Financial News

[Balta1701]

So where is your next post about how many other taxes they pay, and how it is dishonest to post stuff like this?

Clearly these corporations can afford higher taxes. Why I saw numbers saying that 99% of them owned either a refrigerator or a television.

[Balta1701]

It's a terrible number and obviously will be revised to a small net loss once the bigger government job cuts get processed...

 

But it's actually kinda cool to see it come in at exactly "0".

[StrangeSox]

Is austerity killing Europe's recovery?

[StrangeSox]

Regulations, taxes aren't killing small business, owners say

 

Read more: http://www.mcclatchydc.com/2011/09/01/1228...l#ixzz1WoNkzoBx

[southsider2k5]

Regulations, taxes aren't killing small business, owners say

 

Read more: http://www.mcclatchydc.com/2011/09/01/1228...l#ixzz1WoNkzoBx

 

Of course they aren't... They are exempt from most of the big ones.

[NorthSideSox72]

Of course they aren't... They are exempt from most of the big ones.

I agree, the idea that regulatory uncertainty or overhead is killing small business has always been garbage. There are specific industries, like finance and energy, that certainly do have a LOT of large scale regulatory overhauls underway that are half-baked, and those definitely have an effect... but small businesses don't generally do much in those industries.

 

[southsider2k5]

I agree, the idea that regulatory uncertainty or overhead is killing small business has always been garbage. There are specific industries, like finance and energy, that certainly do have a LOT of large scale regulatory overhauls underway that are half-baked, and those definitely have an effect... but small businesses don't generally do much in those industries.

 

I can detail lots of those in first person form.

[StrangeSox]

I agree, the idea that regulatory uncertainty or overhead is killing small business has always been garbage. There are specific industries, like finance and energy, that certainly do have a LOT of large scale regulatory overhauls underway that are half-baked, and those definitely have an effect... but small businesses don't generally do much in those industries.

 

Regulations can also create job and small business opportunities.

[NorthSideSox72]

Regulations can also create job and small business opportunities.

Not when they are still half-baked. As I've said before, the worst case scenario is not over-regulation or under-regulation... it is under-regulation with a whole s***load of apparently over-regulation waiting to go in, and no one really knows what it will mean. And that is the current scenario.

 

[StrangeSox]

That was just smug defense of my own job!

 

but I'm assuming you're referring to dodd-frank?

[NorthSideSox72]

That was just smug defense of my own job!

 

but I'm assuming you're referring to dodd-frank?

That, plus there are a number of other pathetically bizarre attempts and derivative rules beyond that, plus the FRB and other banking agencies talking about capital reserve requirements and lending requirements - all very basic stuff for a lot of shops.

 

As everyone here knows, I personally was fine with TARP, in fact it was quite successful. The problem is they didn't follow it up with the right regulations, and when things finally started being put down on paper, they are all so vague as to be useless. They completely failed on post-TARP. This should be among ObamaCo's top priorities in his administration, is getting these regulations solidified and codified. The vagueness actually gives him oportunities to do a lot with it too, without Congress, but for whatever reason, he's punted it over and over again. This could give him some very good political capital, if things can get done, that he can show the voters, and put the onus back on the industry itself.

 

[southsider2k5]

That was just smug defense of my own job!

 

but I'm assuming you're referring to dodd-frank?

 

I just read today where regulators are requiring firms to turn over their proprietary algo's.

[StrangeSox]

Oh that sounds like fun, digging through trading algorithms.

 

Dodd-Frank is a giant, vague crappy mess, but then again we all knew it would be.

[NorthSideSox72]

I just read today where regulators are requiring firms to turn over their proprietary algo's.

I predict a zero percent chance that it will be that simple or that blanket. No way the regulatory agencies can ask for proprietary strategic information without incident-specific cause. Won't survive a court challenge.

 

[southsider2k5]

Oh that sounds like fun, digging through trading algorithms.

 

Dodd-Frank is a giant, vague crappy mess, but then again we all knew it would be.

 

Welcome to our regulatory system, where different bodies don't enforce the same rule the same way. Trust me, I write and read findings letters.

[StrangeSox]

At least I get the benefit of working in an industry with only one regulatory body.

 

I don't mind the idea of financial regulation reform if it means we clarify and consolidate many of the overlapping jurisdictions and regulatory interpretations while also strengthening the ability of regulators to actual regulate and back Wall Street away from being as much of a casino as it is now.

