“Quantitative easing” was supposed to be an emergency measure. The Federal Reserve “eased” shrinkage in the money supply due to the 2008-09 credit crisis by pumping out trillions of dollars in new bank reserves. After the crisis, the presumption was that the Fed would “normalize” conditions by sopping up the excess reserves through “quantitative tightening” (QT) – raising interest rates and selling the securities it had bought with new reserves back into the market. The Fed relentlessly pushed on with quantitative tightening through 2018, despite a severe market correction in the fall.
In his brilliant book about the history of Latin America – “Las Venas Abiertas de América Latina”, (The Open Veins of South America) originally published in 1971 – Eduardo Galeano (1940-2015) starts by writing that the international division of work consists of defining that some countries specialise in winning and others in losing. Galeano describes a history of the region that is made by its own People, a history that does not depend on the greatness and the richness of the Country. A system where development deepened inequalities and popular sovereignty had to be bonded because There Is No Alternative. “It’s a problem of mindsets”, would declare the canny eurocrat after reading Galeano’s introduction.
This past weekend, September 15-16, marked the 10th anniversary of the Lehman Brothers Investment bank collapse and the subsequent generalized financial system crash that followed. Business and mainstream media flooded the airwaves and print publications with recounts and assessments of the events of ten years past. Most promoted the theme about how the Federal Reserve central bank and the US Treasury rescued us all from another 1930s-like depression. The corollary message is that ‘IT’ can’t happen today because of the various reforms instituted in the wake of the crash that now prevent the repeat of something similar like 2008. Buried in the reviews of 2008 events is the sticky question of whether the investment bank, Lehman Brothers, should have been allowed to fail—as the US Treasury Secretary, Hank Paulson, and the chair of the Federal Reserve, Ben Bernanke, decided to allow.
The current generation is the first one in history that will have a lower standard of living than its predecessors and a shorter life expectancy. In the aftermath of the 2008 financial crash, where there are more people in part-time jobs with lower wages, fewer benefits and massive debt, people are forced to find ways to make a living. In his new book, "Everything for Everyone: The Radical Traditions that are Shaping the New Economy," Nathan Schneider explains how his generation is incorporating old traditions, such as worker ownership, with new technology...
William Cohen—a former senior-level mergers and acquisitions banker on Wall Street who is now a special correspondent for Vanity Fair—on Sunday spoke about the ten-year anniversary of the 2008 financial crisis, warning the practices that prompted the economic collapse have not substantially changed in the past decade. In an interview with CNN’s Ana Cabrera, Cohen warned the United States has not made the necessary changes to prevent another devastating recession. “I wish I could say that we had, but we haven’t,” Cohen said. “The main driver of bad behavior on Wall Street is the compensation system, what people get rewarded to do. People are pretty simple—they do what they are rewarded to do. Wall Street is still rewarded to take big risks with other people's money. They are not rewarded to take prudent risks.
By Conor Humphries and Mark Heinrich for Reuters. Three senior Irish bankers were jailed on Friday for up to three-and-a-half years for conspiring to defraud investors in the most prominent prosecution arising from the 2008 banking crisis that crippled the country's economy. The trio will be among the first senior bankers globally to be jailed for their role in the collapse of a bank during the crisis. The lack of convictions until now has angered Irish taxpayers, who had to stump up 64 billion euros - almost 40 percent of annual economic output - after a property collapse forced the biggest state bank rescue in the euro zone. The crash thrust Ireland into a three-year sovereign bailout in 2010 and the finance ministry said last month that it could take another 15 years to recover the funds pumped into the banks still operating.