.......and so it begins.

Well it begins if you didnt read TF & The Market Ticker. Once again KD , one hell of a job and keep up the great work.

Thanks KD, I'm sure you will be on the lookout for additional Wikileaks cables concerning the banks to write about.

I can't believe they're still levitating all this bull****.

I've been thinking lately about scenarios....

For the past year, I've been waiting for one of the Euro dominoes to fall and take the whole system down, but they seem to be able to stave that off.

So I guess the big domino is going to have to fall first. I think this year it will be Congress that initiates the collapse - by not funding the government. The more of these kind of leaks, the angrier people will get. At some point, even Joe Sixpack may want the crash to happen.

And even knowing they were insolvent , "regulators" allowed bonuses to be paid in 2007, 2009, 2010.

The last two years coming after taxpayers enabled them to dodge the bullet.

Nice work KD.

This is the other side of the coin that involves the propping up of the stock market, particularly the financial sector. As you report involving many misleading reports to investors as the financial institutions are not realistically reporting their true assets and liabilities. This is being enabled by the Fed and Treasury. Similarly to ignoring all the fraud charges this does not create a healthy environment for moving forward. The losses and fraud need to be acknowledged and we need to move forward with a transparent system that people can believe in to re-establish faith in the govt and markets.

Just re-iterating the obvious. Keep pounding the pavement.

The drum beat get louder....................................

Well, you have the Fed, ECB, Japanese finance minister, IMF, etc., all stating they are all in. That continues to force long only funds (the majority of investment options in 401k's and such) to cram their money in risk assets because with the primary dealer network as a pass through to the equity markets, the Fed has everyone's back. The only ways I see this paradigm shifting is Libor spreads blowing out, and we have proof that those numbers were misreported when needed, or the Treasury market shooting up interest rates. Why the TNX dropped so much yesterday is puzzling. Maybe the Fed can still control bondzilla. Someone was sure in control yesterday on Opex.

I'm not saying a large selloff in risk assets and commodities can't occur soon, but the fact that equities ignored the temporary Euro collapse yesterday leads me to believe the masters still have the levers working.

The coverup is not a recovery, and it is powerful and well coordinated in opaqueness. My gut tells me this all blows up at once, but I don't think a few Wikileaks will be enough to do it. China tightening publicly and slowing the emerging markets, squeezing commodity longs may be a trigger. A real congressional hearing with real questioning of the Fed early next year would be another. I will be interested to see the difference in questioning between the D controlled senate vs. the Ron Paul house next time around.

Anyone know when the first Fed or Treasury testimony is scheduled next year?

Anti,

+100000000000000000000000000000

I can understand why they are doing it. What I can't understand is why the dollar is still the reserve currency as a result of these type of actions? How are they controlling the rest of the worlds reaction to it?

Isn't this fraud? If I have to take an 80% haircut on the amount of a loan my collateral will support, isn't it pretty strong evidence that my collateral is not worth par? Then I present that same collateral at par to regulators and investors, that is fraud. Am I missing something? But Karl, there is another batch of junk the Fed outright bought - those CDOs they purchased to keep AIG afloat and are now selling through Maiden Lane. To me, this is the bigger fraud. They bought that junk at par. Under what authority? Yeah, I know you've harped in this before, but this act was so clearly aimed at helping the banks rather than the American Public, I have suggested that the U.S. Congress repudiate those purchases and demand that the Fed's owners - the big banks that own the Fed - eat the losses that Maiden Lane incurs. Impossible, I know, but this is the larger crime and it*****es me off. BTW - I am not against having a U.S. Central Bank, but the form of the Fed, a privately held corporation, sanctioned by Congress to perform central bank functions for the American People has proven to be foolish. It isn't merely that Greedscam and Bernanke were corrupt, the system encourages, nay, demands, corruption. Changing leadership would not change the outcome, we need to change the system. It is time the American People stopped being fools. As currently constituted, the U.S. Federal Reserve banks serves its owners (big banks), not its clients (American People).

Ilike:
nearly half all debt on the planet OUTSIDE THE U.S. is denominated in USD. These bailouts also apply to the European, Asian banks exposed to USD debt. And on top of that, the Euro-zone banks are drowning in EUR debt. So the "best of the worst" reserve currencies is still Bucky.
and the world's reaction? They are sending Ben fan mail 'cause they can't afford these numbers (not that we can, but they can less)

People ask me what it would take for me to jump onto the Team Obama bandwagon. My answer is that it's far too late now but if, back in JAN-MAR 2009 he had opened-up all this fraud for all the world to see and let the chips fall (and they certainly would have fallen mightily) where they may then I not only would have supported him I'd have defended him literally to the death.