[Balta1701]

back Wall Street away from being as much of a casino as it is now.

The people who want that the least are the people who play that casino with taxpayer backing.

[mr_genius]

Mr.President, it is time for you to step down. Admit you have failed. oh wait, then Joe Biden would be president...

[Balta1701]

So where is your next post about how many other taxes they pay, and how it is dishonest to post stuff like this?

You'll enjoy this addendum.

Institute for Policy Studies, a liberal think tank, named in a new report 25 major American corporations whose CEOs were paid more last year than their firm's total U.S. income tax bill. Of those business elites, 10 have substantive ties to Obama -- including some who have official economic policy advisory positions in his administration -- according to a HuffPost analysis of the report.

 

All told, these 10 CEOs with Obama connections brought in over $158 million for themselves last year. Their companies' federal tax bill, however, was a combined net benefit of $5.4 billion -- meaning the federal government actually owed these companies billions of dollars. Eight of the 10 firms not only did not pay taxes; they received large refunds. The 10 companies scored combined U.S. profits of $26.8 billion.

[Cknolls]

You'll enjoy this addendum.

The most ironic thing is GM receiving over 20 billion in tax loss carry forwards. This is unheard of with a bankrupt company. They would not have turned a profit nor would they turn a profit any time in the future if they did not write off past losses against future earnings.

 

[Balta1701]

The 10 year hit 0% on Friday.

[southsider2k5]

Tuesday ought to be a bloodbath

 

http://www.businessinsider.com/josef-acker...rankfurt-2011-9

 

Deutsche Bank CEO Just Gave A Terrifying Speech In Frankfurt

Courtney Comstock | Sep. 5, 2011, 2:23 PM | 11,828 | 53

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inShare.53 Josef Ackermann just gave a terrifying speech about the fragility of the Euro banking sector right now.

 

At a conference in Frankfurt he said, "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."

 

We have translated the speech based on Handelsbatt's, the organizer of the event where Ackermann spoke, account of it.

 

"In recent weeks, the distrust of the financial markets has spread to the banks because they are now suffering from the debt crisis in Europe and have a lot of exposure to, for example, Greek bonds."

 

"Since the financial crisis, some European banks have lost a third or more of their market capitalization," he said, according to Google Translate.

 

"Most institutions have a rating of "below the book value or at best."

 

There are three major stress factors crushing Euro banks right now, he says: the debt crisis, structural factors and financial regulation. With them together, it will be hard for the European banks to increase their revenues.

 

The implication is that not just Eurozone countries are buckling under the pressure of Greece's, France's, and Italy's debts, but banks are too. It sounds like a desperate call for a bailout. Now.

 

However he says, "State funds could use means to put stability back into many companies and countries, but that does not remain the only solution."

 

Still, the situation he describes looks dire. He says, "Many countries and households would have to reduce their debt. The mortgage business and consumer loans were [the few things] driving growth. In addition, there's the problem of shrinking populations in several European countries, which negatively affects the growth of credit markets."

 

"All this reminds one of the autumn of 2008," said Ackermann. "We should resign ourselves to the fact that the 'new normality' is characterized by volatility and uncertainty."

 

Some hedge funds, like in 2007 and 2008, saw the enormity of the Eurozone debt crisis and began betting against Euro banks and other companies that have exposure to the crisis earlier this year. Their profits have already started to pay off.

 

As for the rest of the financial industry, things don't look good.

 

Here's what Ackermann sees: "Prospects for the financial sector overall... are rather limited."

 

"We have a financial industry that is still not really providing convincing answers to the questions about the meaningfulness of many modern financial products and trading in securities. The questions are getting louder and require new responses."

 

He also believes high frequency trading needs to be investigated more. He said regulators and the banks need to begin a dialogue to examine the effects of HFT in the markets, so as to avoid imbalances in the markets.

 

However a consequence of all of this scrutiny is that growth prospects for banks are low.

 

"The outlook for the future growth of revenues is limited by both the current situation and structurally."

 

The banks will have to ask how they can be more long-term investors in order to gain more stability in financial markets.

 

"We must in my opinion, check all our work in all areas thoroughly again to ascertain whether we prioritize our genuine tasks as servants of the real economic needs."

