The Inmates Are Now Running The Prison...
re: ["Slider..I have been reading about fear of emerging
nations defaulting on their national debt loaned by mainly
european banks.One nation (I forget which one)in particular
was unable to pay the interest on its debt last month and was
given till Dec I think to catch up.Are you aware of this
situation and if so what do you think the end results will be
if some of these nations were to default..Extremely bad for
european and australian banking giants having loaned a very
large % of their assets to these emerging nations but what
about the euro and dollar.Do you see this default crushing the
euro therefore further strength for the dollar or what.I have
read where some european banks have like 60% of their assets
loaned to emerging national debt where they count on oil
revenue to repay the debt and 80% for some australian
banks..Thanks in advance."]
Pitbull,
John Paulson who made the single greatest trade in the history
of financial markets by shorting subprime CDO's & the ABX,
was the first one who talked about the European Banks posing
even greater systemic risk than U.S. Banks.
Paulson who has closed out his US subprime shorts, is now
actually buying select US subprime paper, but is still
massively short Euro banks for the following reasons...
-- they do not have the backstop mechanisms that US Banks
have with the US Fed & Treasury.
-- they are significantly more leveraged than US Banks.
-- they pose greater systemic risks to their homeland
economies and markets due to the size of their positions
vs. the size of their representative economies.
-- they hold far greater exposure to emerging markets.
"Short" Deutsche Bank/DB has been on of my favorite trades
for months. I've mentioned it a few times...
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From: SliderOnTheBlack 9/29/2008 12:42:47 PM
Post#12078
"European banks are now collapsing (Fortis, B&B), and banks
like DEUTSCHE BANK which was levered 50:1, represent grave
systemic risk to their home economies and markets."
From: SliderOnTheBlack 10/6/2008 7:16:37 AM
Post #12275
While US banks are raising capital, they have fallen short by over $130 billion
dollars to what they have written off. That $130 billion levered 12 x via
fractional reserve banking = $1.5 Trillion in credit that will no longer exist.
Figure a $2 Trillion reduction in credit, in a credit driven economy.
It is now apparent that JPM, Citi, Goldman, and Morgan Stanley are all
bankrupt. The Fed is trying to kidnap and shotgun marry deposit based
banks (in the dark of night) to shore them up. This "end run" of the Fed
by Wells Fargo over Wachovia tells just how desperate the Fed is, in
trying to save the Wall Street icons.
Only 35% of Citi's funding comes from it's deposit base... unless it can
roll up a large deposit base BANK -- it's toast.
And it's not just in the US.
DEUTSCHE BANK is leveraged more than the US investment banks @ 50:1.
It's failure will crater the German economy and markets...
Falling consumption (consumer spending) does not occur in most recessions,
this will be uglier and longer than prior recessions.
We are witnessing the collapse of the largest bubble in market history.
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And here's how that "short" has performed vs. the US XLF and the DOW:
It's outperformed a short on the US XLF financial index by
over 25%, and has out performed a short S&P trade by 2X.
Shorting US Banks has been too dangerous due to the manic
volatility, the over-night bailouts & forced marriages
in the dark of night, and the prop jobs by the PPT.
Here's where we're at in the US banking sector...
We have a MASSIVE concentration of risk.
Meredith Whitney talked about this on CNBC this afternoon.
In the mortgage market, 5 banks hold 2/3rds of all US mortgages.
And in the credit card market, 5 banks also hold 2/3rds of
all credit card issuance.
And that's why it only took Hank Paulson 20 minutes and
a single piece of paper to "force" 9 banks to "take the TARP
money."
Because those 9 banks control virtually the entire US credit system.
Paulson cut through all the off balance sheet bullshit
and told them what they all knew individually about their
own businesses, but no one has ever acknowledged to the
American public....
That those 9 Banks are ALL insolvent, and that given
the continuing economic collapse in America, and given the
concentration of risk in those 9 banks, that they pose
systemic risk to the entire US financial system.
Remember, the IMF has been doing a complete audit of the
US financial system. And as a condition of being allowed
to do that audit, President George W. Bush stipulated that
the results of that audit could not be made public, until
after he left office (can you say -- hello Paraguay?).
Remember this post?
----------------------------------------------------------------------------
Message 25017279
To: paul ross who wrote (12175) 10/2/2008 5:18:52 AM
From: SliderOnTheBlack 27 Recommendations Read Replies (6) of 13723
"This is not a bailout - it's a COVER UP - period."
This is -- "Grand Theft America."
The Bankster Gangsters levered up 30 to 50:1 and for nearly
a decade, sucked unfathomable wealth out of the financial system,
and have now left a hollowed out, bankrupt, house of cards for the
American people.
Does anyone else find it interesting that all of this is occuring after the
IMF at the behest of China, India, Brazil and other member banks, demanded
the US Financial System go under a "FSAP" (Financial Sector Assessment Program)
which is basically a forensic x-ray level audit of the entire US financial system?
Why do you think Bush bought a ranch the size of Texas in Paraguay, and
Cheney an exile retreat in Dubai?
...and why do you think Paulson wants IMMUNITY from prosecution?
For seven years, Bush refused to allow the IMF to conduct its assessment. Even
now, he has only given the IMF board his consent under one important condition.
The review can begin in Bush's last year in office, but it may not be completed
until he has left the White House.
The report will be issued in 2010 - and THAT is when the shit will hit the public
fan (the insider rats will already have exited and left the country with our money).
