Monday, 06 June 2011 11:57

Now That The Mainstream Media Has Admitted That Banks Should Be On A Downhill Slide...

CNBC ran an article this morning, Bank Shares Take a Beating, and It May Not Be Over Yet. Talk about obvious. We have been bearish on banks since they collapsed a couple of years ago. Yes, they soared 100% to 200% after dropping 80% (you do the math and see which side of the bet made the most money), but those share price spikes are the result of pure and explicit government manipulation. There are no fundamental reasons that come to bear to buy these companies. As a matter of fact, they are the new "tobacco" companies and are lightning rods for litigation, and that is the least of their problems. The big issue is that the cause of the their collapse in 2008 has went nowhere but deeper in into their respective balance sheets, hidden by captured government regulators and funny money accounting shenanigans. The bulk of most bank lending in this county is done for the purchase of real estate. How do you think that business is doing now? How about those ever so valuable legacy assets?

Let's run through just the latest of the many BoomBustBlog warnings, after all you just have to be asking yourself by now, "Is Another Banking Crisis Inevitable?".

The chickens are coming home to roost, dude. When you send your chickens out in the morning, they return to your barnyard. Not your neighbor's barnyard, not the guy across the street, but your barnyard. Oh, I say it and say it again... You've had! Been took! Hoodwinked! Bamboozled! Led astray, run amok! This is what they do!

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Another stint on Max Keiser discussing what happens when its the banks that walk away from a home, phantom banking profits that never were, and more shenanigans that are the tour de force that is today's banking system and economy. To skip directly to the Reggie Middleton interview, move to 11:55 in the video.

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Related articles:

Here are quite a few more...

You’ve Been Had! You’ve Been Took! Hoodwinked! Bamboozled! Led Astray! Run Amok! This Is What They Do!

Monday, February 28th, 2011

The Fiery Sword of Truth

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Greece Reports: “Circular Reasoning Works Because Circular Reasoning Works” – Or – Here Comes That Default!!!

Monday, May 23rd, 2011 by Reggie Middleton

For all of those who felt I was too bearish on the Euro region in 2009 and 2010, thus far nearly every proclamation that I have made has come to light or shown a direct path to doing so. I believe I was unequivocally clear in my assertion that Greece will default at least a year or so ago (even if said default would be marketed by some other name for the sake of political expediency). I would consider this a must read for anyone in the mainstream media reporting on this topic, or any investor/stakeholder who may fear the Grecian domino effect, even if you feel you have seen some aspects of it before.

Well, now its time to call Greece out on its perversely circular  reasoning being used to justify its alleged stance that it will not default. I read a humorously crafted ZeroHedge article this morning which immediately cause the following image to pop into mind…

For more on the origin of said circle, I first refer you to an article ran yesterday in Bloomberg

It Should Be Obvious To Many That The Risk Of Defaulting Sovereign Bonds Can Spark A European Banking Crisis

Thursday, April 14th, 2011 by Reggie Middleton

I’m fresh back from my trip to Amsterdam where I lectured ING institutional clients and staff on the potential of a European banking collapse. Below are a few clips from the first of two lectures.

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Reggie Middleton’s Real Estate Recap: As I Have Clearly Illustrated, It’s a Real Estate Depression!!!

Wednesday, May 25th, 2011 by Reggie Middleton

Summary: I called it the coming RE Depression in 2007! I put MY money where my mouth was and sold off all of my investment real estate. I put YOUR money where my mouth was and shorted all that had to do with real estate (REITs, banks, builders, insurers). I called almost every major bank collapse months in advance. I warned the .gov bubble blowing does not = organic economic recovery. Now I’m saying we need to, and will, continue what’s left of the crash of 2009, with ample global company. There will be no RE recovery this year, and there will be a crash. OK, you heard it here!

First, let’s go through the headlines for the day then proceed to breadcrumb trail that clearly led us to where we are now and where we will ultimately end (oh yeah, In Case You Didn’t Get The Memo, The US Is In a Real Estate Depression That Is About To Get Much WorseWednesday, February 23rd, 2011)

Sound Money Interview of Reggie Middleton (05-24-11), Aired on NYC’s WNYE Radio Tuesday, May 31st, 2011 by Reggie Middleton

On 5/24/11 I recorded a podcast interview with the Sound of Money, an interesting financial show that airs on NYC’s WNYE radio. You can listen to 46 and a half minutes of my viewpoints and opinions via this link, Sound-money-interview-of-reggie-middleton-05-24-11.

