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From FT: A city run by one of China’s incoming political leaders that has billed itself as a future international financial centre is instead becoming the country’s internet censorship capital. Tianjin, whose Communist party secretary Zhang Gaoli is one of the seven men most likely to get a seat on the new politburo standing committee due to be unveiled at the 18th party congress starting on Thursday, is developing a replica of Manhattan to which [...] It was supposed to be win-win. The government agency got a slightly lower rate, while the investment bank earned fees. If the variable bond’s rate rose above the fixed rate target – the scenario that government finance officials feared most – the swap counterparty (the banks often off-loaded the instruments to speculators) paid off the government agency. If the variable bond rate went down, the swap payments moved in the [...] Macroeconomic issues currently playing out in Europe, Asia, and the United States may be linked by the same dynamic: over-leveraged banking systems concerned about repayment from public- and private-sector borrowers, and the implication that curtailment or non-payment would have on their balance sheets. Global banks are linked or segregated by the currencies in which they lend. Given the currencies in which their loan assets are denominated, market handicapping of the timing [...] by Michael
#1 Historical Trends A recent IMF research paper by Luc Laeven and Fabián Valencia showed that a banking crisis is far more likely to start in September than in any other month. The following chart is from their report…. So what will this September bring? #2 JP Morgan Do you remember back in May when JP Morgan announced that it would be taking a 2 billion dollar trading loss on some derivatives trades gone bad? Well, [...] From Bruce Krasting: I participated in a slow-motion disaster back in theearly ’80s. I was working for the global powerhouse, Citibank. Walter Wristonwas running the show at the time. Banks, bond issuers and investors are bracing for aftershocks from a wave of bank downgrades expected to hit the U.S. as soon as the coming week. Moody’s Investors Service has said it is likely to reduce by the end of June credit ratings for 17 large global banks, including five of the six biggest U.S. financial firms by assets. The downgrades are expected to raise borrowing costs and crimp some lucrative [...] Interesting that two of the articles today take polar views, a rally on a Greek Euro exit and Apocalypse Fairly Soon! Global Banks See Market Rally On Greek Exit Gary Jenkins from the bond advisers Swordfish said those betting on a market crash should be careful. “The global central banks are going to respond with the biggest flood of liquidity the world has ever seen. It will make the LTRO (the ECB’s [...] From Telegraph: Bank of America said it expects a “powerful short squeeze” in risk assets as speculative funds unwind positions, led by a rebound in battered bank stocks and Club Med bonds. The euro would surge 10pc to $1.40 against the US dollar after dipping first to $1.20 in the immediate panic. The benign outcome assumes that the European Central Bank steps in with massive support, backed by the US Federal Reserve, [...] An article in Radar magazine in May 2008, citing three unnamed former government officials, reported that “8 million Americans are now listed in Main Core as potentially suspect” and, in the event of a national emergency, “could be subject to everything from heightened surveillance and tracking to direct questioning and even detention. The alleged use of Main Core by the Bush administration for domestic surveillance, if confirmed to be true, would [...] From Reuters: Jasjit Bhattal, the highest-ranking ex-Lehman executive at Nomura Holdings (8604.T), resigned on Tuesday after the wholesale division he led suffered heavy losses and forced the Japanese investment bank to scale back its global expansion. The departure of Bhattal is the latest blow to Nomura’s ambitions to join the elite ranks of global investment banks following its acquisition of Lehman Brothers’ European and Asian operations after the storied Wall Street firm [...] From Reuters: Air pollution levels in Hong Kong were the worst ever last year, the South China Morning Post reported on Monday, a finding that may further undermine the city’s role as an Asian financial centre as business executives relocate because of health concerns. Worsening air quality in Hong Kong caused by vehicle emissions and industrial pollution from the neighboring Pearl River Delta is already forcing many in the financial community to move to [...] by ZH Over the past month we have been closely documenting a major funding squeeze in the all important shadow economy – the “synthetic liquidity” conduit which far more than traditional sources of cash, has become all important for proper bank functioning over the past decade. Courtesy of adverse development in Europe, one by one various components of this unregulated funding scheme have become frozen necessitating the first of many central [...] Banks with a TCE to RWA ratio of less than 6.5% to 7.5% accounted for a disproportionate share and the vast majority of distressed banks. Approximately 21% of the largest global banks became distressed during the crisis. Banks with a TCE to RWA ratio of less than 6.5% prior to the depths of the crisis had a distress rate of 33% and made up 58% of distressed banks. Banks with [...] FXstreet.com (Barcelona) – S&P rating agency has just downgraded 37 global banks. Goldman, BofA, Citigroup, Morgan Stanley, BNY Mellon are amongst the cuts based on a new methodology. Japanese and UK banks cut or outlook lowered as well. (Excerpt) Read more at fxstreet.com … Found these in a USA Today article: Bank of America
by ZH Denial. Denial is safe. Comforting. Religiously and relentlessly abused by politicians who don’t want nor can face reality. A word synonymous with “muddle through.” Ah yes, that “muddle through” which so many C-grade economists and pundits believe is the long-term status quo for the US and the world just because it worked for Japan for the past three decades, or, said otherwise, “just because.” [...] From FT: New international bank capital rules are “anti-American” and the US should consider pulling out of the Basel group of global regulators, Jamie Dimon, chief executive of JPMorgan Chase, has said. In an interview with the Financial Times, Mr Dimon said he was supportive of forcing banks to have more capital but argued that moves to impose an additional charge on the largest global banks [...] by ZH While the US was panicking over a double zero jobs report, things in Europe just fell off a cliff. As both the WSJ and Reuters report, it seems that the second Greek bailout, following repeated and consistent disappointments by Greece which has resolutely refused to comply with the terms of its fiscal austerity program, has just collapsed.And with the US closed on Monday: long [...] Naked Capitalism Bank of America’s actions continue to betray its words. CEO Brian Moynihan bravely maintained in an investor conference call last week that the beleaguered bank would be around for the next 230 years and did not need more new capital. He nixed selling equity at its current price levels, because it would be highly dilutive. Yet we and others have raised the issue that the [...] The biggest global banks are cutting jobs at the fastest rate since 2008 as a weak U.S. economy squeezes revenue, regulators push firms to hold more capital and companies restructure businesses to improve profitability. The 50 largest banks, including HSBC Holdings Plc (HSBA), Credit Suisse Group AG (CSGN) and Bank of America Corp. (BAC), disclosed plans for almost 60,000 reductions since Jan. 1, according to company statements and data compiled by [...] Central banks have been on a gold buying spree. In “The Rising Financial Gold Market,” I highlighted how countries, such as Mexico, Russia and Thailand, were adding to their gold reserves. And in 2010, central banks became a net buyer of gold for the first time in 21 years, according to the World Gold Council. Central bank gold buying could soon be matched with other global banks [...] by ZH Operation Empire State Rebellion is back. Perhaps in the aftermath of the IMF “very major breach” by anonymous hackers, it is really time to make sure all external access points to FedWire and FedLine are truly safe and sound. It will be very sad if it is uncovered that this source of externally accessible portal to hundreds of billions in emergency Fed funding has been somehow [...] by Hugh G Rection 1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS. 2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities [...] by ZH But that’s ok- these banks will focus on funding US Treasury issuance first, ergo no need for more QE… Among some of the report findings, which will hardly be deemed shocking: Some stress tests should have higher capital hurdles |
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