167-ARE WE NOW IN THE END TIMES? | View Thread

MONDAY 02 JULY 2012

The Barclays Libor scandal may have shocked the British public, but Joseph Stiglitz saw it coming decades ago. And he's convinced that jailing bankers is the best way to curb market abuses. A towering genius of economics, Stiglitz wrote a series of papers in the 1970s and 1980s explaining how when some individuals have access to privileged knowledge that others don't, free markets yield bad outcomes for wider society. That insight (known as the theory of "asymmetric information") won Stiglitz the Nobel Prize for economics in 2001.

And he has leveraged those credentials relentlessly ever since to batter at the walls of "free market fundamentalism".

It is a crusade that has taken Stiglitz from Massachusetts Institute of Technology, to the Clinton White House, to the World Bank, to the Occupy Wall Street camp and now, to London, to promote his new book The Price of Inequality.

And kind fortune has engineered it so that Stiglitz's UK trip has coincided with a perfect example of the repellent consequences of asymmetric information.

When traders working for Barclays rigged the Libor interest rate and flogged toxic financial derivatives – using their privileged position in the financial system to make profits at the expense of their customers – they were unwittingly proving Stiglitz right.

"It's a textbook illustration," Stiglitz said. "Where there are these asymmetries a lot of these activities are directed at rent seeking [appropriating resources from someone else rather than creating new wealth]. That was one of my original points. It wasn't about productivity, it was taking advantage."

Yet Stiglitz's interest in the abuses of banks extends beyond the academic. He argues that breaking the economic and political power that has been amassed by the financial sector in recent decades, especially in the US and the UK, is essential if we are to build a more just and prosperous society. The first step, he says, is sending some bankers to jail. " That ought to change. That means legislation. Banks and others have engaged in rent seeking, creating inequality, ripping off other people, and none of them have gone to jail."

Next, politicians need to stop spending so much time listening to the financial lobby, which, according to Stiglitz, demonstrates its spectacular economic ignorance whenever it claims that curbs on banks' activities will damage the broader economy.

This talk of economic ignorance brings us to the eurozone crisis and the extreme austerity policies being pursued. Stiglitz is depressed. In 2000 he resigned from the World Bank and launched an excoriating attack on the way it and its sister institution, the International Monetary Fund, handled the Asian financial crisis of the late 1990s. He condemned the IMF for imposing brutal and inappropriate adjustment policies on bailed out nations – medicine which, he argued, merely pushed nations further into crisis. "For me there's some nostalgia here," he says.

Does he see any hope for the eurozone, I ask, or is it now heading, inevitably, for a breakup? "It is a train that can still be stopped" he says. "But the relevant question is the politics in Germany. Have they created in their rhetoric a dynamic that makes it difficult to stop? In particular [German Chancellor] Angela Merkel's rhetoric that the crisis was caused by profligacy. She's framed the issue as profligacy, rather than framing it as 'the European system is fundamentally flawed' ".

The central argument of his latest oeuvre is that the huge inequalities of income and wealth that have developed in the US and elsewhere in the West over recent decades are not only unjust in themselves but are retarding growth.

"Every economy needs lots of public investments – roads, technology, education," he says. "In a democracy you're going to get more of those investments if you have more equity. Because as societies get divided, the rich worry that you will use the power of the state to redistribute. They therefore want to restrict the power of the state so you wind up with weaker states, weaker public investments and weaker growth."

It's an elegantly simple proposition. And one that logically points to a radical manifesto of redistribution and higher taxation in the name of the general public good. Time will tell whether this comes to be regarded as another manifestation of towering economic genius. But, for now, crusading Stiglitz has one more weapon in his hands with which to batter down those walls of folly.

Joseph Stiglitz: A life in brief

Born: Gary, Indiana in 1943

Educated: Amherst college, in New England. Later, Massachusetts Institute of Technology

Career: Nobel Prize-winning economist and former member of President Clinton's administration during his time in the White House and, latterly, an adviser to President Obama. He is currently a professor at Columbia University

Family: Married to Anya Schiffrin, a professor at Columbia

FYI: Stiglitz' home town also produced Paul Samuelson, the first American winner of the Nobel Prize for economics

Stiglitz wrote of Samuelson: "Paul allegedly once wrote a letter of recommendation for me which summarised my accomplishments by saying that I was the best economist from Gary, Indiana."

