Archive for the ‘Federal Reserve’ Category

Rolling Stone
Matt Taibbi
October 8, 2010

It’s amazing, given the attention the Tea Party allegedly is paying to government waste and government spending, that there hasn’t been more controversy about the now-seemingly-inevitable arrival of “QE2” – a second massive round of money-printing cooked up by the Fed to prop up both the government and certain sectors of the economy. A more overtly anticapitalist and oligarchical pattern of behavior than the Fed’s “Quantitative Easing” program could not possibly be imagined, but the country is strangely silent on the issue.

What is “QE”? The first round of “quantitative easing” was a program announced by Ben Bernanke last March in response to the financial crisis, ending in March of this year. In what will soon be known as “QE1”(i.e. once QE2 is announced), Bernanke printed over a trillion dollars out of thin air, then used that money to buy, among other things, mortgage-backed securities (MBS) and Treasury Bonds. In other words, the government was printing money to a) lend to itself and b) prop up the housing market, with Wall Street stepping in to take a big cut.

That was QE1. There has long been speculation that another trillion-plus money-printing program called QE2 is coming, but only recently have there been concrete hints from the Fed along those lines. Among other things, New York Fed Vice President Brian Sack just this week squeaked out a comment about how, “In terms of the benefits, balance-sheet expansion appears to push financial conditions in the right direction.” Translating into English, “balance-sheet expansion” means the Fed adding to its balance sheet, i.e. printing money to buy stuff – i.e. QE2.

Thanks to that and other hints, most everyone now expects the Fed to announce a new QE program in November. The big banks have now openly begun to predict this, with JP Morgan Chase among others raising its odds of the Fed buying mortgages in the next 6 months from 10% to 50%. Another effect we’re seeing is that mortgage originators are hiring again, in anticipation of being able to fork out QE-funded mortgages.

QE is difficult to understand and the average person could listen to a Fed official talk about it for two hours right to his face and not understand even the basic gist of his speech. The ostensible justification for QE is to use a kind of financial shock-and-awe approach to jump-starting the economy, but its effects for ordinary people are hard to calculate. Theoretically the entire country has some sort of stake in this program, as (among other things) U the Homeowner may see your home value stay stable or fall less than it would have thanks to this artificial stimulus. You also may be able to buy a house when you wouldn’t before, thanks to declining mortgage rates.

And jobs, I suppose, may theoretically be created by all this dollar meth being injected into the financial bloodstream – although the inflationary effect of printing trillions upon trillions of new dollars would probably wipe out the value of the money you make at that job. When it comes to calculating what QE actually does for you, or how much it harms you, that question is just very hard to answer.

But one thing we know for sure is that big banks and Wall Street speculators are real, immediate beneficiaries of the program, as they suddenly have trillions of printed dollars flowing through the financial system, with endless ways to profit on the new chips entering the casino.

And by an amazing coincidence, many of the biggest players in the financial services industry have a habit of buying up MBS or Treasuries just before these magical money-printing programs of the Fed send their respective values soaring. If you own a big fund, for instance, and you know that the Fed is about to buy a trillion dollars of mortgage-backed-securities through a new Quantitative Easing program, buying a buttload of MBS a few weeks early is a pretty easy way to make a risk-free fortune. One of the worst-kept secrets on Wall Street is that the big bankers and fund managers get signals about the Fed’s intentions about things like QE well before they are announced to the rest of us losers in the public.

A hilarious example of this cozy insiderism popped up just a few weeks ago, when PIMCO bond fund chief Bill Gross let it slip on a live CNBC interview that he was getting inside info from the Fed. The interview is with former Goldman analyst and (now) CNBC anchor Erin Burnett, as well as my slimeball former colleague from the Moscow Times and (now) CNBC bobblehead Steve Liesman, who slobber typically over the bond king in the segment.

