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Bloomberg: Smashing The Big Banks -- For Profit

August 28, 2013

Four hundred years of economic theory (and economic History) tell us that oligopolies (in any form) are totally parasitic behemoths, which should never be allowed to exist in any legitimate economy. Thus as the (only) Messenger broadcasting the need to whittle-down the corporate monstrosities in the financial sector back within the realm of sanity, my messages have previously been framed in such basic, theoretical terms.

Incidentally, these arguments have observed that (contrary to Corporate Media mythology) these gigantic financial institutions are not even efficient. They have long since passed any economies-of-scale where “bigger is better.” Instead, these Big Banks now exhibit all of the characteristics of clumsiness, inertia, and general inefficiency which all of the Small Government zealots point to – in insisting that “Big Government” needs to be shrunk.

“Smashing the Big Banks” does not have to be justified on mere grounds of morality or economic theory alone. It can also be successfully argued that these behemoths need to be scaled-down on grounds of pure economic efficiency. Thus even if all these Big Banks weren’t (in reality) mere cogs of a single Banking Monopoly; there are multiple, sound arguments for dismantling these parasitic predators – and zero arguments justifying their continued existence.

Indeed, Bloomberg itself now reports that “breaking up JPMorgan” would currently produce an instant profit of 30% -- on the asset-value of the components alone – and then its increased profitability as it (once again) operated as a collection of (separate) more-efficient pieces would kick-in:

…JPMorgan Chase and Co. (JPM), the biggest U.S. bank by assets, would be worth 30 percent more if broken into its four business segments.

Of course why stop there? Those “four business segments” were each already too big themselves. Why not smash JPM into ten or twelve roughly equal parts – and make this profit/efficiency orgy even greater? The fact that any/all initiatives to splinter these Big Banks produces (cumulative) immediate reductions in overall systemic risk is just icing on the cake.

In writing previously that “too big to fail = too big to exist”; my arguments were always framed in terms of the insanity of creating a financial system which is nothing but a permanently ticking time-bomb. Additionally, the entire mantra of “too big to fail” is nothing but a (very) thin veil for financial extortion:

“Give us all your money, or we’ll blow up the economy.”

Clearly in a world which places “profit” ahead of morality and sanity, my smash-the-Big-Banks initiative would generate much greater traction if framed in more appealing terms: a chance for everyone to make (a lot of) money. The alternative paradigms facing us are an illustration of stark simplicity:

  • Continue with our “too big to fail” model, where these financial behemoths are so bloated and inefficient that the only way they can even manage to stay alive is through endless/infinite infusions of Corporate Welfare from our governments (and now us) – which (as a mathematical certainty) is guaranteed to “kill the Host” (i.e. our economies);


  • Break up these Big Banks into (much) smaller, (much) more efficient pieces. Then they will no longer require their $trillions per year in Corporate Welfare – because the competent entities will be profitable, while the incompetent entities will be allowed to wither-and-die, cut off from their too-big-to-fail teat.

That’s called “capitalism”, and once upon a time we practiced something remotely resembling it in our economies: free markets; competition. What a concept!

Of course what is most important of all with the Corporate Media itself acknowledging that “smashing the Big Banks” is profitable is that it removes any/all “risks” in taking a sledge hammer to this “too big to fail” oligopoly/monopoly. In playing whack-a-Mole with the Big Banks; everybody wins (even the Big Banks themselves) and nobody loses…except the One Bank.

In shining a magnifying glass on the ever-shrinking wages of the Average Worker (i.e. those who still have jobs); the Corporate Media has used “productivity” as its Whipping Boy, supposedly justifying the endless, ruthless reductions in compensation to the Average Worker. The workers need to be paid their slave-wages on grounds of “efficiency”.

What’s good for the Goose is good for the Gander.

If Western workers had to accept the 50% reduction in their standard of living because they were “no longer competitive” (in a world of “globalization”); this same argument applies not just equally to the Big Banks – but literally an entire order of magnitude greater, in pure economic terms.

We “can’t afford” to pay the Average Worker in the West a livable wage, and so the Middle Class have become the Working Poor. But we “can afford” to hand $trillions per year in Corporate Welfare to a handful of non-competitive, grossly inefficient (and entirely criminal) Big Banks? This goes beyond insanity, and straight into the realm of financial perversion.

Indeed, the word “non-competitive” is clearly euphemistic with respect to these Big Banks. They are an open crime syndicate. Having already been caught (illegally) rigging the $500-trillion LIBOR debt market, and being caught “laundering” the money of international Drug Lords on a near-weekly basis; the latest revelation of Big Bank crime is the (illegal) rigging of currency markets.

…The recurring spikes take place at the same time financial benchmarks known as the WM/Reuters (TRI) rates are set based on those trades. Now fund managers and scholars say the patterns look like and attempt by currency dealers to manipulate the rates, distorting the value of trillions of dollars in investments in funds that track global indexes.

The crimes of these Big Banks (all instruments of the One Bank) now exceed the scope of their “legitimate” banking business by dollar value. They are fraud-factories first, and “banking” comes a distant second. Smashing the Big Banks would not merely provide huge profits for all involved, it would force these gangsters to cease much of their extortion, racketeering, and market-rigging – and once again engage in legitimate commerce.

Then there is poor, Eric Holder, so-called “Attorney General” of the United States. In the current, banking crime syndicate; he’s nothing but a sleazy Bag-Man – publicly pledging not merely to “look the other way”, but to actively cover-up all Big Bank crime. Even the Italian Mafia doesn’t force its own “bought Cops” to publicly confess that they serve organized crime.

In the process of evolving from “banks” to Comic Book gangsters who are now getting caught engaging in sleazy, warehouse “shake-down” operations; these Banksters now not only consider their crime to be a way of life, but they are ridiculously inefficient criminals. We never hear the Italian Mafia whining that it needs $trillions in subsidies, or it will “go out of business.”

Smash the Big Banks to dramatically reduce the systemic risk of financial collapse (and permanently remove “too big to fail” from our vocabularies). Smash the Big Banks to save near-bankrupt Western governments $trillions per year in Corporate Welfare. Smash the Big Banks to reduce organized crime. Or, simply smash the Big Banks to make a lot of money.

We may not all be able to agree on our reasons; but we can certainly all agree on the result.


Jeff Nielson

Jeff NielsonJeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is

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