Posts about Business, Economics, and Finance
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By Peruvian_🐂 with regarded adaptationz by 👉🐒👈 there is no TL;dr or ELIA.
For the last few decades, houselessness has been on the rise in virtually every major American city. Drug addiction and mental health issues are of course the driving factors. Below is a graph of the amount of houseless using shelters in New York. We can see spikes in the late 1980s due to the crack scourge, but the rate stabilized until the aftermath of the 2008 financial crisis. Due to deflationary forces rippling through our economy, mass layoffs and home evictions, millions of people across the States lost their housing and became desperate.
The Fed (🐒 Federal Reserve) responded to the housing bust with a massive influx of cash into mortgage backed securities. Cumulatively, since 2008, the Fed owns more than $2.6T of MBS (🐒 Mortgage Backed Securities). This caused massive asset price inflation in the housing market and led to enormous wealth gains for those who owned real estate- but those who did not, or lost their homes in the bust, now saw skyrocketing home values but did not have any equivalent jump in income to compensate. This caused what is called "economic despair", similar to the opioid crisis tormenting midwestern "rust-belt" cities.
The median age of a new homebuyer has risen steadily since 2008- due to the higher prices of homes, many were priced out of the market. Only middle age folks had the wealth to pay for these expensive homes- boosting houselessness across the spectrum but especially in young people.
With a collapsing economy and slowly rising rent and home prices, dozens of thousands of people were pushed onto the streets each week- and did not have a way back into housing. They turned to drugs, crime, and more to deal with the pain and anxiety.
Economic self-reliance- especially for men, is closely linked to rates of depression and sewacyde. When the jobs in the city leave, the houses get too expensive to own, and the school tuition skyrockets; many feel an overwhelming hopelessness and turn to self destructive habits to cope with the pain.
Typically in a recession the Treasury will increase spending to cushion the blow to workers- and in 2009 they did extend a few unemployment benefits. But, by and large, Congress authorized few benefit programs for workers, and the average time on the benefit decreased after a slight bump in 2009. At the same time, the Fed was pumping massive amounts of cash into the banking system, boosting equity and bond prices to cope with the fallout of '08.
This caused the beginning of a massive bull market- 70% of the gains for the last 30 years have occurred since the Fed began their massive QE (🐒 Quantitative Easing) program. This would benefit the real economy, they claimed- creating what is called a "wealth effect", the behavioral economic theory suggesting that people spend more as the value of their assets rise.
The idea is that consumers feel more financially secure and confident about their wealth when their homes or investment portfolios increase in value. They are made to feel richer, even if their income and fixed costs are the same as before.
However- who does this really benefit? Studies show that the majority of the equities are owned by the top 10% in terms of wealth- in fact, these wealthy individuals own 89% of all listed US stocks!
The median American worker saw his bosses become enormously wealthy, without additional work or effort put in, while his/her wages were stagnant for basically the entire decade. This further contributed to economic despair and gave people a sense of a "rigged system" and that the American dream, touted by the Baby Boomers and those before them, was now dead.
Upward mobility became increasingly difficult as home and asset prices rose without a corresponding increase in median wages.
Something had changed since 2008. Although the NBER ( 🐒 National Bureau of Economic Research) claimed that we had only experienced a recession, if we use their original terminology we actually had been through a depression.
Depressions were originally defined as prolonged periods of economic underperformance, which by all indications we were experiencing. GDP (🐒 Gross Domestic Product) nominally was rising, but much of that could be attributed to increased government spending (component of GDP) and base effects of recovering from a weakened economy. NBER estimates we underperformed GDP potential by around $8.2 Trillion in real growth since ’08, which would have mostly gone to middle and working class workers in the form of wages.
Although unemployment spiked post 2008 and then began falling, a large part of the reason for this is how unemployment is actually calculated. They include people who do not have jobs and are actively looking for work- but what about those who have given up and no longer are looking? they are not included in these stats- which is why we see a falling Labor Force Participation rate (above) even when the unemployment figures are reportedly falling.
Millions of Americans have left the workforce- and many of these people have ended up houseless, dependent to drugs, and worse. According to the National Institute on Drug Abuse, almost 100k people lost their lives in 2020 due to an overdose- 5x the rate of the early 2000s:
The Fed has also worked to suppress interest rates to the zero bound- stimulating credit growth and pushing money out on the risk curve. This brought enormous sums of cash into the tech space, where companies received insane multiples on incredibly low earnings.
Tech linked indices, like the NASDAQ, saw enormous price gains in excess of the other "blue chip" stocks of the real economy. Facebook, Apple and Google became trillion dollar companies and VCs (🐒 Venture Capitalists) were willing to pour in unlimited funding for whatever the tech giants wanted.