Gross at one point says this:

“What is important going into November is the staff forecast for economic growth for the next 12-18 months. Our understanding is that the Fed is about to downgrade their forecast from 3% down to 2%. Which in turn would suggest that unemployment won’t be coming down… and so that would be the trigger to my way of thinking for Quantitative Easing in November.”

The admission is so untoward that the ex-Goldmanite Burnett immediately races to clean up the problem, saying to Liesman, who is also on the panel, “We don’t have that forecast yet, right, Steve?”

At which point the ever-helpful Liesman replies, “We won’t get that for 3 weeks, Erin. That’s when it comes out with the minutes of this meeting .”

Check out 5:20 of this video (courtesy of Zero Hedge):

There are so many different ways for Wall Street guys to make risk-gazillions off of QE, it’s not even funny. When I was researching the “Wall Street Bailout Hustle” story last year, for instance, I learned about one fund that loaded up on MBS before the first QE announcement, then saw their MBS skyrocket in value after QE – at which point the fund sold off a lot of its MBS holdings and bought Treasuries, effectively taking money from the Fed and lending it right back to the government at interest.

Activist Post
August 31, 2010

Rights are Privileges (Freedom is Slavery): The primary duty of all public officials is to protect the rights of citizens as defined in the Constitution, where they shall not make or enforce any laws that violate those rights.  In fact, the “checks and balances” were put in place to assure that rights of citizens are not being trampled by one branch of the government. After 9-11, President Bush and other public officials proclaimed that their most important job was protecting the safety of the American people, which basically put an end to our rights coming first.

If the corporate-government fear campaign fails to scare the rights away from citizens, they try to convince the public that rights are now privileges and charge a fee or a tax for the “right” to engage in a certain activity.

Here are a few recent examples where rights are eroding into privileges:

  • Air travel has become a privilege since 9-11.  We must now forfeit all rights to our physical being by submitting to naked body scanners that emit unhealthy levels of radiation, or open-palm invasive frisking.  Everyone is assumed to be guilty until thoroughly cavity checked for explosives.
  • Free-speech Blogging on the Internet is now the target of taxes and licensing fees — the trial financial assault before free speech is ultimately killed with the end of net neutrality. Philadelphia is seeking a blog tax, while South Carolina has attempted to require all controversial speech groups to register, of course with a fee attached.
  • Food rights may be disappearing faster than any other rights.  Armed raids on raw milk producers and the proposed senate bill S.510 that seeks to essentially criminalize local food are the pinnacle of corporate-government tyranny.
  • Rights to use Rainwater is becoming illegal or being taxed by the overlords who control mother nature and the slaves who dare to use her resources.  Your basic right to nature’s sustenance is now a taxable privilege in the land of the free.
  • Gun rights are under continued pressure by the government and the media to make us believe it is a privilege to own guns.
  • Capital rights, or the freedom to spend or invest our own money, are now under assault with capital controls.
  • Property rights erode every time property taxes are jacked up because the Fed creates inflation.  We own less and less of our property each day the dollar devalues. Property rights also erode as more strict zoning regulations continually pass.

Campaign For Liberty
Lew Rockwell
August 6, 2010

You surely didn’t think that the governing elites would let this economic crisis pass without pushing some cockamamie scheme for control. Well, here is the cloud no bigger than a man’s hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us.

The IMF study that calls for this is by Reza Moghadam of the Strategy, Policy, and Review Department, “in collaboration with the Finance, Legal, Monetary and Capital Markets, Research and Statistics Departments, and consultation with the Area Departments.” In other words, this paper shouldn’t be ignored.

It’s a long-term plan, but the plan has the unmistakable stamp of Keynes: “A global currency, bancor, issued by a global central bank would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy…. The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present.”

The term bancor comes from Keynes directly. He proposed this idea following World War II, but it was rejected mostly for nationalistic reasons. Instead we got a monetary system based on the dollar, which was in turn tied to gold. In other words, we got a phony gold standard that was destined to collapse as gold reserve imbalances became unsustainable, as they did by the late 1960s. What replaced it is our global paper money system of floating exchange rates.

