Well, my fellow Slope-a-Dopes, it appears the market Gods were with me on Friday, much to the chagrin of many of you I'm sure. We did indeed breach 1369 on the S&P index, leaving me firmly entrenched on the SOH to fight another day. You tedious momos didn't really think you could rid yourselves of this engaging macro savant so easily, did you?
Today, I want to draw your attention to the multi-national mega banks, and the deepening dangerous disarray they have and will continue to impose on the global economy. In life, karma comes back to haunt you, what goes around comes around, you reap what you sow, you get what you deserve, and so on and so forth…….etc. It is my contention that the elite international financiers whom were the principle architects of the financial crisis, directly responsible for much that is wrong with the economic reality on the ground today, which has caused so much harm world wide for so many, are about to meet their public executioner. Pay back may have finally arrived, time for them to face the music, and suck on their own karmic debt for a change.
The Eurozone situation is getting way past critical, and is intensifying day by day. It's now crystal clear to any one with half a brain, like myself, that direct bailouts to the Nation States of the periphery, and or LTRO cash injections to their faltering mega banks, can not, and will not solve the problem at hand. Mathematically, without additional GDP growth from the recession riddled EU countries of Italy, Spain, Greece, Portugal, Ireland, which now includes France the 2nd largest economy in the entire zone, soon to include others, and inevitably even the diminished German export machine itself, there is near zero probability that these ill-conceived funding rescue packages will pan out for the multi national investment banks, nor the Sovereigns that back them. The current lame lackey leadership of the Nation States, that willingly & fearfully support these banksters, like frail dear frozen by head lights too petrified to let them fail or put them in jail, no matter what the costs to their own people, are about to get a wake up call, and be promptly run over by the disenfranchised masses.
Free money does diddly squat, if it is not used in a real legitimate productive capacity. LTRO steroid cash infusions are not the answer, as the funds are simply being transferred from the mega EURO banks to the Sovereigns in a circle jerk. The banks get free money, are told to buy up periphery bonds, initially pocketing the unearned spread, but eventually losing value on the unsound debased bonds. Much like Timmay's home grown turbo TARP, the money simply never makes it into the main street economy at the ground level, which is imperative if you are interested in genuine growth. Simply put, without an increase in REAL underlying economic activity, the poorly capitalized banks will continue to falter as the contraction intensifies.
It clearly serves no one's interest to have the largest economic block on the planet fall off the face of the earth, which is exactly what's happening as we speak. The time for patchwork liquidity solutions is over, this is a solvency crisis, and the only answer / solution to a solvency problem is internal growth, not more external borrowing. Furthermore, the much touted panacea of "austerity" is not a viable alternative either. Once again, you need growth to dig yourself out of insolvency, and austerity does not provide growth, especially for european style economies with their significant & important public sector components. And besides, the people won't accept it, today's election results in France, Greece, Italy, & Germany should make that quite clear.
The banks & bankers that got us into this mess, are surely not the ones we should look towards to get us out of this mess. There was never any accountability whatsoever at the highest levels once this outrageous debt debacle disclosed itself. Zero heads rolled at the multi-national mega banks, and that my friends is a huge glaring problem still haunting us today. The incompetent rapacious crooks that were left free at the top, are much more interested in covering their fat asses, and continuing their disgraceful megalomaniac schemes, rather then spending a single minute of their time & capital trying to build a brighter future, hand in hand with those of us they betrayed. If we are to re-capitalize the banks with OUR money, it needs to be done with new banks, with new leadership, with real productive goals serving the entire industrial economy as a whole, as opposed to the short sighted, perverse, self-interested agenda practiced by the current kleptocrats, solely for the benefit of the depraved financialized sector of the economy. The sooner we realize this, get on with it, move boldly forward, leaving this self serving over compensated trash behind us, the better off we will all be. Let the banks tank!
Needless to say, I was quite encouraged to read the below article in Forbes late Friday:
Mike Mayo Smacks JPM with a Big Downgrade
Mike Mayo of CLSA downgraded JPM by not one, but two notches, to underperform from outperform. That’s quite a statement considering JPM is typically viewed as the strongest bank among its peers with CEO Jamie Dimon at the helm.
It’s not that Mayo thinks JPM is in shambles. In fact he calls it “best in class” but believes bank’s units would be more valuable if broken up. He writes, “Investors have a choice to own some of the parts but not all of them, and we prefer to mix and match a little more aggressively and stay more nimble given the evolving financial and political landscape.”
Mayo also cites increased macro uncertainty as another reason for the downgrade today. He writes in today’s note: "We are downgrading JPMorgan Chase from Outperform to Underperform given increased macro uncertainty in the USA and macro/political uncertainty in Europe, estimates that are well below peer due to likely lower-than-average revenue for both markets and spread revenue, and a view that 1Q12 earnings are the best for some time."
I was equally pleased to see this information from the Financial Times yesterday:
European Banks Lurch Lower
European banks were among the worst hit stocks across the continent this week as the sector was buffeted by uncertainty about the economic outlook for the eurozone.
“Confidence is still very fragile,” said Robert Parkes, strategist at HSBC.
Banco Santander, Europe’s largest bank by market capitalisation, hit a three-year low during the week, helping to drive the wider Spanish Ibex 35 index to close at its lowest point in three years.
Shares in the bank fell 3.3 per cent over the week to €4.68. Banco Popular led losses among Spanish banks, falling 7.2 per cent to €2.28, while the broader Ibex 35 fell 3.7 per cent over the week to close at 6,876. The last time it hovered around this level was in March 2009.
The FTSE Eurofirst 300 banks index fell 3.2 per cent over the week to 370.51.
UniCredit made some of the biggest losses across the continent over the week. Shares in Italy’s largest bank by assets tumbled 12.3 per cent to €2.70. Intesa Sanpaola, Italy’s largest retail bank, fell 9.9 per cent to €1.05. The FTSE MIB index dropped 5.8 per cent to close at 13,918.57.
The ECB announcement came on the heels of data indicating manufacturing weakness had spread to the core European countries, prompting investor concern about German and Swiss banks.
Deutsche Bank fell 7.2 per cent over the week to €31.08, while Commerzbank fell 6.6 per cent to €1.53. Credit Suisse fell 6.6 per cent to SFr20.69.
In Frankfurt, the Xetra Dax fell 3.6 per cent to 6,561.47.
In Paris, falls in BNP Paribas shares helped to drive the CAC 40 down 3.2 per cent to 3,161.47. France’s largest bank by assets fell 6.6 per cent to €28.99.
These brazen elite banksters may think they have gotten away with murder thus far, but as their karmic debt collects, the public winds will begin to howl at them, eventually reaching such dangerous decibel levels, that invariably they will be made to pay dearly for their contemptible misdeeds, perhaps even with their lives one day. The time is most assuredly coming, when they look back crying & wailing, wishing desperately that they had been summarily removed promptly from office in the first place.
You reap what you sow….Evil Plan 59.0….XLF will lead the way to SPX 1300, and beyond!