Read This And Then Stab Your Eyeballs Out With a Pick Axe

Courtesy of Joshua M Brown, The Reformed Broker

As the average US citizen drags his wounded semi-corpse of a body across 2009’s finish line, it is heartwarming and life-affirming to know that the bloodsucking lobbyists are raking it in like never before down in Washington D.C.

From Politico via the CATO Institute:

K Street is raking it in.

Washington’s influence industry is on track to shatter last year’s record $3.3 billion spent to lobby Congress and the rest of the federal government — and that’s with a down economy and about 1,500 fewer registered lobbyists in town, according to data collected by the Center for Responsive Politics.

One giddy veteran lobbyist exclaims, "It is the most active time that I have ever seen in the advocacy business — from 1973 on.”  The "advocacy business"…lol, that’s like "efficiency expert" or "downsizing consultant".  Gross.

With every new social program, bailout, industry overhaul, regulatory takeover and bureacracy’s birth, the influence peddlers see another opportunity to move and place their chips as though they’re at a roulette table in hell.

It’ll be Kristmas on K Street for the foreseeable future.  In the words of David Boaz, "If you put out a picnic, you’re going to get ants."

Sources:

Lobbyists On Pace For a Record Year (Politico)

http://www.cato-at-liberty.org/2009/12/23/boom-time-on-k-street/

“How low?”

Forty-two percent. Yep… forty-two percent (42%) of Americans fall into the Strongly Disapprove Category of Rasmussen’s latest Obama Presidential Approval Index.

How could this happen to our Glorious Leader? What happened to cause this? Well, tell ya what… lets take a look at some of the plethora of reasons Americans, in fact, a lot of the world have lost their adoration of this man and his administration.

Unemployment is skyrocketing. November Federal unemployment figures are showing how the rate fell from October’s 10.2 percent to 10 percent. Now when you realize that one of the four weeks included in the calculating of this figure is only three days long. AND that week was a HOLIDAY week. So no one was out looking for a job and this is used to show how the jobless rate is going down. Su-ure…

A staggering economic recession. I could go on about this for 100,000 words and not even scratch he surface on this accomplishment of the Obama regime.

The housing crisis (which WAS started by liberals) and caused the housing sector to crater.

Another glowing accomplishment of this bunch: They took over GM and Chrysler. Then scammed the American public with the Cash For Clunkers program… How many of the new cars sold were actually AMERICAN MADE or even American assembled?

And just what was the long-term result of this hoax? In September, GM, Ford and Chrysler each reported drastic declines in sales. It seems that the American market is suffering from a hangover from the Cash for Clunkers scam.

When compared with 2008 September sales figures General Motors suffered the steepest drop, 45 percent. Chrysler? They were down 42 percent and what about Ford? Remember that Ford did not suck up to the government teat. I wonder if this fact has anything to do with the fact that Ford Motor Co. got to enjoy the much smaller decline of 5.1 percent.

The banking system, nationalizing mortgage agencies (in effect taking state ownership of half the homes in America)

Then there is the Cap and Trade package… what a joke. The vast amount of money this and the entire climate control scam will cost is almost beyond comprehension: $1,761 per family, per year.
Think of all the families in the US… $200 billion dollars PER YEAR!!!

This Cap and Trade climate control scam is falling apart before Obama’s very eyes. And now the rest of the world is getting to see the emptiness of his power. His support for the ‘Nopenhagen” climate control agenda has not done anything to get it’s passage, in fact, his support is playing to the very failure of the Copenhagen climate control and re-distribute the wealth of the US.

A stimulus (Slush fund) package that is still sitting, waiting to be spent. Well, just waiting to buy votes…

Next in line is the rationed, single-payer (off the table today, but tomorrow…), government healthcare plan.

61% of American people are dead-set against his hallmark piece of legislation and no, that does not mean that… well, so, 39% of the American people like it…

WRONG!

At the VERY best, maybe, MAYBE 19% like it. And even the people who taut that number do it with some reservation: they can’t show that approval is that high. I don’t know how I could try to sell something that less than one in five buyers are interested in. And lemme tell ya, my wife has a proven record as a salesperson, and ‘could sell refrigerators to Eskimos’. Not that she would try, but selling the American people on the rationed, government healthcare system that Princess Nancy, Squeaky Reid, and Big Barry are trying to cram down our throats is beyond even her.

If it is all so wonderful, everything that the American people need… why is Big Barry having to traipse over to Capitol Hill every other day to ‘talk’ (read: browbeat) to members of Congress? I thought he was so magnificent that this would have passed just because… well, HE asked for it.

Oh, yeah I know that this question has been asked, but it’s my turn: if the rationed, government healthcare scam is all so great, why don’t the members of Congress want to be the first to enroll their families in it? Maybe they know that the government healthcare plan WON’T EVEN begin actually enrolling participants for FOUR YEARS!!! Yeah, they start taxing the bejesus out of everyone now, but the American public won’t get to really appreciate how this scam will screw them over until 2014. But then, hopefully a LOT of the members of both houses of Congress WILL be private citizens again and will get to truly enjoy the benefits of this.

Another aspect of the rationed, government issued healthcare scam is the impact it will have on the National debt. The public debt plus the debt held by government accounts for the gross federal debt can go. The Treasury Department is able to borrow funds only as high as the statutory debt limit permits. The public holds 70% of the gross federal debt.

On Wednesday, by a 218-214 vote the House passed legislation to give the federal government the ability to borrow $290 billion to finance its operations for only six additional weeks.

Between this and the costs associated with the healthcare scam… even if no more is piled into the equation, our great-grandchildren will be paying on the bill this administration is passing on to them.
Oh, there is also someone who is REALLY PO’ed by how high the debt limit has been pushed. The Chinese, and they are LIVID with it. Seems that the Chinese are becoming increasingly disillusioned with Big Barry’s ‘leadership’.

And really, who can blame them? As of October the Chinese hold 798.9 billion dollars worth of US debt. The problem is: with the dropping of the value of the dollar… well, the Chinese are experiencing massive losses on their investment in US bonds.

And what about some of our other friends around the world? Well, Dubai, whose economy is so closely tied to ours is going face down into the sand.

