All Things Financial Sector

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    Posted: 02 December 2010 01:16 PM #31

    Eric Landstrom - 02 December 2010 04:13 PM

    Bruce, when Lehman Brothers, our fifth largest I-bank collapsed, America immediately went into recession as our economy was kneecapped. Our five largest C-banks are far larger than Lehman and the damage from one of them failing would be much worse. Even a loss of confidence in our banks economy viability can kneecap our economy.

    EXACTLY my point Eric. WHY are we IN this situation?

    Bust them up, make the top 8, into 25 separate banks, diversify the risk and lower the “taxpayer bailout losses” and “bankers keep the profits” situation we are continually finding ourselves in.

    Look at Iceland. They said to the banksters and bondholders ... “too bad, YOU eat your own losses” .... and they are now projected to be in surplus within 24 months. Ireland and Greece however, just bailed out the banker-buffoon’s, and will NEVER EVER come out and go into the green.

    In a rational economy, risk takers { the banks } get to keep their profits, AND SUFFER when they have losses.

    We however, have a win-win situation now, they WIN, no matter what.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 02 December 2010 02:13 PM #32

    TanToday - 02 December 2010 05:16 PM
    Eric Landstrom - 02 December 2010 04:13 PM

    Bruce, when Lehman Brothers, our fifth largest I-bank collapsed, America immediately went into recession as our economy was kneecapped. Our five largest C-banks are far larger than Lehman and the damage from one of them failing would be much worse. Even a loss of confidence in our banks economy viability can kneecap our economy.

    EXACTLY my point Eric. WHY are we IN this situation?

    Bust them up, make the top 8, into 25 separate banks, diversify the risk and lower the “taxpayer bailout losses” and “bankers keep the profits” situation we are continually finding ourselves in.

    Look at Iceland. They said to the banksters and bondholders ... “too bad, YOU eat your own losses” .... and they are now projected to be in surplus within 24 months. Ireland and Greece however, just bailed out the banker-buffoon’s, and will NEVER EVER come out and go into the green.

    In a rational economy, risk takers { the banks } get to keep their profits, AND SUFFER when they have losses.

    We however, have a win-win situation now, they WIN, no matter what.

    And you think busting them up now is a good idea? Really? Moreover, a bank’s size hasn’t been proven to be a problem. The problem is the laws that encouraged banks to lend to people who were risky without requiring an ever increasing reserve ratio. The idea was that banks could lend to whomever so long as they could distribute the risk of those loans. With the advent of synthetic bonds through credit default swaps, the system went awry in the same way that all of your neighbors could take out fire insurance on your house and then burn it down and collect.

    What should be done is simply require higher and higher reserve ratios as loan pools increase while moving all credit default swaps to a public exchange with full transparency so that everybody can see where systemic risks reside. The problem was never bank size, Bruce. The problem was and is that no one market participant can see the total amount of risk building up in the system. 

    Furthermore, once our domestic banking is kneecapped and unable to service all of our domestic needs, then banks like Deutsche Bank move in and we give them more and more of our business until the foreign banks become “too large to fail” and at some point in the future, we’re forced to backstop the stupid foreign banks instead of our own. That’ll go over like a lead zeppelin but we’d be forced to do it to stop an economic collapse.

    Consider also that our large global companies need global banking in order to do business worldwide. As our domestic companies have grown globally, they’ve demanded that our banks offer global operations so as to conduct business in foreign shores and bring profits home. Again, Tan, size is not the problem.

    While sensitive to the fact that at the heart of the matter you would like to see a throttle lock put into place so that banking can no longer tank economies, your kind of knee-jerk reaction to reduce the size of domestic banking is exactly the kind of thing that will lead to further despair though greater uncertainty, slower recovery, and additional unemployment while not addressing the real problem that nobody had sufficient reserves to face the systemic risk that had built up in the financial system because no single market participant could see the total risks in the system because of a lack of transparency.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 02 December 2010 03:29 PM #33

    Dick Bove shared on CNBC that the Fed’s history shows that the financial crisis with the banks is over.

