Libor explained. (Easy Street)
How deep does the Libor scandal run? (The Source)
What’s the alternative to Libor? (WSJ)
Did the BOE tell the banks to do it? (Money Game)
The regulatory structure didn’t keep up with Libor. (Money Supply)
Archives of “banks” tag
rssUAE backs Dubai's banks
Nov. 30 (Bloomberg) — The yen weakened against higher- yielding currencies after the United Arab Emirates’ central bank said it “stands behind” the country’s banks, easing concern about a possible default by state-owned Dubai World.
The euro advanced for the first time in five days against the yen after the Abu Dhabi-based central bank of the U.A.E. said lenders will be able to borrow using a special facility tied to their current accounts. The Australian and New Zealand dollars rallied as demand rose for riskier assets after concern eased over credit losses in the Middle East.
“The decision by U.A.E. helped calm down credit woes,” said Akane Vallery Uchida, foreign-currency strategist in Tokyo at Royal Bank of Scotland Plc. “The yen, which was bought over jitters in Dubai, is being sold.”
Grade 3 Math Assignment
Grade 3 Math Assignment
Tom has 1 apple.
Tom has promised to give Robbie, Jim, Anne and Mary, half an apple each.
How does Tom get 4 half apples from 1 apple?
Bonus Question:
While Robbie, Jim, Anne, and Mary are waiting for their half apple, Tom gets hungry and takes a couple bites out of the apple. How does Tom now turn a half eaten apple into 4 half apples?
And you aren’t allowed to call it an iApple and say it can do anything.
Here is the basic problem and why Italian and Spanish bonds are getting crushed again today (ignoring horrific unemployment data out of Spain).
If Italy defaults with a 40% recovery, there is 1.613 trillion euro of debt affected (that is up about 10 billion in about a month). That means creditors would lose 970 trbillion. Spain with 663 billion would cost almost 400 billion (its debt has shot up about 15 billion in a month).
The problem is that EFSF doesn’t take default off the table. It may delay the time to default (by helping roll debts as they mature), but all it mainly does is shift who would take the loss. The guarantors can’t handle losses that big. (more…)
RBI hikes export credit refinance rate to 5 per cent
The Reserve Bank of India (RBI) today said the standing liquidity facilities provided to banks (export credit refinance) and primary dealers (PDs) under the collateralised liquidity support would be at the revised repo rate, ie, 5.0 per cent with effect from 20 March 2010.
The RBI had, in its monetary policy announcement on 19 March, had increased the fixed repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 4.75 per cent to 5.0 per cent with immediate effect.
The RBI, while announcing its monetary policy measures, had said that there had been significant macroeconomic developments since the third quarter review in January 2010.
Advance estimates by the CSO for 2009-10 and for Q3 of 2009-10 suggest that the recovery is consolidating, RBI noted. Data on industrial production currently available up to January 2010 show that the uptrend is being maintained.
JPMorgan Chase :Markets are overbought
“Although the SEC fraud case does not have direct implications outside Financials, the rise in uncertainty is negative for equities at a time when equity markets are overbought. Technicals have been pointing to overbought equity markets for some time now and Friday’s correction has the potential to drag the S&P 500 down toward 1175 in the near term. But our technical strategists see very little chance of the S&P 500 falling below 1150, i.e., the January high, over the coming weeks.”
Source: JPMorgan Chase & Co. (Public, NYSE:JPM)
Please note that JPMorgan Chase & Co. (Public, NYSE:JPM) has been dead right on their market calls, as the Pragmatic Capitalist points out in his website, “few of the big banks have traded the recovery as well as JP Morgan. They nailed the reflation trade and they have subsequently been dead right about the reflation trade transforming into the recovery trade. They’ve recommended that investors pile into the highest risk names in the market and its been a winning trade since.”
Portuguese Bank Borrowings From ECB More Than Double In May, Hit All Time Record of €35.8 Billion
Alas, the deteriorating funding environment in Portugal is not a fluke – according to the Bank of Portugal, bank borrowings from the ECB surged in the past month, and doubled from €17.7 billion to €35.8 billion in May. As Steven Major from HSBC said, quoted by the FT: “These yields are approaching that magic number of 5 per cent that is likely to be charged by the European stability fund. If the yields keep going up at this rate, then they will be paying much more than 5 per cent next month, which is arguably unsustainable.” And confirming the non rose-colored glasses reality was another banker who said: “These yields are not sustainable. Portugal will have to access the emergency stability fund if they continue to rise at this rate.” Elsewhere, Greece continue to be bankrupt.
