Mbuna

Are Banks Being Naughty Again with Derivatives? Could Be Good

Let me get to the core issue here. In every argument and dissertation I have read in support of derivatives there are 2 aspects of the arguments that are present in every single case, sometimes explicit and sometimes implicit. The first of these is the absolute fact that the fundamental reason for the creation of derivatives was so that financial institutions could bypass their capital requirements to gain greater leverage. There are other "beneficial" reasons for the creation of derivatives but they are not the fundamental ones. Those who write in support of derivatives will often mention this aspect but always as a secondary matter to the hedging or insurance aspect of derivatives. This brings us to the second matter that I have never failed to find among those who support derivatives. Not only are they in denial of the fundamental reason for the creation of derivatives but they show all the classic signs of addiction, the signs that they should be in a 12 step program or some other kind of rehab. This is why I call derivatives "financial crack" and those who support derivatives "financial crack addicts". These people will happily warp reality to fit their "modus operandi" but the fact of the matter is you have trillions of dollars hanging on financial engineering whose primary purpose was to skirt regulations in order to gain greater leverage. Fools are born at a far greater rate than every minute

Exclusive: Big Banks' Recent Profitability Due to AIG Scam?

Ahh yes those banks know exactly what they are doing, right? H/T Naked Capitalsim, from FT Alphaville-

"US commercial banks lost $9.2bn on derivatives trades in Q4 08"

Have a read.
ftalphaville.ft.com/bl.../

What Else Are the Banks Hiding?

Nonsense! Please tell me why banks have to hide those losses in the first place. Dishonesty and deceit are supposed to be how banks conduct business? Yeah just look at those quarterly reports- we are supposed believe that rubbish? I'm supposed to believe the major banks are forthright? Are you out of your mind? They are HIDING LOSSES. Just listen to what all the CEO's have said about their banks over the course of the last and compare it to what actually happened. Go back over the quarterly reports over the last year- the lies and dishonesty are there for everyone to see vis a vis what has actually transpired since then. You apparently think banks are supposed to be gambling casinos. Las Vegas East, better known as Wall St. needs to be regulated back into reality.


On Mar 26 10:44 PM MattZN wrote:

> The media tends to focus only on the negative aspects of the banks.
> They don't seem to be able to spend even 10 minutes reading a 10-K,
> so most people never hear about the positive aspects., etc.
>
>

Should Healthy Banks Give Back Their TARP Funds?

Goldman Sachs is shrewd to be sure but there is yet more smokescreen here. How much money have they gotten from the Fed in exchange for "assets"? Is there anyway to research this? Is it then possible to take money from the Fed and hand it to the government? Leave it to Goldman Sachs to find a way to make it happen. Nothing those big banks say and do is forthright and straightforward.

Congress: Shortsighted About Financials

An important rule with Congress-
When it comes to money and government politics always comes first.
When it comes to money and the member of Congress money always comes first.

Added Debt Won't Rescue the Great American Ponzi Scheme

Amen brother amen! The pain cannot be escaped. You can pay it now or pay it later. Guess which one will hurt more. I feel we are headed for a train wreck but may Grace and wisdom intervene for a more benign scenario.
(I especially liked the graph of deposits in failed banks as a % of nominal GDP.)

We Cannot Afford to Wait to Recapitalize U.S. Banks

Few recognize the political clout that the Wall St. "psyche" has right now. It is actively extorting trillions of dollars from the taxpayers. It controls the Fed and the Treasury. Geithner is creature of this "psyche" and he is blinded by his own knowledge to the detriment of the greater good for all. The government cannot act on the banks because the pervasive underlying psyche dictates that Wall St. must be protected at all costs-better to bankrupt the entire country than bankrupt the financial system. Many would argue that they are one and the same and this is the big delusional moment we are at, to our detriment. As the financial Wall St. vampire drains its victim how much blood will be lost before the government can come to its senses? Right now the vampire has control, to be sure.

Two Fed Graybeards Speak Out

The end effect of all these super banks and acquisitions has at this point in time been shown to effectively benefit corporate executives and financiers ONLY. Fundamentally it is the rich getting richer and they have no intention of letting go easily. The Wall St. psyche has effectively infiltrated the previous and current administrations and that is why no effective action has been taken. Wall St. is extorting trillions of taxpayer dollars with government complicity. Few are willing to recognize the political power that Wall St. has accumulated over the last 8 years but we are seeing in spades right now. They have control of the Fed and the Treasury and I fear it will take a long time to purify the delusion that what is best for Wall St. is best for the country.

AIG and Our Core Economic Issue: Unknown Asset Values

The real issue here is that AIG opened up their own gambling casino with CDS's and lost. AIG is now effectively extorting money from the US government and thus from us all. In my opinion, anyone who fails to address this issue directly is either blinded and brain dead due their own greed or refuse to acknowledge it out of their own greed. It is an orientation toward self and away from any kind of greater good. This kind of lawlessness needs to come to end with new laws, enforcement and big time criminal prosecution Additionally,the US should subpoena every email and every top executive from Goldman Sachs, who've had their hand in the AIG till from the beginning but there has been too much cronyism between Goldman and the government for the real truth to come out. If you really believe in free markets then Goldman would have already been history by now.

Nationalize Citigroup and Bank of America

Here's a little "I told ya so" from a post I did in June 2008 exemplifying the rampant denial still so prevalent.
"It's nice to see a little dose of reality here but I wonder what it will take for someone with a larger platform start to speak out on the culture of lies and denial that is now so prevalent in the financial sector. There are so many white elephants in the room it is practically a frickin stampede! One example- it has been clear for around 6 months that Citibank was insolvent. Where was (is) the press coverage of that fact? The facts are there if you wade through the BS but there is some kind of taboo about telling the truth. Everyone knows all these quarterly reports are anything but truthful. It has reached the point of absurdity in my opinion."

When will someone start thinking outside the box?

Nationalize Citigroup and Bank of America

The time for nationalization of these banks was a year ago when it was patently obvious that they were insolvent. It has clearly been a year of denial in the financial system, like watching a corpse rot. Felix you could and should have written this post a year ago. No one wanted to take responsibility then when it might have done some good. Certainly no one is willing to do it now unless the consequences of not nationalizing forces the governments hand, which it might. I can see from a number of posts here that far too many still live in fantasyland. Well, this is not Disneyland and the ride we've all been on will be over soon.

BofA Following Citigroup to $5 or Lower

Most people on Wall St. need their head examined, period. It is a fantasy life and most of the columnists here on Seeking make their living off of that fantasy. Reality is right in front of you and doesn't even take any research. Here is part of a comment I posted in July (yes you can look it up to verify) 2008 to-
The Great GSE Meltdown: Market Adding Fuel to Fire?
"This will totally impair the ability for Citigroup (C), Merrill Lynch (MER), and Lehman Brothers (LEH) to raise capital." These 3 companies were clearly insolvent 6 months ago IMO as a result of the gathering of the perfect financial storm which has cut off any possible escape route. The only drama playing out now is how long they can artfully hide their insolvency. Everyone is in over their heads and Bernanke and Paulson can do little more than put bandaids on to try to protect the interests of their constituents. (end of excerpt)

So here we are 6 months later and what happened? Rocket science? Nope just some common practical sense. And yes even after billions of rescue dollars those banks are STILL insolvent, the ones left anyway. One final clue that I have made before- What makes you think that a monetary system contrived nearly 100 years ago can just continue to work off into the unlimited future? The answer is that it CANNOT work indefinitely. Who will start thinking outside the box?