Wednesday, Apr 22, 2009
Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent
Bloomberg: Bank Regulators Clash Over U.S. Stress-Tests Endgame
The U.S. Treasury and financial regulators are clashing with each other over how to disclose results from the stress tests of 19 U.S. banks, with some officials concerned at potential damage to weaker institutions. With a May 4 deadline approaching, there is no set plan for how much information to release, how to categorize the results or who should make the announcements, people familiar with the matter said.
Posted by sold 2 rent 1 @ 10:04 AM (1343 views) Add Comment
32 Comments
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1. sold 2 rent 1 said...
LEAKED BANK STRESS TEST RESULTS are on this link:
http://www.fourwinds10.com/siterun_data/government/banking_and_taxation_irs_and_insurance/social_security/news.php?q=1240331106
The Turner Radio Network has obtained the stress test results. They are very bad. The most salient points from the stress tests appear below.
1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent. (Based upon the “alternative more adverse” scenario which had a 3.3 percent contraction of the U.S. Economy in 2009, accompanied by 8.9 percent unemployment, followed by 0.5 percent growth of the U.S. Economy but a 10.3 percent jobless in 2010.)2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans. (Without further government injections of cash)
3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
4) Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
6) 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; and HSBC America`s, 550 percent. It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital! (HSBC is NOT in the top 19 banks undergoing a stress test, but is mentioned in the report as an aside because of its risk capital exposure to derivatives)
7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The debt crisis is much greater than the government has reported. The FDIC`s "Problem List" of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.
Put bluntly, the entire US Banking System is in complete and total collapse
2. will said...
I'm sure they will spin their way out of this one with more denial and lies.
3. happy mondays said...
s2r1, we are close to singularity!
4. sold 2 rent 1 said...
happy mondays,
Whilst we may only be 2 years from the consciousness singularity we have an enormous amount of change to happen before then.
Like any exponential function the biggest changes comes right at the end. We aint seen nothing yet.
For Armstrong PI cycle followers I have just read David Nichols recent Fractal Gold Report (available on free 1 month trial)
QUOTE from article
"I've come to the conclusion that while Martin Armstrong's original observation of the 8.6 year cycle is undoubtedly brilliant, his conclusion that the timing structure is based on Pi (π) -- i.e., 3.141 x 1000 days, or 8.6 years -- is actually mistaken."
"That is an easy and natural mistake to make, because of a quite remarkable mathematical coincidence. Maybe it's not a coincidence, but as far as I can tell it is. And my dad agreed when I asked him about it this weekend, and he's definitely one smart dude. In my opinion the real reason why 8.6 is so important in financial markets is not because of Pi (π), but is instead because the square root of 2 (1.414) plus the square root of 3 (1.732) equals 3.146."
"So it is either meaningful that √2 + √3 is extremely close to π, or it's just a coincidence. I think it's just a coincidence. But it's certainly not a coincidence that the basis of the timing cycles in financial markets are the relationships between root 2 (1.414), root 3 (1.732), and root 5 (2.236). For those of you interested in further study on this, these square roots are also the foundation of the Platonic Solids, which were originally characterized by Pythagoras and other Ancient Greeks as the fundamental building blocks of the natural world."
Any HPCer understand Platonic Solids?
5. mountain goat said...
S2R1 this Turner Radio Network report was discredited (although not neccessarily untrue). For example HSBC is not part of the tests. Techieman posted it on monday.
6. alan said...
Thanks S2R1,
The situation looks bad. It could be a case of "when it fails" and not "if it fails".
I guess not too many news broadcasters will want to pick this one up. Too many heads in the sand!
7. sold 2 rent 1 said...
mountain goat,
"this Turner Radio Network report was discredited"
By who? MSM, government officials?
8. sold 2 rent 1 said...
From the link posted above
UPDATE 0147 HRS EDT Monday, April 20, 2009 --
For those who may be skeptical about the veracity of the stress test report above, be reminded that only last Sunday, April 12, this radio network obtained and published a Department of Homeland Security (DHS) Memo outlining their concerns that returning US military vets posed a domestic security threat as "right wing extremists." That memo, available here, is marked "FOR OFFICIAL USE ONLY" and contained strict warnings that it was not to be released to the public or to the media. We obtained it and published it days before other media outlets.
That DHS report appeared on this blog at least two full days before the story was picked up by The Washington Times, and virtually every other US media outlet.
