People are chaining themselves to barricades and waving red flags in the streets of London in protest of the G8 talks. The protest has been called a “carnival against capitalism.” Sadly these folks do not understand the vital difference between “capitalism” which is voluntary and provides opportunity for those not blessed with access to the modern aristocracy, and “crony capitalism” where the state is hijacked by the powerful to line their pockets and consolidate power.
From Daniel Hannon, a guy who often gives great perspective on both the EU and the US from his perch in the UK.
Another must read article from Matt Taibbi. Yes, Taibbi still won’t go after the Federal Reserve and the biggest fixer club of them all, the FOMC at the Federal Reserve. But he has done some excellent work over the past 5 years exposing the inner workings of a financial system which is deeply flawed. (To be kind.)
Anyone who has read us for very long knows that we give bankers a hard time, often. The financial industry, especially the big banks, is rife with crony capitalism. The big banks are arguably the biggest crony capitalists of them all, and the corruption which comes with a Wall Street/Washington DC axis must be dealt with. It is vital for the future of our economy. Ending the Fed would be a good start.
Too big to fail and too big to jail are essentially the same sort of crap, with different smells. In both phenomena recklessness is rewarded and broader society is made to pay in obvious and not so obvious ways.
Take a look at this chart of economic recoveries in the United Kingdom over the past century. Ugly.
European politicians especially love them.
Technically one of their alums is taking over the Bank of England, Mark Carney, but it is pretty clear that the “vampire squid” now holds sway over nearly the entire European banking system.
First, what is Libor or LIBOR?
It is the London Interbank Offered Rate. The rate at which an individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11.00 London time.
In short it’s the rate at which banks can get money from other banks just before lunchtime in London.
It sets a benchmark for most of the world’s derivative markets which trade in various currencies. It is, after the Fed Funds Rate the most important interest rate in the world.
And it looks like at least some of the world’s banks may have colluded in 2008 (and probably for a good bit longer than that) to keep the rate lower than it should have been, in essence making the banking sector look healthier than it actually was.
Goldman’s conquest of Europe continues. This morning comes word that Jim O’Neil, Goldman Sachs Asset Management Chairman, is in the running for BOE head.
He joins Mark Carney, current head of Canada’s central bank, and Goldman alum, as a contender.
Government Sachs is no joke. They have huge exposure to all sorts of financial nastiness. Might as well head off any trouble right at the source.