    “The private sector programs have been wound down or eliminated,” he said. “The Federal Reserve is back to its old game of funding U.S. Treasury debt. The private sector may now be certified as ‘healthy.’”

    In other words, the only people who still need more money is our government.

    http://www.cnbc.com/id/40473315

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 02 December 2010 04:45 PM #34

    Eric Landstrom - 02 December 2010 07:29 PM

    Dick Bove shared on CNBC that the Fed’s history shows that the financial crisis with the banks is over.

    “The private sector programs have been wound down or eliminated,” he said. “The Federal Reserve is back to its old game of funding U.S. Treasury debt. The private sector may now be certified as ‘healthy.’”

    In other words, the only people who still need more money is our government.

    http://www.cnbc.com/id/40473315

    Bull.

    They are backstopping the Euro RIGHT NOW via IMF cutout loans and guarantee’s, and did so earlier only a few months ago.

    Stop believing the professional liars on your TV.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 02 December 2010 04:51 PM #35

    TanToday - 02 December 2010 08:45 PM
    Eric Landstrom - 02 December 2010 07:29 PM

    Dick Bove shared on CNBC that the Fed’s history shows that the financial crisis with the banks is over.

    “The private sector programs have been wound down or eliminated,” he said. “The Federal Reserve is back to its old game of funding U.S. Treasury debt. The private sector may now be certified as ‘healthy.’”

    In other words, the only people who still need more money is our government.

    http://www.cnbc.com/id/40473315

    Bull.

    They are backstopping the Euro RIGHT NOW via IMF cutout loans and guarantee’s, and did so earlier only a few months ago.

    Stop believing the professional liars on your TV.

    You’re right: the only people who need money right now are governments and municipalities.

    Signature

    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 02 December 2010 06:47 PM #36

    Bernard Madoff walks back to his apartment in New York in this December 17, 2008 file photo. REUTERS/Shannon Stapleton/Files
    Madoff trustee sues JPMorgan

    Irving Picard, who is seeking money for defrauded former clients of Bernard Madoff, said he filed a $6.4 billion lawsuit accusing JPMorgan Chase of aiding the imprisoned Ponzi schemer’s fraud.

    Imagine that! JP Morgan, being less than forthright about their income methodologies….who would’a thunk it?

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 02 December 2010 09:09 PM #37

    http://www.infowars.com/arrest-assange-arrest-the-banksters-instead/

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 03 December 2010 09:55 PM #38

    Signature

    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
  • Posted: 03 December 2010 10:30 PM #39

    Eric Landstrom - 02 December 2010 06:13 PM
    TanToday - 02 December 2010 05:16 PM
    Eric Landstrom - 02 December 2010 04:13 PM

    Bruce, when Lehman Brothers, our fifth largest I-bank collapsed, America immediately went into recession as our economy was kneecapped. Our five largest C-banks are far larger than Lehman and the damage from one of them failing would be much worse. Even a loss of confidence in our banks economy viability can kneecap our economy.

    EXACTLY my point Eric. WHY are we IN this situation?

    Bust them up, make the top 8, into 25 separate banks, diversify the risk and lower the “taxpayer bailout losses” and “bankers keep the profits” situation we are continually finding ourselves in.

    Look at Iceland. They said to the banksters and bondholders ... “too bad, YOU eat your own losses” .... and they are now projected to be in surplus within 24 months. Ireland and Greece however, just bailed out the banker-buffoon’s, and will NEVER EVER come out and go into the green.

    In a rational economy, risk takers { the banks } get to keep their profits, AND SUFFER when they have losses.

    We however, have a win-win situation now, they WIN, no matter what.

    And you think busting them up now is a good idea? Really? Moreover, a bank’s size hasn’t been proven to be a problem. The problem is the laws that encouraged banks to lend to people who were risky without requiring an ever increasing reserve ratio. The idea was that banks could lend to whomever so long as they could distribute the risk of those loans. With the advent of synthetic bonds through credit default swaps, the system went awry in the same way that all of your neighbors could take out fire insurance on your house and then burn it down and collect.

