Category Archives: Uncategorized

By Pam Martens and Russ Martens: July 9, 2015 Yesterday, beginning at 11:32 a.m. and for the next three hours and forty minutes, the iconic New York Stock Exchange shuttered trading in all of its listed securities. The Exchange said it had experienced an internal glitch. Unknown to most Americans, some of those shuttered stocks on the New York Stock Exchange were Chinese stocks and among the largest capitalized companies in the world. More than 100 Chinese companies trade on U.S. stock exchanges as American Depository Receipts (ADRs) and almost 200 Chinese company ADRs trade over-the-counter in the U.S. (Individual shares are referred to as ADS, American Depository Shares.) Last year, Thomson Reuters estimated the market value of Chinese companies listed on just the New York Stock Exchange and Nasdaq Stock Market at more than $1.4 trillion. With the Chinese stock market rupturing over the past week and trading in more … Continue reading →

By Pam Martens and Russ Martens: July 8, 2015  It’s starting to feel like we never actually emerged from the 2008 crisis: the U.S. government and the Federal Reserve simply threw $13 trillion at the crisis and walked away, hoping that an endless zero-interest-rate-policy (Zirp) would patch over the cracks in the global financial system. What we seem to have now is an endless series of rolling crises instead of one big global crisis. The rolling crises, from Puerto Rico to Greece to China’s stock market, all have one thing in common – the unraveling of too much debt. That could rapidly turn into a full-fledged global crisis if policymakers misdiagnose what’s happening, treating the problems as isolated crises instead of a interconnected debt hangover from the go-go years. The plunging price action in industrial commodities this week strongly suggests that debt was not sufficiently purged in the 2008-2009 economic … Continue reading →

By Pam Martens: July 7, 2015 If you happened to be sitting behind a Wall Street trading terminal on Tuesday, October 20, 1987, you are likely having heart palpitations reading about what’s currently happening in the Chinese stock market. Tuesday, October 20, 1987 was the day after Black Monday, the infamous U.S. stock market crash that shaved 22 percent off the Dow Jones Industrial Average in a single day. Only those working behind a trading terminal the day after the crash can truly appreciate the horror of having customer orders to sell their stock and having no idea as to the price at which the stock was trading despite the market being technically open for trading. On Tuesday, October 20, 1987, the U.S. stock market was less of a market and more of a crapshoot. So many stocks had been halted for trading that futures markets in Chicago had to … Continue reading →

By Pam Martens and Russ Martens: July 6, 2015 The fallout from yesterday’s Greek referendum is now spilling over into the share prices of global banking stocks in morning trading, with some down as much as 7 to 5 percent, raising the specter that if Germany doesn’t soon focus on the bigger financial stability picture, it could create more bailouts in short order. The rumored close vote by the Greek people in a referendum yesterday turned into a landslide 61 percent vote against the tough austerity measures being offered by the European Commission, the European Central Bank and the International Monetary Fund in exchange for continued loans to the struggling country. News reports since the vote indicate that German Chancellor Angela Merkel and Wolfgang Schäuble, the German Finance Minister, have no plans to quickly cave in to Greek demands for a more generous deal than the one offered prior to … Continue reading →

By Pam Martens and Russ Martens: July 2, 2015 When Mario Draghi, President of the European Central Bank, famously said on July 26, 2012 that he would do “whatever it takes” to save the Euro, apparently providing a life line to Greece wasn’t part of the “whatever.” That has a lot of investors and heads of state worried: what else might not be part of his pledge? Would a financial crisis in Portugal, Spain or Italy also not be part of doing whatever it takes? It’s beginning to sound like there’s a monetary cap on doing whatever it takes. This is the exact quote from Draghi’s speech on July 26, 2012: “And so we view this, and I do not think we are unbiased observers, we think the euro is irreversible. And it’s not an empty word now, because I preceded saying exactly what actions have been made, are being … Continue reading →

