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Independent, Bombastic Financial News Show Dramatically Scoops the Financial Times On French Bank Run Story
Stacy Herbert and Max Keiser have absolutely scooped the FT on the French bank run story with thier interactive interview of me and the use of new media. Absolutley! The following are Stacey's Twitter stream in reverse chronological order for today:
- No lines outside BNP Paribas. But then it is still lunch time. No self-respecting French person would neglect dessert course.
- Here is @ReggieMiddleton on a French bank run on 12 September boombustblog.com/BoomBustBlog/A… Post provides links back to even earlier warnings.
- A must watch Keiser Report youtube.com/watch?v=ciGKW3… Troika Tanks, Junta Bots & A Run On French Banks
- Today's episode of the Keiser Report features interview with @ReggieMiddleton talking about a run on French banks. Should be on youtbe soon.
- Keiser Report bit.ly/qvnYBi Troika Tanks, Junta Bots & a Run on French Banks with @ReggieMiddleton #keiserreport
- @ReggieMiddleton warned you first! read.bi/oRSDwd EL-ERIAN WARNS: "These Are All The Signs Of An Institutional Run On French Banks"
Last week, Stacey and Max distributed free bank run models for thier viewers and readers to play with...
Posted on September 18, 2011 -Stacy Summary: We’re interviewing Reggie Middleton this week for the Keiser Report. In particular, we’ll be talking about French banks. Check out his “Run on the Bank” model for BNP Paribas. Questions for Reggie in the comments thread below.
And they even used Twitter to solicit questions from their audience to ask me during the taped show. All in all, a very strong coverage of the French bank run situation, before the actual run. This is how I belive the media should work. While I don't necessarily disagree with anything that Mr. El-Erian has said in this interview (and how could I since it is essentially an abbreviated version of what I have been saying for 4 months), and I have the utmost respect for him, it is far, far from timely. I urge any and all to read Mr. El-Erian's article and the FT presentation and compare it to that of the more independent (if not bombastic) new media and let me know which offers more substantive value. For those that do not follow me, the following has been my chronological take to date (those that do follow me and have seen this already can skip past the recap down to the videos below):
Post Note: BNP management is now shopping around for capital investment.
On that note, let's review my post last week, "BoomBust BNP Paribas?" (it is strongly recommended that you review this article if you haven't read it already) I started releasing snippets and tidbits of the proprietary research that led to the BNP short, namely 
Bank Run Liquidity Candidate Forensic Opinion - A full forensic note for professional and institutional subscribers. It outlined some very telling reasons why BNP's share price appears to be spillunking, namely:
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- Management is lying being less than forthcoming with the valuation of toxic assets on its books.
- The sheer amount of these assets on the books and the levereage employed to attain them are devastating
- BNP has employed the proven self destructive financing methodology of borrow short, invest in depreciating assets long!
- BNP management lying being less than forthcoming about reliance on said funding maturity mismatch, despite the fact it handily dispatched Bear Stearns and Lehman Brothers in less than a weekend!
Another BIG Reason Why BNP Paribas Is Still Ripe For Implosion!
As excerpted from our professional series Bank Run Liquidity Candidate Forensic Opinion:
This is how that document started off. Even if we were to disregard BNP's most serious liquidity and ALM mismatch issues, we still need to address the topic above. Now, if you were to employ the free BNP bank run models that I made available in the post "The BoomBustBlog BNP Paribas "Run On The Bank" Model Available for Download"" (click the link to download your own copy of the bank run model, whether your a simple BoomBustBlog follower or a paid subscriber) you would know that the odds are that BNP's bond portfolio would probably take a much bigger hit than that conservatively quoted above. Here I demonstrated what more realistic numbers would look like in said model... 
To note page 9 of that very same document addresses how this train of thought can not only be accelerated, but taken much further...
So, how bad could this faux accounting thing be? You know, there were two American banks that abused this FAS 157 cum Topic 820 loophole as well. There names were Bear Stearns and Lehman Brothers. I warned my readers well ahead of time with them as well - well before anybody else apparently had a clue (Is this the Breaking of the Bear? and Is Lehman really a lemming in disguise?). Well, at least in the case of BNP, it's a potential tangible equity wipeout, or is it? On to page 10 of said subscription document...
Yo, watch those level 2s! Of course there is more to BNP besides overpriced, over leveraged sovereign debt, liquidity issues and ALM mismatch, and lying about stretching Topic 820 rules, but I think that's enough for right now. Is all of this already priced into the free falling stock? Are these the ingredients for a European bank run? I'll let you decide, but BoomBustBloggers Saw this coming midsummer when this stock was at $50. Those who wish to subscribe to my research and services should click here. Those who don't subscribe can still benefit from the chronology that led up to the BIG BNP short (at least those who have come across my research for the first time)...