But the elites never give in, never give up. The proposal for a global currency and global central bank is again making the rounds. What problem is being addressed? What is so desperately wrong with the world that the IMF is floating the idea of a world currency? In a word, the problem is hoarding. The IMF is really annoyed that “in recent years, international reserve accumulation has accelerated rapidly, reaching 13 percent of global GDP in 2009 — a threefold increase over ten years.”

You see, monetary policy isn’t supposed to work this way. In their ideal world, the central bank releases reserves and these reserves are lent out, leading to a boom in consumption and investment and thereby global happiness forever (never mind the hyperinflation that goes along with it). But there is a problem. The current system is nationally based and so the economic conditions of one country turn out to have an influence on the borrowing and lending markets. Without borrowers and lenders, the money gets stuck in the system.

This is a short history of the last two years. By now, if the Fed had its way, we would be awash in money. Instead the reserves are stuck in the banking system. It’s like the whole of the population of the United States has suddenly been consumed by the moral advice: neither a borrower nor a lender be.

And why? Well, there are two reasons. Borrowers are just a bit nervous right now about the long term. They are watching balance sheets day by day, consumed with a weird sense of reality that had gone out the window during the boom times. Meanwhile, the bankers are just a bit risk averse, happier to keep the reserves in the vault than toss them to the winds of fate. They have the bank examiners breathing down their necks right now, and lending doesn’t pay well, not with interest rates being suppressed down to the zero level.

Under these conditions, yes, hoarding seems like a pretty good idea. What’s more, we should be very grateful indeed for this retrenchment. The idea of plunging back into another bubble seems rather shortsighted.

The IMF has a problem with this practice, though it doesn’t dwell on it. The problem is that this practice of maintaining high reserves is putting a damper on consumption and investment, prolonging the recession. The simple-minded solution coming from the high-minded eggheads at the IMF is to find some system, any system, that would push the money from the vaults into the hands of the spending public.

The rationale for the global currency and global central bank is that the reserves could always find a market in a globalized system, and would not therefore be so tied to the exigencies of a nationally based banking and monetary system.

An academic paper can wax eloquent for hundreds of pages about the advantages of a global system. It will lead to more stability, efficiency, and less politicization of money and credit. And truly, there is a point here: a real gold standard is always tending towards a global currency system. Different national currencies are merely different names for the same thing.

But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we’ve never seen. There would be no escape from political control at that point.

Every proposal of a drastic solution such as this always comes with a warning of some equally drastic consequence of failing to adopt the proposal. In this case, the IMF actually raises questions about the survivability of the dollar itself. “There has been a long-running debate speculating on whether the dollar could collapse,” says the paper. It raises the worry that if a run on the dollar materializes, central banks could attempt to race each other to dump it permanently.

But, the paper points out, many people wonder whether “good alternatives to the dollar exist.” And for this reason, it might be a good idea to cobble together such an alternative sooner rather than later.

There is probably more truth in that statement than most people want to grant. But the right alternative is not yet another and more global experiment in paper money inflation. God forbid. If we want an alternative to the dollar, there is one that could appear before our eyes if only we would let it happen. Private currencies traders the world over could, on their own, give rise to a new currency rooted in gold and traded by means of digital media. On many occasions over the last 20 years, such a system nearly came to be. But guess what? The government cracked down and stopped it. The governing elites have decided that there will be no currency reform unless it comes from the marble palaces of the monetary elites.

The Dollar Vigilante
Jeff Berwick

“Bond Vigilante” – Definition: “A bond vigilante is a bond market investor who protests monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields.” – Wikipedia

“Dollar Vigilante” – New Term: ”A dollar vigilante is a free market individual who protests the government monopoly on money and financial policies such as fractional reserve banking and un-backed fiat currencies by selling those same fiat currencies in favor of other assets, often including gold and precious metals.”

