LyrArc Article Gist
There are similarities in the Republican and Democratic party platforms in 2016. One area of agreement is in the reinstatement of Glass Steagall Act. That legislation made in the Depression period to separate commercial banking from investment banking was changed  when president Clinton made changes in a deal with Senators Phil Gramm and Jim Leach in 1999. The too big to fail problems of banks and the problems of investment banks during the 2008 financial crisis are attributed to the lack of Glass Steagall protections for financial stability and safety. The result is that in the post 2016 environment banks can expect a tougher regulatory environment. Another are is in trade where both parties are expected to take tougher positions to protect U.S. interests. The Republican platform calls for "better negotiated trade agreemets that put America first."

LyrArc Article Gist
This podcast in the WSJ takes up a Chinese startup Luckin Coffee that had major investors in the U.S. and China, including big banks in the U.S. and Europe.  The idea is simple- sell coffee in China to aspirational coffee drinkers following western lifestyles using mobile app. It is the story of huge investments and losses, and collapse of a NASDAQ listed company with what the WSJ investigation calls fabricated sales. Why are infrastructure and health, education products starved of capital left high and dry, while billions are poured into such investments with huge losses. All you need is this article in the WSJ of Sept 16, 2015, shown in today's articles. Showing forecasts of rapid growth of coffee consumption for an aspirational western lifestyle consumer in China, and a small mobile app investment to attract investors in a startup -if you refashion the coffee retail outlets as a tech company by selling coffee for delivery/takeout by mobile app. Luckin Coffee in China shown in the podcast in today's articles did this and attracted billions of dollars in investment from investors, including large banks and financial companies in Europe, U.S. and China, only to collapse in 2 years with losses and investigations in China and the U.S. Luckin Coffee soared after its NASDAQ stock exchange listing in 2018 only 1 year after its founding. WSJ calls it "brazen" the effort to add tech hype to a coffee company and have it listed on NASDAQ in just over a year, only to see its sales and value collapse just as quickly. $400 million in convertible bonds losing 90% of their value, the stock losing most of its value and NASDAQ delisting the stock after $311 million in fabricated sales were found as reported in the South China Morning Post. For U.S. investors the problem is that Chinese companies can list on the NASDAQ or other stock exchanges in the U.S., but U.S. investors cannot look at financial records of companies in China. Yet there are basic questions- why is it a tech company? Why are investors like big banks and other large financial investors pushing so much money into such places when there is so much that needs to be done in health and infrastructure investment, and real tech investment? 5G or 6G? Health systems? Ocean Grounds has a coffee store in Shanghai, Pacific Store has coffee retail outlets in China, and Starbucks is still in the business with retail outlets - remember none of these companies are tech companies. In 2017 Luckin Coffee started by making it look techy with a mobile app and refashioned itself as a tech company.  What is so big about a mobile app as there are hundreds of millions of apps. The rest came from making it look like Starbucks, right down to baristas, fancy coffee machines, and opening stores near Starbucks, according to the Podcast in the WSJ.The difference between Starbucks and Luckin Coffee - the price Luckin Coffee would sell for about $2 compared to about $4 for a Starbucks latte. Yet do this by pricing at closer to Starbucks and issuing promotions discounts constantly on the mobile app, that would bring the price to about $2. That is all it takes to make a tech company nowadays. No scientific research, no science and technology, no technical experience, nothing of the kind that led to the invention of the computer chip or the vaccines that are now being developed, or research activity of any sort. Banks, financial companies are willing to channel huge amounts of money into these places and lose it, as they did in We Work, and are doing at companies such as ride sharing app companies, as well as other app companies without any core technological component or value added such as infrastructure or health products. Only it is not the bank's money but the people's money and savings that are deposited at banks and channeled into investments. At the same time as investments in much needed infrastructure and health, education, services that really matter to us as a society, are neglected and starved of capital.     ...

