Episodes of Hyperinflation from Diocletian to Bernanke - How It Might Unfold Today
Guest Post: Caution - Falling Currencies
Eventually, people will discover that they cannot save in terms of dollars (those who don’t figure it out will be rendered economically irrelevant as their wealth is removed from their hands). Savings is a necessary prerequisite for investment. Investment is necessary for companies to grow, to develop new technologies, products, and markets. Growth is necessary to hire new workers. As existing companies achieve higher productivity of labor, and do not need as many workers to perform the same work, they lay off unneeded people. In a free market, the unemployed would quickly be hired by growing companies that expand and develop new businesses. But today’s structurally high unemployment can be traced back to Friedman’s quack prescription (among other government interference). Weakening the currency not only discourages savings, it also weakens businesses who have to keep the currency on their balance sheet and who have to import some of their inputs. When a currency loses value, then all who hold it incur a loss. It is not possible to employ workers and run a business in a country without holding significant amounts of its currency. Currency debasement therefore imposes constant losses on enterprises that try to operate in such an environment.This Is Where "The Money" Really Is - Be Careful What You Wish For
We have long shown that "investors" whatever that term means in the New Normal - those gullible enough to put their money in Bennie Madoff, pardon Bennie Bernanke Asset Management? - have been not only reluctant to put their money into stocks, but despite week after week of artificial, low volume highs, driven entirely by Primary Dealers (and now European banks post the $1.3 trillion in LTROs, not to mention even foreign Central Banks recently buying high beta stocks) spiking the market ever higher courtesy of record reserves, but in fact continue to pull their cash out of the stock market with every thrust higher. Why, just last week another $1.4 billion in cash was pulled from domestic equity funds, nominal Dow 13,000 be damned. The truth is that the banks are desperate to start offloading their risk exposure to retail investors, and instead of selling, are furiously trying to send the market ever higher just to get that ever elusive "investor" back: just look at how much the market rose by last week, CNBC will say: do you really want to be out of this huge rally? Alas, the damage has been done: between the Great Financial Crisis, the Flash Crash, a massively corrupt regulator, rehypothecating assets that tend to vaporize with no consequences, and a central bank which effectively has admitted to running a Russell 2000 targeting ponzi scheme, the investor is gone. But what if? What if the retail herd does, despite everything, come back into stocks? After all the money is in bonds, or so the conventional wisdom states. What harm could happen if the 10 Year yield goes back from 2% to 3%, if the offset is another 100 S&P points. After all it is good for the velocity of money and all that - so says classical economic theory. Well, this may be one of those "be careful what you wish for." Because while investors have indeed park hundreds of billions out of stocks and into bonds, the real story is elsewhere. And the real story is the real elephant nobody wants to talk about. Presenting: America's combined cash horde, which between total demand deposits, checkable deposits, savings deposits, and time deposits (source H.6), is at an all time high of $8.1 trillion.
Even The Monkey Knows Economic Data Is Worthless
Eric De Groot at Eric De Groot - 1 hour ago
Data signaling the economic rebound is gaining steam emboldened traders to
sell Treasuries and lift money-market rates amid positive sentiment from
the central bank. Traders that believe the headline/economic hype rather
than the message of the markets often find their trading positions pantsed
by reality. Falling constant currency trends in the charts below is the
market's way of saying...
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content, and more! ]]
Trader Dan visits Turdland at the TF Metals Report Site
Trader Dan at Trader Dan's Market Views - 2 hours ago
Yesterday my pal, Turd Ferguson, the owner and proprietor of TF Metals
Report site, was gracious enough to do one of his now famous podcast
interviews, with yours truly as his latest victim ( excuse me - that was a
typo Turd - I was supposed to write 'guest' :o) ).
Seriously - the interview was a lot of fun for me personally but more
importantly, we both hope it is helpful to those who are perhaps interested
in some of the pitfalls that would-be traders face as they attempt to
navigate through today's wildly volatile markets.
We covered quite a bit of ground about trading in gen... more »
In Upwardly Distorting The Economy, Has "Global Warming" Become Obama's Best Friend?
Back in early February, Zero Hedge was among the first to suggest that abnormally warm temperatures and a record hot winter, were among the primary causes for various employment trackers to indicate a better than expected trendline (even as many other components of the economy were declining), in "Is It The Weather, Stupid? David Rosenberg On What "April In January" Means For Seasonal Adjustments." It is rather logical: after all the market is the first to forgive companies that excuse poor performance, or economies that report a data miss due to "inclement" weather. So why should the direction of exculpation only be valid when it serves to justify underperformance? Naturally, the permabullish bias of the media and the commentariat will ignore this critical variable, and attribute "strength" to other factors, when instead all that abnormally warm weather has done is to pull demand forward - whether it is for construction and repair, for part-time jobs, or for retail (and even so retail numbers had been abysmal until the just released expectations meet). Ironically, while everyone else continues to ignore this glaringly obvious observation, it is Bank of America, who as already noted before are desperate to validate a QE as soon as possible (even if their stock has factored in not only the NEW QE, but the NEW QE HD), that expounds on the topic of the impact of record warm weather. In fact, not only that, but BofA makes sense of the fact why GDP growth continues to be in the mid 1% range while various other indicators are representative of much higher growth. The culprit? Global Warming.
Remember Fukushima: Presenting The Radioactive Seawater Impact Map
A
few days after the one year anniversary of the Fukushima disaster,
nobody talks about it anymore. After all it's "fixed", and if it isn't,
the Fed will fix it. Remember in the New Normal nothing bad is allowed
the happen. So for those who have forgotten, here is a reminder.obama's WWIII Coming Soon...
by Paul Joseph Watson, InfoWars.com:
With the USS Enterprise on its way to bring the number
of US aircraft carriers located in the Persian Gulf up to three, the
Navy has announced it will send four additional mine countermeasure
ships to the Strait of Hormuz as tensions with Iran rise.
“Four additional mine countermeasure ships are being
dispatched to the region in addition to further airborne mine
countermeasure helicopters, Chief of Naval Operations Adm. Jonathan
Greenert told the Senate Armed Services Committee during a Navy budget
hearing Thursday,” reports Stars and Stripes.
No date has been set for the deployment of the ships,
but they will join the USS Enterprise, currently on its way to the Fifth
Fleet area of operations, along with the USS Carl Vinson and the USS
Abraham Lincoln, both of which are already patrolling the Strait of
Hormuz.