Many people today don’t even realize it because anyone alive today has always lived under an artificial, non-free market financial system. No one even questions the fact that every country has a “central bank” and that every country outlaws any use of currency except for the one it produces.

But, in essence, this highly manipulated, centrally planned/communist system of world finance really began with the creation of America’s third central bank (the first two had previously collapsed or were outlawed) called The Federal Reserve on December 23, 1913. To this day many don’t realize it but the Federal Reserve is not a part of the American government. It is a privately owned, secretive banking cartel. We should note, however, that whether it is publicly or privately owned isn’t the crux of the problem. The problem is that ALL attempts to centralize banking are non-free market and will always result in a steady corruption of the system until it finally reaches collapse.

Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s stated, “Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

In fact, the President of the US at the time of enactment of the Federal Reserve, Woodrow Wilson stated the following in regard to the Federal Reserve being created under his watch, “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

The scourge of a central bank was well known even in the days of the creation of the United States as Thomas Jefferson opined, “The central bank is an institution of the most deadly hostility existing against the principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

And, guess what Mr. Jefferson, the people of the US are now waking up to realize your prophecy has come true. For the first time in US history banks own a greater share of residential housing net worth in the United States than all individual Americans put together!

However, because America used to be such a bastion of free markets and even today still is partially-free it quickly became the most powerful and wealthy country in the world DESPITE having the Federal Reserve at the heart of their financial system.

That is, until August 15, 1971, when the issuing of debt money by the Federal Reserve had effectively bankrupted the US and then President Nixon was forced to announce that even foreign governments and central banks could no longer redeem their US dollars for gold.

And that was the beginning of the end and is, in fact, the reason why we are on the verge of a complete global financial implosion. What was started in 1913 with the creation of the Federal Reserve and the income tax managed to hobble along until it finally collapsed in 1971 with the end of the Bretton Woods system.

With that collapse, in 1971, every country in the world went off the gold exchange standard. This meant that all currencies were backed by nothing. Currencies that used to be directly convertible into gold at the request of the holder, at least at the central bank level, were finally just pieces of paper with pictures of famous dead people drawn on them.

Some may say that this system “worked” because it produced all of the amazing advances of the last century. However, it is much more precise to say that the system managed to work for that long precisely because the 20th century was the most amazing century in the history of human evolution and the countless technological advances enabled this fraudulent system to appear to work for a time.

But that time is nearly running out. After four decades of unbacked fiat currencies nearly every country in the world is now so indebted that it isn’t possible to ever pay back their debts. These debts were all enabled by this fiat currency system which enabled governments to print more and more money, which enabled more and more debt over time. As we said above, it appeared to work, until they all reached a point where even the interest payments on the debt will soon overtake the entire budgets of some countries, even including the United States.

The US government itself, in its official 2009 Financial Report (http://www.gao.gov/financial/fy2009/09frusg.pdf) states, “Absent a change in policy, the interest costs on the growing debt together with spending on major entitlement programs could absorb 92 cents of every dollar of federal revenue in 2019.”

You read that correctly, the US government itself has stated that by 2019 almost EVERY penny collected in taxes will go towards paying ONLY the interest on the debt and spending on the major entitlement programs (Social Security, Medicare etc).

And here is the worst part, this is a prediction by the US government who is always wrong and incessantly understates how bad things will get. It is our prediction, at The Dollar Vigilante (TDV), that the US will reach this state by no later than 2015 – even as soon as 2012. Our reasoning is that the US government predicts that tax revenues will continue to stay at the same level or grow over time. However, we believe that as soon as 2011 the US will be in the midst of such a great depression that tax revenues will basically collapse.

In fact, they are already in collapse. After the first big hit to the US economy in 2008, tax receipts in 2009 plunged. On a year-over-year basis, by the summer of 2009, individual tax receipts were down 22% from 2008 and corporate income taxes imploded by 57%.

