rollingstone.com / By Matt Taibi / December 28, 10:25 AM ET
Another day, another corporate titan suffering from devastating amnesia. This time, the memory-loss patient is none other than Angelo Mozilo, the former CEO of Countrywide Financial.
Deposed in the landmark lawsuit between the monoline insurer MBIA and Countrywide/Bank of America, Mozilo professed not to know the difference between “verified” income and “stated” income. He also made some incredible remarks regarding his [...]
Faber Warns “Everything Will Collapse”
Famed economist Marc Faber appeared on Bloomberg TV with a harsh, direct warning to investors.
“U.S. monetary policies will destroy the world,” he said, referring to the new round of stimulus – QE3, or “QE Forever” – the Fed plans to launch this year.
Faber’s not alone.
A group of his economic peers agree that with more central bank action like QE3, global economic collapse is imminent.
In a newly released documentary [...]
Are the bond markets going mad? It is a question that many investors might ask. For as anxiety has erupted in the eurozone, something striking has occurred with respect to US Treasuries and German Bunds.
If you look at the credit derivatives market – the place where investors judge the risk of bond default – government bonds are getting riskier, not just in places such as Greece but in supposed havens such as [...]
I use the dollar in the description of Credit Default swaps for a basis as they could be denominated in any fiat currency.
Understand that the dollar is the defacto “Reserve currency – Petrodollar” that the world uses to transact business. As that dollar becomes more encumbered with “leverage” its ability to be a store of value has less conviction and faith. The “only” value that a fiat paper currency can [...]
Have you guys read this? This just reinforces feelings that economically speaking, it’s close to being done. Like dominoes falling, the final one will come down. If you don’t like to read just scan the bolded topics in the article. The implications are huge. This is deep.
snip-…The Bank of England and the US Federal Reserve are both implicated, but they will skate until the end game. They control the prosecutors [...]
Jeff Nielson: Nearly two and a half years ago, I first began warning readers of the “economic terrorism”which Wall Street had unleashed upon Europe – via the fraudulent manipulation of credit default swaps, and equally fraudulent “ratings cuts” from their accomplices, the ratings agencies. At a time when only Greece had begun to experience financial turmoil, I wrote:
…It will be even more interesting to see what happens next. If the CDS [credit [...]
May 22 – Credit default swap (CDS) spreads on two technology giants are indicating significantly bearish market sentiment, according to Fitch Solutions in its latest earnings commentary.
CDS on Dell, Inc. (reporting after market close today) have widened 42% over the past quarter, notably underperforming North American technology firms overall (12.5% wider CDS). ‘Markets are currently pricing Dell’s default risk on the precipice of high yield territory now,’ said Author and Director Diana [...]
Bill Black is interviewed by Amy Goodman for Democracy Now. Video of the full interview is embedded following these notes.
The story that JP Morgan is telling us: They had about $15 billion in distressed European debt. Europe has been in trouble, so those investments were losing value. Their story, which does not make sense, is that they decided to hedge this position with a derivative of a derivative. In this case, it [...]
by George Washington
Before we can understand what’s really going on with JP Morgan’s loss (which will probably end up being a lot more than $2 billion), we need a little background.
Is the world’s largest publicly-traded company
Is the largest bank in the U.S. … the biggest of the too big to fail banks which are killing the American economy
Is the largest derivatives dealer in the world (and see this), and derivatives are inherently destabilizing for the economy
Essentially wrote the faux “reform” legislation [...]
The Wall Street Journal – J.P. Morgan’s $2 Billion Blunder
Bank Admits Losses on Massive Trading Bet Gone Wrong; Dimon’s Mea Culpa
A massive trading bet boomeranged on J.P. Morgan Chase & Co., leaving the bank with at least $2 billion in trading losses and its chief executive, James Dimon, with a rare black eye following a long run as what some called the “King of Wall Street.” The losses stemmed from wagers [...]
