American International Group
- Merkel Pushes Back Against Hollande Call to End Austerity Drive (Bloomberg)
- ECB's Draghi throws crisis ball back to governments (Reuters)
- Greek Bank Chief Warns of a Possible Euro Exit (WSJ)
- China’s Wen Says Economy Will Maintain Robust Expansion (Bloomberg)
- North Korea's nuclear test ready "soon" (Reuters)
- Hong Kong Peg Architect Says Convertible Yuan `Long Way Off’ (Bloomberg)
- Hollande seeks wider EU fiscal pact (FT)
- Gavyn Davies: Why UK GDP continues to lag the G7 (FT)
- U.S. Lost AAA on Danger of Liquidity Crisis, S&P’s Kraemer Says (Bloomberg)
Addressing his perception of lessons learned from the financial crisis, Ben Bernanke is speaking this afternoon on poor risk management and shadow banking vulnerabilities - all of which remain obviously as we continue to draw attention to. However, more worrisome for the junkies is the total lack of QE3 chatter in his speech. While he does note the words 'collateral' and 'repo' the proximity of the words 'Shadow, Institutions, & Vulnerabilities' are awkwardly close.
Unfortunately, nobody in the Treasury seems to want to deal with the mess at Ally Financial before Election Day. But the question is whether Ally can wait until then.
- Investors help Athens over bailout hurdle (FT)
- Greece Moves Closer to Swap (WSJ)
- U.S. Warns Apple, Publishers (WSJ)
- China offers other Brics renminbi loans (FT)
- Court Challenges EU on Bank Downsizings (WSJ)
- QE blamed for surge in pensions shortfall (FT)
- Tang: Open to adjusting dollar trading band (WSJ)
- U.S. Report to Warn on Cyberattack Threat From China (WSJ)
The cash settlement world of OTC derivatives is not investing, but gaming. And the House sets the rules.
For our quote of the week, we go to the man who almost brutally cut the meal between breakfast and brunch (it was formerly supposed to be German demand #39 for Greece but was mysteriously cut in the final draft) in the name of fiscal austerity and setting a shining example of calorific sacrifice. We repeat almost. Quote Busineweek: "No one pays attention to the activation of the CDS." Venizelos told lawmakers in comments broadcast live on state-run Vouli TV........ :0
AIG just conducted a two-fold master class of i) how to confuse Wall Street of having "superb" earnings, and ii) how to avoid paying any corporate taxes for years to come. Because as part of the company's just announced massive $19.8 billion profit, a whopping $17.8 billion was nothing short of the oldest tax accounting gimmick in the book - the release of a valuation allowance (i.e., deferred tax liability vs deferred tax asset conversion). In other words, apples to apples, the real Net Income attributable to shareholders was not $19.8 billion but realistically $2 billion, which would compare to last year's $11.2 billion if only it was not for a $13.5 billion gain on divested business posted in Q4 2011, when the company again was fudging numbers like a drunken sailor. Anyway, we are confident even the algos will figure it out eventually. But the real slap in the face coming from this bailed out company is that as a result of this accounting change, AIG will essentially not pay any taxes for years to come, most likely until its next insolvency.
- New Greek demands threaten debt deal (FT)
- Greek Finance Minister Heads to Brussels; Loan Talks Stall (WSJ)
- Talks Stalled on Greek Bailout as Venizelos Heads to Brussels (Bloomberg)
- US banks near historic deal on foreclosures (FT)
- Obama: Europe needs "absolute commitment" on debt crisis (Reuters)
- Fed's Lacker sees no need for more easing for now (Reuters)
- Europe compromise urged at summit (China Daily)
- China to Punish Illicit Bank Lending, Shanghai Securities Says (Bloomberg)
- Monti Meets Obama Amid ’Spectacular Progress’ (Bloomberg)
- Draghi’s First 100 Days Presage Greek Help (Bloomberg)
Solyndra, Ener1, and now Kaufman Bros - The current economy may not be very good at creating jobs, even minority-focused ones, but its track record in inverse job creation is rapidly becoming second to none. Bloomberg reports that "Kaufman Bros. LP, the minority-owned investment bank that helped unwind U.S. stakes in bailed-out financial companies, ceased operations as of yesterday, according to a notice posted on its website. Chief Executive Officer Benny Lorenzo told employees that New York-based Kaufman was closing immediately in a meeting yesterday after trading closed, according to two people with knowledge of the matter, who declined to be identified because they weren’t authorized to speak publicly. Neither Lorenzo nor Chief Financial Officer Gerard Durkin returned messages left on their office and mobile phones yesterday and today." More amusing is the following description: "The company, which also has offices in San Francisco, said it was sought out by institutional investors, hedge funds and government agencies to help meet diversity goals." No comment. The closure notice can be found on the company's website. And so another bank bites the dust. Many more coming.
- Fed Holds Off for Now on Bond Buys (Hilsenrath)
- Bonds Show Return of Crisis Once ECB Loans Expire (Bloomberg)
- Greek Debt Talks Enter Third Day After ‘Substantial’ Discussions (Bloomberg)
- Sharp clashes at Republican debate ahead of vote (Reuters)
- Lagarde Joins Warning on Fiscal Cuts Before Davos (Bloomberg)
- Investors exit big-name funds as stars fail to shine (Reuters)
- Payday lenders plead case to consumer agency (Reuters) - the EFSF included?
- EU Toughens Fiscal Pact Bowing to ECB Objections, Draft Shows (Bloomberg)
- Minister Urges Japan to Use Strong Yen (FT)
- China Eyes Pension Fund Boost for Stock Market (Reuters)
- China Manufacturing Contraction Boosts Case for Easing: Economy (Bloomberg)
In this issue of The Institutional Risk Analyst, we return to the zombie dance party to check in on the queen of the prom, American International Group ("AIG"). First a question: Vampires are all the rage now in popular culture, so allow us to offer a macabre metaphor for AIG. Do you know what a "blood doll" is? A girl who craves to be the regular victim of or willing donor to a vampire. But hold that thought.