By Pam Martens and Russ Martens: July 1, 2015 Greece has two things in common with bankrupt or teetering parts of the United States: it took advice and money from Wall Street while paying huge fees; now the catastrophic results of that bad advice is falling on the backs of the poor and most vulnerable citizens. In fact, we’re all Greeks now. From the $1.2 trillion in student debt now on the backs of U.S. college students, a growing number of whom are turning to prostitution to keep up, to teetering Puerto Rico, the bankruptcy of Jefferson County, Alabama in 2011, Detroit’s bankruptcy in 2013, Wall Street was on hand to grease the skids or set the train wreck in motion. As Greece pensioners line up outside of banks today to receive a fraction of their monthly pension, Puerto Rico has acknowledged it can’t pay its $72 billion in debt … Continue reading →

By Pam Martens and Russ Martens: June 30, 2015 Are Goldman Sachs executives Lloyd Blankfein, Gary Cohn and Addy Loudiadis losing any sleep over elderly pensioners waiting outside shuttered banks in Greece, desperately trying to obtain their pension checks to pay their rent and buy food? Are these Goldman honchos feeling a small pang of conscience over the humiliation by creditors of this once proud country? Perhaps Blankfein, who famously espoused that he’s “doing God’s work” might shed a tear or two for the small child clinging to her elderly Grandmother’s hand as she searches in Athens for an ATM that will give her $66 from her bank account – the maximum allowed per day under the newly imposed capital controls. According to investigative reports that appeared in Der Spiegel, the New York Times, BBC, and Bloomberg News from 2010 through 2012, Blankfein, now Goldman Sachs CEO, Cohn, now President … Continue reading →

By Pam Martens and Russ Martens: June 29, 2015 Greece has just a tad more population, at 11 million, than New York City and its boroughs. But this morning, it has caused hundreds of billions of dollars to be erased from stock and bond markets around the world. The situation in Greece this morning is as follows: banks and the Athens Stock Exchange have been closed until at least July 6, following a breakdown in talks between Greek Prime Minister Alexis Tsipras and the country’s creditors. The July 6 date stems from the vote in the Greek parliament over the weekend to hold a July 5 referendum allowing Greek citizens to vote on the austerity program offered by creditors in exchange for extending more loans to Greece. As a result of a run on the banks as the talks disintegrated, capital controls have now been imposed in Greece, allowing Greek … Continue reading →

By Pam Martens and Russ Martens: June 25, 2015 Remember when the Department of Homeland Security was issuing those color-coded terrorist alerts? Well, they don’t do that anymore.  They’re back to using plain ole black-and-white words to describe threats. Apparently, however, the U.S. Treasury’s Office of Financial Research (OFR) thought it was such a cool idea that they’ve started color-coding threats to our financial security from the denizens on Wall Street: the gang that brought our country to its knees in 2008 while the most expensive military in the world was hunting down robed cave-dwellers in the Middle East. OFR’s color-threat alert is called the Financial Stability Monitor. The monitor is based on approximately 60 indicators and organized as a heat map: The closer an indicator is to the red end, the more elevated the risks; the closer an indicator is to the green end of the spectrum, the lower … Continue reading →

By Pam Martens and Russ Martens: June 24, 2015 By any measure, the taxpayer bailouts and Federal Reserve loans of more than $13 trillion infused into the banking system during and after the 2008 financial collapse eclipse any other period in U.S. history. A growing body of research now suggests that these bailouts have set us up for ever greater episodes of moral hazard. Kartik B. Athreya, writing for the Richmond Fed, has described moral hazard this way: “As for implicit guarantees as a source of systemic risk, the idea is this: Any belief among financial market participants especially creditors, that they will be made whole by the public in the event of the failure of the assets they finance (i.e., that they will be ‘bailed out’) will lead them, all else equal, to (i) take greater risks, even if that means becoming ever more opaque or interconnected, and (ii) … Continue reading →