Fed insider exposes giant central bank “easing” swindle

A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud.

By: Mike Whitney, CounterPunch

Source: Press TV

http://www.presstv.ir/detail/2013/11/16/335041/fed-insider-easing-swindle-banks/

“This was a program (QE) that was devised to help mortgage lending in America…Instead, what we saw was massive Wall Street earnings.” Andrew Huszar, Bloomberg TV Interview

A former Federal Reserve official who helped the Central Bank manage its bond buying program, dubbed QE, has admitted that the program is a fraud. In a shocking op-ed in Monday’s Wall Street Journal, Andrew Huszar apologized for his role in the Fed’s $1.25 trillion asset purchase program which he described as “the greatest backdoor Wall Street bailout of all time.”

So far, no one at the Fed has responded to the charges, nor has Congress or the Department of Justice (DOJ) taken steps to investigate allegations that the multi-trillion dollar program was not intended to help Main Street as announced, but to shore up flagging bank balance sheets and zombie financial institutions that would have defaulted without the Fed’s stealth welfare program.

Surprisingly, Huszar’s credibility has not yet been challenged nor his claim that he played a pivotal role in overseeing the program. As he notes in his confession, he was “managing what was at the heart of QE’s bond-buying spree-a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months.” He was asked “to quarterback” the largest giveaway to Big Finance on record. The fact that his allegations have not prompted an thorough investigation of criminal malfeasance at the Fed boggles the mind and points to a justice system that makes no pretense of operating in the interests of the people it is supposed to serve.

Huszar admits that he left the Fed -where he’d worked for seven years- because he’d “witnessed the institution deferring more and more to Wall Street”, that is, implementing policies which only benefited the banks.

“I had come to believe that the Fed’s independence was eroding,” says Huszar. These feelings were reinforced when Huszar was asked to purchase hundreds of billions of dollars of mortgage-backed securities, which according to him, put the system at risk of another crash.

“We constantly risked driving bond prices too high and crashing global confidence in key financial markets,” he said. “We were working feverishly to preserve the impression that the Fed knew what it was doing.” (“Andrew Huszar: Confessions of a Quantitative Easer“, Wall Street Journal)

The implication is clear, the Fed shrugged off its mandate of “price stability” and deliberately put the system at risk in order to assist its primary constituents, the banks.

It wasn’t long before Huszar figured out the program was a fake and that QE “wasn’t helping to make credit any more accessible for the average American. The banks were issuing fewer and fewer loans,” he said. “More insidiously, whatever credit they were extending wasn’t getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash.” (WSJ)

This column (Mike Whitney - CounterPunch) has been making this same point for more than two years, that all the profits on the interest rate spreads were going to the banks. QE has not led to a credit expansion nor was it designed to do so. It is a lavish subsidy to the financial elites and deep pocket bondholders who control the political-economic system. Huszar’s testimony further underscores that point.

Huszar again: “From the trenches, several other Fed managers also began voicing the concern that QE wasn’t working as planned. Our warnings fell on deaf ears. In the past, Fed leaders-even if they ultimately erred-would have worried obsessively about the costs versus the benefits of any major initiative. Now the only obsession seemed to be with the newest survey of financial-market expectations or the latest in-person feedback from Wall Street’s leading bankers and hedge-fund managers.” (WSJ)

No one cared that QE was not stimulating credit, because that was not the objective. The real goal was to boost profits at the banks so they could offset the massive losses on their trove of mortgage-backed assets which dropped precipitously following the Crash of ’08 leaving them exposed to potential restructuring and nationalization. The $700 billion from the TARP bailout merely provided enough operating capital for the banks to continue to run their businesses. In contrast, QE was a strategy to drain the ocean of red ink from bank balance sheets and restore them to profitability. What mattered was profits. Profits at the expense of employment, profits at the expense of growth, profits at the expense the nation’s economic future. Profits, profits, profits. How can anyone fail to see that now?

Huszar again: “Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank’s bond purchases had been an absolute coup for Wall Street. The banks hadn’t just benefited from the lower cost of making loans. They’d also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed’s QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.” (WSJ)

See? It was an “absolute coup for Wall Street”…the “most profitable year ever.” In other words, QE was a transparent ripoff from the get go, and the Bernanke Fed orchestrated the entire affair.

And it didn’t stop there either, because the Fed launched three more versions of QE increasing its balance sheet by nearly $4 trillion while inflating asset bubbles in US Treasuries, equities, junk bonds, farmland, housing and financial assets across-the-board. The Fed has created a gigantic bubble in long-term Treasuries which threatens the world’s biggest and most liquid bond market and puts the dollar at risk of losing its position as the world’s reserve currency.

