Infinite Unknown

From the article:

Comment: It’s not “socialism for the rich”; that’s an oxymoron.

It’s corporatism, i.e. fascism, as defined by Benito Mussolini.

- Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts (Sott.net, Sep 1, 2012):

The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out.

Ben Bernanke, Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling:
Continue reading »

Tags: Alan Greenspan, Bailout, Bank of America, Banking, Barclays, Bear Stearns, Ben Bernanke, BNP Paribas, Citigroup, Congress, Credit Suisse, Deutsche Bank, Fed, Federal Reserve, Global News, Goldman Sachs, Government, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Politics, RBS, U.S., UBS

- Swiss Bank Crackdown Accelerates As Credit Suisse, UBS Clients Raided In Germany, France (ZeroHedge, July 11, 2012):

While virtually every European risk indicator is now being gamed to underreport the true nature of the capital flow panic on the continent, one remains steadfast: Swiss nominal yields, which as we pointed out a month ago, have become the only true indicator of liquidity stress. And as noted this morning, Swiss 2 Year bond just hit a record nominal -0.37% (which coupled with record low yields in German yields explains everything about where money is sprinting to in Europe, and just how much “confidence” in the system is left). And while the SNB continues to suffer massive losses on its EURCHF peg, the reality is that it continues to offer a free put to all those who wish to move away from EUR exposure and into the relative safety of the CHF (the risk of cantonal disintegration is still relatively low). Which is why the only recourse authorities have in dealing with the now record flight to Swiss safety is brute force. Sure enough, as Reuters reports, clients of the two largest Swiss banks: Credit Suisse and UBS was raided in two independent, but likely linked, operations in Germany and France, respectively, in a show of force that moves beyond mere tax-evasion and has a goal of scaring anyone who still thinks of keeping their money in the relative safety of Geneva and Zurich bank vaults.

From Reuters:

German tax authorities have raided Credit Suisse clients and French officials searched the homes of UBS employees, deepening the crackdown on foreigners hiding money in Swiss offshore accounts to dodge taxes.

Switzerland’s strict banking secrecy rules, which have helped build a $2 trillion offshore financial sector, have infuriated cash-strapped governments as they try to crack down on tax evasion by wealthy citizens.

Roughly 5,000 German clients of Credit Suisse are being probed on suspicion of tax evasion and some had their homes searched, a bank source said on Wednesday, as European tax officials broaden their investigation to include clients as well as banks. Continue reading »

Tags: Banking, Credit Suisse, Economy, Global News, Government, Politics, Switzerland, UBS

- Here We Go: Moody’s Downgrade Is Out – Morgan Stanley Cut Only 2 Notches, To Face $6.8 Billion In Collateral Calls (ZeroHedge, June 21, 2012):

Here it comes:

• MOODY’S CUTS 4 FIRMS BY 1 NOTCH
• MOODY’S CUTS 10 FIRMS’ RATINGS BY 2 NOTCHES
• MOODY’S CUTS 1 FIRM BY 3 NOTCHES
• MORGAN STANLEY L-T SR DEBT CUT TO Baa1 FROM A2 BY MOODY’S
• MOODY’S CUTS MORGAN STANLEY 2 LEVELS, HAD SEEN UP TO 3
• MORGAN STANLEY OUTLOOK NEGATIVE BY MOODY’S
• MORGAN STANLEY S-T RATING CUT TO P-2 FROM P-1 BY MOODY’S

But the kicker:

ONLY MORGAN STANLEY, HSBC CUT LESS THAN MOODY’S ORGINAL MAXIMUM.

And there you have it – the reason for the delay were last minute negotiations, most certainly involving extensive monetary explanations, by Morgan Stanley’s Gorman (potentially with Moody’s investor Warren Buffett on the call) to get only a two notch downgrade. And Wall Street wins again.

Recall, from MS’ 10-Q:

“In connection with certain OTC trading agreements and certain other agreements associated with the Institutional Securities business segment, the Company may be required to provide additional collateral or immediately settle any outstanding liability balances with certain counterparties in the event of a credit rating downgrade. At March 31, 2012, the following are the amounts of additional collateral, termination payments or other contractual amounts (whether in a net asset or liability position) that could be called by counterparties under the terms of such agreements in the event of a downgrade of the Company’s long-term credit rating under various scenarios: $868 million (A3 Moody’s/A- S&P); $5,177 million (Baa1 Moody’s/ BBB+ S&P); and $7,206 million (Baa2 Moody’s/BBB S&P). Also, the Company is required to pledge additional collateral to certain exchanges and clearing organizations in the event of a credit rating downgrade. At March 31, 2012, the increased collateral requirement at certain exchanges and clearing organizations under various scenarios was $160 million (A3 Moody’s/A- S&P); $1,600 million (Baa1 Moody’s/ BBB+ S&P); and $2,400 million (Baa2 Moody’s/BBB S&P).”

So instead of $9.6 billion, MS will face only $6.8 billion in collateral calls.

