It’s definitely different this time…
The 2008 analog lines the current trajectory up with August 2008 right after Treasury Secretary Paulson told the world reassuringly that:
“Our economy has got very strong long-term fundamentals. And you know, your policy-makers and regulators here – we’re very vigilant.”
And we all know what happened next…
Could never happen again?
Rumors of ECB monetization (which would be highly problematic in the new “bail-in” world) and old news of the emergency debt-buyback plan have sparked an epic ramp in Deutsche Bank’s stock this morning (+11% – the most since Oct 2011). This extreme volatility is, however, eerily reminiscent of 2007/8 when headline hockey sparked pumps and dumps on a daily basis in Lehman stock… until it was all over.
“Deutsche Bank is fixed”?
Or is it?
Things are already fading…
We suspect every bounce will be met by opportunistic selling as an inverted CDS curve has seldom if ever reverted back to life.
– Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (Bloomberg, Oct 14, 2014):
Too big to fail is likely to prove a costly epithet for the world’s biggest banks as regulators demand they increase holdings of debt securities to cover losses should they collapse.
The shortfall facing lenders from JPMorgan Chase & Co. to HSBC Holdings Plc could be as much as $870 billion, according to estimates from AllianceBernstein Ltd., or as little as $237 billion forecast by Barclays Plc.
The range is so wide because proposals from the Basel-based Financial Stability Board outline various possibilities for the amount lenders need to have available as a portion of risk-weighted assets. With those holdings in excess of $21 trillion at the lenders most directly affected, small changes to assumptions translate into big numbers. Continue reading »
– Art Cashin: “Things Could Theoretically Turn Into What I Call A Lehman Moment” (ZeroHedge, Sep 13, 2014):
Courtesy of Finanz und Wirtschaft, interview by Christoph Gisiger
Wall Street veteran Art Cashin does not fully trust the record levels at the stock market and draws worrisome parallels between the geopolitical tensions over Ukraine and the Cuban missile crisis.
From the assassination of President Kennedy via the stock market crash of 1987 and the Fall of the Berlin Wall through to the burst of the dotcom bubble, the terror attacks of 9/11 and the collapse of Lehman Brothers: Art Cashin has experienced all the major world events of the last half century at the floor of the New York Stock Exchange. Currently, the highly respected Wall Street veteran keeps a close eye on the geopolitical tensions in the Middle East and on the situation in Ukraine which reminds him of the Cuban missile crisis «The markets are edgy and nervous», says the Director of Floor Operations for UBS Financial Services while constantly checking the quotation board. Like many traders here, he is somewhat skeptical of the huge stock market rally that started in March 2009. «I think it is a question of the extraordinarily low interest rates», he explains. Continue reading »
Prepare for collapse.
– The Head Of ‘The Central Bank Of The World’ Warns That Another Great Financial Crisis May Be Coming (Economic Collapse, July 13, 2014):
Most people have never heard of Jaime Caruana even though he is the head of an immensely powerful organization. He has been serving as the General Manager of the Bank for International Settlements since 2009, and he will continue in that role until 2017. The Bank for International Settlements is a rather boring name, and very few people realize that it is at the very core of our centrally-planned global financial system. So when Jaime Caruana speaks, people should listen. And the fact that he recently warned that the global financial system is currently “more fragile” in many ways than it was just prior to the collapse of Lehman Brothers should set off all sorts of alarm bells. Speaking of the financial markets, Caruana ominously declared that “it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally” and he noted that “markets can stay irrational longer than you can stay solvent”. In other words, he is saying what I have been saying for so long. The behavior of the financial markets has become completely divorced from economic reality, and at some point there is going to be a massive correction.
So why would the head of ‘the central bank of the world’ choose this moment to issue such a chilling warning? Continue reading »
– Is This The Top? First Quarter Corporate Profits Tumble Most Since Lehman (ZeroHedge, June 3, 2014):
As SocGen’s Albert Edwards conveniently points out, during the excitement of the downward revision of Q1 US GDP from +0.1% to -1.0% investors seem not to have noticed a $213bn, 10% annualized slump in the US Bureau of Economic Analysis’s (BEA) favored measure of whole economy profits, defined as profits from current production. Also known as economic profits, the BEA makes adjustments to remove inventory profits (IVA) and to put depreciation on an economic instead of a tax basis (CCAdj). Edwards shows the stark difference between the BEA’s calculation for post-tax headline profits (up 5.3% yoy) and economic profits (down 6.8% yoy) in the chart below. In short: the plunge in actual corporate profits in Q1 was the biggest since Lehman!
