Guest Post: Hard Evidence: Bailed-Out Banks Take More Risk

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Wed, 11/09/2011 - 11:35 | 1860872 PAPA ROACH
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That's it, I am starting a fucking bank!!

Wed, 11/09/2011 - 11:48 | 1860925 PAPA ROACH
PAPA ROACH's picture

Welcome to my new bank, come by and see me!


Wed, 11/09/2011 - 13:07 | 1861290 trav7777
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somebody actually expected contrition or shame from these motherfuckers?  WTF?  how the fuck did they ACT during the event itself???  Snotty, petulant, self-absorbed.

Until and unless these fucks start GOING TO JAIL, don't expect shit out of them.  They will take the money as their entitlement and lever it the fuck even more.

Wed, 11/09/2011 - 11:50 | 1860937 jdelano
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NO GO FOR L-PAP?!  WOW.  Central Banking Cartel losing control?!!!

Wed, 11/09/2011 - 11:35 | 1860875 cat-foodcafe
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They are all buying each other's garbage to keep the prices from collapsing.  All balance sheets are a joke at this point.  This is CDS-2 in action.  If you can't use your original CDS insurance, then just get some cash from Ben and buy the trash.

Wed, 11/09/2011 - 12:47 | 1861211 swissbene
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reminds me of modest mouse song 'bankrupt on selling':

so all of the businessers in their unlimited hell

where they sell and they buy and they buy and they sell

all their trash to each other but they're sick of it all

and they're bankrupt on selling

Wed, 11/09/2011 - 11:35 | 1860876 So Close
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When reality takes hold this will be true.

Wed, 11/09/2011 - 11:54 | 1860948 HelluvaEngineer
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Not today.  G-pap is about to resign again on TV.  Put on your BTFD rally hat.

Wed, 11/09/2011 - 11:35 | 1860877 disabledvet
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Watch you talkin 'bout Willis?

Wed, 11/09/2011 - 14:50 | 1862021 TheMerryPrankster
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Different strokes 4 different folks...

I now know why Goldman became a bank in the blink of an eye.

Wed, 11/09/2011 - 11:40 | 1860898 Clorox Cowboy
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The only solution has always been to break up big banks into many small banks, then put a cap (so un-American I realize) on how big, in % of total deposits, any institution can become.  Don't tell Romney, though...he'd have you brought up on murder charges for killing a person!

Wed, 11/09/2011 - 14:51 | 1862027 TheMerryPrankster
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You could limit banking by region or by state as it was when we had a stable economy.

Wed, 11/09/2011 - 11:41 | 1860899 DogSlime
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So perhaps the limits on executive compensations, dividends, etc. in a perverse way increased our chances of having to bail the banks out all over again.


Only if we're stupid enough to let the banks think that we will bail them out again.

Our leaders need to have the balls to stand up and say that the 2008 bailouts would be the last time that would ever happen...

...but our leaders are spineless and corrupt, so the elite know - KNOW!! that there's no end to the amount of hardship the little guy can be made to suffer at the altar of TBTF.

God help us all :(

Wed, 11/09/2011 - 11:41 | 1860904 IrritableBowels
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Glad I stayed in TVIX overnight. 

School's out due to inclimate weather....BEAR DAY

Wed, 11/09/2011 - 11:43 | 1860908 YesWeKahn
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Should let them fail the first place. A verbal education never works for a speeding driver, you have to fine them.

Wed, 11/09/2011 - 11:45 | 1860910 Crash N. Burn
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"Overall, the analysis of banks’ investment portfolios suggests that CPP participants actively increased their risk exposure after being approved for federal capital."

Well duh! If you walked into a casino and were presented 2 games. Game 1 is 2 to1 odds, game 2 is 20 to 1. If its your money you'd pick game 1 (better chance of winning). Banksters always pick game 2 because you pay for the losses. Posted this video in the blackrock thread explaining how limited liability and tax incentives created these volitiliy seeking 40 to 1 leveraged too big to fail parasites.

