testosteronepit.com / By y Wolf Richter / February 26, 2013, 6:10PM
Bank bailouts in the Eurozone, like bank bailouts elsewhere, have made owners of otherwise worthless bank debt whole through a circuitous process where, in the end, taxpayers transferred their money to investors. Even in Greece, investors were coddled. Even Proton Bank that had siphoned off $1 billion in a scheme of fraud, embezzlement, and money laundering was bailed out at taxpayer expense [European Bailout [...]
by Phoenix Capital Research
The markets in Europe continue to rally hard despite the fact that Europe’s financial system is totally insolvent.
At the center of this mess is Spain, which now barely functions as a country. Spanish pharmacies, owed $500 million by the government, are running out of medicine in Valencia. Strikes have resulted in trash not being collected for 20 days in Jerez. Over 2.2 million children live in poverty [...]
by Phoenix Capital Research
Spain continues to heap one impossible idea on top of another.
The latest “plan” consists of Spain creating a bad bank called SAREB that will buy up bad assets in Spain in an effort to clean up the country’s finances.
SAREB was part of the €100 billion Spanish bailout plan which was set forth in June. Once again, none of it makes any sense.
Spain’s Bad Bank to Buy Up [...]
Spain’s banks face a capital shortfall that could climb to 105 billion euros ($135 billion), almost double the estimate the government provided last week, according to Moody’s Investors Service.
The nation’s lenders may need infusions of 70 billion euros to 105 billion euros to absorb losses and still keep capital ratios above thresholds outlined in legislation last year, Moody’s analysts wrote yesterday in a report. That compares with the 53.7 billion euro shortfall found [...]
From New Deal Democrat’s summary:
Weekly indicators were quite mixed. Initial claims, especially as measured over 4 weeks, are sending a good signal. Housing prices are firming. The long leading indicators of housing (especially refinancing), real money supply, and corporate bond yields also continue to be positive. Consumer sales were weakly positive. On the other hand, gasoline prices and sales are a negative. Railroad data was mixed, as were purchase mortgages, [...]
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — One day after former Citigroup Inc. CEO Sandy Weill said banks should be broken up to protect taxpayers, a current executive at the super-sized financial institution defended a new system for dissolving a large failing bank, arguing that taxpayers are not exposed.
On Wednesday, Weill, often thought of as the father of too-big-to-fail banks, told CNBC that what “we should probably [...]
Investors pull record $120.7B out of Spain
Investors pulled a record amount of money out of Spain during the first quarter, official data showed Thursday, in a sign of deteriorating confidence in the country’s debt-ridden economy.
Capital outflows totaled 97 billion euros ($120.7 billion) during the first three months of the year, the highest amount since records started being kept, the Bank of Spain said.
The figure compares to a net entry of [...]
Spanish Debt Insurance Costs Hit Another Record High At 562 BPs
LONDON (Dow Jones)–The cost of insuring Spanish sovereign debt against default hit yet another record high Friday, rising 12 basis points from Thursday’s close to 562 basis points as its banking system is under severe stress, undermining investors’ confidence and threatening to once again push the country’s borrowing cost to unsustainable levels.
Spanish Banks’ Bad Loans Worsen as Recession Bites: Economy
Moody’s Investors Service is delaying ratings downgrades on more than 100 banks as it assesses the effect of JPMorgan (JPM) Chase & Co.’s trading losses and a greater possibility of a euro breakup, a Moody’s official said.
The Moody’s official declined to be identified as he wasn’t authorized to comment publicly. Moody’s said on April 13 that it would begin downgrading banks, including BNP Paribas SA (BNP), France’s biggest lender, Germany’s Deutsche Bank AG (DBK) and New York-based JPMorgan and Morgan [...]
The cost of insuring against a Spanish default surged to a record on concern a bailout of Bankia SA (BKIA), the nation’s third-biggest lender, won’t fend off a banking crisis triggered by bad real estate loans.
“While there is no danger of an imminent collapse at Bankia, there is a risk that it becomes a zombie bank, which has to rely on the European Central Bank to fund it over the [...]
From Chris Whalen via The Burning Platform:
… At the start of the financial crisis in 2007, the top four retail banks — Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo — were printing money by turning residential mortgages into securities of various toxic flavors and selling them to investors. In many cases, these securities were deliberately fraudulent, part of a breakdown in the legal protections against such activities put in [...]
We haven’t been hearing a lot from Matt Taibbi lately because he’s on deadline.
But he took a break from his furious writing to comment on this week’s bank earnings and the impending Moody’s downgrade of a few of the major Street players — BofA, Morgan Stanley, Goldman and Citi.
We know that earlier this week, Black Rock’s Larry Fink said that if some of these banks were downgraded, his massive asset management firm would have to stop doing business with them [...]
April 8, 2012
There are unintended consequences when policy aims at depreciating a currency in favor of bolstering an ailing banking system. The Federal Reserve has been on a multi-decade mission to lower the value of the US dollar. The primary purpose of this mission is to inflate banks into solvency as they try to work their way out of the massive financial crisis. The amount of troubled real estate loans is still [...]
by Bill Sardi
Recently by Bill Sardi: Stealth Withdrawal Of Wealth From China By Its Entrepreneurs Unwittingly Helped China Avert Runaway Inflation. But That Practice Is About To Be Halted.
Prior to the housing market collapse of 2008, about 70% of the revenues of US banks were comprised of profits made off of real estate loans. But with a self-induced real estate bubble where lenders relaxed loan [...]
Associate Professor of Economics and Law, William Black, joined George Knapp for a discussion on how our economic crisis has been brought about by deliberate fraud on the part of banks involved in real estate loans. The household losses in this crisis are estimated at a staggering 11 trillion dollars, he reported (by comparison, the S & L crisis of the 1980s was contained at $150 billion, he noted). Accounting [...]
Ticking time bombs: European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, in addition to all that eurozone sovereign debt:
European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, adding to pressure on lenders that also are holding large quantities of euro-zone government debt.
Four years after instruments like “collateralized debt obligations” [...]
Via Peter Tchir of TF Market Advisors
Ignoring the knee-jerk reaction of stocks to rally 4% on the headlines that Dexia will be save and other banks will be recapitalized, it is worth thinking about what this really means and the next logical steps.
For now I will not even focus on the fact that this was from a meeting of Finance Ministers and not heads of state. [...]
NEW YORK (CNNMoney) — Bank of America is reshaping its management team, and two big Wall Street names are out.
The company will continue on without two honchos: Joe Price, the president of consumer and small-business banking, and Sallie Krawcheck, president of wealth and investment management.
The reorganization “aligns …. with [the company's] three core customer groups: individuals, companies and institutional investors,” Bank of America (BAC, Fortune [...]
In an appearance at the Casey Research Spring Summit, Michael Maloney takes a look at the recent contraction of the money supply—it’s not pretty.
“This is an emergency – there’s something going wrong here,” Mike tells the crowd.
The dilemma of the U.S. Federal Reserve is that it’s damned if it does, damned if it doesn’t:
“If they end quantitative easing, it’s going to go into deflation—a huge implosion. If they [...]
Gold rose to new record nominal highs in debt laden U.S. dollars, euros and pounds today due to the growing risk of a systemic financial collapse and fiat currency crisis.
Gold rose 0.5% in U.S. dollar terms to a new nominal record high at $1,602.05 per ounce. Euro falls saw the dollar rise 0.8% against the euro and gold rise 1.4% in euro terms to EUR 1,041 per [...]
This article originally appeared in The Daily Capitalist.
Commercial real estate loans and residential housing will continue to be a significant drag on economic performance. Until the mass of over-built homes and commercial properties are liquidated credit will remain tight and unemployment will remain high.
The unfortunate fact remains that credit for most of America is still tight, banks are still trying to repair their balance sheets, [...]
More than 2 years after the financial crisis, a weak residential and commercial real estate market remains the biggest threat to the economy, according to ValuEngine’s Richard Suttmeier.
Looking out into 2011, Suttmeier warns residential housing could fall another 15-30%. “The housing market is still overpriced relative to where we began the new millennium,” he tells Aaron in this segment. “Prices are still about 50% [...]
The FDIC files suit against 11 former execs of a failed Illinois bank, accusing them of gross negligence and breach of fiduciary duty, as the agency steps up its efforts to recover losses by its deposit insurance fund.
The lawsuit, filed Monday in the U.S. District Court in Chicago, accuses former officials at Heritage Community Bank of negligence, gross negligence and breach of fiduciary duty.
The FDIC has [...]
He will resign in disgrace within the next year after the sudden but non-preventable collapse of the US Dollar!
I will make this simple:
Quantitative Easing is printing Federal Reserve Notes (cash, look at the top of your dollar bill) out of thin air (Jackson’s elevation is 6700 feet or thin enough) and he is exchanging the newly minted non-yielding “toilet paper” for current secondary market US treasuries. This reduces the Treasuries [...]
Would-be buyers canceled about 40 percent of new home contracts in San Diego in May, up from 10 percent in April, the company said. Data on new signings in that city werenÃ¢â‚¬â„¢t immediately available.
…..In Phoenix, contracts in the subdivisions surveyed by Metrostudy fell almost 49 percent for the week ended May 24 from the same period a year earlier
Most over valued region in San Francisco gets a taste of the [...]
Via calculatedriskblog.com :
From NY Fed President William Dudley’s commencement speech at New College of Florida:
[T]he recovery is not likely to be as robust as we would like for several reasons.
First, households are still in the process of deleveraging. The housing boom created paper wealth that households borrowed against. This pushed the consumption share of nominal gross domestic product to a record high of about [...]
The critical observation from the Nomura economist explains why the realists and the naive idealists are at greater odds than ever before: the government continues to perpetuate, endorse and legalize accounting fraud in the hope that covering everything up under the rug will rekindle animal spirits.
The truth, as Koo points out, is that were the FASB to show the real sad state of affairs, the two core industries in the [...]
It’s bank failure Friday and today was no disappointment. Today regulators stepped up to the plate with Eight Bank Seizures as the number of failures in 2010 hits 50.
U.S. regulators on Friday seized eight banks with assets totaling more than $6 billion, raising the tally this year to 51 failed banks and adding to the carnage of small institutions [...]
Treasury yields increase significantly (0.3% in two days)
Greece has already lanuched 7y notes issue TODAY! (I expect to be well over 6%)
European banks have to refincance 480B euro commercial real estate loans, much of it underwater expecting about 115B euro missing by the end of 2011 from banks.
BDI is declining for 9 day, HARPEX is even worse, still hovering near the lowest point.
The US debt is clearly unsustainable, even Bernanke [...]
The market is probably mispricing the actual problems in the system because it assumes that the bailouts of the banking industry will protect the problems with this mess. Yet someone will be paying for this. Wall Street is simply assuming it will be the middle class yet again. Take a look at the concentration of CRE debt with the too big to fail:
Expect bigger problems to hit in the CRE [...]