It is not just SocGen’s bear who observes this surprising finding: Goldman is on it as well. Continue reading »
– Bernanke Finally Reveals, In One Word, Why The Financial System Crashed (ZeroHedge, March 4, 2014):
Now that Ben Bernanke is no longer the head of the Fed, he can finally tell the truth about what caused the financial crash. At least that’s what a packed auditorium of over 1000 people as part of the financial conference staged by National Bank of Abu Dhabi, the UAE’s largest bank, was hoping for earlier today when they paid an exorbitant amount of money to hear the former chairman talk.Bernanke confirmed as much when he said he could now speak more freely about the crisis than he could while at the Fed – “I can say whatever I want.”
So what was the reason, according to the man who was easily the most powerful person in the world for nearly a decade?
“Overconfidence.” (no, not “weather”)
Yup. That’s it.
The United States became “overconfident”, he said of the period before the September 2008 collapse of U.S. investment bank Lehman Brothers. That triggered a crash from which parts of the world, including the U.S. economy, have not fully recovered.
“This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,” Bernanke said.
Actually what is going to sound even more obvious, is that subprime was not contained.
– Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery (ZeroHedge, Oct 27, 2013):
If there is ever a case study about people who built up their reputation and then squandered it for first being right for all the wrong reasons, and then being wrong for the right ones, then Meredith Whitney certainly heads the list of eligible candidates. After “predicting” the great financial crisis back in 2007 by looking at some deteriorating credit trends at Citigroup, a process that many had engaged beforehand and had come to a far more dire -and just as correct – conclusion, Whitney rose to stardom for merely regurgitating a well-known meme, however since her trumpeted call was the one closest to the Lehman-Day event when it all came crashing down, it afforded her a 5 year very lucrative stint as an advisor. Said stint has now been shuttered.
The main reason for the shuttering, of course, is that in 2010 she also called an imminent “muni” cataclysm, staking her reputation once again not only on what is fundamentally obvious, but locking in a time frame: 2011. Alas, this time her “timing” luck ran out and her call was dead wrong, leading people to question her abilities, and ultimately to give up on her “advisory” services altogether. Which in some ways is a shame because Whitney was and is quite correct about the municipal default tidal wave, as Detroit and ever more municipalities have shown, and the only question is the timing.
– The Biggest Banking Disconnect Since Lehman Hits A New Record (ZeroHedge, Oct 10, 2013):
As regular readers know, the biggest (and most important) disconnect in the US banking system is the divergence between commercial bank loans, which most recently amounted to $7.32 trillion, a decrease of $9 billion for the week, and are at the same the same level when Lehman filed for bankruptcy having not grown at all in all of 2013 (blue line below), and their conventionally matched liability: deposits, which increased by $60 billion in the past week to $9.63 trillion, an all time high. The spread between these two key monetary components – at least in a non-centrally planned world – which also happen to determine the velocity of money in circulation (as traditionally it is private banks that create money not the Fed as a result of loan demand) is now at a record $2.3 trillion.
Which, of course, also happens to be the amount of reserves the Fed has injected into the system (i.e., how much the Fed’s balance sheet has expanded) since the great experiment to bailout the US financial system started in September 2008, in which Ben Bernanke, and soon Janet Yellen, stepped in as the sole source of credit money. The only difference is that while the Fed is actively pumping bank deposits courtesy of the fungibility of reserves, loan are unchanged.
– Five Years After Lehman, BIS Ex-Chief Economist Warns “It’s Worse This Time” (ZeroHedge, Sep 15, 2013):
The froth is back. As we noted yesterday, corporate leverage has never been higher – higher now than when the Fed warned of froth, and as the BIS (following their “party’s over” rant 3 months ago) former chief economist now warns, “this looks like to me like 2007 all over again, but even worse.” The share of “leveraged loans” or extreme forms of credit risk, used by the poorest corporate borrowers, has soared to an all-time high of 45% – 10 percentage points higher than at the peak of the crisis in 2007.
