market ace

Sobering Stat: ARMS Index Indicates Market Is at Peak, Not Bottom

All of the above comments have merit and the markets are sloppy gambling halls driven by excess greed and FED money, which will all come tumbling down when reality really sinks in - BUT also rememeber tc cover your backside.

Is all of this money pouring into stocks and commodities (think especially oil here) because da boyz know the dollar is sinking like a rocjk could be seriously devalued very soon and they do not want to be caught holding US dollars.

Just a thought, when markets act so irrationally and it may nor all be because of media hype about green shoots.

Solvency and Liquidity: Non-Identical Twins, Redux

We have all played liars poker with our money and made or lost a few buck . Then the Fed expanded the game to lie about the value of the trillions of the pieces of paper they are printing by exchanging them at par for toxic assets worth "much less". Now isn't it reasonable for the banks to play liars poker with investors, by making their fianncial statements say whatever they want while investors try and guess at their true value.

Many a firm has gone bankrupt with valuable long term assets on their books, but no liquidity to pay their current bills. Then the courts liquidate those vakuable long term assets and guess what? They find that the present value in the current market is far less than the carrying cost on the books. A lot of banks and investors will now learn this lesson in valuing assets and companies.

One Easy CDS Fix

Why is everyone only talking about CDS's when the derivative market in interest rate swaps dwarfs it about 10-1 and giant problems will arise here when interest rates rise.

Until the third quarter of last year, the banks' losses in derivatives were almost entirely confined to credit default swaps — bets on failing companies and sinking investments.

But credit default swaps are actually a much smaller sector, representing only 7.8 percent of the total derivatives market.

Now, with potential new losses in interest rate derivatives, this problem has the potential to cause a collapse in a whopping 82 percent of the derivatives market.

Thus, considering this far larger volume, any threat to interest rate derivatives could be far more serious than anything we've seen so far.

Today U.S. banks alone control $200.4 trillion in derivatives; and it's precisely in this dangerous sector of IRS's that the megabanks dominate the most.
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According to the Office of the Comptroller of Currency's Q4 2008 report, America's top five commercial banks control 96 percent of the industry's total derivatives, while the top 25 control 99.78 percent. In other words, for every $100 dollar of derivatives, the big banks have $99.78 ... while the rest of the nation's 7,000-plus banking institutions control a meager 22 cents!3 This is a massively dangerous concentration of risk.

The large banks are exposed to the danger that buyers will vanish, markets will suddenly become illiquid, and they'll be unable to unload their positions without accepting wipe-out losses. The large banks are exposed to the danger that, with exploding federal deficits and new fears of inflation, interest rates will suddenly surge, delivering a whole new round of even bigger losses in the months ahead.

Worst of all, the five biggest banks are exposed to breathtaking default risk — the danger that their trading partners could fail to make good on their gambling debts, transforming even the best winning trades into some of the worst losers.

Here's a chart on these risks, updated to reflect the new data just released on Friday for the year-end 2008,

Bank of America's total credit exposure to derivatives was 179 percent of its risk-based capital;

Citibank's was 278 percent;

JPMorgan Chase's, 382 percent

HSBC America's, 550 percent, and

Goldman Sachs' total credit exposure at year-end was 1,056 percent, or over ten times more than its capital.

Get ready for some big fireworks in the banking industry that even Bernanke's giant printing press cannot possibly handle and all of the proposed accounting changes cannot mask or cure this massive problem..

Congress: Shortsighted About Financials

When you talk about being short sighted and missing the point, you are the ultimate example. The real point is that these banks cried wolf and had Paulson play congress and the taxpayers for suckers .They were just trying to further line the pockets of their all too wealthy executives at the expense of the taxpayers. It is obvious these firms still care nothing about putting country first and are more concerned about their bonuses than anything else, so much so that they would repay money they tried so hard to steal from the taxpayers to protect them.

