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BofA Warns Upcoming "Desperate Measures" By Authorities Will Result In Another 2008 Market Collapse

Tyler Durden's picture


Last week we had Citigroup warning that the market bottom is about to fall out, as the Fed is more than likely to disappoint already very lofty expectations (according to various estimates from both Goldman and the second Tier banks, i.e., all of them, the market has priced in roughly $500 billion in QE3 already). Today, Bank of America, which may or may not be with us much longer, has taken this desperate alarmism several notches further, and is warning that due to the gridlock in both the fiscal ("fiscal authorities have bombarded the markets with a quadraphonic message of hopelessness") and monetary ("the Fed is out of bullets anyway") stimulative pathways, the likely outcome of anything from DC will be nothig short of a disaster. To wit: "rather than a repeat of 2010, when the Fed saved the day with QE2, we think we are moving closer to a repeat of 2008, when major policy errors devastated the economy." For once we actually agree with Bank of America: "In our view, the pressure to “do something” is now far more likely to result in more desperate or radical measures, even if it is bad policy." Does this mean that we are looking at a TARP "vote down" market reaction this Friday if indeed the chairman disappoints? We will know for sure in about 100 hours, which just may be the longest 100 hours for bulls since the start of the artificial and solely QE inspired bear market levitation in March of 2009. 

From Bank of America, "Deja Vu"

Summers just haven’t gone that well for markets in recent years. Many have noted the similarities between 2011 and 2010, or even 2008, but in fact the interest rate pattern in each of the past six years has been depressingly and remarkably similar: rising rates and economic optimism in the first half of the year ultimately giving way to pessimism and lower rates in the second half. It indeed seems like we have been here before. But rather than a repeat of 2010, when the Fed saved the day with QE2, we think we are moving closer to a repeat of 2008, when major policy errors devastated the economy.

For mortgages and housing, the 6-year pattern appears particularly problematic. Rates have hit new lows in each successive year since 2006 (Chart 13) but the response, in terms of increased home purchase mortgage applications (Chart 14), has also decreased in each year. The latest week’s sharp 9% drop in purchase activity, as mortgage rates hit a record low, was especially disturbing. The purchase index has not yet taken out the low from a year ago, but it is close to doing so. It appears as if the Fed’s multi-year move to lower rates has been pushing on a string all along when it comes to housing demand. The muted response of the refinancing index (Chart 15), while good for the IO trade we have long recommended, is another indication of the bad news on the mortgage and housing front.

Regardless, as Ethan Harris and Michelle Meyer note in Helplessly Hoping, the Fed is about out of bullets anyway. Meanwhile, the “fiscal authorities have bombarded the markets with a quadraphonic message of hopelessness,” proving that they are “too dysfunctional to deal with the US’s massive fiscal problems.” The situation in Europe appears to be even worse. Against this backdrop, economic risks are increasingly skewed to the downside, indicating that risk aversion is the appropriate market positioning.

We have been steadily adjusting our more optimistic view of risk taking in securitized products downward over the past month, as the debt ceiling debacle and its devastating market impact became reality. At this point, after another week of discouraging market and economic data (most notably for us the mortgage application data cited above), we turn more negative and see little reason to have anything but a market weight exposure to securitized products, in spite of the attractive nominal valuations (Chart 16, Table 5). Within agency MBS, we switch to a down-in-coupon bias and recommend paring back on IO exposure. In credit, our bias is to the highest quality, top-of-the-capital structure bonds.

The environment has become too overwhelmed by uncertainty, particularly on the policy front. In our view, the pressure to “do something” is now far more likely to result in more desperate or radical measures, even if it is bad policy. The most obvious immediate candidate for this is the concern that has hung over the agency MBS market for the past year: elimination of institutional obstacles to refinancing such as loan level pricing adjustments (LLPA) as a quid pro quo for a cut in the preferred dividend payments. The muted refinancing response to historically low interest rates shown in Chart 15 likely has become unacceptable from a policy perspective, and responses are available.

This, along with the increased possibility of a low for long rate environment, particularly if the Fed implements Operation Twist as expected, requires us to reset the benign prepayment expectations we have had over the past year. The capacity argument we made just last week now appears less likely to stand in the rapidly evolving political and economic environment. Just as banks have been pressured to modify existing borrowers, we can look for pressure to be exerted on banks to expand capacity, lower the primary-secondary spread, and refinance high rate borrowers who have faced challenges moving through the refinancing pipeline. In addition, the simple economic incentives of the refinancing business should help drive capacity expansion.


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Mon, 08/22/2011 - 14:35 | 1586962 Cognitive Dissonance
Cognitive Dissonance's picture

Just about a month ago weren't all the banks holding hands and singing Kumbaya? I smell a coordinated dump.

Can we get a courtesy flush please?

Mon, 08/22/2011 - 14:37 | 1586978 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Can we have Bank of America wipe its own ass, please?

Mon, 08/22/2011 - 14:44 | 1587019 Fukushima Sam
Mon, 08/22/2011 - 14:46 | 1587037 egdeh orez
egdeh orez's picture

Longest 100 hours is a victory for the bulls!