Thursday, 28 July 2011 The Mechanics Behind Setting Up A Potential European Bank Run Trastde and European Bank Run Trading Supplement
I identify specific bank run candidates and offer illustrative trade setups to capture alpha from such an event. The options quoted were unfortunately unavailable to American investors, and enjoyed a literal explosion in gamma and implied volatility. Not to fear, fruits of those juicy premiums were able to be tasted elsewhere as plain vanilla shorts and even single stock futures threw off insane profits.
Wednesday, 03 August 2011 France, As Most Susceptble To Contagion, Will See Its Banks Suffer
In case the hint was strong enough, I explicitly state that although the sell side and the media are looking at Greece sparking Italy, it is France and french banks in particular that risk bringing the Franco-Italia make-believe capitalism session, aka the French leveraged Italian sector of the Euro ponzi scheme down, on its head.
I then provide a deep dive of the French bank we feel is most at risk. Let it be known that every banked remotely referenced by this research has been halved (at a mininal) in share price! Most are down ~10% of more today, alone!
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- French Bank Run Forensic Thoughts - Retail Valuation Note - For retail subscribers
- Bank Run Liquidity Candidate Forensic Opinion - A full forensic note for professional and institutional subscribers
So, What's the Next Shoe To Drop? Read on...
For those who claim I may be Euro bashing, rest assured - I am not. Just a week or two later, I released research on a big US bank that will quite possibly catch Franco-Italiano Ponzi Collapse fever, with the pro document containing all types of juicy details. This is the next big thing, for when (not if, but when) European banks blow up, it WILL affect us stateside! Subscribers, be sure to be prepared. Puts are already quite costly, but there are other methods if you haven't taken your positions when the research was first released. For those who wish to subscribe, click here.
Here is the actual Max Keiser post today that has the interview...
Keiser Report: Troika Tanks, Junta Bots & a Run on French Banks
Posted on September 22, 2011
Stacy Summary: We interview Reggie Middleton about a run on French banks. I notice today that Pimco’s El-Erian is also talking about a run on French banks. He must have watched the Keiser Report when it aired from late last night PDT. We know you’re taking our shtick Mr. El-Erian, we’ve got our eye on you!
Go to 13:07 marker in the video, contrast and compare and consider watching the smaller more independent shows for the real scoop every now and then.
For some back ground on the "Kick the Can Triumvirate Three" [BBB Trademark], go to 20:50 in the video and dedicate 5 minutes to it...
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+5... Superb Reporting: Facts and Truth
There is a lot of crap on the internet... turns out the disinformation is coming out of the Wall Street/City of London Corporate Whore Media... and not those "unreliable" bloggers...
Then there is fact based reporting punching through and exposing the whores from people like Mad Max, Stacey, Tyler and Reggie...
That is the power of the internet... The ruling financial oligarchy can't plug every hole to keep the truth out...
Bank Analyst Grudge Match
In a neutral studio, I would like to see a bare knuckles debate match with no editing between:
CNBC Lies-man and Bankster-Bitch Bove
vs. Mad Max and Reggie...
Max and Reggie would fact based wipe the floor with those worthless shilling whores... Plus Lies-man is such a clueless nimrod... Max and Reggie would shred those douches...
You'll see, the banks will be saved. No new Lehman. Yaaaaawn. Merry Christmas.
Careful Reggie. Promoting a bank run is illegal in many countries. Don't be surprised to find yourself carted off to the gulag one day.
"Truth is treason in the empire of lies".
I got the french runs too http://www.youtube.com/watch?v=UI2FolId6CA
Great job Reg, though you can't predict the outcomes based on every action gets a certain reaction. You aren't an insider so you don't know the true "planned action". You can only deduce on a realtime basis, what the reaction is after a said occurence or rumor of claim of future action.
Sifting through bullshit, wears me out. KEep plugging Reggie, you might find a penny in that pile of shit, yet.
four gold stars pasted on the forehead of REGGIE
XYZ REGGIE ! ! !
The European Economic Union (EU) is a bureaucracy run by economically ignorant technocrats. Whereas it's predecessor, the European Economic Community (EC) was a brilliant idea because it only dealt with the free movement of people, goods and services, across a labrinth of borders and through a spiders' web of red tape regulations.
The EU is now a political entity not an economic zone. The Euro will not survive. The EU was doomed from day one when it's focus changed from an economic one and became a political entity.
