Bankrupt Trans-Atlantic Financial System Is Running Out of Wacko Bailout Schemes
Aug. 13, 2019 (EIRNS)—The financial news service Bloomberg ran an article yesterday reflecting the growing waves of panic sweeping the entire trans-Atlantic financial community, as they contemplate their bankruptcy and possible new crazy schemes to put off the day of reckoning.
“The rate on 30-year Treasury bonds approached an all-time low” this week, Bloomberg wrote, noting that even more significant than its current level is the speed at which the collapse is occurring. “The speed of this collapse means 1.318%—the all-time low set three years ago—is at risk of being broken this month or in September.” The catalyst for the plunge in U.S. rates, they explained, is the fall in rates elsewhere in the world, especially Europe.
This is all heading towards negative interest rates in the U.S., in hot pursuit of the rest of the world. Bloomberg quoted Mark Heppenstall, chief investment officer for Penn Mutual Asset Management, which has $27 billion under management: “There’s a lot of concern that negative rates are going to move onto U.S. shores.” There is already one Danish bank that is offering its customers negative interest rates on mortgages—i.e., borrowers have to pay back less than they borrowed.
Another bailout scheme under consideration by the Federal Reserve, according to the Wall Street Journal, is “a tool that could reduce the risk of a credit crunch in a downturn. The tool is known as the countercyclical capital buffer.”
Say what?! The idea is to activate a “tool” designed to make banks hold more capital in reserve to cover difficulties, in order to immediately go in the opposite direction and cut it—i.e., unleash yet another torrent of speculative financial capital.
Fed Chairman Jerome Powell explained at a late July press conference: “The idea of putting it in place so you can cut it, that’s something some other jurisdictions have done, and its worth considering,” The Wall Street Journal article explained that “Messrs. Quarles [Fed Vice Chairman] and Powell have cited the Bank of England’s approach as a possible model for the U.S.”