WEF Davos 2016 LIVE: Banking moguls continue brandishing financial Armageddon to intimidate us all but in Davos they worry about the very distant future

Davos Switzerland, 19/1/2016 - Leonardo DiCaprio (L), Actor and United Nations Messenger of Peace for Climate and Founder, Leonardo DiCaprio Foundation - LDF, USA, (next to him on the right) Hilde Schwab (C), Chairperson and Co-Founder, Schwab Foundation for Social Entrepreneurship, ( together with her husband Klaus Schwab they founded WEF) and Joseph R. Biden Jr, Vice-President of the United States of America applaud during the Opening of the Annual Meeting 2016 of WEF. WEF swiss -image.ch/Photo Monika Flueckiger.

Davos Switzerland, 19/1/2016 – Leonardo DiCaprio (L), Actor and United Nations Messenger of Peace for Climate and Founder, Leonardo DiCaprio Foundation – LDF, USA, (next to him on the right) Hilde Schwab (C), Chairperson and Co-Founder, Schwab Foundation for Social Entrepreneurship, (together with her husband Klaus Schwab they founded WEF) and Joseph R. Biden Jr, Vice-President of the United States applaud during the Opening of the Annual Meeting 2016 of WEF. WEF swiss -image.ch/Photo Monika Flueckiger.

On Thursday 7n January this newspaper commented that behind the capital markets selloff, which shook the financial world in the first week of this year, were the financial moguls who want to impose their terms to central banks and mainly the American Fed. Since then stock markets keep losing a lot of grounds every day. Yesterday this tendency took frightening dimensions. The S&P index reached its two years low.

In Europe it was even been worse with the London, Paris and Frankfurt stock markets losing between 3% and 4%. Oil prices fell by 6% reaching $26.2 a barrel. Even worse, it seems that there is a widespread perception, probably officiously nurtured, that this will continue. And as if the time has stopped in Davos on the Swiss Alps and what is happening in the rest of the world right now doesn’t reach the perennial Alpen valley, academics and super rich people keep wondering about what will our daily life look like after fifty years and what the ‘fourth industrial revolution’ will do to employment in the distant future? In the spirit of John Maynard Keynes, a good answer to such worries could be that, in the long term we will all be dead. Let’s return to today’s realities.

What the moguls want has recently been aired with ‘penetrating’ analysis published in main stream media, authored by market pundits. Their motto is that the Fed, for one thing should not start cutting down the $4.5 trillion it has injected into the US major banks for free. And secondly, the Fed shouldn’t raise further, the almost zero interest rate it just started charging for its trillions or better it has to return to the flat zero interest rate practice, it followed during the last five years.

The American super banks

In short, the major American banks are telling us that we should continue generously subcidising their profitability with our dollars. The method is very simple. The Fed gives to banks trillions at zero interest rate and they lend it to foreign governments and other big borrowers for an average interest rate of 8%, thus making a net profit of $360 billion a year. Given that they have been doing this for five years now, they have usurped €1,800bn mainly from the Americans, who sweat five days a week for their living.

The banks have also been ‘investing’ the money they get for free from the Fed at every grey or dark market, making even larger but riskier profits. Of course they don’t care about risks, because if their bets turn sour, they will be saved again with Fed’s money. As everybody knows ‘they are too big to fail’.

In Europe too

The European banks are developing their strategy around the same lines. Currently they are promised by the European Central Bank to get €1.41 trillion more, during the next twelve months for an interest rate too close to zero. Everybody else, that is consumers or small businesses have to pay dear interest rates for a loan. For comparison reasons, consider that consumers pay on the average for their loans anything between 20% and 30% for the same money the banks have received for free.

Coming back to yesterday’s selloff in all markets from Tokyo to London and from Shanghai to Frankfurt, some people may think that this was a genuine fall of values and the banks had nothing to do with it. Add to that the unbelievable fall of the price of oil and one may arrive at the conclusion that the banks are innocent and they just have to take percussions and get more money from the monetary authorities, in order to save capitalism and us all from a new Armageddon.

Driving the markets down

If you dig a bit deeper however in what happened in the markets yesterday, you will find out that it all started with the selloff of the oil giants Exxon and Chevron stocks, which fell 4.6% and 6.3% respectively. Interrelated with that was the fall of the WTI crude oil price by 5.96% in the NYMEX market. Then every other value in the capital and the commodities markets followed suit in the abyss. It was a clear cut short selling of everything.

One may comment that this was to be expected because the world economy is lowering gear. But a reduction of the global economy growth rate from 4% last year to 3.4% in 2016 can hardly a cause for the capital and commodities markets to lose trillions and the real economy to be threatened with destruction. No economic theory can support that, with the exception of the market pundits, who theorize that the ‘investors’ are currently over reacting. It’s not the investors who do that. On the contrary most investors, especially, those with long term perspectives, would never push the market to a new crisis.

Is it a trap?

