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Who Will Be The Next JPM?
So, in today's news we have Greek bank runs (again), remnants of JP Morgan yield grab gone bananas, and European Banks Battered As Reality Sets In. I know there has to be at at least a small contingent of you who truly don't want to hear me say "I told you so". Well, guess what I have to say to that small contingent...
Better yet guess what very popular American bank has their fingers in all three of the fires fanning above? You see, I not only warned of a European bank collapse nearly three years ago, I actually went on a European banking collapse tour throughout, of all places, Europe!
The bank run thingy was actually a foregone conclusion. Greece is only step one, albeit a very obvious step one, but still the first step nonetheless - reference How Greece Killed Its Own Banks!, written exactly TWO years ago - Tuesday, 27 April 2010. The MSM should stop harping on Greece, its done. The real story is what will Greece's bust bring about. Well, there are quite a few banks in much 'allegedly" stronger domiciles primed to do the 'ole accelerated one-two step (that's bank run for those without a sense of humor), reference "How to Prevent Bailouts, Bank Runs and Other Fun Things To Do With Your Hard Earned Dollars".
Now, the question for the truly big boys is what happens after the inevitable Pan-European bank runs get started. Well, the answer to that is already stored in the BoomBustBlog archives. Come on, y'all, where the strategists, the chess players, those who are able to look more than two moves ahead. I made this post so, now others may start "Hunting the Squid", looking at JPM Morgan as the sovereign entity that it wants to be and DB as the leveraged powder keg that it appears. Then there's BNP and BofA. You heard it all here first. Despite that, the MSM has put analysts in the consistent spotlight who I feel (without intending to disrespect them, of course) have been serially incorrect on banks. I have addressed this in my blog posts, namely Question the Quality Of BoomBustBlog Bank Research, Will You? Bove and Fitch Follow "The Blog"! and CNBC Favorite Dick Bove Admits To Being Wrong On Banks, But For The Right Reasons, But Those Reasons Are Still Wrong!!!
You see, with things crumbling so predictably, I don't have to do much along the lines of new content or writing. This entire mess has already been laid out in my archives, and in rather illustrious detail. Let's start archive grabbing with...
Goldman Sachs
The hardest hitting investment banking research available focusing on Goldman Sachs (the Squid), but before you go on, be sure you have read parts 1.2. and 3:
- I'm Hunting Big Game Today:The Squid On A Spear Tip, Part 1 & Introduction
- Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?"
- Reggie Middleton Serves Up Fried Calamari From Raw Squid: Market Perceptions of Real Risk in Goldman Sachs
So, what else can go wrong with the Squid?
Plenty! In Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?" I included a graphic that illustrated Goldman's raw credit exposure...
So, what is the logical conclusion? More phallic looking charts of blatant, unbridled, and from a realistic perspective, unhedged RISK starring none other than Goldman Sachs...
And to think, many thought that JPM exposure vs World GDP chart was provocative. I query thee, exactly how will GS put a real workable hedge, a counterparty risk mitigating prophylactic if you will, over that big green stalk that is representative of Total Credit Exposure to Risk Based Capital? Short answer, Goldman may very well be to big for a counterparty condom. If that's truly the case, all of you pretty, brand name Goldman counterparties out there (and yes, there are a lot of y'all - GS really gets around), expect to get burned at the culmination of that French banking party
I've been talking about for the last few quarters. Oh yeah, that perpetually printing clinic also known as the Federal Reserve just might be running a little low on that cheap liquidity antibiotic... Just giving y'all a heads up ahead of time...
And for those who may not be sure of the significance, please review my presentation as the Keynote Speaker at the ING Real Estate Valuation Seminar in Amsterdam, below. After all, for all intents and purposes, Dexia has officially collapsed - [CNBC] France, Belgium Pledge Aid for Struggling Dexia... and its a good chance that it's a matter of time before BNP follows suit - exactly as BoomBustBlog predicted for paying subsccribers way back in July.
A step by step tutorial on exactly how it will happen....
- The Mechanics Behind Setting Up A Potential European Bank Run Trade and European Bank Run Trading Supplement
- What Happens When That Juggler Gets Clumsy?
- Let's Walk The Path Of A Potential Pan-European Bank Run, Then Construct Trades To Profit From Such
- The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!
