Banks

Stimulus Is Failing: Global Banks to Break Support Levels, US Dollar Plummets to 2-Year Low

31/07/2020 by Idelto Editor

Central banks worldwide have injected further stimulus into the economy, as European Union (EU) leaders recently approved a $2.1 trillion budget, the Bank of England boosted stimulus injections in mid-June, and the Federal Reserve announced on Wednesday that it would keep lending until the end of the year. Meanwhile, bank indexes show that financial institutions based in the UK, Japan, and the EU are about to break support levels that have held up since the mid-eighties.

The global economy looks bleak and the world’s central banks are trying really hard to keep the monetary system from breaking even further. This week, members of the U.S. Federal Reserve met for a two day Federal Open Market Committee (FOMC) meeting to discuss the U.S. economy. Fed chair Jerome Powell told the press that the “pace of recovery looks like it has slowed”

During the two-day FOMC event, Powell and the committee decided to keep the benchmark lending rate unchanged, at near zero. In addition to this move, the Federal Reserve also said that it plans to continue lending to private financial institutions until the end of the year. The lending was supposed to halt in September, but the committee is keeping the money flowing.

Further, the Federal Reserve doesn’t think that the benchmark lending rate will be changed until the year 2022. “The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world,” a statement from the Federal Open Market Committee explained. “Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year.”

Following the meetings on Tuesday and Wednesday, the U.S. Commerce Department published the worst gross domestic product (GDP) report ever. The GDP shrank by 32.9% during the second quarter of 2020 according to the report. The chief economist at IHS Markit, Nariman Behravesh, called the report “horrific” and said: “We’ve never seen anything quite like it.” Analysts believe the decline was largely fueled by a lack of summer consumer spending and economists expect a disastrous economic fallout in the winter.

In addition to the Federal Reserve, central banks worldwide are distributing stimulus injections like water. News.Bitcoin.com recently reported on the $2.1 trillion budget approved by the European Union, and the Bank of England (BoE) added an additional £100 billion ($131.2 billion) in asset purchases on June 18. BoE also revealed that the monetary policy committee plans to boost the central bank’s asset purchase program to £745 billion.

In mid-July, the Bank of Japan (BoJ) decided to keep the country’s benchmark lending rate at -0.1% for Japanese banks that collaborate with the BoJ. Japan’s central bank also plans to keep the monetary policy stimulus going strong and Japanese leaders blame the economic challenges on the novel coronavirus.

Global Macro Investor and Real Vision Group’s Raoul Pal believes that the central bank’s moves worldwide will continue to bolster investments like gold and bitcoin.

Pal said on Thursday that the UK and Japanese banks are about to break significant support levels that held for decades.

“Another reminder to not lose sight of the big picture,” Pal tweeted. “UK banks are about to break the only support since the start of the index in 1986. EU banks had a small re-test of the cliff of death and new all-time lows most likely await. Japanese banks are rolling back down and will probably fall to all-time lows (below 1983).” The Global Macro Investor continued by adding:

This is one of the reasons the central banks are rushing to create digital currencies – it gives them the ability to run a banking system without banks, should they need it. U.S. banks don’t look like they are going to avoid a sharp fall in their share process either, but the U.S. banks look in better shape currently than the others.

Statistics show that the U.S. dollar plummeted to a two-year low on Thursday after the Bureau of Labor Statistics released unemployment data. The U.S. saw it’s second-consecutive week of increased unemployment claims and the $600 benefit insurance ends this week for millions of Americans.

The U.S. dollar dropped to lows not seen since 2018 on Thursday according to the currency’s trade-weighted index. The USD index against a basket of fiat dropped from 93.42 to 92.82 on July 30. It is the weakest the American dollar has been since May 2018, and a number of analysts have concerns about the currency’s future. Over the last two days, the Federal Reserve cited difficulties with unemployment levels and the liveliness of the U.S. economic system in general.

On Thursday, it was revealed that the U.S. saw 1.43 million new unemployment claims for the week. Collectively there are more than 54 million Americans that have filed claims, according to seasonally-adjusted data stemming from the U.S. Bureau of Labor Statistics.

“It is definitely a bit more cautious and dovish, and basically tells the market they’re not going to raise interest rates any time soon,” Kathy Lien, managing director at BK Asset Management in New York stressed on Thursday. “In an environment where the market is dumping dollars, it’s another excuse to drive it lower.”

A great number of global investors have said that the central bank’s stimulus and interest rate moves worldwide will continue to cushion precious metals and cryptocurrency markets. Bitcoin (BTC) has been hovering just above the $11k zone, while gold is trading for $1,957 per troy ounce of the fine metal.

Do you think the rounds of fiscal stimulus will bolster bitcoin and precious metal markets? Let us know in the comments section below.