As The Telegraph reports, ex-BIS Chief Economist William White exclaims, “All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets that are ending in a boom-bust cycle.”
Crucially, the BIS warns, nobody knows how far global borrowing costs will rise as the Fed tightens or “how disorderly the process might be… the challenge is to be prepared.” This means, in their view, “avoiding the tempatation to believe the market will remain liquid under stress – the illusion of liquidity.”
Continue reading »
– It Is Happening Again: 18 Similarities Between The Last Financial Crisis And Today (Economic Collapse, July 25, 2013):
If our leaders could have recognized the signs ahead of time, do you think that they could have prevented the financial crisis of 2008? That is a very timely question, because so many of the warning signs that we saw just before and during the last financial crisis are popping up again. Many of the things that are happening right now in the stock market, the bond market, the real estate market and in the overall economic data are eerily similar to what we witnessed back in 2008 and 2009. It is almost as if we are being forced to watch some kind of a perverse replay of previous events, only this time our economy and our financial system are much weaker than they were the last time around. So will we be able to handle a financial crash as bad as we experienced back in 2008? What if it is even worse this time? Considering the fact that we have been through this kind of thing before, you would think that our leaders would be feverishly trying to keep it from happening again and the American people would be rapidly preparing to weather the coming storm. Sadly, none of that is happening. It is almost as if they cannot even see the disaster that is staring them right in the face. But without a doubt, disaster is coming.
The following are 18 similarities between the last financial crisis and today…
– “The Dark Side of the QE Circus” (Silver Bear Cafe, June 25, 2013):
There may come a day soon where the markets sell off if one of the whiskers in Big Ben’s beard is out of place. Or perhaps if his tie is a bit crooked. Or maybe we end up with Janet Yellen as the next puppet in charge over at the local banking cabal and we fret about her hairdo. I don’t know, but one thing that is for certain is that this central bank so wants to be loved and we are so under psychological attack with all of this QE nonsense that it isn’t even funny.
QE is the endgame. ZIRP was only the beginning. QE, or monetization (which they’ll never call it because of the negative connotations), is the heroic measure applied to an already dead system. Our system, for all intent and purposes, died in 2008. It ceased to exist. The investing, economic, and business paradigm that has existed since is drastically different than its predecessor despite all the efforts being made to convince everyone, including Humpty Dumpty, that it is in fact 2005 all over again.
Now we get to the fun part of the game. This is the part where the not-so-USFed wants to give the idea that it is tapering (buzzword of the month) without actually doing so. There will be no tapering. There will be no end to QE. The goose (Americans and their willingness to continue to pile up debt) is still laying the golden eggs. And even if they make paper contracts on those golden eggs gyrate wildly in price, they still want them. The quislings on television who are gleefully bashing precious metals this morning? They want them. They want your physical metal. These folks will swim through any sewer to get that which they desire. If you don’t understand the Machiavellian nature of your enemy, then you’re in for an extremely rough ride. This is no playground. This is a battlefield (credit to Chuck Baldwin). They’re playing chess and we’re still playing Tiddly Winks.
Tags: Barack Obama, Ben Bernanke, Bonds, Collapse, Debt, Dollar, Economy, Fed, Federal Reserve, Global News, Gold, Government, Inflation, JPMorgan, Lehman Brothers, Politics, Quantitative Easing, Silver, Society, U.S.
– For Bonds, It’s A Lehman Repeat (ZeroHedge, June 25, 2013):
There is plenty of discussion of outflows but we though the following chart was perhaps the most insightful at why this drop is different from the last few year’s BTFD corrections. As we noted here, corporate bond managers have desperately avoided selling down their cash holdings (since they know dealer liquidity cannot support broad-based selling and its an over-crowded trade) and bid for hedges in CDS markets. But it seems, given the utter collapse in the advance-decline lines for high-yield and investment-grade bonds that the liquidations have begun. While the selling in high-yield bonds is on par with the Lehman liquidationlevels, it is the collapse in investment grade bond demand that is dramatic (and worse than Lehman). It’s not like we couldn’t see it coming at some point (here) and as we warned here, What Happens Next? Simply put, stocks cannot rally in a world of surging debt finance costs.Corporate Bond Advance-Decliners lines are as liquidation-based bad as during Lehman (worse in fact for IG)…
Do Not Panic!! This is orderly…
The current decline in the high yield market, now at 30 trading days, has been the fastest since the end of the 2008 recession, with yields widening 159 bp. Only the July – October 2011 market decline had a greater ultimate magnitude than the current period.