YouTube

Still the firm is not out of the woods: Continue reading »

Tags: Bank of America, Banking, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Economy, Global News, Goldman Sachs, HSBC, JPMorgan, Moody's, Morgan Stanley, Nomura, Rating, RBS, Societe Generale, Warren Buffett

- Big Bank Downgrade By Moody’s Imminent (ZeroHedge, June 21, 2012):

Even as Moody is now about a week late on its Spanish bank downgrade where the banks are rated higher than the sovereign (which obviously is kept in check to prevent yields on bonds from soaring even more), here comes the next wholesale bank downgrade:

• Moody’s expected to announce ratings downgrade for UK banks this evening – Sky Sources
• Exclusive: Big news – I’m told Moody’s will announce downgrades of some of world’s biggest banks, incl in UK, after US mkts close tonight. – Sky’s Mark Kleinman

Looks like that fabricated 2 notch Margin Stanley downgrade (because 3 notches just won’t do – those 4 months of Gorman-led “negotiations” made that painfully clear) is about to strike. The real question is: What Would Egan Who Do?

From Sky:

Some of Britain’s biggest banks are poised to have their credit ratings downgraded by Moody’s as soon as tonight as part of a wider reassessment of the health of the global banking industry, I can reveal.

Moody’s is expected to outline its verdicts about the creditworthiness of banks including Barclays, HSBC, JP Morgan and Royal Bank of Scotland.

Continue reading »

Tags: Bank of America, Banking, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Economy, Europe, Global News, Goldman Sachs, HSBC, JPMorgan, Moody's, Morgan Stanley, Nomura, Rating, RBS, Societe Generale, UBS

- Credit Suisse Explains “The Real Issue”, And Why There Is Two Months Tops Until France Is In The Bulls Eye (CBS News, June 10, 2012):

Credit Suisse’s William Porter is strangely laconic and oddly brief in his latest issue of the European Credit Flash titled “The Real Issue”:

“It’s all about Spain”, so now we are cutting to the chase. Recapitalization of the banks versus funding the sovereign is of course a semantic issue given the nature of the interplay. But it enables the attempted finesse we describe below.

“Portugal cannot rescue Greece, Spain cannot rescue Portugal, Italy cannot  rescue Spain (as is surely about to become all too abundantly clear),  France cannot rescue Italy, but Germany can rescue France.” Or, the credit of the EFSF/ESM, if called upon to provide funds in large size, either calls upon the credit of Germany, or fails; i.e, it seems to us that it probably cannot fund to the extent needed to save the credit of one (and probably  imminently two) countries that had hitherto been considered “too big so save” without joint and several guarantees.

The issue can be finessed for a while by addressing the issues as bank issues and recapitalizing the banks by bond transfer. This hides from the  (primary) market and is simply another manifestation of the “Sarko trade” given by the LTRO. That rally lasted four months. Given the market’s adaptive learning behaviour, we suspect that this finesse might last two. The eventual denouement should be flagged by symptoms of the failure of  the credit of EFSF/ESM and/or France.

And there you have it. As evidenced by today’s reaction to the bailout, which had a half life of 2 hours, and was a complete failure in 6, the market is learning much, much faster than expected. Which also means that Porter’s estimate for the length of time before the next wave of the contagion tsunami strikes somewhere in the middle of the 8th arrondissement is furiously optimistic, but we agree: 2 months tops.

Continue reading »

Tags: Bonds, Credit Suisse, Debt, Economy, EU, Europe, France, Global News, Government, Greece, Italy, Politics, Portugal, Society

- 10 ‘Facts’ That Should Worry Europe’s Equity ‘Fiction’ (ZeroHedge, April 2, 2012)

Tags: Banking, Bonds, Credit Suisse, ECB, Economy, EU, Europe, France, GDP, Global News, Government, Greece, Holland, Ireland, Italy, Politics, Portugal, Society, Spain, Unemployment

– Moody’s may downgrade UBS and Morgan Stanley (Reuters):

Moody’s warned on Thursday it may cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone government debt crisis is spreading throughout the global financial system.

It was reviewing the long-term ratings and standalone credit assessments of a range of banks, Moody’s added. Markets were unaffected by the Moody’s announcement.

“Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” the ratings agency said in a statement.

It said among 17 banks and securities firms with global capital markets operations, it might cut the long-term credit rating of UBS, Credit Suisse and Morgan Stanley by as much as three notches following the review. It said the guidance was indicative.

Among the banks that might be downgraded by two notches are Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings, and Goldman Sachs.

Bank of America and Nomura were included in those that might be downgraded by one notch.

Tags: Bank of America, Barclays, BNP Paribas, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC Holdings, Morgan Stanley, Nomura, UBS

- S&P slaps ten Spanish banks with downgrade (Sydney Morning Herald, Dec. 16, 2011):

Standard and Poor’s downgraded Thursday the credit rating of 10 Spanish banks after applying new criteria, and warned it may lower their short-term scores further.