Wed, 11/09/2011 - 11:52 | 1860911 DormRoom
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The Moral Hazard Chain:  Savings & Loan Crisis > LongTerm Capital Management crisis > Asian Crisis > Real Estate Crisis > Sovereign Debt crisis.


You follow the node in the financial network.. Each crisis was absorbed by bigger nodes, until it reached Central Banks,  the IMF implodes, and the  institutions of the Bretton Wood system (IMF, World Bank, WTO flexible, exchange rates) are gone.


Once these pan-national institution fail, Western hegemony is over.


Wed, 11/09/2011 - 14:53 | 1862042 TheMerryPrankster
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all 3rd world citizens know power resides in the banks and in the armies. If the big bank fails (iMF etc) the armies remain.

Wed, 11/09/2011 - 11:46 | 1860913 YesWeKahn
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This time, I will be on the street and protest any tax payer robery.

Wed, 11/09/2011 - 11:46 | 1860917 topcallingtroll
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They took on more risk because leverage ratios were being watched and to try to repay sooner to get out from onerous scrutiny.

This is another good example of why regulations are ineffective.

Market discipline (allowing failure to fail) is the best approach to making sure banks are morw careful.

Wed, 11/09/2011 - 11:46 | 1860918 El Gordo
El Gordo's picture

So long as the TBTF's can continue to swap dead horses for dead cows, no sweat.  A rolling loan gathers no loss.

Wed, 11/09/2011 - 11:48 | 1860923 slaughterer
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Look, it's a bird, it's a plane, it's the EU rumour-du-jour!  Coming to an exchange near you!

Wed, 11/09/2011 - 11:48 | 1860926 Kickaha
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What are traders to do when there remains no wealth to be exchanged?

Obviously, you trade risk, instead.  There is plenty of that available these days.  You can just as readily skim some profits from those trades as you did when there was wealth to trade.

"Liquidity" aids this process.  Since fiat liquidity is worthless, being completely unbacked by any real wealth and given to you by the government via ZIRP, exchanging it for risk is a fair trade for both sides.

Picture a bunch of prop desk guys standing in an empty olympic size swimming pool, holding a cup of risk.  As they fill their cup by dealing in new securities designed to transfer risk, they get nervous and dump the risk into the pool.  The cup is then empty, and they breathe a sigh of relief.  Everybody else is doing the same.  This process repeats itself over and over agan, and after a while, they all look around and find that they are all up to their necks in risk.  That is where we are today.

But if somebody else can be found to bail out the pool and take some of that risk, its back to business as usual, since their is no wealth to trade, only risk.

Wed, 11/09/2011 - 11:50 | 1860932 SheepDog-One
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A Shiticane is swirling right off coast...big, greasy, dirty Cat 5 Shiticane.

Wed, 11/09/2011 - 11:54 | 1860952 UGrev
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Does it come with corn?

Wed, 11/09/2011 - 12:00 | 1860964 SheepDog-One
Wed, 11/09/2011 - 14:56 | 1862067 TheMerryPrankster
Wed, 11/09/2011 - 11:49 | 1860934 monopoly
monopoly's picture

Any one that buys a bank for more than a 2 hour trade is in a delusional state of mind. That makes 0 sense. No, I do not short them but never, ever trade them. Broken, lying, insolvent squids, all of them. And when I think of Mozillo I always get sick.

And look at our miners. DOW down 260 and most are green, we will not see Robot today. Maybe we break 1,800 later???

Wed, 11/09/2011 - 12:01 | 1860987 Josh Randall
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RobotBucketShopTrader will be in later with his analysis after the Trading day is over, so he can find out whom the winners were and then pretend they were his...stay tuned...

Wed, 11/09/2011 - 11:50 | 1860935 Seasmoke
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of course they do.......and why wouldnt they ?

Wed, 11/09/2011 - 11:55 | 1860956 xavi1951
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Bring back Glass-Steagall of 1932.  End the games.

Wed, 11/09/2011 - 12:01 | 1860985 SheepDog-One
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Problem with that is theyre WAY past the point of no return...change 1 law and all is fixed? the system MUST collapse....they designed it that way.