The worst may be yet to come in the global financial crisis as the central bank spending that kept defaults low runs out, according to Deutsche Bank AG. (DBK)
Credit-default swap prices imply that four or more European nations may suffer so-called credit events such as having to restructure their debt, strategists led by Jim Reid and Nick Burns said in a note. The Markit iTraxx SovX Western Europe Index [...]
JPMorgan Chase didn’t really save the day by buying up a few stocks, they simply gave good eye candy, or put on a good show — in reality they were purposely crashing the system — just as they always do — so they could pick up the pieces at bargain rates — you have to understand the full profit cycle of everying, beginning with the fraudclosure scheme.
And please remember, it [...]
Greece’s use of collective action clauses forcing investors to take losses under its debt restructuring triggers payouts on $3 billion of default insurance, the International Swaps & Derivatives Association said.
A total 4,323 credit-default swap contracts may now be settled after ISDA’s determinations committee ruled the use of CACs is a restructuring credit event, according to a statement distributed today by Business Wire. Before the ruling, Greek swaps rose to a record $7.68 [...]
Written by Jeff NielsonMonday, 05 March 2012 13:26
One of the most poorly kept secrets in Wall Street’s empire of fraud was that credit default swaps were never anything but pretend-insurance. The credit default swap market is a $60+ trillion paper Ponzi-scheme. The Wall Street crime syndicate claiming to “back” this insurance have nothing more than a few $billion of liquidity apiece. It is a fact of arithmetic that these fraud-factories [...]
Uploaded by CapitalAccount on Feb 16, 2012
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The rating agency moody’s has warned it is considering downgrading the investment banking world’s biggest players — this includes Bank of America, Goldman Sachs, JP Morgan, Morgan Stanley…the list goes on and on. I like the way the Wall Street Journal put it: “Moody’s is worried about everything in investment banking.” And speaking of worries — Art Cashin of UBS in his note this [...]
by Sam Ro
In this morning’s Cashin’s Comments, UBS’s Art Cashin addresses what worries traders these days.
A Greek default has been on everyone’s minds lately. But the traders Cashin has talked to think that it’s just the tip of the iceberg.
The bigger fear is what happens in the credit default swap (CDS) markets. No one knows how big it is, who the counterparties are, and, worst of all, whether the CDS contracts will actually trigger [...]
by Simone Foxman
Analysts have been buzzing lately over whether or not a Greek debt restructuring would characterize a credit event and ultimately trigger credit default swap (CDS) contracts.
EU leaders have pushed the idea of a voluntary default that would not trigger the CDS. Most financial analysts have been pretty set against this, arguing that a high-handed move by EU leaders would destroy the massive industry of CDS—one of the only direct [...]
From Charles Hugh Smith:
… Here is a brief summary of the situation in Europe:
1. Greece is poised to default, the end-game everyone anticipated in 2011. It is not a matter of “if,” but “when.”
2. That default will trigger credit-default swap contracts, derivatives known as CDS that protect the owner from events such as default.
3. This will implode the shadow-banking system and the visible banking system, as those who sold the [...]
Charles Hugh Smith
1. Greece is poised to default, the end-game everyone anticipated in 2011. It is not a matter of if but when.
2. That default will trigger credit-default swap contracts, derivatives known as CDS that protect the owner from events such as default.
3. This will implode the shadow-banking system and the visible banking system…
JPMorgan Chase (this applies to Goldman Sachs & Morgan Stanley, but more so to top rat JPM) was responsible for lobbying congress for the overturning of Glass-Steagall, while it created the credit default swap, and countless variants of CDOs. It has enjoyed the strongest derivatives position since that time.
JPMorgan was responsible for structuring the securitized-mortgage-foreclosure profit cycle:
they profit from lending the mortgage, then profit from its securitization, then profit from its foreclosure [...]
Via Peter Tchir of TF Market Advisors,
As we wait for more IIF announcements about the Greek Private Sector Involvement (PSI), Greek CDS remains bid above 60 points up front. For a contract that is about to be “worthless”, this seems to have a lot of value.
