When Government Pay for Rich, Poor get Poorer
- This is called capitalism
U.S. poverty totals hit a 50-year high
The government’s efforts to save the banks is
basically paying poor people's money ( stealing and extorting) and giving it to
rich to enjoy life. The whole exercise of QE1 and QE2 are just efforts in
saving the funding lobbies and their interest so that they can get funding for
All these easing has made life more difficult
for the poor. It has made basic staple food affordability not only in poor
countries but also in USA. More than 15% are poor who can have healthcare,
housing and education.
Soaring Poverty Casts Spotlight on 'Lost
Reporting from Washington—
In a grim portrait of a nation in economic
turmoil, the government reported that the number of people living in poverty
last year surged to 46.2 million — the most in at least half a century — as 1
million more Americans went without health insurance and household incomes fell
The poverty rate for all Americans rose in
2010 for the third consecutive year, matching the 15.1% figure in 1993 and
pushing many younger adults to double up or return to their parents' home to
avoid joining the ranks of the poor.
Taken together, the annual income and poverty
snapshot released Tuesday by the U.S. Census Bureau underscored how the
recession is casting a long shadow well after its official end in June 2009.
The number of poor children younger than 18
reached its highest level since 1962, said William Frey, a demographer at the
Poverty reached a record high for Latino
children, who Frey said accounted for more than half the overall increase in
poor children last year.
Blacks had the highest child poverty rate at
39%, up more than 3 percentage points from last year.
Overall, poverty was generally higher than the
national rate in states with high unemployment and in the South. Mississippi
had the highest poverty rate last year, at 22.7%, and New Hampshire had the
Overall, the number of 25- to 34-year-old men
and women who were living with their parents last spring totaled 5.9 million —
a 25.5% increase since the recession began in 2007.
The census report, coming shortly after
President Obama unveiled a proposed $447-billion package of tax cuts and
spending to revive job growth and the recovery, was seen as intensifying the
debate over the government's role in helping the poor and unemployed at a time
of budget deficits and painful cutbacks in public services.
JP Morgan Chief Says Bank Rules 'Anti-US'
America Should Pull Out of Basel - Because
they are Anti American
America is Out of Kyoto - Because they are
America is Out of ICC - It is illegitimate
What suits to America is Americanism - What
suits to World and Principle of Justice is Anti America - This is what exactly
EU-US Economies - Will Another Lehman-Style
Crisis Be Prevented? - CNBC
No it is not possible. The crisis cannot be
prevented. When we look at present situation not much has been changed and the
causes of the previous collapse are still existent in the market.
Big to Fail -- The companies which were affected and needs rescue have become
bigger, the systematic risk of collapse of the system has not removed or
reduced, over the years it has increased.
Balance Sheet Transaction - Derivatives and swaps are there and nobody really
knows how much each of them owe. How much risk or swaps or derivatives they
have played. Derivatives are still off balance sheet and not governed by the
assets are still there on the balance sheet sitting and looking pretty beautiful.
No one knows how much toxic each of them has and what is its worth.
Rating Agencies are same, methods are same and methodology is the same. They
are still beyond control and again started playing the dirty game.
are same - they have not changed their behavior and practices. They are not
controlled and supervised.
is going down, mortgage is under water and bond for them are in market.
Corona Relief -The Governing Council decided
(1) To launch a new temporary asset purchase
programme of private and public sector securities to counter the serious risks
to the monetary policy transmission mechanism and the outlook for the euro area
posed by the outbreak and escalating diffusion of the coronavirus, COVID-19.
This new Pandemic Emergency Purchase Programme
(PEPP) will have an overall envelope of €750 billion. Purchases will be
conducted until the end of 2020 and will include all the asset categories
eligible under the existing asset purchase programme (APP).
A waiver of the eligibility requirements for
securities issued by the Greek government will be granted for purchases under
The Governing Council will terminate net asset
purchases under PEPP once it judges that the coronavirus Covid-19 crisis phase
is over, but in any case not before the end of the year.
The Governing Council of the ECB is committed
to playing its role in supporting all citizens of the euro area through this
extremely challenging time. To that end, the ECB will ensure that all sectors
of the economy can benefit from supportive financing conditions that enable
them to absorb this shock. This applies equally to families, firms, banks and
As central banks implement coronavirus rescue
plans, has moral hazard been forgotten?
