Lock and load, let's roll.

There will be no end to it, until there is.

This actually allows them to put-off judgement day even longer. Just more tools to prevent the needed correction from taking place.

These ticker entries will end up as a big fat 'I TOLD YOU SO' when everything blows up and J6P finds out why his ass hurts.

When we hear the question, "What happened?" I'm just going to say, "Market-ticker.org"

It's pretty obvious to me that the US Government, and Canada's, have become a plutocratic-kleptocracy.

I have my pitchfork and silver bullets.

When does hunting season start is all I want to know.

Precedent, Is that what they are calling it these days?

I think this accelerates judgment day. Cost of capital will go up and hoarding will be more common.

Silver Bullets: the Classic Touch!

Isn't this going to start a sell off of senior secured bonds?

Quote:

As I've repeatedly said, I can't buy anything in the financial space as an investment today - not even "big conglomerates" like GE - because it is impossible for me to evaluate their balance sheet and believe what I am reading.

Gen.

Doesn't your statement also apply to the non-zombie community/regional banks? I often get asked by elderly, frightened people, is the bank I use safe? Will the balance sheet tell me anything? I give them the only responsible answer to first question which is I do not know. The second answer is equally unappealing to the recipient, and that is that the balance sheet tells you nothing if they have a line item for MBS, CMO, CDO, because even the bank's CFO has no idea what they are worth.

I cajoled the manager of a moderate sized, non publicly traded, bank holding company to give me the balance sheet, and they had a significant number under line item MBS's. With a smile and a smerk he said we are 5 star rated and have always been a conservative bank. Thanks Buddy for nothing.

If they have a Tier 1 capital ratio slightly >6%, in light of the fact that the balance sheet says nothing without mark to market input, is not the Tier 1 ratio valueless?

"I knew I should've made those bonds callable."

Are you calling for 100% reserve ratios Karl?

Well, to be fair, what did Bair and the FDIC have to do with the GM and Chrysler bailouts? Nor do TBTF banks have unions...

And how else do you get the ****ing marks to be taken when the White House and Fed have already been captured and have already immasculated the SEC and the FASB? The gov is always the super super senior, and I have no problems if they start to act like it via a legitimate democratic mechanism (it's a CONGRESS COMMITTEE that put this through), which basically means they can make the rules as they go (don't like it? go invest in China or Russia or Saudi). So it can jam down on the senior secured if it wants to (KNOWING IT'S NOT REALLY SECURED!!!), which can then jam down on the juniors/unsecured, which can jam down on the equity. That's the theory anyways. I'd agree with you if I believed that Bair was trying to protect holders of unsecureds and equity, but I don't believe that. Congress on the other hand I'm not so sure about, but I'd rather have FDIC/Congress hold the balance of power (no matter how ****ing messy that is) than the Fed/Treasury/primary dealer syndicate.

Wouldn't "FDIC insured" bank account owners in a failed bank be another definition for "government secured creditors"?

Sounds to me some lawyers are creatively writing out the need for FDIC money via new congressional laws....

BTW, Genesis, as you've aptly stated many times before, an investor must be able to explicitly trust the accuracy of a balance sheet before they can begin to evaluate it!

"kleptocrats" ???

Is that a new word? I have never seen or heard that word before.

Anyway, unless the lender possesses the collateral, to me a loan is unsecured. I don't care what a prospectus or bond counsel or any other paid shill says.

One dollar of capital for each dollar of unsecured lending outstanding. A 1:1 ratio.

Karl, what is the current ratio? And what is the total amount of unsecured lending outstanding?

I'm sure you've written about it before, but I'd appreciate it if you could repeat those numbers. Thanks. Great tickers today, as always.

I've been out of the industry for eight years. I worked on the side that did the "sweeps". So, when we had the entire book of treasuries and agencies pledged as collateral on municipal sweep accounts, the bank was still allowed to count them in their capital ratios?? Ths sounds like double counting. How can these securities back specific sweeps and the overall deposit base at the same time? I am understanding this correctly?

On another note, before I left, we implemented FAS 133. ALL derivatives had to be put on the balance sheet & they had to be marked to market through income. If they proved to be an effective accounting hedge, the mark could go through equity. I'm still wondering how they got around this.

This is all about FHLB debt. FHLB debt is above the FDIC in the capital structure currently. So they tend to lend to zombies then expect the FDIC to bail them out. Putting this rule in would make them less apt to do so as they would be risking real money.

Quote:

I've been out of the industry for eight years. I worked on the side that did the "sweeps". So, when we had the entire book of treasuries and agencies pledged as collateral on municipal sweep accounts, the bank was still allowed to count them in their capital ratios?? Ths sounds like double counting. How can these securities back specific sweeps and the overall deposit base at the same time? I am understanding this correctly?

Yep. Sweeps were one of the dodges used to get around capital ratios - Greenspan was the architect of that bull****, as sweep accounts were considered exempt from reserve requirements thanks to what amounted to an "Executive Order" issued by him.

Lastchance:

klep⋅toc⋅ra⋅cy  /klɛpˈtɒkrəsi/ Show Spelled Pronunciation [klep-tok-ruh-see] –noun, plural ‑cies. a government or state in which those in power exploit national resources and steal; rule by a thief or thieves.

Origin:
1815–20; klepto- (comb. form of Gk kléptçs thief) + -cracy

Bair is gonna need an extra dose of Bayer.

..............

http://www.usdebtclock.org/

Ribbit

Thanks. In plain english, it sounds synonymous with a looting operation.

So I've thought about this some more, and have one final post on the topic...

Let me say that I agree with the opinion expressed on this blog, and it's very very well thought out:

http://www.interfluidity.com/v2/215.html

The question in my mind that remains, however, is 'how do you get there when your system has already been captured and the regulated banksters know that they are in control of the Fed and White House?'

The only way I can see the banking syndicate willfully bowing to the kind of new taxation structure outlined in this piece IS IF YOU SCARE THEM WITH A MORE SEVERE OPTION that's backed by Congress / Senate and the people.

Always negotiate from a position of strength.

THAT'S why I support this discretionary approach, at least in the political context. It's only way I think we'll ever be able to get to a less-discretionary approach as outlined in this article in the long run.

Until we take that ****ing bull dick out of our asses, cut it off and jam it down the throats of the perpetrators so that they know that we mean business, they're still going to keep ****ing us up the ass.

Lean in with a heavy hand, or don't do it at all. Letting the banksters tell us how to tweak things is just making things worse.

http://yglesias.thinkprogress.org/archiv....

Peace, out.