The post Stimulus Is Failing: Global Banks to Break Support Levels, US Dollar Plummets to 2-Year Low appeared first on Bitcoin News.

Covid-19 Stimulus: Banks Will Gain $18 Billion in Fees for Processing PPP Relief Loans

15/07/2020 by Idelto Editor

The world’s banking cartel will gather $18 billion in fees for facilitating the settlement of small business Paycheck Protection Program (PPP) relief loans leveraged during the Covid-19 pandemic. The $640 billion in PPP relief loans stem from the CARES Act and allegedly there’s only $130 billion left for Americans looking for funds.

The Banks Will Acquire $18 Billion from Fees Simply by Processing PPP Loans

A recent report from the Washington Center for Equitable Growth details that financial institutions will gather close to 3% of the aggregate total of $640 billion in PPP relief loans just for processing the funds. The Washington Center for Equitable Growth’s (WCEG) policy director, Amanda Fischer said that banks stand to make $18 billion from the CARES Act from standard processing fees. “If we did it through a public institution, there would be [more than] $140 billion left,” Fischer stressed on Tuesday.

Fischer said that traditionally banks use the fees to cover the cost of risk provided that some of the loans turn out to be fraudulent. However, PPP loans stem from the government and the possibility of them accepting funky PPP loans is extremely low. “Basically it’s free money,” Fischer highlighted in her interview. Fischer also had shown that the fee processing is a nice lump sum of revenue for certain banks like JP Morgan Chase, which could acquire $864 million and New Jersey-based Cross River Bank stands to rake in $163 million.

The CARES Act: The Perfect Example of the American Government’s Corruption During Times of Crisis

The CARES Act has been controversial even before the bill was signed by Donald Trump when U.S. representative, Thomas Massie, told the public the stimulus bill bolsters a shroud of secrecy surrounding the Federal Reserve. The stimulus plan has also been under fire for incentivizing hospitals, as many hospitals, long term care centers, and nursing homes were facing budget issues well before the Covid-19 outbreak. A number of skeptics have accused hospitals and nursing homes of inflating the coronavirus death numbers.

Not only do people blame the government for giving banks the opportunity to rake in $18 billion from processing fees alone, but many Americans also blame the government for overreacting during the coronavirus outbreak. The American government was responsible for closing down a number of small businesses nationwide, but also chose a number of monopolies like Walmart to remain open. Because the government chose favorites by deeming some businesses ‘essential’ and others ‘nonessential,’ a tidal wave of small American businesses are starting to fail or will go bankrupt in the near future and never return.

‘A Failure of Preparedness’

The bitcoiner Andrew D (@bitcoingoup) on Twitter explained the situation quite well on Tuesday. “Jeff Bezos is $75 billion dollars richer this year,” Andrew D tweeted. “Your local comic book shop owner just declared bankruptcy and permanently closed his business after 13 years in the community. Neither event was the result of free market activity; both the result of our government’s meddling.” He further added:

We can no longer tolerate an expansionary monetary policy that benefits only the elite and continues to oppress the common man. We need to end the Fed. Enough is enough.

A number of analysts believe the controversial CARES Act and the $18 billion raked in from fees will bolster cryptocurrencies and transform the “bank business model in the post-Covid-19 world.” Americans and citizens from all around the world are getting fed up with the poor central planning that aims to keep the elite in power. Even the International Monetary Fund (IMF) believes that financial inclusion is being ignored by the traditional banking system, and a form of inclusion stemming from digital financial services will be a game-changer.

Amanda Fischer from WCEG noted during the end of her interview, the fact that banks have been allowed to reap $18 billion from relief programs means that central planners have no reliable infrastructure for people looking for quick access to money during times of crisis. “We should have invested in better systems,” Fischer said. “[It is] a failure of preparedness.”

The Small Business Association (SBA), the entity that handles PPP relief programs, has been under fire for a long time for not being willing to change the infrastructure when it comes to accessing disaster relief funds. The banks making revenue off simply processing the PPP settlement are likely not complaining about the lack of changes.

What do you think about banks standing to make $18 billion from processing PPP relief loans? Let us know what you think in the comments section below.

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US Turmoil and Negative Interest Rates – Billionaire Michael Novogratz Says ‘Watch Gold and Bitcoin’

02/06/2020 by Idelto Editor

For the first time since October 2019, Federal Reserve Chair Jerome Powell admitted to leveraging quantitative easing (QE) tactics. Powell explained on Friday, the central bank is now comfortable with leveraging QE on a regular basis. Furthermore, the Fed is planning on utilizing negative interest rates in the near future, according to a number of economists and analysts. The economic turmoil in the U.S., and abroad is causing a number of well known investors like Michael Novogratz to focus on bitcoin and gold.

