Is the global economy just a giant debt scam? What the financial elite doesn’t want you to know | Salon.com

Let’s restate that, because it gets more shocking the more you think about it. The bailout money came from the European Central Bank and the IMF, largely meaning the taxpayers of France, Germany and other prosperous nations of Western Europe. Exactly none of it went to restore social services or repair roads in Greece. All of it was used to make payments on the Greek government’s existing debt — most of which was to banks in Western Europe. So Angela Merkel and François Hollande (then the French president) and other political leaders extorted money from their own taxpayers, on the pretense that they were helping out a small, struggling nation on Europe’s southern fringe, and siphoned it directly to the biggest European banks, largely in their own countries. It was a direct wealth transfer from ordinary people to the financial elite.

Source: Is the global economy just a giant debt scam? What the financial elite doesn’t want you to know | Salon.com

An Infrastructure Plan That Would Actually Work by Willem Buiter & Dag Detter – Project Syndicate

The total value of commercial assets owned by state and local governments is sure to be of the same magnitude, or larger. After all, local governments own and operate most airports and ports, as well as utilities such as water, sewerage, and electricity – all of which are in desperate need of funding. But real estate comprises the bulk of public commercial assets. By some estimates, publicly owned assets account for as much as one-quarter of the total market value of real estate in a city or county. At the same time, many localities need additional funding for affordable housing.

All told, this public wealth represents a substantial opportunity for investors, local governments, and society as a whole. If professionally managed, the yield from such a vast portfolio of commercial assets could fund not just critically needed infrastructure investments, but also any other public goods and services that are in demand.

Source: An Infrastructure Plan That Would Actually Work by Willem Buiter & Dag Detter – Project Syndicate

Seychelles Finds A Novel Way To Swap Its Debt For Marine Protections : The Two-Way : NPR

The Seychelles have brokered a novel deal that will allow the island archipelago to swap millions of dollars in sovereign debt for protecting nearly one third of its ocean area.

It’s hailed as the first of its kind. “Seychelles is clearly breaking new grounds and with it, it has positioned itself as a world leader in ocean governance and management,”

https://www.npr.org/sections/thetwo-way/2018/02/23/588273709/seychelles-finds-a-novel-way-to-swap-its-debt-for-marine-protections

Vernacular Economics: How Building Codes & Taxes Shape Regional Architecture – 99% Invisible

Ever noticed how the bricks on newer British buildings are bigger, or stopped to appreciate hand-stenciled wallpaper, or enjoyed a sip from a fancy hollow-stemmed glass? If so, you may well be admiring a product of regulation and taxes as much aesthetic tastes. From basic materials to entire architectural styles, building codes and taxation strategies have had huge historical impacts on the built world as we know it. Take the capital of France, for instance.

Source: Vernacular Economics: How Building Codes & Taxes Shape Regional Architecture – 99% Invisible

Why cities should stop fighting big banks and create their own – Salon.com

Frack-happy, Trump-supporting North Dakota probably isn’t the first place you would expect to find a working model, but since 1919, the state has used the Bank of North Dakota to finance everything from student loans to sewer upgrades and small business loans. The bank just posted its thirteenth consecutive year of record profits, earning more than $136 million in 2016. And unlike at a big private bank, that money goes right back into investing in the people, rather than into investors’ pockets.

Source: Why cities should stop fighting big banks and create their own – Salon.com

Three Reasons Trickle-Down Tax Cuts Don’t Work

History shows that bad economic ideas almost never die, especially when they serve the wealthy and powerful. There’s no better example of this truth than trickle-down tax cuts. As we write this, the Trump administration is teeing up a tax plan that slashes taxes for the wealthy and the corporate sector, does little for everyone else (repealing the Affordable Care Act actually raises taxes on some with low and moderate incomes), and stiffs the U.S. Treasury to the tune of $6.2 trillion, according to the Tax Policy Center’s estimates.

Source: Three Reasons Trickle-Down Tax Cuts Don’t Work

Paul Krugman: Donald Trump’s infrastructure plan is one big scam – Salon.com

Paul Krugman: Donald Trump's infrastructure plan is one big scam

Trump’s plan to rebuild the country’s infrastructure is really a scheme to enrich wealthy people…..

There is also the fact that private investors will have no interest in building infrastructure that can’t be turned into a profit center. Privatizing these public projects is a gratuitous hand out to select investors, who would be aquiring public assets for “just 18 cents on the dollar, with taxpayers picking up the rest of the tab.