“Do WHA…?” you ask. We remain dependent upon foreign oil. With no coherent energy policy and none on the horizon, this administration seems to be content to curtail and cripple the US economy so that less oil is needed.

And now… I know, you’re getting tired of all this. So are a lot of people. The problem is that the reasons just keep coming.

With the undermined world confidence in the US dollar: a direct result of the Obama Administration policies, a further devaluation of the dollar, an increase in interest rates, both of which will invariably lead to higher inflation in the US. Mass production of dollars U.S. by fiat is just another reason for the further drop in faith in the U.S.

So… because dollars are being printed as fast as the presses can run, the dollar is tanking in every way. Russia and China have been pushing to replace it with everything from the Euro (PAH-LEEZE) to whatever.

Now, some of the Arab States are pushing to replace the dollar with a petro-currency of their own.
The Gulf States who have so far have signed onto this idea are Saudi Arabia, Qatar, Kuwait, and Bahrain, with The United Arab Emirates holding out, for now.

Replacing the US dollar as the currency used for oil contracts would greatly increase the influence of these Arab States in the global exchange and capital markets.

Collectively, the members of this group account to being a regional superpower. A superpower with a combined GDP of $1.2 trillion and forty percent of the world’s proven oil reserves.

And financial power equal to that of China. And we remember how PO’ed China is at us.

Translate this with Babel Fish

The Bombay Stock Exchange (BSE) market capitalisation and bank deposit levels move in diametrically opposite directions. In an economy that is on shaky ground, bank deposit levels go up, but when there is optimism, market cap goes up, reveals a 34-month study conducted by New Delhi-based SMC Capitals.

The elements of fear and greed (which drive the capital markets) are clearly visible in the trends seen in the allocation of assets by
investors in terms of cash and stocks. An attempt to compare the BSE market cap levels (over the period starting January 2007), with the aggregate bank deposits in the banking system shows the relative measure of the entire market capitalisation of BSE as percentage of aggregate bank deposits in the entire banking system. This is a reflection of the level of risk appetite in the investor community.

For instance, in January 2007, BSE market cap at Rs 3,779,000 crore as a percentage of aggregate bank deposits was 152 per cent, which means BSE market cap was 1.52 times more than the entire bank deposits at that time, that was Rs 2,485,000 crore.

When the market started recovering since March 2009, the BSE market cap as a percentage of aggregate bank deposits crossed 100 per cent level and at present, these level is at about 138 per cent.

BSE market cap at the end of November was Rs 5,793,000 crore, while bank deposits stood at Rs 4,196,000 crore, data from SMC Capitals shows. Latest data on bank deposits is available only till November.

As the bull market cap kept racing ahead during 2007, these levels of BSE market cap, as a percentage of aggregate bank deposits, have kept rising. At the peak of the bull market, that is by December 2007, these levels reached 235 per cent.

Simply put, BSE market cap at Rs 7,169,000 crore was more than double the Rs 3,047,000 crore kept in bank deposits.

“What it means is that the deposits available with sche-duled banks put together can’t even buy half of BSE stocks. This was probably the sign of ‘excess optimism’ in the capital market,” said Jagannadham Thunuguntla, equity head of SMC Capitals.

However, by the time the bear market started in 2008, this level of BSE market cap as percentage of aggregate bank deposits has consistently kept falling. By the time the markets touched the bottom in February 2009, this level fell to 74 per cent.

This means that with the aggregate bank deposits available with the banking system, one can buy all the BSE-listed stocks and will still be left with 26 per cent of the deposits. This probably marked the sign of excess fear in the system, said Thunuguntla. By this time, the BSE market cap was to the tune of Rs 2,862,000 crore, whereas the aggregate bank deposits were to the tune of Rs 3,848,000 crore.

Paul Volcker’s message, passed along by Simon Johnson, with love. - Ilene  

“Wake Up, Gentlemen”

Courtesy of Simon Johnson at The Baseline Scenario

Simon Johnson, former chief economist of the International Monetary Fund, is a professor at the MIT Sloan School of Management, a senior fellow at the Peterson Institute for International Economics, and a member of the CBO’s Panel of Economic Advisers.  He is a co-founder of The Baseline Scenario.

by Anders Borg, Minister for Finance and Mats Odell, Minister for Local Government and Financial Markets

Bringing order to financial markets and addressing the economic crisis is one of the Swedish EU Presidency’s main priorities. It is not difficult to understand why. The world, Europe and Sweden are still living with the consequences of the global financial crisis that erupted in autumn 2008. In Europe, millions of jobs have disappeared in the past year. In Sweden, the crisis has led to over 100 000 lost jobs. Many countries, whose public finances are in a terrible state, must now engage in a comprehensive process of fiscal consolidation. The road back to stability and growth is long and arduous.

We are experiencing a crisis of historic proportions, with comparisons being made with the Great Depression of the 1930s. This crisis originated in global macroeconomic imbalances, complex new securities, inadequate regulation, inadequate supervision of financial markets and the greed and irresponsibility of a financial industry constantly wanting more.

Politics has two distinct roles to play in the current situation. The first is to mitigate the impact of the crisis and help accelerate the economic recovery. The second is to formulate the response required to counteract the harmful effects of a similar crisis in the future. Both tasks must be solved by an EU working together.

To prevent financial crises from bringing down an entire economy, the state – ie the taxpayer – often steps in and supports systemically important banks. Such interventions tend to be expensive for the public, but they must be contrasted with the costs to the entire economy of a collapse of the financial system.

The financial sector has this year been given more support than ever before. According to the IMF, the supportive measures amount to more than 5 000 billion Swedish kronor. Within the EU, we quickly agreed on a coordinated package of measures, to prevent one country’s solution from becoming another country’s problem.

While we have dealt with the most urgent situation, we must also tackle the underlying causes of the crisis and help prevent the emergence of new financial crises. The Swedish Presidency has devoted considerable energy to finding ways forward towards greater stability. The need for new, stronger rules and institutions has been a priority. We have worked for greater regulation and the creation of powerful new European financial market supervisors to address potential crises. Significant progress has been made:

* Better and more efficient financial market regulation. New authorities with a clear mandate will allow the EU to face an increasingly international banking industry and reduce the risks of imbalances and crises harming households and businesses.

