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Bank of America Shocker: New Commercial Loan Plunge Is Largest Since Lehman

Tyler Durden's picture




 

Roughly two months ago, when we compared the loan data released by America's largest, TBTF banks, and what the Fed's own commercial bank data revealed in its weekly H.8 statement, we asked a simple question: "Is The Fed Fabricating Loan Creation Data?" Visually, the discrepancy was shown as follows:

Our summary then:

Is the Fed fabricating loan level data?  Or, less dramatically, is the Fed merely once again goalseeking its weekly "data" to account for a world in which deposit expansion is no longer running at the pace seen in pre-taper days. It would be logical that the one "plug" the Fed would adjust to balance off its model is to boost lending activity, which would explain why the Fed is suggesting lending is surging.

 

Unfortunately, lending is not only not surging, it is contracting, if only among the Big 4 banks in the first quarter.

 

So whether the Fed has an ulterior motive, or is simply fudging for a lowered Fed reserve creation growth trendline, we believe the people deserve an answer: just what is really going on here?

Why is this data so important? Because absent a pick up in commercial bank lending, which should eventually match and surpass the amount of bank "assets" created by the Fed's QE (which in 2013 amounted to $255 billion per quarter), then bank liabilities can't grow nearly as fast, and as we showed earlier this week, neither can US GDP which is directly correlated to the amount of commercial bank liabilities in circulation.

In other words, more than anything else, it is loan creation - i.e., money creation in its conventional pathway, via commercial banks not via the mutant, aborted process in which the Fed creates money only to ramp asset values - that is so critical for real, not artificial, not manipulated, US economic growth.

So did we make up our allegation, and did we simply dream up the data that we showed above?

Well, no. At least not according to one of America's largest banks: Bank of America. As BofA's Michelle Mayer admits, looking at C&I loan data - both that sourced directly by BofA, and by the Fed's own call reports, while "the outstanding level of commercial and industrial BAC loans has been growing at a fairly steady pace for the past three years"... "there was acceleration into 2013, but the last few months show some slowing, consistent with the weakness in capex spending. The Federal Reserve data are more volatile, showing both a bigger slowdown last year and a bigger pickup recently." 

She concludes: "A meaningful improvement from trend would be a signal that a more robust capex recovery has begun. We have yet to see this in the data."

We sure do: because the bulk of cash that would otherwise be spent on CapEx: that most productive use of funds for the entire economy, and for broad GDP in general, has instead been trapped and redirected into shareholder friendly, but business model crushing, stock buybacks mostly purchased on credit, which means the moment there is another downturn and rates rise, all those corporations which succumbed to activist investors will be that much closer to record-levered insolvency.

But back to loans, because while the C&I data is mixed at best, where things get really bad is looking purely at commercial loans.

It is here that Bank of America reveals the startling truth:

The number of new commercial loans made by BAC has declined notably over the first half of the year. Measured as an indexed level to cycle peak (which was December 2005), the data show that the recent drop was the largest since the recovery began.

Oops. If this is accurate then not only is the Fed fabricating loan data outright, it is massively misrepresenting the general direction of loan creation altogether. In fact, if loans are contracting, when one adds the decline in reserve "asset" creation, then banks are set for a world of pain come October when QE is set to end!

BofA admits as much:

The drop in new loans is a worrisome sign given the importance of new business formation and small business expansion in generating a stronger overall recovery. The number of loans for renewal/extension has remained fairly constant, holding steady through the recession.

And visually:

So while we will know for sure if the Fed is lying after the Q2 bank loan data is released when we have two quarters of discrepancies, the initial readings are very troubling. What is worse, it may well be that the Fed is not maliciously and deliberately manipulating loan data, but is merely Fed incorrect information. Which would explain its willingness to taper: if the Fed realized that bank loan creation is not only not growing but declining, what it should be doing it untapering post haste and in fact adding to QE.

We wonder just how long it will take Yellen to grasp this fundamental flaw in its thinking...

 

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Wed, 06/11/2014 - 08:58 | 4844029 AccreditedEYE
AccreditedEYE's picture

Who the hell wants to expose themselves to LIBOR + "unknown" over the next few years when you can lock in low rates via bond issuance and buy back stock? Loans are for R&D... and actually, I forget what that stands for.

Wed, 06/11/2014 - 09:06 | 4844069 ArkansasAngie
ArkansasAngie's picture

" ... if the Fed realized that bank loan creation is not only not growing but declining, what it should be doing it untapering post haste and in fact adding to QE."

Horse manure.  

More QE is going to save us?

Liquidity does not solve insolvency.  

It's time to deleverage.  

