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Yes, The BoomBustBlog Forecast Pan-European Bank Run Has Breached American Soil!!!

Reggie Middleton's picture





 

In the post "The Ironic, Prophetic Nature of the MF Global Bankruptcy Filing and It's Potential Ramifications"
I identified the MF Global event as something that the mass media and
many analysts are resisting to do. I called it for what it was - a run
on the bank - plain and simple. I forecasted this "new-ish" style of
bank run (a run where instiutional counterparties cause the drain) about
6 months ago, see The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!

Well,
there have been runs on the bank in Europe, and it has skipped the pond
to arrive here in the states. It's just that no one want to call it
that, even though that is exactly what it is. On of the pertinent points
about these bank runs is the abject risk it showers the brokerage
account holder in those banks with. Remember, thanks to TBTF, banks
customers are no longer those silvery haired grandmas walking out with
toasters. Which brings me to an interesting story by Jonathan Weil over
at Bloomberg: MF’s Missing Money Makes You Wonder About Goldman

Six
months ago the accounting firm PricewaterhouseCoopers LLP said MF
Global Holdings Ltd. and its units “maintained, in all material
respects, effective internal control over financial reporting as of
March 31, 2011.” A lot of people who relied on that opinion lost a ton
of money.

MF
Global filed for bankruptcy on Oct. 31. This week the trustee for the
liquidation of its U.S. brokerage unit said as much as $1.2 billion of
customer money is missing, maybe more. Those deposits should have been
kept segregated from the company’s funds. By all indications, they
weren’t.

PWC botched it with MF Global's relatively plain
vanilla operations and $41 billion or so of assets. What in the world
makes anyone comfortable believing that they will get it right with
Goldman (you know, that other company that MF Global's CEO ran) with
nearly a trillion dollars of assets (not reconciling the myriad off
balance vehicle assets that are in play)? So, if PWC was able (or
willing?) to overlook flaws that allowed $1.2 billion worth of client
money to literally disappear at MF Global, imagine how well they're
manning the ship at an entity roughly 25X larger and more complex - not
to mention that much more influential in coercing auditors and analysts
to "look the other way". For anyone who actually believes that Goldmans
is really so much better than MF Global and can never take the losses
that MF Global did - stop inhaling from pipes passed to you from West
Street inhabitants!

MF Global ran into a liquidity squeeze while betting on the European debt that I have warned my subscribers for two years to avoid like the plague. Goldman is doing the same thing, no?

As excerpted from the model that powers BoomBustBlog subscriber document Goldmans Sachs Derivative Exposure: The Squid in the Coal Mine?

goldman_balance_sheet_risk

As
you can see, Goldman traded its derivative book risk for sovereign risk
- just in the nick of time to catch the tail end of a derivative
crisis  & the start of a sovereign debt crisis. Excellent job
fellas! Goldman has literally doubled its sovereign assets, starting the
exact year that I started warning in the Pan-European Sovereign Debt Crisis series. BoomBustBlog subscribers covered this scenario over a year ago.

Go to the 26:40 marker in the video...

Italy has a funding issue that nobody was able to foresee, right? Wrong! After Warning Of Italy Woes Nearly Two Years Ago, No One Should Be Surprised As It Implodes Bringing The EU With It

France is heavily levered into Italy and Franco-Italiano fortunes are closely linked, right? Italy’s Woes Spell ‘Nightmare’ for BNP - Just As I Predicted But Everybody Is Missing The Point!!!

American banks (like Goldman) are on the hook for protecting the damn near doomed French banks right?  French Banks Can Set Off Contagion That Will Make Central Bankers Long For The Good 'Ole Lehman Collapse Days!

image009

But in the end of one, or two, three big banks go down, it's basically a giant pan-global clusterfuck, no?

"The Next Step in the Bank Implosion Cycle???"and As the markets climb on top of one big, incestuous pool of concentrated risk... 

Guarantees provided by U.S. lenders on government, bank and corporate debt in Greece, Italy, Ireland, Portugal and Spain rose by $80.7 billion to $518 billion in the first half of 2011, according to the Bank for International Settlements.

Here's
the question du jour - Can Goldmans Sachs Derivative Exposure,
realistically unhedged, cause the biggest run on the bank in Financial
History?

As excerpted from Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?

The notional amount of derivatives held by insured U.S. commercial banks have increased at a CAGR of 22% since 2005, which naturally begs the question
“Has the value or the economic quantity of the underlying increased at a
similar pace, and if not does this indicate that everyone on the street
has doubled and tripled up their ‘bets’ on the SAME HORSE?”