He not only condoned the frauds that were initiated under GWB, he decided to double- and triple-down on them and then, as if to add insult to injury, re-appoint an obviously insane person to sit in charge of it all (that would be Benron Shalom, of course).

Until and unless people, by the hundreds, are perp-walked out of fancy government and financial district offices all across the fruited plain then Who is John Galt is my only answer to any question of electoral politics and policy going forward.

It's over. Only inertia is keeping it all afloat now.

Mr. Ilikecoffee, In my opinion there are a couple of reasons bucky hasn't gone dumpster diving. First, the rest of the world is caught in the financial mess and central banks all over have absorbed risks that would have sunk their banks, hence their currencies are sliding too. Second, oil is still sold in dollars and the U.S. has gone to extraordinary lengths to ensure that remains the case (i.e. killing Saddam Hussein). Then there is all that U.S. debt held by foreign central banks. While QE likely*****es them off, they would tend to respond by quietly selling their dollar-denominated assets because in a currency collapse, the first guy out the door wins. Finally, U.S. military might. Oil producers know that if they abandon the dollar, the four carrier strike forces in the Persian Gulf would likely disappear (the U.S. imports oil mostly from this hemisphere).

The linkpin in this is oil. I tend to believe that if OPEC decided to dump the dollar, its reserve currency status would evaporate almost overnight and this country would be in a world of hurt. Hence, I would expect the U.S. to do everything in its power to prevent this, including invading Iran if necessary. Indeed, the only rational reasons I can come up with for the U.S. invasion of Iraq was to please the Saudis and protect the dollar. Hussein did indeed hold a weapon of mass destruction - oil.

My wife asked me what it would take for all of it to come crashing down and "stop functioning".
She made me think a bit to answer.
I'd say any response will be psychological in nature.
There may be a Black Swan event people attribute as a cause later, but my bet is it will be because people are more and more anxious and less trusting.
When too many are primed for self preservation then sooner or later there will be a market move or armed conflict or assassination or price rise and business failure that will snow ball.
People on edge will take action in areas unrelated to the Black Swan because they are primed to look for one. A sudden action in say Korea may result in buying silver or an Asian market drop which will trigger a stock sell off which will be like pebble kicked over a cliff top onto an unstable slope of scree. When the situation is unstable and enough people believe it then it eventually becomes almost self fulfilling.
I remember once back in the 70s we had a shortage of toilet paper. There wasn't really a shortage, but somehow the rumor got started and all the house wives rushed to the store and filled their carts with toilet paper and the rumor was reality. That's how I think this will end.
Just my opinion and answer to her.

All of the U.S. political lies are in support of Wall Streets lies. We are coordinated and .gov promises citizens their cake (pensions and benefits) and until the checks stop coming, those people will not scream. In other words, when we are forced into austerity, the game is up because everyone will have to fight over scarce dollars at the city, state, and federal level as well as private sector. This is when the can can't be kicked further down the road. Hopefully this is soon.

The Euro countries have their own political and banking problems, but have their own sets of socialist policies to please the proletariate. As each Euro country makes promises it can't keep, it hurts the Euro and the other nations in the union. It would be the equivalent of the states openly fighting for federal dollars and some getting them and some not to bail out their insolvent pensions. This should start happening soon, or we will have major state defaults and extreme austerity issues state by state.

At current pace, Euro debt cycles are putting their dirty laundry front and center, so the Euro stress allows Ben to print into phantom (relative) dollar strength. If the EU collapses, Ben may get years of cover fire in dollar printing sins to cover his banking cartel. Bet that Ben will back the Euro banks if he is not stopped because if they fail, the U.S. banks fail.

This is just a big game of liars poker where everyone is claiming to have terrific hands, but nobody will call an opponent to prove they've got it. It is the result of off balance sheet trillions, Fed cover ups, and opaque government. Nobody will call the other's hand because they are afraid the Fed might print up a bill with 15 fours on it to cheat the game.

Imagine playing cards for money when people at the table can create cards for their hand during the game. Pretty soon everyone has Five Aces and then the shooting begins. The Fed is printing cards for it's players so until they are outed everyone has a winning hand and will keep going all in. The tax payers and sovereigns are the guy at the table with house cards, and are gonna lose their ass when someone says "call".

That is when we the people need to reach into the pot, take our money back and shoot the cheaters in the head. I have my doubts.

BOA refuses to process transactions for Wikileaks.

HAHAHA!!!

FU BOA!