Mon, 08/22/2011 - 14:53 | 1587071 malusDiaz
malusDiaz's picture

The Mark aka BoA, has learned of what role its about to play...

Mon, 08/22/2011 - 15:12 | 1587156 zenbones
zenbones's picture

Somebody's gotta be sacrificed to Mammon.

Mon, 08/22/2011 - 17:11 | 1587655 TruthInSunshine
TruthInSunshine's picture

The Bernank will forget to sterilize the AIDS-Ebola-FleshEatingBacterium contaminated needle and/or give a fatal dose of Heroin to the Wall Street Junkies who now are completely jonesing for a fix.

Their skin is crawling and they have imaginary snakes, spiders and roaches crawling all over their bodies.

Hurry Bernank! Administer the fatal dose!

Do it, Bernank, do it!

Mon, 08/22/2011 - 18:19 | 1587912 Ahmeexnal
Ahmeexnal's picture

Wikileaks confirms destruction of BofA bombshell evidence:


Seems like BofA handed out phat bonuses to the script kiddies.

Is that why Assange is off the hook?

Mon, 08/22/2011 - 17:53 | 1587807 akenathon
akenathon's picture

okay let's assume that this time around no one get fundings as in 2008...

1) Run on banks...I personally think that if that happens...they will close the banks after 48 hours

2) People get killed on the Treasuries as the money will be for sure blocked for "other" purposes...which are numerous

3) The world's finance as we know it will cease to exist

4) They will revalue the US dollar and Europe will follow (they are both the biggest holders of Gold) by attaching to the US dollar

5) They will make US dollar convertible into Gold at a rate far higher than today as such that all the liabilities are covered by Gold assets

6) China will be left with nothing and their hopes to become a financial super power are wiped out in a single day as all their assets will be down 50%

So if money gets nothing and Bretton Woods II is to come back where to put the money apart from Gold?


Mon, 08/22/2011 - 19:48 | 1588263 Ahmeexnal
Ahmeexnal's picture

So if money gets nothing and Bretton Woods II is to come back where to put the money apart from Gold?


1s2 2s2 2p6 3s2 3p6 4s2 3d10 4p6 5s1 4d10


Tue, 08/23/2011 - 02:35 | 1589305 Cast Iron Skillet
Cast Iron Skillet's picture

you a goddamn chemist or something? just say, "SILVER!!!" :-)

Mon, 08/22/2011 - 14:54 | 1587074 Buckaroo Banzai
Buckaroo Banzai's picture

"Desperation is a stinky cologne." --  Chief Bruce Grady

Mon, 08/22/2011 - 15:48 | 1587291 glenlloyd
glenlloyd's picture

In other words BOA is up shit creek without a paddle if the Fed doesn't 'do something'

Mon, 08/22/2011 - 17:10 | 1587644 Freddie
Freddie's picture

I guess BOA's mortgages, HEILOCs and credit cards they handed out to illegal aliens did not go very well.  Real estate armageddon brought to you by community organizers.

Mon, 08/22/2011 - 17:33 | 1587738 New_Meat
New_Meat's picture

"Bank of Amigos"

Mon, 08/22/2011 - 15:24 | 1587203 Piranhanoia
Piranhanoia's picture

a firehose and a hazmat suit

Mon, 08/22/2011 - 15:58 | 1587336 Lord Welligton
Lord Welligton's picture

and Fulfilled by Amazon.

Gift-wrap available.

That's just sick.

Mon, 08/22/2011 - 17:16 | 1587683 Use of Weapons
Use of Weapons's picture

When I thought my mind could no longer be shocked, I discover an entire market of Chinese made plastic appendages designed so fatties can wipe. That's about the only growth sector in the US economy at the moment, pissed off I missed it.


Times were when that was a royally appointed position, or you paid good money to a nurse - democracy in action, one supposes.

Mon, 08/22/2011 - 14:47 | 1587044 MillionDollarBonus_
MillionDollarBonus_'s picture

You may be shocked but I'm actually becoming quite annoyed with Dr. Bernanke. Bernanke has become frustratingly hawkish over the course of this year and my equity portfolio is now heavily underwater due to his lack of decisiveness. I sincerely believe it is time for Obama to pick a new Fed chairman who has the courage to provide the monetary stimulus that this economy is BEGGING for.

Mon, 08/22/2011 - 14:56 | 1587087 walküre
walküre's picture

Not sure if you're joking. But you actually make sense. Dr. Ben hasn't done what is required.

Ask yourself why. Answer, he's not there to serve YOU. His friends have made it rich and now you're going to loose.

Mon, 08/22/2011 - 15:04 | 1587120 Joe Sixpack
Joe Sixpack's picture

Are you sure he is not one of the Bernank's pals? Maybe he is still waiting for his payout (ala Madoff).

Mon, 08/22/2011 - 15:11 | 1587150 walküre
walküre's picture

Perhaps. But what just comes to mind is that Obama could put the blame squarely on Bernanke if the economy goes into the toilet and ride his 2012 campaign to go "all in" with Americans on the back of failed Fed policies.