Read More @ InfoWars.comThe life of a nation, of a culture, is sustained by very few but very critical social circumstances. These pillars must stand strong, maintained with the utmost care and caution; as one would fight to maintain the beat of his own heart. If these vital foundations are dissolved or destroyed, the nation and the people contained within are subject to the most heinous of generational afflictions. The citizenry and all that nurtures their progress, begins to die. Slowly suffocating in a corrosive atmosphere of dishonor, men turn toward pure self interest at the expense of their greater selves, giving rise to hatred, desperation, and an environment of disturbed malleability that is easily exploited by those who seek power.
Read More @ Alt-Market.com
Brace yourself for The New Revolution, A 2012 Phenomenon. Nationwide
Movement Igniting. Ron Paul is only the spark for the fire to come
5 Reasons Why American Riots Will Be The Worst In The World
from The Daily Bell:
Bad
Loans at State-Run Banks Add to India’s Woes … Slow payments to
construction companies from the government are adding to the headaches
of a slowing economy and a growing deficit. When people talk about
Europe’s “government debt problem” they mean something easy to describe:
countries that borrowed more money than they can easily pay back. In
India, it’s a bit more complicated. Here, where the government is
grappling with national debt and a growing budget deficit, the state
might play the part of the delinquent debtor, the imperiled lender or
the foot- dragging regulator — or may play all three roles in a single
set of tail- chasing transactions. The private company Hindustan
Construction, for instance, is trying to renegotiate its $1.3 billion
debt, some of it owed to government banks, to avoid defaulting. The
company says its financial problems are partly a result of the
government’s slow payments for road and highway projects, as well as
government delays in giving final go-ahead on other projects already
tentatively approved. Bad loans now pose “the most significant risk to
the financial system” in India, according to a recent survey of 100
bankers by the Reserve Bank of India. – New York Times
Dominant Social Theme: Public banks are the best. Anyone who believes the government isn’t competent to run the economy doesn’t understand the grandeur that was the USSR.
Free-Market Analysis: One of the big elite promotions in the past five years or so has been, in our view, an outpouring of prose celebrating the efficacy of state-run banks and “public” central banks.
Read More @ TheDailyBell.com
Bad
Loans at State-Run Banks Add to India’s Woes … Slow payments to
construction companies from the government are adding to the headaches
of a slowing economy and a growing deficit. When people talk about
Europe’s “government debt problem” they mean something easy to describe:
countries that borrowed more money than they can easily pay back. In
India, it’s a bit more complicated. Here, where the government is
grappling with national debt and a growing budget deficit, the state
might play the part of the delinquent debtor, the imperiled lender or
the foot- dragging regulator — or may play all three roles in a single
set of tail- chasing transactions. The private company Hindustan
Construction, for instance, is trying to renegotiate its $1.3 billion
debt, some of it owed to government banks, to avoid defaulting. The
company says its financial problems are partly a result of the
government’s slow payments for road and highway projects, as well as
government delays in giving final go-ahead on other projects already
tentatively approved. Bad loans now pose “the most significant risk to
the financial system” in India, according to a recent survey of 100
bankers by the Reserve Bank of India. – New York TimesDominant Social Theme: Public banks are the best. Anyone who believes the government isn’t competent to run the economy doesn’t understand the grandeur that was the USSR.
Free-Market Analysis: One of the big elite promotions in the past five years or so has been, in our view, an outpouring of prose celebrating the efficacy of state-run banks and “public” central banks.
Read More @ TheDailyBell.com
[Ed. Note: Related.]
from USAWatchDog:
USAWatchdog.com – This week, we find Israel and Iran at the top of the story list—again. The U.S. has given Iran a “last chance” ultimatum to work out a peace deal with its nuclear program or be attacked by the end of the year. Meanwhile, Israeli Prime Minister Benjamin Netanyahu, basically, said he doesn’t need the blessing of the U.S. to attack Iran’s nuclear sites. It sounds like war in the Middle East is not far away. Fuel prices are heading higher according to Edmunds.com and many other oil market analysts. The national average is approaching $4 a gallon, but it’s already $5 a gallon in certain areas on the East and West coasts. Experts expect to see a $5 per gallon national average this year, but if there is war in the Middle East, all bets are off. The sky is the limit. There is still no clear winner in the GOP for the presidential nomination, but Santorum and Romney appear to be fighting it out at the top. Some Republicans want Newt Gingrich to step aside, and the MSM is now nearly ignoring Ron Paul. The Greek debt deal was hammered out last week, but is it really over? The CME is signaling there is trouble brewing with the credit default swaps that insure the toxic bonds. This week, the Chicago Mercantile Exchange voluntarily asked that it be removed as a derivatives clearing organization in Europe. The bondholders took a nearly 75% loss to get the new Greek debt deal done and are likely going to be looking for the CDS “insurance” to pay the difference. Could it all blow up soon? I don’t think the CME stopped doing business in Europe because it was going to be making too much money in commissions. All these stories and more from Greg Hunter and USAWatchdog.com.
from USAWatchDog:
USAWatchdog.com – This week, we find Israel and Iran at the top of the story list—again. The U.S. has given Iran a “last chance” ultimatum to work out a peace deal with its nuclear program or be attacked by the end of the year. Meanwhile, Israeli Prime Minister Benjamin Netanyahu, basically, said he doesn’t need the blessing of the U.S. to attack Iran’s nuclear sites. It sounds like war in the Middle East is not far away. Fuel prices are heading higher according to Edmunds.com and many other oil market analysts. The national average is approaching $4 a gallon, but it’s already $5 a gallon in certain areas on the East and West coasts. Experts expect to see a $5 per gallon national average this year, but if there is war in the Middle East, all bets are off. The sky is the limit. There is still no clear winner in the GOP for the presidential nomination, but Santorum and Romney appear to be fighting it out at the top. Some Republicans want Newt Gingrich to step aside, and the MSM is now nearly ignoring Ron Paul. The Greek debt deal was hammered out last week, but is it really over? The CME is signaling there is trouble brewing with the credit default swaps that insure the toxic bonds. This week, the Chicago Mercantile Exchange voluntarily asked that it be removed as a derivatives clearing organization in Europe. The bondholders took a nearly 75% loss to get the new Greek debt deal done and are likely going to be looking for the CDS “insurance” to pay the difference. Could it all blow up soon? I don’t think the CME stopped doing business in Europe because it was going to be making too much money in commissions. All these stories and more from Greg Hunter and USAWatchdog.com.
by Mamta Badkar, BusinessInsider.com:
Foreclosure
filings fell 8 percent year-over-year in February, with 206,900 U.S.
properties receiving some form of filing, according to RealtyTrac’s U.S. Foreclosure Market Report.