The chart below shows total borrowings from the ECB by Portuguese banks…
Lehman To Sue One Or More Big Banks Over Derivatives "Fraudulent Transfer"
Lehman Holdings will be filing a lawsuit against one or more major banks in regards to the valuation of derivatives. This will occur today or Monday. It is the first such lawsuit (valuation dispute) of its kind by Lehman. Some of the counterparts to Lehman’s existing trades weren’t willing to play nice, so the “estate” felt it necessary to rack up another few thousand billable hours and take this battle to court.
Which banks you may ask? The Valukas report indicated the beneficiaries of the alleged fraudulent transfer were as follows: Goldman Sachs, Barclays, Morgan Stanley, JPMorgan, Citadel L.P. and DRW Trading. Surely, another lawsuit for shady business practices against Goldman is all the firm needs right now.
Abu Dhabi Lecture: Short Summary
He began by explaining why extreme deflation scenarios are extremely unlikely under the Bernanke Fed, comparing the Fed chairman’s commitment to an anti-deflation strategy to Hitler’s Mein Kampf, a book that also clearly stated a policy program in advance but was not widely believed until it was too late.
Likewise Dr Faber believes Mr. Bernanke is committed to printing money and will in any case have very little choice because of entitlements and the US constitution. Thus he could see the S&P 500 dropping back from current levels to say 950 in this autumn but by then Fed monetary policy would be strongly inflationary and bring the market back up.
Dr Faber pointed out that with the US so deep in debt the Fed thinks it cannot allow asset prices to drop below a certain point because that would devastate the balance sheets of the banks with debt deflation. But he thinks in the long run this is just rolling up another crisis for the future that will destroy the US dollar and cause an even bigger financial crisis.
Declaring himself the ‘most pessimistic of forecasters, nobody is more pessimistic than me’ Dr Faber outlined a scenario in which the dollar has to be replaced by another unit after a future inflation, and holders of cash and bonds lose virtually everything in the process.
Regulators to probe euro trades
The regulatory fall-out from the Greek debt crisis grew on Wednesday as EU and US authorities said they would probe trades in the euro and the market in sovereign credit default swaps. European Commission officials said they would use a meeting as early as Thursday with banks and regulators to discuss regulation of trading in sovereign CDS, which have become politically contentious amid Greece’s financial crisis. The US justice department said it was also examining hedge fund trades against the euro.
For The First Time Ever, The "1%" Own More Than Half The World's Wealth: The Stunning Chart
oday Credit Suisse released its latest annual global wealth report, which traditionally lays out what has become the single biggest reason for the recent “anti-establishment” revulsion: an unprecedented concentration of wealth among a handful of people, as shown in Swiss bank’s infamous global wealth pyramid, an arrangement which as observed by the “shocking” political backlash of the past year, suggests that the lower ‘levels’ of the pyramid are increasingly unhappy about.
As Credit Suisse tantalizingly shows year after year (most recently one year ago), the number of people who control roughly half of the global net worth, or 45.9% of the roughly $280 trillion in household wealth, is declining progressively relative to the total population of the world, and in 2017 the number of people who were worth more than $1 million was just 36 million, roughly 0.7% of the world’s population of adults. On the other end of the pyramid, some 3.5 billion adults had a net worth of less than $10,000, accounting for just about $7.6 trillion in household wealth. And inbetween is the so-called global middle class – those 1.4 billion people whose rising anger at the status quo made Brexit and Trump possible.
As the report authors write, there is just one group to have benefited from the Fed’s post-crisis monetary policies: ” Our calculations show that the top 1% of global wealth holders started the millennium with 45.5% of all household wealth. This share was about the same until 2006, then fell to 42.5% two years later. The downward trend reversed after 2008 and the share of the top one percent has been on an upward path ever since, passing the 2000 level in 2013 and achieving new peaks every year thereafter. According to our latest estimates, the top one percent own 50.1 percent of all household wealth in the world.”
As the bank then laconically adds, “Global wealth inequality has certainly been high and rising in the post-crisis period.” And as the chart below shows, in 2017, for the first time ever, the richest 1% now controls just over half, or 50.1%, of global wealth. (more…)