It's time to throw the dad gum bums out and let moral hazard reign.  Then things will get better. 

Wed, 06/11/2014 - 09:18 | 4844121 negative rates
negative rates's picture

flawed thinking is never detected within the federal reserve.

Wed, 06/11/2014 - 09:49 | 4844169 GetZeeGold
GetZeeGold's picture

 

 

Looks like someone is getting a nailgun kit for Christmas.

 

Yes I said Christmas.....deal with it.

Wed, 06/11/2014 - 10:19 | 4844385 max2205
max2205's picture

550 liars in govt all of which need to serve 20 to 30 in the big house

 

Fuck them all

Wed, 06/11/2014 - 10:35 | 4844457 Cthonic
Cthonic's picture

Too generous a retirement, me thinks.  Ship 'em to Somalia and let them scrounge.

Wed, 06/11/2014 - 16:33 | 4846031 johngaltfla
johngaltfla's picture

D

E

F

L

A

T

I

O

N

It's how all bubbles end boys and girls....

Wed, 06/11/2014 - 18:54 | 4846454 nope-1004
nope-1004's picture

So is this insovent bank, insolvent?  lol.  Good night BofA.

 

Wed, 06/11/2014 - 23:56 | 4847416 TheReplacement
TheReplacement's picture

In the early 1900s two guys are trekking through some forsaken wilderness when they were captured by natives.  The chief of the natives knew some engrish and spoke with them once they were penned up. 

Chief, "We offer you a choice.  You can choose death or oogy."  Then he looks at one of the men and says, "Make your choice now."

The man almost immediately chooses oogy.  How bad can that be?

He is taken from his imprisonment, tied to a tree trunk, and orally and anally raped by every male in the village.  Some of the women join in using the aft end of the warriors spears.  This goes on for hours until the man dies as his friend watches helplessly.

The chief returns to the cage and ask the other man to choose.

"I'll take death!", the man shouts.

The chief stares at him for a moment, nods, and says, "Death it is.  You will be beheaded on the same log your friend is laying dead on now.  But first, OOGY!!!"

--------

My point, yes we will have deflation.  But first, INFLATION!!!

 

 

Wed, 06/11/2014 - 11:21 | 4844739 xtop23
xtop23's picture

"...... when QE is set to end."

LOL.

You're such a joker Tyler :)

Wed, 06/11/2014 - 13:21 | 4845308 MansaMusa
MansaMusa's picture

"QE is set to end in October..."

Is that before or after another black flag staged military emergency?

Wed, 06/11/2014 - 23:47 | 4847404 TheReplacement
TheReplacement's picture

You make us wait?

Wed, 06/11/2014 - 13:04 | 4845231 SDShack
SDShack's picture

"flawed thinking is never detected within the federal reserve."

A sociopath is incapable of believing their thinking is flawed. Hence the reason why the world is fucked.

Wed, 06/11/2014 - 17:04 | 4846165 Anusocracy
Anusocracy's picture

Their thinking stems from their morality and that is what is flawed.

Wed, 06/11/2014 - 18:16 | 4846355 CH1
CH1's picture

A sociopath is incapable of believing their thinking is flawed. Hence the reason why the world is fucked.

I'd state it differently:

The world is fucked because people obey sociopahts.

Wed, 06/11/2014 - 22:37 | 4847246 Bunga Bunga
Bunga Bunga's picture
A First-Rate Madness: Uncovering the Links Between Leadership and Mental Illness

http://www.amazon.com/exec/obidos/ASIN/1594202958/reasonmagazineA/

 

The Startling Accuracy of Referring to Politicians as 'Psychopaths'

http://www.theatlantic.com/health/archive/2012/07/the-startling-accuracy...

Wed, 06/11/2014 - 09:27 | 4844152 Quinvarius
Quinvarius's picture

Well.  That's not going to be allowed to happen.  Those bankers control the creation of money.  They are going to get paid no matter what.  If they can't earn it, they are just going to give it to themselves.

Wed, 06/11/2014 - 10:18 | 4844377 SofaPapa
SofaPapa's picture

And as long as enough people are willing to trade what bankers are printing for true tangible wealth, they can get away with this.  But knowledge in the population of the true "value" of the paper they are gifting themselves is growing.  Or is that just wishful thinking on my part?

Wed, 06/11/2014 - 19:43 | 4846639 hot sauce technician
hot sauce technician's picture

No. Working John Qs around the world are slowly coming to the realization that the insulated political elites, all of whom play by the same fiat rules, are disconnected from their actual concerns and are getting more apathetic and agitated with the deep state which has been the political model du jour since - more or less - WW2.