Source: Paul Krugman: Donald Trump’s infrastructure plan is one big scam – Salon.com

Fear Spreads of a Housing Crash in Canada | Alternative Economics

The reading marks a change from almost unbridled consumer optimism in a housing market that has carried the Canadian economy since the 2008 global financial crisis, even as policy makers warn price gains in some cities are unsustainable.

Source: Fear Spreads of a Housing Crash in Canada | Alternative Economics

The Global Real Estate Bubble Is OFFICIALLY Bursting | Seeking Alpha

Bubbly cities like Singapore and Vancouver have started punishing foreign housing investors that have pushed up property prices to unaffordable – and unsustainable – rates. Foreign investors are now being taxed in many of these areas, and as a result, their real estate markets have begun to tank.During this housing burst, the most high-end, desirable locations will be hit the hardest.

Source: The Global Real Estate Bubble Is OFFICIALY Bursting | Seeking Alpha (sic)

Big Wall Street Firms Make Lame Excuse for Volcker Rule Non-Compliance, Ask for Additional Five Year Extension | naked capitalism

Anyone who knows bupkis about finance knows if you can’t sell a financial asset in three years (or more accurately, seven), particularly with public and private market valuations at record levels, the problem is not liquidity. It’s valuation. These banks are carrying these holdings on their books at inflated marks and don’t want to recognize losses……..

“It’s laughable that the biggest, most sophisticated financial firms in the world claim they can’t sell the stakes year after year,” said Dennis Kelleher, CEO of non-profit Better Markets. “Everyone else in America has to comply with the law and Wall Street should also.”

Source: Big Wall Street Firms Make Lame Excuse for Volcker Rule Non-Compliance, Ask for Additional Five Year Extension | naked capitalism

The “New Housing Crisis” – Not Enough Rental Homes? | Zero Hedge

The point here is that while the housing market has recovered – the media should be asking ‘Is that all the recovery there is?’

With 30-year mortgage rates below 4%, we should be in the middle of the next housing bubble with prices and home ownership rising. The question the media should be asking is “why?” Furthermore, what happens if the “bond market bears” get their wish and rates rise?

The housing recovery is ultimately a story of the “real” unemployment situation that still shows that roughly a quarter of the home buying cohort are unemployed and living at home with their parents. The remaining members of the home buying, household formation, contingent are employed but at lower ends of the pay scale and are choosing to rent due to budgetary considerations. This explains why household formation is near its lowest levels on record despite the “housing recovery” fairytale whispered softly in the media.

Housing-NetHouseholdFormation-072516

While the “official” unemployment rate suggests that the U.S. is near full employment, the roughly 94 million individuals sitting outside the labor force would likely disagree. Furthermore, considering that those individuals make up 45% of the 16-54 aged members of the workforce, it is no wonder that they are being pushed to rent due to budgetary considerations and an inability to qualify for a mortgage.

The risk to the housing recovery story remains in the Fed’s ability to continue to keep interest rates suppressed. It is important to remember that individuals “buy payments” rather than houses, so each tick higher in mortgage rates reduces someone’s ability to meet the monthly mortgage payment. With wages remaining suppressed, and a large number of individuals not working or on Federal subsidies, the pool of potential buyers remains contained.

The real crisis is NOT a lack of homes for people to buy, just a lack of enough homes for people to rent. Which says more about the “real economy” than just about anything else.

While there are many hopes pinned on the housing recovery as a “driver” of economic growth in 2013, 2014, 2015, 2016 – the lack of recovery in the home ownership data suggests otherwise.

Source: The “New Housing Crisis” – Not Enough Rental Homes? | Zero Hedge

Deutsche Bank Chief Economist Joins SocGen Chairman in Trying to Foment Banking Crisis to Get Germany, Brussels to Blink | naked capitalism

Another race to the crash: who goes first Deutsche Bank or Italian Banks? Can bankers get politicians to pull the emergency cord? Who gets screwed? Stay tune for Crash 2.0.

Why bank executives are stoking a banking crisis, with Deutsche Bank in their crosshairs.

Source: Deutsche Bank Chief Economist Joins SocGen Chairman in Trying to Foment Banking Crisis to Get Germany, Brussels to Blink | naked capitalism

Our global financial system is broken. Here’s a plan for fixing it | World Economic Forum

The result is what has been called secular stagnation, new normal, ugly deleveraging, balance sheet recession and Japanification. I call it “QE infinity”: a prolonged period of low growth and low interest rates, where policy-makers persist in implementing policies that won’t fix the problem. They won’t ever say they’re out of ammunition, but central bankers are starting to look like naked emperors. “Is monetary policy by itself going to create growth, employment? You seem to give a lot of responsibilities to the European Central Bank. Can monetary policy create growth by itself? The answer is no. Monetary policy can create the economic conditions for growth,” ECB President Mario Draghi told the European Parliament last year. Put differently, there is only so much monetary policy can do to re-start growth: it is an anaesthetic, not a cure. to the European Central Bank. Can monetary policy create growth by itself? The answer is no. Monetary policy can create the economic conditions for growth,” ECB President Mario Draghi told the European Parliament last year. Put differently, there is only so much monetary policy can do to re-start growth: it is an anaesthetic, not a cure.