Luis Miguel 1162 61587 Lima	RE: ARE WE NOW IN THE END TIMES? 7/16/2012 11:11:49 AM
	Floods in Japan kill 26, thousands remain cut off Associated Press – 6 hrs ago A road, left, is buried in a landslide in Yame, Fukuoka Prefecture, Japan, Sunday, July 15, 2012. Heavy rain triggered flash floods and mudslides in southern Japan this week, killing over two dozens of people. (AP Photo/Kyodo News) JAPAN OUT, MANDATORY CREDIT, NO LICENSING IN JAPAN, CHINA, HONG KONG, SOUTH KOREA AND FRANCE TOKYO (AP) — Thousands of people in southern Japan remained cut off Sunday by floods and mudslides triggered by torrential rains that have killed at least 26 people, local authorities said. Evacuation orders issued a day earlier for a quarter of a million people were lifted in most areas Sunday as the rains subsided, allowing many people to return home. But thousands remained cut off by landslides or fallen trees that blocked roads in mountainous areas. More than 3,000 people were left stranded in Yame, in Fukuoka Prefecture in southwestern Japan, where roads were cut off to seven districts, the Kyodo news agency reported, citing local authorities. The Japanese military airlifted food by helicopters to stranded districts. Local officials raised the death toll from the torrential rains in the northern parts of the Kyushu region to 26 and six people remain missing in Kumamoto, Oita and Fukuoka prefectures, Kyodo reported. Most of the victims were in their 70s and 80s. In Yame, a 70-year-old man died after being caught in a landslide, while another man died in Yanagawa, also in Fukuoka, after being retrieved from a car at an irrigation channel floodgate, according to local authorities, Kyodo reported. In Kyoto Prefecture, in western Japan, heavy rainfall of up to 3.5 inches (90 millimeters) per hour flooded around 100 houses each in Kameoka and Kyoto, Japan's old capital, Kyodo reported. The Japan Meteorological Agency said that the worst was over, but predicted more rain and thunderstorms in some areas through Monday.
	"Choose a job you love and you will not have to work a day in your life" (Confucius)
	+0

Luis Miguel 1162 61587 Lima	RE: ARE WE NOW IN THE END TIMES? 7/16/2012 11:24:11 PM
	Is Petrol Price Rigged, Too? 2012 JULY 16 Posted by Andrew Eardley Is Petrol Price Rigged, Too? Andrew: Following on from the City of London’s ever-spreading banking LIBOR manipulation scandal, the UK Daily Telegraph is today suggesting that oil prices may have been similarly manipulated. Was the Petrol Price Rigged, Too? By Rowena Mason, Emma Rowley, The Telegraph – July 16, 2012 http://tinyurl.com/d9pufv6 Motorists may have been paying too much for their petrol because banks and other traders are likely to have tried to manipulate oil prices in the same way they rigged interest rates, an official report has warned. Concerns are growing about the reliability of oil prices, after a report for the G20 found the market is wide open to “manipulation or distortion”. Traders from banks, oil companies or hedge funds have an “incentive” to distort the market and are likely to try to report false prices, it said. Politicians and fuel campaigners last night urged the Government to expand its inquiry into the Libor scandal to see whether oil prices have also been falsely pushed up. They warned any efforts to rig the oil price would affect how much drivers pay at the pump, which soared to a record high of 137p per litre of unleaded earlier this year. Robert Halfon, who led a group of 100 MPs calling for lower fuel prices, said the matter “needs to be looked at by the Bank of England urgently”. “We need to know whether the oil price has been manipulated in a similar way to Libor,” the MP for Harlow said. “This impacts on millions of people all round the country concerned about the price of petrol at the pumps.” Petrol retailers use oil price “benchmarks” to decide how much to pay for future supplies. The rate is calculated by data companies based on submissions from firms which trade oil on a daily basis – such as banks, hedge funds and energy companies. However, like Libor – the interest rate measure that Barclays was earlier this month found to have rigged – the market is unregulated and relies on the honesty of the firms to submit accurate data about all their trades. This is one of the major concerns raised in the G20 report, published last month by the International Organisation of Securities Commissions (IOSCO). In the study for global finance ministers, including George Osborne, the regulator warns that traders have opportunities to influence oil prices for their own profit. It points out that the whole market is “voluntary”, meaning banks and energy companies can choose which trades to make public. IOSCO says this “creates opportunity for a trader to submit a partial picture in order to influence the [price] to the trader’s advantage”. In an earlier report, the regulator concluded: “It is open to companies to report only those deals that are in their own best interests for the rest of the market to see.” The price reporting agencies, Platts and Argus, argue they employ journalists to weed out false data submitted by oil traders. IOSCO says reporters are “well-aware that traders have an incentive to push the market one way or another and do not generally believe everything they are told”. However it points out this system is heavily reliant on the “experience and training” of journalists to make a judgement about what the oil price should be. Further alarm bells are being sounded by US regulators, who have already pointed out the rate-rigging scandal could spread to the oil market. Scott O’Malia, a top official at the US Commodities Futures Commission, has drawn attention to the “striking similarity” between the potential for manipulating oil and Libor. British regulators carrying out the Wheatley Review into the Libor scandal have this week signalled they will look into whether other markets were skewed. Paul Tucker, the Bank of England’s deputy governor, told MPs that Barclays’ abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information. Politicians last night called on the Bank of England and the Government to take heed of IOSCO’S finding about the oil market to prevent another crisis of confidence in the banks. Lord Oakeshott, the former Liberal Democrat Treasury spokesman, said the oil price system ought to be examined in the wake of the Libor scandal. “Clearly it’s right we must shine a light on how other crucial benchmark prices are reported, especially when they affect the cost of living for millions of motorists,” he said. Brian Madderson, chairman of the Petrol Retailers’ Association, also called for an investigation into the “alarming” conclusions of the G20 report. “All the petrol retailers buy their products based on Platts prices,” he said. “If IOSCO thinks the price is open to manipulation it could well be and that would affect prices on the forecourts.” Banks are also calling for reform of the oil price system, amid fears that it is open to abuse by a minority of traders. Simon Lewis, chief executive of the Global Financial Markets Association, has raised concerns about the “opaque” way the oil price is worked out. In a letter to IOSCO, he said price reporting agencies may not be as impartial as they claim, because they take fees from banks and oil companies to provide information. “Incentives may arise to favour those who pay greater subscriber fees or provide greater access to market information,” he said. Some experts, such as Raymond Learsy, a former commodities trader and author of Oil and Finance, have been warning for years that the oil market is open to corruption. “Given how important Libor is, if that can be manipulated, then why can’t oil be manipulated?” he said. “The price lends itself to manipulation. The oil price is not a true reflection of supply and demand.” The reporting agencies have hit back at claims their prices are open to distortion. In a joint statement, Platts and Argus said there are “fundamental differences” in the way Libor and oil prices are reported. “Independent price reporting organisations are independent of and have no vested interest in the oil and energy markets,” they said. “Their ownership is transparent, and strict internal governance separates editorial and commercial functions. Independent price reporting organisations are not market participants, nor providers of transaction execution, clearing or settlement services.” Platts added that there are four main differences between oil prices and Libor – the quality of its data, its independence, competition between reporting agencies and the transparency of its methodology.
	"Choose a job you love and you will not have to work a day in your life" (Confucius)
	+0