 

But immediately, the Euro banking sector must prepare for what happens if solutions to the Eurozone crisis and corresponding Euro banking crisis remain unsupported or nonexistent.

 

However recapitalization is not the answer. Ackermann duly shot down the measure suggested by IMF head Christine Lagarde at Jackson Hole.

 

He said recapitalizing the banks urgently, as Lagarde suggested, would be "counterproductive."

 

"A forced recapitalization would give the signal that politicians do not themselves believe in the measures" they are negotiating.

 

As a result, it could exacerbate the debt situation in individual countries. Also, faced with a threat of dilution (a result of recapitalization), private investments in banks would be even less likely.

 

Another measure that he does not think will help, he says, is dissolving the Eurozone. "The costs of supporting weak member states, particularly from the German perspective, are less than the costs of disintegration.... It is a dangerous illusion to believe that a country could do better should it reclaim the sovereignty it has delegated to the EU."

 

Sounds like Ackermann just sounded the alarm. There is now a full-on Euro banking crisis.

 

The conference he's at continues tomorrow. It's entitled "Banks in Transition," and it's organized by the German business daily Handelsblatt.

 

Here's a couple of videos of him giving the speech. Warning: they are in German.

 

 

 

Read more: http://www.businessinsider.com/josef-acker...9#ixzz1X7hyBN2f

[Balta1701]

The whole series of successive PIGS bailouts really has just been an effort to protect those big German and French banks anyway. At least someone is saying so.

 

Interesting to see himsuggest that HFT is deserving of an investigation.

[southsider2k5]

In Euro Zone, Banking Fear Feeds on Itself

By LANDON THOMAS Jr. and NELSON D. SCHWARTZ

Published: September 6, 2011

 

Remember the collapse of Lehman Brothers? Europeans certainly do.

 

“This crisis has the potential to be a lot worse than Lehman Brothers,” said George Soros, the hedge fund investor, citing the lack of a pan-European body to handle an extreme banking crisis.

 

As Europe struggles to contain its government debt crisis, the greatest fear is that one of the Continent’s major banks may fail, setting off a financial panic like the one sparked by Lehman’s bankruptcy in September 2008.

 

European policy makers, determined to avoid such a catastrophe, are prepared to use hundreds of billions of euros of bailout money to prevent any major bank from failing.

 

But questions continue to mount about the ability of Europe’s banks to ride out the crisis, as some are having a harder time securing loans needed for daily operations.

 

American financial institutions, seeking to inoculate themselves from the growing risks, are increasingly wary of making new short-term loans in some cases and are pulling back from doing business with their European counterparts — moves that could exacerbate the funding problems of European banks.

 

Similar withdrawals, on a much larger scale, forced Lehman into bankruptcy, as banks, hedge funds and others took steps to shield their own interests even though it helped set in motion the broader market crisis.

 

Turmoil in Europe could quickly spread across the Atlantic because of the intertwined nature of the global financial system. In addition, it could further damage the already struggling economies elsewhere.

 

“This crisis has the potential to be a lot worse than Lehman Brothers,” said George Soros, the hedge fund investor, citing the lack of an authoritative pan-European body to handle a banking crisis of this severity. “That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do.”

 

The growing nervousness was reflected in financial markets Tuesday, with stocks in the United States and Europe falling 1 percent and European bank stocks falling 5 percent or more after steep drops in recent weeks.

 

European bank shares are now at their lowest point since March 2009, when the global banking system was still shaky following Lehman’s collapse.

 

Investors also continued to seek the safety of United States Treasury bonds, as yields on 10-year bonds briefly touched 1.90 percent, the lowest ever, before closing at 1.98 percent.

 

Adding to the anxiety, several immediate challenges face European officials as they try to calm markets worried about the debt crisis spreading.

 

In the coming weeks, the 17 countries of the euro currency zone each could agree to a July deal brokered to bail out Greece again and possibly the region’s ailing banks. Along with getting unanimity, more immediate obstacles could trip up the agreement.

 

On Wednesday, Germany’s top court upheld the legality of Berlin’s rescue packages, but said any future bailouts for debt-stricken euro zone countries must be approved by a parliamentary panel. On Thursday, officials in Finland are to express their conditions for approving the deal, and other countries may follow with their own demands to ensure their loans will be paid back.

