Search This Blog


Search Tool

Mar 16, 2009

Today's Crisis is a Photograph of the crash of 29, By Fernando Guzmán Cavero

Today’s Crisis is a Photograph of the crash of 29: By Fernando Guzmán Cavero

Today’s Crisis is a Photograph of the crash of 29: By Fernando Guzmán Cavero

Why of the current economic and financial crisis? The crash in the global economy is now mired, without having a clear picture of the magnitude of the consequences, whose roots are exactly the same as the crisis of 29: the lack of state real control to avoid designed schemes to inflate the prices of securities listed in the New York Stock Exchange,plus a lack of supervision of commercial banks credit among others. Since that experience, the USA started to search an answer to explain the crisis and began to re-think about the limits the free enterprise economic system should have. Something must be done to prevent abuses the imperfect markets have, was one voice; and mostly heard from those responsible of the development of the crisis. The following step , was to begin establishing a series of controlling norms with the purpose prevent that few astute and powerful persons do not profit of thousands of thousands of people who believed in their proposals to invest in overvalued assets. The Securities and Exchange act of 1933, is the beginning of a continuous institutions established to prevent financial fraud.

The Great Depression according to Jim Powell does not have to do with immoral investments bankers and other financial advisors who traded stocks with insider information and structured schemes well known in our days, to increase artificially the stock prices. The article of Mr. Powell is a response to Adam Cohen:: ”Nothing to fear: FDR’s inner circle and the hundred days that created Modern America, Adam Cohen, Penguin,352.His argument, as Opposed to Cohen point of view, who praised Roosevelt’s New Deal, is basically the following:: “The main reason people lost money in the stock market was not in fact fraud. Rather, stock prices went down principally in response to Federal Reserve efforts to curb speculation. Unit Banking laws contributed to bank failures, by preventing them from opening branch offices to diversify deposits bases and loan portfolios”…… In the same manner he argues with Cohen, saying: Cohen also praises the Agricultural Adjustment Act for destroying, raising farm prices and farm income. Yet he ignores the effect it had on three-quarters of Americans who were not farmers they were consumers ,millions of them poor who had to lay out more money for food and clothing.(Cotton was among the crops destroyed.) Nor does Cohen acknowledge that from the beginning farm subsidies always went disproportionately to big farms, since the subsidies were paid on a per acre basis. He does not seem to consider FDR’s National Recovery Administration adversely affected farmers by establishing cartels that fixed prices above market level, requiring farmers for the supplies there needed.” Let me make some important precisions with regard to the statement, which attributes: Unit Banking laws, to failures in the banking system.

This statement is partially true, because not all the states banned branches. However, those which allowed branches, had less failures than those which prohibited them, see Wheelock 1995, Mitchener 2000, 2004. This is consistent with the diversification hypothesis, but not necessarily undoubtedly.

According to Mark Carlson and Kris James Mitchener; Calomiris and Mason (2000) and Carlson 2004 found out, precisely the opposite conclusion: bank with branches were more likely to fail than those called unit banks. The reason lays on the strategy pursued: ones emphasized in diversification, while the others privileged the reduction of reserves (see: Branch Banking, Bank Competition and Financial Stability; Mark Carlson and Kris James Mitchener).It is also very interesting, Jim Powell’s opinion regarding the creation of the Tennessee Valley Authority.
Powell, wanders the validity of such a state depending Agency, Organization or institution, that acted, if I well interpret him, as convened to its principal authorities power status. The numbers are the least important arguments; accountants can explain you, how hide or inflate personal or Corporations income. The arguments that state employees are paid at the expense of taxpayers is the neo classical, argument, which fails to be reasoned by the heavy it is and falls by its own weight. Never to say, that something had to be to be done and will have to be done now; where competition is not perfect and abuses arising from private monopolies are worst in last instance than those arising from arbitrary state policies. Are not both, the same photograph in different scenarios of the same lack of solidarity with the poorest people in this inhuman world? That is not the point Mr. Powell, the problem goes beyond which system of production of goods and services is better. I do believe that the human beings are walking around a circle since Marx and Adam Smith or Adam Smith and Marx, immersed in byzantine discussions. I wonder whether the debate should not start on the reflection of the anti-values that had conquered us since the biblical story of Cain and Abel. Are we going to open our eyes and recognize that the first matter is ethical, as to whether the natural resources of our planet could supply the needs that its human race demands (of all and not only of a few privileged), leaving around two thirds of human beings on the margin of its own existence. .If we do not start a new debate, with a different benchmark than the proposed, I will have to say:
“SEE YOU LATER ALLIGATOR; SEE YOU IN A WHILE CROCODILE” Alerts "Us Banks rally, lead Wall Street higher"