LyrArc Article Gist
Private credit market has grown to $2 trillion in 2025 in 10 years  reaching $3.5 trillion in 2028 yet remains unregulated. Private credit is when investment funds such as Blackstone and Apollo, others, loan money to large companies. After the 2009 financial crisis bank regulation was tightened so that riskier loans were kept off the banks books to avoid another financial crisis. This led to the private credit market as a source of loans for small companies.Over 10 years the loans are now going to large companies and it is growing fast. As is typical in the capitalist economies regulation falls behind new financial developments or tech developments. Congress is always playing catchup and is distracted by other issues or has lobbyists asking for less regulation.  This report in the WSJ says when companies like Blackstone have private credit loans of $260 billion this can pose substantial risks for the US economy when this area of lending has no regulation as is required for a modern economy to function correctly. Private credit offers returns of 14-16% for these funds with risks associated and regulators are not asked to set the required rules. It only makes bank regulation ineffective as lending goes to unregulated parts of the economy. ...

LyrArc Article Gist
Swiss shareholder activist Ethos Foundation called for personnel changes at UBS. Dominique Biedermann, head of Ethos called for the replacement of Kaspar Villiger and Carsten Kengeter, who head UBS investment bank. Biedermann said UBS should leave investment banking and former Deuthche Bundesbank President, Axel Weber, should join UBS as chairman earlier than the planned 2013 date. He suggested Hugo Baenziger, current chief risk officer at Deutsche Bank, rather than interim CEO Sergio Ermotti, who is an investment banker, as the right person for the CEO position at UBS.

LyrArc Article Gist
Swiss regulators engineer UBS buying Credit Suisse for over $3 billion in an emergency rescue. This happened after the Swiss central bank made and infusion of $50 billion into Credit Suisse that failed to stabilize the Swiss bank. With outflows of $10 billion Swiss Francs in the week recently Swiss regulators had to quickly arrange UBS buying out Credit Suisse for over $3 billion.  In its early days in the nineteenth century Credit Suisse helped build the Swiss electricity grid and the Swiss rail system. After World War II it was part of the reconstruction effort in Europe. After 1990 it merged with banks in the US and engaged in international acquisitions, investment banking operations, and wealth management. This led to problems and the company had to make settlements for each of its businesses in the last three decades, leading to the current crisis. The bank is seen as lacking good governance, and taking on excessive risk in the pursuit of profit. A bank that was known for setting up key infrastructure in Switzerland in the nineteenth century succumbed to poor management and risk taking over one hundred years later as it fumbled in each of its businesses. ...

LyrArc Article Gist
The business model where hedge funds take in short term money from investors for a 2% fee and a fifth of profits, and invest it in longer term bets and sometimes illiquid situations, is breaking down. This happened to the investment banks and ended with the collapse of Lehman and Bear Stearns. With losses approaching 20%, many illiquid investments, and investors asking for their money, this model may lead to a rapid shrinking of the hedge fund industry, which now has about $2 trillion of investor money.

LyrArc Article Gist
Local investment companies were allowed to borrow beyond their limits after the financial crisis of 2008. There are about 8000 local investment companies (LIC's) and they were used during 2008-2010 to get funds quickly to projects. The LIC's borrowed for local governments, and borrowed extensively to build roads, railroads, power plants, and other infrastructure and buildings. Northwestern University Professor Shih has followed this carefully, and estimates LIC debt owed to banks at $1.68 trillion, or 34% of China's GDP. Some of the banks have collateral in land, but many banks are relying on the ability of the local governments to pay back the loans. And some of this is in money losing projects.

LyrArc Article Gist
As Goldman Sachs is about to report its first quarterly loss since 1929 of $2 billion it finally ends its long profit making run. In a Bloomburg interview on December 14, Ace Greenberg an old investment bank hand at Bear Stearns, says the days of investment banks like Goldman Sachs are now past. The old model investment banks are gone.

