Does the big US banks needs to be broken up?

With the US Presidential elections looming,the question on whether "The Big US banks needs to be broken down " becomes relevant again.

Here are the top six and their total assets:

1. Bank of America Corp., $2.264 trillion
2. J.P. Morgan Chase & Co., $2.246 trillion
3. Citigroup Inc., $1.957 trillion
4. Wells Fargo & Co., $1.260 trillion
5. Goldman Sachs Group Inc., $937 billion
6. Morgan Stanley, $831 billion

After the 2008 financial recession,the Obama administration introduced the Dodd Frank legislation,which is a massive piece of financial reform legislation as a response  The act's numerous provisions, spelled out over thousands of pages, are scheduled to be implemented over a period of several years and are intended to decrease various risks in the U.S. financial system.

However statistics reveal that the despite the legislation,these banks have continued to get bigger.

Failure of these banks could take down 50% of the US economy along with it.

These banks have often indulged in blatant misuse of power they have gained by monopoly in the market. Financial Industry Regulatory Authority (FINRA) has fined 10 firms a total of $43.5 million for allowing their equity research analysts to solicit investment banking business and for offering favorable research coverage in connection with the 2010 planned initial public offering of Toys"R"Us.

FINRA fined the following firms.

Barclays Capital Inc. – $5 million
Citigroup Global Markets Inc. – $5 million
Credit Suisse Securities (USA), LLC – $5 million
Goldman, Sachs & Co. – $5 million
JP Morgan Securities LLC – $5 million
Deutsche Bank Securities Inc. – $4 million
Merrill Lynch, Pierce, Fenner & Smith Inc. – $4 million
Morgan Stanley & Co., LLC – $4 million
Wells Fargo Securities, LLC – $4 million
Needham & Company LLC – $2.5 million

We haven't seen any of the executives of these banks being forced to face the law.Due to their size, these banks often get away by paying the million dollar fines and still reap rich profits.

The US election campaigning mechanism doesn't help the process either with Super PAC's financing the candidates they prefer.It's an indirect way of ensuring their sustenance.

Any one having a decent credit score can purchase a house in the US by putting down a down payment of 3-5% of the total value of the house.This system works as long as the economy does well.However in case of a recession,when people lose jobs ,they end up being homeless in a short span of time.Lack of a strong family system in many cases leads to depression and suicides.

Those in favor of the big banks argue that the banks reflect the state of the economy.Bigger the companies in the economy,its only natural that the banks would be huge in size.They also argue that breaking down the banks will not increase the quality of service or security of data.

 It would be interesting to see if the next President of the US follows up on the Dodd Frank Act and ensure that it gets implemented as scheduled.At present,the intent is only being shown by Bernie Sanders.

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Ramifications of falling oil prices

The world is on a turning point with the plummeting oil prices. This has multiple ramifications across the economic & political scenario around the world.

1.China&India

With the Chinese economy slowing down, the consumption of oil has slowed down over the last 2 years. With the Chinese stock market going on a tailspin over the last few months, the FDI to the Chinese market is bound to decline.

With the other big weight India opting for nuclear energy and solar energy to replace its dependency on fossil fuels, the import of oil in these two guzzlers is further going to reduce in the coming decades.

2.Fracking technology

The US has successfully employed fracking technology to tap into its reserves in Texas and North Dakota to reduce its dependency on oil from OPEC. This has pushed in excess of oil into the market. Saudi Arabia has increased the production of oil into the market as a counter strategy to US to make it unprofitable for US companies like BP to remain profitable.However,US has so far shown no inclination to reduce production using fracking.

3.Iran back in business

The recent lifting of sanctions on Iran has allowed it further pump in crude oil to the market. The straining of relations between Iran and Saudi after the recent execution of a Shiite cleric in Saudi Arabia has made Iran go on a fight mode with the Saudi’s. Reports suggest that Iran is willing to sell oil at even a loss so as to make Saudi go  off the radar completely.

4.Falling hegemony of Saudi Arabia

Saudi Arabia is expected to run out of money if oil were to stay at around the 25 $ per barrel mark for another  5 years. At present Saudi has a healthy forex reserve of more than 700 billion dollars. The Saudi government has started cutting down on austerities and subsidies offered to its public with the fall in oil prices. They would like the oil price to remain around the $100 per barrel. However this looks highly unlikely and oil prices are expected to remain in the range of 45 – 55 $ per barrel over the next decade. It has become increasingly clear that the Saudi hegemony is going to continually decrease in the coming years.

 War in the Middle East

Latest reports prove that with Russia and Iran’s support, Assad has been able to gain ground in Syria. The Americans did not expect Putin to jump into this game. However Putin has played a masterstroke here from being a political pariah to stealing the carpet under Obama.

Saudi Arabia has been reluctant to send in its army with it already being involved in a war with Yemen. However it’s a well-known secret that the biggest financiers of ISIS has been Saudi.The US foreign policy of supplying arms to Saudi has been the biggest hypocrisy of the 21st century. Next time ,the US goes on a foreign invasion,you can bet that it would face stiff opposition from Iran,Russia,China and South America.

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Being on H4 visa in US

The USCIS recently passed a law to allow spouses of H1B visa holders who are in US on H4 visa to apply for Employment authorization through an EAD,in cases where the I140 form has been approved for the H1B holder.

This change in rule has brought about a huge sigh of relief among the families of the Indian community in US.Over 90 000 applications for H4 -EAD came through by December 2015,a few months after the legislation was approved.

It was high time that the US gets rid of this no brainer restriction.In fact the USCIS should go a step further and stamp the EAD for H4 workers the moment they enter US.Countries like Canada and Australia are much more friendly in this regard as they allow both the husband and wife to work without restrictions once the visa gets through.

