A zombie government armed with accounting tricks has bailed out a zombie banking industry using even more financial phoniness. A few numbers pushed here and there, and the industry is earning record profits. But out in the real world where people live and work, things aren't so rosy. Zombies make negligent landlords and dangerous neighbors.
In the real economy on Main Street, the circumstances are different. If you want to buy a house in the US and you need a conventional mortgage, and if you are not a speculator and want to live in dwelling, your costs have now risen substantially.
Peer-to-Peer Lending and Crowd-Funding Have the Power to Change Finance
Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).
Dimon: "So, we were asked to buy Bear Stearns. Some said the Fed did us a favor...No, no, we did them a favor. Let's get this one exactly right. We were asked to do it."
ZH Regular William Banzai Had a Hand in Making the Film ... and ZH Regular Chris Whalen Gave An Amazing Interview
The Issue Is Not Really Regulation ... It is a Malignant, Symbiotic Relationship Between Government and Wall Street
What's $2 Billion for Ben Bernanke's Chosen Son?
Remember the look on one's face when one hears there is no Santa Claus, or tooth fairy? That, more or less, is what the visage on everyone's favorite CNBC anchors Becky Quick, Joe Kernen and Andrew Ross Sorkin was, when Chris Whalen matter of fact (because it is a fact) let a rare glimpse of reality on the NBC Universal distraction and entertainment show, when he said "There is no Chinese Wall. Please. Come on. This is Wall Street." Awkward silence follows. And why not: if the banks officially call frontrunning an "Asymmetric Information Initiative" to mask the simple illegality from the idiot regulators, why not call a spade a spade, and expose one more aspect of the lies and crime that is shoved down investors' throats every single day.
“As the U.S. economy and especially Wall Street and the banks were less and less focused on funding and financing real economic activity jobs, factories, commerce, the rise of the ersatz virtual world of credit faults swaps and over-the-counter derivatives, all of these gray markets—that are unregulated, that are not traded on exchanges, that have no transparency—were really a way for banks to generate income because they could no longer make their money on the real economy,”
Is The Entire Global Banking Industry Carrying Naked, RISKY, Unhedged "Risk Free" Sovereign Debt? Quick Answer: Probably!Submitted by Reggie Middleton on 11/03/2011 12:59 -0400
Here I discuss the chances of Goldman Sachs succumbing to an MF Global/Lehman/Bear Stearns style bank run. Impossible, you say? Don't bet the farm on that one, son!
Federal Reserve and Bank of America Initiate a Coup to Dump Billions of Dollars of Losses on the American TaxpayerSubmitted by George Washington on 10/18/2011 20:06 -0400
Just another coup, which will scalp us of many billions of dollars ...
I personally believe that there is no "free" alpha. That said, there is a way to earn returns that may look like alpha, especially if you are an astute student of human nature. You can make a bet when other people are behaving irrationally, as when you buy when there is blood in the street.
Another Blow For America's Banks (And Bank Of America) After California Kills Robosigning SettlementSubmitted by Tyler Durden on 10/01/2011 08:22 -0400
Anyone exiting the third quarter with a Bank of America (or Wells, or JPMorgan, or Citi) short on their books will be delighted to learn that the "other" mortgage fraud scandal, not the putback litigation which is sure to cost Bank of America billions in incremental legal fees now that that particular settlement appears to be challenged and banks even across the Atlantic are joining in the legal free for all, but the "Linda Green" robosigning affair, which various conflicted attorneys general had held a tenuous grasp over with a settlement in process, has just blown out wide into the open once again, after California joined New York AG Schneiderman in pulling out of the talks, and leaving Iowa Atty. Gen. Tom Miller with a completely lost cause. We expect all other states to promptly follow New York and California's examples. The net impact is quite adverse for all mortgage lenders, as this development will merely snarl the traditional foreclosure process for even longer, and while beneficial to borrowers, it will put even less cash into the depleted coffers of the banks that so desperately need it. Since few if any will actively pursue distressed, or any, housing sales, it will not only hinder further balance sheet repair of the banking sector, but will keep a lid on any potential housing market improvement, which as BCG indicated a few days ago, is the most critical missing link to any economic recovery. Without it the hands of the Fed chairman are tied even more, and leave him (and the middle class) with just one, nuclear as it may be, option.
Ten days ago Zero Hedge presented the idea of applying an Asbestos-type settlement to the neverending lawsuits against Bank of America which if continue at the current rate will result in the swift and brutal end of the massively undercapitalized bank by a thousand Rep and Warranty litigation cuts. Yesterday, we were happy to see that the idea has received far broader billing, and is being taken up by non other than Reuters: "When some look at all of the litigation arising from Bank of America's big role in the U.S. mortgage mess, they start thinking of asbestos and how thousands of lawsuits arising from that cancer-causing product brought down many manufacturers more than a decade ago. The solution back then to dealing with claims filed by more than 750,000 workers exposed to asbestos was the creation of dozens of "asbestos settlement trusts," which have paid out tens of billions dollars in damages. Some of them are still going strong today. The asbestos trusts were seen as an innovative approach to deal with seemingly endless litigation and provide a measure of compensation to sick workers and their families. The system for dealing with claims also allowed some of the hobbled manufacturers to emerge from bankruptcy largely free of the crushing weight of lawsuits." In other words, the choices for Bank of America are now two: either it prepares for a slow, painful, insolvency as all of its cash is bled out in litigation fees and "one-time" lawsuit charges, or, almost just as bad, it funds a massive trust, ringfencing all past, current, and future claims, and which is funded...by nearly all of Bank of America's equity. Yes, the end result will be a near wipe out of the existing Bank of America stock, but it will not be bankruptcy! In essence, what BAC will do is a bankruptcy remote "prepackaged bankruptcy" in which it spins off its contingent liabilities, with an equity buffer of whatever the litigants choose (most likely up to about 95% of the firm's current equity value), and proceeds to grow as a simple bank (with or without Merrill) and fund itself through retained earnings, in the process shedding off the "cancer" that are $1.2 trillion in toxic mortgages. The result of this would be a BAC share price of under $1 but that is inevitable. The alternative: freefall chapter 11 and technically 7 (which will never be allowed by the administration, sorry Chris Whalen), means BAC trades to $0.00, and the status quo system of crony communism is finished.