This virtually unlimited cash gave the tech firms the resources to supercharge their apps to become mass psychology manipulation tools- to addict young people, causing anxiety and depression. Worst of all, it pushed sewacyde rates up, especially among young girls, who were fed unending comparisons and social judgement from their peers in the digital milieu. These apps have gotten more ubiquitous and more entrenched over time- if any young person wants to be relevant and have friends, they are pushed to buy into these harmful apps.
Of course, some may say this was inevitable, as the tech giants would eventually be pushing for profit and exploiting these children anyways- but the Fed certainly sped up this process significantly by lowering interest rates and allowing unprofitable tech firms to borrow freely, pushing up valuations and allowing them to raise mind boggling amounts of cash.
Money is power, and power can buy many things, even the ability to influence minds.
Young people nowadays are in most ways actually worse off than their parents. They can't buy a home. They can't afford school. They can't get a good job. And this issue is causing societal-wide consequences, like a falling marriage and birth rate.
Couples typically only marry when they can afford their house- although it is commonplace in Latin American and Asian cultures for a married child and spouse to live with parents, this is taboo in the states, where owning a property is considered a rite of passage.
General rates of depression are rising- humans are made for community, for intimacy.
Turns out we need each other. 🐒🦧🦍
And by pricing couples out of the housing market, destroying jobs, and hiking asset prices, the Fed has seriously damaged the ability of young people to seriously date and have children. Thus the birth rate is collapsing in the US as well, which portends some disastrous consequences in the next 40 years. Small generations beget small generations- and we may begin a death spiral, similar to Japan where overwhelming amounts of old people are retiring, with no one to replace them. This decreasing population means less workers, less products, and a less industrious economy- creating economic stagnation and decline in the long run. Furthermore, it puts severe strain on the retirement system, such as social security.
The Social Security trust fund most Americans rely on for their retirement will run out of money in 12 years, one year sooner than expected, according to an annual government report. The outlook, aggravated by the 😷🌐, also threatens to shrink retirement payments and increase health-care costs for older Americans. When the program was created, there were over 6 young workers paying in for every 1 retiree receiving benefits. That figure is now less than 3:1, and is soon falling to 2:1
Through the magic of QE (🐒 Quantitative Easing), the Fed has exacerbated the worst houseless, mental health, and population crisis the United States has ever faced. These issues are incredibly complex and hard to remedy- and it may take decades to undo the damage.
Source of this God-tier DD by the 🐂
🐒🤙
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What happened since my last update on CSDR 909/2014?
‼️ Edit 1: If you wish to do something, you can send an email to all ECON members. Just click on the letter icon and you can directly mail the representative.‼️
https://www.europarl.europa.eu/committees/en/econ/home/members
I have written to all German MEPs and about 200 others members of the EU parliament. Tomorrow, all MEPs should have received mail from me. Then no one can say any more, he has known nothing...
On 23.01.23 CSDR was negotiated in the committee for economics and monetary affairs, ECON. Main findings?
Settlement discipline in Europe is worse than in other marketplaces
EU doesn’t know why this is so
Mandatory buy-ins (MBI) only in case of extreme emergency
ESMA to get mandate to control CSDs
I send a complaint to the PETI committee that I was not informed that the ECON committee was negotiating the petition item.
And i got the following response of the PETI committee yesterday:
So: the ECON Committee was informed about the petition in November already. The Committee did not mention the petition in a syllable in its debate on 1/23-23 - of course. For whatever reason… 🤷♀️
In the meantime i got the following feedback from Rene Repasi to my email, member of the European parliament, professor in law and member of the ECON Committee.
💜
So voting in February. I suppose he means here the vote in the ECON Committee and not in the Parliament. In any case, in the agenda of the upcoming plenary sessions there is still nothing to read about CSDR.
Here is the link to the upcoming plenary sessions and the agendas:
https://www.europarl.europa.eu/plenary/en/agendas.html
Please keep checking back as well, the agendas are created 4 weeks in advance and up to 1 week before they can still be changed. We have to be extremely vigilant, because what does the whole thing show us so far?
No one is letting us know when it comes to the CSDR
The ECON committee knows that this petition exists and just ignores it! Am I surprised?
We need to keep collecting signatures for all we're worth and contacting congressmen.
I will keep you posted on further feedback. So far from the 90+ German MPs a whole 3 feedbacks! I am almost slain by the vigor of our MEPs....
With the amendment of the CSDR, another problem was published by the rapporteur Johan van Overtveldt:
The MBI were originally once part of the EU Short Selling Regulation 236/2012, but when this should have entered into force, the MBI were taken out of the SSR 236/2012 on the grounds that they would be better inserted in the CSDR 909/2014.
On 2/1/2012, the CSDR now entered into force with the exception of the MBI. This means that there has been no valid regulation regarding MBI for exactly 1 year. Here the EU has created a wonderful scope for the financial industry. Now it is proposed to put MBI back into the SSR, but this would mean that the SSR would have to be renegotiated and voted on again.
