• Tag Archives Regulation
  • First India Bans Cash, Now It’s Targeting Gold

    In November of last year, India banned certain cash notes in a bold move to force businesses into the banking system to better harvest more taxes from its livestock.
    Now, under the guise of ‘improving transparency’ and forming a ‘common market,’ India has begun targeting gold with new taxes, regulation, and incentives for citizens to turn over their undeclared gold to the financial sector.
    Roughly 86% of India’s economic activity happened in cash at the time much of it was banned. Presumably that includes the $19-billion-per-year retail gold industry. Again, it appears that India’s government (central bankers) wants a bigger cut of the action and to better track the private assets of citizens.
    Bloomberg has been reporting that India’s government is teaming up with crony gold dealers to plan a complete revamp of its gold policy – which is always code for ‘control, regulate and tax.’
    Bloomberg reports:

    This post was published at Zero Hedge on Jun 25, 2017.

  • Italian Taxpayers To Foot 17 Billion Bill As Rome Bails Out Another Two Insolvent Banks

    Two weeks after the first, and biggest, European bank bail-in took place under the relatively new European bank resolution mechanism, the EBRD, when Spain’s Banco Popular wiped out the holders of its most risky securities, including equity and AT bonds, and then selling what was left of the bank to Santander for 1 – a process that took place without a glitch – Italy may have just killed any hope of a European banking union, when the bailout of two small banks made a “mockery” of Europe’s new regulation.
    Late on Sunday, Italy passed a decree that will effectively sell the good part of the two banks to Intesa, Italy’s second-largest and best-capitalized bank. Intesa said last week that it would be willing to buy the best assets for a token price of 1 as long as the government assumed responsibility for liquidating the banks’ large portfolio of sour loans. As a result, Italy said it would commit as much as 17 billion in taxpayer funds to clean up the two failed “Veneto” banks in one of Italy’s wealthiest regions and support the takeover of their good assets by Intesa Sanpaolo SpA for a token amount. After an emergency cabinet meeting on Sunday, Finance Minister Pier Carlo Padoan said the Italian government will provide Milan-based Intesa with about 5.2 billion euros to allow it to take on Banca Popolare di Vicenza SpA and Veneto Banca SpA assets without hurting capital ratios, The European Commission, in a separate statement, said it approved the plan for the two banks and that it is in-line with state-aid rules.
    Unlike the Banco Popular bail-in by Santander, however, Intesa would only take on the good assets. PM Gentiloni said the lenders will be split into good and bad banks and that the firms, with taxpayers on the hook for the bad banks. The process was rushed to allow the failed banks to reopen on Monday and avoid a depositor panic and bank run. The intervention is necessary because depositors and savers were at risk, Gentiloni said. The northern region where they operate ‘is one of the most important for our economy, above all for small- and medium-size businesses.’

    This post was published at Zero Hedge on Jun 25, 2017.

  • The Unlisted Dead! ECB Deemed Veneto Banca and Banca Popolare di Vicenza Failing or Likely to Fail

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    Two Italian banks, Veneto Banca and Banca (Un)Popolare di Vicenza, have shut down due to lack of capital. Both bank’s stocks are unlisted.
    On 23 June, the European Central Bank (ECB) determined that Veneto Banca S.p. A. and Banca Popolare di Vicenza S.p. A. were failing or likely to fail as the two banks repeatedly breached supervisory capital requirements. The determination was made in accordance with Articles 18(1a) and 18(4a) of the Single Resolution Mechanism Regulation.
    The ECB had given the banks time to present capital plans, but the banks had been unable to offer credible solutions going forward.
    Consequently, the ECB deemed that both banks were failing or likely to fail and duly informed the Single Resolution Board (SRB), which concluded that the conditions for a resolution action in relation to the two banks had not been met. The banks will be wound up under Italian insolvency procedures.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 24, 2017.

  • ECB Declares Two Italian Banks Have Failed

    The European Central Bank (ECB) has announced as of June 23rd, that it was declaring two Italian banks insolvent. Veneto Banca SpA and Banca Popolare di Vicenza SpA have failed since the two banks repeatedly violated the regulatory capital requirements. The determination was made in accordance with Article 18 (1a) and Article 18 (4a) of the Uniform Resolution Mechanism Regulation.
    The European banking crisis continues.

    This post was published at Armstrong Economics on Jun 24, 2017.

  • Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries

    Projected losses at the top 34 banks in a ‘severely adverse scenario.’ The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession.
    Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently.
    And it would likely be better for Wall Street anyway if banks could lever up with risks so that a few of them would get bailed out during the next recession. Let’s remember, for the Fed’s no-holds-barred bailout-year 2009, Wall Street executives and employees were doused with record bonuses. The Fed’s bailouts were good for them. And it has been good for them ever since.

