Comments on: Big American Banks – reasons to be worried

By: Golem XIV - Thoughts

Golem XIV - Thoughts — Fri, 15 Oct 2010 15:44:17 +0000

Hello Kalki, Welcome.

Well that is the question. The problem for all the crooks concerned is that it is rapidly turning into a rubic's cube of shifting parts.

What the Fed would like ideally, is to convince all concerned that they all have to stick to how it is now. The problem is how do you convince those who see a way of contesting a foreclosure on their house not to contest it? Especially at election time.

At its simplest you appear to have the survival of the Big banks on one side and on the other Property law and States rights. That is a VERY ugly fight for the Fed and Washington to get in the middle of. But in the middle they are.

The whole thing is compounded in its complexity because it is happening as a currency war gathers pace. And, in Europe, people are beginning to wake up and oppose their governments over austerity. In France there may be full scale fuel shortages. Put these three things together and you have a NIGHTMARE of volatility.

It could all go inside out from volatility alone.

By: Kalki

Kalki — Fri, 15 Oct 2010 15:17:23 +0000

So if the big four dodge the bullet again, and the rest go down, at cost to the taxpayer, then taxpayers will just accept it?

By: Testa

Testa — Fri, 15 Oct 2010 08:48:22 +0000

Smart move on their part.

I do wonder if the others will follow suit in 'coordination' now.

"This rise in CDS costs, in turn, raises the likelihood that interbank lending costs could start to move up."

I would appreciate if you could explain as I dont understand how the in individual banks CDS costs and the LIBOR rate are linked. You wrote 'likelihood' which means its not actually connected.

http://en.wikipedia.org/wiki/London_Interbank_Offered_Rate

Thanks for your posts.

By: Golem XIV - Thoughts

Golem XIV - Thoughts — Fri, 15 Oct 2010 08:11:01 +0000

John,

Yes that is what I think too. This is JPM getting in before anyone else. Let's watch to see if any other banks, and if so which ones, follow.

I think the banks and the dollar are feeling politically exposed.

By: john

john — Fri, 15 Oct 2010 07:30:38 +0000

Hi Golem

Could JPM's $4Bn could well be a 'we live in turbulent times, get some money in while all is calm' precaution.

That way when the next wave hits they will be more protected from it (capital ratio etc.) and even IF a big bank was to be allowed to fail it would only be the weakest... and in that case any big bank with a healthy capital ratio would probably get the dieing bank and probably a big chunk of goverment cash too.

If all the banks are weak and political sentiment starts to go agaist them then won't we see them all scrabbling not to be the weakest?

John (jms452)