Wed, 11/09/2011 - 12:12 | 1861048 xavi1951
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I know what you are saying.  However, "designed" to collapse?  What I was implying was (after the crash) reinstate GS and lets see if it works now, like it did up until the repeal in 1999.  It would kill the squids.

Wed, 11/09/2011 - 11:56 | 1860960 SheepDog-One
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Something is going to snap here big time, like an overstressed crane cable....POP!...then its On like Donkey Kong. 

Food riots, gas station murder and mayhem, bank wars in the parking lots as people are shut out behind 2 inch thick bulletproof glass (Ive been doing installations myself localy) soon, REAL soon.

Wed, 11/09/2011 - 13:09 | 1861295 swissbene
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yeah it does not feel right.  full moon tomorrow.


on the bp glass: are you saying first hand knowledge of recent bank installations.  not clear if your own installations are separate.  if you do not mind clarifying it seems like a useful signal.

Wed, 11/09/2011 - 14:44 | 1861953 fajensen
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Some of "our boys" coming back from Kosovo should be able to stir up some RPG's at a reasonable price ... 

Wed, 11/09/2011 - 11:57 | 1860962 Calculated_Risk
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It's all fun and games when it's not YOUR money!

Wed, 11/09/2011 - 12:06 | 1861009 SheepDog-One
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I like the story on MF Global paying out their bonuses a couple hours before bankruptcy...burn the fucker to the ground...the whole damn thing!

Wed, 11/09/2011 - 12:05 | 1861002 tony bonn
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so science is catching up with common sense....nice work if you can get it...i suppose that these astute researchers will study the effects of prunes upon defecation and announce that there is a positive correlation....

Wed, 11/09/2011 - 15:00 | 1862106 TheMerryPrankster
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So you're sayin they know their shit?

Wed, 11/09/2011 - 12:07 | 1861023 bankonzhongguo
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I don't see a down side to being a bank or increasing risk.  In fact the only survival strategy is to become bigger and more irresponsible in order to get those bailouts and political protection.

Has any of these TBTF banks been hurt in all these years?  No. They prosper on the misery they cause.  They do it because they find joy in apprehending the World.

What happened to the whole 'Greek bond haircut' concept.  Gone.  Overnight, with the G-pap smoke and mirrors show.

You would be out on the street if you made bad decisions on risk.  Until one of these banks gets nationalized, its rank and file employees put in bread lines, the executives and directors publicly linked and identified and cut down like pigs in the street, the sovereign bonds surrendered back to the issuing countries and all the "debt" cancelled - nothing will change.

The odds of all that happening?  Less than zero.

Its going to be an interesting 2012.

Wed, 11/09/2011 - 12:10 | 1861037 SheepDog-One
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If you make it to 2012. Remember this what youre seeing is the planting of demolition charges, theyre almost done....Id suggest moving away from the blast zone because the count down has already started.

Wed, 11/09/2011 - 12:08 | 1861025 vegas
vegas's picture

Privatize gains, socialize risk. WTF is so hard to understand?

Wed, 11/09/2011 - 12:12 | 1861047 slewie the pi-rat
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"moral" banksters?  [insert guffaw here]

Let Them Fail, then Put Them In Jail   [BiCheZ]

if they turned everything to shit, do not acquit!

Wed, 11/09/2011 - 13:13 | 1861310 Shizzmoney
Shizzmoney's picture

Yet Representatives in Congress tell us to "DONT BLAME THE BANKS"

No wonder this country is one of the worst in the world in math skills.

Wed, 11/09/2011 - 14:36 | 1861887 bahaar
bahaar's picture

Just as a monkey gives birth to a monkey and an oak tree gives birth to an oak tree...austerity gives birth to austerity and bail-out gives birth to bail-out...Duh.

Wed, 11/09/2011 - 14:55 | 1862060 Grand Supercycle
Grand Supercycle's picture

DOW chart reveals very overextended price action and another Wile E Coyote scenario...

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