* Cross-border supervision of financial systems. A European Systemic Risk Board (ESRB) will be set up to monitor the stability of the financial system as a whole. The Board will meet the demands that a more complex and globalised financial market brings.

* New European rules for capital adequacy. They will make banks more resilient to losses in bad times and reduce the risk that households and businesses are affected by a constrained credit supply.

* An end to the harmful bonus culture. Consensus has been reached on new common rules that promote a sound and sustainable long-term development of banks and prevent risky behaviour that threatens the stability of the financial system. The greedy accumulation of wealth must not come at the expense of society and its stability.

Besides the goal of bringing more order to financial markets, Sweden has taken on the challenge of addressing the state of public finances in the EU. Large fiscal deficits and rising public debt risks undermining the whole of Europe’s recovery.

In this context, the Member States have, during the Swedish Presidency, agreed on the so-called Gothenburg principles of how to return to sound public finances, through the establishment of a so-called exit strategy. Countries with poor public finances have a very difficult journey ahead, with likely tax increases and expenditure cuts, which will hit public services hard.

The efforts to create stability in financial markets are now entering an intensive phase. A crucial cornerstone in the construction of a new regulatory and supervisory structure is still lacking, namely the new and more effective authorities that will follow financial institutions and constitute the micro-prudential supervision at the EU level, for the banking, securities, and insurance sectors. These supervisory agencies will, for example, be able to carry out binding mediation in disputes between member states’ regulatory agencies and can, in crisis situations, receive specific, supra-national powers. In negotiations we will also push for the right of these agencies to, in some cases, make decisions aimed directly at financial institutions that don’t act according to EU regulation, if national authorities have failed to implement the common rules.

It is important that we maintain the drive to reform. Throughout history we have seen that the willingness to change old structures tends to decrease with time, as the original crisis fades into history. As a result, necessary reforms have not been carried out and crises have recurred. The Swedish Presidency’s ambition is that we can decide on the establishment of the new supervisory agencies. In addition, we intend to agree on a framework for more transparent rules on openness and exchange of tax information, in order to prevent money from being hidden in tax havens, thereby avoiding taxation. It is unacceptable that some countries serve as a base for tax evasion.

We believe we have a responsibility to act, based on the conclusions we have drawn from the crisis. A return to “business as usual”, with a lack of regulation and supervision as well as excessive bonuses and risk-taking, would be insulting, dangerous and cynical. It would also be a slap in the face to all those who have lost their jobs during the crisis.

Next week EU’s finance ministers will meet for a crucial meeting in Brussels. If we succeed, we will have managed to create effective rules for the increased stability of banks and other financial institutions within the EU. We have also already created a strong financial market supervision and prevented unhealthy bonuses and compensation. Sweden’s message, in our Presidency role, is clear. It is time for Europe to decide. A stronger regulatory framework and more order in financial markets will improve Europe’s ability to keep greed and irresponsibility locked up, thus benefiting stable growth and employment. It will also benefit the economy and jobs in Sweden.

1.  That Robert Pattinson was not in fact hit by a taxi fleeing fans in New York;

2.  and that he exists.

3.  That Lehman Brothers could only fall once;

4.  and that it didn’t happen this year.

5.  That our President (thank God!) has not been the subject of violent attack, despite all the crazy talk.

6.  That we still have a banking system, despite all the crazy talk.

7.  That Captain Sully Sullenberger did not allow his plane to crash into midtown Manhattan, even if the automatic pilot system supposedly could have landed the plane on its own.  (I don’t believe that.)

8.  That Levi Johnston is not our son-in-law.

9.  That Swine Flu has not mutated into a life-threatening epidemic like the 1917 Spanish Flu.

10.  Speaking of the 1917 Spanish Flu, that Edward Cullen didn’t  survive it.   Or did survive it.  Or did whatever he was supposed to have done.

Enjoy your thanks-giving.

And, as always, thank you all for reading.

(If you get a chance, please check out 1 Mississippi by Karin Gustafson at Amazon or on ManicDDaily home page.)

Almost every day, we have to make all sorts of payments: bank savings, house mortgages, home and travel insurances, pensions savings. Banks, fund management companies and insurance companies are often known quite simply as the financial sector. And as the financial sector of today is transnational, it has become an important issue for the EU. Especially since the explosion of the financial crisis.

“The financial sector affects us all – households, companies and authorities – in our every day lives. If you cannot manage payments, borrow money or take out insurance, then the everyday lives of individuals, companies or the economy as a whole, cannot function”, says Hans Bäckström who works with these issues at the Swedish Ministry of Finance during the Swedish EU Presidency. A functioning financial sector is as important as a functioning energy supply. The problem is that the financial sector and the financial markets are vulnerable to all kinds of disruptions, as we have seen in the last year. This is where society has an important role to play.

Professor Clas Bergström from the Stockholm School of Economics believes that instability on the financial markets are caused by declining trust among the banks’ financiers (for example households) and among the actors on the financial market.

“Households are very important. When the trust in banks decline in households, deposits in the bank also decline which means that the banks have access to less capital. When, added to this, trust between banks and other actors in the financial market declines, so that they no longer lend money to one another, then it turns into a downward spiral”, he says.

When the world economy flagged last year, instability on the world’s financial markets led to companies and households finding it difficult to borrow money. The effects of the downward spiral was falling growth, bankruptcies and unemployment as well as a substantial economic downturn.

“International cooperation was not enough”

Many financial actors, such as banks and insurance companies, are today conducting business in many different countries.

According to Hans Bäckström of the Swedish Ministry for Finance, the crisis clearly showed that international cooperation on supervision was not enough in today’s globalised world, where there is free movement of capital and services across borders.

“Above all, there were two major flaws: firstly the lack of any connectivity between company-specific supervision and the overarching analysis of the financial markets and secondly there was inadequate cooperation and coordination between the different national supervisory authorities”, he says.

To address the lack of connectivity between company-specific supervision and the overarching analysis of the financial markets, the EU’s ministers for finance decided to establish a special stability board: the European Systemic Risk Board (ESRB), at their meeting on 20 October earlier this year. The board will collect and analyse information on a market-overarching level, issuing warnings against negative tendencies influencing financial stability.