Source: Our global financial system is broken. Here’s a plan for fixing it | World Economic Forum

The Jewish-Polish Broker Who Saved America

Solomon arranges some of the most crucial loans of the war effort and, working in concert with Robert Morris – the Revolution’s chief banker – becomes central to the colonials’ eventual victory. When George Washington sees his one-in-a-million opportunity to trap and destroy Lord Cornwallis at Yorktown, it is money that is wanting and Solomon comes through. Washington can’t move his army into siege position to capitalize on Cornwallis’s historic error because an army on the march must be fed. Robert Morris turns once again to Solomon the broker, who comes up with the vital $20,000 when the Treasury itself is empty. Within a day, the French and American armies, flush with the funds necessary, make their way to Yorktown and surround the city. Cornwallis is cut off from supply lines and promptly gives up.

Source: The Broker Who Saved America

Elizabeth Warren Opens Broad Attack Against Rent-Seeking Oligopolists Like Amazon, Apple, Google, Walmart, Comcast | naked capitalism

In a market the size of America’s prices should be lower than in other industrialised economies. By and large, they are not. Though American companies now make a fifth of their profits abroad, their naughty secret is that their return-on-equity is 40% higher at home.

Source: Elizabeth Warren Opens Broad Attack Against Rent-Seeking Oligopolists Like Amazon, Apple, Google, Walmart, Comcast | naked capitalism

Must-read: Narayana Kocherlakota: “The World Needs More U.S. Government Debt” – Equitable Growth

The world wants U.S. debt and the U.S. needs infrastructure repair. Seems like a natural match unless you’re a Republican or fellow-traveling Democrat.

Must-Read: Narayana Kocherlakota: The World Needs More U.S. Government Debt: “Are government-imposed restrictions holding back the U.S. economy?… …In a way, yes: The federal government is causing great harm by […]

Source: Must-read: Narayana Kocherlakota: “The World Needs More U.S. Government Debt” – Equitable Growth

Top 50 US Companies Stash a Trillion Dollars Offshore While Benefitting from Trillions in Government Support | Oxfam America

The 50 biggest US companies, including global brands such Pfizer, Goldman Sachs, Dow Chemical, Chevron, Walmart, IBM, and Procter & Gamble, have stashed more than a trillion dollars offshore and used more than 1,600 subsidiaries in tax havens to avoid billions of dollars in tax each year, according to Oxfam America. In a new report released today ahead of Tax Day, Oxfam outlines how corporate tax dodging costs the US an estimated $100 billion each year, a gap that the average American taxpayer would have to shell out an extra $760 to cover…..

…..The report reveals that the same companies are among the largest beneficiaries of US taxpayer funded support, receiving a staggering $11 trillion in federal loans, loan guarantees and bailout assistance from 2008-2014 even as they avoided hundreds of billions of dollars in taxes over the same period.

Oxfam calculated that during this period, these 50 companies collectively received approximately $27 in loan support for every $1 they paid in federal taxes.“…..

The companies, which made nearly $4 trillion in profits globally between 2008 and 2014, paid an average effective tax rate of just 26.5% – well below the statutory tax rate of 35% in the US and well below the tax rate of an average US worker of 31.5%…..

“For every $1 spent on lobbying, the largest 50 companies received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts,”…..

Source: Top 50 US Companies Stash a Trillion Dollars Offshore While Benefitting from Trillions in Government Support | Oxfam America

Why Commercial Real Estate Is Next: ‘Challenging Technicals’ Are About To Become ‘Weak Fundamentals’ | Zero Hedge

There is a growing sense of tighter financial conditions, particularly to the commercial real estate sector. Late last year the regulators issued a joint statement on Prudent Risk Management for Commercial Real Estate Lending and the latest Senior Loan Officer Opinion Survey (SLOOS) shows that banks tightened their lending standards to commercial real estate meaningfully in 4Q15…. The growing sense of gathering clouds in terms of tightening financial conditions to commercial real estate translates into a more challenging road ahead for US commercial real estate.

Source: Why Commercial Real Estate Is Next: ‘Challenging Technicals’ Are About To Become ‘Weak Fundamentals’ | Zero Hedge