    This post was published at Wolf Street on Jun 23, 2017.

  • McKinsey: Banks Will Have To Slash 30% Of Analyst Jobs To Comply With New Research Rules

    As the global equity research market continues to wrestle with how they will comply with the European Union’s MiFID II regulations, McKinsey & Co. has just penned a new study effectively saying they’ll have no choice but to fire a ton of equity research analysts who write a bunch of stuff that no one ever reads…which seems like a reasonable guess. Per Bloomberg:
    Europe’s impending ban on free research will cost hundreds of analysts their jobs with banks set to cut about $1.2 billion of investment on the area, according to a report by McKinsey & Co.
    The consultancy estimates the $4 billion that the top-10 sell-side banks currently spend on research annually is likely to fall by 30 percent as clients become pickier about what they pay for, McKinsey Partner Roger Rudisuli said in an interview. Investment banks’ cash equity research headcount has fallen 12 percent to 3,900 since 2011 compared with as much as 40 percent in sales and trading, leaving the area facing ‘big cuts’ to catch up, he said.
    ‘Two to three global banking players will preserve their status in the new era, winning the execution arms race and dominating trading in equities around the globe,’ McKinsey said in a report Wednesday, which Rudisuli helped write. ‘Over the coming five years, banks will need to make hard choices and play to their strengths. Not only will the top ranks be thinned out, there will be shakeouts in regional markets.’

    This post was published at Zero Hedge on Jun 22, 2017.

  • Government as the Source of Monopoly: US Airlines Edition

    “Is Government the Source of Monopoly?” asked Chicago economist Yale Brozen in an essay first published in 1968. Yes, he answered – not only directly, by awarding exclusive licenses and contracts, but also indirectly, via regulation, minimum-wage legislation, and other forms of government intervention. Austrian economists such as Murray Rothbard and Dominick Armentano went further, arguing that monopoly per se is impossible on the free market, as long as government does not restrict entry into markets. More successful firms will tend to grow and increase their market share, but this does not constitute monopoly, as long as other firms are free to compete, or try to compete. The concept of monopoly only makes sense, theoretically and empirically, when the government protects privileged firms from competition, either directly or through the kinds of indirect means discussed by Brozen.
    I recently came across a lucid example of government-created monopoly in Thomas Petzinger excellent book Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines into Chaos (Crown, 1996). Petzinger explains the emergence of the US commercial airline industry in the 1930s as the result of efforts by Walter F. Brown, Postmaster General in the Hoover Administration, to reorganize the nascent airmail business.

    This post was published at Ludwig von Mises Institute on June 17, 2017.

  • How We Should Name Business Cycles

    Economists have long played semantic games with business cycles. In particular, they try to downplay the significance of the crisis and to obfuscate its cause.
    First of all, bubbles and economic crises are initially denied and then usually not named until after they end and particular sectors of the economy are revealed to be what Lionel Robbins called ‘a cluster of entrepreneurial errors.’
    The housing bubble was an exception because it was obvious to Austrian economists that there was a bubble as early as 2002 and that it was concentrated in housing due to various government subsidies, tax breaks, and regulations.
    Murray Rothbard explained that economists have played semantic games regarding the naming of business cycles. Up until the Great Depression an economic crisis typically started with a boom, followed by a ‘panic’ and concluded with a ‘depression.’
    After the disaster of 1929, economists and politicians resolved that this (i.e., a ‘depression’) must never happen again. The easiest way of succeeding at this resolve was simply to define ‘depression’ out of existence. From this point on, America was to suffer no further depressions.

    This post was published at Ludwig von Mises Institute on June 16, 2017.

  • The Next Economic Crisis Is Going To Leave The Majority Of People In Shock – Episode 1307a

    The following video was published by X22Report on Jun 15, 2017
    EU has decided to put Greece further into debt. It is becoming clear that Greece will never get out of this debt hole. 70% of the people support the BREXIT. Canada’s existing home sales has declined rapidly. Bitcoin dropped on worries about cyber attacks and regulations. Nike cutting 1500 people. The US manufacturing industry declines once again. Illinois is worse now than back in the great depression of the 30s. Bloomberg’s Mike Cudmore says the Fed has just pushed us into a recession, what he really means a collapse of the economy. Japan has decided that they will look into joining China’s belt and road trade system. The Fed is now pushing the collapse is not holding back, most of the people are going to be shocked when this hits.

