Posts Tagged ‘insolvent banks’

A Warning To America From The East

A Warning To America From The East

JapanCourtesy of Karl Denninger at The Market Ticker

Ambrose Evans-Pritchard writes the following:

Democrat leader Yukio Hatoyama, who won a landslide victory over the weekend, has pledged that there would be no increase in debt to fund his $180bn boost for child allowances and social policy by 2013, but his advisors are already back-tracking as they examine the dire tax figures.

While Japan pulled out of recession in the second quarter, it has barely begun to make up for the 11.7pc contraction of its economy over the preceding year. Industrial production was still down 23pc in July. Exports were down 39pc to the US.

Uh huh.  These are great promises, but Japan’s tax receipts are down 27% over the last year.   This sounds oddly familiar…. our government’s tax receipts are down huge as well, as are the tax receipts of the states.

Michael Taylor from Lombard Street Research said Japan made a strategic error during its Lost Decade by waiting too long to pull the monetary levers. "They failed to boost money supply the way the Fed and the Bank of England are trying to do through quantitative easing. Their fiscal packages led to a massive deterioration in public finances."

Oh nonsense.

Japan tried to avoid the truth.  They tried to sweep the bad debt under the rug instead of forcing it out of the system.  They attempted to apply the Keynesian "fix" that seems to be the tonic to all that ails the economy – spend spend spend and loosen loosen loosen monetary policy.

Did it work?  No. 

Nor will it work here, because just like in Japan the lies have not been flushed from the system and those who have hidden boluses of garbage have not been forced to admit to and clear them.

"IMF studies show that as public debt rises above 60pc of GDP fiscal stimulus loses it effect. People anticipate the consequences: higher taxes, and eventually higher interest rates. The bond vigilantes will always get you in the end," he said.

Hmmm…. Public debt in the US is about $11 trillion, GDP 14ish, so where does that leave us?…
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Ah, The Game Is Afoot!

Ah, The Game Is Afoot! 

shell gameCourtesy of Karl Denninger at The Market Ticker

You knew it wouldn’t be that easy…..

Aug. 27 (Bloomberg) — The Federal Reserve argued yesterday that identifying the financial institutions that benefited from its emergency loans would harm the companies and render the central bank’s planned appeal of a court ruling moot.

"Harm the companies" eh?  You mean reveal that they are and have been insolvent, and The Fed has been engaged in covering them up?

“What has the Fed got to hide?” said Senator Bernie Sanders, a Vermont independent who sponsored a bill to require the Fed to submit to an audit by the Government Accountability Office. “The time has come for the Fed to stop stonewalling and hand this information over to the public,” he said in an e-mail.

The Fed is hiding the insolvency of banks.  They, along with their handmaidens in Congress (which is where you work Mr. Sanders) even went further and twisted the arm of FASB to legalize intentional accounting distortions that I argue amount to fraud.

The truth of what has been done keeps peeking around the corner in the form of bank failures and FDIC deposit insurance fund losses, with the latest charade being Colonial Bank that was carrying assets thirty seven percent above where its acquiring bank believes is a reasonable mark on the day prior to being taken over, and which in the FDIC’s last published release was considered "well-capitalized!"

These losses and the costs of this cover-up are being forcibly extracted from The American People literally at gunpoint through the issuance of hundreds of billions of Treasury Debt which we, our children and grandchildren will have to repay – a staggering total that the CBO and Obama Administration now admit will total nine trillion dollars over the next ten years.

“Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow,” Norman Nelson, vice president and general counsel for the group, said in the document.

Experience in the banking industry has shown that when you countenance false and inflated marks on assets losses inevitably flow (to the taxpayer) and the longer and more-involved the conspiracy to cover…
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FDIC Dissembling Again

FDIC Dissembling Again 

liesCourtesy of Karl Denninger at The Market Ticker

The Litany of Lies has once again appeared from a government agency:

"While challenges remain, evidence is building that the U.S. economy is starting to grow again," said FDIC Chairman Sheila Bair.

Bullshit.  The economy is not growing; capacity utilization is not expanding, hours worked have no durable upward trend, job loss is continuing and consumer spending and borrowing are both contracting.  This is a flat lie.

Chairman Bair went on to say, "The FDIC was created specifically for times such as these. No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the last 75 years. No insured depositor has ever lost a penny of insured deposits…and no one ever will."

Alan Greenspan disagreed in 2003 that "The FDIC was created specifically for times such as these."  Indeed, it was his opinion that The FDIC in many ways CREATED times such as these!