The 10 banks had their ratings lowered and remained in “creditwatch with negative implications”, indicating the risk of a further downgrade, Standard and Poor’s said in a statement.

- S&P cuts ratings of 10 Spanish banks‎ (Reuters, Dec. 15, 2011):

Standard & Poor’s cut the credit ratings of 10 Spanish banks on Thursday and said they remained on watch for a possible further cut subject to a review of Spain’s sovereign rating.

- Fitch cuts ratings on 8 major banks‎ (AP, Dec. 15, 2011):

NEW YORK (AP) — Fitch Ratings on Thursday downgraded its viability ratings on eight of the world’s biggest banks, citing increased challenges facing the banking sector due to weak economic growth and heightened regulation.

The firm lowered its viability ratings for Bank of America Corp., Barclays PLC, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group Inc., Morgan Stanley and Societe Generale.

Continue reading »

Tags: Bank of America, Banking, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Economy, Fitch, Global News, Goldman Sachs, Morgan Stanley, Societe Generale, Standard & Poor's

- The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation (ZeroHedge, Dec. 10, 2011):

Now that the rehypothecation bogeyman has been let loose, and the question of just how many paper (and apparently physical) assets have been double, triple, and n-counted (where n can be a number up to “infinity”) by the infinitely daisy-chained modern global financial system in which one’s liability is someone else’s asset….apparently up to infinity times, the next logical step was for the firms named in the original Reuters article (‘MF Global and the great Wall St re-hypothecation scandal’) to step up and begin denials they had anything to do with anything. Sure enough, below is the first (of many) such response, by Interactive Brokers, claiming it has been greatly misunderstood and unlike MF Global, it has done nothing wrong at all. Of note is that IB was simply one of many brokers mentioned in the Reuters piece, where we read that

“Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).“

Sure enough, we predicted a firm would have to promptly step up and “deny all charges.” To wit: “Oh Jefferies, Jefferies, Jefferies. Barely did you manage to escape the gauntlet of accusation of untenable gross (if not net) sovereign exposure, that you will soon, potentially as early as tomorrow, have to defend your zany rehypothecation practices.” As it turns out Jefferies, and all the other mentioned banks tried to avoid this festering can of worms by completely ignoring the topic… until Interactive Brokers’ response now demands that every single named bank has to do the same and come out with an outright explanation of why it has billions in hyper-hypothecation, or else not journalists and bloggers, but the market itself will suddenly start asking questions. Something tells us it will not be nearly as easy enough for the others to deny all charges… Incidentally, if this indeed becomes “the next big thing”, what the potential collapse of (re) hypothection means is that PBs will be unable to lend out shares anymore, in effect collapsing stock shorting as there is one giant short stock recall/forced buy in. Ironicaly the unwind of the biggest market fraud could result in the entire market pulling one last “Volkswagen“style hurrah, before all hell breaks loose.

From Interactive Brokers Continue reading »

Tags: Banking, Credit Suisse, Economy, Global News, Goldman Sachs, Hypothecation, JPMorgan, MF Global, Morgan Stanley, Rehypothecation, Wall Street, Wells Fargo

See also:

- Gerald Celente Endorses Ron Paul For President – ‘The Entire Economic System Is Collapsing’ – ‘Fascism Has Come To America In Every Form’ (Video – Nov. 29, 2011)

- Have You Heard About The 16 Trillion Dollar Bailout The Federal Reserve Handed To The Too Big To Fail Banks? (The Econonomic collapse, Dec. 2, 2011):

What you are about to read should absolutely astound you.  During the last financial crisis, the Federal Reserve secretly conducted the biggest bailout in the history of the world, and the Fed fought in court for several years to keep it a secret.  Do you remember the TARP bailout?  The American people were absolutely outraged that the federal government spent 700 billion dollars bailing out the “too big to fail” banks.  Well, that bailout was pocket change compared to what the Federal Reserve did.  As you will see documented below, the Federal Reserve actually handed more than 16 trillion dollars in nearly interest-free money to the “too big to fail” banks between 2007 and 2010.  So have you heard about this on the nightly news?  Probably not.  Lately Bloomberg has been reporting on some of this, but even they are not giving people the whole picture.  The American people need to be told about this 16 trillion dollar bailout, because it is a perfect example of why the Federal Reserve needs to be shut down.  The Federal Reserve has been actively picking “winners” and “losers” in the financial system, and it turns out that the “friends” of the Fed always get bailed out and always end up among the “winners”.  This is not how a free market system is supposed to work.

According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis comes to a whopping $16.1 trillion.

Continue reading »

Tags: Bailout, Bank of America, Banking, Barclays, Bear Stearns, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Dexia, Dollar, Dresdner Bank, Economy, Fed, Federal Reserve, GAO, Global News, Goldman Sachs, Government, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Politics, RBS, Societe Generale, U.S., UBS, Wachovia, Wall Street, Wells Fargo