The Banksters know the gig is up.
Why do you think Paulson wanted to bail out foreign investors?
The arrogant bastards are literally asking us to fund both their cover up,
and their exit, by buying back the toxic waste they created."
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Why do you think that even now, after the alphabet soup
of bailouts and backstops, and after hundreds of billions
of dollars already pumped into the banking system, that banks
STILL will not loan to each other?
...because they all NOW know -- they're all bankrupt and
insolvent.
We will continue to see wave after wave of capital injections
before these banks are solvent.
The only thing that Paulson and Bernanke can do...
is to buy time, and hope & pray that the US economy
recovers in 2009, because if it doesn't...$700 Billion
will be chicken feed.
Bottom line...
It's all about jobs.
Repeat that.
Remember that.
And print that out and tape it to your trading monitor.
"IT'S ALL ABOUT JOBS."
-- How much more money will it to take to bail out the banks?
-- How long will the recession will last?
-- How many US banks will fail?
-- Will the US recession turn into a "depression?"
-- Where's the bottom for the DOW?
-- How low can Oil go?
-- What will Gold do?
-- When will home prices bottom?
-- Will the Fed go to ZIRP?
-- What will be the next shoe to drop?
-- What are realistic 2009 S&P EPS estimates?
All of that and a lot more, will ALL be dependant on U.S. JOBS.
And now the bad news...
NOTHING the Fed, or the Treasury has done so far, will have
ANY positive impact on US jobs.
Because the large banks aren't loaning money, they're hoarding
it. And they're hoarding it because they're insolvent. They
need it to shore up their balance sheets and more and more
assets will continue to be written down over time.
And the smaller banks don't have the money. They aren't
getting the bailouts and they're taking the brunt of the
impact from ramping unemployment, and the credit crunch
from that extreme concentration of credit issuance in BOTH
the mortgage and the credit card markets - both dominated
by just 5 large banks.
67% of US GDP is from consumer spending.
Consumers are seeing their home values collapse, their
retirement accounts and pensions crushed, and their
jobs disappearing in droves.
This is a credit based economy and credit has been
vaporized.
And it's going to get worse, much worse... before it gets
ANY better.
The only thing Paulson & Bernanke have done for Main Street,
is to stop what was becoming the strong possibility of a
nationwide bank run.
That, and they backstopped money markets.
But, they didn't make the US banking system solvent. They only
bought it time, and picked a few winners & losers.
And let's call a spade a spade...
Paulson's threat to congress about martial law and a armageddon
scenario in the banking system, was to save Goldman Sachs.
Paulson "broke the glass" to save Goldman -- period.
Why do you think he wanted "immunity" as part of the bailout package?
Let's NEVER forget that Hank Paulson was the chief
architect in increasing the leverage that could be used by
Wall Street Investment Banks.
Paulson's lobbying allowed investment banks to increase their
leverage from 15:1 in 2000, to over 50:1 by 2004, which they
then pyramided atop Greenspan's explosion in money supply,
and irrationally exhuberant rate cuts.
And today, the U.S. Treasury is now a branch office of Goldman Sachs.
The inmates really are running the prison people.
And the insiders are cutting themselves deals left and right,
as Rome burns.
They're picking the winners and losers, and getting pay back
on companies like Bear Stearns, who turned it's back on the
other Wall Street investment banks during the LTCM bailout.
And Greenspan is now a paid consultant to the likes of John
Paulson, who made billions by shorting mortgages and who is
now buying up "select" distressed mortgages, as well as being
a paid consultant to PIMCO, who is also now a corporate
insider to the bailout process.
Never has Wall Street been in a position to deal itself
such a lucrative hand.
Imagine being able to take advantage of double digit
yields in bank bonds, and knowing which companies are going
to be backstopped by the Fed, and which ones are not.
Remember those massive, deep out of the money put positions
bought right before the bear raid on Bear Stearns? That trade
made $271 million in PROFIT.
-- not only did the Bankster-Gangsters literally pull off the
largest ponzi scheme in history, by first lobbying to exempt
themselves from oversight and limits on leverage...
-- not only did they then use that leverage to create a paper
pyramid of exponentially levered derivatives that now dwarfs
the capitalization of the global financial system...
-- not only did they collapse foreign banks, and entire
economies...
-- not only did they collapse hedge funds, mutual funds,
banks, and insurance companies on Wall Street...
-- not only did they collapse pension funds, state, and local
governments, along with the retirement accounts, the jobs, and
the hopes and dreams of Main Street...
-- not only did they suck hundreds of billions of dollars in
windfall profits, salaries, and bonuses out of the US financial
system ...
BUT NOW... as "inmates running the prison" they're using
"Trillions" (no longer Billions), of YOUR taxpayer dollars,
not to bail you, or Main Street out... not to create jobs,
or to stimulate the US economy... but instead, to bail
themselves and their fellow insiders out, to fund
billions of dollars of bonuses for Wall Street, and to fund
their purchase of select assets now available at pennies on
the dollar.
What will stop them?
Only two things...
Bullets and blood.
...because they no longer fear the ballot box. Not just
because they control BOTH parties, but also because all they
need to do, is wave a $600 stimulus check under the nose of
voters, or promise to give them socialized/free health care.
A chicken in every pot for Main Street and Trillions for Wall Street.
...the deal (and the crime) of the century.
SOTB |