    What should be done is simply require higher and higher reserve ratios as loan pools increase while moving all credit default swaps to a public exchange with full transparency so that everybody can see where systemic risks reside. The problem was never bank size, Bruce. The problem was and is that no one market participant can see the total amount of risk building up in the system. 

    Furthermore, once our domestic banking is kneecapped and unable to service all of our domestic needs, then banks like Deutsche Bank move in and we give them more and more of our business until the foreign banks become “too large to fail” and at some point in the future, we’re forced to backstop the stupid foreign banks instead of our own. That’ll go over like a lead zeppelin but we’d be forced to do it to stop an economic collapse.

    Consider also that our large global companies need global banking in order to do business worldwide. As our domestic companies have grown globally, they’ve demanded that our banks offer global operations so as to conduct business in foreign shores and bring profits home. Again, Tan, size is not the problem.

    While sensitive to the fact that at the heart of the matter you would like to see a throttle lock put into place so that banking can no longer tank economies, your kind of knee-jerk reaction to reduce the size of domestic banking is exactly the kind of thing that will lead to further despair though greater uncertainty, slower recovery, and additional unemployment while not addressing the real problem that nobody had sufficient reserves to face the systemic risk that had built up in the financial system because no single market participant could see the total risks in the system because of a lack of transparency.

    Fantastic response!

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    Posted: 04 December 2010 08:47 PM #40

    Eric - 04 December 2010 02:30 AM

    Furthermore, once our domestic banking is kneecapped and unable to service all of our domestic needs, then banks like Deutsche Bank move in and we give them more and more of our business until the foreign banks become “too large to fail” and at some point in the future, we’re forced to backstop the stupid foreign banks instead of our own. That’ll go over like a lead zeppelin but we’d be forced to do it to stop an economic collapse.

    Uh…..

    .... that already happened Eric.

    Proving my point.

    I will graciously accept your humble admission of error.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 04 December 2010 09:09 PM #41

    TanToday - 05 December 2010 12:47 AM
    Eric - 04 December 2010 02:30 AM

    Furthermore, once our domestic banking is kneecapped and unable to service all of our domestic needs, then banks like Deutsche Bank move in and we give them more and more of our business until the foreign banks become “too large to fail” and at some point in the future, we’re forced to backstop the stupid foreign banks instead of our own. That’ll go over like a lead zeppelin but we’d be forced to do it to stop an economic collapse.

    Uh…..

    .... that already happened Eric.

    Proving my point.

    I will graciously accept your humble admission of error.

    Fed documents show that several foreign banks with large domestic operations went to the Fed discount window. We didn’t force foreign banks to accept money from our treasury. Bruce, you do recognize the difference between the Federal Reserve and our treasury, right? Additionally, you have as yet to interact with the actual problem that reserve capital requirements didn’t match systemic risk because none of the market participants or regulators could see the risks building up throughout the entire system.

    Moreover, you have as yet to offer a point other than you are angry at banks. You’ve failed to identify the problem and because you don’t really know what the real problem is you are unlikely to stumble upon true resolution.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 04 December 2010 10:10 PM #42

    Eric-

    Once again you side with the banks and I am befuddled as to why.

    But that not withstanding I think you know full well that TBTF needs to end.  Everyone knows it.

    Securitization is the issue.  Fractional lending traditionally falls apart every time the 10:1 ratio is violated.  We were up to 30:1 to 40:1.

    Even with super-tight lending standards, a 4% default rate renders a bank insolvent at 30:1.

    But that’s nothing - we had NO lending standards and a complicit ratings agency scam designed to cover up this fact.

    Bankers love inflation because it is essentially a counterfeiting operation.  Allow greedy banksters to counterfeit money and well, they’re gonna RUN WITH IT.

    But wait!  There’s more!!!!