- The Fuel Behind Institutional “Runs on the Bank” Burns Through Europe, Lehman-Style!
- Multiple Botched and Mismanaged Stress Test Have Created The Makings Of A Pan-European Bank Run
- France, As Most Susceptible To Contagion, Will See Its Banks Suffer
- Observations Of French Markets From A Trader's Perspective
- On Your Mark, Get Set, (Bank) Run! The D…
- ECB As European Lender Of Last Resort = Institutional Purveyor Of A Pan-European Ponzi Scheme
The European banking debacle was predicted at the start of 2010, a full year and a half before this has come to a head. If I could have seen it so clearly, why couldn't the banking industry and its regulators?
Now, back to GS, and considering all of the European falllout coming down the pike, of which Goldman is heavily leveraged into, particulary France (say BNP/Dexia/etc.)...
Let's go over exactly how GS is exposed following the logic outlined in the graphic before this series of videos, as excerpted from subscriber document Goldmans Sachs Derivative Exposure: The Squid in the Coal Mine?, pages 3,4 and 5.
And to think, many thought that JPM exposure vs World GDP chart was provocative. I query thee, exactly how will GS put a real workable hedge, a counterparty risk mitigating prophylactic if you will, over that big green stalk that is representative of Total Credit Exposure to Risk Based Capital? Short answer, Goldman may very well be to big for a counterparty condom. If that's truly the case, all of you pretty, brand name Goldman counterparties out there (and yes, there are a lot of y'all - GS really gets around), expect to get burned at the culmination of that French banking party I've been talking about for the last few quarters. Oh yeah, that perpetually printing clinic also known as the Federal Reserve just might be running a little low on that cheap liquidity antibiotic... Just giving y'all a heads up ahead of time...
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This is precisely the question I have been asking for the past week! Who else, and who next? Thanks!
rest assured the only rats on the sinking ship will goldman's client's money, the md's will be long gone , 'sue me' they'll smugly say.
Obuma will be the next JPM.
"Goldman may very well be too big for a counterparty condom.."
Not your best analytical discription Reggie but that made me laugh ;)
Well done Reg, you're one of the few out there to give us a clear picture of the true magnitude of the financial dominos (and gambling junkie bankers) about to collapse
Reggie,
Always a great analysis.
As you know, fair value accounting on Level 3 assets is an inexact endeavour which leaves the banks much room for, shall we say, creative price discovery.
At the end of Q1 2012, the Level 3 assets as a % of total assets of the 6 largest bank holding companies was as follows:
JPM 4.7% BAC 2.1% C 3.5% WFC 3.9% GS 5.0% MS 3.8%
However, their Level 3 assets as a percent of total assets at fair value were:
JPM 12.0% BAC 6.3% C 8.6% WFC 14.9% GS 7.2% MS 9.3%
Would you agree that the higher the percentage of Level 3 assets to total assets implies that there is a greater risk associated with the bank? With that in mind, GS may have some serious problems lurking, but what do you make of Wells Fargo? I am sure that they are still trying to digest the junk they inherited in the Wachovia merger, but aren't their Level 3 assets as a percent of total assets at fair value a bit excessive?
BOA or a Spanish Bank, choose one.
Well pimp my ride Reggie, you are the cat's pajama's once again ! I sign up for your newsletter every day just because you are the best at whatever the heck it is that you are the best at. What is better than best ? YOU ARE, BAYBEE !!!!!!
Sarc set on stun.
I thought there was only one in Stan "the man" Musial, but now there are two. Way to go Reggie.
Who will be the next JPM? I don't know, but Jim Rogers does. He claims that he his short a "major US financial institution" because of major problems that will be revealed soon. During the CNBC interview, he declined to name the institution, of course, but he claimed that the problems are completely unrelated to JPM's revelations last week.
He revealed it the other day with Maria (Maria actually revealed it). Its JPM he has been short on
tHIS WAS WORTH COMING TO THE ZH WEB SITE TODAY ( WHICH I DONT DO HARDLY ANYMORE SINCE THEY SPEND SO MUCH TIME AND WORDAGE ON GREECE AND EUROPE, AND NOT AS MUCH AS DESERVED ON THE STATES, INDIVIDUALLY AND COLLECTIVELY
BUT I HAVE LOGGED IN TO POINT OUT THAT THE LINK IN THE ABOVE ARTCILE , AS PER BELOW, ONLY GOES TO THE DISCLAIMER PAGE AND NOT TO THE NAMES PAGE WITHIN THE LINK.
