IMF firms global growth forecasts on resilience; China-US talks extended; US sentiment hurt by jobs worries; US signals much more debt raising; UST 10yr at 4.33%; gold and oil rise; NZ$1 = 59.6 USc; TWI-5 = 67.5

It is effectively isn't it?

Lol - he effectively calls the housing market a pyramid scheme or ponzi

Maybe he watched the Tucker Carlson podcast with Richard Werner. I did. It's close to 3 hours long.

Werner came out with the Ponzi metaphor as it relates to how the housing markets across the Anglosphere are essentially not run by market dynamics and banks set the price. 

And there it goes...

Rental market softens: Median Auckland price down 2% on year, ‘affordability ceiling’ curbs rises

It is the first time since 2009 that the median rent has dropped.

Werner doesn't make any recommendation for credit distribution to be centralized. On the contrary. He believes that having as many commercial localized banks as possible is a good thing. He even puts it down as instrumental in the success of the China economy. But in the Anglosphere, central banks prefer to have fewer banks - consolidation and centralization. 

Werner claims central banks were often established as cartels by the largest banks to protect their interests. These institutions can coordinate policy and bailouts, offering implicit guarantees that encourage riskier behavior among major players, raising barriers for smaller banks. 

Modern regulation and supervision, often led or mandated by central banks, tend to be resource-intensive - requiring capital buffers, compliance, and reporting mechanisms that are far easier for large banks to adopt than for local or community banks. As a result, consolidation accelerates, reducing the number of small banks and increasing the dominance of systemically important institutions.

 In times of crisis, central banks historically focused bailouts and liquidity support on larger banks, frequently allowing smaller institutions to fail. For example, during the Great Depression in the U.S., the Federal Reserve did not bail out thousands of small, local banks, which led to their absorption by larger competitors. Depositors lost savings, while surviving large banks expanded their reach.

With his post at 2:33 today, I think Phoenix answered your question very well, Murray.



What I would add is that the spirit of PBS (Public Banking Solution) which Werner supports, needs to be implemented at all levels of banking - right from the Central Bank down to banking at a local community, cooperative, and savings bank level.



In that way, the more banks and competition there are, the better society and the economy are served. Private banks with third-party ownership wouldn't be excluded, but they would have to compete for customers on the same playing field to be able to survive. 



In this system, the central bank would play a much lesser role, or even cease to exist, because no longer would they be lording over the private banks that traditionally create ~97% of the money supply. 



I totally support Werner in his argument for decentralising the banking system based on Germany’s local cooperative banks like the Sparkassen and Raiffeisen banks, which operate as not-for-profit entities.



The focus on serving local communities and small businesses reduces the need for a dominant central bank by empowering local institutions to create and allocate credit for productive purposes.



Meaningful reform would see central banks having a minimal role, potentially limited to clearing and settlement functions or acting as a lender of last resort, rather than directing credit or setting broad monetary policy.



The focus would shift to ensuring that money creation serves public needs, which could be managed by treasuries or decentralised banking institutions.



Treasuries could take on a more significant role, and governments could stop issuing bonds to fund deficits, and instead borrow directly from banks or community banks through standard loan contracts, eliminating CB central bank interventions.



The Treasury would work closely with decentralised public banks to ensure that credit creation aligns with national economic priorities, such as infrastructure development, support for small businesses, and the productive economy, rather than leaving this vital policy choice to a central bank driven by private interests.



DAH FED - the worst model on planet Earth - a lesson to the world of what not to do.



Perhaps the best way to envisage how a pure PBS at CB level could have an immediate effect on societal wealth, real productivity and investment in infrastructure is to reflect on the ownership of the New York Fed - the most outrageous example of a CB model ever dreamt up.



This is the largest and most obscene money spigot on the planet. It is 100% owned by a private banking cartel with over 70% of the shares owned by just two mega-banks, Citibank and JPMC - they just happen to be two of the most outrageously reckless banking entities in existence.



These two banks were not only instrumental in causing the crisis, but were also bailed out with massive taxpayer-funded support and emerged stronger, effectively being rewarded for their reckless behaviour.



Citi's collapse, were it not for the Fed bailout, was driven by its massive exposure to subprime mortgages and off-balance-sheet entities, which hid significant leverage.



Citigroup’s practices, enabled by the 1999 repeal of the Glass-Steagall Act, allowed it to merge commercial banking with risky investment banking, fueling massively speculative activities and systemic risk.



JPMC also contributed significantly to the crisis through its involvement in derivatives and mortgage-backed securities - an FCIC report noted that JPMC’s leverage was between 20:1 and 22:1, indicating substantial risk-taking.



JPMC’s acquisition of Bear Stearns and Washington Mutual during the crisis exposed it to toxic assets from these failing institutions, which were later tied to legal settlements for misconduct.



JPMC was fined $296.9 million for betting against toxic mortgages after the crash began, profiting from the financial catastrophe it helped create.



Citigroup received the largest taxpayer bailout in U.S. history during the 2008 GFC - over $517 billion - including...