As we noted here:
YouTube Added: 21.03.2013
Tags: AIG, Bank of England, Banking, Bonds, Collapse, Cyprus, Debt, Derivatives, Derivatives market, ECB, Economy, EU, Europe, Fed, Federal Reserve, Global News, Government, Hillary Clinton, JPMorgan, Lehman Brothers, Max Keiser, MF Global, Obama administration, Politics, Quantitative Easing, Reggie Middleton, Society, U.S.
– Euro Official On Cyprus: “Markets Believe We Will Find A Solution, This Might Not Be The Case” (ZeroHedge, March 21, 2013):
While the market levitation courtesy of the Fed, BIS and BOJ continues unabated to give the impression that all is well, allowing empty momentum-chasing chatterboxes to say that Cyprus is not a big deal because… well, look at the market (and real traders the chance to quietly dump existing risk positions), the artificial, centrally-planned calm during the storm may be ending. The reason comes from none other than the Eurogroup, whose deputy finance ministers held a conference call last night, and whose transcript has been seen by Reuters.
Here are the highlights.
Euro zone finance officials acknowledged being “in a mess” over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy.
In detailed notes of the call seen by Reuters, one official described emotions as running “very high”, making it difficult to come up with rational solutions, and referred to “open talk in regards of (Cyprus) leaving the euro zone”.
Not very confidence boosting. But then again, with confidence in Cyprus now gone, the time for damage control is long gone. Sure enough, it just goes from bad to worse: Continue reading »
– Did JPM’s CIO Intentionally And Maliciously Start The Margin Call Avalanche That Crushed Lehman? (ZeroHedge, March 3, 2013):
It is conventional wisdom that in the days leading to Lehman’s bankruptcy filing on the night of September 15, 2008, sheer panic and utter confusion ruled ever back- and middle-office, over concerns that a counterparty, any counterparty, but especially Lehman, would end up being “not money good“, and the result was that trigger-happy margin clerks had the potential to make or break a company, by demanding just enough variation margin that would send the notice recipient promptly into bankruptcy. It is also conventional wisdom, that it was precisely several such margin calls mostly out of JPMorgan that precipitated the Chapter 7 filing by Lehman brothers, as the firm was finally unable to mask the fact that it was terminally overlevered, and even more terminally illiquid. It is certainly conventional wisdom, that Lehman was certainly massively overlevered, holding billions of overmarked CMBS on its balance sheet, and was doing everything in its power to hold on to precious liquidity, taking every opportunity to window dress its balance sheet as far better than it truly was (Repo 105 at the end of every quarter promptly comes to mind), over fears of avoiding precisely such a margin call onslaught, where the first margin call would cascade into many, likely lethal, margin calls. Continue reading »
– Secrets and Lies of the Bailout (Rolling Stone, Jan 4, 2013):
It has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you’d think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we’ve been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right?
It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.
Tags: AIG, Bailout, Bank of America, Banking, Barack Obama, Ben Bernanke, Bush administration, Citigroup, Economy, FDIC, Fed, Federal Reserve, Financial Crisis, General Motors, George Bush, Global News, GM, Goldman Sachs, Government, Great Depression, Henry Paulson, Jamie Dimon, Larry Summers, Lehman Brothers, Merrill Lynch, Neil Barofsky, Nomi Prins, Obama administration, Politics, Ponzi schemes, Sheila Bair, Society, TARP, Taxpayers, Timothy Geithner, U.S., Wachovia, Wall Street, Wells Fargo
– The Federal Reserve Cartel: Part IV: A Financial Parasite (Veterans Today, Dec 14, 2012):
(Excerpted from Chapter 19: Big Oil & Their Bankers…Part four of a five-part series)
United World Federalists founder James Warburg’s father was Paul Warburg, who financed Hitler with help from Brown Brothers Harriman partner Prescott Bush. 
