Sunday, May 27, 2018

European and Mid-Sized American Banks Engineer Risk Shift

The financial crisis of 2007-2008 led to enhanced regulation that was designed to preserve the power hierarchy of banks, while regulating their risk production in the US and Europe (see my book here).

Wall Street has been attacking Dodd-Frank legal reforms instituted after the 2007-2008 financial crisis since they were instituted.  Consider this article from 2015 that describes the Republican-led assault: 
Weisman, Jonathan and Lipton, Eric. In New Congress, Wall St. Pushes to Undermine Dodd-Frank Reform. January 13, 2015,
WASHINGTON — In the span of a month, the nation’s biggest banks and investment firms have twice won passage of measures to weaken regulations intended to help lessen the risk of another financial crisis, setting their sights on narrow, arcane provisions and greasing their efforts with a surge of lobbying and campaign contributions.

The continuing assault on the 2010 Dodd-Frank law has achieved remarkable success, especially compared with the repeated failures of opponents of another 2010 law, the Affordable Care Act.

The financial industry has been methodical, drafting technically complicated legislation that can pass the heavily Republican House with a few Democratic votes. And then, once approved, Wall Street has pushed to tack such measures on to larger bills considered too important for the White House to block.

Now, with the help of some Democrats, the Republicans have successfully loosened regulatory governance of the so-called mid-size US banks, which are actually huge by historic standards:
May 22 2018 Congress Approves First Big Dodd-Frank Rollback. The New York Times.

The legislation will leave fewer than 10 big banks in the United States subject to stricter federal oversight, freeing thousands of banks with less than $250 billion in assets from a post-crisis crackdown that they have long complained is too onerous….

…. A report from the Federal Deposit Insurance Corporation on Tuesday said that the combined net income of the nation’s commercial banks and savings institutions reached $56 billion in the first quarter of 2018, a 27.5 percent increase from a year ago…

…. The legislation also offers a reprieve to big — but not behemoth — banks, allowing large institutions like American Express and BB & T to no longer be deemed “systemically important” and subject to stricter oversight.

The bill also exempts some loan originators, including small lenders, from certain disclosure requirements under the Home Mortgage Disclosure Act.
Majia here: In addition to loosening of regulations governing the so-called “mid-sized” banks, there are also efforts underway to eliminate or loosen the Volcker Rule requirements and to reduce mandated capital ratios. The Republicans are targeting the consumer protection bureau as well.

The 2007-2008 financial crisis resulted in a huge transfer of wealth that has been detailed thoroughly by Michael Hudson and Dean Baker among other critical observers.

The crisis itself was caused by risk-seeking, particularly by powerful financial actors. Crisis costs were staggering. In April of 2009, the International Monetary Fund stated that the global losses resulting from the financial meltdown exceeded $4 trillion, with approximately $2.7 trillion of those losses derived from loans and assets originating in the US[i] 

Keep in mind that of those losses, only $400 billion could be attributed directly to the US residential mortgage market loans, according to Federal Reserve Governor Mishkin. 

Although sub-priming mortgages have been identified as the security base responsible for precipitating a four-trillion (US dollar) financial crisis that began at the end of 2007, these instruments were merely the bottom of a speculative bubble of derivatives contracts that were created out of, or that insured, debt-backed bonds deriving ultimately from mortgages, consumer loans, municipal bonds, etc. 

Government responses to the crisis in the US and Europe were organized around preserving the largest banks' solvency. National and international governmental agencies made huge capital infusions into the financial sector, preserving the most powerful players that happened to be precisely those responsible for engineering the crisis.

In the US, even the mainstream media found the federal response unsatisfactory: In 2011, Bloomberg news reported that:
“Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount US homeowners currently owe on 6.5 million delinquent and foreclosed mortgages.”[ii]
It would have been more cost-effective to have bailed out homeowners but the money went to the banks and insurers.

Post-financial regulation was nowhere near as strict as it needed to be (e.g., the de-fanging of the Volcker Rule). 

Today's de-regulatory push will produce another financial crisis, there is no doubt. 

Where will the next crisis begin? Its possible the next crisis of financial contagion will start in the European banks based on an article published in the Wall Street Journal describing a regulatory work-around by European banks:
Max Colchester (2018, May 24). European banks engineer a risk shift. The Wall Street Journal, B1, B11.
The strategy works like this: banks seeking to “free their balance sheets” are engaging in a form of “synthetic securitization” whereby the banks pay a fee to investors to cover potential losses on loans.

This allows the banks to reduce their capital reserves, which essentially means the bank balance sheets are more leveraged. 

These deals are “privately structured,” meaning payment terms aren’t transparent. 

The interesting article reporting on this risk trade does not specify the nature of the investors purchasing banks’ synthetic securities. The question is what happens to these investors’ capacity to insure losses in the event of a crisis?  Remember what happened with AIG? 

The European banks’ health doesn’t seem to good right (e.g., Deutsche Bank plans on cutting up to 10,000 jobs).

US and European banks are producing risk while their highest-compensated employees make out like bandits. The risk they produce will ultimately generate costs for the economies that are disrupted in the next crisis. People will lose jobs. Homes will be lost and small businesses closed. Lives will be disrupted.