But don’t be fooled by these numbers. Foreclosure activity is expected to increase 15 percent this year compared to 2011, according to RealtyTrac’s Daren Blomquist.
While foreclosure activity was pushed down by decreases in some of the larger states, 21 states reported annual increases in foreclosure activity, a level not seen since November 2010.
RealtyTrac CEO Branon Moore said he expects foreclosures to rise this year, pushed by states where courts are working through a backlog of foreclosed properties:
Read More @ BusinessInsider.com
Dear CIGAs,
Jim Sinclair’s Commentary
Anglo American sees M&A as ‘strategic priority’ – Parker By: Natasha Odendaal
16th March 2012
JOHANNESBURG (miningweekly.com) – Diversified mining group Anglo American continued to examine merger and acquisition opportunities as a “strategic priority” in driving value in core commodities, said chairperson SirJohn Parker.
Last year, the group bought the Oppenheimer family’s 40% interest in De Beers for $5.1-billion, raising its profile in diamonds. Anglo American also brought up its total stake in Peace River Coal (PRC) mine, including a number of exploration leases, in British Columbia, Canada, to 100%, following its acquisition of the 25.17% interest in PRC that it did not already own.
Anglo American in November also sold its 24.5% interest in Anglo American Sur copper assets, in Chile, for $5.4-billion to Mitsubishi Corporation.
“Our commodities help to both fuel growth in developing countries and to enable the continuing technological revolution in the developed economies,” he said, adding that growing demand for metals and minerals was fuelling mining companies exploration of regions beyond their traditional mining jurisdictions, despite infrastructural, logistical and other challenges.
“Anglo American’s diversified portfolio included material exposure to metallurgical coal and iron-ore, which both benefited from continued industrialisation in emerging economies, while also having exposure to later cycle businesses through platinum and ultimately, diamonds, as GDP [gross domestic product] per capita increases,” Parker wrote in the group’s 2011 annual report, published this week.
More…
Jim Sinclair’s Commentary
Goldman Should Be Barred From Returning More Capital, Bair Says – Bloomberg
Goldman Sachs Group Inc. (GS) should be prohibited from boosting its dividend or repurchasing stock because Federal Reserve stress tests showed the investment bank is too leveraged, according to former regulator Sheila Bair.
The leverage ratios of four financial firms dropped below 4 percent under the stressed scenario, according to test results the Fed released this week. Two of those firms, Citigroup Inc. (C) andMetLife Inc. (MET), were prohibited from raising dividends or repurchasing shares. The central bank approved the capital plans of two others, Goldman Sachs and Morgan Stanley.
More…
Jim Sinclair’s Commentary
SWIFT instructed to disconnect sanctioned Iranian banks following EU Council decision Published on 15 Mar 2012
This article is also available in German
Brussels, 15 March 2012 – Following an EU Council decision, SWIFT is today announcing it has been instructed to discontinue its communications services to Iranian financial institutions that are subject to European sanctions.
The new European Council decision, as confirmed by the Belgian Treasury, prohibits companies such as SWIFT to continue to provide specialized financial messaging services to EU-sanctioned Iranian banks. SWIFT is incorporated under Belgian law and has to comply with this decision as confirmed by its home country government.
“This EU decision forces SWIFT to take action” said Lázaro Campos, CEO of SWIFT. “Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”
The EU-sanctioned Iranian financial institutions and the SWIFT customer community have been notified of the disconnection, which will become effective on Saturday 17 March at 16.00 GMT.
SWIFT has been and remains in full compliance with all applicable sanctions regulations of the multiple jurisdictions in which it operates, and has received confirmation of this from the competent regulatory authorities. As a global provider of secure messaging services, SWIFT has no involvement in or control over the underlying financial transactions that are contained in the messages of its member banks.
Related links
Council of the European Union – Council elaborates EU sanctions against Iran
Official Journal of the European Union
Statements on sanctions
About SWIFT
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,000 financial institutions and corporations in 210 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
For more information, please refer to http://www.swift.com/.
Jim Sinclair’s Commentary
IMF approves $36.56 billion funding for Greece
EU warns that painful social overhaul ahead By Nicholas Paphitis
March 16, 2012
ATHENS – The International Monetary Fund on Thursday approved $36.56 billion in funding for Greece over the next four years, while Standard and Poor’s warned that the country’s new bonds remained vulnerable to default despite this month’s massive debt writedown.
The IMF’s executive board granted the immediate release of $2.15 billion of these funds as part of the country’s second bailout, a statement said.
Greece will receive a total $226.2 billion in rescue loans from its eurozone partners and the IMF to keep it afloat until 2016, as dizzily high borrowing rates have blocked its ability to raise money on the international bond markets.
IMF Managing Director Christine Lagarde warned that risks to Greece’s austerity and reform program still “remain exceptionally high, and there is no room for slippages.’’ She said new pain lies ahead for Greeks, despite the tough measures implemented over the past two years.
“Full and timely implementation of the planned adjustment – alongside broad-based public support and support from Greece’s European partners – will be critical to success,’’ she said in a statement.
More…
Jim Sinclair’s Commentary
Italy Said to Pay Morgan Stanley $3.4 Billion By Nicholas Dunbar and Elisa Martinuzzi – Mar 16, 2012 8:10 AM MT
When Morgan Stanley (MS) said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates.
Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private.
The cost, equal to half the amount to be raised by Italy’s sales tax increase this year, underscores the risk of derivatives countries use to reduce borrowing costs and guard against swings in interest rates and currencies can sour and generate losses for taxpayers. Italy, with record debt of $2.5 trillion, has lost more than $31 billion on its derivatives at current market values, according to data compiled by the Bloomberg Brief Risk newsletter from regulatory filings.
“These losses demonstrate the speculative nature of these deals and the supremacy of finance over government,” said Italian senator Elio Lannutti, chairman of the consumer group Adusbef.