There will be further bodies established alongside the ESRB to address the second problem; i.e. the lack of coordination between national supervisory bodies. Three European authorities will be established with this in mind (for the banking, insurance and securities sectors respectively) to facilitate coordination between national authorities. They are to develop binding technical standards, work for a uniform application of common regulations, act as mediators in disputes between the supervisory authorities in the Member States, coordinate crisis measures and so forth.

“It is like having good and well-organised fire services”

The most important objective is to reduce the risk of new financial crises occurring but also to be able to act faster and more efficiently should the problem arise despite this. The new structure is meant to supplement, not replace, the work of national supervisory authorities and central banks.

“There will always be ’bubbles’ and other disruptions on the financial markets. The important thing is to discover and address problems before they threaten government finances, welfare and employment”, says Hans Bäckström. “It is like having good and well-organised fire services – even though you can take measures to prevent the risk of fire, there will still be fires now and again. But then you have to be on the spot quickly to put them out!”

RBI to Assess Affairs of Foreign Banks Operating in India

The Reserve Bank of India (RBI) decided to run a detailed assessment of the risk-management capabilities and evaluate the transparency in financial affairs of all foreign banks operating in India with an aim to ensure that they do not pose any systemic risk to the banking sector.

However, until this process is finished, foreign banks are doubtful to be permitted to open more branches in India while India has committed to allowing 12 new branches to foreign banks in a year, but has been more liberal.

Moreover, this has resulted in a high presence of foreign banks in India as their WTO commitment allows them to deny licenses to foreign banks once their share in the total assets of the banking system exceeds 15%.

Additionally, as it comes in the aftermath of the financial crisis, the audit reflects concerns over an unduly large presence of foreign banks creating risks for Indian financial markets.

Meanwhile, the finance ministry and the central bank had always supported allowing foreign banks to operate in India as they thought that increased presence of foreign banks boosts the efficiency of the domestic banking sector.

Hello Friends, last month we witnessed loads of action with the RBI’s monetary policy being laid down.

However here we bring more on the RBI policies and projections.

RBI policies and projections

The Reserve Bank of India (RBI) laid the groundwork on Tuesday i.e. on 27th Oct in its monetary policy for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles.

The RBI had injected in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis.

For now, the Reserve Bank has decided to keep the policy repo rate unchanged at 4.75 per cent, the reverse repo rate unchanged at 3.25 per cent and the (Cash Reserve Ratio) CRR of banks unchanged at 5 per cent of their (NDTL).

The following measures constitute the first phase of ‘exit’:

- The Statutory Liquidity Ratio (SLR), which has earlier been reduced from 25 per cent of NDTL to 24 per cent, is being restored to 25 per cent.

-The limit for export credit refinance facility, which was raised to 50 per cent of eligible outstanding export credit, is being returned to the pre-crisis level of 15 per cent.

-The two unconventional refinance facilities:

(i) special refinance facility for scheduled commercial banks; and

(ii) special term repo facility for scheduled commercial banks [for funding to Mutual Funds (MFs), Non-banking Financial Companies (NBFCs), and Housing Finance Companies (HFCs)] are being discontinued with immediate effect.

Further, the liabilities of scheduled banks arising from transactions in Collateralized Borrowing and Lending Obligations (CBLO) with Clearing Corporation of India Ltd. (CCIL) would now be subject to the maintenance of the CRR.

Stay Tuned for more on this in our coming blogs.

We would cover Monetary Projections of RBI and Economy scenario and indicators at the moment.

The Wall Street Journal is reporting in a little noticed piece, that China’s bank’s may be having trouble, like everyone did, six months ago……The piece goes on to say that their profits may in fact be just driven by expansion and may not reflect the sum of their assets?…hum??????

Didn’t they lend this country a boat load of money a few months ago?

“Franciskj Knowledge Bank is world’s first knowledge bank open today.I am the owner of this bank.My goal is to become world’s largest banker in one year. Create GDP of US$ one trillion. Create 10 million knowledge bankers across the world. we’ll be lending knowledge and ideas to needy customers of the world. No security required.The only yardstick is proven dignity & integrity, should be a regular reader of my blog. Ideas from US$ 100,000 to US$1trillion available.Special invitation to governments across the world for creating 1 million knowledge bankers in each country “  This is an example of an ad in Knowledge Economy of future.All rights reserved © franciskj, 2009

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) –

Oct. 9 (Bloomberg) — The Federal Reserve is considering accessing money market funds through clearing banks or creating a facility to drain the record amount of cash added to the financial system, according to people familiar with the plans.

Those methods may help conserve the capital of the …

Source: Fed Said to Consider Clearing Banks, Facility to Drain Reserves

The REAL Battle Over America’s Banking System

Courtesy of Washington’s Blog

New York Versus the Rest of the Country

If you are happy with the banking system, and don’t think it needs to be reformed, then you probably work for one of the banks headquartered in New York.

Indeed, the banks outside of New York have acted much more conservatively, used more conservative capital ratios and less leverage and gotten less involved in credit derivatives and other speculative investments.

Buy a banker in the Midwest a drink, and he will probably rail against the giant New York banks for causing the financial crisis, costing the smaller, better run banks a lot of money and huge fees, and driving many smaller banks out of business.

And even within the Federal Reserve, what the New York Fed and Bernanke are saying is wholly different from what the heads of the regional Fed banks are saying. The Fed banks in Philadelphia and Kansas City and Dallas and elsewhere disagree with what the New York Fed and Fed’s Open Market Committee are doing. See this and this.

So the battle isn’t between bankers versus outsiders. It is between the giant New York money-centered banks and the rest of the country.

Reserve Requirements

Congresswoman Kaptur said last week:

We used to have capital ratios. We need to get back to them. Ten to one. For every dollar in your bank, you can lend ten. You know what J.P. Morgan did? A hundred to one. And then with derivatives, who knows how much?

Remember, Milton Friedman – the monetary economist worshipped as the guy with all of the answers in the latter part of the 20th century – advocated for 100% reserves.

