Paul Krugman: Bull Market Blues

Like most economists, I don’t usually have much to say about stocks. Stocks are even more susceptible than other markets to popular delusions and the madness of crowds, and stock prices generally have a lot less to do with the state of the economy or its future prospects than many people believe. As the economist Paul Samuelson put it, “Wall Street indexes predicted nine out of the last five recessions.”

Still, we shouldn’t completely ignore stock prices. The fact that the major averages have lately been hitting new highs — the Dow has risen 177 percent from its low point in March 2009 — is newsworthy and noteworthy. What are those Wall Street indexes telling us?

Citigroup Has More Derivatives than 4,701 U.S. Banks Combined; After Blowing Itself Up With Derivatives in 2008

By Pam Martens and Russ Martens

According to the Federal Deposit Insurance Corporation (FDIC), as of March 31, 2016, there were 6,122 FDIC insured financial institutions in the United States. Of those 6,122 commercial banks and savings associations, 4,701 did not hold any derivatives. To put that another way, 77 percent of all U.S. banks found zero reason to engage in high-risk derivative trading.

Citigroup, however, the bank that spectacularly blew itself up with toxic derivatives and subprime debt in 2008, became a 99-cent stock during the crisis, and received the largest taxpayer bailout in U.S. financial history despite being insolvent at the time, today holds more derivatives than 4,701 other banks combined which are backstopped by the taxpayer.

Richard Eskow: Eric Holder’s Justice

Eric Holder certainly has changed since his days at Columbia University. According to the New York Times, “as a boyish-looking freshman” he “was recruited by upperclassmen to help take over the R.O.T.C. office,” which they claimed as “a student center named for Malcolm X.” Actions like that, and heroes like Malcolm X, reflected the idealism that many of us shared in those days.

As attorney general, Holder chose not to prosecute banking giant HSBC for laundering Mexican drug cartel money. Holder, Assistant Attorney General Lanny Breuer, and other Obama Justice Department officials showed similar favoritism to other big banks.