Colonel Ely Garrison was a close friend of both President Teddy Roosevelt and President Woodrow Wilson. Garrison wrote in Roosevelt, Wilson and the Federal Reserve, “Paul Warburg was the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.”
Tags: Adolf Hitler, Banking, Barclays, BNP Paribas, Credit Suisse, CS First Boston, Economy, Fed, Federal Reserve, Global News, Gold, Goldman Sachs, Government, James Paul Warburg, JPMorgan, Lehman Brothers, Max Warburg, Merrill Lynch, Military, Morgan Stanley, Paul Volcker, Politics, Rockefeller, Rothschild, Salomon Brothers, U.S., UBS, Woodrow Wilson
– Marc Faber: “Paul Krugman Should Go And Live In North Korea” (ZeroHedge, Dec 13, 2012):
If there is one thing better than Marc Faber providing a free, must-watch (and listen) 50 minute lecture on virtually everything that has transpired in the end days of modern capitalism, starting with who caused it, adjustable rate mortgages, leverage, why did the Fed let Lehman fail, why was AIG bailed out, quantitative easing, Operation Twist, where the interest on the debt is going, which bubbles he is most concerned about, a discussion of gold and silver, and culminating with his views on a world reserve currency, is him saying the following: “The views of the Keynesians like Mr. Krugman is that the fiscal deficits are far too small. One of the problems of the crisis is that it was caused by government intervention with fiscal and monetary measures. Now they tells us we didn’t intervene enough. If they really believe that they should go and live in North Korea where you have a communist system. There the government intervenes into every aspect of the economy. And look at the economic performance of North Korea.” Priceless.
50 minutes of Faberian bliss:
Tags: AIG, Alan Greenspan, Ben Bernanke, Bonds, Bubble, Collapse, Debt, Dollar, Economy, Fannie Mae, Fed, Federal Reserve, Freddie Mac, Global News, Government, Lehman Brothers, LTCM, Marc Faber, Mortgage crisis, Mortgages, Operation Twist, Paul Krugman, Politics, Quantitative Easing, Stock Market, U.S.
– “What’s Next?”: Simon Johnson Explains The Doomsday Cycle (ZeroHedge, Sep 22, 2012):
There is a common problem underlying the economic troubles of Europe, Japan, and the US: the symbiotic relationship between politicians who heed narrow interests and the growth of a financial sector that has become increasingly opaque (Igan and Mishra 2011). Bailouts have encouraged reckless behaviour in the financial sector, which builds up further risks – and will lead to another round of shocks, collapses, and bailouts.This is what we have called the ‘doomsday cycle’ (Boone and Johnson 2010). The cycle turned in 2007-8 and was most dramatically manifest in the weeks and months that followed the fall of Lehman Brothers, the collapse of Iceland’s banks and the botched ‘rescue’ of the big three Irish financial institutions.
The consequences have included sovereign debt restructuring by Greece, as well as continuing problems – and lending programmes by the IMF and the EU – for Greece, Ireland, and Portugal. Italy, Spain and other parts of the Eurozone remain under intense pressure.
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
– Treasury’s Secretive $2.4 Trillion Fund Guarantee (CNBC, Aug 9, 2012):
Details about a secretive government program to bail out money-market mutual funds are finally coming to light.
Acting without any explicit Congressional authority, the U.S. Treasury guaranteed in excess of $2.4 trillion of money market funds after the giant Reserve Primary Fund “broke the buck” following the bankruptcy of Lehman Brothers. The program, which ended on Sept. 18, 2009, seems to have successfully prevented a panicked run by money-market fund investors.
But until now the Treasury has kept the identities of the funds that received government backing and the amounts guaranteed secret. It was not clear how many funds obtained backing or for how much taxpayers were on the hook during the program’s duration.
– CONFIRMED AT LAST: The attempted cover-up of how JP Morgan torpedoed Lehman Brothers (The Slog, July 15, 2012):
As an early propagator of the allegation that JP Morgan Chase deliberately hastened the Lehman collapse, the Slog finds itself vindicated three years on by a successful regulator action against JPM, and contemporary documentation.
