Mind Over Market

Market observers have been quick to agree that Europe can not print its way out of its crisis, in spite of the $1 trillion emergency rescue package announced Monday. The best quote expressing this view comes Jim Rickards, senior managing director for market intelligence at Omnis, Inc., a scientific consulting firm in McLean, Virginia, from his appearance on CNBC. Rickards quote, from the CNBC video above from Monday, May 10 during early morning show Squawk on the Street at 7:23 AM, is as follows: "Look at what Soros did to the Bank of England in 1992. He went after them, they had a finite amount of dollars. He was selling sterling and taking the dollars, and they were buying the sterling and selling the dollars to defend the peg," Ricards said. "All he had to do was sell more than they had and he wins. But he needed real money to do that. You either had to have cash, which he did, or bank lines of credit." "Today, you can break a country. You don't need mon...

In the financial regulatory overhaul bill that passed the House December 11, insufficient regulation of over-the-counter (OTC) derivatives 'renders impotent' the enhanced resolution powers aimed at making sure large financial institutions are not too big to fail, according to economist Robert Johnson. By Robert Stowe England MindOverMarket.blogspot.com December 13, 2009 The Wall Street Reform and Consumer Financial Protection Act that passed the House of Representatives December 11 on a 232-202 party-line vote fails to attain its intended objective to rid the regulatory regime of the moral hazard of too-big-to-fail. Thus, the bill, known in Capitol Hill short-hand as H.R. 4173, does not protect the tax payer from future financial crises when regulators will once again be compelled to bail out major financial institutions that fail, economist Robert Johnson has told Mind Over Market . The complete text of the interview with Johnson, who is the Director of Financial Reform at the...

The director of the independent and nonpartisan Committee on Capital Markets Regulation, Hal S. Scott of Harvard University, says that the Obama Administration’s proposal on the resolution of systemically-important financial institutions, if adopted, would lead to the creation of ‘a zombie financial system’ where financial institutions can neither die nor restructure sufficiently to be viable and where the burden of sustaining them falls on the taxpayer. The Committee recommends instead that financial institutions determined by Treasury to be systemically important should be resolved by the Federal Deposit Insurance Act and not under either bankruptcy law or the open bank assistance provided under a too-big-to-fail policy (or under a too-systemically-important-to-fail policy). Derivatives contracts could be sold rather than liquidated to limit systemic issues. Scott made his comments at a forum sponsored by the American Enterprise Institute where a panel of experts commented on his pre...

Watch CBS Videos Online Here is the text of the CBS News' 60 Minutes segment "Financial WMDs" that was broadcast August 30, 2009 The Bet That Blew Up Wall Street Steve Kroft On Credit Default Swaps And Their Central Role In The Unfolding Economic Crisis Note: This story was first published on Oct. 26, 2008. It was updated on Aug. 27, 2009. Anyone with more than a casual interest in why their 401(k) has tanked over the past year knows that it's because of the global credit crisis. It was triggered by the collapse of the housing market in the United States and magnified worldwide by the sale of complicated investments that Warren Buffett once labeled financial weapons of mass destruction. They are called credit derivatives or credit default swaps. As correspondent Steve Kroft first reported last fall, they are essentially side bets on the performance of the U.S. mortgage markets and some of the biggest financial institutions in the world - a form of legalized gambling ...