We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

The Bernank Will Step Down Within 18 Months

Posted by : Phoenix Capital...

Post date: 08/26/2011 - 13:32

With another Crisis already at our doorstep, the litigation is going to be fast and furious. Blankfein is just the beginning. We’re going to see more investigations, more lawsuits, and more...

Buffett's Move Marks the Beginning of the End

Posted by: Phoenix Capital...

Post date: 08/26/2011 - 13:52

Anyone who thinks Buffett’s decision to buy BAC is a positive for the market needs to get their heads checked. Buffett bought GS right before the entire financial world imploded!!! You think he...

A $2.3 Million Bet On UniCredit Unihilation

Last week it was Bank of America, when someone bought $2 million in November $4 Puts, today it is the Italian equivalent: UniCredit, where someone just put on (no pun intended) a $2.3 million bet expiring in just under 4 months, that the bank will be trading far lower. Earlier in the European trading session, someone bought a standalone block of 10,000 0.9 puts, a whopper in the context of traditional volume. The sizable block purchase was more of a statement than anything. In fact, the block sent the put class abuzz, with the puts being the most active on the Milan equity-options market. Granted, it could have taken place with more leverage (i.e., lower strike), but even so, we are confident many will wonder who is this serial put buyer of doomed financials, which continue existing either courtesy of private market capital raises, or regulatory intervention which prevents their shorting to death.

Spread Compression Time With ES "Fair Value" About 15 Point Lower

Time to reestablish some compression trades. As the latest update from Capital Context indicates, ES, relative to its risk benchmark consisting of all other risk assets, is once again along in its optimism, trading about 15 points above its implied fair value. Paradoxically, the driver of today's bout of irrational exuberance is not the latest monetary stimulus announcement by the Fed, which obviously did not come, (and it may be time for the daily dose of sobriety: without fiscal and monetary stimulus Q3 and Q4 GDP will tumble; good luck buying stocks on contrarian bent when even the NBER admits we have entered a double dip), but merely "buying the news" - supposedly everyone was convinced there would be announcement by the Fed, which in itself was a catalyst to buy?! Regardless, the buying is only happening in stock as can be seen by the ES. As such it is time to put the trusty old compression trade back on: short ES, long the Contextual Risk leg.

BofA's $8.5 Billion Settlement Could Fall Apart After Request Made To Move Mortgage Case From State To Federal Court

As most know by now, the ridiculously low $8.5 billion putback settlement, which was supposed to have been closed by now, and which was the key driver in preventing Bank of America from trading far, far lower (and requiring much more capital), is the wildcard that would allow the bank to package tens if not hundreds of billions of claims against the bank in a "tidy (and very small) little package." The key factor allowing this settlement to be structured in its existing form, was that the lawsuit was filed in New York State Court, which allows for a little something known as Article 77, or a provision permitting "special proceeding related to express trust." The details are provided below, but in essence boil down to the following: the settlement in its current form can only be enacted if the lawsuit is conducted under New York State law. Well, minutes ago, David Grais, attorney for Walnut Place, which as we have repeatedly observed represents those interests who claim the $8.5 billion settlement is massively insufficient and are engaged in litigation seeking far greater recoveries, filed a request to transfer the lawsuit from State Court to Federal Court where everything basically begins a new. More than anything, this latest development may explain why Bank of America has been scrambling to raise tens of billions in the open market as an adverse court decision, one granting Grais' request, means the bank is suddenly open to unlimited downside capital risk.

Bank Of America Capital Scramble Continues With Alleged Closure Of China Construction Bank Stake Sale

We are not sure how this is news, since it was announced weeks ago, but according to CNBC the bank that did not need capital, is following up yesterday's $5 billion capital raise with another $10 or so billion by selling "at least half of its 10% stake in CCB." That said, back on August 11, the FT came out with a report titled, "BofA faces struggle to sell CCB stake" in which we learn that "Bank of America is facing difficulties in selling its 10 per cent stake in China Construction Bank, partly because potential investors are expecting a deluge of rights issues, share sales and new listings from Chinese banks. But it might now raise less than than it had hoped. The BofA stake, once valued at $20bn, is now believed to be worth several billion dollars less, according to bankers. The US bank has approached sovereign wealth funds and other investors in the Middle East and in Asia, according to people familiar with the matter. The Kuwait Investment Authority was one potential buyer BofA approached, these people add, but the sovereign wealth fund already holds large stakes in ICBC and Agricultural Bank of China. “Right now, the KIA does not want to do anything more,” says one person with knowledge of the matter. “They think they have enough exposure to Chinese banks.” The KIA expects the two banks in which it already has shares to launch rights offers and the KIA intends to support those banks. "They will only look at CCB if the discount is high enough,” the person added...Potential buyers say the timing for BofA is particularly sensitive because, if CCB does launch a rights offer – as is widely expected – and BofA is still a main shareholder, it will be obliged to participate, using capital it can ill afford to part with." Stated otherwise, this must be one of those, "this time it's different" occasions. Next up: Bank of America does not, repeat NOT, need to sell its employee's blackberrys, but it will. Just because.