Dexia Sets A $5.1bn Provision For Loss On Trying To Sell The Same Residential Real Estate Assets Upon Which JP Morgan Has Slashed Provisions 83% to $1.2bn from $7.0bn

Tuesday, May 31st, 2011 by Reggie Middleton

Do you remember my recent missive “There’s Something Fishy at the House of Morgan“? Well, in it I queried how it was that JP Morgan can continuously pull risk provisions and reserves to pad quarterly accounting earnings at time when I not only made clear that we are in a real estate depression but the facts actually played out the same. As excerpted from the aforementioned article:

 

Weakening Revenue Streams in US Banks Will Make Them More Susceptible To Contingent Risks

Tuesday, April 12th, 2011

JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now

Wednesday, March 2nd, 2011

Last modified on Monday, 11 July 2011 08:06

20 comments

  • Comment Link Jack Foley Thursday, 09 June 2011 05:44 posted by Jack Foley

    Interesting,

    when the inevitable comes from a qualified person like that, its time to take notice

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  • Comment Link Pieter Wednesday, 08 June 2011 20:01 posted by Pieter

    Professor Franz Hörmann from the university in Vienna is statistician and a mathematical genius. His calculations indicate a money system crash in 20…..11. Financial hotshots there tried to prove him wrong and even tried character assassination. They have two problems; every development supports his theories and he is better than they are. We may assume that this will make policymakers a lot more nervous than they want us to believe.

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  • Comment Link Jack Foley Wednesday, 08 June 2011 17:02 posted by Jack Foley

    there have been incidents in barcelona and madrid but nada too serious..
    i think spain or italy will face big problems this summer with their bonds

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  • Comment Link Frank Wednesday, 08 June 2011 16:30 posted by Frank

    I don't think that we have real inflation what we have is stagflation as Reggie has called it. If you want real inflation we need some fundamental changes. We currently have too much debt to the level of income in the US. So we need more income. As of Nov of 2010 they were paying out for an unemployment rate of over 17% that is not counting those that have fallen off the gravy train. They were claiming an unemployment rate of 9.8% for that month. With full employment we aren’t going to be able to service the debt in the US we need wage inflation to get us to where we can service the debt.

    The falling price(s) of houses is cause deflation. We need to put a floor under the housing market in order to support the economy. More government bubble blowing is not what we need. We need the income to pay for the houses with. Those NINGA loans would be looking a lot more repayable if the minimum wage was $30hr. With a minimum wage that high anyone with a full time job would be in the market for a $180K house.

    The economy is structured to run on $900 billion worth of printed money a year. (Over the last ten years the worlds monetary base went from $3trillion USD to $10 Trillion USD with the printed money being used to buy debt in the US.) We need to replace that lost money source. QE1 QE2 QE3 is trying but we have too much debt and not enough income and there are better places than the US to invest that money. Why not print $900 billion and give everyone a check for $3k? That should get us a big spike in consumer spending. With a big spike in consumer spend should come a big spike in employment.

    We don’t have inflation we have stagflation. We need true inflation. A controlled hyper inflation of 200% would put the economy on a sound economic footing. (Short term)

    Long term we need to rebuild our manufacturing base, in order to get that we need a high national savings rate. We need an enforced savings plan with the money hitting the banks not the stock market. When you put the money in the stock market you get an asset bubble. When you put the money in the banks you get balanced trade.

    “Get your feet back on the ground.”

    1, 2, 3 I do believe that I do have my feet on the ground.

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  • Comment Link John Ryskamp Wednesday, 08 June 2011 13:49 posted by John Ryskamp

    The unemployment rate in Spain among those with a Bachelor's degree or higher is not an official 20% (or true 40% underemployment). That's what you need for a revolution. Our oligarchs have gone mad. They will steal right up to the nanosecond of revolution, which will occur precisely when the true underemployment rate among those who have a Bachelor's degree or higher is 40% (20% official).

