Banking Industry Report for August 11, 2011
1) … Simon Johnson in New York Times article Another Round of Bailouts communicates that the world leaders must provide a strategy to address bank capital, otherwise the result will be a global economic collapse, stating: “As Anat Admati and her colleagues have been arguing, large banks and other financial institutions without sufficient capital are prone to failure - this is what spreads failure and panic far and wide.
Bloomberg asks Is there enough money to save world's banks?
The chart of Regional Banks, KRE, shows the failure of the QE Trade and the exhaustion of quantitative easing that came by US Federal Reserve economic policy. Neoliberalism has died and neoauthoritarianism is rising in its place.
Mortgage REITS, such as Annaly Capital Management, NLY, which have securitized GNMA debt, have been one of the engines of neoliberalism. The word, will and way of sovereign leaders, working through regional framework agreements will empower Neoauthoritarianism’s political governance and seigniorage.
The securitization of GSE and sovereign debt, BWX, such as US Treasuries, TLT, and EDV, underwrote Neoliberalism many investors, as is seen in the chart of Putnam American Government Income, PAGVX, as US Dollar Hegemony and United Kingdom Post Colonization Exploits ruled the world. The United States and Great Britain kingdoms are dying. They are being replace by Kings ruling in the world’s ten regions; such kings include Mr. Sarkozy, Mrs Merkel, Mr Trichet, and Mr. Van Rompuy.
A global economic collapse is coming. A stroke, that is a mortal wound, is coming to the head of world’s most important institution, that being finance, commerce, trade, investment and banking. Out of Götterdämmerung, that is an investment meltdown and flame out, a Beast Regime, will rise to rule world-wide in all of mankind’s seven institutions and in ten regions of global governance, as called for the Club of Rome in 1974, constituting a Ten Toed Kingdom of Global Governance.
A triumvirate of leaders from Canada, Mexico and The US will rule the North American Continent. QE 3 is coming, it will feature banks such as Bank of America, BAC, and Citigroup, C, integrating with the government with all excess reserves capitalizing the Bank of Government.
The Telegraph relates Weaker Euro States Could Lose Local Banks. Weaker eurozone members face the prospect of being left with no domestic banks in future as market resistance to funding lenders in peripheral countries grows
Doug Noland has communicated that Neoliberalism was characterized by wildcat finance. I write that Neoauthoritarianism is characterized by wildcat governance as evidenced by the Open Europe report that divisions emerge in the Italian governing coalition over additional austerity measures. Bloomberg reports Tremonti to Present New Austerity Plan as Unions Threaten General Strike. Italian Finance Minister Giulio Tremonti will present a new austerity plan that has prompted threats of strikes from unions as he seeks to eliminate the budget deficit and secure continued European Central Bank support for the country’s bonds. Tremonti will testify before bicameral committees in Parliament on the measures at 11 a.m. in Rome. The package seeks to bring down the deficit next year to between 1.5 percent and 1.7 percent of gross domestic product before eliminating it in 2013, Tremonti told business and labor leaders at a meeting yesterday. “If the measures that end up in the budget adjustment are those that have been circulated in the newspapers and that the government hasn’t denied, the only response will be a general strike,” Susanna Camusso, head of Italy’s biggest federation of unions, the CGIL, said after the talks.
The Telegraph reports French President Nicolas Sarkozy Gathers Ministry to Battle Possible Credit Downgrade. President Nicolas Sarkozy cut short his holiday to announce new moves to slash France's massive debt amid fears it might be next after the United States to suffer a credit-rating downgrade. Sarkozy gave his finance and budget ministers one week to come up with new ideas for keeping France's promises to slash its public deficit, it said, adding that the measures would then be decided on on August 24. The announcement came after ministers battled this week to head off speculation that France will be the next country to lose its top AAA status after the United States was stripped of the prized credit rating last week. Shares in French banking giant Societe Generale briefly crashed more than 20 per cent on the ratings speculation and concern over its exposure to Greek debt amid renewed concern about Athen's implementation of a rescue plan. If France, the eurozone's second-largest economy, lost its AAA rating the effects would stretch far beyond its borders. France provides the second-largest contribution, after Germany, to the eurozone's temporary rescue fund, the European Financial Stability Facility, which enjoys an AAA rating to borrow at low rates and lend to states under bailout programmes. Markets are wondering whether France and Germany can continue to underwrite the debts of troubled eurozone countries without losing their own top credit ratings and thus falling victim to the crisis themselves. French debt has faced pressure on the markets as the cost of credit default swaps - insurance policies against a default -- hit record highs this week, suggesting investors were starting to look at the country more closely. After the United States, "the other AAA-rated G7 sovereigns are all at risk of a downgrade, with the markets focusing particularly on France," said London-based Citi economist Willem Buiter. Jennifer McKeown, senior economist at Capital, said: "Growing concerns about France's fiscal position have underlined the breadth of the eurozone's debt crisis." The International Monetary Fund said last month that France would probably need extra action to cut its deficit in 2012 and 2013 as falling growth threatened to complicate economic recovery.
Neoauthoritarian rule is characterized by strong man rule as the Associated Press reports Cameron relates no culture of fear on UK's streets and as WSWS.org reports 16,000 police deployed in London to put down minority revolt and as the Associated Press reports London Police raid houses over United Kingdom rioting. And reports facial recognition in use after rioting.
Neoauthoritarian rule is characterized by the polit bureau known as the Super Congress or the Super Committee responding to interests of lobbyists as EconomicPolicy Journal reports.
Neoauthoritarian rule will be harsh, not gentle like the Neoliberalism’s rule as Mike Mish Shedlock reports Germany Proposes Stability Council with "Crack the Whip" Power to Impose Sanctions on Countries Lacking Fiscal Discipline, Pro-Business Labor Policies as the German economy minister calling for creation of a non-political 'stability council' for EU.
2) … In today’s news
Insurance Journal reports Debt pressure spreads to insurers' balance sheets.
Yahoo Finance reports Banks drag Wall Street lower as fear returns
The failure of Neoliberalism is characterized by unwinding carry trade investing as Bloomberg reports Turkey Scrutinizes Short Sales Amid Rout After Bans in Greece, South Korea. Turkey is increasing scrutiny of short sales, joining countries from Greece to South Korea that have sought to prevent bearish bets from fueling declines in stocks after the worst global tumble since 2008.
The New Zealand Dollar, BNZ, and the Australian Dollar, FXA, have been competitive currency devaluation loss leaders resulting in unwinding carry trade in Australian Small Caps, KROO, and in New Zealand, ENZL shares. The Milton Friedman Free To Choose floating currency regime is dead and it is being replace by the sinking currency and competitive currency devaluation regime known as Neoauthoritarianism.
Markus Salzmann in WSWS writes Authoritarian regime takes shape in Hungary. Hungary’s right-wing government led by Victor Orban has used its 15 months in office to systematically establish an authoritarian regime.