 

Though they have not succeeded in calming the markets, European leaders have taken a series of steps to avert a Lehman-like failure. New credit lines have been opened by the European Central Bank for institutions that need funds, while the proposed Greek bailout would provide loans to countries that need to recapitalize their banks. In addition, the central bank has been buying up bonds from Italy and Spain, among other countries, to keep interest rates from spiking. Many of these have been bought from European banks, effectively allowing them to shed troubled assets for cash.

 

While the problems in smaller countries like Greece and Ireland are not new, in recent weeks the concerns have spread to banking giants in countries like Germany and France that are crucial to the functioning of the global financial system and are closely linked with their American counterparts. What is more, worries have surfaced about the outlook for Italy, whose debt dwarfs that of other smaller troubled borrowers like Greece.

 

“It seems like the banking sector globally is being hurt on multiple fronts,” said Philip Finch, a bank strategist with UBS in London. “It’s definitely getting worse.”

 

In Europe, the worry is that government bonds owned by European banks could fall sharply in value if economically distressed countries cannot pay back their loans. That would saddle the most exposed banks with huge losses.

 

As a result, banks are reluctant to lend money to one another and are hoarding cash. “If sentiment continues to deteriorate, ultimately we’ll see a deposit run,” Mr. Finch said. “I’m extremely worried about that.”

 

Mr. Finch said European banks needed to raise at least 150 billion euros in new capital, even if they do not experience large losses on sovereign debt. With stock prices so low, though, that is difficult to do, and any new offerings of company stock would dilute the value of existing shares.

 

American money market funds, long a reliable financing source for capital starved European banks, have sharply cut back on their exposure — starting in Spain and Italy but now also France — making it harder for European banks to loan dollars.

 

The 10 biggest money market funds in the United States cut their exposure to European banks by a further 9 percent in July, or $30 billion, after a reduction of 20 percent in June, the Institute of International Finance said in a report issued Monday.

 

“U.S. investors remain very sensitive to the headlines out of Europe,” said Alex Roever, who tracks short-term credit markets for JPMorgan Chase. “The sell-off that we’ve seen in European bank stocks is going to reinforce that and investors are likely to stay hyper-cautious. European banks are not borrowing as much, and they’re not borrowing for as long as they could three months ago.”

 

Nevertheless, American institutions remain vulnerable to problems their French counterparts might encounter. At the end of the second quarter, JPMorgan Chase reported total cross-border exposure of $49 billion to France, while Citigroup had $44 billion and Bank of America had $20 billion.

 

French banks, which have huge holdings of sovereign debt from countries across Europe, have been among the hardest hit, despite the French government’s efforts to protect them. The authorities imposed a temporary ban on short-selling last month after shares in Société Générale, a bank considered too big to fail, tumbled on rumors it may be insolvent.

 

But shares of Société Générale are still sliding amid concern that it, like BNP Paribas and other major French banks, is having trouble raising dollars to finance its American and other dollar-based operations.

 

Société Générale officials say that the market’s fears are unfounded. The bank’s chief executive, Frédéric Oudéa, has described rumors that Société Générale was having trouble raising money as “fantasy.” The shares closed down 6 percent Tuesday at 18.93 euros. Three months ago the shares were at 40.

 

What is more, French banks, like other European banks, are able to obtain financing from the European Central Bank if necessary.

 

Meanwhile, problems in Spain were highlighted on Tuesday when one of Spain’s largest savings banks, Caja de Ahorros del Mediterráneo, reported a startling increase in bad loans to 19 percent of overall lending from 9 percent at the end of last year.

 

Still, the huge stockpile of euros that banks have stashed away at the European Central Bank at rock-bottom interest rates — last night it hit a recent high of 166 billion euros — suggests that no bank is close to a Lehman-like failure.

 

The risk now is that Europe’s resistance to recapitalizing its banks could turn into a broader crisis.

 

Daniel Gros, director of the Center for European Policy Studies in Brussels, had a blunt explanation of why European governments have so far refused to recapitalize their banks.

 

“They don’t have the money and they are in the pockets of their bankers,” Mr. Gros said.

 

Policy makers in the United States and Britain, where compulsory infusions of new capital played a crucial role in calming the markets in 2008, have long urged Europe to do the same.

[StrangeSox]

Marx was right; capitalism will eat itself.