    Until then, no haircuts and no defaults. Don't you understand that, like Czar Nicky or Louis XVI, they have taken an all or nothing pledge? There will be no compromises.

    And why should they compromise? Look how much wealth there still is in American suburbia. There's LOTS to steal.

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  • Comment Link Binh Wednesday, 08 June 2011 12:45 posted by Binh

    This John guy is silly. They have 20% unemployment in Spain and there's no revolution (yes there are big protests, but big protests do not a revolution make).

    The best way to solve the dispute is to arrange a trade based on your respective views on this question. He should put his money where his mouth is or shut up.

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  • Comment Link John Ryskamp Tuesday, 07 June 2011 19:41 posted by John Ryskamp

    Yes but we're not going to have inflation for very long. We're going to have a horrendous deflation caused by a collapse in demand. Don't you realize that all the economic activity of the past two years is simply the result of being able to write off expenses the year they are incurred? Obama even talked about it in the State of the Union address!

    I don't know where you're from, but here in Silicon Valley everyone is scrambling to save money, because tech died two months ago. I guess if you're not here you don't know that. But everyone now has all the chips, servers and software they need--all written off the year they purchased it.

    Now what? That's the question out here: now what? The big layoffs are starting again, everyone is on the bench.

    I don't understand why people don't realize that a collapse in demand is always ahead of a collapse in currency. Again, I don't know where you are, but there has been a collapse in demand in the Bay Area, and I don't really think that even with commodity speculation run rampant, they're going to be able to keep prices high. People simply aren't buying--and they're leaving the Bay Area.

    Get your feet back on the ground.

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  • Comment Link Frank Tuesday, 07 June 2011 17:09 posted by Frank

    The money can be paid back the value can't. Paying back the money can be done with inflation. (We also will tend to get full employment as well)

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  • Comment Link H.Kwint Tuesday, 07 June 2011 16:16 posted by H.Kwint

    Pieter: In NL, we're pretty involved, I'd suggest.

    Last year, our largest pension fund ABP had 2,3 billion worth of Greek bonds, and PGGM was also heavily in Greece. Both 'bailed out' in 2010 it seems. Nonetheless, PGGM is heavily in on Spain, Italy, Ireland and Portugal. On the other hand, the dumba**es at ING were recently still in on Greece for €3B, ABN is in on Greece/Ireland for €1,5B, and Rabo and Aeagon both also invested over €0,1B. Together, I'd suppose we're looking at least at $4B.

    Maybe not as deep in it as Germany or France, but given our smaller population I think "us" also means you and me.

    So, if they're selling / not buying anymore, then who's buying? An internet search reveals it's the Chinese who almost 'bought' Greece now.

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  • Comment Link Jack Foley Tuesday, 07 June 2011 16:06 posted by Jack Foley

    Yea Im irish and ur right John, the money will never be paid back..

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  • Comment Link Frank Tuesday, 07 June 2011 15:59 posted by Frank

    We could do something like savings vouchers if we are going to have an intentional 200% inflation in GDP. If we intentionally cut the value of savings in half, we can replace the value with printed money.

    Inflating away the value of the debt will tend to save the banks from themselves. Writing off 50% of the debt will tend to make the banks fail. If the banking system fails then will we be able to buy gas at the pump? If we can’t buy gas at the pump then how will we buy food at the store?

    We need to print a bunch of money and simply give it to everyone. Hard times are headed our way. As of Nov of 2010 they were paying out for over 17% unemployment as they claimed 9.8%. At this payout rate people that are getting checks aren’t being counted as being unemployed.

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  • Comment Link Pieter Tuesday, 07 June 2011 14:56 posted by Pieter

    John:
    The scheme is more sophisticated than you suggest. At this moment the opinion of the Dutch population is manipulated because the situation is dragging along for quite a while and people here are getting suspicious. Clever as they are politicians use this to present themselves as the brave ones who now dare to present the bitter truth: 'We must stop to suggest that the investment in the Greek (Irish, Portugese) economy is merely a loan, that the money will return. But....on the long term it will cost us (who is "us"?) more to increase debts than to restructure'. In other words: the ECB will cough up the money (the European taxpayer)and the banks will knock on the door of the governments - again.

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  • Comment Link Jack Foley Tuesday, 07 June 2011 06:58 posted by Jack Foley

    all totally wrong , people save and then get killed while the speculators rake it in..