The whole thing seems to me senseless, but creates an incredible amount of time to not have to apply MBI! Since trades are settled by the CSDs, it is only logical to regulate MBI through the CSDR. Moreover, the CSDs are now very well prepared, Clearstream, Euroclear and Eurex have already established buy-in agents. And the depositories again are aware of what the EU is not: why settlement efficiency in Europe is so poor:
BECAUSE THERE ARE NO SHARES! BECAUSE SHARES ARE SOLD THAT DO NOT EXIST!
Once again to roll on the tongue:
On the left the proposed amendments of the EU Commission (so to speak the EU government) and on the right the proposals of the ECON Committee (EU Parliament). Also note the wording…! It is „disproportionate“ to buy securities and also still insist that these must be delivered!
The proposal of the EU Commission is also to be rejected, because
MBI only as a case-by-case decision by the EU Commission
only after long-term and sustainable failure of other measures such as penalties
only for certain selected securities, not in general
only if efficiency differs from other markets
and after consultation of ECB etc
and only if the general market situation allows it at all.
would be applied. In one word: NEVER!
‼️‼️ There is only one meeting of ECON in february! It will be held quite soon, on monday, 6th. Unfortunately without live webstream ‼️‼️
____________________________________________________________________________________________________________
So I decided to reply again to Prof Repasi - its my last chance to transmit our point of view!
At least he is talking to us. He is so far the only rep to bring our arguments directly to the ECON committee.:
Dear Mr. Repasi,
Thank you for the feedback. I would like to give you a few more thoughts for the negotiations.
I think it is fundamentally wrong to present mandatory buy-ins (MBIs) as the problem of liquidity and stability in the financial markets. That is simply a lie. Failures-to-deliver are the core problem. That is common knowledge. And MBI is the ONLY measure that will truly lead to improved settlement discipline.
You are a lawyer. You know the principle of delivery-versus-payment settlement! You know that securities represent property. When I buy securities, I buy them in the good faith that I am acquiring property, true ownership in companies that I believe to have a future. Shareholders buy stakes in companies. Shareholders have voting rights in shareholder meetings. Shareholders strengthen companies. We are anything but casino players for whom an I-Owe-You instead of a real share is a fair game. Failure-to-deliver harm our rights and the companies in each of the ways mentioned.
2. How on earth can it be that enforcing a basic law of trading, delivery-for-payment, can lead to a fundamental crisis in the financial markets? I cannot find any evidence for this, not even in the statements of the ECB, the EU Commission and ESMA.
3 I think it is fundamentally wrong to put MBIs at the end of a long chain of unsuccessful measures as a „last resort“. MBIs are THE KEY to solving the FTDs. In the ECON Committee, each of you notes that FTDs in Europe are far too high, even by international standards. The reason for this misery can be stated quite accurately by the CSDs. CSDs cannot settle the trades because no shares are delivered. This means that shares are sold on the exchanges, which do not even exist!
4. The Singapore Stock Exchange SGX has installed in 2009 (!) a procedure for settlement discipline. There I can view the list of all mandatory buy-ins on a daily basis. The rate of FTD is very low there.
5. Fines for the defaulting sellers are ridiculous because they are simply "priced in". The only "fine" that keeps away market makers and prime brokers with market maker rights from selling shares they don't own and won't buy within 4 days is the price to be paid if the buy-in agent buys the shares in the bid process!
6. The list of exceptions to not having to use MBI is so long that it almost makes you dizzy:
MBI only
as case-by-case decisions by the Commission or ESMA,
only after consultation with ECB,
only certain stocks are to be selected, no delivery at all
only if penalties do not lead to a sustainable improvement after several years of observation,
if the market situation allows it at all
only if it affects only 2 trading partners (what does that even mean? Every buyer and seller must use brokers as intermediaries!)
The EU Commission proposes a decision and enforcement right for itself.
This turns an automated, transparent, traceable and FAIR Settlement Discipline Rule into a construct dependent on individuals and their discretion, which in no way protects the investors rights!
I have not even gone into the fact, which was presented in the report of Mr. van Overtveldt: since 01.02.2022 there is no effective buy-in obligation for short sellers! Does that mean that on European markets may be shorted since one year without restraint and without consequence? I do not want to believe this at all!
In the meantime, an international group of almost 8,500 retail investors is behind my petition. We are not willing to stand by and watch as our rights as shareholders are further eroded in an extremely damaging way, companies are harmed, and the EU economy and community wealth are sold off.
I look forward to a further exchange with you and will gladly take the time to do so at any time. Please take your time to consider our arguments when you go into the ECON negotiations.
All the best and best regards from Munich
bellacrema
In this sense have a nice day to all of you and write to all ECON members. I know there are also MEPs who are on "our" side. We just have to find them!
💜♥️💜 Peace and Love 💜♥️💜
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