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bubbleturbo

Ben Is Already Out Of Bullets!

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http://market-ticker.denninger.net/

Here's reality - Bank Tier Capital - the measure of whether you are "well capitalized" or "dead" as a bank - includes common stock equity.

Specifically, Tier 1 Capital, the most important type for a bank, includes what is known as "Shareholder Equity" as well as retained earnings.

So consider this folks - you can sink a bank if you sink its stock price.

No, the FFT doesn't matter - what matters is real interest rates, and for short-term cash it is now zero, as is confidence in anyone except The Federal Government.

Congratulations Ben; you've failed in restoring confidence because you have failed to force banking and other institutions to cut out the horsecrap and instead have continued to enable it. As a consequence irrespective of your meddling the market no longer trusts ANYBODY with their money EXCEPT for the folks with 6,000 nuclear weapons as backing - that would be the US Federal Government.

This is why I have continued to rant and rave about transparency - given our banking system and how it is capitalized, without transparency and trust the system and our economy will collapse.

The Truth: You must raise cash. NOW. Not commodities, not gold, not "solid stocks", not anything of the kind. CASH, defined as actual CASH or Short-Term United States Treasuries. Again - up to $100,000 in FDIC insured banks with the rest in short-term US Treasuries - either directly (Treasury Direct) or via a Treasury Money Market fund such as VMPXX (Vanguard).

If you don't, and what The Bond Market is saying is coming happens, don't say you weren't warned - because you were - by the only voice that matters - the market.

Edited by BubbleTurbo

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I love this bit - so true - I tune into that channel when things are really exciting and they just have a pile of grinning idiots in denial - like a capitalist game show.................. The problem also is that a lot of the time the East coast American accent on a female is high pitched and whiny as if they are about to go into hysteria.... which is what all these dolly-bird financial anchors sound like....

The Truth: CNBC should be SHUT DOWN as NOTHING MORE THAN A CONDUIT FOR INSIDER TRADING AND ILLEGAL MARKET MANIPULATION. Their "commentators" from various funds who are almost certainly trying to unload shares they are stuck with into YOUR HANDS should be locked up and/or sued into oblivion AS THEY ARE WELL AWARE OF WHAT IS GOING ON AND ARE USING CNBC AS NOTHING MORE THAN A WAY TO SCREW YOU WHILE THEY PROFIT

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KD is good,very good.The site has some interesting contributors,much like here.

He is, too. I posted his comment to a DT article on a recent thread here. The man speaks the truth regardless of whether it is popular or whether or not people want to hear it.

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http://market-ticker.denninger.net/

So consider this folks - you can sink a bank if you sink its stock price.

I think this could be a little misleading out of context. The article goes on to say.

How? Simple - "Shareholder Equity" is not so simple as "stock price." However, the stock price has a major impact on it, because precipitous declines hit both intangibles (good will) and financing costs (in the other direction, raising them) which shrink Shareholder Equity from both ends of the candle at once.

The tier one capital is the amount of cash and equivalents owned by the bank.

The share price is what it costs to own a fraction of the bank.

They are not the same, and a change in the share price has no direct effect at all on the tier one capital.

So even if Barclays share price fell to 10p, it wouldn't alter the amount of tier one capital at all.

What would cause problems for Barclays would be higher losses on lending. They have to be made good from profits, and if no profits, then made good from the shareholders capital.

The article says it is simple, but I don't think I agree. The shareprice will certainly alter the balance sheet if the bank has large amounts of goodwill sitting on the balance sheet from, say, acquisitions, and if the auditors consider it needs to be revalued. Similarly the overall state of the bank, its likely profits, will greatly influence the share price, and also the cost it has to pay for raising funds to lend out. I see the share price as correlated with the overall fate of the bank, but don't agree that a falling bank share price will impact on their ability to lend.

Don't misinterperate this as supporting the banks, I'm not, and I think the losses from falling UK house prices will drive most of the UK ones into effective government ownership. The share price will track that process, but it will be the losses that do it, and the shareprice will just be an indicator.

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I think this could be a little misleading out of context. The article goes on to say.

The tier one capital is the amount of cash and equivalents owned by the bank.

The share price is what it costs to own a fraction of the bank.

They are not the same, and a change in the share price has no direct effect at all on the tier one capital.

So even if Barclays share price fell to 10p, it wouldn't alter the amount of tier one capital at all.

What would cause problems for Barclays would be higher losses on lending. They have to be made good from profits, and if no profits, then made good from the shareholders capital.

The article says it is simple, but I don't think I agree. The shareprice will certainly alter the balance sheet if the bank has large amounts of goodwill sitting on the balance sheet from, say, acquisitions, and if the auditors consider it needs to be revalued. Similarly the overall state of the bank, its likely profits, will greatly influence the share price, and also the cost it has to pay for raising funds to lend out. I see the share price as correlated with the overall fate of the bank, but don't agree that a falling bank share price will impact on their ability to lend.

Don't misinterperate this as supporting the banks, I'm not, and I think the losses from falling UK house prices will drive most of the UK ones into effective government ownership. The share price will track that process, but it will be the losses that do it, and the shareprice will just be an indicator.

Off balance sheet liabilities?? SIVs?? Where do these factor in your analysis?

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The Fed could mail a blank cheque to every man, woman and child if required. Such is the beauty of fiat currency.

I'd love to see them try that with gold. ;)

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Off balance sheet liabilities?? SIVs?? Where do these factor in your analysis?

Methinkshe,

I don't think they depend on the banks share price in the FTSE, if that is what you're hinting. Unless some bank has written an option that depends on its own share price? I've not heard any suggestion of that?

I think SIVs and other off balance sheet liabilities will appear as losses, and reduce capital, and when brought back on balance sheet, will figure in the capital ratios. They most certainly will affect share prices, but won't depend on the share price.

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I think this could be a little misleading out of context. The article goes on to say.

How? Simple - "Shareholder Equity" is not so simple as "stock price." However, the stock price has a major impact on it, because precipitous declines hit both intangibles (good will) and financing costs (in the other direction, raising them) which shrink Shareholder Equity from both ends of the candle at once.

The tier one capital is the amount of cash and equivalents owned by the bank.

The share price is what it costs to own a fraction of the bank.

They are not the same, and a change in the share price has no direct effect at all on the tier one capital.

So even if Barclays share price fell to 10p, it wouldn't alter the amount of tier one capital at all.

Agreed, a casual read of the linked article could easily lead to the wrong conclusion. While Barclays falling to 10p would be terminal IMO, it would be part of a much bigger catastrophe than simply the share price being driven down :ph34r:

Edited by huw

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  • 294 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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