Think about what happens if (or more aptly put, "when") that horse loses! Would there be anybody around to pay up?

Sequentially, the derivatives have increased every quarter since Q1-05 except for Q4-07, Q3-08 (Lehman crisis) and Q4-10 while on a YoY basis the growth has been positive throughout recorded history.  In Q2-2011, the notional value of derivative contracts increased 2% sequentially to $249 trillion. The notional value of derivatives was 12% higher than a year ago.
The notional amount of a derivative contract is a reference amount from
which contractual payments will be derived, but it is generally not an
amount at risk. However, the changes in notional volumes can provide
insight into potential revenue, and operational issues and potentially
the contagion risk that banks and financial institutions poses to the
wider economy – particularly in the form of counterparty risk delta. The
top four banks with the most derivatives activity hold 94% of all
derivatives, while the largest 25 banks account for nearly 100% of all
contracts
.  Overall, the US banks derivative exposure is $249 trillion and is more than four folds of World’s GDP at $58 trillion.

In
absolute terms, JPM leads this list with total notional value of
derivative contracts at $78 trillion, or 1.3x times the Wolds GDP.
However, in relative terms, Goldman Sachs leads the list with
total value of notional derivatives at 537 times is total assets
compared with 44x for JPM, 46x for Citi and 23x for US Banks (average).

So,
what does this mean? Well, it should be assumed that Goldman is well
hedged for its exposure, at least on academic basis. The problem is its
academic. AIG has taught as that bilateral netting is tantamount to
bullshit at this level without government bailout intervention. If there
is any entity at risk of counterparty default or who is at the behest
of a government bailout if the proverbial feces hits the fan blades…
Ladies and gentlemen, that entity would be known as Goldman Sachs.

As excerpted from Goldmans Sachs Derivative Exposure: The Squid in the Coal Mine?, pages 2 and 3...

GS__Banks_Derivatives_exposure_temp_work_Page_2GS__Banks_Derivatives_exposure_temp_work_Page_2GS__Banks_Derivatives_exposure_temp_work_Page_2

Goldman
is much more highly leveraged into the derivatives trade than ANY and
ALL of its peers as to actually be difficult to chart. That stalk
representing Goldman's risk relative to EVERY OTHER banks is damn near
phallic in stature!

GS__Banks_Derivatives_exposure_temp_work_Page_3

As opined earlier through the links "The Next Step in the Bank Implosion Cycle???"and As the markets climb on top of one big, incestuous pool of concentrated risk... ,
this is not a new phenomenon. Quite to the contrary, it has been a
constant trend through the bubble, and amazingly enough even through the
crash as banks have actually ratcheted up risk and assets in a blind
race to become TBTF (to big to fail), under the auspices of the
regulatory capture (see Lehman Dies While Getting Away With Murder: Introducing Regulatory Capture).
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...

 image006

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...

This is the question du jour: Does Goldman have the same bookeeping issues that MF Global did, and is PWC overlooking it?

Well, I pounded the table, screaming for years that Goldman's losses don't add up. Guess what???? As excerpted fromThe Financial Times Vindicates BoomBustBlog's Stance On Goldman

I
read this headline from the Financial Times and said to myself, "Okay
Reg, Don't say 'I told you so'". Thus, you won't hear it from me, at
least not this time. As reported today in the Financial Times: Goldman reveals fresh crisis losses and Goldman’s republished results present a new picture

Goldman Sachs
has revealed details of about $5bn in investment losses suffered during
the crisis for the first time this week, in a move that will deepen the
debate over companies’ financial disclosures. The figures, issued as
part of internal reforms aimed at silencing Goldman’s
critics, show that the bank suffered $13.5bn in losses from “investing
and lending” with its own funds in 2008. But Goldman’s regulatory
filings and its executives’ comments to investors at the time pointed to
about $8.5bn of losses arising from its investments in debt and equity,
as markets were rocked by the turmoil.

Hmmmm! I walked through this in explicit detail in “When the Patina Fades… The Rise and Fall of Goldman Sachs???
and I did it without being privvy to Goldman's financial innards. It
was more or less common damn sense. Goldman and its employees do not
walk on water, they do not shit gold, and they cannot perform miracles.
If one takes an objective approach to their equity analysis, and simple
plug the numbers into a spreadsheet (objectively) you would have come up
with the exact same conclusions that I gave my subscribers all of these years. Let's reminisce, shall we?