Forget 100 to 1 or even 10 to 1. Friedman said the capital ratio should be 1 to 1, where banks only lend out the amount they actually have as deposits on hand.

Friedman has been deified as the economist to follow. But his views on reserve requirements have been completely ignored.

Money Out of Thin Air

Congresswoman Kaptur also said last week:

Banks have the power to create money. And decide how much that is worth.

What is Kaptur talking about?

Here Comes the Judge

Well, in First National Bank v. Daly (often referred to as the "Credit River" case) the court found: that the bank created money "out of thin air":

[The president of the First National Bank of Montgomery] admitted that all of the money or credit which was used as a consideration [for the mortgage loan given to the defendant] was created upon their books, that this was standard banking practice exercised by their bank in combination with the Federal Reserve Bank of Minneaopolis, another private bank, further that he knew of no United States statute or law that gave the Plaintiff [bank] the authority to do this.

The court also held:

The money and credit first came into existence when they [the bank] created it.

(Here’s the case file).

Still confused?

Nobel Economists, Congressmen, the Fed and Treasury Agree

Well, let’s hear from some top economists.

As PhD economist Steve Keen pointed out recently, 2 Nobel-prize winning economists have shown that the assumption that reserves are created from excess deposits is not true:

The model of money creation that Obama’s economic advisers have sold him was shown to be empirically false over three decades ago.

The first economist to establish this was the American Post Keynesian economist Basil Moore, but similar results were found by two of the staunchest neoclassical economists, Nobel Prize winners Kydland and Prescott in a 1990 paper Real Facts and a Monetary Myth.

Looking at the timing of economic variables, they found that credit money was created about 4 periods before government money. However, the “money multiplier” model argues that government money is created first to bolster bank reserves, and then credit money is created afterwards by the process of banks lending out their increased reserves.

Kydland and Prescott observed at the end of their paper that:

Introducing money and credit into growth theory in a way that accounts for the cyclical behavior of monetary as well as real aggregates is an important open problem in economics.

In other words, if the conventional view that excess reserves (stemming either from customer deposits or government infusions of money) lead to increased lending were correct, then Kydland and Prescott would have found that credit is extended by the banks (i.e. loaned out to customers) after the banks received infusions of money from the government. Instead, they found that the extension of credit preceded the receipt of government monies.

Keen explained in an interview Friday that 25 years of research shows that creation of debt by banks precedes creation of government money, and that debt money is created first and precedes creation of credit money.

As Mish has previously noted:

Conventional wisdom regarding the money multiplier is wrong. Australian economist Steve Keen notes that in a debt based society, expansion of credit comes first and reserves come later.

This angle of the banking system has actually been discussed for many years by leading experts:
 

“[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts."
- 1960s Chicago Federal Reserve Bank booklet entitled “Modern Money Mechanics”

“The process by which banks create money is so simple that the mind is repelled.”
- Economist John Kenneth Galbraith

[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.
- Robert B. Anderson, Secretary of the Treasury under Eisenhower, in an interview reported in the August 31, 1959 issue of U.S. News and World Report

“Do private banks issue money today? Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities. . . . The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.”
-Congressman Wright Patman, Money Facts (House Committee on Banking and Currency, 1964)

"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.
- Sir Josiah Stamp, president of the Bank of England and the second richest man in Britain in the 1920s.

Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created — brand new money.
- Graham Towers, Governor of the Bank of Canada from 1935 to 1955

Monetary reformers argue that the government should take the power of money creation back from the private banks and the Federal Reserve system.

Indeed, PhD economist and candidate for Florida governor Farid Khavari wants to create a Bank of the State of Florida, to create credit without burdening the state and its citizens with high interest charges by private banks.

The state of North Dakota already has such a bank.

The bottom line is that monetary reformers argue that letting banks create credit and money and then charge high interest rates creates massive levels of debt for states and taxpayers. They argue that the power to create money should be reclaimed by the government and taken away from the private banks.
 

Personally, I agree with the monetary reformers. But even for those who think this is too radical a proposition, the question is whether a system where debt has to constantly and continually expand to keep the economy afloat is sustainable.

The Ever-Expanding Bubble

In a hearing held on September 30, 1941 in the House Committee on Banking and Currency, then-Chairman of the Federal Reserve (Mariner S. Eccles) said:

That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.

Indeed, Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:

If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.

It should be obvious to everyone that America’s banking system needs to be reformed.

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Beta Monster: The Most Dangerous Banks In the World