LyrArc Article Gist
What we bring is scale, says Teskey, co-founder of Brookfield Asset Management, which has set a target of $25 billion for 2 private funds for climate action. $10 billion has been raised and it continues fundraising. $2 billion from the UAE for energy transition fund and $1 billion for emerging markets transition. Additional fund raising will take place for emerging markets fund. Across all its funds Brookfield says it has raised $100 billion for investment in renewable power and energy transition projects. The demand for renewable power comes from cities and companies looking for cleaner ways of powering everything from data centers to manufacturing. It also comes from regulations on climate and from generous incentives offered by governments. The demand for renewable power from corporates, says Connor Teskey of Brookfield, is simply overwhelming. Teskey and Mark Carney, the former head of the central banks of UK and Canada and the point man on climate for the UN, are co-founders.   Total global energy transition investment was $1.8 trillion in 2023, a 17% increase from 2022, and yet this is nowhere near the needed investment of $4.8 trillion for climate goals needed annually for 2024 to 2030. Lyrarc.com will track these investments in its Climate Change Action part of the site. Brookfield is looking at cutting emissions in what is a broader strategy. whih means it will invest in fossil fuel projects where it can significantly cut emissions. This includes cement and steel makers.    ...

LyrArc Article Gist
In depth interview with Kyohei Morita, chief economist of Barclays Capital, Finance Asia explores different aspects of the Japanese economy and developments after 1987 and under Koizumi, the role of exports and how ordinary households are affected. He points out a few important things about the Japanese economy that are not generally recognized. One is that Japanese banks are vulnerable in the way the subprime crisis has exposed banks in the USA. Their vulnerability comes from owning 15% of the shares on the stock market which came down from a higher number after years of reducing stock holdings. When the Nikkei drops below 9000 this reduces the bank's capital and leads to credit tightening. Morita points out the risk of turning a moderate slowdown from lower exports into a severe slowdown if banks are reluctant to lend. The other point he makes is that small nonmanufacturing companies in Japan have to thrive for Japan to thrive, but he is bearish about private consumption. In a revealing statement he says that in his research he has found that the path connecting corporate profitability to households is seriously eroding. This is due to globalization as Japanese companies are offshoring aggressively, and 30% of the Japanese market capitalization in held by foreigners. His point is that Japanese managers now tend to see wages as costs just like American managers do and not the way they did in the past, so salary costs are suppressed in favor of shareholder dividends which flow out of Japan. Finance Asia referred to an OECD study that shows Japan's ranking in terms of per capita income fell from fifth highest in the OECD in 1992 to 19th in 2002, a fact that Morita recognizes as strange as western economies have tended to follow relatively stable long term income growth, and which he attributes to Japan's terrible demographics with population shrinking since 2006 and more elderly and retired supported by a smaller percentage of working age people. In an exceptionally revealing statement Morita points out that Japan has globalized from the outside but not from the inside. Japan he says needs more foreign direct investment and ideas, and more immigrants, fresh labour and fresh taxpayers. Which is remarkably true as Japan tends to be rather insular as a country and tends to keep out immigrants. The influx of Polish and Eastern European immigrants to the UK under the Blair-Brown Labor government years would be unimaginable in Japan. In the meantime Japan's estimated $15.7 trillion in financial assets held by households or three time national GDP is something that makes it possible for now for Japan to sustain the upward trend in the debt to GDP ratio....

LyrArc Article Gist
Edward Johnson and daughter Abby Johnson- Fidelity Investments succession turmoil and Abby Johnson emerging as CEO is covered in a new book- House of Fidelity by Justin Baer, Deputy Markets Editor WSJ. CEO Edward Johnson (Ned) failed to come up with a succession plan and executives under him were planning to sell the company to Chase or another bank. Ned had talked to Chase's Dimon in 2005 and said he was not interested in selling the company founded by his father. Yet this is what executives under Ned, Reynolds had in mind, who did not have confidence in Abby Johnson's leadership. Fidelity Investments has recovered from poor performance in that period and manages the pension plans of employers in the US, being the largest in this business. In 2026 Fidelity manages life savings of 20% of American adults and 50% of these customers signed up in last 5 years, says WSJ. After a period in her performance in the mutual funds business which was not great Abby was listed for demotion by executives under her father, who would sent her to run the philanthropy part of the business. It shows how awoman now 64 years struggled through this period and took the bold step of defying her father through control of 41% of the stock of the company to gain control of the company- a step that led to her father relenting and letting Abby run the company. It is a tale of how in such situations even the most favored can be put at a disadvantage by perceptions - in this case by Reynolds of Abby's leadership and ability- and need to act swiftly and decisively after impressions have been formed that lead to an outcome that doesn't need to occur. Her father Ned even though he in his younger period was a good stock picker, failed in two ways. By not planning a clear succession and lacking confidence in his daughter to overcome temporary obstacles. ...