The transaction may prompt regulators to push for greater transparency and regulation of how governments use derivatives, said the head of the European Parliament panel that deals with market rules.
More…
Spanish Debt Load Hits New High By DAVID ROMAN
MADRID—Spain’s central bank said Friday that government debt rose to 68.5% of gross domestic product in the fourth quarter, the highest since at least 1990, as the country’s budget deficit surpassed expectations.
Spain’s government ran a budget deficit of 8.5% of GDP last year, down from 9.2% in 2010 but well above the 6% government target.
Debt is also expected to increase this year, as Madrid seeks to cut its deficit to 5.3% of GDP, a tough prospect amid economic contraction and weak tax receipts. Spain’s government is forecasting the economy may contract 1.7% during the year.
In the third quarter, Spanish debt stood at 66% of GDP. A year earlier, it was at 61.2%. Bank of Spain records, starting in 1990, show that debt had previously peaked at 67.4%.
Spain’s debt remains low by European standards, and below the 87.4%-of-GDP euro zone average, according to Eurostat estimates, but it has been rising faster than in other countries as tax receipts collapsed in the wake of a four-year property bust, and government outlays soared with unemployment surpassing 23%—the highest by some distance in the euro zone.
Even though countries like Germany, France and Italy all have government debt levels significantly higher than Spain’s, they also have lower government deficits.
More…
Jim Sinclair’s Commentary
Karzai Calls on U.S. to Pull Back as Taliban Cancel Talks By ROD NORDLAND, ELISABETH BUMILLER and MATTHEW ROSENBERG
Published: March 15, 2012
KABUL, Afghanistan — President Hamid Karzai insisted Thursday that the United States confine its troops to major bases in Afghanistan by next year as the Taliban announced that they were suspending peace talks with the Americans, both of which served to complicate the Obama administration’s plans for an orderly exit from the country
More…
Market Says Trouble Ahead, But Don’t Expect Anyone To Listen CIGA Eric
Shorting the stock, bank, or any sector of a liquidity driven market is a dangerous proposition.
Oversold, an overused and highly ambiguous technical term often used to imply a short term trend inflection, no longer applies to the banking sector. The banking sector was “oversold” in 2009 and 2011 (see chart 1). In all fairness, “oversold” has a nasty habit lingering despite our emotional biases. That’s why cycles and concentration of money flows provide better timing than technically oversold readings.
Chart 1:
Whitney’s warning of Muni trouble ahead finds support in the commercial banking credit trends (see table below). While credit continues to expand, its growth has been limited largely to the public sector. Treasury and agency debt holdings as a percentage of total bank credit have climbed to 18.3%. This is up from 12.2% in early 2008. Why are commercial banks so intently focus on return of rather than on capital?
Soaring public sector credit creation has been offset by contraction in nearly all forms of private sector credit (business, real estate, and consumer loans) since 2008. For instance, consumer credit creation as a percentage of total bank credit has been steadily contracting from 12.6% on April 2010. As of February 2012 it represented 11.4%. The negative trends in the larger, more influential real estate sector are even worse. Falling private credit creation, means falling private economic growth. Falling private economic growth, means falling local, state, and federal tax revenues. It’s called a vicious cycle and no official policies can reverse it.
Whitney is right, but they’ll hammer her to death unless she gets the timing EXACTLY right. The public has been so highly anesthetized by headline spin, they’re not ready to embrace negative messages. That’s how it’s always been. That’s why the smart ones never say too much.
Table 1:
Headline: Banks Oversold, Muni Defaults Still Coming: Whitney
It’s no big surprise that most U.S. banks made it through the recent stress tests, according to analyst Meredith Whitney, who told CNBC the stocks are still oversold and better buys than their smaller competitors.
With the exception of a few large institutions with balance sheet and earnings problems, the founder of the Meredith Whitney Advisory Group said the banks should be trading around book value.
Her comments came a day after the Federal Reserve announced that 15 of the top 19 American banks met capital levels that would allow them to survive a Depression-level economic crisis.
But while she said there is room for gains, Whitney also issued a dose of caution about how far the companies can go.
Source: cnbc.com
More…
Jim,
At counter current, yet correct.
Best regards,
CIGA Christopher
UK to cut top tax rate March 16 2012 at 02:07pm
By SAPA
The British government intends to cut income tax for the country’s highest earners, and will announce details in next week’s annual budget, media reports said on Friday.
Finance minister George Osborne is likely to use his budget to announce he is reducing the top rate of income tax from 50p to 40p, the Guardian newspaper reported, citing government sources.
Osborne is under pressure from the right wing of his Conservative Party and business leaders to slash the top rate in order to stimulate growth and boost Britain’s economic recovery.
However, opponents of the government are likely to say the decision bolsters the Conservative’s reputation as defenders of the rich.
“The budget has to strike a balance,” the government source told the paper. “It has to show we are all in this together, but it also has to show that as a country we are open for business.
More…
Jim,
The truth about the sale of the derivative portfolio (mostly derivatives/synthetic instruments related to corporate bonds including CDS according to articles) by Crédit Agricole to BlueMountain is that they gave it for free!
Please look bellow:
"The bank will pay BlueMountain to manage the portfolio, which will become part of a vehicle called Alpine. CA will also retain the counterparty risk and provide the hedge fund a liquidity facility, the Financial Times reports.
BlueMountain, for its trouble, will keep the profits. Terms of the deal were not disclosed."
Click here to read the article…
This is a €14 billion loss disguised as a sale! MOPE is going at spiritual level in all the Western world.
Bellow is the link to the original FT news.
Click here to read the article…
Best regards,
CIGA Christopher
BlueMountain Buys Crédit Agricole Derivatives Portfolio Mar 16 2012 | 8:02am ET
BlueMountain Capital Management has acquired what remains of Crédit Agricole’s structured-credit market-making business, as CA and other European banks continue to offload assets and improve their capital ratios.
New York-based BlueMountain will continue to wind down the contracts at the business, which CA shuttered the unit three years ago. The bank will pay BlueMountain to manage the portfolio, which will become part of a vehicle called Alpine. CA will also retain the counterparty risk and provide the hedge fund a liquidity facility, the Financial Times reports.
BlueMountain, for its trouble, will keep the profits. Terms of the deal were not disclosed.
The bank said selling it reduces its risk-weighted assets by €14 billion.