The benefits of deposit insurance, as significant as they are, have not come without a cost. The very process that has ended deposit runs has made insured depositors largely indifferent to the risks taken by their depository institutions, just as it did with depositors in the 1980s with regard to insolvent, risky thrift institutions. The result has been a weakening of the market discipline that insured depositors would otherwise have imposed on institutions. Relieved of that discipline, depositories naturally feel less cautious about taking on more risk than they would otherwise assume. No other type of private financial institution is able to attract funds from the public without regard to the risks it takes with its creditors’ resources. This incentive to take excessive risks at the expense of the insurer, and potentially the taxpayer, is the so-called moral hazard problem of deposit insurance.

Of course you wouldn’t expect Sheila Bair to admit to this little problem…..

"Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses," Chairman Bair noted. "Of all the major earnings components, the amount that insured institutions added to their reserves for loan losses was, by far, the largest drag


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Zero Hedge

Federal Decision On Mask Mandate Imminent: Report

Courtesy of ZeroHedge View original post here.

Despite Dr. Anthony Fauci's claim that the federal government wouldn't adopt any new confusing and unscientific mask or vaccine guidance, CNN reports that federal officials are preparing to announce new nation-wide masking guidance after NYC and California ordered public workers to either provide proof of their vaccination status or mask up, while LA has ordered people to wear masks in public once again. According to CNN, the decision is "imminent", and could arrive as soon as Tuesday....



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Phil's Favorites

Bonds and Inflation

 

Bonds and Inflation

Courtesy of Michael Batnick

So this is different. Inflation has never been this high, with bond yields this low.

Rates should, in theory, be a way to gauge what market participants think about future inflation. Higher inflation would cripple today’s coupons, so again, in theory, investors would demand higher rates for that risk.

But investing isn’t about theories. At some point, we need to acknowledge reality. It’s probably time we update our models, mental and otherwise.

There are varying explanations as to why this relationship may no longer hold, and I t...



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Digital Currencies

Is Amazon About To Start Accepting Crypto?

Courtesy of ZeroHedge

For the first time ever, Amazon has shown itself to be interested in crypto with a new major hire within its payments-focused team.

Posted on Thursday, the new role seeks an experienced product leader with expertise in blockchain, central bank digital currencies and cryptocurrencies to “develop the case for the capabilities which should be developed” and drive overall product vision.

The Payments Acceptance & Experience team is seeking an experienced product leader to develop Amazon’s Digital Currency and Blockchain strategy and product roadmap

The Amazon Payment Acceptance & Experie...



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Biotech/COVID-19

US is split between the vaccinated and unvaccinated - and deaths and hospitalizations reflect this divide

 

US is split between the vaccinated and unvaccinated – and deaths and hospitalizations reflect this divide

As coronavirus cases surge, unvaccinated people are accounting for nearly all hospitalizations and deaths. Fat Camera/E+ via Getty Images

Courtesy of Rodney E. Rohde, Texas State University and Ryan McNamara, University of North Carolina at Chapel Hill ...



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Chart School

Investing with Channels - Review

Courtesy of Read the Ticker

The US has a lot of debt, to sell more units of the debt to non US buyers the FED and Treasury must get the unit price of the debt down.

This video assumes a 'risk on' bullish bias into the Nov 2022 US mid terms. The bias assumes a US dollar trending down from it current high price of $93 on the DXY.






Chart 1 - US Dollar Channels


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Chart 2 - Ethereum/USD


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Politics

New York defines illegal firearms use as a 'public nuisance' in bid to pierce gun industry's powerful liability shield

 

New York defines illegal firearms use as a ‘public nuisance’ in bid to pierce gun industry’s powerful liability shield

Illegal gun use is now a public nuisance in New York. AP Photo/Bebeto Matthews

Courtesy of Timothy D. Lytton, Georgia State University

Could calling the illegal use of firearms a “public nuisance” bring an end to the gun industry’s immunity from civil lawsuits? ...



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Promotions

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Kimble Charting Solutions

Crude Oil Cleared For Blast Off On This Dual Breakout?

Courtesy of Chris Kimble

Is Crude Oil about to blast off and hit much higher prices? It might be worth being aware of what could be taking place this month in this important commodity!

Crude Oil has created lower highs over the past 13-years, since peaking back in 2008, along line (1).

It created a “Double Top at (2), then it proceeded to decline more than 60% in four months.

The countertrend rally in Crude Oil has it attempting to break above its 13-year falling resistance as well as its double top at (3).

A successful breakout at (3) would suggest Crude Oil is about to mo...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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