MillionDollarBonuses may be a troll, but there's an angle to the rhetoric.

Obviously most here know that QE's intention was a "Friends of Ben" program.

Mon, 08/22/2011 - 15:27 | 1587220 rgd
rgd's picture

Dr. Bernanke is the student of the Great Depression.  He doesn't have to answer to nobody.  He knows what he is doing.

Mon, 08/22/2011 - 16:08 | 1587362 tgatliff
tgatliff's picture

Exactly.  He is a student of the Great Depression.  Not a teacher... And we all know the kinds of mistakes students can make...  It is rather obvious that Mr. B didnt learn enough about what actually occurred during the GD...  

Mon, 08/22/2011 - 17:41 | 1587760 johnnynaps
johnnynaps's picture

Yep, also makes him perfectly qualified to handle the toxic market that was created well AFTER the Great Depression. Just like hiring a specialist that works on antique Fords to fix your 2011 Lexus.

Mon, 08/22/2011 - 15:29 | 1587232 Smiddywesson
Smiddywesson's picture

Uncle Ben tried to restart the economy, but Uncle Alan blew the engine.  Since then, Ben has been very successful in keeping the markets afloat, kicking the can, and getting gold into the vaults of central banks. 

Not a bad job from thier point of view, but TPTB are not out of the woods yet.

Mon, 08/22/2011 - 16:50 | 1587564 RockyRacoon
RockyRacoon's picture

You're on to something here.   How can He be considered a failure?  Has He not done everything the Banks have wanted Him to do?   How can He be out of bullets when He has the golden printing press?   Bullets come in all forms and He has the ultimate weapon.   Praise be unto His Highest.

Mon, 08/22/2011 - 15:00 | 1587097 TheTmfreak
TheTmfreak's picture

This post is bullish for heroin injections.

Mon, 08/22/2011 - 15:04 | 1587121 mfoste1
mfoste1's picture


Mon, 08/22/2011 - 15:06 | 1587124 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Chairsatan Kkkrugman it is!

Mon, 08/22/2011 - 15:10 | 1587148 Confused
Confused's picture

LOVE THIS GUY!  He is too funny.

Mon, 08/22/2011 - 15:18 | 1587184 Popo
Popo's picture

That was supposed to be a joke, right?

Mon, 08/22/2011 - 18:00 | 1587834 rbsx
rbsx's picture

The question is not whether American industry is begging for it, but rather if it deserves it.

The only purpose QE3 will serve is akin to keeping Terry Schiavo on life support, you can keep industry alive, but keeping it alive through artificial life support, rather than industry innovating to keep competitive and sustainable worth it?

There, for all intents and purposes been 2 bail outs, yet most industries are suffering. Is it the fault of the politicians? Sure partly, but does some of the responsibility lie with the businesses that have made bad decisions? Even more so.

3 strikes and business is out man, time to let them sink like they deserve.

Mon, 08/22/2011 - 20:03 | 1588306 Hulk
Hulk's picture

Nice one Hamy!!!

Mon, 08/22/2011 - 15:00 | 1587100 eureka
eureka's picture

Will there be a moment of truth? Death to the bull by the toreador of no bailouts?

Mon, 08/22/2011 - 14:39 | 1586989 Crisismode
Crisismode's picture

Well, you know, The Bernank has more important banking matters on his plate right now.


That would be The European Banks, of course.

Once he's finished doling out a few Trillion to the PIIG banking cartel

THEN he will get around to taking care of the American banking cartel.

Or, are they all one and the same, perhaps?

Mon, 08/22/2011 - 14:47 | 1587043 Shitters_Full
Mon, 08/22/2011 - 15:06 | 1587125 lolmao500
lolmao500's picture

BAC pay off has been successful.

OpenLeaks founder destroys cables WikiLeaks Bank Of America

Daniel Domscheit-Berg, founder of OpenLeaks who defected from WikiLeaks last year, has announced (later confirmed by Assange ) the destruction of the cache of 3,500 documents that had not seen the light of WikiLeaks. Thousands of documents that were entered 5GB of Bank of America had taken with him when he left the organization with a server. The reason, it has the same Domscheit, maintain safety of informants.

The data will never see the light refers to a series of cables obtained by WikiLeaks between January 2010 and August of that year. Daniel himself has been Domscheit-Berg who leaked documents the destruction of the German newspaper Spiegel .

Apparently, Berg Domscheit WikiLeaks left with a server of the organization that contained a large number of yet unpublished material.

Mon, 08/22/2011 - 16:52 | 1587578 RockyRacoon
RockyRacoon's picture

Who is the Dumbshit-Berg guy again?   He took off with the goods and then trashed them -- er what?

Mon, 08/22/2011 - 14:58 | 1587095 01022010
01022010's picture

"coordinated dump"  reminded me of this:

pieces are starting to come together??

Mon, 08/22/2011 - 15:07 | 1587134 Cognitive Dissonance
Cognitive Dissonance's picture

If Zimbabwe Ben doesn't come through in Jackson Asshole we might just see the Mother Of All (MOA) coordinated dumps after all.