Courtesy of Jesse’s Café Américain

(CFD.net.au – Contract for Difference, Share, Forex, ETFs, Commodities Traders) – more than $1 trillion the central bank pumped the economy, said the people, who declined to be identified because no decision has been made. Dealers would face constraints on capital if they were the sole counterparties on all the so-called reverse repurchase transactions while they’re still repa … more than $1 trillion the central bank pumped the economy, said the people, who Declined to be identified because no decision has been made. Dealers would face constraints on capital if they were the sole Counterparties on all the so-called reverse repurchase transactions while they’re still repairing balance sheets after booking losses and writedowns in the aftermath of the worst financial crisis since the Great Depression. In a reverse repo, the Fed sells securities for a set period, temporarily decreasing the amount of money available in the banking system. “One of the goals could be that the Fed is trying to distribute paper without encumbering dealers’ balance sheets while utilizing existing distribution channels” to expand the transactions to money markets, said George Goncalves, chief fixed-income rates strategist in New York at primary dealer Cantor Fitzgerald LP. Discussions on how to access a broader array of Counterparties other than primary dealers are still developing, said one of the people with knowledge of the situation. Deborah Kilroe , a spokeswoman for the New York Fed, Declined to comment. Needed Securities The Fed, after purchasing about $1.33 trillion in mortgage, government-housing agency and Treasury debt, would also be supplying short-term assets to the money markets at a time when corporate issuance has Declined and following the expiration last month of a federal guarantee on money funds. Fed Chairman Ben S. Bernanke and fellow policy makers face the challenge of decreasing the cash without stunting the economy’s recovery and before it sparks inflation. The central bank’s balance sheet surged by $1.16 trillion in the 12 month period ending August, according to Fed data. Central bank officials have started talks with bond dealers about withdrawing the unprecedented amount of cash injected into the financial system through the use of reverse repos agreements, people familiar with the discussions said last month. At maturity, the securities, usually Treasury, mortgage- backed and agency debt, are returned to the Fed, and the cash to the dealers. Tri-Party Market The value of the transaction is listed as an asset on the dealer’s balance sheet, and stays there even if a dealer uses the so-called tri-party market to enter into an agreement with another firm for the security, reducing the amount of capital that can be allocated for other Investments. In a tri-party arrangement, a third party known as a clearing bank functions as the agent for the transaction and Holds the security as collateral. JPMorgan Chase & Co. and Bank of New York Mellon Corp. , both based in New York, are the only banks that serve in a trade-clearing capacity in the tri-party repo market. When dealers use repos to borrow money from institutional Investors, it is through tri-party repo. “The Fed has used reverse repos with dealers in the past but it has never been on the scale that is being talked about here,” said Alex Roever , head of short-term debt strategy at primary dealer JPMorgan in New York. “Operationally, it would be much easier to use the primary dealers to arrange reverse repo with money funds, but capital considerations interfere here.” ‘Range’ of Counterparties Bernanke told Congress in July that the Fed may step beyond primary dealers and conduct the reverse repurchase agreements government-sponsored enterprises or a “range of other counterparties.” Fed Vice Chairman Donald Kohn said Sept. 30 that “draining reserves at some point also will be an aspect of exiting.” He added, in remarks at a conference sponsored by the Cato Institute and the Shadow Open Market Committee in Washington, that “we are developing new techniques for draining reserves, including reverse-repurchase agreements against mortgage-backed securities and time deposits for banks at the Federal Reserve.” The Fed created 10 emergency programs to support the financial markets since the collapse of the subprime mortgage market triggered a global credit squeeze, including the Term Asset-Backed Securities Loan Facility, or TALF, where Investors receive loans from the Fed to buy asset-backed securities. “If we were to get additional supply from the Fed, that just adds to what’s been a dearth in supply and would be very much welcome,” said Debbie Cunningham, head of taxable money market funds at Pittsburgh-based Federated Investors Inc., the third-biggest manager of U.S. money funds. “The market has shrunk a lot for acceptable securities for purchase in money market land.” Commercial Paper Decline The amount of Commercial Paper outstanding has decreased 32 percent to $1.23 trillion since the collapse of Lehman Brothers Holdings Inc. in September 2008, Fed data shows. Commercial Paper, used by companies to pay everyday expenses such as payroll and rent, typically matures in 270 days or less. The Treasury ended its insurance program for money market mutual funds on Sept. 18. The program was started last year as the credit market froze following the Sept. 16 collapse of the $62.5 billion Reserve Primary Fund, which lost money on debt issued by Lehman. The fund’s demise triggered a run on the industry. “A program that enables money market funds to aid the Federal Reserve is an intriguing idea,” said David Glocke, head of taxable money market investments at Vanguard Group Inc. in Valley Forge, Pennsylvania. “The Fed is a no-risk counterparty, and such a program could provide support for short-term yields.” Rate Outlook Central bankers are unlikely to drain cash out of the banking system until at least late 2010, said Ira Jersey , head of U.S. interest-rate strategy in New York at primary dealer RBC Capital Markets. The median forecast of 57 economists surveyed by Bloomberg News from Sept. 3 to Sept. 9 is for the first Fed rate increase to take place in the third quarter of 2010. “The Fed has many options available to change the composition of their liabilities and reduce the monetary base, with reverse repos being only one,” said Jersey. “The Fed may need alternative sources to drain liquidity.” —With assistance from Christopher Condon in Boston and Rebecca Christie in Washington. Editors: Dave Liedtka, Robert Burgess To contact the reporter on this story: Liz Capo McCormick in New York at Emccormick7@bloomberg.net ; Craig Torres in Washington at ctorres3@bloomberg.net Last Updated: October 9, 2009 00:01 EDT

Source: Fed Said to Consider Clearing Banks, Facility to Drain Reserves By Liz Capo McCormick and Craig Torres

There are only two methods by which civilizations can operate: sharing and buying.  The sellers are the foundation upon which the rulers are built into a government imposing these conditions on the masses.

The original system imposed on all animals is foraging and sharing.  Foraging is searching for naturally produced foods, which have been purposely removed from all forests on earth except the deepest of rain forests and jungles.  These also will soon be removed purposely for the same reason: to force the human race to buy their food from the sellers, which in turn forces the people to work for their rulers.

Sharing has been replaced methodically by the costs being controlled by the rulers, which in turn could be calculated to an exact amount needed by a person to barely survive.  Once the ability to calculate how much is needed, a person’s costs could be controlled so that he or she would never be able to save or develop enough assets to stop working.

The latest invention of rulers is the granting of credit.  Credit is a new twist on an old method of keeping the workers in debt, in order to keep them working.  It was the company store that provided all the worker’s needs.  The worker couldn’t possibly afford everything they needed with their salary, so the company store gave the worker credit, which kept the worker in debt and from quitting or retiring.

The new twist is banks have become the means of credit, but the purpose is still the same.  Keeping people in debt and from quitting their jobs, or retiring from work.  When a person can never get out of debt, they must continue working for their sellers.

Proof of this is the recent economic crisis.  The government took the people’s taxes and gave the banks a trillion dollars.  The reason for this was to keep the banks from having to sell their assets that they acquired from the bad loans not being paid as the economy soured.  These bank assets would have made some people richer by buying the assets very cheaply.

If the banks couldn’t sell their assets, then it would cause the bankruptcy of many banks forcing banks to sell assets at an even lower price.  Keeping the banks from failing, and keeping the bank’s assets from being sold cheaply was achieved by the government giving the banks your tax money.  This achieved their goal of keeping things from being sold at a lower price, and forcing people to purchase those things at a high price.

Thus, removing people’s ability to survive by having goods for sale available at lower prices.  Credit and bank bailouts effectively remove the existence of a used market for the lower classes, forcing them to work by having to buy new products at higher prices, which seem lower because of purchasing things on credit.

