Multi-Trillion Bank Bailout Leads to Multi-Billion Bank Profit Bloomberg Finds

Back in August when Bloomberg first scoured the depraved depths of the almost-30,000 pages of FOIA-released Fed documentation surrounding the biggest ever bailout in history, the sheer volume of the loans, ultra-low cost of funds, and lying-through-their-teeth nature of the bank CEOs was enough for some vindication of tin-foil-hat-wearing fringe blogs. In this month's Bloomberg Markets magazine, much of this is rehashed but the truly incredible part - though not entirely shocking to us - is the magnitude of the profits that the banks amassed directly as a result of these 'secret' bailouts. Almost a quarter of their entire income was generated during this period from bailout-related sub-market funds. Over $13bn profit was 'appropriated' during the crisis with Citi and BofA among the largest profiteers.

In The News Today

November 27, 2011, at 11:02 pm
by Jim Sinclair 

Jim Sinclair’s Commentary

This is the rule that will not be violated by pre-emptive actions here or in Euroland.

Jim Sinclair’s Commentary

The key item to any resolution of the euro crisis is that the dollar is then on its own.

On its own and not held up by a mirror image of the Euro under pressure means only one thing and that is a lot lower over a long period. This is just the stuff to support Alf’s expectation of the next phase in gold, the longest in time on its way to $4500.

Banks told to hold back cash and plan for break-up of the eurozone Sam Fleming Economics Editor
Last updated November 25 2011 12:01AM
British banks are coming under intensified regulatory pressure to curb dividend and bonus payments because of fears of a disastrous euro break-up, The Times has learnt.
Banking supervisors are demanding that lenders hold back more of their profits and build up capital as they undertake contingency planning for a range of potentially devastating outcomes in the single currency crisis.
Andrew Bailey, the director of banking at the Financial Services Authority, publicly confirmed yesterday that banks were being told to plan for “any disorderly consequences of the euro-area crisis”.
He said: “Good risk management means planning for unlikely but severe scenarios, and this means that we must not ignore the prospect of the disorderly departure of some countries from the eurozone … it must be within the realm of contingency planning.”
Mr Bailey, speaking at a banking conference in London, added that that supervisors were watching banks carefully and encouraging them to be “active in raising capital where they can.”
One banking source said that it was clear from recent dialogue with the authorities that generous payouts to staff or shareholders would be “frowned upon” given the fragile climate.
The interim Financial Policy Committee, a new Bank of England body overseeing the British financial system, held its regular quarterly meeting this week to discuss the latest developments in the markets.
More…




Jim Sinclair’s Commentary

The Fed will. There is no question about that.

Should the Fed save Europe from disaster?
The dam is breaking in Europe. Interbank lending has seized up. Much of the financial system is paralysed, setting off a credit crunch just as Euroland slides back into slump. By Ambrose Evans-Pritchard
7:30PM GMT 27 Nov 2011
The Euribor/OIS spread or`fear gauge’ is flashing red warning signals. Dollar funding costs in Europe have spiked to Lehman-crisis levels, leaving lenders struggling frantically to cover their $2 trillion (£1.3 trillion) funding gap.
America’s money markets are no longer willing to lend to over-leveraged Euroland banks, or only on drastically short maturities below seven days. Exposure to French banks has been slashed by 69pc since May.
Italy faces a “sudden stop” in funding, forced to pay 6.5pc on Friday for six-month money, despite the technocrat take-over in Rome.
German Bund yields have risen to 59 basis points above Swedish bonds since Wednesday’s failed auction. German debt has been relegated suddenly against Swiss, Nordic, Japanese, and US debt. As the Telegraph reported two weeks ago, Asian central banks and sovereign wealth funds are spurning all EMU bonds because they have lost confidence in a monetary system with no lender of last resort, coherent form of government, or respect for the rule of law.
Even if EU leaders could agree on fiscal union and joint debt issuance – which they can’t – such long-range changes cannot solve the immediate crisis at hand. The push for treaty changes has become a vast distraction.
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Jim’s Mailbox

November 27, 2011, at 10:53 pm
by Jim Sinclair 

Dear CIGAs,

Once this was almost unthinkable, now it is increasingly plausible
Things are escalating faster than I thought; maybe faster than anyone was expecting.
I remember reading many warnings here about this.
I am buying more gold and gold shares

Regards,
CIGA Luis Ahlborn Sequeira

Prepare for riots in euro collapse, Foreign Office warns
British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain. By James Kirkup, Deputy Political Editor
10:00PM GMT 25 Nov 2011
As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.
Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.
The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.
A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.
“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.
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