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The One Chart US Banks Don't Want You To See
Three years ago, the government in all its glory and sound central-planning decided to provide a fully-FDIC-backed facility to allow banks to raise capital at ultra-cheap cost of funds in the middle of the crisis. The Term-Loan-Guarantee-Program (TLGP) has not been far from our thoughts but the next month or so is going to be increasingly anxiety-inducing for the banks that took advantage of that bailout. By the end of June 2012 (i.e. the next six weeks) there is almost $60 billion of TLGP debt that matures for US banks (and will need to be refinanced we assume). This $60 billion has an average cost of funds of 0.3% (that is yield NOT spread) which when compared to the 3.5% - 4% cost of funds for mid-dated US financial debt currently (average CDS around 230bps) means a more than 10x increase in funding costs for this segment of their debt. Of course there are yield-hungry ETF-buyers to be satisfied (note LQD can soak this up and few retail investors realize just how exposed LQD - the investment-grade ETF - is to US financials) and so we expect them to get this off but it can only pressure spreads wider as supply dominates demand in this risk-averse market environment.
Data: Bloomberg
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Ruh Roh........
Why ruh roh? Tarp got rolled into another program... which will get rolled into another program... which will get rolled into another program... It's not like tarp ever got paid. None of this shit gets paid. Well, it does... in smaller increments than expected and after killing any possibility of organic capital formation in the economy (suspending accounting rules, the rule of law, artificially low interest rates, etc.).
What's a few accounting entries among friends?
"It's not like tarp ever got paid. None of this shit gets paid."
http://www.treasury.gov/press-center/press-releases/Pages/tg1096.aspx
Perhaps you were thinking of this?
http://online.wsj.com/article/SB10001424052702303978104577364262736412398.html
Yes, but when banks are given a separate loan program (that repays the tarp money... think GM), then it's counted as "tarp repayment."
Rules make a scam into a system.
nothing QE3 won't fix. We just got a date when it will be announced.
QE 3 announcement in June 2012 is a 75% probability.
Boy! It is a good thing that Seseme Street teaches children the alphabet an an early age so that even the toddlers can understand the grand world of American finance.
AAA, AA, A, BBB, BB, B ..
...bu bu black hole. http://www.youtube.com/watch?v=QACRzweBLMQ&feature=related
There is not such thing as 'carefully' unwinding a ponzi scheme. It's always messy and this time will be no different.
Extend & pretend, or crash & burn. Choose your poison.
You are correct sir. FYI, you have no choice when come to how it will go, you can only prepare and hedge accordingly, period.
So you're really saying 'crash and burn'...after all extending and pretending just makes it even crashier and burnier.
+1 for "crashier and burnier."
See: Full Tilt Poker
No need to choose; you will get both. E&P until it doesn't work anymore, then C&B. Be ready!
http://www.youtube.com/watch?v=ThppEppMw5w
They thought the had 'toxic assets' in 2008? That was just chicken scratch compared to this time.
Yeah, but they had all of this time to play w/ it for free.......
Ni hao ma? Funny how banks complain about having difficulty making money when their "COGS" is near zero.
Just wait until the LGBT funding has to be rolled over...
I am sure the Lesbians, Gays, BIs and Transsexuals on Wall Street will enjoy being rolled over
... and over and over and over.
you are making it sound like fun...Facebook type funnn!
Priceless!!
Just one more reason to stay away from all banks. YOu cannot get a real picture of their worth. Many are insolvent and on life support, even today. Why anyone would buy a bank tock is beyond any rational reasoning.
Bank (tick) tock? Fruedian slip?
they say the euro banks are hocked clean as they have no equity which is not the case of US banks; but if you include the shadow banking liabilities of US banks does this not make Euro banks look better? There seems to be so much OTC fist pumping in the US that one does not get to understand how the shadow banking numbers of US/UK/EUro zone stack up. Any ideas?
They have ALL been technically insolvent for years now. The only question is how long will the rules keep being changed to allow them to operate
or just finally be "arranged" to kill the fuking zombies and wipe them out?
even as a memory they will be bad enuf, still
then howzabout: retrieve the purloined public purses from the putrid perps?
i know i can't answer this but it sure is a good question. i would argue "Europe will buy American" and roll this thing over "lest the USA does a reverse financial Normandy" and implodes the whole euro experiment by leaving...this latter of which might happen anyways. The fact of the matter is both Wall Street and the euro-currency folks are both lashed to that mast whether they like it or not. Bad idea to begin with..."all economies are local" in my view..there will probably not be some spectacular blow up of the euro-zone--the financial tectonic plates have clearly been fissured however and "here comes the Continental drift" as the euro zone simply "goes its natural way" which is NOT together "en toto" but something more "apart but together."
they "bought" some time
now, when the notes are "due" they will buy some more time by selling some more debt
what's not to like?
Nothing a few more bonuses can't fix.
Of course they took advantage of the bailout[s].
Count the woman in the video below in to the millions of muppets who were also taken advantage of.