This was a first in Capitalism, not to mention a complete reversal of Capitalistic ideals, which are businesses either make it in business on their own, or go bankrupt due to incapable or greedy people ruining the business.

Banks are business.  This was the case of the recent economic crash.  Instead of rewarding the banks by bailing them out with our tax money, those people running the banks badly should have received the destruction of their own wealth and jobs for mishandling the banks.

The control of the hearts and minds of the people is the essential ingredient rulers need to enslave all the populations of the earth, which is their ultimate goal.  Cheap labor so the rich can maintain their lifestyle.  It is difficult for people to believe their own nation does this to them, because most people are so caught up in surviving that they have no alternative but to believe what they are told by their governments.  The rulers of their own nations have taught them their mentality.  It is the rulers controlling their brains through the media, the schools, the books published, and the religions.

Controlling the heart is just another way of saying, controlling the brain.  President Bush Jr. coined this phrase when the U.S. attacked Iraq in 2002.  His father, President Bush Sr., told us a New World Order had begun in 1991.  The New World Order referred to a Westernization of our globe including all nations.  This is why it was necessary to remove communism as a way for people to live, which included sharing or everyone’s needs being taken care of by the government, by using your taxes for that purpose instead of bailing-out the rich.

Capitalism is the basis of the United States.  Capitalism plainly defined means buying and selling instead of sharing.  Jack Kennedy said it this way:

“Ask not what your government can do for you, but ask what you can do for your government.”

Hog Wash!  A government simply exists for its people, and not the other way around!  This is why we don’t have welfare anymore, or national health care.  You have to buy it!  You work all your lives and inflation is designed to eat-up your assets as you age and are not looking!

As you have recently noticed, your taxes are used by the rulers to support the rulers and fund military that will be used against its own people when they refuse to work.

What I have disclosed thus far is only the tip of the iceberg.  Yet, understanding why a woman and a man operate the way they do can help people to achieve peace in their own lives.  It isn’t necessary to live tormented.  Since we let knowledge replace instinct and oppose instinct, a person’s personal peace has fled.

Worrying is in opposition to peace and a sound mind!  Trying to understand each other will promote peace.  Forgiving each other, because it is not possible to understand why we hurt each other, will promote our own personal peace.  Allowing each other to live according to our instincts will promote peace.  Peace is much better than torment.  Peace and torment cannot live together in the same brain.  If they try to live together, one will kill the other.  The killing of one’s brain results in depression, insanity, murder, or suicide.

The essence of life is living, not imposing rules upon ourselves.

That is true freedom!

~Elijah

By Dan Amoss

The big questions of the moment: What kind of economic environment do we face? And more important, what’s already priced into the stock market? Here’s my view on these themes: The real job creators in the U.S. economy, small businesses, will not expand hiring as expected. There are many reasons for subdued hiring plans; an emerging reason to avoid expansion and hiring will be heightened expectations that tax rates will soar in the future to pay for out-of-control government spending.

So I expect over the next several months, mainstream pundits and forecasters will start worrying about tepid hiring, even as the pace of job losses slows. As we “lap” the 2009 corporate cost cutting by early 2010, and top lines fail to rebound, earnings estimates will have to come back down. I’m amazed at how many sell-side analysts are modeling V-shaped recoveries in 2010 earnings. Most stock prices are disconnected from reality.

Another big question is how will policymakers respond to a sluggish- to-nonexistent rebound in hiring? The economically illiterate, and those with preconceived “big government” agendas, will use any crisis as an excuse to expand government. You’ll be ahead of the game if you realize — as many in the media and academia clearly do not — that the government has no resources. It’ll take money out of one of your pockets, skim some off for its cronies, and expect you to be grateful when they put some of it — debased by the Fed’s inflation, of course — back into your other pocket.

The labor market is dealing with a structural imbalance fueled by government-sponsored housing and credit bubbles. Many will call for the government to “solve” this labor market problem, which will cause a new type of market dislocation. By early 2010, some will push for the federal government to start hiring the chronically unemployed in “New Deal” type of programs.

Where you stand on this question will determine your expectations for the future performance of most stocks. I certainly don’t enjoy having such a bearish outlook on the economy, but it’s the conclusion I reach after weighing all the evidence about the real economy; the credit markets; and policymakers’ damaging, distorting influence.

For example, corporate CFOs and Treasurers are happy about the recent bull market in risk. They know much more about their prospects than outside investors, so their balance sheet management is revealing. In a word, the approach toward capital structure is “defensive.” Heavily indebted companies are flooding the market with follow-on stock offerings to pay down debts. They’re also taking advantage of the Pollyannaish mood of the corporate bond market to issue risky bonds at attractive rates, as default risk seems to be a distant memory of bond buyers. Many corporate bond investors have taken the Fed’s bait to reach for yield, regardless of credit risk.

Amazingly, credit risk is a quaint, distant memory for most, when it should be the first consideration for shareholders — especially shareholders of highly leveraged companies like banks and REITs. In leveraged companies, shareholders’ claims can evaporate very quickly when asset values deflate and cash flow dries up.

For banks in particular, credit risk often accelerates out of nowhere. Remember how many big-time investors bought stocks like the failed Washington Mutual because it appeared to be “well capitalized”?

It’s shocking how many banks the FDIC still deems to be “well capitalized,” despite the fact that foreclosure activity is accelerating.

Foreclosure activity is crucial to the outlook for bank earnings. Mortgage losses will become a big problem for bank stocks in 2010. Mark Hanson of Mark Hanson Advisors does great work on the details behind the headline foreclosure and housing price statistics — the kind of granular, non-ivory-tower research that’s missing in Wall Street and Washington, D.C. In an update a few weeks ago, Hanson wrote:

The chart below shows the national monthly notice-of-trustee sales (late stage) versus foreclosures (last stage) counts from March through August. In that short six-month period, there have been 390,000 NTSs that have not resulted in a foreclosure (circled in red). Many are on trial [modifications].

If we assume that 250,000 of the 390,000 are presently on a trial and 40% fail, then beginning shortly 100,000 new foreclosures will spit out over a short period of time that will be added to the foreclosures that will occur naturally for reasons mentioned previously. If 60% fail, then the number goes to 150,000. With foreclosures only averaging 73,000 over the past six months, this new stream of foreclosures is significant — it has the potential to double foreclosures over a single month.

