillion

As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively.

And that's your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

If any of the top four banks fails, the repercussions would be disastrous. And no, Frank Dodd's bank "resolution" provision would do absolutely nothing to prevent an epic systemic collapse.

Is Morgan Stanley Sitting On An FX Derivative Time Bomb?

While virtually every single bank has a preponderance of its derivative exposure in the form of plain vanilla interest rate swaps (on average accounting for more than 80% of total), Morgan Stanley, and specifically its Utah-basedcommercial bank Morgan Stanley Bank NA, has almost exclusively all of its exposure tied in with the far riskier FX contracts, or 98.3% of the total $1.793 trillion. For a bank with no deposit buffer, and which has massive exposure to European banks regardless of how hard management and various other banks scramble to defend Morgan Stanley, the fact that it has such an abnormal amount of exposure to the ridiculously volatile FX space should perhaps raise some further eyebrows...

This is a Suspicious News Brief. Read more at ZeroHedge.
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Wall Street cop faces probe over pepper spray

Source: Russia Today

As protesters cry foul over the NYPD's violent acts perpetrated at Occupy Wall Street demonstrators, the cop that infamously sprayed down a group of women in Manhattan last week with mace will become the subject of an internal investigation. In the days since NYPD Deputy Inspector Anthony Bologna released pepper spray on a group of female demonstrators rallying against big banks last Saturday, at least two videos of the incident have surfaced to the Internet.

This is a Suspicious News Brief. Read more at Russia Today.
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