We've Dug a Pretty Damn Big Hole for Ourselves

How do we get out of this mess?
Monday, April 22, 2013, 9:15 PM

The diminishing returns of technology are insidious, and they are ever with us. By this I mean the slow erosion of the quality of life, despite the impression that technological wonders only make our lives better. » Read more

Daily Digest

Image by Steve Snodgrass, Flickr Creative Commons

Daily Digest 3/31 - Cyprus Feeling Bailout Pain, E.P.A. Plans Stricter Sulfur Limit in Gasoline

Sunday, March 31, 2013, 2:37 PM
  • Debt a common theme as Americans struggle to feel benefits of recovery
  • Big Government: An Unnecessary Evil That Should Be Abolished
  • The Three Stages Of Revolution
  • Monte Paschi says lost billions in deposits after February scandal
  • Cardboard Cops Control Traffic In Bangalore -- Unless It Rains
  • In Cyprus, Feeling the Pain of a Bailout
  • E.P.A. Plans Stricter Limit for Sulfur in Gasoline
  • Bee Deaths From Colony Collapse Disorder On The Rise As Researchers Point To Pesticides
Daily Digest

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Daily Digest 3/27 - Cyprus Banks Stay Shut Until Thursday, Spain Bank Offers Grim Forecast

Wednesday, March 27, 2013, 9:55 AM
  • Cyprus bail-out: savers will be raided to save euro in future crises, says eurozone chief
  • Spain's central bank offers grim economic forecast
  • Mr Yen cautions on Japan's 'unsafe' debt trajectory
  • House To Propose College Tuition Increase
  • California State Treasurer emphasizes shrinking retirement savings
  • Portugal to contract 2.3% in 2013: central bank
  • Bernanke rejects competitive devaluation worries
  • Cyprus bailout: Banks to stay shut until Thursday
  • Recession keeps Italy's banks at risk: IMF
Featured Discussion

Tracking the Impact of Cyprus' Wealth Confiscation

Tracking the Impact of Cyprus' Wealth Confiscation

A thread of breaking headlines tracking the unfolding banking crisis in Cyprus


Cyprus Bank Heist: A True Game-Changer

Near-term risks include domino-like bank runs & capital cont
Sunday, March 17, 2013, 11:29 PM

This weekend on 3/16/13, under pressure from IMF bankers and a push from German politicians, a Cyprus bailout deal was approved that would take the bulk of the bailout fund from the private bank accounts of Cyprus bank depositors.  Yes, you read that right; savers were determined to be the logical target to bail out the profligate.

The reaction from depositors, predictably, was intensely negative.  They are furious and shocked.

This is a complete game-changer.  It means that even money in the bank is not safe.  It implies that money in pension and money market accounts is not safe, either.  It means that rule of laws and contracts really don't matter.  Of course, MF Global taught us that.  It finally means that trust is no longer a part of the equation...  » Read more

Daily Digest

Image by GOC53, Flickr Creative Commons

Daily Digest 3/17 - Bank Runs In Cyprus, The Facts On Fracking

Sunday, March 17, 2013, 10:30 AM
  • Shock in Cyprus as savers face bailout levy
  • Why Cyprus' Rescue Matters To Us
  • Europe Does It Again: Cyprus Depositor Haircut "Bailout" Turns Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs
  • Facing Bailout Tax, Cypriots Try to Get Cash Out of Banks
  • Financial Pearl Harbor, Gold to hit $10,000 per ounce in 21st century?
  • Financialization of Justice: SEC Settles Insider Trading Case With SAC Capital For $600 Million
  • A ‘massive intrusion’: Promise and peril in Trans Mountain pipeline ambitions through B.C. mainland
  • North Dakota's Oil Boom
  • The Facts On Fracking
  • The Dangers Of Fracking
  • Obama Will Use Nixon-Era Law to Fight Climate Change
  • Great Lakes Experiencing 'New Stresses'

Why Our Current Way of Living Has No Future

Rampant malinvestment is creating scarcity of capital, energ
Wednesday, March 6, 2013, 1:25 PM

All of the sordid and spellbinding rackets working their hoodoo on the financial scene have obscured a whole other dimension of the fiasco that America finds itself in, namely the way we have arranged the logistics of everyday life on our landscape – the tragedy of Suburbia.

I call it a tragedy because it represents a sequence of extremely unfortunate choices made by our society over several generations. History will not forgive the excuses we make for ourselves, nor will it shed a tear for the tribulations we will induce for ourselves by living this way. History may, however, draw attention to our remarkable lack of a sense of consequence in transforming this lovely, beckoning New World continent into a wilderness of free parking. In any case, we’re stuck with what we’ve done, and the question naturally arises: What will we do now? » Read more


Janet Tavakoli: Understanding Derivatives and Their Risks

Abuse is the problem
Saturday, September 15, 2012, 10:48 AM

Global financial markets are awash in hundreds of trillions of dollars worth of derivatives. By some estimates, the total amount exceeds one quadrillion.

Derivatives played a central role in the 2008 credit crisis, as they had a brutal multiplying effect on the magnitude of the carnage. As a bad asset was written down, oftentimes there were derivative contracts written against it that resulted in total losses 10x greater than the initial write-down.

But what exactly are derivatives? How do they work?

And have we learned to treat these "weapons of mass financial destruction" (as Warren Buffet colorfully coined them) any more carefully in the aftermath of the global financial crisis? » Read more


The Growing Pressures Likely to Blow the Eurozone Apart

Look for Finland to exit first
Wednesday, July 18, 2012, 12:18 AM

There was yet another European Union summit at the end of June, which (like all the others) was little more than bluff. Read the official communiqué and you will discover that there were some fine words and intentions, but not a lot actually happened. However, there are some differences when compared with past meetings that need explaining:

  1. The European Council is being asked to consider permitting the European Central Bank to have a regulatory role alongside national central banks “as a matter of urgency by the end of 2012.” When this new super-regulator is eventually established, perhaps the ECB might be able to recapitalize banks directly. This was needed three years ago; the Eurozone will be lucky not to have a new banking crisis in the next few months, let alone by the year-end.
  2. A bail-out for Spain’s banks is agreed in principle, but it is to be funded by the European Financial Stability Facility (EFSF) until the European Stability Mechanism (ESM) is up and running. The EFSF has no money and relies on drawing down funds from all member states including Greece, Spain, Italy, Ireland, and Portugal, and the chances of the ESM being ratified by the individual Eurozone parliaments is very slim. We are told that Spain’s banks need about €100bn, but how much they really need is not known.
  3. The ESM will not rank as a prior creditor to the disadvantage of bond holders. This is a positive step, but makes it more difficult for national parliaments to authorize the ESM.

The big news in this is the implication the ECB will, in time, be able to stand behind the Eurozone banks because it will accept responsibility for them. This is probably why the markets rallied on the announcement, but it turned out to be another dead cat lacking the elastic potential energy necessary to bounce.

e another dead cat lacking the elastic potential energy necessary to bounce. » Read more