US bank stocks rally, lead Wall Street higher:

For a full full coverage of the story, click HERE

GATA Dispatches " Russia wants new international reserve currency"

Russia wants new international reserve currency:

Submitted by cpowell on 08:22AM ET Monday, March 16, 2009. Section: Daily Dispatches Russia Proposes Macro-economic, Budget Standards to G-20From Russian News and Information AgencyRIA Novosti, MoscowMonday, March 16, 2009 -- Russia has proposed that compulsory international standards for macro-economic and budget policy be adopted in a new document to the G-20 addressing the global financial crisis, the Kremlin website said on Monday. "It is necessary to work out and adopt internationally recognized standards for macro-economic and budget policy, which are binding for the leading world economies, including the countries issuing reserve currencies," the Kremlin proposals read. The G-20 summit, involving advanced and emerging economies and international financial institutions, will be held in London on April 2 and will discuss the international community's efforts to overcome the ongoing global financial crisis. Russia is also proposing to the G-20 summit that measures be outlined that will address the current global financial crisis and the economic challenges, as well as building a new structure for the global financial system to help avoid future crisis. In particular, Russia put forward an idea for holding an international conference after the G-20 summit to adopt conventions on a new global financial structure. "At the upcoming London summit, we need to reach accord on the basic parameters of the world financial system. In this connection, we propose holding an international conference after the London summit to agree the basic parameters of a world financial architecture and international conventions for a new world financial order," the Russian document read. Russia has also proposed reviewing the role and the mandate of the International Monetary Fund (IMF) and boosting its financial resources. "We believe that the total financial resources available to the fund must be adequate for it to perform its creditor functions. We also consider it necessary to draw up new credit mechanisms making it possible to provide assistance to countries experiencing financial difficulty," Russia's proposal read. In addition, Russia has put forward a suggestion to the G20 summit which would see the IMF examining possibilities for creating a supra-national reserve currency, and also forcing national banks and international financial institutions to diversify their foreign currency reserves. "We believe it is necessary to consider the IMF's role in this process and also define the possibility and the need to adopt measures allowing for Special Drawing Rights (SDRs) to become an internationally recognized super-reserve currency," the Russian document said.
* * * Join GATA here:Bahamas Investment ConferenceThursday-Friday, March 26-27, 2009Atlantis Resort and Casino, Nassau* * *Help keep GATA goingGATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:http://www.gata.orgTo contribute to GATA, please visit:

Bear market rally...or serious reversal?

Adam Hewison gives us a great insight perspective about three major markets (Dow, Nasdaq and S& P) potential reversal on its present downtrend.
Using the Fibonacci Retracement method for these market indexes, he makes it clear, that the market had not made a major reversal..

We better watch Adam's technical approach, Click HERE Alerts: "Wall Street Opens Higher"

Wall Street opens higher, building on 4-day rally.

To read full story, click HERE Alerts " Bernanke says recession could end en 2009

Bernanke says recesssion could end in 2009:

To read full story please click HERE

GATA Dispatches: "James Turk: Extraordinary stress in the silver market"

James Turk: Extraordinary stress in the silver market

Submitted by cpowell on 06:13PM ET Sunday, March 15, 2009. Section: Daily Dispatches 9:05p ET Sunday, March 15, 2009Dear Friend of GATA and Gold (and Silver):GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, reports tonight that the silver market has been in backwardation for 38 days, which he believes is unprecedented and signifies enormous stress in the market -- a serious shortage.Backwardation is when material for immediate delivery is priced higher than material for later delivery, often because buyers doubt that the material can be delivered later. Turk writes: "Rumors abound in London in particular about the shorts being late in meeting deliveries. So the present backwardation is not surprising. It is in effect a confirmation of these rumors, but it also shows that promises to deliver are being increasingly doubted. In other words, people who hold physical silver are not willing to exchange their metal for some paper promise, nor should you. Hold real physical silver; do not accept any paper substitutes like certificates, pool accounts and ETFs."Turk's analysis is headlined "Extraordinary Stress in the Silver Market" and you can find it at the GoldMoney site here: POWELL, Secretary/TreasurerGold Anti-Trust Action Committee Inc.
* * * Join GATA here:Bahamas Investment ConferenceThursday-Friday, March 26-27, 2009Atlantis Resort and Casino, Nassau* * *Help keep GATA goingGATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:http://www.gata.orgTo contribute to GATA, please visit: