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A Fraud By Any Other Name... Reuters Says Everybody Did the Lehman Brothers!

Reggie Middleton's picture




 

Note: I am having extreme formatting issues with this post. You may view the original piece directly on my blog if you are having problems navigating the snippets of code that are popping up here.

After having just stating in an interview earlier this week that
although many banks are probably guilty of what Lehman was caught doing
with Repo 105's pursuing those actions based upon semantics may be
fruitless (it may be called depo 106?), Reuters comes out with this
interesting story: Major
US banks masked risk levels: report

(Reuters) - Major U.S. banks temporarily lowered their debt levels
just before reporting in the past five quarters, making it appear their
balance sheets were less risky, the Wall Street Journal said, citing
data from the Federal Reserve Bank of New York.

The paper said on Friday 18 banks, including Goldman Sachs Group
<GS.N>, Morgan Stanley <MS.N>, J.P. Morgan Chase
<JPM.N> Bank of America <BAC.N> and Citigroup <C.N>,
understated the debt levels used to fund securities trades by lowering them an average of
42 percent at the end of each period
.

The banks had increased their debt in the middle of successive
quarters, it said.

Citi, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan
Stanley were not immediately available for comment when contacted by
Reuters outside regular U.S. business hours.

Excessive leverage by the banks was one of the causes that led to the
global financial crisis in 2008.

Due to the credit crisis, banks have become more sensitive about
showing high levels of debt and risk, worried their stocks and credit
ratings could be punished, the Journal said.

Federal Reserve Bank of New York could not be
immediately reached for comment by Reuters.
 

The Wall Street Journal (see their interactive model) and ZeroHedge broke a similar storty with some meat
behind it to justify the allegations. Ahhh!!! The return of real
reporting, and not just from blogs!

From ZH:

Hmmm... It appears as if this report should have been published in
conjunction with that interview I just gave on regarding the prevalence
of the Lehman Chicanery in the entire banking system!

 

Please excuse the sound. I was coming off of a very bad cold, which
caused me to lose my voice very early on in the interview. 

Let's revisit some of the risks still inherent in the big banrks'
balance sheets...

Goldman Sachs: 

Still has a bunch of trash on its balance sheet, see Reggie
Middleton vs Goldman Sachs, Round 2.
 If you look at the period of
the most recent credit bubble, Goldman did everything that the other
failed and bailed out banks did: leveraged up on trash assets, invested
in and sold the worthless junk, and ran to the government for aid and
bailouts:

So, what is GS if you strip it of its government protected, name
branded hedge fund status. Well, my subscribers already know. Let' take
a peak into one of their subscription documents (Goldman Sachs Stress Test	Professional Goldman
Sachs Stress Test Professional 2009-04-20 10:06:45 4.04 Mb
 - 131
pages). I believe many with short term memory actually forgot what got
this bank into trouble in the first place, and exactly how it created
the perception that it got out of trouble. The (Off) Balance Sheet!!!

  image001.png

Contrary to popular belief, it does not appear that Goldman is a
superior risk manager as compared to the rest of the Street. They may
the same mistakes and had to accept the same bailouts. They are
apparently well connected though, because they have one of the riskiest
balance sheet compositions around yet managed to get themselves
insured and protected by the FDIC like a real bank. This bank's
portfolio looked quite scary at the height of the bubble.

As a matter of fact, it looks just as scary today as it does at the
height of the bubble, but since very few people read balance sheets, no
one really notices.

image003.png

  You know what most people don't realize is that it looks quite scary
now as well.

image004.png

JP Morgan:

Excerpted from Reggie
Middleton on JP Morgan's "Blowout" Q4-09 Results
 - Credit
conditions continue to remain tough as the delinquency rates continue
to climb and NPAs remain at elevated levels. The 30 day+ delinquency
rates for the consumer lending rose to 5.93% in 4Q09 from 5.85% in 3Q09
and 4.21% in 4Q08. The 30 days+ delinquency rates for credit card
touched 6.28% in 4Q09 against 5.99% in 3Q09 and 4.97% in 4Q08.

cons_credit_losses.png

Non performing loans increased to 2.77% of total loans at the end of
4Q09 from 2.72% of total loans at the end of 2Q09.

 loan_losses.png 

 image001_mbs_sales1.png

See al 

 

As clearly foretold last year, JP Morgan is significantly
understating the potential for losses on its WaMu portfolio acquisition

We looked into acquired portfolio of Wamu and as analyzed in the
forensic report, owing to continuous deterioration in the credit
quality, the acquisition is proving to be a bad deal for JPM. Exactly
one year ago, I accused JP Morgan of taking unrealistic marks on the
WaMu portfolio, see Is
JP Morgan Taking Realistic Marks on its WaMu Portfolio Purchase?
Doubtful!.
 It appears as if I was right on the mark, despite
management proclaiming that the loss trend on those loans are going as
expected. If that was the case, why is the discount and loss buffer
already eaten through to provide material net losses - just one year
after the purchase??? The Alt-A/Option ARM/HELOC pain has yet to really
hit, and JPM is already in the red by about 5% on this deal and they
bought it at a 25% discount! I suggest all readers reference the loss
trends in the Alt-A market as of December (A
Fundamantal Investor's Peek into the Alt-A Market
) and paying
subscribers should download the worksheet behind the data to get a
granular view of what is going on. We are already at a charge-off rate
of near 30%, which will not be reflected in JPM's numbers until next
quarter, and I have reason to believe that the WaMu loans will perform
worse than average.

As per the last forensic report at the end of 2Q09, the implied
discount rate for purchased credit impaired loans stood at 22.9% while
delinquency rate was 23.4%, thus a negative buffer of 0.5%. In 3Q09,
this negative buffer has further worsened to 2.6%, due to an increase
in delinquency rate to 25.6% reflecting continuous deterioration in the
acquired portfolio. Moreover, for 4Q09 the delinquency rate has
increased further to 27.8% and though the company has not reported the
outstanding balance and carrying value numbers we believe that the
buffer for 4Q09 will decline further.

image002-wamu_loans.png

image001-wamu_disc.png

In light of expected loan losses from the acquired portfolio, JPM is
adding to the allowance for loan losses. In 4Q09, JPM added nearly $491
million to allowance for loan losses to cover the estimated
deterioration in the Washington Mutual purchased credit-impaired
portfolio; this is compared with no addition in the same quarter last
year and nearly $1.1 billion addition in 3Q09.

Morgan Stanley:

 Morgan Stanley, appears to have reacquired the title of the "Riskiest
Bank on the Street" with iincreasing VaR and declining risk adjusted
returns that reflect growing risk in its investment portfolio, which is
rife with assets that I am quite bearish on.

Morgan Stanley's aggregate trading and non-trading VaR continued to
increase in 3Q09, reaching $168 mn with the risk adjusted return on
capital (RAROC) continuously declining to 22.9% in 3Q09.

  

The latest update for all subscribers: Morgan Stanley Forensic Outlook: Q1 2010 Morgan
Stanley Forensic Outlook: Q1 2010 2010-01-05 04:20:36 504.53 Kb

Free Research: The
Riskiest Bank on the Street

 

Hey, it's all cool. It's not as if they are reliant on each other
to offset these risks, right????

As a result, we have looked into derivative exposure of top commercial
banks to determine if they are hedging with each other to an extent
that engenders systemic risk. We have sourced the data from OCC report
(attached for your reference, see pdf occ_q1_2009_derivatives 10/09/2009,01:37 190.49
Kb
). Overall derivative products in U.S have grown at a
staggering pace rising from $41 trillion by 2000 year end to $202
trillion, or nearly 14.0x of U.S GDP as of March 31, 2009. Of the $202.0
trillion notional value of derivatives in United States, top 5 banks
alone account for 96% of the total industry notional amount The high
concentration of derivatives among the top five players strongly suggest
(this actually being politically correct, realistically it practically
assures us) that they may be subject to extreme levels of counterparty
risk towards each other. JPM is the largest player in derivative
markets accounting for approximately 40% of total notional value of
derivatives in U.S. JPM's notional value of derivatives as of March
31, 2009 stood at 39.0 times its total assets and 959 times its
tangible equity.

** JPM had additional collateral at the initiation of transactions
of

18,500

This will never blow up again, will it? Of course, not for at least
a couple of months until Europe roils the FICC markets: The
Next Step in the Bank Implosion Cycle???

The amount of bubbliciousness, overvaluation and risk in the market is
outrageous, particularly considering the fact that we haven't even come
close to deflating the bubble from earlier this year and last year!
Even more alarming is some of the largest banks in the world, and some
of the most respected (and disrespected) banks are heavily leveraged
into this trade one way or the other. The alleged swap hedges that
these guys allegedly have will be put to the test, and put to the test
relatively soon. As I have alleged in previous posts (As
the markets climb on top of one big, incestuous pool of concentrated
risk... 
), you cannot truly hedge multi-billion risks in a closed
circle of only 4 counterparties, all of whom are in the same businesses
taking the same risks.

Click to expand!

bank_ficc_derivative_trading.png 

So, How are Banks
Entangled in the Mother of All Carry Trades? 

Trading revenues for U.S Commercial banks have witnessed robust growth
since 4Q08 on back of higher (although of late declining) bid-ask
spreads and fewer write-downs on investment portfolios. According to
the Office of the Comptroller of the Currency, commercial banks'
reported trading revenues rose to a record $5.2 bn in 2Q09, which is
extreme (to say the least) compared to $1.6 bn in 2Q08 and average of
$802 mn in past 8 quarters.

bank_trading_revenue.png

High dependency on Forex and interest rate contracts

Continued growth in trading revenues on back of growth in overall
derivative contracts, (especially for interest rate and foreign
exchange contracts) has raised doubt on the sustainability of revenues
over hear at the BoomBustBlog analyst lab. According to the Office of
the Comptroller of the Currency, notional amount of derivatives
contracts of U.S Commercial banks grew at a CAGR of 20.5% to $203
trillion by 2Q-09 from $87.9 trillion in 2004 with interest rate
contracts and foreign exchange contracts comprising a substantial 84.5%
and 7.5% of total notional value of derivatives, respectively.
Interest rate contracts have grown at a CAGR of 20.1% to $171.9
trillion between 4Q-04 to 2Q-09 while Forex contracts have grown at a
CAGR of 13.4% to $15.2 trillion between 4Q-04 to 2Q-09.

In terms of absolute dollar exposure, JP Morgan has the largest
exposure towards both Interest rate and Forex contracts with notional
value of interest rate contracts at $64.6 trillion and Forex contracts
at $6.2 trillion exposing itself to volatile changes in both interest
rates and currency movements (non-subscribers should reference An
Independent Look into JP Morgan,
 while subscribers should
referenceFile IconJPM Report (Subscription-only) Final -
Professional
, and File Icon JPM Forensic Report (Subscription-only)
Final- Retail)
. However, Goldman Sachs with interest rate contracts
to total assets at 318.x and Forex contracts to total assets at 11.2x
has the largest relative exposure (see Goldman Sachs Q2 2009 Pre-announcement opinion Goldman Sachs Q2 2009 Pre-announcement opinion 2009-07-13
00:08:57 920.92 Kb
,  Goldman Sachs Stress Test Professional Goldman
Sachs Stress Test Professional 2009-04-20 10:06:45 4.04 Mb
Goldman Sachs Stress Test Retail Goldman Sachs Stress Test
Retail 2009-04-20 10:08:06 720.25 Kb,
). As subscribers can see from
the afore-linked analysis, Goldman is trading at an extreme premium
from a risk adjusted book value perspective. 

bank_forex_exposure.png

As a result of a surge in interest rate and Forex contracts, dependency
on revenues from these products has increased substantially and has in
turn been a source of considerable volatility to total revenues. As of
2Q-09 combined trading revenues (cash and off balance sheet exposure)
from Interest rate and Forex for JP Morgan stood at $2.4 trillion, or
9.5% of the total revenues while the same for GS and BAC (subscribers,
see BAC Swap exposure_011009 BAC Swap exposure_011009 2009-10-15
01:02:21 279.76 Kb
) stood at $(196) million and $433 million,
respectively. As can be seen, Goldman's trading teams are not nearly as
infallible as urban myth makes them out to be.

bank_ficc_trading_revenue.png 

Although JP Morgan's exposure to interest rate contracts has declined
to $64.5 trillion as of 2Q09 from $75.2 trillion as of 3Q07, trading
revenues from Interest rate contracts (cash and off balance sheet
position) have witnessed a significant volatility spike and have
increased marginally to $1,512 in 2Q09 compared with $1,496 in 3Q07.
Although JPM's Forex exposure has decreased from its peak of $8.2
trillion in 3Q08, at $3.2 trillion in 2Q09 the exposure is still is
higher than 3Q07 levels. Even for Bank of America and Citi , the
revenues from Interest rate and forex products have been volatile
despite a moderate reduction in overall exposure. With top 5 banks
having about 97% market share of the total banking industry notional
amounts as of June 30, 2009, the revenues from trading activities for
these banks are practically guaranteed to be highly volatile in the
event of significant market disruption - a disruption aptly described
by the esteemed Professor Roubini as a rush to the exit in the "Mother
of All Carry Trades" as the largest macro experiment in the history of
this country starts to unwind, or even if the participants in this
carry trade think it is about to start to unwind.

The table below shows the trend in trading revenues from Interest
rate and Forex positions for top banks in U.S.

Click to enlarge...

bank_ficc_exposure.png 

Banks exposure to interest rate and foreign exchange contracts

With volatility in currency markets exploding to astounding levels
(with average EUR-USD volatility of 16.5% over the past year (September
2008-09) compared to 8.9%  over the previous year), commercial and
investment banks trading revenues are expected to remain highly
unpredictable. This, coupled with huge Forex and Interest rate
derivative exposure for major commercial banks, could trigger a wave of
losses in the event of significant market disruptions - or a race to
the exit door of this speculative carry trade. Additionally most of
these Forex and Interest rate contracts are over-the-contract (OTC)
contracts with 96.2% of total derivative contracts being traded as
OTC. This means no central clearing, no standardization in contracts,
the potential for extreme opacity in pricing, diversity in valuation as
well as a dearth of liquidity when it is most needed - at the time
when everyone is looking to exit. Goldman Sachs has the largest OTC
traded contracts with 98.5% of its derivative contracts traded over the
counter. With the 5 largest banks representing 97% of the total
banking industry notional amount of derivatives and most of these
contracts being traded off exchange, the effectiveness of derivatives
as a hedging instrument raises serious questions since most of these
banks are counterparty to one another in one very small, very tight
circle (see the free article, "As
the markets climb on top of one big, incestuous pool of concentrated
risk... 
").

bank_ficc_otc_exposure_and_currency_volatility.png 

Of course, there is no real reason to expect volatility and surprises
in the Euro and Euro-denominated debt, right? There'll be no unpleasant
surprises coming out of that region, for sure!

The Pan-European Sovereign Debt Crisis, to date (free to all)

1.     The
Coming
Pan-European Sovereign Debt Crisis
 - introduces the crisis
and identified it as a pan-European problem, not a localized one.

2.     What
Country
is Next in the Coming Pan-European Sovereign Debt Crisis?
 -
illustrates the potential for the domino effect

3.     The
Pan-European
Sovereign Debt Crisis: If I Were to Short Any Country,
What Country Would That Be..
 - attempts to illustrate the highly
interdependent weaknesses in Europe's sovereign nations can effect even
the perceived "stronger" nations.

4.     The
Coming
Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western
European Countries

5.     The
Depression
is Already Here for Some Members of Europe, and It Just
Might Be Contagious!

6.     The
Beginning
of the Endgame is Coming???

7.     I
Think It's Confirmed, Greece Will Be the First Domino to Fall
 

8.     Smoking
Swap
Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer
Beware!

9.     Financial
Contagion
vs. Economic Contagion: Does the Market Underestimate the
Effects of the Latter?

10.   "Greek
Crisis
Is Over, Region Safe", Prodi Says - I say Liar, Liar, Pants on
Fire!
 

11.   Germany
Finally
Comes Out and Says, "We're Not Touching Greece" - Well, Sort
of...

12.   The
Greece and the Greek Banks Get the Word "First" Etched on the Side of
Their Domino

13.   As
I
Warned Earlier, Latvian Government Collapses Exacerbating Financial
Crisis

14.   Once
You
Catch a Few EU Countries "Stretching the Truth", Why Should You
Trust the Rest?

15.   Lies,
Damn
Lies, and Sovereign Truths: Why the Euro is Destined to
Collapse!

16.   Ovebanked,
Underfunded,
and Overly Optimistic: The New Face of Sovereign Europe

17.   Moody's
Follows
Suit Behind Our Analysis and Downgrades 4 Greek Banks

The
EU
Has Rescued Greece From the Bond Vigilantes,,, April Fools!!!

How
BoomBustBlog
Research Intersects with That of the IMF: Greece in the
Spotlight

Grecian
News
and its Relevance to My Analysis

The table below compares interest rate contracts and foreign exchange
contracts for JPM, GS, Citi, BAC and WFC.

JP Morgan has the largest exposure in terms of notional value with
$64,604 trillion of notional value of interest rate contracts and
$6,977 trillion of notional value of foreign exchange contracts. In
terms of actual risk exposure measured by gross derivative exposure
before netting of counterparties, JP Morgan with $1,798 bn of gross
derivative receivable, or 21.7x of tangible equity, has the largest
gross derivative risk exposure followed by Bank of America ($1,760 bn,
or 18.1x). Bank of America with $1,393 bn of gross derivatives relating
to interest rate has the highest exposure towards interest rate
sensitivity while JP Morgan with $154 bn of Foreign exchange contracts
has the highest exposure from currency volatility. We have explored
this in forensic detail for subscribers, and have offered a free
preview for visitors to the blog: (JPM Public Excerpt of Forensic Analysis SubscriptionJPM Public Excerpt of Forensic Analysis
Subscription2009-09-18 00:56:22 488.64 Kb
), which is free to
download, and File Icon JPM Report (Subscription-only) Final -
Professional
, orFile Icon JPM Forensic Report (Subscription-only)
Final- Retail
 as well as a free blog article on BAC off balance
sheet exposure If
a Bubble Bubble Bursts Off Balance Sheet, Will Anyone Be There to Hear
It?: Pt 3 - BAC
).

bank_ficc_otc_exposure_jpm.png

bank_ficc_otc_exposure_bac_and_gs.png

Subscribers, see WFC Research Note Sep 2009 WFC Research Note Sep 2009 2009-09-30
13:01:30 281.29 Kb
, ~ WFC Off Balance Sheet Exposure WFC Off Balance Sheet
Exposure 2009-10-19 04:25:53 258.77 Kb
 ~ WFC Investment Note 22 May 09 - Retail WFC Investment
Note 22 May 09 - Retail 2009-05-27 01:55:50 554.15 Kb
 ~ WFC Investment Note 22 May 09 - Pro WFC Investment Note 22
May 09 - Pro 2009-05-27 01:56:54853.53 Kb
 ~ Wells Fargo ABS Inventory Wells Fargo ABS Inventory 2008-08-30
06:40:27 798.22 Kb
 to expound on our opinions of Wells Fargo, bel

A Must Read: An
Independent Look into JP Morgan. 
This contains the "public
preview" document (JPM Public Excerpt of Forensic Analysis SubscriptionJPM Public Excerpt of Forensic Analysis
Subscription 2009-09-18 00:56:22 488.64 Kb
), which is free to
download.

Notice how all of the banks on this list probably have at least 100% of
their tangible equity exposed through counterparty exposure to, at the
most, 5 other highly concentrated, highly correlated and highly
incestuous counterparties. Most of the banks have between 12 and 20
times their tangible equity concentrated into this close knit pool.
That, my friends, is excessive risk waiting to implode. I am sure there
are some of you saying "Well, you don't know that they are actually
using each other as counterparties". Yeah, right! Who the hell else
would they be using? Tell me what group of companies will be able to
absorb $4.1 trillion dollars (That's TRILLION with a "T" of MARKET
VALUE carried on the balance sheet, NOT  notional value) of
counterparty risk???  

image001.png

 Cute graphic above, eh? There is plenty of this in the public preview.
When considering the staggering level of derivatives employed by JPM,
it is frightening to even consider the fact that the quality of JPM's
derivative exposure is even worse than Bear Stearns and Lehman‘s
derivative portfolio just prior to their fall. Total net derivative
exposure rated below BBB and below for JP Morgan currently stands at
35.4% while the same stood at 17.0% for Bear Stearns (February 2008)
and 9.2% for Lehman (May 2008). We all know what happened to Bear
Stearns and Lehman Brothers, don't we??? I warned all about Bear
Stearns (Is
this the Breaking of the Bear?
: On Sunday, 27 January 2008) and
Lehman ("Is
Lehman really a lemming in disguise?
": On February 20th, 2008)
months before their collapse by taking a close, unbiased look at their
balance sheet. Both of these companies were rated investment grade at
the time, just like "you know  who". 

 

 Looking at these numbers, the Reuters article above should not be
shocking at all...

So, while the games continue to increase risk, market complacency
is near a high:

image001.png

As you can see, we are just about where we were in 2007 in terms of
average volatility. 

image003.png 

 

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Fri, 04/09/2010 - 16:49 | 293628 sgt_doom
sgt_doom's picture

While normally I am adverse, given the 100 percent corruption levels existing today in America, to suggest contacting anyone, I would strongly urge everyone and all to contact that Financial Crises Inquiry Commission:

http://fcic.gov/contact/

I bet they'd want to hear from everyone on this matter.

Mon, 04/12/2010 - 00:50 | 295968 Bear
Bear's picture

Oh sure they are really interested ... or just collecting names of malcontents or potential IRS investigatees.

Fri, 04/09/2010 - 13:58 | 293509 williambanzai7
williambanzai7's picture

WHAT'S THE DIFFERENCE BETWEEN BANKERS AND WISE GUYS?:

http://williambanzai7.blogspot.com/2010/04/its-repo-105-world-after-all....

Fri, 04/09/2010 - 13:07 | 293438 GS is short Gold
GS is short Gold's picture

let's try to get this out to the MSM. I emailed the story to David Faber. He seems like the only one at cnbs that is close to impartial. by the way to email anybody at cnbc, use the following format - david.faber@nbcuni.com

Fri, 04/09/2010 - 13:05 | 293434 JohnG
JohnG's picture

 

The bailouts will NEVER end.  Theiving bastards.

Fri, 04/09/2010 - 13:01 | 293420 Sudden Debt
Sudden Debt's picture

Sound pretty bullish to me! BUY! BUY! BUY! BUY!

The really is comming! DOW 15000 HERE WE COME!

Fri, 04/09/2010 - 12:26 | 293349 AnonymousMonetarist
AnonymousMonetarist's picture

dup

Fri, 04/09/2010 - 12:17 | 293347 AnonymousMonetarist
AnonymousMonetarist's picture

'Tis institutional fraudulent conveyance...

Just got to keep dancin' and pushing that tempo whilst ignorin' that history rhymes...

Fri, 04/09/2010 - 11:54 | 293289 Rick64
Rick64's picture

Where is that transparency Obama promised. Did he mean transparency as in invisible? Oh the lies.

Fri, 04/09/2010 - 11:52 | 293283 anony
anony's picture

Reporting, investigating, uncovering, exposing, shining the light of truth----not to belittle the efforts and results, the dedication of those doing the work, but that only gets us to the beginning of the first half of the first inning. 

Until the heads of the perpetrators like Fuld and his ilk, the blankfeins and Dimons roll, their heads then placed on a pike, the rape will continue.

 

Fri, 04/09/2010 - 11:50 | 293277 JR
JR's picture

Fast forward to the present (the bubble post-bubble bust) and Goldman still is every bit the speculative hedge fund that defines risk transactions.  The difference is that they are now federally insured just like those community banks that offer grandma CDs…

“Federally insured.”  

This is the entire story.  The long laborious years of banks versus the people have brought us to this point; the most spectacular theft of private resources perhaps in the history of the world.  The scheme in all its ugly dimensions will come apart and in the not too distant future, as you say.  And when it does, the chop-chop of extremely detailed detection and revelation such as yours will have played a major part in opening it up and bringing it down.

Guide us through, Reggie.  Guide us through.  I can’t thank you enough.

Fri, 04/09/2010 - 11:46 | 293259 Ripped Chunk
Ripped Chunk's picture

Once again a great piece. Thanks Reggie.

The question I continue to look for the answer to is why Lehman?  I guess it's who you know and who you may have pissed off at some point.

Or a colder analysis is "with your firm out of the way (no matter how many jobs are lost) we will make X more in profit."

 

Fri, 04/09/2010 - 10:39 | 293126 rich_maverick
rich_maverick's picture

Reggie,

    Once again, love your work.  We can see that the entire financial sector has turned into a bunch of zombies, trying to suck the remaining life out of the rest of the economy.  They are dead, they just don't want the rest of us to know it yet.  We know that all the governments are broke, and have passed the tipping point of no return.  There is technically no way for any of the world governments to pay off their debts.  It is obvious that this house of cards is on its last leg.  Sooner or later, some wind will come and blow this all apart.  At which point: what then?

    Since you were one of the few here who shares a common view with the gold bugs that everything is now in the crapper, yet you are not a gold bug, where are you hiding your wealth?  It's easy (well... not so much, so that's for your journalistic integrity) to show where not to put your money.  The harder question is "where do you put your money to protect your wealth?".  Where does the somewhat wealthier of us middle class hide?  I'm wanting to hear the views of a confirmed non-gold bug who has taken the red pill and has gone down the rabbit hole with the rest of us what if the best policy moving forward?  Are you simply shorting the world and hoping those dollar profits will be worth something in the end?  Do you believe that deflation is inevitable, regardless of how much dollars are printed?  Basically, can you help answer the question: now what?

