Some may recall how the very contentious topic of Greek deposit bank runs was arguably the key catalyst to push Greece (and its banks) to accept a bailout from Europe, after the country realized it had little cash left (and the associated SNAFU in which RBS proved it really has no clue about anything). Well, it is now Ireland turn, and as the below chart shows, the Irish bank run has already commenced, with locals not even bothering to wait until the December 7 coordinated "pull your money" pan-European D (for default)-Day. Bank of America brings attention to this issue, which will likely be the last liquidity event before not only a full bailout of Ireland has to be implemented, full terms be damned, but becomes the catalyst for ongoing CHF strength as European deposits once again rush to the relative safety of the last remaining relatively stable European currency (and of course gold). The result will be an ongoing squeeze in Switzerland, which we now believe may be one of the first countries from the core to feel the vigilantes' wrath shortly after Spain is bailed out, some time in Q1 2011.
The banks in England are celebrating austerity in a tried and true fashion: by boosting salaries. SkyNews reports that HSBC, infamous vault custodian of the precious paper for GLD and SLV, has decided to double banker salaries. After all, someone has to trigger inflation. We are confident the broader English population will celebrate the news with the same fervor as it did when it realized it was its generosity that allowed an insolvent RBS to keep operating for a few addition years.
- Dollar steady against euro, which buys $1.4211.
- Eurozone retail sales down .2% for second month in September.
- Gold rallied to $1,393.40, the highest ever, in after-hours electronic trading.
- Japan's central bank kept its key interest rate unchanged at near zero.
- "Material failure" or "faulty design" the likely cause of A380 engine blowout – Qantas CEO
- Amkor 3Q earnings fell 4% to $78M.
- BHP Billiton to build its Canadian potash business despite Ottawa blocking its $39B bid for Potash Corp.
- API: Crude supplies decline 4.1 mln barrels - larger than expected decline.
- CFTC to probe range of natgas derivatives-trading activity spanning parts of 2008, 2009.
- R&D spending drops for the first time in a decade at major firms: Booz & Co.
- World Bank: China should raise interest rates, allow a stronger yuan to damp inflation.
- Aetna Q3 profit jumps 53% to $497.6M on lower costs.
- BP: Dividend policy to be reconsidered in an effort to restore growth.
- GM to save up to $45B in taxes under an unusual provision of its govt-funded bailout.
Someone has to lose but, in this case, the loser is the Federal Reserve Bank of the United States of America – which plays the part of the perennial sucker as they are willing to sit down at the table and be taken for all they have two or three days a week. And why are they willing to be so generous? BECAUSE IT’S NOT THEIR MONEY!
A Paralyzed Fed Defers Decision On Monetary Policy To Primary Dealers In An Act That Can Only Be Classified As TreasonSubmitted by Tyler Durden on 10/27/2010 23:23 -0500
As if there was any doubt before which way the arrow of control, and particularly causality, points in America's financial system, the following stunner just released from Bloomberg confirms it once and for all. According to Rebecca Christie and Craig Torres, the New York Fed has issued a survey to Primary Dealers, which asks
for suggestions on the size of QE2 as well as the time over which it would be completed. It
also asks firms how often they anticipate the Fed will re-evaluate the program, and to estimate its ultimate size. This is nothing short of a stunning indication of three things: i) that the Fed is most likely completely paralyzed due to the escalating confrontation between the Hawks and the Doves, and that not even Bernanke believes has has sufficient clout to prevent what Time magazine has dubbed a potential opening salvo into a chain of events that could lead to civil war: in effect Bernanke will use the PD's decision as a trump card to the Hawks and say the market will plunge unless at least this much money is printed, ii) that the Fed is effectively asking the Primary Dealers to act as underwriters on whatever announcement the Fed will come up with, and thus prop the market, and, most importantly, iii) that the PDs will most likely demand the highest possible amount, using Goldman's $2-4 trillion as a benchmark, and not only frontrun the ultimate issuance knowing full well what the syndicate of 18 will decide in advance of what the final amount will be, but will also ramp stocks on November 3 to make the actual QE announcement seem like a surprise. This also means that the Primary Dealers of America, which include among them such hedge funds as Goldman Sachs, such mortgage frauds as Bank of America, such insolvent foreign banks as Deutsche, RBS, UBS and RBS, and such middle-market excuses for banks as Jefferies, are now in control of US monetary, and as we explain below fiscal, policy.
Bob Janjuah, the only man who had anything remotely interesting to say at RBS, and luckily left, is now back at Nomura, and is a leaner, meaner, kool-aid debunking machine. His inaugural letter is attached below. One complaint: what happened to all the abrvtns? Bob, that was ur sgntre style. The English here is just 2... krct. The pipl dmnd abrvtns.