More…
Crédit Agricole offloads assets By Dan McCrum and Nicole Bullock in New York, and Scheherazade Daneshkhu in Paris
March 15, 2012 6:54 pm
Crédit Agricole has handed the remains of a closed business in its investment bank over to BlueMountain, a US hedge fund, as European banks seek new ways to boost capital.
The hedge fund has in effect taken over what is left of Crédit Agricole’s structured credit market-making business that ceased operations three years ago, comprising thousands of outstanding derivative contracts related to corporate bonds.
The deal will cut the French bank’s risk-weighted assets by €14bn, helping it to meet upcoming capital requirements set by European regulators, according to Jean-Yves Hocher, the chief executive of Crédit Agricole CIB. “Most of the Western European banks are coping with a lack of liquidity and the need to deleverage,” he told the Financial Times.
BlueMountain, which focuses on debt and derivatives investments, has created an investment vehicle called Alpine to wind down the portfolio of derivatives, funded by capital from its existing funds and fresh money from its investors.
More…
Credit Agricole Sells Derivatives Portfolio to BlueMountain By Fabio Benedetti-Valentini – Mar 16, 2012 9:35 AM GMT-0300
Credit Agricole SA (ACA), France’s third- largest bank, cut risk-weighted assets by 14 billion euros ($18 billion) as its investment-banking unit sold derivatives assets to BlueMountain Capital Management LLC.
The sale to the New York-based investment firm was part of plans set out last year to bolster capital, said Bertrand Hugonet, a spokesman for the corporate- and investment banking unit of Credit Agricole in Paris, confirming an earlier Financial Times report. He didn’t provide further details.
Credit Agricole posted its first annual loss in 2011 as it set aside provisions for Greek sovereign bonds and wrote down financial investments. The French bank, which is cutting fewer assets than larger rivals BNP Paribas SA (BNP) and Societe Generale SA, is refocusing its corporate and investment bank by closing operations in 21 countries, while remaining active in 32, and ending its equity-derivatives business, it said in December.
More…
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Foreclosure
filings fell 8 percent year-over-year in February, with 206,900 U.S.
properties receiving some form of filing, according to RealtyTrac’s U.S. Foreclosure Market Report.But don’t be fooled by these numbers. Foreclosure activity is expected to increase 15 percent this year compared to 2011, according to RealtyTrac’s Daren Blomquist.
While foreclosure activity was pushed down by decreases in some of the larger states, 21 states reported annual increases in foreclosure activity, a level not seen since November 2010.
RealtyTrac CEO Branon Moore said he expects foreclosures to rise this year, pushed by states where courts are working through a backlog of foreclosed properties:
Read More @ BusinessInsider.com
A
look at the factors driving gold and silver supply and demand and why
Warrren Buffett just misses the point as to why they are, and will
remain, of great value as investments.
by Julian Phillips, MineWeb.com:
BENONI – The last few weeks have seen a larger consolidation pattern forming in gold, pointing to a much bigger consolidating pattern that implies far more than just a short-term trading move just ahead of us. The forces that drive both supply and demand in the very short-term are just about in balance, so it is appropriate that we look at these forces to see how they influence gold prices in the short, medium, and long term.
The forces that influence the gold and silver markets are very different from those that affect industrial and base metals. They go far beyond simple prices and the technical picture of demand and supply. They encompass trust, confidence, dependability, and protection that have little or nothing to do with gold’s uses. Warren Buffett is quite right about the “uselessness” of gold. But he has missed the point as to its value. Such a master of management and investment must find such an unmanageable metal virtually useless to him. But therein lays its value as an investment.
Read More @ MineWeb.com
by Julian Phillips, MineWeb.com:
BENONI – The last few weeks have seen a larger consolidation pattern forming in gold, pointing to a much bigger consolidating pattern that implies far more than just a short-term trading move just ahead of us. The forces that drive both supply and demand in the very short-term are just about in balance, so it is appropriate that we look at these forces to see how they influence gold prices in the short, medium, and long term.
The forces that influence the gold and silver markets are very different from those that affect industrial and base metals. They go far beyond simple prices and the technical picture of demand and supply. They encompass trust, confidence, dependability, and protection that have little or nothing to do with gold’s uses. Warren Buffett is quite right about the “uselessness” of gold. But he has missed the point as to its value. Such a master of management and investment must find such an unmanageable metal virtually useless to him. But therein lays its value as an investment.
Read More @ MineWeb.com
by F. William Engdahl, GlobalResearch.ca:
Since
around October last year, the price of crude oil on world futures
markets has exploded. Different people have different explanations. The
most common one is the belief in financial markets that a war between
either Israel and Iran or the USA and Iran or all three is imminent.
Another camp argues that the price is rising unavoidably because the
world has passed what they call “Peak Oil”—the point on an imaginary
Gaussian Bell Curve at which half of all world known oil reserves have
been depleted and the remaining oil will decline in quantity at an
accelerating pace with rising price.
Both the war danger and peak oil explanations are off base. As in the astronomic price run-up in the Summer of 2008 when oil in futures markets briefly hit $147 a barrel, oil today is rising because of the speculative pressure on oil futures markets from hedge funds and major banks such as Citigroup, JP Morgan Chase and most notably, Goldman Sachs, the bank always present when there are big bucks to be won for little effort betting on a sure thing. They’re getting a generous assist from the US Government agency entrusted with regulating financial derivatives, the Commodity Futures Trading Corporation (CFTC).
Read More @ GlobalResearch.ca
Since
around October last year, the price of crude oil on world futures
markets has exploded. Different people have different explanations. The
most common one is the belief in financial markets that a war between
either Israel and Iran or the USA and Iran or all three is imminent.
Another camp argues that the price is rising unavoidably because the
world has passed what they call “Peak Oil”—the point on an imaginary
Gaussian Bell Curve at which half of all world known oil reserves have
been depleted and the remaining oil will decline in quantity at an
accelerating pace with rising price.Both the war danger and peak oil explanations are off base. As in the astronomic price run-up in the Summer of 2008 when oil in futures markets briefly hit $147 a barrel, oil today is rising because of the speculative pressure on oil futures markets from hedge funds and major banks such as Citigroup, JP Morgan Chase and most notably, Goldman Sachs, the bank always present when there are big bucks to be won for little effort betting on a sure thing. They’re getting a generous assist from the US Government agency entrusted with regulating financial derivatives, the Commodity Futures Trading Corporation (CFTC).