  • Merkel Wants G20 Global Taxation of Internet

    Markel is calling upon the G20 to regulate the internet. While she if pretending to be concerned about cyberattacks, which no regulator can prevent, you have to look into the finer details. Chancellor Angela Merkel called for a global regulation sayying: ‘Industry 4.0 will have to go through the process that we have already gone through at the World Trade Organization (WTO) with real trading operations that we have gone through in the G20 process with financial market regulation.’
    She noted that the ‘concerns’ include ‘cyberattacks, the responsibility of social platforms to tax issues in international trade, and growing concern in the world Of policy. ‘

    This post was published at Armstrong Economics on Jun 15, 2017.

  • Zimbabwe: When the Black Market Becomes the Real Market — Jeff Thomas

    For many years, I’ve described black markets not as the evil danger to economies that governments profess them to be, but as predictable and sensible reactions to the overregulation of official markets.
    Black markets appear whenever an official market has become overregulated or otherwise unworkable due to governmental interference. They then thrive in direct proportion to the failure of official markets to function freely. They are, in fact, both a barometer and a checks-and-balances system for official markets.
    Back in 2008, I commented on the growth of the black market in Zimbabwe, as that country slid from inflation to hyperinflation. At that time, the people resorted to the use of other currencies (most notably the US dollar) as black market currency. The government, desperate to force their people into the dying Zim dollar, made it illegal to use the US dollar, but this hardly made a dent in the use of what was clearly a more stable currency. The ban on the US dollar only succeeded in driving it underground. Commerce did not grind to a halt, and money did not cease to change hands. The only real change was that the Zimbabwean government was taken out of the monetary loop.
    The significance here is that when a government corrupts its official market, a black market arises in equal measure to recreate a ‘free’ market. Its very illegality assures that it remains free of regulations and functions effectively.

    This post was published at International Man

  • Why the Tech Wreck May Be a Temporary Blip

    Leadership is an important consideration in any type of market, bull or bear. When market leadership is thin and quickly changes direction, it can signal a shift in the tone of the overall market.
    The rally that has unfolded in recent months has been changing in character. Originally, the thrust began as a reflation trade, as signs of disinflation/deflation began to fade and global bond yields crept higher. The timing of this coincided with the election, which brought with it hopes of tax cuts, deregulation, and infrastructure spending. This boosted the prospects (and share prices) of cyclical companies – those that need an improving economy to do well.
    But then both of these narratives began to fade. Inflation and economic data weakened, and it caused bond yields to fall from their highs near 2.6% to current levels around 2.2%. At the same time, it became clear that very little on Trump’s agenda could be counted on … at least for now.
    This led to another shift in leadership, as technology stocks took over the show.
    Most tech firms, at least those that have been leading the way higher, are secular growth stories. This means that these firms don’t need a robust economy to do well. Instead, the products and services they sell are so unique that they’re almost always in demand.

    This post was published at FinancialSense on 06/12/2017.

  • What Europe’s First Official Bail-In Looks Like

    “If you think this has a happy ending, you haven’t been paying attention,” warns MINT Partners’ Head of Capital Markets Bill Blain, as he reflects on what just happened in Europe (that US equities seem happy to brush off as yet another fleshwound to global instability).
    There is a rule in Financial Institutions that any bank that calls itself ‘popular’ generally isn’t. This was proved last night. But, congratulations if you were a holder of Spain’s Banco Popular’s Senior Debt – they did a Zebedee ‘boing!’ on the basis last night’s last minute Santander rescue makes the bonds money good.
    Bad news for the Equity and COCO AT1 holders – who have the distinction of holding the first major bank capital bonds to be bailed-in/wiped out under EU regulations. Banco Popular senior debt is 12 points higher this morning.
    The AT1 perps are trading at 2.6%, down 50 points!!, and even that price looks optimistic. Ahah. We’ve not seen crashes like that since 2008.
    Popular has been desperately seeking a rescue for the last few weeks, but everyone looked the other way. So last night the ECB triggered the ‘Single Resolution Mechanism’ when it determined the Popular’s liquidity crisis was such its equity would be unable to cover debts or other liabilities.

    This post was published at Zero Hedge on Jun 7, 2017.

  • What Can We Learn from Japanese Gangsters?