One of the most important challenges facing a
central bank (CB) when it must act as a lender-of-last-resort to stabilize a
financial crisis is to avoid fostering moral hazard. This trap occurs when
market participants perceive little-to-no consequences for potentially
excessive risk taking, as they come to believe that they will be protected
should things go awry. Quick and decisive action by major CBs has stabilized
international financial markets during the pandemic downturn, setting the stage
for a broad economic recovery.
But coming on the heels of large-scale CB
accommodation during the 2008-2009 Global Financial Crisis (GFC), officials
have reinforced the market’s belief that CBs will time and time again take
policy measures to protect financial markets from widespread losses.
Having learned from the positive impacts of
their actions during the GFC, major central banks quickly jumped into action to
stabilize the situation when international financial markets plunged in March
as the COVID-19 pandemic struck. The US Federal Reserve (Fed) implemented huge
securities purchase programs, some without limits, going beyond US treasuries
and agencies to buy corporate bonds including those below investment grades
(which CBs traditionally do not touch).
The Fed also offered credit facilities to many
market players, including money market funds and corporations. Importantly, in
response to the US dollar funding crisis among non-US banks, the Fed arranged
currency swap lines with several major central banks and US Treasury repurchase
agreement lines with many other monetary authorities. As a result, the Fed
balance sheet quickly increased from $4.2 trillion in February to a peak of
$7.2 trillion in mid-June.
Similarly, the European Central Bank (ECB)
launched a €750 billion Pandemic Emergency Purchase Program, later increasing
it by another €600 billion. Under these programs, the ECB can purchase
government and corporate bonds in member countries, without previous
constraints on how much it can acquire in each member country. Consequently,
the ECB balance sheet has increased from €4.7 trillion in mid-April to €5.6
trillion in June.
Timely central bank actions have helped
international equity markets recover most of the 30 to 40 percent losses
suffered in February and March. Portfolio capital flows have more than reversed
their earlier net outflows from risk assets. Borrowers including those below
investment grades have been able to issue significant volumes of bonds. For
example, global corporations have issued more than $6.4 trillion of bonds—on
course to reach a record high this year. Emerging market sovereigns have also
issued $123.5 billion of hard currency bonds in the first half of the year.
But the swift recovery of financial markets
seems to be at odds with the underlying economic reality—where unemployment
remains widespread and bankruptcies remain quite elevated. Moreover, financial
market buoyancy is persisting even as the Fed balance sheet has shrunk from
$7.2 trillion to $6.9 trillion in late July; and the ECB balance sheet has also
declined modestly in recent weeks—reflecting investors’ reduced reliance on CB
support. This is a clear indication of moral hazard at work. Markets no longer
need central banks to add liquidity to do well; all they require is just the
conviction that CBs are there ready to provide support when needed. While
providing breathing room in the short term, this expectation of CBs coming to
the rescue will likely lead to continued risk taking by the market, which could
threaten future financial bubbles and stability risks.
Another manifestation of moral hazard is the
fact that plentiful CB liquidity and low interest rates continue to sustain
most companies, including unproductive ones. The number of zombie
companies—those generating insufficient profits to pay interests on their debt—
has noticeably risen as a share of the corporate universe. According to
Deutsche Bank Securities, zombies currently make up 20 percent of US companies,
having doubled since 2013. The share of zombies in Europe is likely similar
given that in 2016, a BIS study estimated the zombie share at 12 percent for
fourteen advanced economies under study (mostly in Europe). The United States
and Europe could be falling into the same trap Japan did three decades ago,
when the country kept zombie companies alive with easy financing conditions so
that their share reached almost 35 percent in the mid-1990s, ushering in
decades of slow growth.
Reserve's $3 trillion virus rescue inflates market bubbles
Federal Reserve’s $3 trillion bid to stave off an economic crisis in the wake
of the coronavirus outbreak is fuelling excesses across U.S. capital markets.
U.S. central bank has pledged unlimited financial asset purchases to sustain
market liquidity, increasing its balance sheet from $4.2 trillion in February
to $7 trillion today.
the vast majority of these purchases have been limited to U.S. Treasuries and
mortgage-backed securities, the Fed’s pledge to bolster the corporate bond
market has been enough to spur a frenzy among investors for bonds and stocks.