But the banks and their most vaulted employees will be fine. 

Rinse and repeat until there is no wealth left to extract from the body of the population.


[i] Mark Landler and David Jolly, “I.M.F. Puts Bank Losses from Global Financial Crisis at $4.1 Trillion,” The New York Times, April 22, 2009, accessed April 23, 2009

[ii] Bob Ivry, Bradley Keoun and Phil Kuntz “Secret Fed Loans Helped Banks Net $13B,”, November 27, 2011, accessed November 29, 2011,

Saturday, May 26, 2018

Returning to 19th Century Rules for Workers

There is a concerted effort underway by a diverse group of authorities, deploying a diverse set of strategies, to under-cut worker rights established across the twentieth century.

Unions have mostly disappeared and the remaining public sector unions are under heavy assault. The RedforEd movement has been an example of an effective tactical response to this assault on public sector teachers, who labor under increasingly challenging conditions.

But in general the trajectory has been towards a contraction of worker rights and pay.

The recent Supreme Court ruling allows employers to force employees to sign contacts giving up their right to class action lawsuits individualizes workers and pits them against their corporate masters in a fundamentally unequal relationship.

You can read about the ruling here:

Imagine that your employer stole your time through systematic, incremental wage theft, which is a significant problem that has been made worse by automated programs that "round" time. Although this problem would impact every worker, each would have to submit to arbitration or attempt to battle their employer individually.

Imagine your employer systematically discriminated against women and prevented their promotion. This is a common problem that has in the past been addressed through class action lawsuits, as illustrated in the case of Walmart (e.g., class action suit by workers who said they were discriminated against because of pregnancy here).

Collective action is under attack: this new ruling allows corporations to require you sign away your right to collective representation as a condition of employment.

We are heading fast toward a new form of government where people are dispossessed of hard-won rights

Friday, May 25, 2018

Re-Writing Fukushima Histories

A newly published study describes researchers' detection of cesium-rich microparticles, both inside and outside the Fukushima Daiichi exclusion zone in Japan.

The study is behind a paywall and I've not read it yet, but will follow up with any particularly interesting findings beyond those cited in the abstract below:
Ryohei Ikehara, Mizuki Suetake, Tatsuki Komiya, Genki Furuki, Asumi Ochiai, Shinya Yamasaki, William R. Bower, Gareth T. W. Law, Toshihiko Ohnuki, Bernd Grambow, Rodney C. Ewing, and Satoshi Utsunomiya. Novel Method of Quantifying Radioactive Cesium-Rich Microparticles (CsMPs) in the Environment from the Fukushima Daiichi Nuclear Power Plant Environmental Science & Technology Article ASAP
DOI: 10.1021/acs.est.7b06693
Highly radioactive cesium-rich microparticles (CsMPs) were released from the Fukushima Daiichi nuclear power plant (FDNPP) to the surrounding environment at an early stage of the nuclear disaster in March of 2011; however, the quantity of released CsMPs remains undetermined. 
Here, we report a novel method to quantify the number of CsMPs in surface soils at or around Fukushima and the fraction of radioactivity they contribute, which we call “quantification of CsMPs” (QCP) and is based on autoradiography. 
Here, photostimulated luminescence (PSL) is linearly correlated to the radioactivity of various microparticles, with a regression coefficient of 0.0523 becquerel/PSL/h (Bq/PSL/h). In soil collected from Nagadoro, Fukushima, Japan, CsMPs were detected in soil sieved with a 114 μm mesh. There was no overlap between the radioactivities of CsMPs and clay particles adsorbing Cs. 
Based on the distribution of radioactivity of CsMPs, the threshold radioactivity of CsMPs in the size fraction of <114 0.06="" based="" be="" bq.="" determined="" font="" m="" method="" on="" t="" this="" to="" was="">he number and radioactivity fraction of CsMPs in four surface soils collected from the vicinity of the FDNPP were determined to be 48–318 particles per gram and 8.53–31.8%, respectively. The QCP method is applicable to soils with a total radioactivity as high as ∼106 Bq/kg. 
This novel method is critically important and can be used to quantitatively understand the distribution and migration of the highly radioactive CsMPs in near-surface environments surrounding Fukushima.
The findings are important and indicate concerning levels of contamination when bioaccumulation and biomagnification are considered.

You can read a press release on the study here:
Fukushima-Daiichi radioactive particle release was significant says new research. (2018, May 24). University of Manchester. Available the immediate aftermath of the Fukushima Daiichi nuclear accident, it was thought that only volatile, gaseous radionuclides, such as caesium and iodine, were released from the damaged reactors. However, in recent years it has become apparent that small radioactive particles, termed caesium-rich micro-particles, were also released. Scientists have shown that these particles are mainly made of glass, and that they contain significant amounts of radioactive caesium, as well as smaller amounts of other radioisotopes, such as uranium and technetium.

This press release describes findings effectively but incorrectly states that after the accident "it was thought that only volatile, gaseous radionuclides" were released from the reactors.

History is re-written in these words.