So,
what is GS if you strip it of its government protected, name branded
hedge fund status. Well, my subscribers already know. Let’ take a peak
into one of their subscription documents ( Professional" width="16" height="16" border="0" /> Goldman Sachs Stress Test Professional 2009-04-20 10:06:45 4.04 Mb
- 131 pages). I believe many with short term memory actually forgot
what got this bank into trouble in the first place, and exactly how it
created the perception that it got out of trouble. The (Off) Balance
Sheet!!!

image001.png

Contrary
to popular belief, it does not appear that Goldman is a superior risk
manager as compared to the rest of the Street. They may
the same
mistakes and had to accept the same bailouts. They are apparently well
connected though, because they have one of the riskiest
balance
sheet compositions around yet managed to get themselves insured and
protected by the FDIC like a real bank. This bank’s portfolio looked
quite scary at the height of the bubble.

And back to the FT article...

The
diverging figures, which do not change Goldman’s overall results for
2008, are because of the fact that, like many rivals, the bank did not
provide a full breakdown of profits and losses from activities carried
out with its own resources.

Interesting, $5 billion of losses
goes unreported, yet there was no change to the years results. I wish I
could lie about $5 billion of losses that didn't allegedly exist, make
them disappear again after I come clean, then have the media applaud me
for my honesty - all at the taxpayers expense as I bonus myself into
that new 63 foot Azimut. You know, the one that doesn't come with the
hot international girls with w 6 pack license and bikinis. Hey
taxpayers, its your money that bonused these boats!!! Italy has a
pipeline straight to the American taxpayers wallet through the Goldman
bonus pool. Okay, let's finish excerpting the aticle...

The revelation of the 2008 loss on its investments supports Goldman’s argument that it did not profit from the crisis.

I,
for one, never claimed they profited from the crisis. To the contrary, I
claimed that they lost, big time! This statement seems awfully
conciliatory from the main stream media. I know you guys can't (or
won't) get as rough around the edges as I do, but come on fellas. 'nuff
brown nosing.

Lynn
Turner, a former chief accountant for the Securities and Exchange
Commission, praised Goldman’s move but called for the SEC to look into
the bank’s past disclosures. “This sets a good example that others
should follow,” he said. “But it does raise the question as to why the
management did not provide this view back then and whether the SEC are
going to do something about this discrepancy.” Mr Turner said SEC rules
required companies to give investors a view, as seen from “the eyes of
management”, of their finances: “For such a discrepancy to have arisen,
management must have lost an eye.”

Praise!!! Lost an eye!!!
Hold the hell on here. Goldman outright lied, and lied big time. It was
an obvious lie, and I pointed it out in full detail to both my blog
readers and paid subscribers. As a matter of fact, the losses are most
likely STILL on the balance sheet (or hidden off) and will surface one
way or the the other. Again I reference subscriber document: Professional" width="16" height="16" border="0" /> Goldman Sachs Stress Test Professional 2009-04-20 10:06:45 4.04 Mb - 131 pages

As
a matter of fact, it looks just as scary today as it does at the height
of the bubble, but since very few people read balance sheets, no one
really notices.

image003.png

You know what most people don’t realize is that it looks quite scary now as well.

image004.pngi

I said it before, and I'll say it again, I think this is a prime example of the "Devils Chickens Coming Back Home To Roost". You see, my dear readers and fellow tapayers...
You've been had!
You've been took!
You've been hoodwinked!
Bamboozled,!
Led astray!
Run amok!
The
FT reports that neither the SEC nor GS had a comment. I would suppose
not. I suggest the SEC buy their entire agency a sitewide subscription
to BoomBustBlog, thus in lieu or reading about Goldman's "Bamboozling"
in the British financial mags, taxpayers could get the skinny directly
from their own government (directly, and in near real time) and may
actually have some faith restored in its ability to safeguard investors
in this period of "the hoodwink", wink, wink. That is, of course, unless the SEC has been permanently captured, see More on Lehman Brothers Dies While Getting Away with Murder: Introducing Regulatory Capture.

“We have a strong track record as an investor,” he told analysts in December 2008.

With
their ears stinging from accusations that Goldman is “just a giant
hedge fund” or, as Rolling Stone said, a “vampire squid” stretching its
tentacles to make money for itself, an internal committee looking at
reforms reshuffled the bank’s financial reporting.

-worth
of losses came from direct purchases of assets. It also said that it
had lost $1.7bn on residential mortgages and $1.4bn on commercial
mortgages – half of which is believed to be related to Goldman’s
investments.

Overall,
the old disclosure points to losses of about $8.5bn in 2008, rather
than the $13.5bn revealed this week. So why the discrepancy?

Goldman declined to

... 
A new profit-and-loss account for 2008 released this week shows losses
of $13.5bn on Goldman’s “investing and lending” activities.

