01:05 GMT +324 March 2017
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    Big Banks And The Millennials: Why You Can't Have Nice Things

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    Wealth inequality grows in the U.S. as banks are merely slapped on the wrist for misconduct. Sputnik looks at some facts and figures to explain why so many young Americans are losing hope of financial independence.

    Major international banks have been rigging the foreign-exchange markets, concluded the US, UK and Swiss regulators earlier this week as they levied fines and settlements amounting to nearly $4.3 billion from Citigroup, JP Morgan Chase, Royal Bank of Scotland, HSBC Bank, UBS, and Bank of America. Barclays remains under investigation. 

    With no charges being filed, and the entire scandal being presented as the work of a few “bad apples” somehow escaping the scrutiny of their superiors, serious questions arise as to whether the governments are taking the bankers' misconduct seriously. One insider quoted by Reuters implied the investigations into wrongdoing were less than forthright. “The banks have been allowed to investigate themselves,” the anonymous insider said, “[they] decide what they want to investigate, what they admit to, and how much they will pay.”

    While $4.3 billion may look like a lot, the daily volume of foreign exchange trades – about 40 percent of which take place in London – is $5.3 trillion. So the settlements the self-investigating banks have offered amount to a drop in the bucket when compared with the likely sums of ill-gotten gains. And the ultimate victim, the consumers, will see none of it. 

    The scandal comes at a time when statistics are showing the richest 0.1 percent of Americans control as much wealth as the bottom 90 percent combined (Economist), and the under-30 generation is facing a bleak future of negative savings, crushing debt, rising obligations and dwindling job prospects.

    CNN reports that almost a third of American adults aged 18-34 are currently living with their parents. Only a fifth of 27-year-olds own a home, while the rest are paying off debt. Home ownership for Americans under the age of 35 is at 36%, down from 43% in 2005, according to the US Census Bureau.

    Of the Millennials who have jobs, almost half use at least half their paycheck to service debt. The cost of tuition has risen 275% over the last 40-odd years. Over 70 percent of college graduates in America today have student debt, and the total amount of student loan debt has reached $1.2 trillion – an increase of 84 percent since 2008. Student loans are also exceptionally difficult to discharge through bankruptcy, requiring proof their repayment would impose “undue hardship” on the debtor and their dependents.

    No wonder the Millennials' savings rate is a negative 2 percent – meaning they are spending more than they are earning. 

    Yet this is the generation expected to shoulder the burden of paying off the national debt, and fund Social Security. In 1945, there were 42 workers for every recipient of Social Security benefits. Today, that ratio is 2.5 to one – and that includes government workers. Counting only private-sector employees, the ratio is 1.6 to one.

    As young Americans are clinging on to the edge with no relief in sight, the stock markets are soaring and big banks are raking in the profits from fixed currency trades – investigating themselves and paying off governments with pennies on the dollar when caught. 

    Contributed by Nebojsa Malic

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