When the governance of a society refuses to listen to the calls for justice and reform over a long period of time, when it acts to ignore, co-opt, diffuse, and then suppress the voice of the reformers, when it uses the law as a means of legal plunder, that government and society will eventually answer not to reasoned dissent, but to the rage of the mob.
Look for the streets and grand avenues of major centers to begin to fill with angry people.
The sadness is that the original motivation was wholly benign. It was the desire for a new way of living in Europe which did not result in us tearing each others' throats out at regular intervals. What went wrong is that without the population realising it or agreeing to it the elite who are running the show decided to continue integration beyond an economic community towards a federation and eventually, I believe, a single state. Unfortunately it will be very difficult to backtrack to the economic community. I wouldn't expect them to give up the push to federalism even if the Euro dies. Death of the euro might even accelerate the push towards federalism.
good job reggie...this is the secone one that i remember ...the first being Apples 'margin compression'
the EU are preparing legislation to burn the sacred bondholders
contagion, bitchez
http://www.bloomberg.com/news/2011-09-21/failing-banks-derivative-trades...
Anyone still holding "paper" got to be,......
Top notch Reg.
Sarkozy invaded Libya for several reasons....one to "stimulate" the dead French economy and second to distract his Sheeples.
Classic.
Shark-oozy learned from his step-daddy...
Wall Street warmonger and CIA criminal worm Frank Wisner Jr...
Thank you Reggie! You truly are one in a million!
And the great thing is that Dodd-Frank really goes in to full gerbil stuffing mode next year, right when the banks should be "recovering"
Reggie does it again.
We dont need no water, let the mother f***er burn
Burn mother f***er, Burn!
http://www.youtube.com/watch?v=RJfFf1JJImY
French banks will be bailed out, mind that. Problems solved.
definitely, but let us look at the implications of that decision. Let us assume the French central bank decides to defacto nationalise the three banks in question and assume say, 100 billion euros of toxic debt, as write downs, transferred into a "bad bank" created by it. Thus, the three banks having been relieved of their turds, they can be recapitalised according to Basel III, something that is not possible today; if we take into account the true value of these defeasible "toxic assets"; which recapitalisation btw the bank managements say is unecessary, affirmations which we all suspect are untrue as do the markets judging by their vivid reactions, and that RM categorically tries to demonstrate.
Now, once the Central bank has done this defeasing operation the banks can go back to doing their commercial business. But the French central bank wiil lose its TRIPLE A as a consequence. Its national bonds will cost much more in interest spread.
End of Story, the Nation will then have to find spending cuts from an already high level of debt service to meet Maastricht 3% deficit and 60% of GDP debt ratios....Oh, the pain... and bye bye investment for growth stimulation that Keynesian French governments love like religion...
That's the point. Downfall of banks------------->gov't bailouts------------>exploding public debt-------------->monetization (w Euro and/or dollar)------------->currency collapse(s)------------------>collapsing governments, civil and international wars-------------->System Change. What's not to like?
"when (not if, but when) European banks blow up"....
For a good analysis of what will happen see this excellent report:
http://www.iie.com/publications/pb/pb11-13.pdf
'Europe’s banks and financial system are highly integrated across countries. Rising expectations of default in some countries could lead to large-scale capital flight into “safe” countries. This shift will raise concerns regarding solvency and liquidity of many financial institutions..... The payments system of the euro area is serving as an opaque bailout mechanism that is currently preventing the euro area from falling apart at this time. If the number of nations in trouble spreads beyond Greece, Ireland, and Portugal, this bailout system will be stressed because of the potential size of accumulated funding..... The ECB operates a payment system that nets out transactions across borders. When, for example, there is more money flowing out of Irish banks into German banks, the Irish central bank incurs a liability to the Bundesbank. The Bundesbank claims on Ireland could be repaid by the Central Bank of Ireland, for example by selling holdings of gold or other valuable assets, but this is not done. Instead, the balances continuously build up and they become financing to the Irish banking system..... The credits are provided with no approval required from national parliaments or budgets, and there is an implicit assumption that all will be fully repaid.These correspondent account balances are critical to the functioning of the euro system. If some central banks decided they would no longer accept claims from another central bank—let us say, hypothetically, the Bank of Ireland [France?] —this would effectively end the euro area.'
Triumphalism, well earned on this occasion. Enjoy the substantial victory.
I reckon your major clients would be worshiping you by now, since you would have least saved them from losing their shirts.
Way to go Reggie. Bovie tells us to buy banks. LOL
Cramer told us banks were good two months ago. Bigger LOL
Eh on Cramer, don't think that is fair. He has been saying for quite a while, sell all financials, period. And has been consistently saying don't buy any financials, none. Yes I DVR his show and watch the opening monologue.