• $45 billion in capital from the U.S. Treasury.
• Over $300 billion in government guarantees on its dubious assets.
• $5.75 billion in guarantees on its senior unsecured debt and $26 billion on its commercial paper and interbank deposits by the FDIC.
• A secret revolving loan facility from the Federal Reserve, providing a cumulative $2.5 trillion in below-market-rate loans from 2007 to mid-2010

As the Martens of WSOP pointed out... "the bailout as a subsidy to investors at taxpayers’ expense - Citigroup’s survival relied upon Uncle Sam’s open wallet, which blocked meaningful reform and perpetuated its risky culture."



They argued that these bailouts were part of a broader $16.8 trillion government commitment, with $4.6 trillion paid out, far exceeding the commonly cited $700 billion TARP figure.



Citibank’s Rewards:

• Despite its central role in the crisis, Citigroup emerged intact and larger, with minimal structural reform. The Martens argue that the bailout allowed Citigroup to avoid nationalisation or liquidation, preserving its “bank culture that had repeatedly brought losses and bankruptcy.” They suggest that wiping out shareholders and liquidating assets could have restored confidence and reduced moral hazard.
  
   
• Post-crisis, Citigroup continued to engage in risky activities, such as holding $2.6 trillion in off-balance-sheet assets as of December 31, 2023, compared to $1.7 trillion on its balance sheet. Citigroup’s stock rose 58% the day after its bailout was announced, and the cost of insuring its bonds against default fell by half, signalling restored investor confidence due to government backing rather than internal reform.
  
   
• WSOP view Citigroup’s survival as part of an “institutionalised wealth transfer system” from taxpayers to the 1%, enabled by repeated Fed bailouts (e.g., in 2008, 2019, and 2020)
  
  
  
  JPMC's Rewards:
  
   
• JPMC emerged from the crisis as the largest bank in the U.S - controlling 70% of bank assets alongside other megabanks. Its acquisitions of Bear Stearns and Washington Mutual, facilitated by Fed support, allowed JPMC to buy these failing institutions at bargain prices, significantly expanding its market share.
  
   
• The Martens argue that JPMC’s relatively strong position allowed it to avoid the worst of the subprime lending fallout, enhancing CEO Jamie Dimon’s reputation as a skilled leader. Dimon himself claimed JPMC’s actions were to “support our country,” but the Martens see this as self-serving, as the acquisitions exposed JPMC to legal liabilities but also cemented its dominance.
  
   
• Despite a $13 billion settlement in 2013 for misconduct related to mortgage-backed securities (with much of the wrongdoing attributed to Bear Stearns and Washington Mutual), JPMC remained profitable and faced no significant structural penalties. The Martens highlight that this settlement included $9 billion in fines and $4 billion in consumer relief, partially offsetting taxpayer losses from the Fannie Mae and Freddie Mac bailouts.
  
   
• They criticise JPMC’s continued risk-taking, such as holding $3.2 trillion in off-balance-sheet assets as of December 31, 2023, and its alleged violation of capital reserve rules, which a whistleblower claimed allowed JPMC to hold less capital and boost profits

  Broader Critique and Implications

• Wealth Transfer and Moral Hazard: The Martens argue that the bailouts of Citibank and JPMC were part of a systemic wealth transfer from the 99% to the 1%, with the Fed’s actions in 2008, 2019 (repo loans), and 2020 (COVID-19 bailouts) reinforcing this pattern. They view the lack of punishment for megabanks as creating a moral hazard, where banks know they are “too big to fail” and thus take excessive risks.
  
   
• Regulatory Failure: They criticise the repeal of Glass-Steagall in 1999, which enabled the creation of Citigroup and similar megabanks, as a key enabler of the crisis. The Dodd-Frank Act of 2010, meant to curb such excesses, has been undermined, with banks like JPMC regaining derivative privileges and continuing risky practices.
  
   
• Political Influence: The Martens point out that Wall Street megabanks, including Citigroup and JPMC, are among the top campaign donors to politicians like Senator Chuck Schumer, suggesting that political ties protect these banks from meaningful reform.
  
  
  
  SOME FINAL NOTES - including some notable customers...
  
  
  
  JPMG is small fry compared to Trump, when it comes to felony convictions - a mere 6 compared to Captain Chao$'s 34.
  
  
  
  But total fines and out-of-court settlements amount to over $40 billion just since 2000. Of course, these are simply paased off as operating expenses deployed, as they ply their trade - besides, they control the money spigots anyway.
  
  
  
  Banking for the likes of Bernie Madoff, Epstein and the like... cough, splutter...
  
  
  
  JPMC served as the primary bank for Bernard Madoff’s Ponzi scheme, which operated from the 1970s until his arrest in December 2008, defrauding investors of approximately $17.3 billion in principal.
  
  
  
  The bank’s involvement spanned over two decades, handling massive financial transactions that facilitated the largest financial fraud in U.S. history.
  
  
  
  JPMC provided banking services to Jeffrey Epstein from 1998 to 2013, facilitating his sex trafficking operations by allowing large cash withdrawals and payments to co-conspirators, despite internal concerns and red flags about his activities.
  
  
  
  From 2006 to 2013, JPMC earned $40 million in fees from Epstein, including $20 million directly from his accounts and $20 million from clients he introduced.
  
  
  
  A few accounts like this, and as the old cliche' goes - pretty soon it can add up to some real money!
  
  
  
  I hope that answers the question, albeit in a  somewhat long-winded way
  
  Col