Read More @ GlobalResearch.ca
by Charles Hugh Smith, OfTwoMinds.com:
The feedback of failure, loss and defeat is our most helpful teacher.
I want to praise horrendously costly lessons, as those are the only ones we really learn from. We hype the value of “book learning” and give lip-service to “learning from others,” but in real life we really only learn the truly valuable lessons from painful defeats and costly losses.
Without the feedback of failure, loss and defeat, we learn little. Indeed, winning, gain and approval are the most dangerous forms of feedback, as they nurture hubris and false confidence.
I just re-learned a horrendously costly lesson the past few months: the stock market has little to do with the the “real” economy. Like many others, I failed to heed my own advice, and the tuition to learn (or re-learn) this lesson is high. (Nothing that a half-gallon of ice cream, a box of Ho-Hos and a night spent weeping in a closet couldn’t fix, fortunately, and no, I did not kick the dog, cat or parrot).
Read More @ OfTwoMinds.com
The feedback of failure, loss and defeat is our most helpful teacher.I want to praise horrendously costly lessons, as those are the only ones we really learn from. We hype the value of “book learning” and give lip-service to “learning from others,” but in real life we really only learn the truly valuable lessons from painful defeats and costly losses.
Without the feedback of failure, loss and defeat, we learn little. Indeed, winning, gain and approval are the most dangerous forms of feedback, as they nurture hubris and false confidence.
I just re-learned a horrendously costly lesson the past few months: the stock market has little to do with the the “real” economy. Like many others, I failed to heed my own advice, and the tuition to learn (or re-learn) this lesson is high. (Nothing that a half-gallon of ice cream, a box of Ho-Hos and a night spent weeping in a closet couldn’t fix, fortunately, and no, I did not kick the dog, cat or parrot).
Read More @ OfTwoMinds.com
by Roman Baudzus, GoldMoney.com:
In
recent months Indian banks have launched a major advertising campaign
to persuade Indians of the virtues of paper gold and silver products. It
looks like this campaign is bearing fruit, as Indian investors have
rapidly increased their purchases of shares in gold ETFs. Traders who
operate traditional businesses based on trade in physical metals feel
that regulations are favouring banks and financial service agencies to
their disadvantage.
The All India Gems & Jewellery Trade Federation is urging the Indian government to start taxing purchases of gold ETFs, and is even calling for the abolition of Indian gold ETFs in order to stimulate demand for physical metal. Indian citizens are well known for their fondness of physical gold and silver products. Interest in ETFs has rapidly increased and the current funds invested in them amount to US$2 trillion.
Read More @ GoldMoney.com
In
recent months Indian banks have launched a major advertising campaign
to persuade Indians of the virtues of paper gold and silver products. It
looks like this campaign is bearing fruit, as Indian investors have
rapidly increased their purchases of shares in gold ETFs. Traders who
operate traditional businesses based on trade in physical metals feel
that regulations are favouring banks and financial service agencies to
their disadvantage.The All India Gems & Jewellery Trade Federation is urging the Indian government to start taxing purchases of gold ETFs, and is even calling for the abolition of Indian gold ETFs in order to stimulate demand for physical metal. Indian citizens are well known for their fondness of physical gold and silver products. Interest in ETFs has rapidly increased and the current funds invested in them amount to US$2 trillion.
Read More @ GoldMoney.com
from FOFOA:
Great comments in the last thread!
I wrote the following as a comment replying to a few questions that
had come up relating to how the act of saving or net production
contributes to the Superorganism’s drive toward sustainable growth. But
I really wanted as many people as possible to watch the video below, so
I thought it would be more prominent in a post. So here you go!
The term “Superorganism” refers first and foremost to “distributed intelligence” or “market intelligence” as opposed to “centralized planning”. If ever you feel the urge to make life better by changing some rule or adding a new one in order to control, cause or stop someone else’s actions, you fall under the category of central planners. If, however, you are driven to personal actions to better your life (rather than the all too common obsession with changing the actions of others you deem to be wrong) you are part of the Superorganism. Central planners are, of course, also part of the Superoganism, but they are a retarding influence on that which would be far more intelligent without them.
Read More @ FOFOA.Blogspot.com
Great comments in the last thread!
I wrote the following as a comment replying to a few questions that
had come up relating to how the act of saving or net production
contributes to the Superorganism’s drive toward sustainable growth. But
I really wanted as many people as possible to watch the video below, so
I thought it would be more prominent in a post. So here you go!The term “Superorganism” refers first and foremost to “distributed intelligence” or “market intelligence” as opposed to “centralized planning”. If ever you feel the urge to make life better by changing some rule or adding a new one in order to control, cause or stop someone else’s actions, you fall under the category of central planners. If, however, you are driven to personal actions to better your life (rather than the all too common obsession with changing the actions of others you deem to be wrong) you are part of the Superorganism. Central planners are, of course, also part of the Superoganism, but they are a retarding influence on that which would be far more intelligent without them.
Read More @ FOFOA.Blogspot.com
by Clif Droke, FinancialSense.com:
Lost
amid the hoopla after the Dow recently achieved a milestone in closing
above the psychologically important 13,000 barrier is another, more
significant benchmark. Gasoline prices hit a record seasonal high this
week. The average price of gasoline across the country is now $3.74, the
highest it’s ever been at this time of year.
Offsetting the steep rise in prices for crude oil and gasoline has been a collapse in the price for natural gas. A glut of natural gas inventory along with continued weak demand following the credit crisis has pushed natural gas prices to their lowest levels in a decade. This in turn has helped mitigate electricity and home heating costs this winter and has also lessened U.S. dependency on coal for power generation. Were it not for the ultra low natural gas price, rising gasoline and crude oil prices would be crushing the economy by now.
Read More @ FinancialSense.com
Lost
amid the hoopla after the Dow recently achieved a milestone in closing
above the psychologically important 13,000 barrier is another, more
significant benchmark. Gasoline prices hit a record seasonal high this
week. The average price of gasoline across the country is now $3.74, the
highest it’s ever been at this time of year.Offsetting the steep rise in prices for crude oil and gasoline has been a collapse in the price for natural gas. A glut of natural gas inventory along with continued weak demand following the credit crisis has pushed natural gas prices to their lowest levels in a decade. This in turn has helped mitigate electricity and home heating costs this winter and has also lessened U.S. dependency on coal for power generation. Were it not for the ultra low natural gas price, rising gasoline and crude oil prices would be crushing the economy by now.
