Tag Archives: Too Big To Succeed

How the US spends 26% of available tax revenue just to pay interest

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“In the Land of the Free, the government routinely doesn’t count interest payments that they make to the Social Security Trust Fund.  Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion, roughly 17% of total tax revenue.  Here’s the thing, though– it’s inappropriate to look at total tax revenue when we’re talking about making interest payments.  The IRS collected $2.49 trillion in taxes last year (net of refunds). But of this amount, $891 billion was from payroll tax.  According to FICA and the Social Security Act of 1935, however, this amount is tied directly to funding Social Security and Medicare. It is not to be used for interest payments.”

http://www.sovereignman.com/finance/us-now-spending-26-of-available-tax-revenue-just-to-pay-interest-14024/

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Bill Bonner: The Massive Problem Threatening the Global Recovery

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Bill-Bonner2

“Debt is an obligation laid upon the future by the past. The larger it gets, the harder it is for the future to happen.  There is a correlation between extreme levels of public debt and low economic growth. High levels of debt-to-GDP have been historically associated with low levels of economic growth.  That is what has been happening in Japan for the last 23 years… and in Europe and the US for the last seven. These economies are still fighting deleveraging, resisting debt deflation and pretending that they can continue to add debt forever… and that somehow this will get them out of their debt traps.  But they are doomed. Without growth they can’t pay the debt. With so much debt, they can’t grow.”

http://www.bonnerandpartners.com/the-massive-problem-threatening-the-global-recovery/

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Global Debt Exceeds $100 Trillion as Governments Binge, BIS Says

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“The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.  The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period.  Borrowing has soared as central banks suppress benchmark interest rates to spur growth. Yields on all types of bonds average about 2 percent, down from more than 4.8 percent in 2007.”

http://www.bloomberg.com/news/2014-03-09/global-debt-exceeds-100-trillion-as-governments-binge-bis-says.html

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Citigroup Victim Of $400 Million Mexican Fraud

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“Not for the first time, Citigroup has stepped into a mess. The problem is that the lender has been cheated out of the cash in one of the most basic businesses in banking. That should worry Citigroup’s rivals, too.  Citigroup’s latest slip emerges from the usually sleepy world of accounts receivable. This is the unit that makes short-term loans while clients wait for money owed to them by other companies to arrive. In this case, by the end of 2013, Citigroup thought it had lent Oceanografia, a Mexican oil-services firm, $585 million to cover any shortfalls while it waited for the state oil company Pemex to pay some bills.  Citigroup has now worked out that only $185 million of the invoices were valid.”

http://dealbook.nytimes.com/2014/02/28/a-maelstrom-of-fraud-without-early-warning/?_php=true&_type=blogs&_r=0

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Mt. Gox Bitcoin Exchange Files for Bankruptcy, Claims $63.6m Debt

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“Mt. Gox is officially filing for bankruptcy protection with an outstanding debt of ¥6.5bn ($63.6m), finally admitting openly that 750,000 of its bitcoins and 100,000 of the company’s own have been lost.  The exchange’s lawyer announced the news during a conference at the Tokyo District Court. CEO Mark Karpeles, wearing a suit and tie, bowed deeply in the tradition of disgraced Japanese business leaders fronting the media.  Assets include $5m ‘held by CoinLab‘ and another $5.5m ‘held by the DHS‘. The Department of Homeland Security seized that amount from Mt. Gox’s US accounts in mid 2013, claiming it had not registered properly as a money transmission business.”

http://www.coindesk.com/mt-gox-files-bankruptcy-claims-63-6m-debt/

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RBS has lost all the £46bn pumped in by the taxpayer

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“Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago when the lender came close to collapse.  The bank has confirmed its total losses since its bailout have now drawn level with the £46bn pumped into it in 2008 in return for an 81pc stake.  RBS made a loss last year of £8.2bn, its sixth consecutive annual loss, taking its cumulative losses to £46bn.  The scale of the losses means that all the capital provided by the taxpayer has now been used up dealing with the toxic legacy assets on the bank’s balance sheet.  Despite, the loss RBS said it had put aside £576m to pay staff bonuses for 2013.”

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10664372/RBS-has-lost-all-the-46bn-pumped-in-by-the-taxpayer.html

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Hackers steal Western Michigan University professor’s paycheck

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“A hacker had gotten into Cool’s WMU account and changed the routing number for his payments, he said, sending $1,518.62 to a bank in Utah. The crime was traced to a computer in New Mexico, Cool said he was told by detectives at the Western Michigan University Department of Public Safety. There was $11.08 left in the Utah account, which is all Cool has gotten back of his paycheck.  On Dec. 20, WMU issued him a paycheck advance, Cool said, which he is paying back in four installments. However, he said he believes the university should reimburse him for his loss, since it was its system that was hacked.”

http://www.mlive.com/news/kalamazoo/index.ssf/2014/02/hackers_stole_western_michigan.html

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Is your money safe at the bank? Economist says ‘no’, withdraws $1m

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“Last week I had over $1,000,000 in a checking account at Bank of America. Next week, I will have $10,000.  Why am I getting in line to take my money out of Bank of America? Because of Ben Bernanke and Janet Yellen, who officially begins her term as chairwoman on Feb. 1.  Let me explain: Currently, I receive zero dollars in interest on my $1,000,000. The reason I had the money in Bank of America was to keep it safe. However, the potential cost to keeping my money in Bank of America is that the bank may be unwilling or unable to return my money.”

http://www.pbs.org/newshour/making-sense/is-your-money-safe-at-the-bank-an-economist-says-no-and-withdraws-his/

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Third prominent banker found dead in six days

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“Bloomberg is reporting this morning that former Federal Reserve economist Mike Dueker was found dead in an apparent suicide near Tacoma, Washington.  Dueker, 50, a chief economist at Russell Investments, had been missing since Jan. 29 and was reportedly having troubles at work.  On Sunday, William Broeksmit, 58, former senior manager for Deutsche Bank, was found hanging in his home, also an apparent suicide. On Tuesday, Gabriel Magee, 39, vice president at JPMorgan Chase & Co’s London headquarters, apparently jumped to his death from a building in the Canary Wharf area.”

http://www.housingwire.com/articles/28796-third-prominent-banker-found-dead-in-six-days

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Bundesbank Floats Wealth Levy Idea for Future Crises

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“Germany’s central bank Monday proposed a one-time wealth tax as an option for euro-zone countries facing bankruptcy, reviving a idea that has circled for years in Europe but has so far gained little traction.  ‘The question arises whether in extraordinary national emergencies in addition to privatization and conventional consolidation efforts, private wealth can also contribute to avert a government insolvency,’ the Deutsche Bundesbank said.  The idea of a one-time tax on private wealth isn’t new. Italy has flirted with the idea of a wealth tax over the past three years.  The IMF in October also floated the idea of a one-time ‘capital levy,’ amid a sharp deterioration of public finances in many countries.”

http://online.wsj.com/news/articles/SB10001424052702304007504579346330639793674

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