I don't know if behavior will turn violent but thanks to the internet alternatives to services traditionally provided by governments i.e. despots to "the people" are available and potentially can make deep state governments obsolete without firing one shot. Examples are abundant.

Thu, 06/12/2014 - 00:04 | 4847438 TheReplacement
TheReplacement's picture

Care to list some of the abundant examples where virtual things in the ether have actually defeated an enemy in a gun battle? 

The only way words win a gun battle is if you use words to convince enough people to fight on your side to win.  Words cannot and will not stop homocidal maniacs and psychopaths from pulling the trigger.  If that were true the Putin would be #cryinglikeabitch, Assad would be hiding in Antarctica, and the jihadis would be on their knees repenting due to all of the things said, done, shown on the internet. 

If you say you are talking about bitcoin then what I wrote above is meaningless to someone like you.

Wed, 06/11/2014 - 09:39 | 4844194 LawsofPhysics
LawsofPhysics's picture

You are on the right track angie, but keep going, you will get to the final conclusion and realize that there is simply no monetary, fiscal, or political solution to scarcity.

hedge accordingly.

Wed, 06/11/2014 - 09:45 | 4844223 ArkansasAngie
ArkansasAngie's picture

I fear that.  And I fear what the "elites" will do to get rid of the problem ... 

 

Wed, 06/11/2014 - 09:51 | 4844244 Spastica Rex
Spastica Rex's picture

What if all the unemployed people in the world were lifted up to Heaven like balloons? Could that help?

Wed, 06/11/2014 - 16:58 | 4846126 g speed
g speed's picture

@ Laws of physics  ---no where in there do I see mention of the elephant in the room--collateral---is there some connection with the china rehypotication of warehoused collateral going missing and less business loans by BoA---just asking-- 

Wed, 06/11/2014 - 10:07 | 4844321 Citxmech
Citxmech's picture

The Fed's decision tree basically looks like this:

Excessive Inflation?  -->  Gently restrict liquidity/raise rates. 

Any scintilla of Deflation? --> Open the monetary firehose.

When your rates are at friggin zero, the printers turned up to "11" and deflation is still winning the day, the only other option they seem to have is gaming the stats, kicking the can, and securing life preservers for the chosen ones (under the guise of critical services).

The scary part is how well this seems to work. . . until the day it doesn't.

Wed, 06/11/2014 - 13:09 | 4845255 SDShack
SDShack's picture

It's actually worse then that. We have deflation in real wages and real assets (only bubble assets are increasing). While we have inflation in commodities and staples... energy, food, utilities, rent, healthcare, etc. The middle class is being purposely squeezed out of existance. The only question is when will they decide they have had enough and fight back.

Wed, 06/11/2014 - 13:38 | 4845380 Citxmech
Citxmech's picture

I was actually going to put a bit in my post about bi-flation causing the fed to short-circuit in cognative dissonance - but the post was getting muddied.  

I think your observation is absolutely clear and correct though.  We've got defaltion in credit driven secorts and inflation in critical comodities.  

Makes it tough for Yellen & Co. when your only tool is a hammer and they need to remove a screw.

Thu, 06/12/2014 - 00:07 | 4847439 TheReplacement
TheReplacement's picture

They aren't trying to remove the damn screw already.  Why can't people understand that it is all intentional from the pols to the bankers?  These people are saying, by their actions, that they mean to kill you all.  Isn't it time you started listening?

Wed, 06/11/2014 - 10:51 | 4844562 NEOSERF
NEOSERF's picture

QE may not work but in the Fed's opinion, QE=confidence and without it, the emperor's clothes are just that...

Wed, 06/11/2014 - 17:26 | 4846241 lasvegaspersona
lasvegaspersona's picture

AA

(cue the Doors) this is the end...things are not going to get better, not in this dollar's lifetime. You seem to be thinking that we just need a good deflationary enema. In other times that has worked. It won't work now however because the problem has grown to the level where only killing off the currency and using a new 'improved' medium of exchange. I call it the 'new dollar', Jim Willie calls it the Schite dollar...whatever. Every fiat currency reaches a point at which it has to be let go and a new instrument put in place. We have come to that point for the dollar....give it a kiss and say goodbye. Don't be angry it happens to ever single fiat. It is a feature not a bug. We will do well with the new one and good things will eventually come. Maybe next round people will come to realize that fiat is just a medium of exchange. It and it's derivatives should not be used to store wealth. The state likes that but they always over print and long term savers who use the currency for savings come, inevitably , to tears.