Media Blackout: US in Yet Another Illegal War ... in Yemen

Friday, August 26, 2011 – by Staff Report

Airstrike Kills 8 Suspected Militants in Yemen ... Officials in Yemen say an airstrike has killed eight militants in the country's south. The officials said Thursday's strike targeted a position held by militants with suspected links to al-Qaida in Yemen. On Wednesday, clashes between Yemeni forces and militants near Zinjibar in southern Abyan province killed at least 30 militants and seven soldiers. Militants have taken control of several areas in southern Yemen during the six-month uprising pressing for President Ali Abdullah Saleh's resignation. – Voice of America
Dominant Social Theme: The US is helping its Yemeni allies fight back against the terror threat.
Free-Market Analysis: How many wars are too many? Unnoticed largely in the press of larger events and obviously downplayed by the controlled Western media, the US and its allies are pursuing yet ANOTHER aggressive, illegal war – this one in Yemen.
How aggressive is it? It is a full-on conflict that has reportedly seen SEALS come ashore on a regular basis at night to engage tribal fighters in Abyan province, this newspaper has learned from sources in Yemen itself that are in a position to know.
The US is now involved in almost innumerable wars in the Middle East, but most have been reported in one way or another. This one has not.
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DB Briefs: Buffett's Love Affair with Banks? / Greek Fire Sale / China's Central Planning Miracle?

Friday, August 26, 2011 – by Staff Report

Warren Buffett Invests $5bn in Bank of America … Billionaire investor Warren Buffett has thrown Bank of America a $5bn (£3.07bn) lifeline, capping an extraordinary week for the US's biggest bank. ... "Bank of America is a strong, well-led company, and I called Brian [Moynihan, Bank of America's chief executive] to tell him I wanted to invest in it," Buffett said. "I am impressed with the profit-generating abilities of this franchise, and that they are acting aggressively to put their challenges behind them. "Bank of America is focused on their customers and on serving them well. That's what customers want, and that's the company's strategy." – UK Guardian
Bailout for Greece Falters Over Demand for Collateral … Euro-zone policy makers on Thursday appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a €110 billion ($158.6 billion) bailout for Greece, raising concerns that the Mediterranean nation may default. Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week. Finland, meanwhile, shows no sign of backing down. ... Euro-zone officials have indicated they are exploring other forms of collateral, such as state property or other noncash assets. But this option would be anathema in Greece, especially as many of the government's assets are already earmarked for privatization. – Wall Street Journal
China's Biggest Banks Post Record First-Half Profits as BofA, RBS Stumble … China's five biggest banks posted first-half profits that surpassed the total of their 14 largest U.S. and European rivals, highlighting the Asian nation's financial power as other economies falter. ... China's banking regulator has also asked lenders to increase capital buffers and accelerate loan collection schedules for local government debt as it seeks to avert a banking crisis following the record $2.7 trillion credit boom that began in 2009. ... Globally, banking stocks have fallen too much, Wan said. Chinese banks may begin to recover once policy makers contain inflation and relax lending constraints, he said. – Bloomberg
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Guest Post: Step 1: How Do I Get Started?

Every day, more people are waking up to the reality that this big, bloated, bankrupt government is the greatest threat to their livelihood. Earlier this week, in fact, I referenced an article in the Wall Street Journal entitled “Federal Asset Seizures Rise, Netting Innocent With Guilty”. The article title says it all– in the land of the free and home of the brave, you don’t even have to do anything wrong for the government to relieve you of your livelihood. They can take away your entire life, leaving you without any means to prove to them that you’ve done nothing wrong in the first place. This is why I think the most important defensive measure is to open a foreign bank account. The idea here is to have some money in a place where you can’t be locked out of it instantly by some bureaucrat. Again, this is not something that is just for the rich and jet set, there are a number of places that have low (or no) minimum balance requirements.