Huszar admits that the Fed’s actions have dealt a blow to the so called “free market” calling QE “the largest financial-markets intervention by any government in world history.” He also dispels the illusion that QE spurred growth in the real economy. (“Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth.”) He also admits that the Wall Street banks are a cartel that’s been strengthened by the Fed’s actions. (“The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.”) And, he also suggests that the Fed suffers from “regulatory capture”, that is, that monetary policy is shaped in a way that best advances the interests of the banks. (“I had come to believe that the Fed’s independence was eroding.”)

Huszar’s testimony leaves little doubt that QE is a P.R. scam designed to pull the wool over the publics eyes. While the Fed’s critics have always said that that was the case, Huszar is the first insider to confirm those claims and to denounce the program as a blatant bailout for the banks.

So where are the regulators? Where are the investigations? Where is the DOJ or the US Congress?

Where is the outrage?

Links:

Andrew Huszar – Confessions of a Quantitative Easer – Wall Street Journal

http://online.wsj.com/news/articles/SB10001424052702303763804579183680751473884
Original Post by: Mike Whitney (CounterPunch)
http://www.counterpunch.org/2013/11/15/fed-insider-exposes-giant-central-bank-easing-swindle/

 

Fed chairman warns US lawmakers on impact of 'fiscal cliff'

 

US Federal Reserve chairman Ben Bernanke

Source: Press TV

http://www.presstv.ir/detail/2012/11/21/273685/us-lawmakers-alarmed-on-fiscal-cliff/

US Federal Reserve chairman Ben Bernanke has once again warned American legislators to ward off the abrupt and severe combination of legislated tax hikes and federal spending cuts, known as ‘fiscal cliff,’ due to take effect by the end of the year.

In a Tuesday speech at the New York Economic Club, Bernanke described fiscal cliff as a “substantial threat” to the country’s economic recovery and urged US lawmakers to put aside partisan political rivalries to avert the massive financial impact on the nation’s already slow economy.

‘‘Uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions,’’ he said, adding, ‘‘Such uncertainties will only be increased by discord and delay.’’

According to reported estimates, the impact of the scheduled federal spending cuts and the expiration of temporary tax breaks will take at least USD 500 billion out of the US economy, threatening to push it back into yet another recession.

Citing several outside economic assessments on the enormity of the ensuing tax hikes and spending cuts, Bernanke said ‘‘a fiscal shock of that size would send the economy toppling back into recession.’’

This is while the Obama administration and Congress are still negotiating over an agreement to reduce the government's massive budget deficit, which has exceeded USD 1 trillion for a fourth consecutive year.

The last time the debt limit was about to be reached, Republican lawmakers in the US Congress waited until the very last minute before deciding to raise the limit.

Saying "the deficit is on an unsustainable path," the Fed chairman further added, ‘‘As you will recall, the threat of default in the summer of 2011 fueled economic uncertainty and badly damaged confidence, even though an agreement ultimately was reached.’’

‘‘A failure to reach a timely agreement this time around could impose even heavier economic and financial costs,” he warned.

Currency war warnings follow US Fed’s “quantitative easing”

 

By: Nick Beams

Source: Global Research
http://www.globalresearch.ca/currency-war-warnings-follow-us-feds-quantitative-easing/

There are growing fears that the US Federal Reserve’s policy of “quantitative easing”—the process by which tens of billions of dollars are pumped into financial markets every month—is sparking international tensions over currency values.

One of the consequences of the Fed’s actions is to push down the value of the US dollar, thus worsening the competitive position of other major countries in international markets.

Following the latest decision, in which the Fed gave an indefinite commitment to purchase mortgage-backed securities to the tune of $40 billion per month, the Brazilian finance minister, Guido Mantega, repeated his earlier warnings of a currency war.

Interviewed by the Financial Times last Thursday, Mantega said the US move was “protectionist” and could have drastic consequences for the rest of the world. “It has to be understood that there are consequences,” he told the newspaper. The Fed’s latest move would have only marginal benefits, he said. There was already plenty of liquidity in the economy but it was not going into production. The real purpose of the measures was to depress the value of the dollar and boost US exports, he added.

Mantega pointed to last week’s decision by the Bank of Japan (BoJ) to intervene in financial markets with its own version of quantitative easing as another sign of global tensions. “That’s a currency war,” he said.

In a move clearly aimed at pushing down the value of the yen and lifting Japanese exports, the BoJ decided to add $128 billion to its program of asset purchases. It cited the effects of “financial and foreign exchange market developments” as one of the reasons for its actions.