Wed, 06/11/2014 - 23:46 | 4847403 TheReplacement
TheReplacement's picture

I believe that part was meant to be seen as the point of view the Fed will/should have based on their overall belief that they can manage and control an economy.  That they cannot should be a forgone conclusion to anyone reading stuff like this on ZH.

Wed, 06/11/2014 - 09:13 | 4844100 SAT 800
SAT 800's picture

The reason for a decline in commercial loans is called "disintermediation". Corps. can and are borrowing directly from the bond market; and bypassing the Banks fee structures.

Wed, 06/11/2014 - 09:19 | 4844124 Oracle 911
Oracle 911's picture

After seeing this I no wonder why China's manufacturing is in decline, and why nobody wanted buy Chinese bonds.

Wed, 06/11/2014 - 19:18 | 4846525 JuliaS
JuliaS's picture

I'm also curious what impact crowd-funding has on the paper market. Originally the loans would've come from banks, instanly expanding the money supply through fractional reserve multipliers. Nowdays, crowd-funding is becoming a prefered method of borrowing. That money comes from savings, as oppose to loans, which, at best, transfers deposits from A to B. No new money is created.

Digital currencies take another small bite out of the pie, which would be insignificant if it, once again, weren't for fractional reserve lending and excess leverage.

Wed, 06/11/2014 - 10:08 | 4844327 JRobby
JRobby's picture

It stands for "currently deductible"

Wed, 06/11/2014 - 12:54 | 4845183 Freddie
Freddie's picture

I was in one of those vile big shit banks.  The one the Saudis bailed out and own part of.  Thing really Big.  The branch is in an affulent area.   The place was a ghost town. I was the only one in there and will be moving to a credit union or the mattress.

One lady there said they needed to go stand on the street corner to get customers. 

I silently chuckled to myself knowing that the big money center banks are (evil) whores.

Wed, 06/11/2014 - 09:00 | 4844033 SheepDog-One
SheepDog-One's picture

Don't use these banks for anything, starve the parasites! Free money is empty calories, they can gorge on it for a while but will starve eventually.

Wed, 06/11/2014 - 08:58 | 4844034 maneco
maneco's picture

The news should be bullish for stocks!

Wed, 06/11/2014 - 09:16 | 4844112 SAT 800
SAT 800's picture

Only insofar as the Corp. funding from direct bond sales is used for stock buybacks; which a lot of it is. However, there's obviously a limit to this phenomenon. Market Watch has "Buybacks are the reason for DOW17000" as a banner this morning; this kind of "everybody knows it know" situation usually means it's about over and done with.

Wed, 06/11/2014 - 09:02 | 4844038 LawsofPhysics
LawsofPhysics's picture

Full faith and credit, in other words, no more faith means no more credit for you...

 

Good thing we bailed these fuckers out huh?  real capital is derived from savings and a banker who does the only real "work" they have called due diligence on an honest loan.  As soon as they started creating money out of thin air, it was only a matter of time...

Roll the motherfucking guillotines and shut off the SNAP cards, nothing changes otherwise.  Time to sort thgis all out. Bring it.

Wed, 06/11/2014 - 09:07 | 4844080 dontgoforit
dontgoforit's picture

Stop SNAP and things will change alright.  They will burn the house down - literally.

Wed, 06/11/2014 - 09:35 | 4844182 LawsofPhysics
LawsofPhysics's picture

Based on the intellect and decision making skills of the average SNAP recipient, you sir, are an optimist.

Wed, 06/11/2014 - 09:52 | 4844251 Spastica Rex
Spastica Rex's picture

Fire is a primative tool.

Wed, 06/11/2014 - 12:58 | 4845195 Freddie
Freddie's picture

We train young men to drop fire on people, but their commanders won't allow them to write 'fuck' on their airplanes
because it's obscene!

Col. Water E. Kurtz

Wed, 06/11/2014 - 13:34 | 4845368 Kprime
Kprime's picture

gotta have some semblance of civility.  lmao

Wed, 06/11/2014 - 12:59 | 4845207 roadhazard
roadhazard's picture

Eggzachery

Wed, 06/11/2014 - 13:33 | 4845361 Kprime
Kprime's picture

I hope so.

Wed, 06/11/2014 - 09:01 | 4844040 Dr. Engali
Dr. Engali's picture

It's that damn pesky weather again. Who would've thought we would have snow in the winter time? I'm sure we will see a snapback........... In 10 years or so.

Wed, 06/11/2014 - 13:31 | 4845357 Kprime
Kprime's picture

when global warming finally kicks in we are going to have a boner of a GDP

Wed, 06/11/2014 - 09:01 | 4844049 stant
stant's picture

Liquidity trap

Wed, 06/11/2014 - 09:06 | 4844075 ArkansasAngie
ArkansasAngie's picture

Insolvency trap

Bankruptcy is good

Wed, 06/11/2014 - 16:42 | 4846061 disabledvet
disabledvet's picture

I agree with this. "Something stupidly obvious is next."

