24th May, 2017
Oligarchy under threat resorts to terrorism
Oligarchism, rule by a few, and the nation state, based
on the principle of the common good, can no longer coexist.
One must be forced out. A revival of the principles
of the nation state, driven by an enormous upswell within
the population, is edging out oligarchism, but is also
leading to an existential backlash from within the oligarchy's
Consider the stakes.
Articles include the following:
- Euro crisis returns; Italy threatens 'return to national currency'
- Wall Street undermines Trump's Glass-Steagall commitment
- USA and China forge new trade pathway
- The special counsel appointment: a double-edged sword
- Iran leaves door open for saner US policy
- USA's actions in Syria don't match its words
- Iran not the source of terrorism, British foreign policy is
- Defence Department: China's Belt and Road a 'strategic threat' to Australia
- Fresh from Belt and Road forum, Ciobo pushes TPP2
- British economist calls objections to bank separation 'tosh'
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'Free market' smashes milk producers
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19th May, 2017
Do Big Five banks fear levy will expose derivatives danger lurking beneath their books?
The Big Five (Big Four plus Macquarie) banks are frantically trying to get most or all of their derivatives obligations excluded from the government’s levy on their liabilities.
The government has said the bank levy applies to derivatives, the financial bets that far exceed in size all other trades in the financial system. For instance, while Australia’s GDP is just shy of $2 trillion, the derivatives contracts held by Australia’s banks amount to around $35 trillion. Globally, official BIS figures record derivatives at around US$500 trillion (compared with US$50 trillion world GDP), but as there is so much dodgy accounting involved, others estimate them at US$1.2 quadrillion (US$1,200 trillion).
According to James Eyres in the 15 May Australian Financial Review, Westpac, ANZ and NAB have told the government that the levy should only apply to so-called “netted” derivatives positions, while CBA has said it should not apply to derivatives at all; Macquarie, true to form, is not making its submission to the government public.
These arguments betray real panic. “Netting”, for instance, is the ruse banks use to explain away the risks involved in derivatives gambling. They deduct, from what they owe on derivatives contracts, the amount that other banks owe them, to claim that the multi-trillions in contracts represent just a few billion in liabilities. While it may be legitimate to “net” transactions between two parties, it is bogus to apply it to derivatives. It can be compared to splitting a restaurant bill—easy among a few people, but what about a few thousand?
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