Friday, November 25, 2016

Fox Business: Fed's Kashkari Says U.S. Faces Another Financial Meltdown

Since we watch for things like this here, we take note of these comments by Minneapolis Fed Chief Neel Kashkari on Fox Business News. He is proposing a plan to reduce the odds of a too big to fail bank bringing down the entire system. Below are a few excerpts.
"Banks are still too-big-to-fail according to Minneapolis Federal Reserve Bank President Neel Kashkari. He told the FOX Business Network’s Maria Bartiromo there’s a high probability of another financial crisis and bailout.

“I’ve heard from senators and congressmen and women on both sides of the aisle who are concerned that the biggest banks are too-big-to-fail. We analyzed the history of financial crises: we’ve now got a 67% chance today of another financial crisis in the next century and another bailout,” he said."

. . . . 

'While responding to JPMorgan (JPM) CEO Jamie Dimon’s argument to keep big banks, Kashkari compared the institutions to nuclear power plants.

“If his customers are actually better off for his scale and scope, he can afford to hold enough capital that the rest of the economy is not at risk. If he can’t then that means his business doesn’t work and then that’s not a public policy problem… It’s like a nuclear power plant. Nuclear power plants are devastating to society if they melt down. So we don’t ban nuclear power, we regulate them so much they virtually can’t fail,” he said."
My added comments: How the Trump Adminstration relates to both the Fed and the so called "Too Big to Fail" banks will be closely watched. So far, those expecting much major change from the Trump Administration may be disappointed. He reportedly asked JP Morgan CEO Dimon to consider the Sec. of the Treasury position and has shown no interest in confronting the too big to fail banks. His other potential candidates for Sec. of the Treasury also have strong Wall Street connections.

Meanwhile, conspiracy theorists are already speculating that global elites actually wanted Donald Trump to be elected so that they can blame the next major global financial crisis on him and tie the failure to the more conservative Republican Party. These kinds of speculations will only increase if we get a huge major crisis a year into the Trump Administration

Here on this blog, it is pretty clear that we don't have much more to do except to monitor events and see if we do get a new major crisis. Without it, it is very doubtful that much major change in the monetary system will take place any time soon and we will not have much to report. There is no sense of urgency for major changes as things stand right now and all the predictions for such a crisis to happen during 2015-2016 have failed to unfold so far.

If we do get a new major crisis, then we have to see how Donald Trump will respond and if there is a major mainstream media effort to blame him for the crisis. How would the public react? Will they blame Trump and the Republicans in Congress or would they distrust the media as they did during the 2016 US election campaign? Lots of hypothetical questions with no answers for now. And again, if we get no crisis, it's all a moot point.

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