In contrast to this argument that it was thought only volatile radionuclides were released, I offer Japanese news media reports of plutonium detected outside the plant and a scientific study documenting atmospheric deposition of uranium-buckyballs in San Diego county, CA. See these studies:
Christopher Armstrong, May Nyman, Tatiana Shvareva et al., “Uranyl Peroxide Enhanced Nuclear Fuel Corrosion in Seawater,” PNAS 109 (2011): 1874-1877, doi: 10.1073/pnas.1119758109. 
Antra Priyadarshi, Gerardo Dominguez, and Mark Thiemens, “Evidence of Neutron Leakage at the Fukushima Nuclear Plant from Measurements of Radioactive 35S in California,” PNAS 108 (2011): 14422-14425, doi: 10.1073/pnas.1109449108. 
I find it interesting how the Fukushima Daiichi narrative is being re-written so that the contestations over the nature and scale of the events of that week in March 2011 are being erased.

Questions regarding the nature, scale and biological effects of contamination are particularly susceptible to debate that gets silenced through revisionism and re-framing. 

So, for example, the significance of new "findings" such as those discussed above will likely be subordinated to the WHO Report anticipating very few effects,. Those effects do not include reproductive effects according to the WHO report and are limited to the most directly exposed within the region, with increased risk mostly in treatable forms of cancer, such as thyroid cancer.

The WHO report stands in strange opposition to the findings on animal populations impacted by Fukushima radiation and the rising incidents of other diseases, such as diabetes, among children in or from Fukushima Prefecture.

Additionally, the nuclear industry and attendant institutional affiliates have been very successful in trivializing the scale of the disaster and responsibilizing the Japanese by focusing on the insufficient sea wall, rather than the flawed GE Mark 1 reactor design and structural failures in cooling (e.g., such as broken pipes) caused by the earthquake.

This blog documents alternative accounts to this dominant narrative. Alternative accounts produced by scientists, journalists, concerned citizens, etc. are found here. Their findings and interpretative accounts negate the lesson the nuclear apparatus would have us learn from the disaster.

I hope that the efforts of all of those who seek to document history from the perspective of affected people and eco-systems, both scientifically and experientially, are still available in a future that will be governed by a logic of total information control (see my discussion here).


Thursday, May 24, 2018

NEUROTOXIC Triclosan Was Pushed in my Kids' Elementary School

I recall when my son's class would be lined up before snack and lunch with the teacher spraying "hand sanitizer" with triclosan on their hands. The kids did not rinse their hands before eating.

At the time I was suspicious so I insisted that my son wash his hands with soap and water. The teacher and her assistant thought I was crazy but now years later my concerns are vindicated with research showing that triclosan is neurotoxic, particularly during pregnancy but who knows what long term effects  accrue for kids with chronic exposure:
Medina S. Jackson-Browne, George D. Papandonatos, Aimin Chen, Antonia M. Calafat, Kimberly Yolton, Bruce P. Lanphear, and Joseph M. Braun Identifying Vulnerable Periods of Neurotoxicity to Triclosan Exposure in Children Published 2 May 2018 | Research 
Exposure to triclosan, an endocrine disrupting chemical, may affect thyroid hormone homeostasis and adversely affect neurodevelopment. 
Using a longitudinal pregnancy and birth cohort, we investigated associations between triclosan exposures during different time windows, and cognitive test scores at 8 y of age in 198 children from the HOME Study 
We quantified triclosan in urine samples from mother–child pairs up to nine times between the second trimester of gestation and 8 y of age. The Wechsler Intelligence Scale for Children-IV [i.e., Full-Scale Intelligence Quotient (IQ)] assessment was administered to HOME Study children at 8 y of age. We estimated covariate-adjusted triclosan–IQ associations at each visit. We also tested whether associations between triclosan concentrations and cognitive test scores varied among exposure at different time periods. 
Full-Scale IQ was not significantly associated with urinary triclosan concentrations during gestation or childhood but was significantly associated with a 10-fold increase in maternal urinary triclosan concentration at delivery [−4.5 points (95% CI: −7.0, −2.0)]. Perceptual Reasoning Index (PRI) scores were significantly decreased in association with urinary triclosan concentrations at delivery and at 2 y of age. Associations between repeated triclosan concentrations and cognitive test scores significantly varied among exposure at different time periods for Full-Scale IQ, PRI, Verbal Comprehension Index, and Working Memory (triclosan–visit interaction p≤0.04). 
Urinary triclosan concentrations at delivery, but not during mid to late pregnancy and childhood, were associated with significantly lower children’s cognitive test scores at 8 y of age in this cohort of U.S. children.
Once again, the public was duped by a reckless chemical industry.

Wednesday, May 23, 2018

Fukushima Daiichi Unit 2 Really Steaming in Rain

TEPCO has told us that unit 2 is the hottest. You can really see that when it rains. Unit 2 is the one with the steam streaming upwards (Unit 3 in the background also looks especially steamy):

These reactors are still a threat because of liquefaction at the site coupled with earthquake activity.

The fuel is extraordinarily hot. I hope TEPCO is successful in its efforts to prevent any of these buildings from collapsing.