Fed is ‘Comfortable’ With Regularly Invoking QE and Negative Rates in the US

The global economy has been shuddering and the U.S. economic system has been falling a lot harder than most. American debt relative to gross domestic product (GDP), jumped to 55% during the end of 2000 and twenty years later it is now 110%. The Federal Reserve has also created trillions of dollars on a whim, due to unprecedented panic sparked by the coronavirus outbreak.

The Fed balance has been jacked up to the tune of $6.9 trillion to date, as the central bank has expanded its powers beyond comprehension. In addition to all the dollars passed between the Fed and numerous financial incumbents, the central bank also chopped the benchmark interest rate to zero. If the Fed drops the interest rate below zero, to the negative zones, economists and market strategists think it will fuel the value of digital currencies like bitcoin and precious metals like gold.

Gold and Bitcoin

A recent report from the financial incumbent, Standard Chartered says that if the Fed starts to implement negative interest rates it will do so in a unique method. Meaning, it would likely go for a big “hail mary” and drop the benchmark rate to -0.5% to -1% fast. Standard Chartered’s report reveals that if the Fed does drop the rate below zero, then gold will jump to spectacular heights immediately after.

The bank thinks that the price per ounce of gold will skyrocket from today’s $1,700+ range, to a high of “$1,920 if Fed turns negative on rates.” Standard Chartered’s report doesn’t mention bitcoin, but the financial entity is very into blockchain technology concepts. Max Bronstein of Coinbase explained on Twitter, in response to a blog post written by former Fed chair Ben Bernanke, that the Fed may try to stave off lowering the benchmark rate below zero by creating more inflation.

“If you’re wondering how the Fed is going to try and stave off negative interest rates, here’s a potential preview, authored by Ben Bernanke himself,” Bronstein said. “The inflation target is going higher, expect another wave of debt monetization.” Moreover, Tesla founder Elon Musk believes the same and explained to the famous Harry Potter novelist, J.K. Rowling, that the Fed’s inflation problem makes the perfect case for bitcoin. Musk said:

Massive currency issuance by government central banks is making Bitcoin Internet money look solid by comparison.

Michael Novogratz: ‘When $10k Bitcoin Goes, It Will Move Fast – Get on the Train’

Despite people’s opinions that a wave of debt monetization may keep the interest rate from falling, Standard Chartered explained that the market may be convinced the Fed will leverage negative rates in the near future.

“Markets saw the Fed funds dipping briefly and very gently (1-2bps) into negative territory in mid-2021 before returning to positive territory (4-7bps) in mid-late 2022. We see this small move into negative rates as reflecting a strong market belief that the Fed will be on hold for an extended period. If the market is convinced that there is no room to raise rates, it will likely price in some probability of rates falling, however remote,” Standard Chartered said in the firm’s recent report.

The prominent Wall Street investor and Galaxy Digital founder, Michael Novogratz explained that because of the “turmoil in the USA” people should watch bitcoin and gold. “Watch Gold vs Bitcoin,” Novogratz tweeted. “If that chart breaks higher it will turbo boost Bitcoin.” Novogratz further added:

Bitcoin is coiling. It will take out $10k soon. All the tragic turmoil in the USA adds to the narrative. Budgets are going one way and it’s the opposite of balanced. When $10k goes it will move fast. Get on the train.

Bitcoin (BTC) touched a high of $10,280 on June 1, 2020, as the American nation has been dealing with mass riots and protests. Since then the cryptocurrency is battling heavy resistance and the price is hovering just above the $10k zone at the time of publication.

What do you think about gold and bitcoin prospering from the economic meltdown? Let us know in the comments below.

The post US Turmoil and Negative Interest Rates – Billionaire Michael Novogratz Says ‘Watch Gold and Bitcoin’ appeared first on Bitcoin News.

Covid-19 Economy Fuels Faith in Crypto: Trust In Bitcoin Over Banks Increased 3X Since 2017

19/05/2020 by Idelto Editor

The market research organization, The Tokenist, recently published a report called “Comparing Public Bitcoin Adoption Rates in 2020 vs 2017.” The study’s findings give a comprehensive look at the cryptocurrency ecosystem between 2017 and now. The researchers’ survey shows that since the post-Covid-19 economy is setting in, trust in bitcoin has grown 29% in the past three years.

Faith In Traditional Banks and Financial Incumbents Is Waning

A recently published study from the crypto think tank, The Tokenist, details that there is a growing trust in bitcoin over traditional investments like gold, stocks, and real estate. The market researchers leveraged a survey that was taken in April 2020 (5,421 participants in 24 countries) and collated several surveys from 2017 as well. The Tokenist utilized these polls to see how attitudes and perceptions have changed since the price fluctuations and the impact of Covid-19.