Further evidence of the impact of global financial turmoil is revealed by Japanese trade figures for last month. These show that exports to Western Europe were down by 28 percent compared to a year ago, with exports to China falling for the third month in a row.

China is also concerned about the impact of the Fed’s actions. The head of the country’s central bank, Zhou Xiaochuan, publicly released criticisms he made last April of the “quantitative easing” program. He said the continued injections of cheap credit were not working and more targeted measures should be developed to get money where it was needed.

China has two concerns about the fall in the value of the American dollar. It tends to push up the value of the yuan, which impacts on Chinese export markets, and reduces the value of the more than $1.2 trillion of US treasury bonds that Beijing holds.

The US Fed’s rationale for its actions is that the injection of liquidity will lower interest rates and encourage investment, resulting in the creation of more jobs and a lowering of unemployment. But a recent Duke University survey of the chief finance officers of 887 large companies found that a lowering of interest rates would have virtually no impact on their decisions.

According to the Duke University analysts: “CFOs believe that … monetary action would not be particularly effective. Ninety-one percent of firms say they would not change their investment plans even if interest rates dropped by 1 percent, and 84 percent said they would not change investment plans if interest rates dropped by 2 percent.”

In other words, so far as the real economy is concerned, the Fed’s actions are equivalent to pushing on a string. Indeed this is recognised within leading financial circles.

Addressing the Harvard Club of New York last Wednesday, Richard Fisher, a non-voting member of the Federal Opening Market Committee, which decided on the latest policy, said the Fed was sailing deep into unchartered waters. In a frank admission, he stated: “The truth … is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.”

Former Fed chairman Paul Volcker has added his voice to those who insist that further quantitative easing will do nothing to boost the economies of the US and Europe. Speaking at a conference in Scotland over the weekend, he said: “There is so much liquidity in the market that adding more is not going to change the economy.”

The growing sense that the world economy is heading down again was reinforced by the latest forecasts from the World Trade Organisation. It predicted that the world economy would grow only 2.5 percent this year, down from its previous estimate of 3.7 percent.

While the Fed’s measures have almost no impact on investment and jobs, they do give a boost to financial markets. Since the collapse of September 2008, the Fed has followed a clear agenda. The banks and finance houses, whose speculative activities, some of them of an outright criminal character, triggered the crisis, have been given endless supplies of ultra cheap money. Profits are being made through the elevation of the price of financial assets resulting from the injection of more money from the Fed.

However, the stagnation and outright recession in the real economy means that this process cannot continue indefinitely and the house of cards must collapse. The interventions by the world’s three major central banks—the US Fed, the European Central Bank and the Bank of Japan—means that rather than being able to provide further bailout money, they will themselves be dragged into the maelstrom.

 

Federal Reserve announces QE3

 

Ben S. Bernanke (AFP Photo / Brendan Smialowski)

Source: Russia Today

http://rt.com/usa/news/federal-reserve-qe3-effort-079/

The Federal Reserve announced Thursday that they will spent $40 billion a month on bond purchases in an effort to kick-start the US economy, the Associated Press reports.

Federal Reserve Chairman Ben Bernanke is expected to make a public address later today to discuss the results of this week’s Federal Open Market Committee (FOMC) meeting, but in the FOMC confirms that it will keep interest rates "exceptionally low" at least through mid-2015, AP confirms, with the Fed failing to reveal and an end date to the effort at this time.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed reports in a Thursday afternoon statement. The decision to issue the announcement was approved on an 11-1 vote.

Economists had predicted that the central bank would unveil plans for a third-round of a quantitative easing, or QE3, but the Fed has only hinted at plans for a bond purchasing program until now.

Last week, Goldman Sachs said, “With today’s August employment report showing a nonfarm payroll gain of 96,000 and an unemployment rate of 8.1% because of a drop in the participation rate, we expect a return to unsterilized and probably open-ended asset purchases at the September 12-13 FOMC meeting.”

Some critics, including noted investor Jim Rogers, have attested that previous rounds of quantitative easing did little to aid the faltering economy, and that a third attempt may be met with the same respojnse.

"QE1 failed, QE2 failed, so I'm not so sure they would announce QE3, because they'll look like fools again," Rogers told Yahoo this week.

Less than one month ago, Bernanke warned that QE3 was becoming more and more likely, saying, “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

 

Federal Reserve downgrades US economy assessment

A pressman checks uncut sheets of $20 bills on July 12, 2012, at the US Bureau of Engraving (BEP) in Washington, DC

Source: Press TV

http://www.presstv.ir/detail/2012/08/01/253945/fed-downgrades-us-economy-assessment/

The US Federal Reserve has downgraded its assessment of the country’s economy, saying the economic growth has slowed and US economy is losing strength.