Go long popcorn and a real time market feed.

Mon, 08/22/2011 - 16:53 | 1587580 RockyRacoon
RockyRacoon's picture

Sounds like I need to go long Charmin.

Mon, 08/22/2011 - 20:04 | 1588310 Hulk
Hulk's picture

Either that, or stop using your left hand for eating...

Mon, 08/22/2011 - 18:01 | 1587836 New_Meat
New_Meat's picture

CD--are we reaching "Peak Popcorn?"  Especially with 1/2 of the corn crop going to Ethanol production (not that there's anything wrong with that, except when it's burned).

T'would be a shame, peak popcorn.

- Ned

Mon, 08/22/2011 - 15:27 | 1587221 Life of Illusion
Life of Illusion's picture



Bof A over 50 billion in assets.

Dodd-Frank gives Fed full control.


Mon, 08/22/2011 - 16:35 | 1587505 bbaez
bbaez's picture

Can we guess who will get first crack at the estate sale?

Mon, 08/22/2011 - 15:45 | 1587283 Smiddywesson
Smiddywesson's picture

I used to think the dollar was going to go to zero, but I also came to the realization that if all the central banks and governments are coordinating kicking the can and suppressing gold prices while they buy cheap gold, they will coordinate the crash too. 

There's no way the banks of the world are going to let us pay off our mortgages with funny money.  They will pull the plug and move us to a gold related standard before they take that haircut.  If they are successfull in amassing enough gold first, they will be not only solvent but incredibly wealthy.

Mon, 08/22/2011 - 15:04 | 1587118 IQ 145
IQ 145's picture

Well, I'm holding on to my 1000 share block bought at $7.37; I'saying $6.50 is a double bottom; at $6.35, I'm sayin "good bye"  A mere flesh wound. Although I wish people at the bank would keep their damn mouth shut; we don't need to hear no stuff about financial problems anounced by a Bank. Don't they have any sense, or what?

Mon, 08/22/2011 - 15:58 | 1587335 Spastica Rex
Spastica Rex's picture

Grifters need to stay on script.

Mon, 08/22/2011 - 16:35 | 1587509 fiftybagger
fiftybagger's picture

Wow, yer brave.  Remember Bear Sterns?  closed Friday at 30, opened Moday at 2.  All paper will burn in the coming bonfire.  Physical gold and silver only.

Silver For The People

Mon, 08/22/2011 - 18:19 | 1587911 Praetorian Guard
Praetorian Guard's picture

...for the love of god. Do you realize what happens if "paper burns" globally? Silver and Gold will be the LAST thing on your mind. Count on ML, CooP, CoG, etal, as the State makes a last ditch attempt to keep together the empire. PM's won't do you anygood. Pray this does not happen, though from a mathematical and logical perspective it will, as hell will be on Earth.

Mon, 08/22/2011 - 16:55 | 1587587 RockyRacoon
RockyRacoon's picture

With moves like that you need to post under a different username.

Mon, 08/22/2011 - 16:57 | 1587591 tekhneek
tekhneek's picture

I'll take the other side of that trade. I sold >100 options today AGAINST you.

I would hedge myself if I were you, friend.

Mon, 08/22/2011 - 18:03 | 1587841 slewie the pi-rat
slewie the pi-rat's picture

i hope they were deep in the money, honey!

Mon, 08/22/2011 - 18:32 | 1587962 mt paul
mt paul's picture

IQ 145

are you the new robo trader....

got the other side 

of your trade

thanx ..

Mon, 08/22/2011 - 16:38 | 1587517 Justinx34
Justinx34's picture

Besides BofA - what is the next worst US bank?

Mon, 08/22/2011 - 17:50 | 1587790 Lord Koos
Lord Koos's picture


Mon, 08/22/2011 - 16:47 | 1587548 persu
persu's picture

S&P low 666, s&p dropped 6.66 and now BAC 6.66....just a pure coincidence?

Mon, 08/22/2011 - 14:35 | 1586964 The Piker
The Piker's picture

Good relative strength in FAZ again

Mon, 08/22/2011 - 14:37 | 1586974 CPL
CPL's picture

Keep a trailing stop loss and make sure you don't hold over night.


Good luck chief.

Mon, 08/22/2011 - 14:41 | 1586995 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Long straddle

Mon, 08/22/2011 - 14:56 | 1587082 snowball777
snowball777's picture

"Wide stance"

Mon, 08/22/2011 - 15:06 | 1587127 nantucket
nantucket's picture

paging senator craig, paging senator larry craig, please enter the white "courtesy" stall

Mon, 08/22/2011 - 15:12 | 1587151 Mr Lennon Hendrix
Mr Lennon Hendrix's picture



Reporter at Jackson Hole:  How can you shoot Americans?

Bernanke:  Easy, you just don't lead them as much.

Mon, 08/22/2011 - 15:19 | 1587189 Flakmeister
Flakmeister's picture

M-I-C-K-E-Y M-O-U-S-E......