Goldmans Sachs Derivative Exposure: The Squid in the Coal Mine?
http://boombustblog.com/component/option,com_docman/Itemid,200023/gid,413/task,doc_download/
That's because you are trying to download a subcription document. Subscribe to the site and the research is yours to download.
Great work as always Reggie, can you give this joker a new keyboard if he subscribes?
LMAO.
the best things in life are freeeee, but give me money!
Let's see...
...the shit list from 2008 is still in effect.
CitiBank
Goldman Sachs
- any of their baby banks
TD/Waterhouse Price Coopers...whatever hyphenated addition to the shit show in Canuck Banking
HBC
CIBC - lots of exposure to European debt and derivatives.
Lloyds and the etnire British Banking system is tits up.
France and everything in the country.
JPM - still has a lot more red ink than black
GM Financing. Ford Financing. Honda Financing...auto industry.
All airline credit facilities. Peak Air travel bitchez.
Dot.Com 2.0 will Dot.Bomb 2.0
...everyone that got it in the ass in 2008 and then some.
Iceland...all of europe...Iceland btw is still in deep shit, just because they refuse to pay doesn't make it safe to give them any money. I wouldn't give a penny to someone that lost my money and their own. It'll be fixed in a couple of human generations.
Nice list, thanks
there's one BIG counterparty to the banking explosion left out and well worth a mention:
Government
if the big banks go tits up there's no more baby milk for European Govts whose politicians require bankers to sell their debt
if we ever wonder why Prime Ministers Tony Blair, Gordon Brown and David 'call me tosser' Cameron always get their knickers in a twist 'defending The City of London' and bend over backwards to please/pleasure the bankrupt British Banks 'interests' it's because these babes are in the bankers pockets
So go Big Banks, so goes Big Govt ....and the sooner the better (for recovery)
The FED should do absolutely nothing. More QE won't work. There is no miracle, just pain. The sooner we go through it, the better.
i want $40,000+ gold....print Ben print.....
gold guns and plenty of food...
More QE won't cure anything real, but it will shift the pointer to who hurts the most. BOHICA.
Thanks, Reggie!
Keep Stackin!
Fizz Rules.
Move the pawn in front of the king first.
So predictable, Thanks Reggie
JP Morgan will be the next JP Morgan. If you think they are not already getting trillions in bailout money on the sly, think again. JPM traders all use the same stupid playbook. Leverage up and become the market. You can only lose money that way. It is like the dot com business model--Lose on every trade but make it up in quantity. JPM will get bailed out and start the cycle again.
JPM is not getting money on the "sly" they are a primary dealer, they get money from the FED for free. This is a end run to the to big to fail prevent defense. JPM and Goldman run the country, most of the sheep have just not figured it out yet.
yes and who makes the likes of JP Morgan too big to fail?
The Fed
..by giving them Primary Dealer status.
What has the Fed and US Govt done to solve this problem? Sweet nothing.
Great Read! nice and concise. ( I had to blow up the the page with the chart several times, to read the text )
Thx, Reggie. Calamaris long ?
go Reggie ! i enjoy reading his stuff .
It's frightening how accurate you've been and how absent any other voices making similar judgements have been.
It's almost like there's something they don't want us to know.
NY Times reporting JPM losses now over 50% higher!! Accelerating faster than expected, hedge funds to blame :/ popcorn moment is imminent.
http://dealbook.nytimes.com/2012/05/16/jpmorgans-trading-loss-is-said-to...
If there ever was a guarantor of QE3, this is it.
Reggie you are spot on....Keep up the great work!!
It will be either Citicorp or B of A. Or BOTH.....You can take that to the bank, or better yet, stuff the gold under your mattress.....
Pandit will do for C what he did for Old Lane. Moyboy is a retard. Both will fail without constant bailouts.
Thank you, Reggie.
RE: chess players
(those who are able to look more than two moves ahead) --
Sometimes I can see one move ahead, often not that many.