I mean...the Fed isn't lying about M-2. That thing has been flat lining since 2008. "Policy Enslavement" seems to be going about it all wrong.

Good luck turning the internet off.

Problem of "internal control" or "internal controls"?

Sure sounds like a London Whale "times a trillion" to me.

Wed, 06/11/2014 - 09:02 | 4844051 Tabarnaque
Tabarnaque's picture

In a debt base monetary system if there is no loan creation then there is no economic growth.

Maybe the loan creation reported by the Fed included the Belgium connection?! Just saying...

Wed, 06/11/2014 - 09:03 | 4844061 q99x2
q99x2's picture

Can't we choose to analyse some other country now?

Wed, 06/11/2014 - 09:15 | 4844111 Tabarnaque
Tabarnaque's picture

Europe is in even worst shape! Their loan creation has been on a down trend for years now.

Wed, 06/11/2014 - 09:24 | 4844137 Grande Tetons
Grande Tetons's picture

I was thinking the exact same thing. Two of the largest economies in the world with dubious loan creation. By dubious I mean rather shitty in somewhat uncertain terms.  

Wed, 06/11/2014 - 09:37 | 4844185 LawsofPhysics
LawsofPhysics's picture

Yes, but financial "products" and "services" as a percentage of GDP has been growing for years...

"winning"

Wed, 06/11/2014 - 13:30 | 4845348 Kprime
Kprime's picture

throw in Japan and you have a deal

Wed, 06/11/2014 - 16:46 | 4846075 disabledvet
disabledvet's picture

"The banality of Mass Default."

Not everyone is not paying the bills here.

The Banks as "mere utilities" strikes me as a recipe for total disaster...but we'll see. Everyone's got "plan payoff" in mind right now.

Wed, 06/11/2014 - 09:06 | 4844071 dontgoforit
dontgoforit's picture

Untaper?  Really?  They just moved to Belgium, right?  Could be Namibia next, who knows.  This is the screwiest shit I've seen in my 64 years.

Wed, 06/11/2014 - 09:09 | 4844086 Unknown Poster
Unknown Poster's picture

It sounds like a second quarter of negative GDP may be upon us. While this is rare in a booming economy, the FED's models show strong growth. So BTFD, BTFATH until POMO  ends.

Wed, 06/11/2014 - 09:15 | 4844110 Winston Churchill
Winston Churchill's picture

I just can't see how they manipulate Q2 GDP positive at this point.

In an election year they will try.

Wed, 06/11/2014 - 09:50 | 4844239 Government need...
Government needs you to pay taxes's picture

They haven't (yet) included hookers and blow in the GDP numbers.  So the ace has yet to be played. . .

Wed, 06/11/2014 - 09:55 | 4844259 Winston Churchill
Winston Churchill's picture

Crack whores at $10 per BJ, isn't going to cut it.

Wed, 06/11/2014 - 11:02 | 4844633 ParkAveFlasher
ParkAveFlasher's picture

Well said.  Volume alone would never cover the gap at that price without a good measure of deregulation (as overheard in the Neo-Keynesian Wonderland).

Wed, 06/11/2014 - 15:26 | 4845818 Raging Debate
Raging Debate's picture

Winston - Remember 2008? Print it and revise six months later.

Wed, 06/11/2014 - 21:09 | 4846964 Farqued Up
Farqued Up's picture

Negative GDP in a deflationary economy means much worse than advertised. Even the idiot child Krugman has to be having fits of depression as all good Keynesians are. The banksters need to watch over and over Dr. Strangelove followed by Godzilla to cheer themselves up. Pass the popcorn, this flick will be a marathon.

Wed, 06/11/2014 - 09:34 | 4844179 Quinvarius
Quinvarius's picture

The shit that passes for economic analysis these days is astounding.  I hope this was sarcasm.  To operate as if any of that made sense would clearly indicate insanity. 

Wed, 06/11/2014 - 09:43 | 4844217 Unknown Poster
Unknown Poster's picture

It was sarcasm, except the BTFD part. That was insanity, or rational insanity.

Wed, 06/11/2014 - 09:15 | 4844108 intric8
intric8's picture

Well its nice to know the fed supplies us with reams of data - crap notwithstanding - to support future bs policy moves that have already been determined. Where's a nailgun when you really need one?