LyrArc Article Gist
As the Indian economy experiences a slowdown in 2019-20 a revealing statistic that lack of loans in the banking system is playing a critical role comes from the central bank, the RBI. Compared to the 6 month period April to September 2018 when 800,000 crore rupees loans were made to borrowers in the first 6 months of 2019 the loan volume dropped to 90,000 crore rupees.

Bad loans in the banking system and mismanagement in the banking system have caused the drop in loans, leading to government efforts to inject money into banks and consolidate banks by merging failing banks into larger better run banks. Additional causes of a slowdown are the drop in consumption, sales decline in the auto and other industries. A cut in corporate tax and the 2020 budget with investments in infrastructure, relaxing fiscal limits to invest more.  are designed to stimulate growth.

LyrArc Article Gist
The Fed gets tougher on "too big to fail" but how tough? Does it have the guts to go after this problem asks Peter Eavis. If he does Bernake would go down in history as a hero says Eavis. Meanwhile Fed Governor Tarullo clearly point to the utterly inconceivable fact that after a crisis of these proportions with large banks being bailed out, the remaining banks and financial institutions are larger than before the crisis. And the banking lobby has stalled regulation to control the problems in derivatives trading and other areas. Splitting up or downsizing the banks and separating their social function as deposit takers in the economy from their trading desks and investment activity, is being advocated by central bankers from Volcker to Mervyn King. See links.

LyrArc Article Gist
Bank of America plans to sell its $8 billion stake in China Construction Bank. Bank of America will post a $3.3 billion gain on the sale of these shares. This lowers Bank of America's stake in China Construction Bank to 5% from 10%. Buyers include Temasek Holdings of Singapore. Bank of America's new CEO Brian Moynhan is trying to sell noncore assets to bring the bank closer to meeting new reserve capital requirements set by the Federal Reserve. These steps include selling its consumer credit card unit in Canada, and plans to sell other non-U.S. credit card units. Warren Buffett recently made a $5 billion investment in Bank of America. Restructuring of consumer units will lead to job reductions of 10,000. Earlier this year the bank made 6000 job reductions.

LyrArc Article Gist
Chase bank investments in strategic companies of the US with the US government in a Jamie Dimon effort October 2025. Chase Bank CEO Jamie Dimon says- “It has become painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing—all of which are essential for our national security." 

LyrArc Article Gist
Losses on trading by JP Morgan Chase bank's London "Whale" reach $5.8 billion by July 2012, according to Finance chief Doug Braunstein. The bank will restate results for the first quarter of 2012, with first half losses of $5.1 billion on the trades made by the Chief Investment Office. Overall profits for the second quarter were $4.96 billion compared to $5.43 billion in the prior year quarter.

LyrArc Article Gist
A senior Bank of England official says the Brexit referendum led to loss of 29 billion pounds of investment since 2016.

LyrArc Article Gist
The U.S. makes its first interest rate cut since 2008. The U.S. central bank, the Federal Reserve cut interest rates by a quarter percentage point on July 30 2019. For seven years after the financial crisis of 2009 the U.S. central bank cut rates to generate business investment confidence and initially to prevent a deep crash in stock markets. In making this cut the U.S. is now a follower of the European central bank which is cutting rates to stimulate the economy. The U.S. does not want to see too much divergence with European interest rates which are showing negative yields and the U.S. at about 2.25% putting the U.S. with a disadvantage in trade from a stronger currency that results from higher rates. That crisis was a result of poor lending by banks in an irrational search for profits that never materialized. It ended up hurting the savings of ordinary Americans who earned close to zero on savings accounts. A similar pattern was seen in Britain and the European Union, resulting in a loss of confidence of working class voters in the established political parties and the emergence of Trump in the U.S., UKIP in Britain, AfD in Germany and the National Front in France.  ...