Mon, 08/22/2011 - 16:39 | 1587520 Justinx34
Justinx34's picture

I am going to be in Jackson Hole during the summit - BUT where is the actual location , hotel, or conference held at?

Mon, 08/22/2011 - 16:39 | 1587521 Justinx34
Justinx34's picture

I am going to be in Jackson Hole during the summit - BUT where is the actual location , hotel, or conference held at?

Mon, 08/22/2011 - 16:55 | 1587585 WonderDawg
WonderDawg's picture

Look for the guy who will now be following you around. He'll be wearing a dark suit and sunglasses, pretending to read a newspaper with one finger stuck in his ear. Ask him where the conference is being held.

Mon, 08/22/2011 - 16:57 | 1587598 RockyRacoon
RockyRacoon's picture

They don't use shoe phones any more?  Dang.

Mon, 08/22/2011 - 17:11 | 1587654 Rick64
Rick64's picture


Mon, 08/22/2011 - 15:18 | 1587185 Flakmeister
Flakmeister's picture

"Ankle grasp".....

Used the AM rally to reload on the SDS that was called away last friday... looking good so far... Hedged by selling the weekly 27 and 28 calls. ~3% premium for some that is 8% out of the money (at the time)...

,,,,S777, if I didn't know better, you were enjoying yourself in the GW thread. 

Mon, 08/22/2011 - 16:06 | 1587359 fwchiro
fwchiro's picture

Confucious say: Man who straddle fence have sore crotch

Mon, 08/22/2011 - 14:36 | 1586967 King_of_simpletons
King_of_simpletons's picture

Economy be damned. The mandate for the Federal Reserve is to show that they are "standing by to help" and that they will. One can only wonder who they are trying to help.

Mon, 08/22/2011 - 15:14 | 1587166 zenbones
zenbones's picture

Not me, not you, not your neighbor, and not your momma.

Mon, 08/22/2011 - 14:36 | 1586968 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Long hot summer, bitchez.

Mon, 08/22/2011 - 16:10 | 1587369 Hi Ho Silver
Hi Ho Silver's picture

No worries. After all it's only transitory.

Now pass the iced tea.

Mon, 08/22/2011 - 14:36 | 1586969 NOTaREALmerican
NOTaREALmerican's picture

There is only one solution:   Krugman's Anti Space Alien Defense Program (Big-Space).  

Captain:  "Scotty, we need more money!"

Scotty:  "I'm not sure she'll take much more of this, Captain.".



Mon, 08/22/2011 - 14:39 | 1586986 Long-John-Silver
Long-John-Silver's picture

Scotty:  "I'm not sure she'll take much more of this, Captain.".


Scotty:  "I'm not sure she'll print much more of this, Captain.".


Fixed it for you.

Mon, 08/22/2011 - 15:02 | 1587107 MsCreant
MsCreant's picture


If "she" is the economy, then I will take NARM's version over yours. She just can't take it.

Mon, 08/22/2011 - 18:28 | 1587947 gmrpeabody
gmrpeabody's picture

"Any more, Captain, and she'll blow!"

No disrespect meant, MsCreant.  ;- )

Mon, 08/22/2011 - 14:37 | 1586971 SeverinSlade
SeverinSlade's picture

Friday will be interesting.  I think the bulls are going to be disappointed when Bernanke doesn't announce QE3 like he did QE2.  Could we see a -500 to -1000 day?  Definitely possible.

Mon, 08/22/2011 - 14:43 | 1587005 NOTaREALmerican
NOTaREALmerican's picture

Well,  you can't have the Loan Ranger save the day unless the town-folk are being threatened.    The 1000 point drop is the cue the Loan Ranger needs.


Tonto:   "Kemo Sabe, the music, it starts..." 



Mon, 08/22/2011 - 15:17 | 1587179 Jonas Parker
Jonas Parker's picture

Tonto: "What you mean 'we', paleface?"

Mon, 08/22/2011 - 15:26 | 1587188 narnia
narnia's picture

we're not going to get QE3 (at least, officially).

that said, don't rule out obama preempting bernanke with lord buffet & darth krugman on each side & the imperial court of 12 standing behind them with a "bold" central fiscal plan.

Mon, 08/22/2011 - 14:37 | 1586977 Ancona
Ancona's picture

They are pushing poor Beelzebernanke in to a tight spot here.

Mon, 08/22/2011 - 14:37 | 1586979 Jim in MN
Jim in MN's picture

Oh, fer God's sake. 



Go out of business if you can't take a simple downturn.


Mon, 08/22/2011 - 14:39 | 1586996 V in PA
V in PA's picture

Yeah! And eat your fucking pees too!

Mon, 08/22/2011 - 14:42 | 1587013 SheepDog-One
SheepDog-One's picture

Either we get billions in bonuses, or thats IT we're taking down the whole country with us!!

Top o the world MA! TOP O THE WORLD! 