Wed, 06/11/2014 - 09:17 | 4844118 NoWayJose
NoWayJose's picture

Had me until the end - with the untaper statement. If QE has not generated loan creation over the last five years, then why would the Fed think that it will work now?

Wed, 06/11/2014 - 09:26 | 4844149 The Most Intere...
The Most Interesting Frog in the World's picture

Thank you!

 

I think the Fed knows it's not working and is bound and determined to get off the hampster wheel!  Not to mention the fact that, per recent ZH article, there is three times the demand for Treasuries than supply during the taper.  Time will tell...

Wed, 06/11/2014 - 10:31 | 4844438 Tyler Durden
Tyler Durden's picture

Simple: because they are all in now.

The Fed has no other choice but to keep doing the same (which has failed) or actually admit defeat on everything it has done in the past 6 years and lose credibility which would crush the dollar.

Wed, 06/11/2014 - 15:12 | 4845760 Seeing Red
Seeing Red's picture

I do wonder if they know it won't work, or whether it's purely to save face ("But, but ... we followed Keynesian principles!!").

Wed, 06/11/2014 - 22:53 | 4847281 Ides of November
Ides of November's picture

"Saving Face" is an Asian thing. Westerners don't need to "Save Face" - we just tell it like it is.

LOL

Well, that's what I was always told when I was growing up....

Thu, 06/12/2014 - 14:04 | 4849416 MeelionDollerBogus
MeelionDollerBogus's picture

It's not working? It's making more debt-slaves & crashing economies one financial class at a time. Pretty sure that's the intended goal so it's working great.

Wed, 06/11/2014 - 15:50 | 4845892 Raging Debate
Raging Debate's picture

Tyler - I disagree. All in doesn't mean shit when growth has stalled globally. Pushing more inflation draws more attention to themselves and they intend to keep there franchise here, there and everywhere. Besides, they made a killing on the last 40 years of Laissez Faire, 2008 bailouts to current and will make a killing on deflation with muppets (2015) in stocks even on a correction. Also own what 60% assets globally now?

These people are shrewd, morally misaligned but highly intelligent. They know when to slink off to great resorts and wait for the next cycle. The model in bust phase always is W shaped. I was right about when to the quarter like Bob Doll of Blackstone in 2008 but wrong the second lef would come in 2012. I do have a better understanding now how a reserve currency can levitate longer than you can stay solvent now.

Since the model is about 80 years for a host I wont be alive to make a killing with them next time if there is a next time, ww3 would change a lot of the way the world operates today.

Wed, 06/11/2014 - 17:58 | 4846206 honestann
honestann's picture

All in?

Ever hear of Zimbabwe?

They have a long way to go.  Any "all in" talk assumes they have at least a little bit of scruples.  They don't.  Unless you count negative scruples, which they have in spades.

But yes indeed, the predators-that-be do intend to go "all in".  But what that means is global war between government and the sheeple-chimps who populate this planet.  And that phase has just begun (police state abuses).

When you see governments nuking or releasing biological warfare upon "their own" populations, you know they are getting closer to "all in".  Not before.

Wed, 06/11/2014 - 23:28 | 4847366 Seeing Red
Seeing Red's picture

HonestAnn -- I really like your post -- but you're kind of a buzzkill regarding survival.

Wed, 06/11/2014 - 11:27 | 4844763 OC Sure
OC Sure's picture

Isn't QE 3 admission that QE 2 did not work, QE2 admission that QE1 did not work, QE1 admission that forcing mortgage rates lower did not work, and so on all the way back to what they claim did not work but actually did; the Panic of 1907. It is there entire existence that does not "work." They have become their own worst enemy and defeat is upon them whether they admit it or not.

Wed, 06/11/2014 - 13:19 | 4845291 SDShack
SDShack's picture

Sociopaths NEVER admit defeat. Their ability to soldier on in the face of all rational evidence to the contrary is in their very DNA. They are only driven to WIN, at all costs, in the world they have created in their own mind. They will lie, cheat, steal and eventually sacrifice EVERYTHING to win. Customers, friends, family, everything. Failure just reinforces a need to double down, triple down, go all in. Eventually the sociopath self destructs, but not before they destroy everything and everyone around them. They are the most dangerous force on Earth, and they will never stop until they are either stopped by the masses, or they implode as a result of their own device.

