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

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

UN General Assembly President defends ‘landmark’ migration compact

No end to Deutsche Bank’s problems: new litigations in the US and frailty in EU stress test

A day in the life of a Rohingya refugee

Better protection against non-cash payment fraud

Preparing for developing countries the ‘Greek cure’

DR Congo Ebola centre attacks could force retreat against the deadly disease, warns UN health chief

Global Talent – Professional Internships

In dreams and in love there are no impossibilities

Junior Enterprises as a solution for Youth Entrepreneurship

Canada has high levels of well-being and solid growth but trade tensions and housing market pose risks while inclusiveness could be improved

Libya: Thousands seek shelter in health clinics from Tripoli fighting, UN warns

Security: better access to data for border control and migration management

MEPs propose more transparent legislative drafting and use of allowances

The relationship between Dengue and the rainfall in Boa Vista, Brazil

Tackle ‘tsunami of hatred’ across the world urges Guterres, to counter anti-Semitism, racism and intolerance

The strong version of the EU banking union gains momentum

‘Shared responsibility’ to stop 420,000 needless deaths from tainted food each year, UN, world leaders warn

Here are 3 lessons Europe can learn from China’s flourishing start-ups

UK: Customs Union with EU or a longer delay of Brexit

Europe’s top court hears Intel and sends € 1.06 bn antitrust fine to review

Scientists have a new suggestion to create more climate-friendly cows

It’s time for global businesses to accept local responsibility

This is how Copenhagen plans to go carbon-neutral by 2025

Canada grants asylum for Saudi teen who fled family: UNHCR

Migration has set EU’s political clock ticking; the stagnating economy cannot help it and Turkey doesn’t cooperate

Joint advocacy letter template to sign and ratify the Treaty on the Prohibition of Nuclear Weapons

With millions of girls ‘at risk’ today of genital mutilation, UN chief calls for zero tolerance

5 surprising ways to reuse coffee grounds

Mergers: Commission fines Canon €28 million for partially implementing its acquisition of Toshiba Medical Systems Corporation before notification and merger control approval

Why saving our forests should be a global priority

Fears for food security and the future of farming families, as Fall Armyworm spreads to Asia

Climate change is destroying a barrier that protects the US from hurricanes

Humanitarian visas would reduce refugees’ death toll

Snowden is the “EU nomination” for this year’s Oscars

4 key ways countries can finance their SDG ambitions

South Sudan: ‘Outraged’ UN experts say ongoing widespread human rights violations may amount to war crimes

The racial wealth gap in the US is affecting its citizens and its economy – this is how

MWC 2016 LIVE: Under Armour learns from “robust community of data”

Restore land to save the planet, boost the economy, says head of UN body combating desertification

Trump and Brexit: After the social whys the political whereto

Food system failures in our age of abundance

UK must make clear what it wants, MEPs say in Brexit debate

‘Stay together and step up’ action to meet Global Goals, ECOSOC President tells development forum

Campaign kicks off with High-level Event on #FairInternships

Generalist practicing: is it worth it?

How to make primary healthcare a favourable career choice for medical students: Strategies and reflections

Worldwide UN family celebrates enduring universal values of human rights

Tuesday’s Daily Brief: sexual violence in conflict, a malaria vaccine trial, updates on Libya, Ebola in DR Congo, Sri Lanka and Mali

Finland must focus on integrating migrant women and their children to boost their contribution to the economy and society

Why did Cameron gain absolute majority? What will he do now? Will he vote ‘yes’ in Britain’s in – out EU referendum?

ITU Telecom World 2017: exploring smart digital transformation

How Finland is fighting fake news – in the classroom

Peace dividend palpable in South Sudan, but ‘grassroots’ are moving faster than elites, says Shearer

E-Governance: A powerful tool to combat, mitigate and sustainably manage disaster risks

“One Belt One Road”: Its relevance to the European Companies

Khashoggi trial in Saudi Arabia falls short of independent, international probe needed: UN rights chief

The future of crypto-assets, from opportunities to policy implications

ECB’s unconventional monetary measures give first tangible results

Inspiring young doctors: the beginning of the change

Davos: Why the global elites couldn’t find answers this year?

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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s