LyrArc Article Gist
The Fed and FDIC issue a report on the failure to regulate SVB and Signature bank. It says the failure to regulate stems from the law passed by Congress leaving a gap for regulation of mid sized banks, and the appointment of Randall Quarles to the Fed supervisory position by then president Trump in 2019. The result was a 40% decline in hours spent by supervisory regulators on the SVB bank even as its assets grew rapidly. Overall the supervisory hours for the Federal Reserve system as a whole declined. This led to cultural issues under Mr. Trump where less regulation the better was the prevailing attitude. Fed report in Fedspeak says- "Staff felt a shift in culture and expectations from internal discussions and observed behaviour that changed how regulation was executed." It would take a special effort by the Biden administration to bring the situation under control to keep the nation's banking system healthy and strong to support the investments the economy needs. After the 2009 crisis and the decade lost to the US economy and the American people from losses in unemployment and savings as a result of deregulated banks, another crisis was prevented. This time the Fed, FDIC, General Accountability Office are all clear about the value and role of regulation in a properly functioning economy, instead of the pushback after the 2009 crisis to regulation. Once again president Biden has shown the way.   ...

LyrArc Article Gist
The impact of the bank losses will be felt in a process of deleveraging that will exagerate and worsen the credit crunch for years. As banks on the way up in a positive profits cycle can make more money only by leveraging with the leveraging factor may be about 10 times, for an investment bank much higher about 30 times, and on the way down as profits shrink the deleveraging cycle works just as sharply. For every dollar lost as the deleveraging cycle moves into reverse a bank has to contract lending by $10, and for every dollar lost an investment bank has to contract lending by $20-$30 depending on how leveraged it was. A recent study with Anil Kashyap, University of Chicago as one of the authors says the lending contraction frm the mortgage related losses alone would lead to a $1 trillion credit contraction for the USA economy and expects a big shrinking of banks. As all banks contract and some banks go under private equity and hedge funds are likely to take on some of the role of investment banks but they are not regulated so the situation in terms of regulatory oversight would be just as risky as before. Treasury has a list of 100 banks in danger and FDIC has a list of 90 such banks. Merrill Lynch's $48 billion in collateralized debt obligations underwritten in 2007 are almost all on the verge of default or already in default and it will sell off assets like Bloomberg and Black Rock to raise capital....

LyrArc Article Gist
India's economy is at 2.597 trillion dollars at the end of 2017according to World Bank figures, surpassing 2.582 trillion for France. India's economy has doubled in a decade and is expected to pass Germany and Japan in GDP by 2032, to become the third largest after the U.S. and China.

As China's growth has slowed India's is growing. It recovered by July 2017 from one time events designed to actually spur growth such as the effort to implement a nationwide tax for GST. Demonetization also contributes to growth by accelerating the shift away from cash to recorded and taxable transactions. The tax revenue is increasing as less of the economy is in the black market sector. Higher tax revenues enable larger investments in health, education and infrastructure.

New bankruptcy law and speedy resolution of bad debt of banks is also laying the ground for future growth with new investment.

LyrArc Article Gist
Ring-fencing the retail operations of UK banks from possible losses in the investment banking activities was part of proposals by the Independent Commission on Banking in the UK. Now a parliamentary commission calls for periodic reviews of such ring-fences to ensure this separation is actually still in place, and not been diluted or otherwise removed by bending the rules to favor banks because of lobbying by the banks. It says "over time the ring-fence will be tested and challenged by the banks. Politicians too could succumb to lobbying from banks and others, adding to pressures to put holes in the ring-fence." The report emphasized that a lot more needs to be done to restore standards in banking, especially after recent reports of LIBOR and other revelations of market rigging and corruption. The emphasis in the report is for banks "to be discouraged from gaming the rules."

LyrArc Article Gist
"My economic plan is working and we are just getting started," says president Biden about the US economy as it registers growth of 2.4% in the second quarter. Inflation is cut to 3% from about 9% last year. Even US central bank Fed increases in rates by 5 percentage points since March 22 at consecutive bank meetings has not slowed down the US economy enough. Biden says there is nothing accidental about this. Biden pushed investment in the US. Business investment increased by 56% in the last quarter accounting for a third of the economic growth, much of it in infrastructure, in bridges and roads, in manufacturing plants. Biden administration has allocated $299 billion in infrastructure funding for projects, another $503 billion is done by private investment. And more is coming down the pipeline.