The banking system has slowed down the necessary process of “working out” unmanageable debts. Deliberately delaying loan foreclosures and write-offs — whether through government edict or smoothing out loss recognition over time — has the effect of backing up the plumbing in the system of credit intermediation. It’s the post-1990 Japan scenario of sweeping bad loans under a rug because “we can just hold on until asset values come back.”

I’ve written repeatedly about the accounting for — and resolution of — toxic assets throughout the banking system, because I see it as crucial to the outlook for both the U.S. economy and corporate earnings. The longer this is delayed, the more likely the U.S. economy suffers a fate even worse than post-bubble Japan. We have a scenario of defensive, undercapitalized banks, combined with a huge population of effectively bankrupt U.S. consumers. This is a problem that requires comprehensive debt restructuring and resolution before we can have a sustainable economic recovery.

Net-net, the outlook for economic recovery is questionable, at best…which means that the outlook for rising share prices is even more questionable.

Guest Post: Tavakoli On the Reserve Currency Discussions

Courtesy of Jesse’s Café Américain, and special thanks to Janet Tavakoli.

Here is a commentary from Janet Tavakoli on the Robert Fisk article in yesterday’s Independent.

It is remarkably well grounded and thoughtful in its analysis and is well worth reading.

This is a guest post at Le Café Américain, but links to her site and other important essays are contained herein.

Her insights are a welcome palliative to some of the astonishingly shallow commentary we have seen and heard from the financial media.

Of course we would agree that this discussion has been ongoing for many years, as such a discussion fills the void in the evolution of global finance after the breakdown of the original Bretton Woods Agreement, and the closing of the gold window by Richard Nixon.

The point which we have made, perhaps not nearly so well, is that the actions of the Fed and the Treasury over the last ten years have brought the world to what appears to be a tipping point, something that will finally precipitate a change in what has long been a de facto equilibrium; a sea change if you will.

A major precipitant to the current action appears to be the quinquennial rebalancing of the SDR, which will be occurring in 2010. That, and the widespread financial fraud which Wall Street perpetrated on foreign investors, which has been seriously underplayed by the American media.

This is the scenario which was forecast here in 2005, when it became apparent that Greenspan and his governors, together with the Treasury, were not going to act in a manner that would promote a sustainable environment for the status quo.

And further, that the serial sociopaths on Wall Street would keep pushing their luck to the limit, face-ripping their way around the world with our trading partners and creditors until they hit the wall in the form of a break in confidence and an irreparable loss of trust, triggering a significant financial blowback.

Although there was some hope that Obama and his economic team might be able to turn the tide, that hope is fading quickly. And so here we are today.

China Defaults, Currency Basket Threatens Dollar
TSF – October 6, 2009
By Janet Tavakoli

Robert Fisk exposed revived discussions by the Gulf States, China, France, Japan, Brazil, and Russia to replace the dollar as the benchmark oil trading currency with a basket of currencies including gold within 10 years.

This proposal is not new and discussions have been ongoing for decades. But other extraordinary moves in the capital markets suggest we should take this threat to the dollar’s position very seriously. For example, China has $2.3 trillion in currency reserves (about 70% in dollars), and China knows how to get its way.

In November 2008, Chinese banks said they would no longer play by our rules. Top tier banks (Bank of China and Industrial and Commercial Bank of China) reneged on derivatives contracts. They failed to come up with billions in collateral on dollar/yen FX trades, which were out of the money after the yen’s October appreciation. This should have been headline news in every financial newspaper, but it wasn’t. Chinese banks defaulted.

They may have been partially motivated by U.S. malfeasance in the capital markets that caused losses in Asia. The U.S. squandered its credibility and our cover-ups have done nothing to restore it.

Most credit support annex agreements would say that closing out these trades would be an event of default, and then the cross default on all the trades would kick in with the same counterparty. But the credit of the Chinese banks was better than many of their counterparties. Everyone was forced to renegotiate contracts with the Chinese banks.

From the perspective of the derivatives markets, this is earth shattering. What would have happened if AIG had done the same thing? (Hey, Goldman, UBS, and others…you want your collateral? Well…Stuff It!)

At the end of August 2009, China signaled that state owned oil consumers: Air China, COSCO, and China Eastern could default on money-losing commodities derivatives contracts.

If we had been paying attention, the U.S. should have done everything in its power to correct our mistakes, clean up the mess in our financial system—instead of sweeping it under the carpet—and turned our efforts to maintaining the credibility of the capital markets and the credibility of the dollar.

Janet Tavakoli is the president of Tavakoli Structured Finance, a Chicago-based firm that provides
consulting to financial institutions and institutional investors. Ms. Tavakoli has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago’s Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (John Wiley & Sons, September 2008).
 

Tavakoli’s book on the causes of the global financial meltdown and how to fix it is: Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (Wiley, 2009).

Everyone knows that fear and greed are the two key factors that drive the stock market.

If you talk to any seasoned investors in the market, they would tell you of the stories of how people got carried away by greed and lost all their money in the process.

Stories about people spooked by ‘fear factor’ also do the rounds of Dalal Street at regular intervals.

According to a study by SMC Capitals, “the elements of fear and greed are clearly apparent in the trends of allocation of assets by the investors in terms of cash and stocks.’’

The trend, says the study, can be seen at the levels of market cap and bank deposits in the economy.

When there is fear among the investing community, the bank deposits go up.

And, when there is widespread optimism, the market cap levels go up.

“If you look at investor behavior in the last three years,
the pattern is very clear:

the first year was of over-optimism,

the second was of over-pessimism and

now it’s the recovery period.

This trend is clearly visible if you look at the market cap and bank deposits (or the real wealth),’’ says Jagannadham Thunuguntla, equity head of New Delhi-based SMC Capitals.

In the study, SMC has compared the BSE market cap from the period starting January 2007, with the aggregate bank deposits in the bank deposits.

The relative measure of the entire market capitalisation of BSE as a percentage of aggregate bank deposits in the entire banking system demonstrates the mindset of the investor community.

Read the Full Story on The Economic Times

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