Since they also got unjustified free money from AIG at the expense of the taxpayers, why would they want to share any gains with the taxpayers on the preferred stock deal. Hopefully these worthless greed monsters do pay us back and expose the fact they never needed the bail out in the first place and were just bent on more greed and theft, but amazingly someone may finally called their bluff just by cutting off their outrageous bonuses.

Bonusgate: Politics, Economics, Outrage and Media

I think you badly underestimate the rage started by bonusgate. This is only the start. Remember the Boston Tea Party was one little act that changed the world and when the rage of the people reaches the proper level all hell will break loose in this country and hopefully change Washington forever.

Obviously the "its only a litte percentage" crowd misses the whole point that it is small like the tip of the iceberg, but will also expose the whole corrupt system below, that has married Wall Street and our incompetent gov't to screw main street and to take a position as our masters rather than as our servants and providers of financial services - The exact thing that our founding fathers and especially Jefferson warned about.

It is now exposing how congress - our representatives (LOL) constantly approve bailouts that the people are very much against and pampers and enriches failed financial institutions that pay them (aka campaign contributions) to act in their behalf against the will of the people. When all was going well no one cared, but people are waking up and caring deeply and congress and the President better wake up to that fact.

Those of us that have worked hard, paid our bills and tried to make a better life for our children and grand children are sick of this wasteful spending to save Wall Street from its reckless habits. We will not borrow money to live beyond our means and no American should be encouraged to do so again. Dicouraging savers, that are the true base of any real recovery, while again rewarding and encouraging reckles spending by example is a great shortcoming of this gov't.

Putting a Wall Strett insider in charge of the Treasury, especially one that is a liar and a cheat, instills no confidence in anyone and provides no creative thinking to solve economic problems. All Geithner is now doing is to use our hard earned tax dollars to entice and beg Wall Street to save us from Wall Street. I guess he was not content to just throw money at AIG without any controls so they could flaunt main street with insane bonuses. These are both ridiculous acts and will not work for the good of the country. This guy needs to go ASAP.

With the unconstitutional Fed directing our economy, like communist bosses, for their own personl gain, spending trillions of tax payer money with no say or oversight from congress, people besides Ron Paul are quickly figuring out that it is wrong and has to end. Bernanke getting so desperate to save his private bank owners that he is now creating money out of thin air like a banana republic dictator must be stopped.

Just as a small thing like Watergate exposed a corrupt whitehouse and brought down an admininistration hopefully bonusgate will bring down all of Washington and create a new era of prosperity for the US.

Outing AIG's Bonus Babies: What's the Point?

This is why they will not disclose the list, because most of these bonuses were paid overseas:

According to the UK Guardian, "in addition, to AIG providing $121m to 6,400 employees across the rest of its sprawling global empire."
Nearly half of those retention bonuses are for the staff of the Financial Products Division which is almost single-handedly responsible for the ills which have befallen AIG and, by extension, you and me.

The Financial Products Division is located in … London . Mayfair, London .

According to the Guardian AIG paid "bonuses of $450m (£322m) to staff at the London-run financial products division that crippled the company with vast losses on toxic derivatives."
That would be $450 million of your money. And mine

Tim Geithner Should Be Drawing the Mob More than AIG

ALmost as dumb as his latest proposal to duct the hundreds of millions of bonuses from the next $30 bbl that he gives to AIG. Lock them all up to stop this lunacy and waste of tax payer dollars.

AIG Giftwraps $450M

Sure the bonuses are outrageous and need to be stopped and the incompetent employees and management need to be fired not rewarded. All the gov't needs to do is throw them into BK as they surely can do as their largest creditor and let courts decide which contracts can be canceled.

Even worse is the payment of billions of our tax payer money to foreign banks. The actions of this firm surely do border on treason and they should pay dearly for their actions - somehow very long term jail sentences comes to mind in this regard. We could build a special VIP prison for the executives that run this tax payer scam. They make Madoff look like a saint. Hopefully we will also leave some cells available for the incompetent members of congress that have blessed this criminal action and continue to blindly fund these crooks.