Why would Greek CDS still be so well bid?
One answer is stubbornness and stupidity. Maybe the CDS buyers are so convinced that Greece is a mess, [...]
The CDS index market remains one of the most liquid sources of hedges and positioning available (despite occasional waxing and waning in volumes) and is often used by us as indications of relative flows and sophisticated investor risk appetite. However, as Kamakura Corporation has so diligently quantified, the broad CDS market (specifically including single-names) remains massively concentrated. This concentration, evidenced by the Honolulu-based credit guru’s findings that three institutions: JPMorgan Chase, Bank of [...]
Private equity leveraged buyouts (P.E. LBOs) typically put up 10% of their own collateral (although Romney would sometimes only put up 5% to 6%) with the remaining 90% from bank loans taken out against the buyout target company. This loads the company with extreme amounts of debt, which greatly reduces their taxes due to the greater tax deductibility from debt interest payments. (Equity dividends are always taxed higher than debt [...]
From the Economist about a year ago — now all too true.
As we watch the ongoing train wreck in the European Union, we can’t help wondering where it will all end up. I search in vain on the internet for a discussion about the logical conclusion to this catastrophe, but few venture to put forth a picture of what’s to come. Here is my best guess.
The fear of a Euro breakup has [...]
With banks on both sides of the Atlantic using derivatives to hedge, potential losses aren’t being reduced, said Frederick Cannon, director of research at New York-based investment bank Keefe, Bruyette & Woods Inc.
“Risk isn’t going to evaporate through these trades,” Cannon said. “The big problem with all these gross exposures is counterparty risk. When the CDS is triggered due to default, will those counterparties be standing? If everybody is [...]
Stock World Weekly: Europhoria
Excerpt from Europhoria, the week ahead section:
The markets enjoyed this week’s eurozone announcement, with its expansion of the EFSF, the 50% “haircut” for Greek bondholders, and the recapitalization of European banks. But the Europhoria was not universal, and many remain skeptical. For a well-done glimpse into the inner-workings of the eurozone’s latest plan, watch this Xtranormal cartoon. Zero Hedge’s take: “While it is not the [...]
(Extract from page 22 of BIS Quarterly Review, September 2011)
Recently, there has been a substantial amount of interest in the extent to which the category “guarantees extended” 1 of the BIS consolidated banking statistics on an ultimate risk basis could be used as a proxy for the credit default swap (CDS) exposures of various banking systems to individual countries. Several important caveats apply to such an approximation.
First, while the contingent liabilities [...]
“Its latest round of troubles began on Friday morning before the markets opened at 9:30 a.m. Zero Hedge, a well-read and controversial financial blog, linked to a Bloomberg News article that noted Morgan’s credit-default swap spreads had been widening. The Zero Hedge post also directed readers to a previous Zero Hedge article that pegged Morgan Stanley’s net exposure to French banks at $39 billion, about [...]
(Reuters) – Moody’s Investors Service lowered debt ratings for Bank of America Corp, Citigroup Inc and Wells Fargo & Co on Wednesday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.
The government is “more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled,” said the rating agency, a unit of Moody’s [...]
Goldman Sachs has published a semi-secret 54-page report for hedge-fund clients arguing that the world’s going to hell and recommending ways to cash in.
The WSJ’s Susan Pulliam and Liz Rappaport got their hands on a copy.
The report is not an official Goldman research report.
It’s an unofficial Goldman research report–the kind you really want to read.
In the report, Goldman strategist Alan Brazil argues that:
European banks need $1 trillion of capital [...]
Mr Speaker, people will be concerned about the turmoil in the world’s financial markets and what it means for economies here and across the globe.
I want to use the opportunity of the recall of Parliament to update the House on what we are doing to protect Britain from the storm and to help lead a more effective international response to the fundamental causes of this [...]