"Economic activity decelerated somewhat over the first half of this year," the Federal Reserve announced after a two-day top-level meeting on Wednesday.

The interest rate-setting Federal Open Market Committee (FOMC) also said that it expected "economic growth to remain moderate over coming quarters and then to pick up very gradually."

"The unemployment rate will decline only slowly," it added.

The bank also downplayed glimmers of hope that the housing market is starting to rebound, saying "despite some further signs of improvement, the housing sector remains depressed."

Despite the disappointing news, no measures have been taken by government officials so far, and the Federal Reserve shied away from launching a fresh economic stimulus package.

Ryan Sweet of Moody's Analytics described the Fed's decision not to provide more stimulus or extend the timeframe for low rates as "a bit of (a) surprise move."

"There was a strong case for changing the rate guidance," he said, adding that "the odds of the Fed launching a third round of quantitative easing in September are lower."

Ron Paul's support peaks on the eve of Iowa caucus

Republican presidential hopeful U.S. Rep Ron Paul (R-TX) waves during a campaign stop at the Park Place Event Center on January 2, 2012 in Cedar Falls, Iowa (AFP Photo / Justin Sullivan)

Source: Russia Today
http://rt.com/usa/news/ron-support-iowa-paul-147/

Republicans in the state of Iowa will gather today to cast their vote in the caucuses that will largely impact the presidential race, and all eyes are on Ron Paul as the Texas Congressman holds the lead in the polls.

Following the bow out of Herman Cain and a schizophrenic surge up and down in the popularity of his peers, Rep. Ron Paul has rocketed to the forefront of the Republican Party in recent week, passing the competing gang of politicians also vying for the nomination. By Tuesday night, America will know the results of the Iowa Caucuses and could indeed have a clear idea of who could take the GOP’s nomination and perhaps eventually the presidency.

The last few surveys conducted by the Des Moines Register and Public Policy Polling put Paul either above the other frontrunners or neck-and-neck at first place. The Iowa caucus, the first among many during the presidential election year, have historically played a role in the rest of the race leading up to November.

On Monday, Rep. Paul acknowledged the skyrocketing support that could propel him to victory today, but stayed strong in backing his word and the campaign promises he’s made.

"We, the people, are growing and I'm optimistic," Paul said from Davenport, Iowa on Monday. That same day the politician found himself in Des Moines, IA and was welcomed by the same admiration as he did across state. "The enthusiasm is growing by leaps and bounds and crowds are getting bigger," Paul said from Des Moines Marriott ballroom. What was expected to serve as a “whistlestop” on the road to caucus day turned into practically a party as droves turned out to show their support. That support, says Paul, comes from ideas that he willing to stand up for, much to the chagrin of his GOP peers.

"As far as I'm concerned, there's only one issue," Paul said. "There's one issue that has made America great, an issue that you can answer all your questions on is individual liberty."

That point of view and others have made Paul a clear opponent of the ideologies largely shared by the competing pool of Republican candidates, and that option has allowed the congressman to accumulate a large fan base of likeminded youths.

It’s “young ideas” that Paul says puts him above the competition. “Freedom is a young idea,” he adds.

"He has tapped into something among young people . . . People here are sick of those wars, and they want the troops to come home," David Yepsen, director of the Paul Simon Public Policy Institute, tells the Chicago Sun Times.

Paul spokesman Jesse Benton adds to ABC News that it’s much more than that. “He governs on principle. He is consistent and does not flip-flop. And he is the only candidate who will really cut the spending and balance the budget so we can get back on our feet and create jobs,” says Benton.

'World needs new reserve currency'

Nobel Prize winning economist Joseph Stiglitz

Source: Press TV
http://www.presstv.ir/detail/174296.html

A prominent American economist says the world needs a new global reserve currency to avert trade imbalances that are reflected in the US national debt.

In an interview with Bloomberg on Sunday, Nobel Prize winning economist Joseph Stiglitz said that a “global system” is needed to replace the dollar as a reserve currency and help avoid a weakening of US credit quality.

“By taking off the burden of any single country, we don't have to have trade deficits,” the Columbia University professor pointed out.

“Things would be much worse if it were not the case that Europe was having even more of a problem, but winning a negative beauty pageant is not the way to create a strong economy.”

“The likelihood of the US government failing to honor its financial obligations and in particular make due and full payments on US Treasury securities is extremely low,” according to the international Fitch Ratings agency.

Americans appear to be growing nervous, and that unease could take an economic toll.