First it was the New York Fed, now the FHFA itself (regulators of Fannie and Freddie) is getting involved in putbacks. The WSJ has just reported that the GSEs have hired law firm Quinn Emanuel as the "agency considers how to move forward with efforts to recoup billions of
dollars on soured mortgage-backed securities purchased from banks and
Wall Street firms... The FHFA hasn't disclosed the targets of its subpoenas, though some
banks have acknowledged receiving them, including J.P. Morgan Chase
& Co. The probe is focused on so-called private-label securities
that were originated by mortgage companies, packaged by Wall Street
firms and then sold to investors." Not to be confused with RoboSigning, which is at the heart of the Fraudclosure and could serve as a catalyst to what some claim as the unwind of the multi-trillion MBS market in a worst case scenario, this is a parallel effort that seeks to get banks to repurchase far more of misrepped and miswarrantied mortgages. As we previously disclosed, it is precisely this ongoing action that Bank of America and Wells Fargo have been (under)reserving against: and if the GSEs, together with the FRBNY, Pimco, BlackRock and who knows who else, are sensing the current moment as one of terminal weakness for the mortgage servicers, who knows how many billions in mortgages could be putback to the TBTF banks, who are luckily flush with still fresh taxpayer cash and trillions in excess reserves. Either way, it appears that while the New York Fed is going after BofA, the GSEs are about to dine on Jamie Dimon. Either that, or all this is a smokescreen to promptly settle all current and future possible litigation in an adversarial process involving government entities, and thus streamlined to a mutually amicable resolution.
Are Irish Taxpayers About To Bail Out Goldman? Is Peter Sutherland Stealing From His Own People To Give To The Vampire Squid?Submitted by Tyler Durden on 10/17/2010 00:07 -0500
It is deja vu all over again. To little media fanfare the dire financial situation in Ireland is nothing less than a repeat of the Lehman collapse in those dark days of September 2008. With the recent nationalization of half of the country's six big banks, and the blanket guarantee over the rest of them, the Irish government has effectively made sure that bondholders in all banks, even those which such as long insolvent Anglo Irish bank will be made whole by the long-suffering Irish taxpayers. And despite rumors of haircuts for at least sub debtholders, actual facts validating this possibility remain unseen. Which begs the question why is everyone in the world so terrified of taking mark to market losses on even a few billion in debt? Simple: as all of the world's banks, but Europe more so than anyone else, are now caught in the biggest circle jerk ever imaginable, with one entity's liabilities making up another's assets, which in turn are someone else's liabilities, and so forth in a MC Esher (or is that HR Giger?)-esque flow chart of the surreal (as can be seen here), even one dollar of write downs can spiral and affect tens if not hundreds of billions of downstream assets (and thus liabilities). Which explains why the ECB and everyone else in Europe is so intent on preventing a failed auction in Ireland (we previously disclosed that virtually every September auction of Irish bonds was purchased by the ECB, either directly and indirectly): should the banks that are on the hook actually validate their impairment, Europe is one step away from activating its own $1 trillion TARP package. Yet what is amusing is that inbetween the cracks of exclusively European-bank based senior and subordinated bondholders in such bankrupt banks as Anglo-Irish, a familiar name emerges: Goldman Sachs.
As more come on board with QE2, risk appetite is rising, but betting on a Fed-inspired recovery rally can be a dangerous game...
One definition of insanity is doing the same thing again and again and expecting different results. Unless the government substantially changes its approach, unemployment will keep rising.
Simply said, nobody is trading... and it is causing massive pain for parasite volume-churning traders and HFT firms.
- Asian stocks gain as US economic concerns ease.
- Australia increases commodity export sales forecast to record $203B.
- ECB steps up its bond buys amid worries of default by Greece, Portugal, Ireland.
- Escaping double dip to growth recession means no unemployment relief seen.
- Greece sells 13-week T-bills, yield drops to 3.98%
- Gulf states in $123B US arms spree; Arab nations seek to counter power of Iran.
- Oil falls after US Homebuilder Confidence reading prompts demand concern.
- Treasuries hold gain as Fed may say it is open to boosting debt purchases.
- US recession ended in June 2009, NBER says amid threat of renewed slump.
Bank Of America Cutting 5% Of Capital Markets' Personnel, Firing 400 Employees Globally, Many More To Come...Er... GoSubmitted by Tyler Durden on 09/20/2010 17:18 -0500
The much anticipated "low volume market" casualties are accumulating. As we noted first a few weeks ago, and subsequently picked up by other MSM publications, it was only a matter of time before Wall Street, which earlier in 2010 decided to foolishly lever up on the economic "reflation" myth and hire tons of people, is once again preparing to fire in droves, a phenomenon which traditionally is the best indicator a given economic cycle's peak has come and gone. Bloomberg has just disclosed that Bank of America is following similar actions from RBS disclosed earlier, and is firing as many as 400 employees in global banking and markets division. Charlie Gasparino, who first broke the news, also added the twist that the departures are taking place now "so as to deprive the unlucky employees year-end bonuses." Gotta love Wall Street's code of ethics. At least in the past layoffs would wait until after year end. No such luck anymore, now that most other banks are also likely considering comparable steps, and news of terminations start flooding in.
- Asian stocks gain as Oracle, RIM earnings boost tech stocks.
- BoJ facing pressure to do even more to prop up the economy.
- China approves 4 Taiwan banks to set up mainland branches.
- European governments approved a free trade agreement with South Korea.
- International Monetary Fund hasn't ruled out putting together more aid for Greece.
- Oil rises above $75 in Asia as traders look for demand clues from US economic data.
- U.S. jobless claims declined last week to their lowest level in two months.