The government managed to temporarily stave off complete collapse by creating an array of four-letter bailouts and guarantees tallying up to more than $12 trillion to date! But even this gargantuan printing of money, mostly enacted in 2008 and 2009 have provided next-to-no recovery and we will soon be entering the next stage of collapse – at which point the US government will see its income tax receipts not even meet its interest and entitlement obligations.

All this would be bad enough, but here is where it gets worse. Way worse.

Nearly every other western country in the world is at similar levels of debt and are all rocketing towards outright bankruptcy.

Greece was the first big one but nearly every other country in Europe, the UK, the US and Japan are all right behind them. Just look at this table below from the OECD. It shows debt as a percentage of GDP for various OECD countries. The official debts, the ones in red, are in and of themselves massive and unpayable. Yet total debts (the grey bars) which include unfunded liabilities such as pensions and health care dwarf even the official debts.

june 2010

It is already a foregone conclusion that Greece is insolvent yet the US itself is nearly in the same financial situation. As are the rest of the countries listed. And countless others, not even bothering to comment on individual states in the US like California and New York, which are also all insolvent.

So now it is just a matter of time and circumstance for each and every one of these countries to do one of the following: A) Declare bankruptcy and have their currency collapse or B) Hyperinflate their money supply so that all past debts become worth very little in today’s money – also something that will destroy their currency.

Some think this may occur over a decade or two. Here, at TDV, we think this will happen over the next few years.

Which brings us to our purpose and point in writing TDV: to help protect you from the coming world financial collapse with most of your assets in tact because the great majority of people will be wiped out by what is coming.

In coming issues we will go further in depth into what we expect to occur but, at the very least, we expect many western countries to enact currency controls which will make it so you will not be able to move your money out of the country. The governments will then do everything they can to stay afloat including cutting most entitlements including pensions which will leave countless elderly people in poverty – look forward to Granny and Grandpa moving back in with you! As well, any savings in banks will likely be taken over by the governments and forced into “buying” government debt. As this happens there will be a complete collapse of the western economies and will be great social unrest, which has already begun in places such as Greece.

There will be many ways to protect yourself – and this will be the main thrust of this newsletter – but time is running out on all of them. Transferring significant portions of your wealth from cash into precious metals is a high priority. As well, diversifying your wealth outside of your home country and the hands of your ravaging government and into a few different regions is also important. It is even highly recommendable to those who live in the countries in the worst financial condition (US, most of Europe, Japan) and who have the capability to prepare to leave your home country and head for some of the countries which may be least affected by the coming strife.

As well, investing into gold mining companies and even learning how to invest in private placements in these companies – something we will discuss in depth regularly here – will create a lot of wealth for those of you who may not yet have the assets or capability to expatriate and diversify your assets.

We will have thoughts, analysis and ideas on all of these strategies on an ongoing basis at TDV.

In closing, almost invariably, when faced with this information, many people respond with either disbelief or a desire to not think about the repercussions because it hurts too much. However, we don’t necessarily see the financial system collapse as being a bad thing. Not many people realize how many lives this system has destroyed and how much wealth and resources it has wasted. It was an artificial system of theft and deceit and was doomed since its inception but once it is gone we will see a time of rebirth for the world.

There will certainly be some interesting times between now and a rebuilding of the world’s financial system and TDV hopes to stay with you through the collapse, chaos and then into the brave new world that will soon be forged.

telegraph.co.uk
Ambrose Evans-Pritchard
July 15, 2010

great depression
The US workforce has shrunk by a 1m over the past two
months as discouraged jobless give up the hunt    Photo: AP

The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.

Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.

“The worm is turning,” said David Bloom, currency chief at HSBC. “We’re in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we’re moving into a new phase because we’re hearing alarm bells of a US double dip.”

Mr Bloom said a deep change is under way in investor psychology as funds and central banks respond to the blizzard of shocking US data and again focus on the fragility of an economy where public debt is surging towards 100pc of GDP, not helped by the malaise enveloping the Obama White House. “The Europeans have aired their dirty debt in public and taken some measures to address it, whilst the US has not,” he said.