Consumer sentiment fell in March to its lowest level since November 2009. With oil prices rising, Americans' confidence in the economic recovery has taken a sudden plunge.

The financial and psychological strains appear to be encouraging Americans to cut back. Already, one in every three consumers has cut spending due to rising prices.

G20 seeks indicator deal in Paris

Finance ministers and central bank heads meet in France to decide common indicators to measure nations' economic health.


Sarkozy, whose country heads the G20 this year, has told ministers to put national concerns aside [EPA]

Source: Al Jazeera
http://english.aljazeera.net/news/europe/2011/02/201121982516550310.html

Members of the G20 are striving to reach a deal on a set of indicators to measure the economic health of member states, in a bid to avoid another global financial crisis.

The G20 has been seeking to avoid another major financial crisis by increasing economic co-operation between member states, but in order to do so it is essential the countries agree on a set of economic metrics.

Finance ministers and central bankers from the 20 developed and developing countries are holding a second day of talks in Paris on Saturday to try to finalise the details of any agreement.

In welcoming remarks on Friday, Nicolas Sarkozy, the French president, warned participants that they would have to put national interests aside for the greater good of the group.

"The temptation to give priority to national interests is great. But let me tell you clearly - that would be the death of the G20," said Sarkozy.

A diplomatic source told the AFP news agency that no agreement emerged during a working dinner for finance ministers on Friday.

The source said that China remained reluctant to agree to certain indicators that were under consideration, and there was no united front among emerging economies on the issue.

However, speaking on Saturday, Wolfgang Schaeuble, the German finance minister, said there was a "good chance" of breaking the current deadlock on the indicators.

He also said that Germany would back French proposals to work on increasing transparency in commodity markets and for implementing a controversial financial transaction tax.

Four indicators

France says that it wants an agreement as soon as possible so that the International Monetary Fund can make policy recommendations in the second half of the year.

"We need a thermometer that works so we can examine the imbalances in all their aspects to make as useful a diagnosis as possible," said one negotiator.

A series of four indicators are under discussion. Two measure imbalances within countries: the public deficit and debt, plus the level of private savings.

The other two measure external imbalances: the current account balance or trade balance, or foreign currency reserves or real exchange rates.

Sarkozy, whose country holds the G20 presidency this year, has vowed to reform the world monetary system and commodities market.

He said that he aims to defend poorer countries from trade and currency turbulence.

Some member states, including France, have also also discussed the option of curbing the dollar's supremacy as the world reference currency.

The US delegation, however, has said that it wants to focus on the effect of volatility in capital flows between countries

US home prices dip for 4th month in row

As foreclosed homes flood the markets, prices could tank even further.

Source: Press TV
http://www.presstv.ir/detail/162028.html

A double-dip in the US home prices appears to be underway in America's biggest cities, endangering an already fragile economic recovery in the country.

Home sale prices fell 1.6 percent for the fourth consecutive month in November 2010, the Standard & Poor's/Case-Shiller Index, which tracks the real estate market in 20 major US cities, showed.

The housing market got a boost early last year with the help of tax incentives. But after the US government's initiatives ended, sales dropped sharply.

Falling home values result in what economists call a negative wealth effect. In this scenario, people's financial confidence is shattered as a result of lost equity in their homes.

Currently, there are more than ten million households in the United States who owe more on their homes than they have equity.

Some economists predict the US housing price, which is a key indicator of the country's economic vitality, will drop by as much as 20 percent this year.

According to their reports, the decline in home value is greater than it was in 1928 to 1933 during the Great Depression -- a severe worldwide economic depression in the decade preceding World War II.

In addition, unemployment has remained stubbornly high and millions of Americans are still at risk of foreclosure.

California bankruptcy chatter alarms investors

Source: Press TV
http://www.presstv.ir/detail/161839.html

Some analysts are saying that bankruptcy could be California's best bet for getting out from under a crushing budget deficit of 25 billion dollars.

But current U.S. law prohibits states from declaring bankruptcy, which is why some are pushing for a change.

This call for a change in the bankruptcy law comes as California's financial future looks even more bleak than it did the previous year.

The state's budget deficit continues to increase while the unemployment rate shows no sign of dropping.

Declaring bankruptcy could be the best path for the state to get out from under it's crushing debt and move toward recovery.

Economists say other California municipalities are already taking advantage of bankruptcy protection.

The city of Vallejo and Orange County both filed for bankruptcy and are emerging with an improved financial situation.

But economists say there's a big difference between a city and a state.

That's why California Treasurer Bill Lockyer is already dismissing the idea of filing for bankruptcy, saying it would limit the state's ability to create jobs and to secure future investments.