Mon, 08/22/2011 - 14:58 | 1587090 Dasa Slooofoot
Dasa Slooofoot's picture

[Tom Hanks] There's no crying in usury! [/Tom Hanks]

Mon, 08/22/2011 - 15:10 | 1587147 nantucket
nantucket's picture

from day one the bondholders have been protected from losses and the public was forced to eat them.  there was more than enough total capital at the culprit banks to absorb the losses of marking to market...but it would have wiped out equity holders and haircut bondholders up to 50%.  the federal gub'mint didn't allow it...a crime...and it stuck joe taxpayer right in the arse.  pretty sweet deal.

Mon, 08/22/2011 - 15:21 | 1587192 Jim in MN
Jim in MN's picture

Sweet until the implications of a lost generation of steroidal Japanification become apparant.  As in now, with at least fifteen years to go.


Mon, 08/22/2011 - 16:41 | 1587524 DosZap
DosZap's picture

Jim in MN,

Amen Bro.....................


After the news of the SECRET 1.2 TRILLION dumped on Wall Street.................these SOB's (all of them) need to be tarred and feathered, and ran out of town on a rail.


Mon, 08/22/2011 - 14:37 | 1586981 Brindle702
Brindle702's picture

Can we get a new world currency?  This one sucks now.

Mon, 08/22/2011 - 14:39 | 1586994 baby_BLYTHE
baby_BLYTHE's picture

only if it resembles something like this

Mon, 08/22/2011 - 14:42 | 1587011 Long-John-Silver
Long-John-Silver's picture

The new world currency is Gold. Hugo Chavez just figured that out a few days ago. More will come to understand that as well.

Mon, 08/22/2011 - 15:54 | 1587317 Smiddywesson
Smiddywesson's picture

The new world currency is Gold. Hugo Chavez just figured that out a few days ago. More will come to understand that as well.

It is remarkable that some don't see this when the only long term action being taken by the banks is their gold buying.  The fact that gold buying makes their short term situation worse by tying up capital shows that gold figures prominently in their future plans.  And yet, everyone wants to talk about stocks.  This is truely amazing, right up there with the tulip bubble.

Mon, 08/22/2011 - 17:12 | 1587656 Raymond Reason
Raymond Reason's picture

You're right, man.  When everything else they do is such an obvious "quick fix", buying gold seems out of character.  

Mon, 08/22/2011 - 17:18 | 1587677 YHC-FTSE
YHC-FTSE's picture

Yep, amazing. 401K, bonuses, insurance, M&A and HFT come to mind when "everyone" talks about stocks. They (MSM) talk about it because that is all they know - we've all heard them refer to PMs as "Relics" and "Barbaric". Any other investment vehicle that does not involve the fantasy rigged casino of Wall St. might as well be Martian to them.


There's the other thing too: Reality. The reality of fiat money is that 99% does not exist. I mean it. 99% of all wealth exist merely as numbers stored on machines and does not have any physical presence at all. That folding paper money and coins in your pocket represent just 1% of all money in existence. And that's the rub. If TPTB had to deal with real assets, real human endeavours, and real human ingenuity to get rich, they would never be able to con so many people with magic money they "create" out of thin air by fractional reserve and monetary policies. I dare say money should represent something physical - not merely PMs but even as a calculation of human effort and ingenuity - anything to make it impossible for the banks and governments to defraud people. And gold is a good start to make a medium of exchange and convenience that represents the value of human effort. 


TPTB have had it so easy for so long, siphoning off trillions that cannot ever be paid off even if they had another planet full of Americans working their heads off for the next 100 yrs. So what do you think they will do? Allow you to control your own wealth? Your own life and your own destiny? Fat chance. They will fight gold as a medium of exchange, tooth and nail, ultimately confiscating it from the public with voluntary and then compulsory sale of your gold to the government at a price they dictate, and they will use all the tricks of the trade - your sense of patriotism to "help America recover" - to do it. Its happened before, it has happened recently elsewhere, and it will happen again. Without the fiat USD they cannot con all of the people all the time. It is their lifeblood and if their enmity against any country that has asked for gold in exchange for commodities is an indication, they will kill to keep the status quo. 

Mon, 08/22/2011 - 14:39 | 1586988 slaughterer
slaughterer's picture

What irony: at long last, right before it is about to go out of business, BAC has a clear perspective on the market. 

Mon, 08/22/2011 - 14:40 | 1586998 SheepDog-One
SheepDog-One's picture

Like a fall-down drunk on his deathbed...gets 1 little moment of sudden clarity.

Mon, 08/22/2011 - 14:46 | 1587040 V in PA
V in PA's picture

Amy Winehouse bitchez

Mon, 08/22/2011 - 15:00 | 1587102 Dasa Slooofoot
Dasa Slooofoot's picture

Q: What is the difference between Amy Winehouse and a moped?


A: A moped can reach 30.   ba boom tssh.

Mon, 08/22/2011 - 14:42 | 1587009 Crisismode
Crisismode's picture

What do they say about a dying person's life flashing through his brain just before expiring?

Mon, 08/22/2011 - 15:41 | 1587271 JohnG
JohnG's picture

The last thing that goes through a bug's brain as he hits the windshield is his ass.