H1B is a work visa for high skilled workers and its not rocket science to realize that most of the folks on H1B are married to people who are graduates or even post graduates in many cases.


1.The US economy would instantly benefit by allowing the spouses of these H1B workers to work in the States.They would pay for taxes and social security.Some of them might even turn out to be entrepreneurs and employ Americans,thereby expanding the economy.

2.Getting an opportunity to work would provide the spouses to feel a part of the American life as most of them get stuck into feeling homesick,depressed or end up in cases of domestic abuse in worse instances.They feel that their prime of life gets wasted.

3.Immigrants form the backbone of the US economy.With the baby boomers retiring by 10 000 per day in the coming day,it becomes critical for US to replace these workers with a younger talented workforce.The spouses of many of these H1B workers feel inclined to go back to India or their native countries after a couple of years due to the helpless feeling of being non productive.

The US would need to loosen up these nonsensical restrictions on its immigration policies if it has to continue remaining an attractive destination for the best brains around the world.Is Donald Trump listening?

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Is the Internet making us smarter or dumber?

Is the internet making us smarter or dumber?Are the millenials becoming smarter with the smart phone or are they going south ?

The answer won't be a binary.Yes ,in may aspects.The brain is not wired to handle multiple thoughts at the same time which is exactly what a smart phone makes you do.When you log into facebook or twitter and start reading an article,a whatsapp message pops out and your brain forces you to halt the article and switch to the whatsapp.Suddenly,yet another advertisement pops up which further steals your attention and diverts you from the article.This constant bombardment of information is not necessarily good.The question is how much of this information really gets filtered down as knowledge or gets applied in your life.

Of course the internet brings with it tons of positives which the previous generation did not have access to.You could check the weather,book flight tickets,look at the reviews of the latest gadget or restaurant down the block,do a background check on someone,transfer money to family,start your video channel all from the comfort of wherever you are.

However the biggest curse of the internet seems to be the drastic drop in memory and concentration levels with the previous generation.If you talk to folks from the previous generation,we would realize that they might not be a jack of all trades but you could bet on them to deliver quality in their area of specialization.On the contrary the current generation seems to take the path of being jack of all trades and master of none.

Constantly being on the internet tends to make people easily irritable and impatient.It does take patience to lock oneself in a library without any external distraction and finish a book.

It would be interesting on how the brains of this and the future generations would evolve in the coming years with the advent of social media.

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Social media and living life in a binary mode

With the advent of the like button in facebook,users have started to look life in a binary mode.Either you like something or does not.Recent reports hint that facebook is contemplating bringing on a dislike button.It would have made more sense if facebook had an option of an equivalent of "seeing things in grey".

Everything in life has a an upside and a downside to it & completely depends on the perspective.Liking and disliking encourages kids to take a binary view of life which would negatively impact their thought process.

With all the pluses that social media brings,the binary mode seems to be one of the biggest cons.Studies prove that the time you spent on social media,higher the chances of you getting irritated and depressed easily for the simple reason that people tend to put their best selves on instagram or facebook.If things are not going well & you look at a friends profile filled with exotic pics and yummy food,chances are that you will end up depressed rather than feel good for your friend.

You might like the pic for the sake of it but your heart might not necessarily agree with your head.As a result,there are chances for people to lead hypocritical lifes where they mistake crass materialism for true happiness.This is not to deny all the great benefits that social media brings with it.

However,the millenials would do well to use this great blessing of our generation with the right dosage.

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The credit score saga !

If you have lived in the United States, a lot of your thoughts would surround around the 2 words : "CREDIT SCORE".

Maintaining a good credit has become equivalent between poverty and survival in this country.

Your credit score is supposed to show on how you fare in paying off your credit card bills and managing your finance

The question is whether the credit score system is a good system.






From personal experience, some of the cons that I see on the system are :

• Students who pass out of college with a heavy student load of around 30 000 $ and don't end up finding a decent job which pays at least 50 000 $ per annum in 6 months,life is going to be hard for them.They are forced to work multiple part time jobs to make ends meet.They are sucked into the credit system at a young age.This kind of a vicious system doesn't allow you to pursue fields like arts and creativity which involve a longer period for a person to establish.
• The credit system makes it difficult for you to go on a sabbatical or make a career switch as your score would take a deep plunge the moment you stop paying the required credit card payments and the bank balances go down.
• If you go through a divorce and end up paying child care support and a heavy alimony,your finances could be ruined which in turn could nose dive your credit score in a short amount of time.The financial pressure could break a person and make him or her depressed and feel left out.
• Parents discourage children from staying with them after they turn 18 as they don't want their credit scores and finances to be affected by standing as guarantor for loans for their kids.This breaks the bond between kids and their parents.Kids don't care a hoot for their parents especially if the parents don't share their college or dorm fees.

Supporters of the system argue that :

• The system works well for a person or family who is financially stable.The system ensures that you pay your bills on time and manage your credit cards well.

The question we should be asking is ,shouldn't we move emphasize more a DEBIT Score rather than a Credit score?The debit score could look into how much you try to save per month or paycheck once you settle in your career.The idea should be to encourage individuals and families to save rather than pay their credit card bills systematically.The 2 six letter words that the US would need to fix in the 21st century if they have to remain a superpower is : 1)Family 2)Savings.

The FED has so far had the luxury of printing and pumping cash indiscriminately.This cannot go on forever and would eventually require families to save.Earlier the better.The fundamental model of the US economy would change if another recession was to strike & people might switch over to the savings model rather than the consumption model.