    If government regulations are squeezing your business, and you want to avoid the risk inherent in the mainstream financial system, what do you do?
    Buy gold!
    This is true even if your business is – shall we say – not completely above board.
    In fact, Japanese organized crime is reportedly turning to gold as its traditional revenue streams are squeezed by stepped-up law enforcement. Deutsche Welle reports gold smuggling and theft have risen sharply, particularly in southern Japan.
    Obviously, we don’t want to get involved in organized crime, but can we learn something from these Japanese gangsters?
    Jake Adelstein is an expert on Japan’s underworld. He said the country’s organized crime groups, known as ‘yakuza’ have found gold to be a lucrative income stream in recent years. The sudden surge in gold smuggling provides evidence of this trend. Japanese customs detected only eight attempts to smuggle gold into the country in in 2014. That number increased to 294 last year.
    Gangs across the country are desperate for new sources of income after the police began a crackdown on their more traditional sources of income around five years ago. In years gone by, the ‘yakuza’ earned their living largely from extortion and protection rackets, but the new legislation has effectively eliminated those revenue streams. So they have been casting around for a new way of making a living, and the gangs that are dominant in southern Japan have clearly recognized the opportunities that lie in gold.’

    This post was published at Schiffgold on JUNE 6, 2017.

  • Trump Bids Adieu to Paris Climate Agreement. What Does this Mean for Energy Investors?

    Surprising no one, President Donald Trump announced his decision to withdraw the U. S. from the Paris climate agreement last week, highlighting the depth of his commitment to keep ‘America First.’ Also surprising no one, the media is making much of the fact that the U. S. now joins only Nicaragua and Syria in refusing to participate in the accord.
    Trump was under intense pressure from business leaders, politicians on both sides of the aisle, environmental activists, members of his Cabinet – even his own daughter Ivanka, reportedly – to stay in the agreement, but he made his decision with the American worker in mind. The Paris accord, Trump said, ‘is simply the latest example of Washington entering into an agreement that disadvantages the United States,’ leaving American workers and taxpayers ‘to absorb the cost in terms of lost jobs, lower wages, shuttered factories and vastly demised economic production.’
    This is the assessment of Secretary of Commerce Wilbur Ross, who went on Fox Newsto defend the decision. ‘Any time that people are taking money out of your pocket and you make them put it back in, they’re not going to be happy,’ Ross said, making a similar argument to the one that prompted the Brexit referendum last year.
    Just as many Brits were tired of following rules passed down from unelected officials in Brussels, many Americans have feared the encroachment of global environmentalists’ socialist agenda, which they believe threatens to usurp their freedom.
    A thought-provoking article from FiveThirtyEight outlines how climate science became a partisan issue over the last 30 years in the U. S. It was the fall of the Soviet Union in the early 1990s, the article argues, that brought on a significant partisan shift in attitude, with conservative thinkers beginning to see the regulations that went along with environmentalism as the new scourge.
    No, the Sky Isn’t Falling
    Despite the withdrawal, I believe that the U. S. will not stop innovating and being a world leader in renewable energy – even while oil and natural gas production continues to surge. As the president himself said, we will still ‘be the cleanest and most environmentally friendly country on Earth.’
    Recently I shared with you that we’re seeing record renewable capacity growth here in the U. S., with solar ranking as the number one source of net new electric generating capacity in 2016. In the first quarter of 2017, wind capacity grew at an impressive 385 percent over the same period last year. The ‘clean electricity’ sector now employs more people in the U. S. than fossil fuel electricity generation, according to the 2017 Energy and Employment Report.

    This post was published at GoldSeek on 6 June 2017.

  • RBC Warns Equity Markets Have Entered The ‘FOMO’ Stage

    It’s risk-parity heaven right now, notes RBC’s head of cross-asset strategy Charlie McElligott, with global equities (developed and EM) AND fixed-income all continuing their torrid rallies, but McElligott warns this is a classic “from worst to first” PM-grabbing into a new “Fear Of Missing Out” stage of the equities-rally.
    Bonds remain well-bid on account of the ongoing ‘slowing into tightening’ narrative, with commodities being the only asset class (outside of volatility, of course) that is lower overnight as a ‘signal’ for the lower bond yields. This continues to be ‘falling inflation expectations’ story for rates / bonds: industrial metals continue their struggles (Chinese / PBoC deleveraging efforts, while recent efforts at STRENGTHENING yuan to stem FX outflows will FURTHER FEED global disinflation in coming months) in conjunction with Crude’s inability to get off the mat post disappointing OPEC (market still focusing on US shale supply–especially now, with the thinking post Trump’s Paris Accord drop-out that we’ll see even MORE US oil supply via increased drilling / deregulation).
    #FOMOROTATION: But today is largely an equities-centric story, as stocks can of course view the world in a ‘mutually-exclusive’ fashion from the aforementioned fixed-income ‘slowing growth’ concerns. A goldilocks interpretation of ‘easier financial conditions’ (weaker USD and lower US rates / flatter curves are a POSITIVE for large cap US corporates) against still-expansive data (yesterday’s US ADP print portending + for NFP) keeps stocks in a very ‘sweet spot,’ especially as the world is still awash in liquidity despite the ‘coming’ pivot tighter. To this point, EPFR data last night showed us that cash continues to be deployed in both equities (+$13.7B inflow in global Eq funds, a five week high absolute $ number) and bonds (+$6B inflow) as well. It seems like investors are appropriately taking their cues from very recent CB messaging: cautiously ‘slow and steady’ tightening in light of recently ‘softer’ inflation data.

