Monopoly is a new Norm- really!?

[Gdjjr]

In my youth US economic policy focused on preventing concentration of economic activity. No more. Concentration is the new normal. In the US the five largest banks have about half of total bank assets. Media ownership is concentrated in 6 corporations. Big Box chains have taken over from independent businesses. Amazon is an online retail monopoly. Google, Facebook, and Twitter are essentially monopolies.


We have gone from monopoly is bad to monopoly is good. Anti-trust, once an area of economic study, seems to have disappeared from the curriculum and from federal regulation.

Be sure and shoot at the messenger AFTER you read the article.

Teaser:

CNN reports a S&P Global Ratings estimate of $2.1 trillion in credit losses due to the pandemic and says the five largest US banks have set aside $35 billion against loans expected to go bust.


That is not much of a cushion for the loans of our five largest banks. Unless rules have changed and I am mistaken, bank reserves are an offset to profits. If the five banks expect $35 billion in profits and put that amount in reserves, they have no profits to report and no taxes to pay. Later when they need a stock price boost, they can stop adding to reserves, and their earnings will show a big jump.

More at the link

 

[there4eyeM]

Capitalism is restrained either by good will or good regulation. The "will" part is terribly uncertain.

 

[Gdjjr]

The "will" part is terribly uncertain.

The restricting by laws is terribly certain- it certainly creates black markets, crony capitalism and corruption in the halls of congress, never mind local gov't entities.

 

[Toddsterpatriot]

Monopoly is a new Norm- really!?

 

[Toddsterpatriot]

In my youth US economic policy focused on preventing concentration of economic activity. No more. Concentration is the new normal. In the US the five largest banks have about half of total bank assets. Media ownership is concentrated in 6 corporations. Big Box chains have taken over from independent businesses. Amazon is an online retail monopoly. Google, Facebook, and Twitter are essentially monopolies.


We have gone from monopoly is bad to monopoly is good. Anti-trust, once an area of economic study, seems to have disappeared from the curriculum and from federal regulation.

Be sure and shoot at the messenger AFTER you read the article.

Teaser:

CNN reports a S&P Global Ratings estimate of $2.1 trillion in credit losses due to the pandemic and says the five largest US banks have set aside $35 billion against loans expected to go bust.


That is not much of a cushion for the loans of our five largest banks. Unless rules have changed and I am mistaken, bank reserves are an offset to profits. If the five banks expect $35 billion in profits and put that amount in reserves, they have no profits to report and no taxes to pay. Later when they need a stock price boost, they can stop adding to reserves, and their earnings will show a big jump.

More at the link

Unless rules have changed and I am mistaken, bank reserves are an offset to profits.

Almost. Loan loss reserves are an offset to profits. Not reserves.

If the five banks expect $35 billion in profits and put that amount in (loan loss) reserves, they have no profits to report and no taxes to pay.

Yup.

Later when they need a stock price boost, they can stop adding to (loan loss) reserves, and their earnings will show a big jump.

If they add zero to loan loss reserves, their earnings will be their earnings.
If they REDUCE loan loss reserves they'll add to profits (and taxes owed).

 

[Toddsterpatriot]

Paul Craig Roberts is such an idiot......

There is another interesting point in the CNN report that went unnoticed. Because of various scandals and penalties, Wells Fargo is currently prevented from growing its balance sheet. In other words a hold has been put on its size and the bank is prohibited from acquiring more assets to offset its losses. Could the Federal Reserve be setting up Wells Fargo for a takeover by one of the New York Banks? A bank that can’t grow its balance sheet is not in a good position to remain independent.

Wells currently has about 10% of total US bank deposits.
A bank can't buy another bank if the combined entity will hold more than 10% of total deposits.
Wells can't buy anyone, no one can buy Wells. DURR.