The Ticker 2011 predictions are coming up in two weeks. Will they be affected by any of the leaks or possible upcoming leaks?

IT WAS TOO LATE FOR THE FINANCIAL SYSTEM WHEN KING MADE HIS COMMENTS.

Quote:

King said there are two imperatives. First to find ways for banks to avoid the stigma of selling unwanted paper at distressed prices or going to a central bank for assistance. Second to ensure there's a coordinated effort to possibly recapitalize the global banking system.

I am so glad that they lied.
I am so glad that they kicked the can down the road.

Keep printing boys!

I want to live pass Xmas.

jal

@jal - which Xmas? They could be kicking the can until Xmas 2012.

@ Docj

/nod

Found this interesting:

http://www.telegraph.co.uk/finance/newsb....

This was half of an approximate $40 billion loan portfolio. Ireland is still a small country but Spanish real propert is similiarly situated. If British banks
are marking Irish debt to market one wonders where they will get the extra capital to do so and if it is the British government there goes Cameron's budget plans.

Maybe Ireland is that little pebble Bagbalm spoke of.

The best solution IMO is to require the TBTF institutions to each have a new class of new bond issues that:

1. Gets marked to market every night.
2. These bonds are all subordinate in their claims on corporate assets to any and all liabilities except for equity holdings - i.e. shareholders of any common/preferred series.
3. These bond series idemnify the FDIC, depositors, other legacy bonds, credit default swap losses, derivative losses, etc. where the bonds are completely wiped out BEFORE any of these other claimants have to take a loss.
4. A baseline percentage formula is derived for calculating a minimum threshold on the ratio of the sums of these mark-to-market bonds over the total assets of the holding company (on balance sheet + off balance sheet) reported on their latest 10 filing (i.e. 10-K or 10-Q).
5. This baseline percentage grows as the banks assets grow. For example, I'd like to see 4% if the bank has 25B of assets, 5% if they have 100B, 6% if they have 400B, 7% for 1.6T, etc. as a baseline.
6. If they fail on a 20 day moving average to stay over this baseline then they get put under emergency probation which they can be released from if they get at least a full percentage over the baseline for at least 10 straight days.
7. While in probation if they fall more than a full percentage under the baseline for 5+ days or stay in probation for 30+ days then the bondholders get converted into shareholders and all existing equity shares get wiped out. The bondholders (now shareholders) then have 60 days to get at least a full percentage over the baseline for at least 10 straight days to get out of probation.
8. The bond issues are for 5+ years at a coupon rate no greater than 600bp per annum over the 20 day moving average of the 5 year US Treasuries rate.

Frankly we don't need to wait for the government to act on any of this except for step #7.

And such an idea (i.e. #5) will help keep the TBTF risk in check. Suppose you are a megabank with 3.2T of assets. You'd need to have 240B or 7.5% of assets in these bonds. If you break yourself up into 8 equal pieces of 400B each then you only need 24B each or 192B total which is 48B less. Each of these pieces could break up into 20 mini-banks of 20B assets each and be under the TBTF threshold altogether.

Now suppose that such a megabank was run by a greedy Lord Sith CEO and management team that wanted great power to blow up the world. Their 3.2T of reported assets are only really worth 2.20T and they have 2.60T of liabilities on the books besides these 240B (i.e. 0.24T). Suppose the market wises up to their insolvency and thus downgrades these bonds. Suppose their average coupon rate is 6% for 5 years and they are downgraded to 80 cents on the dollar or a 10.8% yield or 192B. The bank could try a little bit of honesty to lower their reported assets from 3.2T to 3.0T and raise some bonds to get over the threshold and even higher to make sure they're not on probation. And even if this fails the market still has 240B face value of bonds to absorb the spillover risks that a bust would bring.

I believe that the bond market would do a much better job of regulating the megabanks than the Federal Reserve, OCC or FDIC could ever do. As long as a bank is well-managed and solvent (or even close to solvency) they should have no trouble raising funds via the bond market. Now if they're not solvent then yes they'll be in deep trouble. But even in the scenario I described above its possible that they could conceivably raise the funds from current shareholders/bondholders who would hope they could make cashflow margins to eventually come out ahead by giving the bank company a loan shark deal.

Suppose you bought 1B shares of a bank at 10/share and now its 2/share. If you "triple down" and buy 12% yielding bonds to help shore up their balance sheet then your shares might be worth something in the long run if all goes well.

Right on Docj. I have to agree.

I agree with everything Docj wrote except for one thing.

He wrote: "It's over. Only inertia is keeping it all afloat now."

I write: "We can't allow it to be over."

We MUST save our country from financial armageddon.