Details of certain aspects of the stress test reported above have now been CONFIRMED through REUTERS News service when they disclosed the risk-capital percentages publicly on April 6, 2009 at this link
Further, todays Wall Street Journal (April 20, 2009) is confirming at this link that lending by the largest banks has DECREASED 23% since the government began the T.A.R.P. program, causing many in Congress to ask where the money has actually been going. Apparently, it has been going into propping-up the failing banks instead of out in loans to the public.
Additional details and proofs are forthcoming. . . . . continue to check back on this developing story.
9. sold 2 rent 1 said...
Also from the link above
UPDATE 1154 HRS EDT April 20, 2009 --
The United States Treasury has openly and brazenly lied regarding our stress test report and we can prove they have lied about it.
This morning, the United States Treasury issued a statement (HERE) claiming they do not yet have the results of the Stress Tests, rebuking our report
How do we know its a lie?
Because of this from April 10th:
April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said.
The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month.
How can you be ordered not to release something you don't have?
Since that was published on the 10th of April, we therefore know that the results exist and Treasury, the banks involved and The Fed have them, as The Fed was concerned that some banks might try to use them (perhaps in a misleading fashion) during their first quarter conference calls and earnings releases.
Sorry guys, but whether the Turner Radio Network has the real results or not is no longer material. What's material is the claim that Treasury doesn't have them, since they told the banks on the 10th not to release them, and you can't release what you don't have.
The problem with lying is that eventually you forget your previous lies and thus get caught when you contradict yourself.
10. happy mondays said...
s2r1, i knew it would not be a simple yes or no from you. Lol, i'm still struggling with the mayan's, but will look into this..Cheers
11. jack c said...
See also previous related posting
Monday, Apr 20, 2009But our financial institutions are in better shape....Turner Radio Network: LEAKED! Bank Stress Test Reults !
lending has decreased by 23% since TARP.. and some other nuggets.
Posted by techieman @ 02:27 PM (444 views) Add Comment
12. mountain goat said...
S2R1 yes discredited mainly by officials. Also the effect it had on the markets lifted with the official discrediting. Better now that you have included the rebuttal from Turner Radio Network.
The issue is not really bank solvency though is it. We all know they are insolvent. It is whether humpty dumpty can ever be TARPed back together again.
For me a bigger issue is the latest good banking results. As Weiss points out there was so much fraudulent accounting after 'mark to market' was lifted recently, "It’s the ultimate double standard: The banks get away with inflating their toxic assets. But at the same time, they’re allowed to mark to market their own debts, which happen to be trading at huge discounts on the open market precisely because of their toxic assets."
13. rickyb said...
Use of PI or √2 and √3 all looks perfectly irrational to me.
14. 51ck-6-51x said...
S2R1 - your user-headline of "Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent" is a little misleading, since the article does not talk of this rumour - Maybe you should consider the use of this commentary for such statements. (I'm not that bothered to be honest - it's just a suggestion.)
15. techieman said...
Also see the Bloomberg video earlier - ""whitney" near the end. I find this whole issue quite interesting.
16. general congreve said...
MG @ 12 - "The issue is not really bank solvency though is it. We all know they are insolvent. It is whether humpty dumpty can ever be TARPed back together again."
This is the central point of all the problems we face, and I'm pretty sure the answer is no. The western financial system is up s**t creek without a big enough paddle to row it's way out. The tax burden that the bailouts have created just isn't serviceable whilst keeping an economy growing. If you're being taxed to the hilt just to pay down record national debt (money not reinvested in the economy) and servicing your own massive personal debt with the rest of your disposable income (to pay for that massive mortgage and all those credit cards you maxed out over the last decade) then how on earth is the economy going to grow? It's won't, it will shrink, and the more it shrinks the faster it shrinks. And as the economy shrinks the banks see more loans go bad and so need more bailouts to stay afloat, a downward spiral.
The only way out of this situation for a desperate govt. is to take on even more debt to make up the shortfall in tax, obviously this is unsustainable, as creditors will soon stop lending to a hopeless case. So then it's off to the printing press and headlong to Zimbabwe on Thames. THIS IS ALREADY HAPPENING WITH FAILING BOND SALES AND QE. It is already a GAME OVER situation, it's just a case of how long it'll take to hit the bottom now.
Gordon or Gold?
17. techieman said...
general congreve off topic - re your question yesterday re EW you can do a search for yours truly and FTSE and DAX and see what you come up with.
18. layers said...
All thanks to the BIS and it's directive on capital adequacy ratios - and all part of the plan to bring a single global currency under the BIS' command. Rothschild's plans coming to fruition people.
19. general congreve said...
Cheers Techieman.
20. general congreve said...
