Famed investor George Soros is calling for a break-up of the banking oligopoly in the United States. His recent comments were made in reference to the big four U.S. banks that have come to dominate the banking sector. CitiGroup, Bank of America, JP Morgan and Wells Fargo now dominate the overwhelming majority of the U.S. bank market.
As regular readers know, I believe this oligopoly is part of the problem and that Ben Bernanke has likely increased the potential risks in the U.S. economy by further consolidating the sector. Perhaps most important, however, is the risks these four banks (and all banks for that matter) are allowed to take. Soros is in favor of the Volcker Rule which would segregate deposits from a bank’s risk taking operations such as hedge funds and prop trading. This appears like a no-brainer after what we just experienced, but unfortunately, with consolidated banking came consolidated lobbyists and that’s a recipe for even further power over Congress. The likelihood of the Volcker Rule passing is close to nothing at this point.
Soros has made a career out of being right. I am guessing he’ll be right again about the U.S. banking system, but it appears as though little will be done about it….
Here is an interesting chart that shows the ascendancy of the financial sector in the US.
Commercial banking is largely an administrative function, with a few highly paid decision makers, and many lower paid functionaries and clerks that make a decent if unspectacular wage commensurate with a utility function.
Starting with the Reagan privatization revolution, the finance sector began to grow in importance, moving from a utility serving the capital distribution and storage needs of the real economy taking a relatively small percentage of real output, to a dominant force in the national decision making process, controlling the allocation of capital through its powerful influence and lobbying in Washington, placement of its supporters in political positions of power, and the consolidation of the mainstream media into an oligopoly of four or five major corporations.
Now we have a financial sector dominated by a relatively few number of multinational corporations that are certainly not utilities serving the productive economy. In reality the big multinational banks have become hedge funds speculating in a broad range of markets, often in competition if not contrary to the interests of their customers, relying on other people’s money for capital to sustain an outsized leverage and a steady stream of rents and speculative winnings, and to cushion any losses in the event of the occasional market downturns.
And if we do not give the banks their demands, if we do not maintain the status quo, then they threaten that they cannot protect the world from financial ruin and a collapse of the money system, which they themselves control. And this is no mere extortion, no corruption of a single party or person, but the foundation of an enduring modern tyranny.
“Single acts of tyranny may be ascribed to the accidental opinion of a day; but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing a people to slavery." Thomas Jefferson
Notes: The Scottish parliament is in the Holyrood section of Edinburgh, the capital of Scotland. MSP stands for members of Scottish parliament. Nicola Sturgeon is leader of the Scottish National Party (SNP).
Scotland’s First Minister Nicola Sturgeon has told the BBC that Holyrood could try to block the UK’s exit from the EU.
By Jacob Wolinsky. Originally published at ValueWalk.
In this discussion, students from the University of Nebraska got to ask Bill Gates and Warren Buffett questions of their choosing. The questions vary widely and can be found below. Warren Buffett and Bill Gates are two of the richest people in the world and their answers and advice are invaluable to anyone looking for success.
Date: September 2005
Location: University of Nebraska
We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.
As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."
I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.
For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....
One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...
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After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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