Thx!

Rich

 

Fri, 04/09/2010 - 12:24 | 293365 Modern Money Me...
Modern Money Mechanics's picture

I think you answered your own question. Each of us must judge their tolerence for risk-of-loss and it appears you have reached your threshold of too much risk. There too much volitity to justify minimal profit when the whole portfolio could be lost. You are not alone. More and more investment advisors have begun hiding in gold.

50 ways to move into tangibles...

You buy 1964 Kennedies out the back, Jack
Make a St. Gaudians plan, Stan
On Ebay you don't need to be coy, Roy
Just get yourself free
Hop on the Kitco bus, Gus
You don't need that IRA very much
Just buy PMs by the key, Lee
And get yourself free

Fri, 04/09/2010 - 10:30 | 293103 wgpitts
wgpitts's picture

Class Action Lawsuit: "Short" Sellers or Buyers of "Put Options" Defrauded by the Federal Reserve Bank

If you or someone you know lost money by taking short positions in the stock market this past year, encourage them to join this group. The Fed has admitted to making secret loans, encouraging false financial reports and illegal direct stock purchases. Discovery from this suit can bring out lots of good information.
Spread the word.

Info:
http://www.facebook.com/group.php?v=info&ref=mf&gid=112775505414171

Fri, 04/09/2010 - 11:42 | 293249 the grateful un...
the grateful unemployed's picture

"I'm shocked, shocked, to learn gambling is going on here.." Claude Rains, Inspector Reneau, Casablanca

"The world is full of bastard coated bastards, with bastard filling.." Scrubs

 

"Buckle your seatbelts, it's going to be a bumpy night." Bette Davis

 

The last time I was part of class action suit, I held Newmont options, and quite a few of them really, over a several year period. I worked half a day getting my records together, and I got a check for $4. I could have made more working as a janitor cleaning out their office.

Fri, 04/09/2010 - 10:26 | 293100 lucky 81
lucky 81's picture

'you're only as honest as you can afford to be', " lenny bruce"

Fri, 04/09/2010 - 10:23 | 293091 ExistentialSkeptic
ExistentialSkeptic's picture

Based on a quick scan of the source code, it appears that you have a number of link tags to twitter embedded inside the style code for some of your formatting tags -- the beginning quotation marks of the html reference is read by the browser as the end of the style tag and you get the weird "extra" characters.

The problem does not seem to exist in the source code on your own website.

Fri, 04/09/2010 - 10:30 | 293104 Reggie Middleton
Reggie Middleton's picture

My system's text editor provides a much richer assortment of styles and tags then does ZH's. Since the ZH editor doesn't strip and sterilize the code, it must be done by hand which I simply don't have the time to do. It wouldn't be bad if I typed everything from scratch, but I often  borrow from the deep well of content on my blog.

 

Fri, 04/09/2010 - 10:22 | 293089 Hephasteus
Hephasteus's picture

Dogs will show their weaknesses and illnesses but cats will hide them right up till they suddenly die or get so sick you can't save them.

God your cold was horrible. Hope you are feeling better reggie!!!

 

Fri, 04/09/2010 - 10:27 | 293101 Reggie Middleton
Reggie Middleton's picture

It was pretty bad, flu-like. I just lost my voice again as well. I've been working too hard...

Fri, 04/09/2010 - 10:13 | 293073 37FullHedge
37FullHedge's picture

These banks are too big to fail, I would expect them all to be bailed out when this thing blows up, The damage caused and how it will pan out, Thats a hard one, This could implode the US$ and bonds with the QE needed, Nothing is safe, but physical gold and silver is a fair start.

Fri, 04/09/2010 - 10:24 | 293094 Hephasteus
Hephasteus's picture

Ya california is too big to shake and rattle. And Guam is to underpopulated to tip over.

Fri, 04/09/2010 - 10:22 | 293090 Reggie Middleton
Reggie Middleton's picture

Nothing is too big to fail. If anything, the oligarchs running them are too connected to let fail, at least for the time being. I feel we may be experiencing a paradigm shift momentarily that may very well put that theorem to the test, though.

Fri, 04/09/2010 - 09:41 | 293006 mikla
mikla's picture

I be lovin' my Reggie!

Fri, 04/09/2010 - 10:25 | 293097 Reggie Middleton
Reggie Middleton's picture

I love y'all too! :-)

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