Mon, 08/22/2011 - 15:02 | 1587113 Poetic injustice
Poetic injustice's picture

They say, all balance sheets flash before eyes of management, before they are all kicked out.

Mon, 08/22/2011 - 15:57 | 1587326 Smiddywesson
Smiddywesson's picture

When your boss shoves all its worthless MBS paper in your pension fund, your perspective suddenly becomes crystal clear.

They will be lucky if some middle aged employee doesn't go postal in their office space.

Mon, 08/22/2011 - 14:39 | 1586991 Seasmoke
Seasmoke's picture


Mon, 08/22/2011 - 16:01 | 1587340 Spastica Rex
Mon, 08/22/2011 - 17:14 | 1587669 Arrowhead
Arrowhead's picture

in death it may have a bernank movement from it's jackson hole, lookout

Mon, 08/22/2011 - 14:39 | 1586992 SheepDog-One
SheepDog-One's picture

Huh....equity markets seem to just LOVE the news of impending collapse!!

Mon, 08/22/2011 - 14:39 | 1586993 oa92000
oa92000's picture


Doug Kass great article about HFT damaging the market & economy & SEC...

Mon, 08/22/2011 - 16:33 | 1587489 Bay of Pigs
Bay of Pigs's picture

What's his view on gold?


Mon, 08/22/2011 - 14:40 | 1586997 IMA5U
IMA5U's picture

Markets are green.  People are too comfortable.  Because the market expects



Mon, 08/22/2011 - 14:41 | 1587003 SheepDog-One
SheepDog-One's picture

Right, and not getting one. 

Mon, 08/22/2011 - 14:40 | 1586999 Cassandra Syndrome
Cassandra Syndrome's picture

Ha ha! This is akin to the Lusitania warning us about the Titanic!

Mon, 08/22/2011 - 14:41 | 1587001 TheGoodDoctor
TheGoodDoctor's picture

Fuck Bank of America. Flush that turd down the toilet. Self serving fucking assholes. They couldn't even follow their own policies when they wanted me to stop using their fucking credit card. Stop using it or go up to 30%. Well I stopped using it, cut it up, filled out their paper work, and sent it in. The next bill, 30% interest rate.

Bank of America is one TBTF that I can't wait to see fail. Capitalize your fucking bank!

Oh, and good morning people of Zero Hedge!

Mon, 08/22/2011 - 15:26 | 1587210 Rick64
Rick64's picture

 "we think we are moving closer to a repeat of 2008, when major policy errors devastated the economy."

Major policy errors? What about the major fraudulent activity these assnoles were involved in that caused the whole problem to begin with. Jesus Christ the arrogance is unbelievable.

They look at the problem and not the cause. 

Mon, 08/22/2011 - 16:59 | 1587605 WonderDawg
WonderDawg's picture

Dude, I had the exact same thought when I read the article. Major policy errors. Huh? Didn't the policies save the banks asses and allow for billions in bonuses? Yeah, that's what I thought.

Fuck off.

Mon, 08/22/2011 - 21:41 | 1588620 NumNutt
NumNutt's picture

I agree with you, fuck BofA, only problem is that is one big turd. I don't think it will go down easy. which means it will take all of us broke ass tax payers to help push it down and out. Everyone get ready to get some shit on your hands, the feds are going to expect some help from all of us....

Mon, 08/22/2011 - 14:41 | 1587002 JW n FL
JW n FL's picture


Reggie is Not a Star!! He's got a Choppa in da car!


Great Work Product as always Reggie!


Google buys Motorola!! looks like Google reads YOU! Reggie! LOL!!

where are all those haterz? real quiet in here??

come on you Haterzzzz!! tell Reggie You were WRONG!!! Man Up!!

Reggie comes here and shares with everyone! for FREE! and he is RIGHT!! and ya'll want to bad mouth the man! well now come admit you were wrong and give Reggie His Due Respect!


I know Reggie you cant talk to me Bro I am to, too hot.. no worries! Much Luv!!

Mon, 08/22/2011 - 14:42 | 1587008 Doyle Hargraves
Doyle Hargraves's picture

The full blown AIDS infected junkie begging for its last lethal fix, I suppose.

Mon, 08/22/2011 - 15:35 | 1587251 Stax Edwards
Stax Edwards's picture

Naaaaa, J-Dub is always all bombastic & shit.

Mon, 08/22/2011 - 14:42 | 1587012 alien-IQ
alien-IQ's picture

Perhaps somebody should remind BofA that BANKS had more than a little to do with the clusterfuck of 2008?

Mon, 08/22/2011 - 15:29 | 1587229 Rick64
Rick64's picture

+1000  The arrogance of these banks is unbelievable.

Mon, 08/22/2011 - 14:43 | 1587016 lolmao500
lolmao500's picture

What happens if BAC goes down? Last time, when Lehman blew up, it nearly destroyed the entire world economy... they were a few billion away from total collapse.

USA was 3 hrs away from Economic, Political Collapse in September 2008

According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks.

Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

Mon, 08/22/2011 - 14:52 | 1587034 Doyle Hargraves
Doyle Hargraves's picture

Good f*cking riddance to it!

"F*ck the system, YOU can bring it down!"


Mon, 08/22/2011 - 15:02 | 1587112 trav7777
trav7777's picture

I can't agree with that...certainly monetary collapse was at hand.  But that doesn't mean the lights have to go out.

Mon, 08/22/2011 - 15:15 | 1587170 nantucket
nantucket's picture

i just don't buy the armagedden scenario that the politicians warned about, they have been totally wrong far too often.  and they relied on hank paulson for the forecast.  that's a deal breaker right htere.  and...the collapse could have been brief, deep, and well into a health recovery by now compared to the slow bleed playing out right now

Mon, 08/22/2011 - 16:58 | 1587602 Things that go bump
Things that go bump's picture

Personally, I was far better prepared then too.  This slow bleed is killing me.  

Mon, 08/22/2011 - 17:57 | 1587821 johnnynaps
johnnynaps's picture

Yeah, me too. I drank half of my savings away. Guess it's time to reload the bar......since gold is way out of my price range!

Mon, 08/22/2011 - 15:29 | 1587234 Kayman
Kayman's picture


In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks

Why worry ? The Fed can keystroke that $ amount in a millisecond.

Even though your children will be paying for it over a lifetime.


Mon, 08/22/2011 - 16:02 | 1587344 Smiddywesson
Smiddywesson's picture

Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

And it would have saved our country, punished the gamblers who ruined us, and prevented generations of Americans from living a life of abject poverty because they were rewarded for their folly.

Mon, 08/22/2011 - 17:29 | 1587723 rwe2late
rwe2late's picture

Rep. Kanjorski: "It would have been the end of our economic system and our political system as we know it."

Yes, it could well have meant the end for:

 a debt-fueled military godzilla, an insatiable financial vampire, and lobbyist-drugged zombie politicians.


Mon, 08/22/2011 - 17:50 | 1587793 snakeboat
snakeboat's picture

Somebody sick a nasty ass honeybadger on that Kanjorski guy.  Hate that guy.

Mon, 08/22/2011 - 14:43 | 1587020 oogs66
oogs66's picture

Didn't Bac just reiterate their bullish year end target a couple of weeks ago???

Mon, 08/22/2011 - 14:45 | 1587032 SheepDog-One
SheepDog-One's picture

Yep, I dont feel sorry for any of these bullshitters not even 1 bit.

Mon, 08/22/2011 - 15:26 | 1587214 New_Meat
New_Meat's picture

Bear Sterns had that infamous conference call before lights-out. -Ned

Mon, 08/22/2011 - 15:32 | 1587242 Rick64
Rick64's picture

Now all we need is Jim Cramer to tell everybody that there is no chance of BOA failing then its a done deal.

Mon, 08/22/2011 - 17:03 | 1587624 RockyRacoon
RockyRacoon's picture

You beat me to the punch line, Rick.    Good one!

Mon, 08/22/2011 - 18:30 | 1587955 Rick64
Rick64's picture

Good to see you around.

Mon, 08/22/2011 - 14:44 | 1587024 SheepDog-One
SheepDog-One's picture

Clusterflock of black swans circling....shit hawks right behind them waiting their turn on the carcass of america.

Mon, 08/22/2011 - 18:09 | 1587870 New_Meat
New_Meat's picture

That's what I've always liked about Black Swans.  They are so scarce, they are really valuable.  Why, I remember that Keene guy on Boomberg in the fall of '08, saying "Folks, that's a nine-standard-deviation move!"

Too bad that Taleb couldn't have gotten a royalty on "Black Swan".  I think that Krugman did manage to get royalties on "Green Shoots."  Wonderin' how that is working out.

- Ned

Mon, 08/22/2011 - 14:44 | 1587028 DefiantSurf
DefiantSurf's picture

Hmmm, I have a BAC credit card with a $30k limit...maybe I need to go shopping this afternoon



Mon, 08/22/2011 - 14:58 | 1587092 Strom
Strom's picture

Head over to your local PM dealer and load up on gold and silver...

and stop off and pick up some lead on the way home.

Mon, 08/22/2011 - 16:36 | 1587511 Piranhanoia
Piranhanoia's picture

reverse.  don't leave the metal in the car.

Mon, 08/22/2011 - 14:45 | 1587031 ??
??'s picture

Roubini is out calling for $500b

he's one of them, isn't he

Mon, 08/22/2011 - 14:46 | 1587039 SheepDog-One
SheepDog-One's picture

$500 billion from where? For what? Keeping the bankrupt bankers bonus billions flowing? We're WELL past full retard.

Mon, 08/22/2011 - 14:50 | 1587052 ??
??'s picture

actually  I think he's trying for a job in the sadminstration cause he goes on to say the money should be spent on solar panels and schools

Mon, 08/22/2011 - 15:06 | 1587131 IQ 145
IQ 145's picture

OMG, another fucking Phd. who's totally out of contact with reality. He needs to be de-programmed.

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