Read More @ FinancialSense.com
Dear CIGAs,
At 11:30am this morning the Whistle Blower comment reported yesterday was deleted from the CFTC web page.
According to comments made in the euro press, the Fed is in arrears
concerning gold audits due to countries storing gold with the New York
Federal Reserve Bank.
Jim Sinclair’s Commentary
If the market fails to properly value a company making progress on the ground, M&A will.
Anglo American sees M&A as ‘strategic priority’ – Parker By: Natasha Odendaal
16th March 2012
JOHANNESBURG (miningweekly.com) – Diversified mining group Anglo American continued to examine merger and acquisition opportunities as a “strategic priority” in driving value in core commodities, said chairperson SirJohn Parker.
Last year, the group bought the Oppenheimer family’s 40% interest in De Beers for $5.1-billion, raising its profile in diamonds. Anglo American also brought up its total stake in Peace River Coal (PRC) mine, including a number of exploration leases, in British Columbia, Canada, to 100%, following its acquisition of the 25.17% interest in PRC that it did not already own.
Anglo American in November also sold its 24.5% interest in Anglo American Sur copper assets, in Chile, for $5.4-billion to Mitsubishi Corporation.
“Our commodities help to both fuel growth in developing countries and to enable the continuing technological revolution in the developed economies,” he said, adding that growing demand for metals and minerals was fuelling mining companies exploration of regions beyond their traditional mining jurisdictions, despite infrastructural, logistical and other challenges.
“Anglo American’s diversified portfolio included material exposure to metallurgical coal and iron-ore, which both benefited from continued industrialisation in emerging economies, while also having exposure to later cycle businesses through platinum and ultimately, diamonds, as GDP [gross domestic product] per capita increases,” Parker wrote in the group’s 2011 annual report, published this week.
More…
Jim Sinclair’s Commentary
The more the talk of change, the more things remain the same.
Goldman Should Be Barred From Returning More Capital, Bair Says – Bloomberg
Goldman Sachs Group Inc. (GS) should be prohibited from boosting its dividend or repurchasing stock because Federal Reserve stress tests showed the investment bank is too leveraged, according to former regulator Sheila Bair.
The leverage ratios of four financial firms dropped below 4 percent under the stressed scenario, according to test results the Fed released this week. Two of those firms, Citigroup Inc. (C) andMetLife Inc. (MET), were prohibited from raising dividends or repurchasing shares. The central bank approved the capital plans of two others, Goldman Sachs and Morgan Stanley.
More…
Jim Sinclair’s Commentary
In the economic sense, this is nuclear even if only selective at the inception.
The Banks named for all intents and purposes are put out of business.
SWIFT instructed to disconnect sanctioned Iranian banks following EU Council decision Published on 15 Mar 2012
This article is also available in German
Brussels, 15 March 2012 – Following an EU Council decision, SWIFT is today announcing it has been instructed to discontinue its communications services to Iranian financial institutions that are subject to European sanctions.
The new European Council decision, as confirmed by the Belgian Treasury, prohibits companies such as SWIFT to continue to provide specialized financial messaging services to EU-sanctioned Iranian banks. SWIFT is incorporated under Belgian law and has to comply with this decision as confirmed by its home country government.
“This EU decision forces SWIFT to take action” said Lázaro Campos, CEO of SWIFT. “Disconnecting banks is an extraordinary and unprecedented step for SWIFT. It is a direct result of international and multilateral action to intensify financial sanctions against Iran.”
The EU-sanctioned Iranian financial institutions and the SWIFT customer community have been notified of the disconnection, which will become effective on Saturday 17 March at 16.00 GMT.
SWIFT has been and remains in full compliance with all applicable sanctions regulations of the multiple jurisdictions in which it operates, and has received confirmation of this from the competent regulatory authorities. As a global provider of secure messaging services, SWIFT has no involvement in or control over the underlying financial transactions that are contained in the messages of its member banks.
Related links
Council of the European Union – Council elaborates EU sanctions against Iran
Official Journal of the European Union
Statements on sanctions
About SWIFT
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,000 financial institutions and corporations in 210 countries. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.
For more information, please refer to http://www.swift.com/.
Jim Sinclair’s Commentary
The Greek tragedy is FAR from over.
IMF approves $36.56 billion funding for Greece
EU warns that painful social overhaul ahead By Nicholas Paphitis
March 16, 2012
ATHENS – The International Monetary Fund on Thursday approved $36.56 billion in funding for Greece over the next four years, while Standard and Poor’s warned that the country’s new bonds remained vulnerable to default despite this month’s massive debt writedown.
The IMF’s executive board granted the immediate release of $2.15 billion of these funds as part of the country’s second bailout, a statement said.
Greece will receive a total $226.2 billion in rescue loans from its eurozone partners and the IMF to keep it afloat until 2016, as dizzily high borrowing rates have blocked its ability to raise money on the international bond markets.
IMF Managing Director Christine Lagarde warned that risks to Greece’s austerity and reform program still “remain exceptionally high, and there is no room for slippages.’’ She said new pain lies ahead for Greeks, despite the tough measures implemented over the past two years.
“Full and timely implementation of the planned adjustment – alongside broad-based public support and support from Greece’s European partners – will be critical to success,’’ she said in a statement.
More…
Jim Sinclair’s Commentary
When you turn your client into a counter party that client enters the cross hairs of the OTC derivative manufacturer.
In all probability, $3.4 billion is the price of tearing up the pieces of paper.
Italy Said to Pay Morgan Stanley $3.4 Billion By Nicholas Dunbar and Elisa Martinuzzi – Mar 16, 2012 8:10 AM MT
When Morgan Stanley (MS) said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates.
Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private.
The cost, equal to half the amount to be raised by Italy’s sales tax increase this year, underscores the risk of derivatives countries use to reduce borrowing costs and guard against swings in interest rates and currencies can sour and generate losses for taxpayers. Italy, with record debt of $2.5 trillion, has lost more than $31 billion on its derivatives at current market values, according to data compiled by the Bloomberg Brief Risk newsletter from regulatory filings.
“These losses demonstrate the speculative nature of these deals and the supremacy of finance over government,” said Italian senator Elio Lannutti, chairman of the consumer group Adusbef.