In
my opinion, any prudent investor should find it impossible to deny the
distinct possibility that they could lose the farm with Goldman as well.
The similarities with MF Global - apart from having the same CEO and
sovereign bets, are eery.

It ain't just MF Global and
Goldman either. Who else does PWC audit, but not necessarily find issue
with? None other than JP Morgan, whose assets are roughly $2.3 trillion.
So, if PWC couldn't find the needle in the $42 billion hay stack,
imagine the odds of finding that same needle of loss in a $2.3trillion
hay stack. We're talking roughly 50x the chance of making the same
error/oversight.

Tell me you Prime brokerage clients, "Do 'ya feel lucky?"

On JP Morgan

Here I am attempting to gain a green card for our entrance into the "Economic Republic of JP Morgan..."

 image001.pngimage001.png

Bloomberg reports (and Reggie clarifies): JPMorgan Joins Goldman Keeping Italy Debt Risk in Dark

JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS),
among the world’s biggest traders of credit derivatives, disclosed to
shareholders that they have sold protection on more than $5 trillion of
debt globally.

BoomBustBlog annotation...

As excerpted from An Independent Look into JP Morgan:

When considering the staggering level of derivatives employed by JPM, it is frightening to even consider the fact that the
quality of JPM's derivative exposure is even worse than Bear Stearns
and Lehman‘s derivative portfolio just prior to their fall.

Total net derivative exposure rated below BBB and below for JP Morgan
currently stands at 35.4% while the same stood at 17.0% for Bear Stearns
(February 2008) and 9.2% for Lehman (May 2008). We all know what
happened to Bear Stearns and Lehman Brothers, don't we??? I warned all
about Bear Stearns (Is this the Breaking of the Bear?: On Sunday, 27 January 2008) and Lehman ("Is Lehman really a lemming in disguise?":
On February 20th, 2008) months before their collapse by taking a close,
unbiased look at their balance sheet. Both of these companies were
rated investment grade at the time, just like "you know who". Now, I am
not saying JPM is about to collapse, since it is one of the anointed
ones chosen by the government and guaranteed not to fail - unlike Bear
Stearns and Lehman Brothers, and it is (after all) investment grade
rated. Who would you put your faith in, the big ratings agencies or your
favorite blogger? Then again, if it acts like a duck, walks like a
duck, and quacks like a duck, is it a chicken??? I'll leave the rest up
for my readers to decide.


Bloomberg reports: Dexia Takes 3.6 Billion-Euro Charge on Asset Sales

That
charge taken by Dexia was more than necessary, and most likely not
nearly enough. But wait a minute, why did JP Morgan do the exact
opposite regarding the exact same asset class?

Do you remember my recent missive "There’s Something Fishy at the House of Morgan"?
Well, in it I queried how it was that JP Morgan can continuously pull
risk provisions and reserves to pad quarterly accounting earnings at
time when I not only made clear that we are in a real estate depression but the facts actually played out the same. As excerpted from the aforementioned article:

I
invite all to peruse the mainstream financial media and sell side Wall
Street's take on JP Morgan's Q1 earnings before reading through my take.
Pray thee tell me, why is there such a distinct difference? Below are
excerpts from the our review of JP Morgan's Q1 results, available to
paying subscribers (including valuation and scenario analysis): File Icon JPM Q1 2011 Review & Analysis.

A Few Questions on Goldman Sachs 3rd Quarter 2010 Results That No One Thought to Ask Wednesday, October 27th, 2010

Recommended reading from Reggie Middleton’s BoomBustBlog in the investment banking space…

  1. Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?
  2. A Step by Step Guide to Exactly How Much Derivatives Risk Each of the 5 Big Banks Actually Have, and How It Could All Go Boom!
  3. JP
    Morgan’s 3rd Quarter Earnigns Analysis and a Chronological Reminder of
    Just How Wrong Brand Name Banks, Analysts, CEOs & Pundits Can Be
    When They Say XYZ Bank Can Never Go Out of Business!!!
  4. Four Facts That BANG JP Morgan That You Just Won’t Hear From The Sell Side!!!
  5. We’ve Been Bamboozled by the Banking Industry, but the Chickens Are Coming Home to Roost
  6. The
    Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks
    Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!
  7. Are We In a “Banking” Depression?
  8. As Earnings Season is Here, I Reiterate My Warning That Big Banks Will Pay for Optimism Driven Reduction of Reserves
  9. The
    Truth Goes Viral, Part 2: Italian Towns Damaged by Derivatives,
    Downtown Brooklyn Real Estate, Goldman Sachs, JP Morgan, Europe’s
    Overbanked Status, Reggie Middleton, Matt Taibbi, and Simon Johnson –
    All in One Video
  10. Re: Morgan Stanley’s Q2 2010 Results – The Mainstream Media May Be Hazadous to Your Wealth!