    This post was published at Zero Hedge on Jun 2, 2017.

  • Commercial Banks Slash Auto Loans Outstanding For First Time In Six Years

    After the subprime mortgage bubble burst back in 2009, new regulations prevented banks from rushing right back into mortgages to re-inflate a market that nearly took down the global financial system. Of course, Uncle Sam didn’t restrict wall street from blowing massive bubbles in all asset classes, in fact the Fed seemingly condones it, just the mortgage market.
    And so, all that loan volume shifted to autos…
    …and student loans.

    This post was published at Zero Hedge on May 30, 2017.

  • Mnuchin Comments On Trump’s “Historic” Budget Proposal: “It Will Prevent Taxpayer Bailouts”

    In a statement issued moments ago discussing Trump’s proposed, if completely impossible, budget proposal, Treasury Secretary Steven Mnuchin said that Trump’s “budget will achieve savings through reforms that prevent taxpayer bailouts and reverse burdensome regulations that have been harmful to small businesses and American workers.” Translation: taxpayer bailouts are imminent, especially now that the current economic cycle is the 3rd longest of all time and a recession grows likelier with every passing day.
    Mnuchin also said that Trump’s proposed initiatives “coupled with comprehensive tax reform and other key priorities, will move America one step closer to sustained economic growth of 3 percent or higher.”
    While we will clearly take the under, what we find most amazing about Trump’s budget proposal, is that it does not anticipated a recession until 2027. That would imply 18 years of economic growth since the 2009 recession, without a single contraction! Good luck with that.

    This post was published at Zero Hedge on May 23, 2017.

  • Stocks and Precious Metals Charts – Mind the Gap

    “Starting around 1980, American society began to undergo a series of deep shifts. Deregulation, weakened antitrust enforcement, and technological changes led to increasing concentration of industry and finance. Money began to play a larger and more corrupting role in politics. America fell behind other nations in education, in infrastructure, and in the performance of many of its major industries. Inequality increased.
    As a result of these and other changes, America was turning into a rigged game – a society that denies opportunity to those who are not born into wealthy families, one that resembles a third-world dictatorship more than an advanced democracy.”
    Charles H. Ferguson, Predator Nation
    ‘When the system is rigged, when ordinary citizens are powerless, and when whistle-blowers are pariahs at best, three things happen:
    First, the worst people rise to the top. They behave appallingly, and they wreak havoc.
    Second, people who could make productive contributions to society are incented to become destructive, because corruption is far more lucrative than honest work.
    And third, everyone else pays, both economically and emotionally; people become cynical, selfish, and fatalistic. Often they go along with the system, but they hate themselves for it. They play the game to survive and feed their families, but both they and society suffer.’
    Charles H. Ferguson, Inside Job
    It was a risk off day in the markets. No doubt about it.
    The purported reason was the disclosure by the ex-FBI Director Comey that President Trump apparently asked him to forego the investigation of the ex-Security Advisor Flynn.

    This post was published at Jesses Crossroads Cafe on 17 MAY 2017.

  • India Working Toward Establishing a Spot-Gold Exchange

    In an effort to bring order to India’s gold market, the government has partnered with the World Gold Council to create a physical spot-gold exchange. According to Bloomberg, it could be up and running as soon as next year.
    The move toward an India spot-gold exchange is part of a broader bullion industry self-regulation effort gaining steam in one of the world’s leading gold markets. Last month, three committees formed – one to study a gold trade code, one to formulate good delivery rules, and a third to explore a spot exchange. The committees were born out of a meeting that included business chambers, the World Gold Council, banks, the Indian Bullion and Jewellers Association (Ibja), and the India Gold Policy Centre at IIM-Ahmedabad.
    According to Bloomberg, establishing the spot exchange faces some challenges, including the fact that state governments in India oversee gold-related matters, not the central government. Lack of vault space and reliable receipts for metal also pose hurdles.

    This post was published at Schiffgold on MAY 16, 2017.