    THAT wasn’t NEARLY enough - once the 30:1 was maxed out - Citi, WaMu etc. were all out of ink!!!

    Can’t have that!

    So what do they do?  They SECURITIZE thereby freeing up the ability to make themselves EVEN MORE RISKY.

    And all the while - pension funds and municipalities are levering up to buy into this giant, exponentially growing perfect storm.

    Then naked CDS shorts enter the fray….and Fannie/Freddie….AIG….


    ******KABOOOOOOOOOOOOOMMMMMMMM**********

    And we are left with a completely insolvent, corrupt cabal of THIEVES essentially taking over our entire economy.

    AND YOU BUY INTO THIS.

    YOU SUPPORT THIS.

    TO MAKE A BUCK.

    OKAY - TO MAKE LOTS OF BUCKS.

    Forget it.  It’s over.

    The economy has shrunk and is no longer capable of supporting the enormous debt loads accrued over the decades.  Hence - naked money printing which is essentially a naked short against the DOLLAR.  Yup.  Ben is shorting ALL OF US.

    It won’t work.  Rates are ZERO.  Interest on bonds is being paid by unbacked fiat printing.  Of course bonds are selling off because after all - people invest in bonds to own the labor of the bottom - not to get ‘pretend’ counterfeit interest.  So the bonds sell to offset the short Ben puts on the $$$.

    Finally - remember this.  It wasn’t a housing bubble - it was a credit bubble.  And it has only partially burst.  Once QE 2.0 or 3.0 or 7.0 runs out - it is lights out unless we:

    1. GO TO WAR in a huge way.
    2. Colonize Mars.

    The endless run of forced thieving inflation is coming to an end.  And I believe we are in for the storm of the century.

    Check this out sometime and lemme know if the two latter ‘mandates’ have EVER been achieved by the “Federal” reserve.

    http://www.federalreserve.gov/aboutthefed/section2a.htm

    The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

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    The ends don’t justify the means…

         
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    Posted: 04 December 2010 10:16 PM #43

    Here’s our so-called “recovery”:

    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/gono/Fed 12.2.jpg

    Translation of the above:

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    The ends don’t justify the means…

         
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    Posted: 04 December 2010 10:25 PM #44

    Think of this cold, hard fact.

    In 1992, the national debt was around $3.5 Trillion.  The Federal Reserve has now “purchased” almost that amount of cr*p.

    There won’t BE a QE 3.0 because the dollar will essentially collapse should he go any further with this.

    Imagine you can’t afford your rent so you write the landlord a check from Landstrom Local Savings bank.  Would you HONESTLY expect him to accept it?!?!

    Well - why should the bond market accept the SAME THING from Ben?!

    It isn’t MONEY if it isn’t backed by LABOR - by WORK - by innovation.  You can’t just print away your debts.

    But of course you all know this so…

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    The ends don’t justify the means…

         
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    Posted: 04 December 2010 11:08 PM #45

    The following charts show the point at which the ‘system’ collapsed:

    Notice how the Fed balance sheet BALOONED at the same time.

    This is akin to paying off your debts with printed money.  Sure - the world will play along for a time - after all - we have the “real” assets - the military bases, weapons, technology and 320 million war-mongering people.  But the bond market will be first to say, “no mas” and with that the entirety of life as we know it will be forever changed.  And when bond yields rise, housing goes kaplooie and corporate borrowing costs will soar.  Oh yeah - and that record amount of corporate cash?  It doesn’t exist.  Another lie.  Go look at Dow 30 companies and look at YoY debts and liabilities - all rising.

    Then there are insolvent municipalities - Illinois, NY, NJ, California, pensions - Illinois, CalPERS, NY Retirement - COUNTRIES - ie PIIGS (all still broke).

    Holding your hand over the drunk’s mouth won’t stop him from vomiting but it just might get your hand wet. 

    Owning ANY paper assets at such a time will be absolutely pointless.

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    The ends don’t justify the means…