Wed, 06/11/2014 - 13:35 | 4845374 OC Sure
OC Sure's picture

I believe you

Thu, 06/12/2014 - 13:40 | 4849255 MeelionDollerBogus
Wed, 06/11/2014 - 09:25 | 4844139 youngman
youngman's picture

I dont know but if you got burned by your loans 5 years ago...why would you want a new one now.....the people I knew from the depression era never had a loan the rest of their lives....they saw what it did back then...and never wanted to be in that position again...same as today....people and companies are tightening up....no more flying by free loan money....IMHO

Wed, 06/11/2014 - 18:24 | 4846372 MeelionDollerBogus
MeelionDollerBogus's picture

For my own real name, address & actual collateral? Never.
Now if it wasn't anything secured by collateral, the downside is... if I'm willing to pay even when banks & corporations are willing to default with little real penalty.
Now that would be silly, wouldn't it?

Wed, 06/11/2014 - 09:34 | 4844175 RiverRoad
RiverRoad's picture

So no loans here, but lots and lots in Europe now, right?

Wed, 06/11/2014 - 09:39 | 4844193 Kina
Kina's picture

PRINT

Wed, 06/11/2014 - 09:42 | 4844203 yogibear
yogibear's picture

LOL, Fed reverses taper, then QE and grinds down the small people. More transfer of wealth from the 99% to the 1%.

So far the recovery was all supported by printing and debt.

Wed, 06/11/2014 - 09:41 | 4844208 ptoemmes
ptoemmes's picture

As a small business owner, I'm holding out until the banks come to me and offer to pay me to borrow money.  I call it my version of NIRP.

/sarc

 

 

Wed, 06/11/2014 - 09:41 | 4844209 Kina
Kina's picture

How on earth did they think they could taper from the situation the started in...when there has been no recovery anywhere (and surely they wouldn't be buying their own faked stats).

 

Well maybe they haven't tappered....just moved to Belgium and elsewhere....but it seems not only can they not tapper they need...to increase the rate of printing.....getting near that asymptote   .

Wed, 06/11/2014 - 10:00 | 4844280 valley chick
valley chick's picture

Tired of taper talk...they can not taper nor can they raise the rates without the house of cards collapsing. End game. 

Wed, 06/11/2014 - 18:18 | 4846359 MeelionDollerBogus
MeelionDollerBogus's picture

Most certainly there is only untapering.
Remember unbirthdays?
the Mad Hatter has simply declared the tea-party will take place at various other tables which happen to be directly adjacent to the original table which is now tapering down from the party.

Wed, 06/11/2014 - 09:42 | 4844212 Government need...
Government needs you to pay taxes's picture

Businesses tend to look down the road a bit further than individuals.  If this trend becomes durable, Katie, bar the door.

I dont see consumer credit usage declining (yet), so this represents a single 'yellow flag' datapoint.

Don't forget we are in a quasi-command economy, which means more 'busts in the model'

Perhaps the Belgian corporate sector is in need of credit.

Wed, 06/11/2014 - 09:47 | 4844228 Kina
Kina's picture

Also.... in the end...they will take Your money before they take theirs.....remember that.

Wed, 06/11/2014 - 18:17 | 4846356 MeelionDollerBogus
MeelionDollerBogus's picture

Yours?
If it's not in your hand you don't own it.

Wed, 06/11/2014 - 10:25 | 4844243 OC Sure
OC Sure's picture

 

 

 

This article then coincides well with their reported soaring excess reserves, reverse repurchase agreements, and Federal Reserve Earnings Remitted to the US Treasury:

 http://research.stlouisfed.org/publications/usfd/20140606/usfd.pdf    

These "earnings" represent productive work removed from the economy and given to the government.

Also note that in the link provided that this report was released on June 6th and had the excess reserves chart included. It has since been removed from the report or I'm just a knucklehead and can't seem to find it in their catacombs. It is however in a different release as of the end of April.

So the contradiction is how can there be so many commercial loans (economic activity) AND soaring ERs, Reverse Repos, and Fed "earnings" at the same time?

 

 

 

 

 

 

Wed, 06/11/2014 - 18:16 | 4846354 MeelionDollerBogus
MeelionDollerBogus's picture

Sheesh, everyone knows bank accounting rules are to be accurate within +/- 2 billion %.

Wed, 06/11/2014 - 10:20 | 4844391 Colonel Klink
Colonel Klink's picture

Fuck bankruptcy of America Muppet Looting.  Hope they die a spectacular death.

Wed, 06/11/2014 - 20:54 | 4846899 Farqued Up
Farqued Up's picture

If I outlive Ken Lewis, I swear he'll get a graveyard golden shower. I'll film it and send copies to all of his kin and the scum at BofA. Beware of tranches with MARKIT doing the fixing of value. A hint to the wise is sufficient.

Wed, 06/11/2014 - 10:34 | 4844454 Peter Pan
Peter Pan's picture

Let's look at the bright side. The less that is lent out, the less risk there is of default.