Also I sometimes don't get all the hate for Cramer. I get it, he was a GSachs douche and manipulated the market like the rest of them. But I don't know, deep down I think Cramer wants to be a good guy -- problem is he was raised alongside investment bankers, the vast majority of whom are scumbags, and of course this washed off onto Cramer.
So if you don't like Cramer, I get it, and there is much to criticize, which is fair. But I see another side to the man.
Reggie already factors in an haircut of 10% for US Treasuries under his realistic scenario.
This for me is simply the proof that not even Reggie can really do a "realistic scenario".
Reminds me of Nassim Taleb and his view about forecasting.
Did you get that Nassim was trying to explain to the model makers that they can't use "standard deviations", as from a bell shaped curve, because the data is not Gaussian? To me that was the best part; total world reaction to date; zero. They go right on committing this Sophomore level error in statistical analysis. And yes, Reggie has forgotten that all forecasters need to be able to cover the fact they were wrong; what's he going to say six months from now when nothing has happened.? Everyone finds their own rhetoric intoxicating.
Agree about "standard deviations", but I believe terms like "mean" and "variance" (s.d. squared) can be defined for any distribution, even one that looks like a duck's ass. The fallacy is to make deductions about the probability of occurrences, based on an event that is a certain number of "sd's" removed from the mean when the dostirbution is not Gaussian normal or log-normal.
I find iq45 bullshit nauseating.
"He who predicts the future, lies, even when he tells the truth" - Nasim Taleb
So Nietzschean.
A) that scenarios says "Adverse", not realisticc. This is simply proof that you read what you want, and not what is there.
B) Most pundits adverse scenarios have ended up being the actual optimistic scenario over the last 5 years.
C) This is the reason why I gave you a model to put YOUR assumptions, and not mine.
I hope you take your investing more seriously than your blog reading.
Hey Reggie, I'm nearly a fan (since I pay, I'm already flattering you, eh?). Cool style, lots of research legwork.
So I was reading a sentence ending with "Here I demonstrated what more realistic numbers would look like in said model..." and the table was of an adverse scenario. Now, without going in any realistic/adverse fight, what I meant is that I disagree with the method. Nobody is going to take 10% of the value of the US Treasuries away from BNP Paribas and there is no sense for me to calculate a scenario that presume a total loss in 10% of the cases and any of those forecasting methods.
I'm not disparaging you method, I'm sure it's a good model - it's just that we are having a major financial crisis because we followed the models, that's all.
I agree fully with B) in the sense that all bearish pundits, independently from using models or not, ended with being themselves surprised.
Look, from what I read from you - all good stuff - I get two ideas:
1. that you will be probably right - up to a certain point where a bank run might be involved. You are showing a possibility.
2. that you are misreading/misunderstanding European moods and history.
What I mean is that Continental Europeans (exclude the British Isles) have a long, long history of "bouts of statism" that could really, really surprisingly come back, fast.
Is a "flash nationalization" of all TBTF banks at prices-per-decree in Europe part of anybody's model? You could buy TBTF cheap, if you were a sovereign, even some famous ones are now worth less than USD 50bn. Funny that they cost so much more to bail out, eh? Or what if the crazy Swiss have a referendum (they are preparing) for the abolition of "the business of Investment Banking"? And the Germans revolt until their gov follows suit? Followed by the others?
Bell, long time ago, was "cut to pieces" - the Baby Bells - "for the good of the market", if I got that right. And this was the US. Free enterprise and all. Then look at the French, the Italians, the Germans and show me where they don't just love to do things "for the greater good".
Where do I put this kind of assumptions in any model? Because what I think is that the game has changed, 1971-2011, the Nixon Age, is over. Let's hope the new age is better.
Bought BAC this morning at $6.07; why? it;s cheap. The overwhelming probability is that BNP Paribas will still be doing business six months from now; if they get their ass in a crack the French Government will nationalize them; big deal.
If you really read Nassim then you'd know intelligence is a parlor trick. IQ145, more like IQ14.5. Cheap? compared to what? Your taste? Your suit? Scotrade has all the tools you need and a baby too!
Best of luck with those falling knives and swords!
Reggie,
Once the bank run occurs, I'm afraid European banking authorities will hold you solely responsible for causing the panic. Their leveraged, insane lending practices had nothing to do with their downfall, of course. It must be the fault of those who exposed the truth. You'll need to cover approximately $100 trillion in losses once CDS contracts and derivatives kick in. Hope you are prepared for this as such costs are associated with revealing reality, a big no no in the modern age.