The Fed minutes warned of “significant downside risks” and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of QE, and a fiscal deficit above 10pc of GDP have so far failed to lift the economy out of a structural slump.

“The Committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably,” it said. The economy might not regain its “longer-run path” until 2016.

“The Fed is throwing in the towel,” said Gabriel Stein, of Lombard Street Research. “They are preparing to start QE again. This was predictable because the M3 broad money supply has been contracting for months.”

The Fed minutes amount to a policy thunderbolt, evidence of how quickly the recovery has lost steam. Just weeks ago the Fed was mapping out withdrawal of stimulus.

Goldman Sachs said it expects the euro to rise to $1.35 by the end of the year. The yen will appreciate to ¥83, through the pain barrier for most of Japan’s big exporters. The new twist is that SAFE, China’s $2.4 trillion fund, has begun buying record amounts of Japanese bonds, a shift in reserve allocation away from the dollar.

The signs of a deep and sudden slowdown in the US are becoming ever clearer as the “sugar rush” from the Obama fiscal stimulus wears off and the inventory boost fades. California, Illinois and other states are cutting spending, tightening US fiscal policy by 0.8pc of GDP.

Thursday’s plunge in the Philadelphia Fed’s July index of new manufacturing orders to –4.3 suggests that the economy may have buckled abruptly, as it did in mid-2008. The Economic Cycle Research Institute’s ECRI leading indicator has tumbled, reaching –8.3pc last week. This points to a sharp slowdown or recession within three months.

While US port data looked buoyant in June, the details were troubling. Outbound traffic from Long Beach fell from 139,000 containers in May to 116,000 in June. Shipments from Los Angeles fell from 161,000 to 155,000. This drop in exports is worsening the US trade deficit, eroding the dollar.

The US workforce has shrunk by a 1m over the past two months as discouraged jobless give up the hunt. Retail sales have fallen for the past two months. New homes sales crashed to 300,000 in May after tax credits ran out, the lowest since records began in 1963. Mortgage applications have fallen by 42pc to 13-year low since April. Paul Dales at Capital Economics said the “shadow inventory” of unsold properties has risen to 7.8m. “The double dip in housing has begun,” he said.

Alcoa, CSX, Intel, and JP Morgan have reported good earnings, but they mostly did so in July 2008 just before their shares collapsed. Such earnings rarely catch turning points and can be a lagging indicator. Profits have been boosted in this cycle by cost-cutting, which is self-defeating for the economy as a whole.

The minutes confirm the Fed is split down the middle over QE. Fed watchers say the Board in Washington wants to be ready to launch another round of bond purchases if necessary, pushing the banks balance sheet from $2.4 trillion towards $5 trillion, but hawks at the regional banks are highly sceptical.

A study by the San Francisco Fed said the interest rates need to be –4.5pc to stabilise the economy under the Fed’s “rule of thumb”. Since this is impossible, massive QE needs to make up the difference.

Tim Congdon from International Monetary Research said the US authorities have botched policy response. “They are forcing banks to contract lending by raising their capital asset ratios. They have let M3 shrink by 1pc a month, as in the early 1930s. The solution is simple. The Fed must raise the level of deposits by purchasing bonds from the non-banking system as the Bank of England has done. They refuse to do it,” he said.

Associated Press
November 19, 2009

The House Financial Services Committee has voted to pull the curtain on the normally secretive Federal Reserve by subjecting the nation’s central bank to a sweeping congressional audit.

The provision would direct the Government Accountability Office to examine transactions the Fed has undertaken to spur lending, stabilize banks and revive the economy.

The Fed is an independent agency of the government and has been shielded from scrutiny. The proposed audit would not include a review of the Fed’s monetary policy deliberations.

Antipathy toward the Fed’s closed-door activities has grown after it used its emergency powers during last year’s financial crisis to pump hundreds of billions of dollars into the struggling financial sector.