And economists say California already has the lowest credit rating in the U.S.

However, proponents of the bankruptcy option say it will give California leverage when dealing with the public employee unions.

The state has a massive unfunded pension liability and the threat of bankruptcy might encourage unions to agree to reduced packages.

But economists say bankruptcy would not address the main reason California is in fiscal turmoil.

Republicans are expected to introduce the bankruptcy legislation within the next 30 days.

Experts say even if the bill was passed, it would take at least two years before states would be able to file.

China taking over US banks

ICBC is doubling its presence in Europe through branch openings in major cities

Source: Press TV
http://www.presstv.ir/detail/161737.html


The Industrial and Commercial Bank of China (ICBC) has agreed on a deal to take over a US retail bank, at a time when American financial institutions are falling one after another.

The ICBC will buy 80 percent of the US unit of Bank of East Asia Ltd. for USD 140 million, the two companies announced in an e-mailed statement on Sunday.

The move, which is yet to be approved by US regulators, could be a positive step for the arrival of Chinese banks to the US retail market.

The deal was signed during President Hu Jintao's state visit to the US.

The acquisition “will enable us to establish a solid presence in the US,” ICBC Chairman Jiang Jianqing said in the statement.

“With this commercial bank license in the US, ICBC can further expand its retail banking business and operating network across the nation.”

In January, ICBC opened its first branch in Paris, and is doubling its presence in Europe through branch openings in major cities.

Over 10 percent of the 7,760 banks in the US are in financial trouble and despite receiving a total of USD 4.2 billion in bailout cash, 98 US banks are still at risk of failing.

In 2010, 157 US banks failed and so far this year seven banks have failed.

US states seek way to file for bankruptcy

Source: Press TV
http://www.presstv.ir/detail/161305.html


American policy makers are trying to determine whether they could let states declare bankruptcy as they confront crushing debts and dwindling revenues.

House Republicans and Senators from the two major political parties have shown an interest in the matter. They have called on bankruptcy lawyers and a former House speaker, Newt Gingrich, to come up with a solution which paves the way to such a measure, The New York Times reported on Thursday.

The report comes as states face a combined pension fund shortfall of USD 3 trillion, according to finance professors' estimate.

Proponents say bankruptcy could permit a state to alter its contractual promises and get out from under massive debts.

Nevertheless, states cannot seek protection in the US Bankruptcy Court as they are considered sovereign.

Financial experts say any effort to simulate Washington's response to a state's request for a bailout would be difficult as major constitutional burdens have to be removed.

Some American cities reportedly run high risk of bankruptcy. The City of Harrisburg, Pennsylvania, is said to have received legal advice to petition for bankruptcy as it is teetering on the edge.

Hamtramck city in Wayne County of Michigan has also sought bankruptcy protection to cover deficits. The request has, however, been turned down by the state of Michigan.

It appears that years of generous spending and lofty pension promises to employees are coming to end across the United States as states are suffering severe financial hardship.

Global economy shifting eastwards

Source: Press TV
http://www.presstv.ir/detail/161236.html


The dominance of the West over the global economy will decline as the economic power is moving eastward, says a Professor of Binary Economics.

In an interview with Press TV, Rodney Shakespeare predicted a gradual transition of the current 'uni-polar' world to a 'multi-polar' one.

“India and Indonesia will help China in creating a new world order,” added Shakespeare.

The possible political outcome of the shift in global economic power will be that of “a change of balance of forces in the world.”

Some economists predict the course of the 21st century to be determined by the nature of the US-China relations.

China's share in world merchandise imports increased from 6.9 percent in 2008 to 7.9 percent in 2009, resulting in China becoming the second largest world importer. China, Germany and the United States remain well ahead of other countries in terms of the total value of imports and exports.

Bank of America posts huge Q4 losses

Source: Press TV
http://www.presstv.ir/detail/161283.html


The largest US Bank, Bank of America, has reported huge losses in the fourth quarter of fiscal 2010 year and revealed a streak of two consecutive quarters of non-profitability.

Bank of America on Friday announced a fourth-quarter net loss of USD 1.2 billion, or 16 cents a share, Forbes reported on Friday.

The loss was driven by charges from pre-announced settlements and write-downs related to mortgage problems.

Bank of America's revenue was also down 11 percent in the quarter to USD 22.7 billion, which was well behind analysts' expectations.

Analysts had been expecting a USD 3 billion charge after the bank said it would pay USD 1.28 billion to Freddie Mac and USD 1.52 billion to Fannie Mae in a bid to buy back toxic mortgages.

