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In the documentary "Dept and Redemption" as mentioned by Reggie the lawyer for Deutsche Bank Paola Severino in the Milan penal court trial (city of Milan vs Deutsche Bank/Depfa/JP Morgan/UBS) that is still continuing is now the minister of Justice in the cabinet of prime minister Monti. Verdict is expected late spring 2012. The trial is on derivatives being bought by the City of Milan, verdict could have consequences for a ton of European cities, villages, provinces who are in a similar position like Milan. A position that in most cases is getting bleaker by the day. In one of the derivatives Milan is speculation on the default of its own state: Italy.
Reggie you might be right and you probably are 100% right about the situation. However, it's not easy to trade on this. For example - you picked BAC correctly I may add.
On Tuesday night BAC was at 5.03 and looked like it was going to crash through 5.
Then you had the (belated) S&P downgrade.
Rumours are that one or more large European banks were on the verge of failure, which meant one or more large American banks were on the verge of failure as well.
My puts were ready to blast off... Cue stick save from TPTB.
Here's the problem right now that we all have - every time something really bad looks like it's going to happen, TPTB will step in with some ridiculous nonsense. Then we have an all is fine rally. People at ZH have taken to naming these rallies even. This is despite the underlying problems with our financial systems etc.
What contagion? If the haircuts are voluntary, there is no CDS trigger.
Please Note: All restructurings, defaults, etc going forward are automatically to be labelled "voluntary".
There we go, problem solved, crisis averted. Next?
the irony of the Goldman name kills me. All along they have been a fucking piece of shit bank sucking the wealth of nations and recommending trades that are equivalent to throwing your money down the toilet. But the best investment advice they can give is literally right in their name - Gold, man.
I think I'm gonna puke blood.
Nice work Reggie. As far as getting an editor. I like the" stream of concsiousness" format better than the dry old acedemia stylings.
One caveat about the video. If you think the things in life that are free are the most expensive, you need a better class of friends.
Internal controls over financial reporting will not stop crooked CEO's, CFO's and COO's from colluding and stealing customer segregated account. PWC did not fail on internal controls over financial reporting, PWC failed at properly assessing "entity level controls". If the people at the top of the organization are crooked, no amount of internal controls will prevent fraud because the "tone at the top" and resulting company culture will overshadow any internal controls implemented.
If Lloyd Blankfein ("mini-me") is a crook, then internal controls will fail to protect stakeholders.
Tell it to the judge!
Careful, Reggie- big game hunts back......
Whats different between GS and JPM and the US govt with trillions in debt/liabilities? While these banks have great exposure, at the end of the day they will be backstopped by the FED. Yes, inevitably there must be a major change in the current financial system. How that plays out is anyones best guess. In the interim, this week you see a good example of what happens to your portfolio when you bet against the financials. You may be correct in your assessment, but that won't necessarily translate to making $$.
What's $$? Oh yeah- that paper stuff that you used to use......
"Backstopping by the FED" is a tired cliche, propogated by too much CNBC watching- in the end, the Fed can only move so much bullshit....
Last time I checked you can still use $$ nearly everyhwere. Go try to spend a morgan and see what response you get. The FED is unlimited in the moves it can make, that seems obvious by this weeks action. While I share the same concern as most readers about the current financial system, you short the financials at your own demise. There are too many pensions invested to allow markets to drop significantly, so the talk of GS or JPM becomming the next MF is pure fantasy- at least for today. Maybe we loose a few smaller banks and the DOW shaves off a few thousand points, but it will be short lived dip.
If Goldman goes down next, we all owe Reggie a beer. A big one!
So Reggie, who do you trade with if you can't even trust your broker? More generally, where does one park one's hard earned 'money' safely?
I had a pension account which after a series of mergers wound up at JPM. I had the option of annuitizing the account or taking a lump sum and rolling into an IRA with another broker. I took the lump sum and rolled it into the IRA several years ago. I'm long CEF in that account and cash. Reggie is spot on!!!
Reggie, I love your analysis, but you seriously need an editor. It's difficult to read your stuff, however right it may be. If I have to take it in its current format, so be it, but I think you'd be well served running your analysis by a Columbia grad or similar...
So what happens to all those 401K accounts (with many fixed interest accounts being held by GS and JPM) when the squid and JPM go belly up? Are these institutions going to present us with yet another "golden short"? Seems like they are hurting already and missing the timing will get you destroyed. I guess now we find out what it is really meant by too big to fail.
Squid Blankfein testifying before Congress in the near future:
"Missing 401Ks? I don't seem to recall any information about our ever having 401k investment vehicles. I will have someone get back to you on that."
Now RM is looking in the right direction : towards the US financials, the mother of the ponzi. Keep looking RM.
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