Luis Miguel 1162 61587 Lima	RE: ARE WE NOW IN THE END TIMES? 7/17/2012 5:19:01 PM
	This article is two weeks old, but it shows banking corruption could have been prevented if only this Nobel Prize's decades-old warnings had been listened to. Joseph Stiglitz: Man who ran World Bank calls for bankers to face the music Joseph Stiglitz tells Ben Chu that rogue financiers have proven that regulation must get tougher MONDAY 02 JULY 2012 The Barclays Libor scandal may have shocked the British public, but Joseph Stiglitz saw it coming decades ago. And he's convinced that jailing bankers is the best way to curb market abuses. A towering genius of economics, Stiglitz wrote a series of papers in the 1970s and 1980s explaining how when some individuals have access to privileged knowledge that others don't, free markets yield bad outcomes for wider society. That insight (known as the theory of "asymmetric information") won Stiglitz the Nobel Prize for economics in 2001. And he has leveraged those credentials relentlessly ever since to batter at the walls of "free market fundamentalism". It is a crusade that has taken Stiglitz from Massachusetts Institute of Technology, to the Clinton White House, to the World Bank, to the Occupy Wall Street camp and now, to London, to promote his new book The Price of Inequality. And kind fortune has engineered it so that Stiglitz's UK trip has coincided with a perfect example of the repellent consequences of asymmetric information. When traders working for Barclays rigged the Libor interest rate and flogged toxic financial derivatives – using their privileged position in the financial system to make profits at the expense of their customers – they were unwittingly proving Stiglitz right. "It's a textbook illustration," Stiglitz said. "Where there are these asymmetries a lot of these activities are directed at rent seeking [appropriating resources from someone else rather than creating new wealth]. That was one of my original points. It wasn't about productivity, it was taking advantage." Yet Stiglitz's interest in the abuses of banks extends beyond the academic. He argues that breaking the economic and political power that has been amassed by the financial sector in recent decades, especially in the US and the UK, is essential if we are to build a more just and prosperous society. The first step, he says, is sending some bankers to jail. " That ought to change. That means legislation. Banks and others have engaged in rent seeking, creating inequality, ripping off other people, and none of them have gone to jail." Next, politicians need to stop spending so much time listening to the financial lobby, which, according to Stiglitz, demonstrates its spectacular economic ignorance whenever it claims that curbs on banks' activities will damage the broader economy. This talk of economic ignorance brings us to the eurozone crisis and the extreme austerity policies being pursued. Stiglitz is depressed. In 2000 he resigned from the World Bank and launched an excoriating attack on the way it and its sister institution, the International Monetary Fund, handled the Asian financial crisis of the late 1990s. He condemned the IMF for imposing brutal and inappropriate adjustment policies on bailed out nations – medicine which, he argued, merely pushed nations further into crisis. "For me there's some nostalgia here," he says. Does he see any hope for the eurozone, I ask, or is it now heading, inevitably, for a breakup? "It is a train that can still be stopped" he says. "But the relevant question is the politics in Germany. Have they created in their rhetoric a dynamic that makes it difficult to stop? In particular [German Chancellor] Angela Merkel's rhetoric that the crisis was caused by profligacy. She's framed the issue as profligacy, rather than framing it as 'the European system is fundamentally flawed' ". The central argument of his latest oeuvre is that the huge inequalities of income and wealth that have developed in the US and elsewhere in the West over recent decades are not only unjust in themselves but are retarding growth. "Every economy needs lots of public investments – roads, technology, education," he says. "In a democracy you're going to get more of those investments if you have more equity. Because as societies get divided, the rich worry that you will use the power of the state to redistribute. They therefore want to restrict the power of the state so you wind up with weaker states, weaker public investments and weaker growth." It's an elegantly simple proposition. And one that logically points to a radical manifesto of redistribution and higher taxation in the name of the general public good. Time will tell whether this comes to be regarded as another manifestation of towering economic genius. But, for now, crusading Stiglitz has one more weapon in his hands with which to batter down those walls of folly. Joseph Stiglitz: A life in brief Born: Gary, Indiana in 1943 Educated: Amherst college, in New England. Later, Massachusetts Institute of Technology Career: Nobel Prize-winning economist and former member of President Clinton's administration during his time in the White House and, latterly, an adviser to President Obama. He is currently a professor at Columbia University Family: Married to Anya Schiffrin, a professor at Columbia FYI: Stiglitz' home town also produced Paul Samuelson, the first American winner of the Nobel Prize for economics Stiglitz wrote of Samuelson: "Paul allegedly once wrote a letter of recommendation for me which summarised my accomplishments by saying that I was the best economist from Gary, Indiana." "The Price of Inequality" by Joseph Stiglitz is published by Allen Lane
	"Choose a job you love and you will not have to work a day in your life" (Confucius)
	+0

