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The "fix" seems to be on in more and more ways (forgive the pun).
Here are a few paragraphs:
"Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year's "deferred prosecution" has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine."
"More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn"
"At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were "the only liquid investment capital" available to banks on the brink of collapse. "Inter-bank loans were funded by money that originated from the drugs trade," he said. "There were signs that some banks were rescued that way."
"What happened at Wachovia was symptomatic of the failure of the entire regulatory system to apply the kind of proper governance and adequate risk management which would have prevented not just the laundering of blood money, but the global crisis."
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
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Here's another way to look a the "rally" from Zero Hedge:
"As silver is about to break $45 any second, we thought we'd take a minute to show the change in the S&P in real terms, i.e. adjusted for the plunge in the dollar. When one compares the YTD change in the S&P compared to the YTD change in DXY, one gets... the following. To all those who hold stocks: congratulations - you have only lost 0.18% in purchasing power year to date. To everyone else: we can only hope Goldman's next downgrade of crude is more effective. That, or take a bicycle to work."
I was tempted to put this in my "Waves and the Dollar" thread, out of spite, but a key point in it was that the major support level for the dollar has just become a resistance level. My 4 year symmetrical triangle chart of the dollar has a price target of 64 "if" it falls and 84 if it breaks upwards. My 30 year head and shoulders target is 35 "if" it falls 104 if it breaks up.
For those wondering - the people of Zerohedge will work with you if you have important information. They do take precautions and make precautions available for you. I was being "observed" before I started contacting them frequently and have stories of getting "scared strait" - but it wasn't ZH that caused it. I say that for those who might not even feel comfortable sending in information, much less calling, which is preferable in some instances. "Marla Singer" doesn't post any more because she's gotten five death threats. Reading posts from people like silvester17 nearly cures the new found apathy.
as you can see, nobody answered the question and came up with a better plan. and I'll say it again. under the circumstances (interest rate at about 0%), there was not a big choice.
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
1. Here are two of the many things that could have been done:
First, the completely obvious answer to what could have been done better is the Fed should have recognized the real estate/credit bubble when it was occurring. They in fact, did but pretended it was of no significance and allowed it to continue. This really began with Greenspan and then when Bernanke became Fed President, it was most likely made worse. I distinctly remember all of Bernanke's testimonies where he stated that he felt "Real Estate was not in a bubble, would not crash and if anything would simply plateau for a few years until everything else caught up with RE prices". Lol!!! They could have simply raised short term interest rates enough to stop the excessive speculation that was occurring in the Real Estate market. They could have also reduced the monetary supply by selling U.S. Treasuries and bringing long(er) term interest rates higher until the speculation in Real Estate cooled down.
The second important thing they should have done was to put a clamp down on the banks' excessive use of derivatives (Collateralized Debt Obligations, Credit Default Swaps and other covenant lite/Mezzanine financing arrangements) and the high risk taking that was affiliated with it. This would have stopped the massive securitization machine that came to be and would have made banks use far less risk because the mortgages that did not fit into the FNMA/FMCC criteria would have had to be held on their (the banks') balance sheets. As we witnessed, the fallout from the use of derivatives resulted in massive bank failures, money markets "breaking the buck" and giant mounds of garbage securities that have absolutely no secondary market and no bid to speak of.
The entire meltdown could have been prevented if they would have acted early enough. But we're talking about the Fed here. They're in it for themselves first and foremost. This meltdown afforded them with an even larger power grab.
2. We would obviously be way better.
3. I can't even imagine how you arrived with your conclusion, please explain.
what you mentioned is was what they could (should) have done before the meltdown. I'm talking about what they should have done after the damage was done. with other words what else than quantitative easing.
and for your conclusion that raising short term interest rates would have helped to prevent the meltdown is very questionable imo. you don't want to fix a problem by creating others. see attached charts.
I totally agree about the excessive use of derivatives. this should have been done. but then voices would appear: what about free market?
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
So, you'd like to know what an alternative to QE would be after the fact that the Fed blew it with failing to nip the problem before it blew up? Lol! I'm afraid it's a bit late at this point don't you think?
As I've said before, they've painted themselves into a tight corner at this point with limited options. I'm for letting the Zombie banks fail. It's going to happen regardless if something isn't done about them. But to be specific and answer your question, they (the Fed) should've broken these big Zombies apart and created a better, more sound banking system. But no, the facade plays on.
The only thing that QE is accomplishing is the destruction of the USD. All the other asset classes are just responding accordingly. Finance 101 teaches you the inflation trade. The Fed is blowing it again by not recognizing the inflation they've created. Bernanke has repeatedly said that this is "transitory". But that's been for quite some time now, I'm thinking this has become a bit more permanent vs. transitory. But I'm not surprised as his track record speaks for itself.
I'm interested in learning more as to why you think raising interest rates to curb excessive speculation is questionable. I've never heard anyone say this before and would like to learn the rational behind that idea.