“And then when you have the suckers by the balls, you squeeze just like this”
Around the time of the Lehman disaster, a senior insider at the firm relayed to me what seemed an astonishing allegation: that in the weeks prior to the eventual collapse, JP Morgan deliberately withheld huge monies owed to Lehman in order to make the bankruptcy a certainty from which they could benefit. I relayed this story to another contact the following year, and he not only corroborated the charge, he also said he was sure Barclays had done the same. The now disgraced Barclays CEO Bob Diamond took over Lehman in a fire sale only weeks later (using taxpayers’ money as a bridging loan to do it) and rapidly built up a commanding position for the division he then headed up, Barcap – the investment arm of the bank.
Now, more than three years later, regulators have penalised JPMorgan for actions tied to Lehman’s demise. The bank settled the Lehman matter and agreed to pay a fine of approximately $20 million. The action took place because of Morgan’s ‘questionable treatment of [Lehman] customer money’: regulators accused JPMorgan of withholding Lehman customer funds for nearly two weeks. So it had been true after all.
Jamie Dimon’s Morgan Chase dodged and dived on this one for three years in an attempt to smooth over the tracks. As late as April this year, the Pirate insisted that the ‘monies involved were small’: but that doesn’t tally with this Wall Street Journal snippet from the time as follows:
‘Lehman Brothers Holdings Inc., the securities firm that filed the biggest bankruptcy in history yesterday, was advanced $138 billion this week by JPMorgan Chase & Co. to settle Lehman trades and keep financial markets stable, according to a court filing.’
Advancing cash to keep the markets stable is simply double-talk bollocks: many observers are sure this was the Lehman trades money withheld by JPM. The Lehman administrators continued to air their grievances about it, and in late May 2010 the bankruptcy estate of Lehman Brothers Holdings, Inc. filed suit against JPMorgan Chase, alleging that JPMorgan’s actions in the weeks preceding bankruptcy were wrongful. The claims arose from amendments and supplements to the Clearance Agreement between Lehman and JPMorgan in the weeks immediately preceding the bankruptcy. (In a nutshell, JPM changed the terms without notice to include onerous requirements for massive collateral against giving Lehman its own money back – a form of crooked logic that only a banker could construct. The weight of this collateral requirement on already serious debts took Lehman Brothers from intensive care to the Pearly Gates).
Gerald Celente on MF Global etc. :
– No.1 Trend Forecaster Gerald Celente: The Entire Financial System Is Collapsing! – This Is FASCISM! (Video, March 26, 2012 )
More on JPMorgan here:
– Regulators: JPMorgan illegally let Lehman Bros. count customers’ funds as its own (Washington Post, April 4, 2012):
JPMorgan Chase illegally allowed Lehman Brothers, the investment bank whose 2008 bankruptcy brought the financial system to the brink of collapse, to count customers’ money as its own, according to federal regulators.
The arrangement boosted the amount that Lehman could borrow from JPMorgan, where the customers’ money was deposited, regulators charged Wednesday.
Then, at the height of the financial crisis, JPMorgan refused to release the customer funds for about two weeks, until regulators ordered it to do so, regulators charged.
The charges were spelled out in an enforcement action against JPMorgan by the Commodity Futures Trading Commission (CFTC).
Without admitting or denying wrongdoing, JPMorgan agreed to pay $20 million to settle the civil case.
The matter adds another dimension of alleged lawbreaking to the history of Lehman’s downfall. It was also another vivid illustration that, even in highly regulated modern financial firms, basic controls can break down.
Last fall, the big brokerage firm MF Global collapsed with as much as $1.6 billion of customer funds missing and unaccounted for. There, too, it appears that clients’ money was treated as if it belonged to the firm.
‘Inside Job’ provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia. It was made on location in the United States, Iceland, England, France, Singapore, and China.
Tags: Banking, Barack Obama, Bonds, Bush administration, Debt, Documentary, Economy, EU, Europe, Fed, Federal Reserve, Financial Crisis, George Bush, Global News, Government, Iceland, Inside job, Lehman Brothers, Matt Damon, Mortgage crisis, Mortgages, Obama administration, Politics, Society, U.S.