In any case the present down tendency, or rather the strategy of bankers will continue for as long as the Fed will be contemplating another increase in its interest rate. All in all, this may not be a gigantic set up by a handful of money sharks. It’s more probably a natural reaction of those who are accustomed to usurping the real economy. From times immemorial, bankers were considered to use deception in order to create value out of nothing, just by creating new money. That’s why even the pioneer and philosopher of free-market economics, Adam Smith advised that the money market and the banker trade should be closely monitored, controlled and strictly regulated unlike any other trade.

Unfortunately during the past twenty years bankers managed to free themselves from traditional tight controls and regulations and now they have imposed their will on the economy and consequently on the society. Rolland Reagan and Margaret Thatcher started deregulating the banking industry and Bill Clinton and Tony Blair finished the job.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Will the three major parties retain control of the new EU Parliament?

Why will Paris upcoming “loose” climate change agreement work better than the previous ones?

IMF’s Lagarde to Peoples of the world: You have to work more for the banks!

LEAGUE OF YOUNG VOTERS LAUNCHES TOOL FOR YOUNG PEOPLE TO COMPARE POLITICAL PARTIES AHEAD OF EU ELECTIONS

EU labour mobility: Inconvenient truths for everybody

Eurozone retail sales fall shows recession

Industrial price dive may lead to point of no return

US, Russia oblige each other in Syria and Ukraine selling off allies

Medical students: The need for emigration

The challenges of mental health: an inconvenient reality

A Sting Exclusive: “Digital and mobile technologies are helping to achieve an economic success in Spain”, the Spanish Secretary of State for Telecommunications and Information Society Víctor Calvo-Sotelo reveals to the Sting at Mobile World Congress 2015

Cameron readies to support ‘yes’ for Britain in the EU

Ship Recycling is the Commission’s Titanic

EU to fail 2050 Green targets due to lack of European citizens’ engagement

Refugee crisis update: Commission is struggling alone with little help from EU or G7 leaders

Italy’s rescue operation Mare Nostrum shuts down with no real replacement. EU’s Triton instead might put lives at risk

‘Habitual residence’ rules deprive EU workers from social benefits

‘Free state aid’ for imprudent banks

Europe to turn the Hamburg G20 Summit into a battlefield

EU and India re-open talks over strategic partnership while prepare for a Free Trade Agreement

Will Eurozone be able to repay its debts? Is a bubble forming there?

Will Europe be a different place this Monday?

EU revengefully shows no mercy to Cameron by demanding a fast and sloppy Brexit now

“For my children Italy will be an innovation lab and not a museum”; the Sting reports live from World Economic Forum 2015 in Davos

The world to teach Germans to…un-German

Scotland “shows the way” to separatist movements as Catalonia calls a vote on independence

Draghi hands over to banks €77.7 billion more

The EU Diplomacy in North Korea promotes peace or war?

Why the ECB prepares to flood the markets with more and free of charge euro; everybody needs that now

Germany and Europe prepare for Trump’s America

China in my eyes

What will the US look like under Trump? Was his election campaign a big scam?

Eurozone economy desperately needs internally driven growth

EU makes key TTIP document public as protests get louder

China, forever new adventures

Russia won’t let Ukraine drift westwards in one piece

Trade deals’ pure realism: it may take 10 years for a post-Brexit agreement

A Sting Exclusive: “There can be no global deal on emissions without China and the USA”, Conservative MEP Ian Duncan stresses from Brussels

Huawei answers allegations about its selling prices

Launch of Pact for Youth: European Youth Forum calls for real business engagement

Real EU unemployment rate at 10.2%+4.1%+4.7%: Eurostat Update

Eurozone business activity again on upwards path

Climate change and its adverse impacts on health

ECB should offer more and cheaper liquidity if Eurozone is to avoid recession

October’s EU strong digital mix: From Safe Harbour to Net Neutrality, Roaming and Snowden

Drawing scenarios for drifting Britain; elections or May’s deadlock?

Nitrate pollution of water sources: new impulses for EU Water Policy?

ECB: A revolutionary idea to revitalize the European economy with cheap loans to SMEs

Spanish vote – bad luck for Greece: Does Iphigenia need to be sacrificed for favourable winds to blow in Eurozone?

Foreign direct investments the success secrete of Eurozone

MWC 2016 LIVE: Stripe gives payments leg-up to startups in emerging markets

US – Russia bargain on Syria, Ukraine but EU kept out

The importance of exchanges for the medical students of the world

The ECB will do whatever it takes to set the Eurozone economy again in motion

Commission: Raising the social issues that can make or break the monetary union

Human rights in Brussels and in Beijing: a more balanced approach needed

Mental health of health professionals: the alter ego

Young people are Europe’s biggest value and hope

EU plans to exploit the Mediterranean Sea and the wealth beneath it

ILO: Unemployment to increase by 8.1 million in 2013-2014

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s