TWO US NAVY F-18S CRASH IN THE ATLANTIC OFF NORTH CAROLINA’S OUTER BANKS


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Four people have been recovered and taken to the Sentara Norfolk General Hospital in Norfolk, Virginia, the Virginian-Pilot reported citing Coast Guard Petty Officer Fagal Nifin.

Nifin said the extent of the crew members’ injuries is “unknown.” One of the crew had a leg injury, reported WCTI.

Search and rescue teams were deployed to the Oregon Inlet area, 25 miles off the North Carolina shore, after reports of two planes colliding around 10:30 ET, according to Norfolk’s WBEC.

Coast Guard officials in Elizabeth City told WCTI that the planes involved were from the Naval Station Oceana in Virginia Beach, Virginia. A fishing vessel reportedly assisted with the rescue.

According to the US Navy, two F/A-18F Super Hornets were involved in an “in-flight mishap” at approximately 10:40 ET, during a routine training mission off Cape Hatteras, North Carolina.

http://www.infowars.com/two-us-navy-f-18s-crash-in-the-atlantic-off-north-carolinas-outer-banks/

 

Why Most of Chicago’s Banks Failed during the Great Depression: The Puzzle Resolved


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The city of Chicago had the highest urban bank rate failure during the Great Depression. A new study by Dr. Natacha Postel-Vinay just published in the prestigious Journal of Economic History uncovers the link between Chicago’s huge real estate boom and bust during the 1920s and the failure of the majority of Chicago’s banks in the early 1930s. In her article “What Caused Chicago Bank Failures in the Great Depression?” Dr. Postel-Vinay establishes that it was mortgage lending that caused the majority of Chicago banks to fail. Her most significant finding is that the mass bank failure was not caused by imprudent lending and the poor quality of the mortgages. The mortgages were small relative to property prices and losses suffered by banks on their mortgages were insignificant. Rather, banks failed because mortgage lending rendered banks inherently illiquid and unable to withstand the mass withdrawal of deposits during the depression. In other words, Chicago’s fractional-reserve banks failed en masse while behaving prudently and going about their regular business: borrowing short and lending long.

By highlighting the role of fractional-reserve banks and financial distortions in the 1920s in explaining the severity of the the Great Depression, Postel-Vinay’s study further undermines the Friedman-Schwartz explanation which focuses almost exclusively on movements in the money supply, and completely ignores interventions in both labor markets and financial markets.

Tags: Money and Banks , Money and Banking

https://mises.org/blog/why-most-chicagos-banks-failed-during-great-depression-puzzle-resolved

 

WHY MOST OF CHICAGO’S BANKS FAILED DURING THE GREAT DEPRESSION


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A new study by Dr. Natacha Postel-Vinay just published in the prestigious Journal of Economic History uncovers the link between Chicago’s huge real estate boom and bust during the 1920s and the failure of the majority of Chicago’s banks in the early 1930s.

In her article “What Caused Chicago Bank Failures in the Great Depression?” Dr. Postel-Vinay establishes that it was mortgage lending that caused the majority of Chicago banks to fail.

Her most significant finding is that the mass bank failure was not caused by imprudent lending and the poor quality of the mortgages. The mortgages were small relative to property prices and losses suffered by banks on their mortgages were insignificant.

http://www.infowars.com/why-most-of-chicagos-banks-failed-during-the-great-depression/

Former Top Obama Official Says Operation Choke Point Had ‘Collateral’ Consequences


One of President Barack Obama’s former top Justice Department officials behind Operation Choke Point said Thursday the program had “unintended but collateral consequences” on banks and U.S. consumers.

“Unfortunately, as the investigations continue, so too have one of the unintended but collateral consequences of such vigilance: mass de-risking,”wrote  Michael J. Bresnick, who previously served as executive director of Obama’s Financial Fraud Enforcement Task Force, under which Operation Choke Point was created. “Members of the industry have raised their hands in frustration and simply avoided lines of business typically associated with higher risk. This reaction to [the Justice Department’s] enforcement initiative, and similar matters brought by the Federal Trade Commission and the Consumer Financial Protection Bureau, is certainly understandable.”

Bresnick addressed the issue in an op-ed for American Banker.

http://dailysignal.com/2016/04/07/former-top-obama-official-says-operation-choke-point-had-collateral-consequences/

German Banks Told To Start Hoarding Cash


In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic.

They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow.

This is the sort of theory that works really well in an economic textbook. But it doesn’t work so well in a history textbook.

Cheap money encourages risky behavior. It gives banks an incentive to give ‘no money down’ loans to homeless people with no employment history.

It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).

Banks are supposed to be conservative, responsible managers of other people’s money.

When central bank policies penalize that practice, bad things tend to happen.

Traditionally when a commercial bank in Europe wants to play it safe with its customers’ funds, they would hold excess reserves on deposit with the European Central Bank.

In the past, they might even have been paid interest on those excess reserves as an extra incentive to be conservative.

Now it’s the exact opposite. If a bank holds excess reserves on deposit at the ECB to ensure that they have a greater margin of safety, they must now pay 0.3% to the ECB.

That’s what it means to have negative interest rates. And for the bank, this eats into their profits, especially when they have tens of billions in excess reserves.

Talk about being between a rock and a hard place.

On one hand, banks stand to lose a ton of money in negative interest. On the other hand, they put their customers’ deposits at risk if they don’t hold extra reserves.

Well, the Bavarian Banking Association has had enough of this financial dictatorship.

Their new recommendation is for all member banks to ditch the ECB and instead start keeping their excess reserves in physical cash, stored in their own bank vaults.

This is officially an all-out revolution of the financial system where banks are now actively rebelling against the central bank.

(What’s even more amazing is that this concept of traditional banking– holding physical cash in a bank vault– is now considered revolutionary and radical.)

http://www.zerohedge.com/news/2016-03-04/revolution-begins-german-banks-told-start-hoarding-cash

GERMAN BANKS TOLD TO START HOARDING CASH


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German newspaper Der Spiegel reported yesterday that the Bavarian Banking Association has recommended that its member banks start stockpiling PHYSICAL CASH.

Europe, of course, has been battling with negative interest rates for quite some time.

What this means is that commercial banks are being charged interest for holding wholesale deposits at the European Central Bank.

In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic.

They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow.

This is the sort of theory that works really well in an economic textbook. But it doesn’t work so well in a history textbook.

Cheap money encourages risky behavior. It gives banks an incentive to give ‘no money down’ loans to homeless people with no employment history.

It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).

http://www.infowars.com/german-banks-told-to-start-hoarding-cash/

40 banks test bitcoin tech for trading bonds


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A group of 40 major banks, including Goldman Sachs and Barclays, have tested a way to trade fixed income assets using the blockchain, the technology that underpins bitcoin, in a move that highlights how serious the world’s biggest lenders are about the technology.

Financial technology firm R3 CEV, which brought together the banks last year to work on blockchain applications, announced the move Thursday.

Blockchain works like a huge, decentralized ledger for the digital currency bitcoin, recording every transaction and stores this information on a global network so it cannot be tampered with. However, most experts agree that the technology is not close to mass adoption and is still just in the trial phase.

The technology can be potentially be applied to wide array of uses and, for financial firms, some of the most interesting areas involve the clearing of trades. Experts say the blockchain will allow a large number of transactions to be settled in a matter of minutes or even seconds as well as being more secure, since each transaction is recorded and cannot be tampered with. At the moment, the process of settling some trades can take days.

http://www.cnbc.com/2016/03/03/40-banks-trial-bitcoin-tech-for-trading-bonds.html