“Faith in large financial institutions has been steadily waning for more than a decade and the COVID-19 pandemic has only accelerated this process,” the report highlights. “Bitcoin, itself developed in the years after the 2008 market crash as an alternative to traditional assets, stands to be a major beneficiary of this trend.”

47% of the Poll’s Respondents Trust Bitcoin Over Big Banks

The Tokenist also leveraged surveys from the company’s mailing list and another that saw 4,852 participants in 17 countries. According to the study’s findings, The Tokenist researchers have found that there is a trend of individuals with “positive sentiment regarding BTC as a long term store of value.”

The findings note that over 45% of respondents preferred Bitcoin rather than stocks, real estate, and gold, and “61% of the total respondents (and 78% of millennials) are now somewhat familiar with BTC, and 14% of millennials have owned the asset.” The report continued:

47% of respondents trust Bitcoin over big banks, an increase of 29% in the past three years. 43% of respondents, and 59% of millennials, feel that most people will be using Bitcoin within the next decade. In 2020, 44% of millennials report that they are likely to buy BTC in the next five years. More than one in three millennials would hold onto Bitcoin they are given, while a slightly smaller number (27%) would immediately sell it. 39% of male millennials now have no problem with the intangible nature of BTC, and a quarter of millennials as a whole report the same attitude.

The report finds that the attitude toward BTC, in general, is more positive and optimism has increased by 27% during the last three years. “60% of respondents felt that Bitcoin is a positive innovation in financial technology,” The Tokenist’s report concludes. “Increased familiarity with Bitcoin has convinced many that it is a positive force,” the paper’s authors added.

What do you think about The Tokenist’s researchers’ surveys and findings? Let us know in the comments below.

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JPMorgan, Bank of America, Wells Fargo Sued Over Trump’s Paycheck Protection Program

22/04/2020 by Idelto Editor

Class action lawsuits have been filed against JPMorgan Chase, Bank of America, Wells Fargo, and U.S. Bank for their alleged unlawful and fraudulent practices in the Paycheck Protection Program. This program is part of President Trump’s $2.2 trillion stimulus package to help small businesses cope with the economic crisis resulting from the covid-19 pandemic.

Lawsuits Against Big Banks

Four class action lawsuits were filed Sunday in the U.S. District Court for the Central District of California against some of the largest banks in the country: JPMorgan Chase Bank, Bank of America, U.S. Bancorp and U.S. Bank, and Wells Fargo Bank.

The suits allege that banks violated the California Business & Profession Code with unfair, fraudulent, and unlawful practices as well as false advertising and fraudulent concealment in dispensing loans from President Trump’s Paycheck Protection Program (PPP). The loans were intended to provide American small businesses suffering from the covid-19 crisis with eight weeks of cash-flow assistance. It is part of the government’s $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

However, banks allegedly prioritized large loans in order to earn larger fees, effectively shutting out small businesses from accessing the funds. The suits, filed by Stalwart Law Group on behalf of small business owners, read:

[The bank] has, once again, prioritized corporate greed at the expense of its small business customers.

Cheating the Federal Stimulus Program, Prioritizing Loans With Larger Fees

Citing data provided by the Small Business Administration (SBA), the lawsuits allege that JPMorgan Chase, Bank of America, Wells Fargo, and U.S. Bancorp failed to process the PPP applications on a first-come, first-serve basis as required by the program. Instead, they “prioritized loan applications seeking higher loan amounts because processing those applications first generated larger loan origination fees for the banks.” The PPP loans are administered by the SBA and processed by banks.

The plaintiffs claim that the banks encouraged them to “act fast” and apply for the loans, concealing from the public that they were “reshuffling the PPP applications” they received “and prioritizing the applications that would make the bank the most money.” As a result of their “dishonest and deplorable behavior,” the suits describe, “thousands of small businesses that were entitled to loans under the PPP were left with nothing.”

The lawsuit documents further explain that under the Paycheck Protection Program, banks are entitled to receive origination fees on loans they process. The fees are 5% for loans of up to $350,000, 3% for loans between $350,000 and $2 million, and 1% for loans between $2 million and $10 million. Banks could, therefore, earn up to $100,000 for processing loans between $2 million and $10 million compared to only a maximum of $17,500 for loans of up to $350,000.

Many people have criticized the fact that large corporations have snatched up funding meant for small businesses. President Trump said that any companies that should not have received the funds will have to give the money back. At least one company, burger chain Shake Shack, has said it will return the $10 million received from the PPP.

Meanwhile, in order to further assist small businesses across the country, the Trump Administration is in the process of delivering another stimulus package. On Tuesday, the Senate passed a new $484 billion relief bill to replenish small business loans as well as fund hospitals and testings.

What do you think about these lawsuits? Let us know in the comments section below.

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