For the full year of 2010, Bank of America reported a net loss of USD 2.2 billion or 37 cents per share.

Bank of America's earnings have been dominated by costs from bad mortgages sold by its sub-prime mortgage unit, Countrywide, during the housing crisis of 2008.

Countrywide has cost the bank more than USD 5 billion in write-downs over the previous two years.

Private investors have taken legal actions against Bank of America to compel it buy back mortgages sold on the open market.

The financiers argue that the mortgages didn't keep to the underwriting policies of government-sponsored enterprises of Freddie Mac and Fannie Mae.

Bank of America and other former Countrywide executives are currently facing numerous law suits over attempts to force lenders to buy back loans that may have been made with incorrect data on income and home values.

In December, America's largest home and car insurance company, Allstate, sued Countrywide for miscalculating misrepresenting the risks on more than USD 700 million of mortgage securities it had earlier bought.

Obama's economic advisor steps down

Former head of the President's Economic Recovery Advisory Board Paul Volcker

Source: Press TV
http://www.presstv.ir/detail/161202.html


US President Barack Obama has announced the departure of former Federal Reserve chairman Paul Volcker as the head of the Economic Recovery Advisory Board.

"Since my campaign for President, I have relied on Paul Volcker's counsel as we worked to recover from the worst economic crisis since the Great Depression," the Associated Press quoted Obama as saying late Thursday.

With an intention to restructure his economic advisory board, Obama named General Electric CEO Jeffrey Immelt as the new head.

The new board, called the President's Council on Jobs and Competitiveness, will focus on increasing employment.

Immelt has been a White House ally since the start of Obama's presidency, though his political contributions tend to be bipartisan and he financially supported Hillary Clinton and Republicans John McCain, Rudy Giuliani and Mitt Romney during the 2008 presidential election.

Volcker's full two-year tenure as "one of the wisest economic minds" in the country will expire on February 6.

Wars to go on until US economy busts

Senior fellow of the Nation Institute, Chris Hedges

Source: Press TV
http://www.presstv.ir/detail/161041.html


The economy-damaging US wars are thought to continue as long as giant American corporations supporting Washington politicians profit from them.

The US economy “will fail because we're paying for it through debt, through borrowing,” a senior fellow at the Nation Institute, Chris Hedges, said in an interview with Press TV on Wednesday.

"The continuation of these conflicts is good for their bottom-line. That's why we're seeing very little reticence on the part of the government which knows how drastic the situation is in Afghanistan to pull back because the people who hold the ultimate power in the United States, which are corporations, want these wars to continue," Hedges continued.

“There are huge corporations whose profits have swollen four by four," Hedges went on to say, also referring to the unwinnable situation of the Afghan war, as covered by popular US news sources such as the New York Times.

In regards to the Iraq war, he mentioned US President Barack Obama's tactical but unpromising words that “he would withdraw the combat troops from Iraq,” only when was there acknowledgement of occupation troops' stay in the war-torn country for years to come.

According to official statistics, 48,000 American troops are currently based in war-wrecked Iraq as a result of which about 4.7 million Iraqis have been displaced.

The United States' invasion of Iraq took place in 2003, without the authorization of the United Nations Security Council, under the pretext that Iraq owns weapons of mass destruction. Later George W. Bush, the then US president, admitted that no such weapons were found there and said he was 'sorry' for those who died in the war.

It is estimated that over 1,300,000 Iraqi civilians have been killed during the war in Iraq. Though combat operations have officially ended, about 50,000 US troops will remain in the war-ravaged country until the end of 2011 to "advise Iraqi forces and protect US interests."

There are currently about 97,000 US troops in Afghanistan. Statistics reveal that there have been over 34,000 Afghan civilian deaths and 1,445 US fatalities since the start of the war in Afghanistan in 2003.

President Obama had previously promised that US forces would begin withdrawing from Afghanistan in July 2011. At the Lisbon Summit though, an agreement was merely reached to start the withdrawal in 2014.

China economic growth worries US

China 's President Hu Jin Tao is to visit US President Barack Obama next week

Source: Press TV
http://www.presstv.ir/detail/159765.html


The United States has expressed concern over China's economic policies and called on the Chinese government to distance itself from an export-based economic growth.

The US wants a “real demonstrative commitment” from China to accelerate the rise of its currency, yuan, and to shift the focus of its economy from the outside to the inside, and thus increase domestic demand and rebalance the economy, Reuters quoted a US official as saying on Tuesday.

"It's both the pace in which they do it and the conviction with which they demonstrate they're going to do it," the senior Obama administration official went on to say.

