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Finally viewing with alarm bank retrenchment across the globe, regulators are set to ease...
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Saturday, June 16, 2012, 12:00 PM ETFinally viewing with alarm bank retrenchment across the globe, regulators are set to ease stringent new capital rules - known as Basel III - set to begin kicking in in 2013. China has already postponed its tough new rules, and the U.K. "capitulation" this week suggests that country's regulators have seen the light.
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The bankers win again.
If we want less output then increase them and nobody whine about lower loan volumes and higher UE. From a timing standpoint you don't want to increase them when the economy is struggling.
Appeasement and extortion is like a doctor telling an anorexic to eat or die and the patient grumbles the doctor is a bully.
Right on TVP.
And I did not propose a risk based capital structure so not sure what you are talking about there.
Core issue was bad underwriting. If everyone who got a loan could pay it back then we would not have this discussion. Liar loans and all the other BS was rotten to the core.
Skewed bonus plans is also just another throw away line. What does that mean and who has those bonuses and how much of the company do they own? There were companies in business for almost 100 years that went out of business and their people always got great bonuses. One could claim correlation but not a 1:1 relationship.
Perhaps that's what the political nutjobs want.
You want to regulate the banks? Regulate the people who use them. They were also infected with (wait for it)..... greed.
*chuckle*
Look at what happened. Mortgage brokers were told to approve anyone and everyone for any type of loan because real estate was a "sure bet." These same mortgage brokers work off commission as do real estate agents. The general thinking was that even if the homeowners defaulted the bank could sell the underlying asset at a higher price then what they loaned out. Not to mention all the money the banks (and their executives) were making selling these "deal" securitized loans to unknowing/naive investors. No accountability and no consequences with excess greed added in makes for a ticking time bomb. I have no problems with greed (I am a victim of that disease myself), but when it leads to a breakdown of the global economy and trillions of personal wealth lost it is not good for anybody.
I am just saying that greed is nothing new. It has caused wars and all kinds of mania over the century. Greed or better yet self interest on a defined playing field is not a bad thing.
The trigger point for the breakdown in the past 10 years was ultra low interest rates which left savers starving for yield (greed) and thereby a search for higher yielding assets which was matched against a rising housing market. So the risk was supposed to be nil which on this board everyone should know does not exist. But almost every institution was on board and greedy for money, votes, power, homes, prestige, etc and only a few people were shorting it and raising their voice.
A calm regulator might have helped too but it is hard to hold back the forces that want everyone to own a home.
Should be good for financials in Europe especially and (FXE)
What are the Germans supposed to capitulate to? Guaranteeing every PIIGS debt? Agreeing to inflation and massive ongoing currency devaluation? Agreeing to gifts and transfers forever to PIIGS countries? Agreeing to fund ever increasing debt in the weakest EU countries?
My point was that fighting inflation in German when the rest of the EU nations are in recession is not how this crisis is going to be solved. The ECB should have never raised rates, and they have been too slow to cut rates.
the real cost of making the future "fail-safe" is excessive and counterproductive.
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'it is too big to fail' fail-safe life insurance policy is already build in.
Basel III is redundant excessive and counterproductive solution.
Similarly, we Individuals have to invest money to grow our income and to improve our lives and their libidos.
Huh? We have to improve our bankers sex drive? Who slipped that one into Basel III - France? (I hope it wasn't the Greeks...)
Aren't entitlements great?
Jimmy bend-a-nail Carter ensured that redlining would get its first start in re to housing. The multiculturalism of the 1990's ensured it would be completed, hammering the final nail into the coffin. Fannie, Freddie & Ginnie came along for the party. Big goobermint sent out invitations and Greenspan was in charge of tapping the keg for the rager.
Leftism is wonderful, iddn't it?
Esau selling his birthright for a mess of pottage comes to mind.
Recent survey pegged European money at only 8.9% of investment in SW Florida, completely dwarfed by Brazil and rest of Latin America.
(Wish I could find link.)
On the other hand, historically, the housing market has typically been lead by upsurges in C, FL, AZ, etc., and all of these markets are showing sign of life. Housing markets don't get led by Kansas.
Now, while its doubtful that things will take off, they probably aren't going to decline appreciably, either. In particular, rent are rising briskly, making homes again competitive.
Just my thoughts. For the record, I'd buy a condo in Miami if I could afford it. Prices around $180,000 seem like a good deal for a vacation house to get away from the cold Northeast winters.
Go in with a few buddies and buy one then you got something.
I would not even care if we agreed on anything. LOL.
Its just like a yo-yo but the coordinated effort of governments world wide are now going to pull the string very hard. Sky's the limit on the upside.
To those expecting massive stock price surges due to liquidity injections, think again. LTRO, QE etc. have worked for the markets, but each injection created a shorter time frame for the boost. Any further liquidity will create even less impetus to the point of zero effect. As long as the underlying economies are not getting off the ground, no amount of liquidity or deficit spending will create a healthy and sustainable economy. Stop this centrally planned and over leveraged madness, we are just digging deeper graves.
hahahahaha
And I would not copy European economic leadership as they are a disaster.