She worked with the JPMorgan in an effort to do something that would have been beneficial to the investors and herself.
But no, despite making her payments she got t-boned and foreclosed. The charts are great and all...but there are real people involved...not just numbers.
California Homeowner and Vietnam Widow Testifies before Legislative Committee on Foreclosure
This was just uploaded on Friday and I'm surprised it didn't get knocked down. None of the banks want anybody to see this.
God bless you for posting this....I've retweeted to the heavens on twitter.
I mean, there has to be a special place in hell for these motherfuckers, right?
Thanks for spreading it around.
Smoke & mirrors.
this is from booyah, yesterday
Matt Taibbi's smack down. Accidentally Released - and Incredibly Embarrassing - Documents Show How Goldman et al Engaged in 'Naked Short Selling' POSTED: May 15, 5:39 PM ET It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public. The rest: http://www.rollingstone.com/politics/blogs/taibblog/accidentally-released-and-incredibly-embarrassing-documents-show-how-goldman-et-al-engaged-in-naked-short-selling-20120515#ixzz1uzy2WwCm
[Paste fromTaibbi&RS}
The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.
Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed. {endPaste, my emph]
this is last week's news, but pretty squiddy reading! and funny...
Hope the malpractice insurance is paid up... geez. (of course, as between the lawyers and the bankers, the bankers are more hated by a few car lengths... which, would likely result in a goose egg).
A fight between lawyers and bankers. I say, "Let 'em go at it".
It's ultimately the only thing that will change the system... but, the banksters checks keep clearing...
"...when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public. "
If indeed it was inadvertent, by now it should be obvious that GS et al do what they want to for reasons that we will never know except that it ends up with more power in their hands and more money out of our pockets. As to the chart and health of the banking system, we have not had a banking system in at least four years now, what we have is a small group of oligarchs at the head of a global theft ring and your continued freedoms such as they are rest upon your willingness to quietly accept the marriage between government and corporate power of, by, and for the one percent.
Sad to say that resistance is really futile, there is no number of actual people they cannot eliminate should those people get too noisy or unruly.
One only needs to realize GS is an arm of the CIA and is acheiving objectives in regards to financial matters. There are global implications to dealing in the US and foreign $ that they would deem national securiy.
I wonder if SlimVirgin will "edit" these factual discoveries into the wikipedia page on overstock.com
Didn't they just find another planet like earth...?
Gee, The nice bank teller lady at my Chase branch didn't mention this. She offered me a cookie.
I hope you didn't eat it.
Banks just love blowing up in July (and in the 6 weeks prior to full elections)... You could set your sundial by it...
Oh my those poor banks! Why I must gird my loins, get a second job, pay more taxes and help them out! It's our patriotic duty! Eh, forget it I think I'll just buy more gold.
Miffed:-)
10x increase in funding cost?
Does that mean it requires at least almost $600 billion for the next QE3?
Not as I understand it. That is the increased funding cost of the loan. The loan is still $60 billion.
Of course, what's an extra zero between friends?
Bennie & The Timms to the Rescue - QE 3 will set sail but let's not forget to throw in another $775-800 billion for additional mortgage purchases from the GSEs (FHLMC, FNMA, & FHA)....but what about the Student Loan issue - I mean what about Sallie Mae? she is gonna need some cash too - I say go for the kewl $1 Trillion because America is all about convenience for the DNC/RNC & the empathy we all feel for the hard working' campaigners who do not give a damn about America nor its future.....America by Goldman Sachs
Don't wnow why credit card interest is never discussed here:
0.3% for the banks,
0.3% x 100 for credit cards.
I'm thinking there is quite a bit of profit margin in there somewhere.
Just sayin.
I pay 0% on my credit card.
I almost never use it.
And when I did, I paid it off in full at month's end.
And a $39 late fee for missing a $25 payment by a day.
Soon the yield on the 10Y will be 0.3%
AFAIC, the banks and capital markets can go piss up a rope. After them, the taxing authorities can foreclose on the remaining inventory of homes, until the weight becomes too great and property tax moratoria are announced.
As I have enjoyed saying over the past three years or so,
Free houses for everybody!
More crap to add to the odorous pile.
And the markets are climbing because the economy is on the road to recovery.
PS: How's those FB shares doing?
A Chart Tyler shouldn't want me to see either.
Pretty sure what he is saying is that those connected banks that can, borrow money under another name and pay off TARP, while their actual exposure does not decline. The money does not get paid, just shifted from one pocket to another.
And then the Bozo's claim victory for the scam.
So the chart is aggregate TGLP maturing debt, with about $15bn due in May, $45bn in June etc?
Is this actual capital for regulatory purposes (ie counted in BIS ratio etc)?
Tyler,
Not to be a nit-picker but your headline is misleading on this article. This is one of MANY charts the banks don't want us to see. I understand you want to grab people with your catchy headlines but you got us anyway.
Keep up the good work because this is usually the only sane place on the internet.
Dan
Notice how the chart goes parabloic in Dec. 100 years after the FED was created. Its going to be a cold winter.