Techieman @17 - Off topic, quick question, yes or no will do, do you think using Wave analysis has made or lost you money overall? Regradless of whether you think you may have mis-called wave patterns on some trades.
21. techieman said...
Gen C - generally i use a combination of technical indicators - simply i use short term RSI divergence and look for 3rd waves or C waves at various levels when the markets are moving. I look to take the middle of a fast moving market rather than the extremes. Although i will try to call a top / bottom of a move, hopefully i would have made money before then. Thats not a recomendation its just my style in any case i give more weight to the Fib numbers sometimes than others.
If markets are meandering aimlessly i try to stay out and look for an opportunity with the same criteria in another market. I have had a bit of a love affair with the FTSE since it was introduced though so i am more inclined to remain long / short of that even when i have no real feel - of course then i just cut positions right down.
And so i cant really answer the question as i dont use EW alone - i have no records of exactly why i took a particular trade (i used to do that but dont bother anymore) . But i do value it as part of an arsenal.
I would read the neely book though, even if its just to get a feel for it - although you have said you have some exposure. I apologise if i am like the man who you ask the time and precedes to tell you how to make a watch a la Harrison!!
22. mountain goat said...
Associated Press Exclusive: Fed tests harder on regional banks. 'Stress tests' focus on loans, not securities, will favor big banks
23. little professor said...
"Turner Radio Network" is a disreputable source run by a white supremacist.
No major bank will fail the stress test. 100% correct, guaranteed.. Mark my words.
24. inbreda said...
13. rickyb said...
Use of PI or √2 and √3 all looks perfectly irrational to me.
Quite right. Asking if two randomly derived numbers are different by coincidence is possibly the most ointless question I have ever been asked.
25. general congreve said...
Techieman @21 - Thanks for the detailed reply, much appreciated.
26. sold 2 rent 1 said...
little professor,
"No major bank will fail the stress test. 100% correct, guaranteed.. Mark my words."
Agreed. It is not time for the banking sector to collapse.
That time is reserved for 2010 - the sixth night
27. 51ck-6-51x said...
LoL @ the question of is it a coincidence that
√2 + √3 ~= π
If
√2 + √3 = π
(exactly)
then the question would be worth considering.
The point is all of these numbers are very natural - √2, √3, and √5 are the first three integral roots which are irrational. These numbers appear all over the place... I especially like how √5 is the basis of Fibbonacci's numbers and the golden ratio (φ-1 = 1/φ = (1+√5)/2). Numbers that appear in nature again and again are the most likely numbers to appear in patterns that are produced by the herding of humans - and one way this herding is expressed is markets, so these cycle ideas are noteworthy. (However more specific research needs to be done by anyone wishing to use them than reading some articles on the net, just as with anything else.)
28. 51ck-6-51x said...
^^ oops:
(φ-1 = 1/φ = (1+√5)/2) should read:
(φ-1 = 1/φ; φ = (1+√5)/2)
29. sold 2 rent 1 said...
666,
Thanks for your feedback.
It was a welcome relief from the usual plums who reject all system theories.
IMHO David Nichols is onto something here.
Read about him
http://www.fractalmarketreport.com/index.php
"Financial markets are chaotic, natural systems, and they should be studied like any other natural system. I've adapted and applied ideas from chaos and quantum theories to build a highly accurate model of how energy distributes in financial markets. After all, markets are just a system where energy -- money, in the case of the markets -- flows in and out, and it's logical to directly study the inherent predictability of market energy flow."
30. dohousescrashinthewoods said...
I'm with 51ck-6-51x, except I am bothered - properly bothered.
That was a disingenuous posting, especially as it implied a mainstream source was carrying a message that was actually put out by a source of unknown credentials.
Right now, that ranks right down there with government propaganda and financial conspiracy. I'm actually quite offended that you did that on this site. If people who are supposed to be exposing what is going on in the face of lies and trickery are being deceitful themselves then they really are no better.
If we can't keep it clean at this level, there is no hope of keeping it clean when the pressure is on and it really matters.
31. dohousescrashinthewoods said...
Just to complete the picture, the blog author appears to be gloating over the death of the Freddie Mac CFO:
http://turnerradionetwork.blogspot.com/2009/04/gotcha-cfo-of-freddie-mac-killed.html
It's pretty sick stuff:
Quotes:
This is what happens to executives who approve payment of outrageous bonuses at firms that needed taxpayer bailouts.
and
On February 2 of this year, I made clear (here) I would use my radio show "for the purpose of inciting violence against those who caused the financial mess." On that day, I made clear that financial people "would be hurt."
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