 

Wed, 06/11/2014 - 11:07 | 4844659 AGoldhamster
AGoldhamster's picture

Not at all surprising.

Many small and medium sized companies are losing business to amazon, ebay and such stuff.

Who's fault?

Those that fill the coffers of amazon, ebay etc.

So - unfortunately, but not at all surprising - you get what you deserve.

 

PS: I have long refused to buy at those mega companies, which just channel your money into the pockets of some completely insane and overpaid CEOs, make you fat (no need to move your ass anymore), kill the local retailers and local companies - and finally destroy life and society in which we have grown up.

Again: you get exactly what you are calling for. Not more - and not less.

Wed, 06/11/2014 - 17:35 | 4846261 MeelionDollerBogus
MeelionDollerBogus's picture

Who needs legs when you can use a motorskooter?
"There's a machine that BREATHES for you? I've been a sucker all along!" - Homer Simpson

Wed, 06/11/2014 - 11:30 | 4844780 FreeNewEnergy
FreeNewEnergy's picture

The banks holding Radio Shack (RSH) paper are going to get a rather rude awakening shortly when that once-iconic company declares bankruptcy. It's been circling the drain for the past two years and is getting close to being delisted - when its share price falls under $1 on average for 30 days (currently 1.34).

Fucking company has been mismanaged for decades and to think, they actually fired me back in 1995 (my good fortune, to be sure) after working as a management trainee for less than a month.

I cudda made 'em a contender, I tells ya.

I've been waiting for the collapse of retail, then stocks, then everything. Could be the start of a trend here today, with stocks down across the board. The fakery seems to be at an end.

Consider, we're 63 months into the ongoing bull market, Japan is imploding, retail is dead, Cantor gets whipped in a primary, Obama's "approval" rating (seriously) at a new low (soon to be lower), Fed tapering, market volumes drying up. Shit has to end sometime, right? Bull markets always end, right?

Right?

Bueller?

I'm tempted to back up the truck on some S&P puts in about a week, maybe sooner. September 185-190 would be my range. Out of the money now, but could be in the money by mid-July.

Wed, 06/11/2014 - 12:45 | 4845145 MeelionDollerBogus
MeelionDollerBogus's picture

Can't believe people still waste money in expiring puts for SPY.
HVU shares are much cheaper & don't expire, are -11x to SPY.
http://flic.kr/p/ikyjpz

Wed, 06/11/2014 - 16:53 | 4846095 Hongcha
Hongcha's picture

I am maintaining my short SPY; covering if SPY closes over 196, chalk it up again.

Wed, 06/11/2014 - 11:42 | 4844849 DerdyBulls
DerdyBulls's picture

What the... I didn't know they were making commercial loans anymore. This isn't modern banking.

Wed, 06/11/2014 - 12:43 | 4845135 MeelionDollerBogus
MeelionDollerBogus's picture

Things are different this time!!

Wed, 06/11/2014 - 13:01 | 4845214 Last of the Mid...
Last of the Middle Class's picture

The scientists behind global warming have proven beyond any doubt that the snow and ice we received this wilnter are clearly a result of a one time special set of curcumstances. While the effecton our GDP is dramatic we can all rejoice in the fact it will never happen again and from here on out things will be . . . just swell. May the GDP be forever in your favor!

Wed, 06/11/2014 - 17:14 | 4846209 F22
F22's picture

I'm in favor of taking out as much in new loans as possible, maxing out the credit cards and using it all to buy physical gold.....

Wed, 06/11/2014 - 18:38 | 4846419 Ludwig Von
Ludwig Von's picture

"We sure do: because the bulk of cash that would otherwise be spent on CapEx: that most productive use of funds for the entire economy, and for broad GDP in general, has instead been trapped and redirected into shareholder friendly, but business model crushing, stock buybacks mostly purchased on credit, which means the moment there is another downturn and rates rise, all those corporations which succumbed to activist investors will be that much closer to record-levered insolvency."

It simply means that he owners of public companies no longer believe in a future for their companies. They are not interested anymore in business activity, but only in cashing in for themselves, immediately. 

Wed, 06/11/2014 - 22:47 | 4847270 Wahooo
Wahooo's picture

Please stop with the "since Lehman" headlines and benchmarking. It means nothing at this point.

Thu, 06/12/2014 - 08:02 | 4847840 Comte d'herblay
Comte d'herblay's picture

"If this is accurate then not only is the Fed fabricating loan data outright, it is massively misrepresenting the general direction of loan creation altogether".

 

This falls into the....

 “I’m shocked, shocked to find that gambling is going on here!” Your winnings, sir.

 

 “Oh, thank you very much!”

 

...category.

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