Category Archives: Uncategorized

By Pam Martens and Russ Martens: March 31, 2015 Last Friday and again yesterday, the Vice Chairman of the Federal Reserve, Stanley Fischer, delivered speeches that attempted to refocus his audience away from the systemic global risk posed by behemoth Wall Street banks and redirect their gaze to dangers lurking in the nonbank sector: things like mutual funds and hedge funds. Reading the speeches, we had an epiphany here at Wall Street On Parade: if something does blow up in the nonbank sector it is highly likely to be caused by an interaction with a Wall Street bank. The insurance company, AIG, would not have failed during the last financial crisis had it not agreed to engage in Credit Default Swaps (CDS) with Wall Street mega banks. Fannie Mae and Freddie Mac would not have failed had they not been seduced into buying dodgy mortgages,  mortgage-backed securities, and derivatives from … Continue reading →

By Pam Martens and Russ Martens: March 30, 2015 It’s tough to keep up with the conspiracy theories that run rampant from day to day in the hallowed halls of Congress. But one that is gaining traction is that the U.S. Treasury Department’s Financial Stability Oversight Council (whose acronym is pronounced F-SOC) is the handmaiden of an international finance cabal and is obediently marching to its beat instead of the mandates of Congress. These suspicions were on display at the Senate Banking Committee hearing last Wednesday and the House Financial Services Committee hearing the week before where U.S. Treasury Secretary Jack Lew, who Chairs F-SOC, was pummeled with thinly veiled, and not so thinly veiled, accusations. F-SOC was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It is charged with the early identification of emerging risks to the financial system. Every major regulator of Wall … Continue reading →

By Pam Martens and Russ Martens: March 26, 2015 Yesterday, economists at the Atlanta Fed’s Center for Quantitative Economic Research notched down their forecast for real GDP growth – the seasonally adjusted annual rate – to a tepid 0.2 percent for the first quarter of 2015. The revision from the earlier forecast of 0.3 percent followed yesterday’s durable goods report that showed a dramatic decline of 1.4 percent in February on a seasonally adjusted basis. Durable goods are products like refrigerators, washing machines or computers, items expected to last for at least three years. Because durable goods carry higher price tags than most other consumer outlays, a weakening in durable goods can be a warning of a tapped out or retrenching consumer. This first quarter forecast stands at odds with the Federal Reserve Board’s FOMC statement of March 18, 2015 which singled out “strong job gains” and rising household spending. … Continue reading →

By Pam Martens and Russ Martens: March 25, 2015 Bloomberg News is carrying an article today that raises the question as to whether cash for trash may be the comeback kid at the European Central Bank. That, in turn, leads to speculation as to how long it will be before the comeback kid leaps across the pond and nestles into the  arms of the U.S. Federal Reserve. According to the article, the European Central Bank is buying up billions of Euros in asset-backed securities made up of things like Spanish auto loans, Portuguese home loans, and legacy deals that have been stuck on the balance sheets of European banks since the financial crisis of 2008 and 2009. The article notes that the ABS market is down from a peak of 524 billion Euros in annual issuance in 2006 to a paltry 77 billion Euros in annual average issuance over the past … Continue reading →

By Pam Martens and Russ Martens: March 23, 2015 Wall Street Journal oil reporter, David Bird, set out from his New Jersey home for a brief walk on January 11, 2014 and disappeared without a trace. Last Wednesday, 14 months after his disappearance and the very same day David Bird’s family had launched a web site to urge the public to help them locate their beloved husband and father, Bird’s body was found in the Passaic River. It was conclusively identified through dental records. A search had been underway for Bird since the evening of his disappearance. He had left his home on Long Hill Road in the Millington section of Long Hill Township, New Jersey to take a short walk. The circumstances were inconsistent with someone who intended to disappear: he was wearing a bright red jacket with yellow zippers; he was a recipient of a liver transplant and … Continue reading →

By Pam Martens: March 20, 2015 One would think we had asked for missile launch codes when we reached out to the futures exchanges to find out what caused the precipitous plunge in the U.S. Dollar’s futures contract at 4:04 P.M. Wednesday afternoon – long after the Federal Reserve’s market moving news had been digested by traders. If currencies are now the new weapons of mass destruction – maybe we were asking for the equivalent of missile launch codes. Our curiosity was piqued when the intrepid Eric Hunsader of market data firm, Nanex, published amazing charts showing a precipitous plunge in the U.S. Dollar just after the equity markets had closed in New York. Hunsader wrote: “On March 18, 2015 between 4:02 and 4:09 PM Eastern Daylight Time, the U.S. Dollar flash crashed, losing over 3% of its value in just under 4 minutes, then gaining most of it back … Continue reading →

By Pam Martens: March 19, 2015 Hillary Clinton just can’t catch a break. As her self-inflicted imbroglio over erasing 30,000 emails involving her time as Secretary of State continues to command press attention, the April issue of Harper’s Magazine is focusing gasp-worthy attention on the “loan-sharking” business that Bill Clinton, as President, assisted in transforming into the too-big-to-fail Citigroup that played a leading role in bringing the country to the brink of financial collapse in 2008. Janet Yellen’s Fed can’t be too happy either about the revelations. The Fed just gave Citigroup a clean bill of health last week under its so-called rigorous stress tests and is allowing the bank to spend like a drunken sailor, raising its dividend 400 percent with permission to buy back as much as $7.8 billion of its own stock. The Fed’s qualitative portion of the stress test is said to look at both risk … Continue reading →

Related Articles: Memo to Fed: Interest Rates Are a Sideshow; the Problem is Income Inequality  Reforming the Fed: Who’s Right; Who’s Wrong?  

By Pam Martens: March 18, 2015 Yesterday, an agency of the Federal government, the U.S. Treasury’s Office of Financial Research (OFR), released a study warning that by three separate measures the U.S. stock market is approaching dangerous “two-sigma thresholds” which can lead to “quicksilver markets.” Translation: we could be heading for a big crash. A two-sigma threshold is when market valuation metrics move at least two standard deviations above the historical mean. The study notes that “valuations approached or surpassed two-sigma in each major stock market bubble of the past century.” Think 1929, 2000 and 2007. A quicksilver market, as defined by the study, is when stable markets turn on a dime and “change rapidly and unpredictably.” The study was authored by Theodore (Ted) Berg and notes that it may not necessarily reflect the official position or policy of the OFR or Treasury. Berg is a Chartered Financial Analyst with … Continue reading →

By Pam Martens and Russ Martens: March 17, 2015 Last week the Press Club of Mexico honored Paul Craig Roberts with the International Award for Excellence in Journalism. Roberts used the occasion to call out a tainted brand of journalism in this country which frequently involves “lying for the government and for the corporations.” Roberts is one of the most prolific writers in America and a former Assistant Secretary of the Treasury for Economic Policy. His journalism career includes Associate Editor of the Wall Street Journal, columnist for Business Week, Scripps Howard News Service and Creators Syndicate. Roberts has also been one of the most strident critics of both the George W. Bush and Obama administrations, calling them “vassals” of the corporate titans. Increasingly, Roberts sees the corporate media as a twin evil to Washington, writing recently that “the so-called ‘mainstream media’ has been transformed into a Ministry of Propaganda.” Roberts’ … Continue reading →