The problem is that the original prophets of this cult--Adam Smith, Ricardo, Turgot, etc.–thought the “market” would contain–in this case–hundreds of thousands of competing banks. Instead we have, what? a dozen large banks worldwide, all “too big to fail.” It also never occurred to the Flounders that the government would rescue insane gamblers through FDIC.
So when, in their crazed greed, morons like Dimon make money, they take millions in salary. When their mindless gambling fails, the taxpayers rescue them.
The solution is truly simple. When a bank fails, the government seizes it. The existing shareholders, bond-holders get nothing, and the top dozen executives are bared from any form of banking for the rest of their lives. The government also makes a maximum effort to claw back the salaries they have received in the past.
The government then recapitalize the bank, splits it into 50 or 100 pieces, which go to work as plain vanilla banks, taking in deposits and loaning money to entrepreneurs and folk who can afford to buy homes. If some one wants to start a fund for gambling on derivatives, he can do so. But the government makes it very clear that the gambling fund is NOT a bank; when the gamblers fail, they will not be Rescued in any way.
I defy anyone to fine any fault with my logic. If anyone disagrees, he clearly is a Communist. Since what I am suggesting is called Free-Market Capitalism. It’s what Adam Smith and the other early prophets of capitalism intended. And it’s the way banking worked until only a few decades ago. Indeed, since bank checks, double-entry book keeping, credit cards, and mutual funds all were invented by 14th century Italian bankers, what I suggest is the way banking worked for something like 600 years.
But today the banksters and other greedy plutocrats pour trillions into negative ads at election time, making it impossible to elect anyone sane. As a result, we will go on with this charade until it destroys civilization for good. After all, the banksters created the current depression. The next depression the banksters create will surely be worse. This next time, it will be the corrupt, irresponsible crooks and liars running the European banks that will destroy the world.
Hyperbole and the apocalypse all in one post. That is a first for me.
I agree with you if a bank fails the government should take it and split it up and the stockholders get nothing. That is typically the definition of bankruptcy so why not? Denying bond holder rights is another story as they have a claim that is not far from a depositors claim. When I deposit my money with the bank I am agreeing to loan them my money so they can re-lend it. And they pay me an interest rate for my loan which they call a deposit. Whatever the case that is just an aside.
There were a lot of lenders or creditors in the Middle Ages that did the local banking and they were called Lords and they enriched themselves through Feudalism and charged exorbitant fees and rates. So small and local operators is not a panacea. If government regulates rates then government is already involved in banking. In summary small lenders can rape you just as effectively if not more so because they are below the radar.
Secondly the US government was involved in banking early because they needed a common currency and needed to pay an army that was ready to quit and need to encourage commerce. All those things require banking institutions. We had a problem in this country also with people opening banks and taking deposits and running for the hills. Therefore deposit insurance. Government has been involved in banking forever. Works OK and maybe someone else is smarter but we are stumbling along fairly well.
If derivatives were the only problem then I would guess that we never had widespread bank failures in the past. Whoops. Wrong again. We had massive failures in the 80's alone. Banks take risk every day and changes in the economy and markets move that risk every day. To the extent that derivatives help them manage that risk great but most people don't understand derivatives anyways so I will leave it at that.
And you are so wrong when you think it is banks ruining the world. The root cause is the governments acting on behalf of people that want a lot and don't want to do much to earn it. Banks just facilitate the transactions.
The problem is that we didn't follow the 1980's S&L crisis this time around. We pretended government knew better this time thru Hank Paulson and his gang and ended up backstopping more zombies when the banks should have been Baby Belled into fractions of their original selves.
They would have been much more prosperous and small business lending would have taken off. But no, capitalism was the problem. hahahaha. Good one.
Great news.
Small business lending is at zero. It will stay there until the hate fest ends. Who knows? It may never end until we reach the dark ages again, all for our good don't you know. The government tells us so. They are so nice, the way the want to dress us up in the morning and put us to sleep in the evening. Ah, parents.
No wonder there's a capital strike. There's a war on capital itself.
We will have unemployment for as long as is necessary. May the beatings continue until morale improves. Perhaps this will be Obama's new campaign slogan.
CDS swap exposure for the big banks like MS C JPM etc is in the trillions and off balance sheets,so, the so called stress test was the biggest joke of this decade !
I have been around the block for more than 6 decades and I realize the info is shocking and worth opining on,but, it's irrelevant as this will continue and timing your buying an selling still works.
My plan ! I see the big banks unable to grow there income at decent rates under the new Volker rules and other restrictions now installed. I also see that we here on SA are the only game in town besides the bot computers ,so, the trading incomes continue to shrink.. Thus, all the talk about to big to fail and banks are too large is a smoke screen.
The only way for BAC JPM an the MS's is to buy the little banks who are profitable and there are many little gems ! That is where I am looking. Small gems in Florida especially and one or two in Nevada and Arizona. These little fish will surly get gobbled up as the banks must grow income.
I'm looking ahead and I am not paying attention the b/s as it will be around long after all of us ! DL