Currency strategists maintain that China is gradually giving up the firm grip and the control of trading in order to internationalize yuan and this strategy is essential for easing the capital control and the reform of foreign exchange.

China, however, has blamed the United States for the trade gap and the imbalances and has called on Washington to take action to resolve its fiscal house problem to prevent the world economy from further instability.

The remarks come just days ahead of Chinese President Hu Jin Tao's official visit to the United States during which economic as well as military issues will be the highlight of the negotiations.

US dollar 'unstable' reserve currency

French President Nicolas Sarkozy has visited his US counterpart Barack Obama, discussing several issues including the reduction of the influence of the US dollar.


As France is hosting G8 and the G20 this year, the Monday meeting was focused on reforming the world economy and preventing another global recession, particularly on the US dollar.

Sarkozy considered the current model which uses the US dollar as the primary reserve currency as "unstable" and stressed that it "makes part of the world dependent on American monetary policy."

However, Sarkozy assured Obama that France still considers the dollar as the number one global currency reserve.

Obama echoed Sarkozy's concern for serious monetary reforms, saying that he and his French counterpart are negotiating the exact reforms needed to be put before the world's industrialized and emerging nations at the upcoming G8 and G20 meetings.

Both leaders pledged to cooperate and coordinate what they called new ideas about reorganizing the world economy.

After meeting in private for two hours, the two leaders invited the press into the Oval Office for comments.

Obama said he and Sarkozy -- the most pro-American French President in years - were slated to hold talks on Afghanistan, Iran, Ivory Coast, Sudan, the Middle East and Lebanon.

'Bailed US banks on brink of bankruptcy'

A file photo of a US bank that was closed down in June 2010

Source: Press TV
http://www.presstv.ir/detail/157488.html


Around one hundred US banks which have been rescued by the federal government are facing the prospect of bankruptcy again, a study finds.

A total of 98 unsteady banks that were bailed out by Washington authorities received more than $4.2 billion from the Treasury Department under the Troubled Asset Relief Program (TARP), a recent analysis of federal data by the Wall Street Journal reveals.

According to the study, TARP was originally created in the middle of the US financial crisis to help only healthy banks.

Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by unregulated lending programs from which they might not recover.

The average size of the 98 banks was $439 million in assets as of Sept. 30. The median TARP infusion for each was $10 million, the study shows, citing federal filings.

The journal calculations also demonstrate that 814 of the country's 7,760 banks and savings institutions are troubled at the end of America's third-quarter financial period, which is up from 729 at the end of the second quarter.

However, figures from the Federal Deposit Insurance Corporation (FDIC) have identified 860 financial institutions as problematic. The banks have not been publicly identified.

In October, the Government Accountability Office said 78 banks on the FDIC's troubled-bank list as of June 30 were TARP recipients, up from 47 at the end of 2009.

Dozens of TARP banks were "marginal institutions" that were financially weaker than other recipients and should have gotten more scrutiny before receiving taxpayer-funded infusions, the GAO said.

'US empire heading for collapse'

Senior US journalist Chris Hedges

Source: Press TV
http://www.presstv.ir/detail/156768.html


A renowned US journalist says Washington's military and economic empire could collapse at any time as it has embarked on the same course in Afghanistan as the former USSR did back in the 1980's.

"We're losing [the war in Afghanistan] in the same way the Red Army lost it," said Chris Hedges in a December 17 interview with the Raw Story.

"It's exactly the same configuration where we sort of control the urban centers where 20 percent of the population lives. The rest of the country where 80 percent of the Afghans live is either in the hands of the Taliban or disputed," he explained.

"Foreigners will not walk the streets of Kabul because of kidnapping, and journalists regularly meet Taliban officials in Kabul because the whole apparatus is so porous and corrupt," the Pulitzer Prize-winning journalist said.

Hedges predicted that US President Obama's war report due later in December would "contradict not only [US] intelligence reports but everything else that is coming out of Afghanistan."

The CIA's own assessment confirmed the long-time foreign correspondent's speculation, as it came in striking contrast with Obama's report.

Defense Secretary Robert Gates, however, insisted that the US controlled more territory in Afghanistan than in 2009.

Hedges also referred to what it called “a corporate coup d'?tat in slow motion" as another symptom of the US decline.

"Our public education system has been gutted. Our infrastructure is corroding and collapsing. Unless we begin to physically resist, they are going to solidify neo-feudalism in this country."

Chris Hedges, the author of Death of the Liberal Class, specializes in American and Middle Eastern politics and societies.

The former New York Times journalist spent nearly two decades as a foreign correspondent in Central America, the Middle East, Africa and the Balkans and has reported from more than fifty countries.