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  • Comment Link H.Kwint Tuesday, 07 June 2011 06:47 posted by H.Kwint

    Isn't that the same?

    If you inflate by 50%, the money anoyone saved is only worth half of the wealth it was before. If you write off about 50% of the worlds debt, those who saved lose 50% of their wealth as well. So whichever of the two, those who saved will lose half of their wealth - in favour of those who lend money. Which means you're punished when you saved and rewarded if you spent more than you had.

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  • Comment Link Jack Foley Tuesday, 07 June 2011 05:22 posted by Jack Foley

    Yea financials got hit really hard yesterday and this is worrying as they were the first to fall also in 2008. Is there a repeat of 2008 on the way?

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  • Comment Link John Ryskamp Monday, 06 June 2011 23:33 posted by John Ryskamp

    Comment on this too:

    Ireland appears on right track, says acting IMF chief
    Irish Times - Mark Hennessy - ‎3 hours ago‎
    Mr Lipsky moved firmly to quash speculation that the IMF would support a restructuring of Greek debt, following waves of public anger against the latest IMF-backed measures to get its austerity efforts back in line with targets. ..

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  • Comment Link Frank Monday, 06 June 2011 22:36 posted by Frank

    What would cause less damage to the world’s economies? Inflating away about 50% of the value of the world’s debt or writing off about 50% of the world’s debt?

    Would the latter tend to cause a general banking system collapse?

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  • Comment Link Reggie Middleton Monday, 06 June 2011 22:29 posted by Reggie Middleton

    I'll be expanding on this tomorrow:

    http://www.ft.com/cms/s/0/359d2e7a-8bb2-11e0-a725-00144feab49a.html#ixzz1OYMyK4gA

    Irish lenders outline loss plans for bondholders

    By Sharlene Goff in London and John Murray Brown in Dublin

    Published: May 31 2011 19:30 | Last updated: May 31 2011 19:30

    Three of Ireland’s lenders revealed plans to impose losses of up to 90 per cent on bondholders in attempts to make them shoulder some of the cost of recapitalising the country’s banks.

    Bank of Ireland said it would shortly announce a cash offer for €2.6bn ($3.7bn) of its subordinated debt, with discounts of either 80 per cent or 90 per cent depending on the type of bond. Two smaller lenders, Irish Life & Permanent and EBS, planned to impose similar losses on holders of about €1bn of debt.

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  • Comment Link John Ryskamp Monday, 06 June 2011 22:24 posted by John Ryskamp

    I've always said: no haircuts, no defaults. And that's the way it's going to be. No there won't be a Greek default. The oligarchs will let the world collapse before they will let their financial companies implode.

    We're going to have a revolution, but it's not going to happen until the BLS OFFICIAL unemployment rate for those with a Bachelor's degree or higher is 20%. Know what it was last month?

    Here it is for the last four months, straight from the Bureau of Labor Statistics Table A.4
    4.2 4.3 4.4 4.5 4.5

    Of course, BLS lies. So double it. Oh go ahead. Triple it.

    SO WHAT!!!!! Are you seriously telling me the oligarchs are going to give the go ahead to a seriously destabilizing event like a Greek restructuring, when almost all of the bourgeoisie is still working, still paying their bills, still getting their income?

    Don't be UTTERLY ridiculous. If our middle class swine had any idea that the financial structure was about to implode, they wouldn't spend another cent, and they'd probably go on a general strike.

    No. The middle class must be left in complete ignorance until it wakes up one morning with no job, no money, no nothing. Are you really going to provoke the animal you are trying to kill? Why on earth would you do that.

    No. Sorry Reggie. I've said it before and I've been 100% right: no defaults and no haircuts.

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  • Comment Link Pieter Monday, 06 June 2011 15:11 posted by Pieter

    Reggie,
    Sorry if this is not correct English.

    It is all over the news in the Netherlands: Greece has to restructure it's debts. It will cost us, the ignorant neoliberal minded, bank-protective and therefore self destructive Dutch taxpayer 20-30 billion euro's! Dutch proverb: (free translated) 'If you burn your ass, you have to sit on blisters'
    Yes, you were right and your visit has opened eyes.

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