Luis Miguel 1162 61587 Lima	RE: ARE WE NOW IN THE END TIMES? 7/17/2012 5:34:36 PM
	Time for "Banksters" to be Prosecuted By Katrina vanden Heuvel, published: July 10 “Banksters,” the cover of the Economist magazine charges, depicting a gaggle of bankers dressed as extras off the “Goodfellas” lot. The editors were reacting to Libor-gate, the collusion among traders of major banks to fix the London interbank offered lending rate, the most recent, most obscure and the most explosive revelation from what seems a bottomless pit of corruption in global banks. Once more the big banks are exposed in systematic fraudulent activity. When Barclays agreed to a $450 million fine for trying to rig the Libor, its CEO offered the classic excuse: Everyone does it. Once more the question remains: Will CEOs and CFOs, as well as traders, be prosecuted? Or will they depart with their multimillion dollar rewards intact, leaving shareholders to pay the tab for the hundreds of millions in fines? The Barclays settlement exposed that traders colluded to try to fix the Libor rate. This is the rate used as the basis for exotic derivatives as well as mortgages, credit card and personal loan rates. Almost everyone is affected. Fixing the rate even a few hundreds of a percentage point could make Barclays millions on any single day — money taken out of the pockets of consumers and investors. Once more the banks were rigging the rules; once more their customers were their mark. The stakes are staggering. The Libor should be as good as gold. It pegs the value of up to $800 trillion in financial instruments. The collusion was systematic and routine. Investigations are underway not only in the United Kingdom but also in the United States, Canada and the European Union. Those named in the probes are all the usual suspects: JPMorgan Chase, Citibank, UBS, Deutsche Bank, HSBC, UBS and others. This wasn’t rogue trading, as the Economist concludes; it was more like a cartel. The Economist writes that what has been revealed here is “the rotten heart of finance,” a “culture of casual dishonesty.” Once more the big banks are revealed to have allowed greed to trample any concern about trust, respect or legality. As investment analyst David Kotok suggests, consider the implications of the Barclays settlement: The general counsel tells the bank’s directors that the bank is offered a settlement for a half-billion dollars in fines, with the resignation of the chair of the board, the chief executive and the chief operating officer, with others to follow. The board, knowing the evidence, agrees to take that deal. Other banks are in line for the same level of culpability.
	"Choose a job you love and you will not have to work a day in your life" (Confucius)
	+0

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Joseph Stiglitz: Man who ran World Bank calls for bankers to face the music

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