On Goldman Sachs

I'm Hunting Big Game Today: The Squid On A Spear Tip

Summary:
This is the first in a series of articles to be released this weekend
concerning Goldman Sachs, the Squid! In this introduction (for those who
do not regularly follow me) I demonstrate how the market, the sell
side, and most investors are missing one of the biggest bastions of risk
in the US investment banking industry. I will also...

Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?

Welcome
to part two of my series on Hunting the Squid, the overvaluation and
under-appreciation of the risks that is Goldman Sachs. Since this highly
analytical, but poignant diatribe covers a lot of material, it's
imperative that those who have not done so review part 1 of this series,
I'm Hunting Big Game Today:The Squid On The Spear Tip, Part...

Hunting the Squid Part 3: Reggie Middleton Serves Up Fried Calamari From Raw Squid

For
those who don't subscribe to BoomBustblog, or haven't read I'm Hunting
Big Game Today:The Squid On The Spear Tip, Part 1 & Introduction and
Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To
Blow Up The World Something To Be Ignored?, not only have you missed out
on some unique artwork, you've potentially missed out on 300%...

Hunting the Squid, part 4: So, What Else Can Go Wrong With Goldman Sachs? Plenty!

Yes,
this more of 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...

Hunting the Squid, Part 5: Sometimes Your Local Superhero Doesn't Look Like What They Show You In The Movies

More on Goldman Sachs

More premium Stuff!

Goldman Sachs Report June 21, 2008 Goldman Sachs Report June 21, 2008 2008-10-20 16:48:01 361.18 Kb

Reggie Middleton on Goldman Sachs’ fourth quarter, 2008 results

Goldman Sachs - strategic investment and public offering Goldman Sachs – Buffet’s strategic investment and public offering 2008-09-26 02:29:15 895.36 Kb

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gs_stress_test_cover.jpg

 


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Sat, 12/03/2011 - 17:16 | Link to Comment backlight
backlight's picture

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. 

Fri, 12/02/2011 - 10:37 | Link to Comment ucsbcanuck
ucsbcanuck's picture

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.

Thu, 12/01/2011 - 15:12 | Link to Comment Matt
Matt's picture

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?

Thu, 12/01/2011 - 14:35 | Link to Comment Comay Mierda
Comay Mierda's picture

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.

Thu, 12/01/2011 - 14:46 | Link to Comment Chief KnocAHoma
Chief KnocAHoma's picture

I think I'm gonna puke blood.

Thu, 12/01/2011 - 14:31 | Link to Comment indio007
indio007's picture

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.

Thu, 12/01/2011 - 14:33 | Link to Comment Camtender
Camtender's picture

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. 

 

Thu, 12/01/2011 - 14:51 | Link to Comment Reggie Middleton
Reggie Middleton's picture

Tell it to the judge!

Thu, 12/01/2011 - 13:57 | Link to Comment jcaz
jcaz's picture

Careful, Reggie- big game hunts back......

Thu, 12/01/2011 - 13:57 | Link to Comment J 457
J 457's picture

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 $$.

Thu, 12/01/2011 - 14:00 | Link to Comment jcaz
jcaz's picture

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....

Thu, 12/01/2011 - 14:51 | Link to Comment J 457
J 457's picture

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. 

Thu, 12/01/2011 - 13:54 | Link to Comment JLee2027
JLee2027's picture

If Goldman goes down next, we all owe Reggie a beer. A big one!

Thu, 12/01/2011 - 13:42 | Link to Comment philosoraptor
philosoraptor's picture

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?

Thu, 12/01/2011 - 14:30 | Link to Comment Comay Mierda
Comay Mierda's picture

 

 

G

O

L

D

Thu, 12/01/2011 - 13:39 | Link to Comment Eagle1
Eagle1's picture

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!!!

Thu, 12/01/2011 - 13:33 | Link to Comment Sigma X
Sigma X's picture

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...

Thu, 12/01/2011 - 13:28 | Link to Comment LawsofPhysics
LawsofPhysics's picture

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.

Thu, 12/01/2011 - 14:36 | Link to Comment Whoa Dammit
Whoa Dammit's picture

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."

 

Thu, 12/01/2011 - 13:20 | Link to Comment falak pema
falak pema's picture

Now RM is looking in the right direction : towards the US financials, the mother of the ponzi. Keep looking RM.

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