The transaction may prompt regulators to push for greater transparency and regulation of how governments use derivatives, said the head of the European Parliament panel that deals with market rules.
More…
Spanish Debt Load Hits New High By DAVID ROMAN
MADRID—Spain’s central bank said Friday that government debt rose to 68.5% of gross domestic product in the fourth quarter, the highest since at least 1990, as the country’s budget deficit surpassed expectations.
Spain’s government ran a budget deficit of 8.5% of GDP last year, down from 9.2% in 2010 but well above the 6% government target.
Debt is also expected to increase this year, as Madrid seeks to cut its deficit to 5.3% of GDP, a tough prospect amid economic contraction and weak tax receipts. Spain’s government is forecasting the economy may contract 1.7% during the year.
In the third quarter, Spanish debt stood at 66% of GDP. A year earlier, it was at 61.2%. Bank of Spain records, starting in 1990, show that debt had previously peaked at 67.4%.
Spain’s debt remains low by European standards, and below the 87.4%-of-GDP euro zone average, according to Eurostat estimates, but it has been rising faster than in other countries as tax receipts collapsed in the wake of a four-year property bust, and government outlays soared with unemployment surpassing 23%—the highest by some distance in the euro zone.
Even though countries like Germany, France and Italy all have government debt levels significantly higher than Spain’s, they also have lower government deficits.
More…
Jim Sinclair’s Commentary
Here is a situation that is totally FUBAR.
Karzai Calls on U.S. to Pull Back as Taliban Cancel Talks By ROD NORDLAND, ELISABETH BUMILLER and MATTHEW ROSENBERG
Published: March 15, 2012
KABUL, Afghanistan — President Hamid Karzai insisted Thursday that the United States confine its troops to major bases in Afghanistan by next year as the Taliban announced that they were suspending peace talks with the Americans, both of which served to complicate the Obama administration’s plans for an orderly exit from the country
More…
Market Says Trouble Ahead, But Don’t Expect Anyone To Listen CIGA Eric
Shorting the stock, bank, or any sector of a liquidity driven market is a dangerous proposition.
Oversold, an overused and highly ambiguous technical term often used to imply a short term trend inflection, no longer applies to the banking sector. The banking sector was “oversold” in 2009 and 2011 (see chart 1). In all fairness, “oversold” has a nasty habit lingering despite our emotional biases. That’s why cycles and concentration of money flows provide better timing than technically oversold readings.
Chart 1:
Whitney’s warning of Muni trouble ahead finds support in the commercial banking credit trends (see table below). While credit continues to expand, its growth has been limited largely to the public sector. Treasury and agency debt holdings as a percentage of total bank credit have climbed to 18.3%. This is up from 12.2% in early 2008. Why are commercial banks so intently focus on return of rather than on capital?
Soaring public sector credit creation has been offset by contraction in nearly all forms of private sector credit (business, real estate, and consumer loans) since 2008. For instance, consumer credit creation as a percentage of total bank credit has been steadily contracting from 12.6% on April 2010. As of February 2012 it represented 11.4%. The negative trends in the larger, more influential real estate sector are even worse. Falling private credit creation, means falling private economic growth. Falling private economic growth, means falling local, state, and federal tax revenues. It’s called a vicious cycle and no official policies can reverse it.
Whitney is right, but they’ll hammer her to death unless she gets the timing EXACTLY right. The public has been so highly anesthetized by headline spin, they’re not ready to embrace negative messages. That’s how it’s always been. That’s why the smart ones never say too much.
Table 1:
Headline: Banks Oversold, Muni Defaults Still Coming: Whitney
It’s no big surprise that most U.S. banks made it through the recent stress tests, according to analyst Meredith Whitney, who told CNBC the stocks are still oversold and better buys than their smaller competitors.
With the exception of a few large institutions with balance sheet and earnings problems, the founder of the Meredith Whitney Advisory Group said the banks should be trading around book value.
Her comments came a day after the Federal Reserve announced that 15 of the top 19 American banks met capital levels that would allow them to survive a Depression-level economic crisis.
But while she said there is room for gains, Whitney also issued a dose of caution about how far the companies can go.
Source: cnbc.com
More…
Jim,
At counter current, yet correct.
Best regards,
CIGA Christopher
UK to cut top tax rate March 16 2012 at 02:07pm
By SAPA
The British government intends to cut income tax for the country’s highest earners, and will announce details in next week’s annual budget, media reports said on Friday.
Finance minister George Osborne is likely to use his budget to announce he is reducing the top rate of income tax from 50p to 40p, the Guardian newspaper reported, citing government sources.
Osborne is under pressure from the right wing of his Conservative Party and business leaders to slash the top rate in order to stimulate growth and boost Britain’s economic recovery.
However, opponents of the government are likely to say the decision bolsters the Conservative’s reputation as defenders of the rich.
“The budget has to strike a balance,” the government source told the paper. “It has to show we are all in this together, but it also has to show that as a country we are open for business.
More…
Jim,
The truth about the sale of the derivative portfolio (mostly derivatives/synthetic instruments related to corporate bonds including CDS according to articles) by Crédit Agricole to BlueMountain is that they gave it for free!
Please look bellow:
"The bank will pay BlueMountain to manage the portfolio, which will become part of a vehicle called Alpine. CA will also retain the counterparty risk and provide the hedge fund a liquidity facility, the Financial Times reports.
BlueMountain, for its trouble, will keep the profits. Terms of the deal were not disclosed."
Click here to read the article…
This is a €14 billion loss disguised as a sale! MOPE is going at spiritual level in all the Western world.
Bellow is the link to the original FT news.
Click here to read the article…
Best regards,
CIGA Christopher
BlueMountain Buys Crédit Agricole Derivatives Portfolio Mar 16 2012 | 8:02am ET
BlueMountain Capital Management has acquired what remains of Crédit Agricole’s structured-credit market-making business, as CA and other European banks continue to offload assets and improve their capital ratios.
New York-based BlueMountain will continue to wind down the contracts at the business, which CA shuttered the unit three years ago. The bank will pay BlueMountain to manage the portfolio, which will become part of a vehicle called Alpine. CA will also retain the counterparty risk and provide the hedge fund a liquidity facility, the Financial Times reports.
BlueMountain, for its trouble, will keep the profits. Terms of the deal were not disclosed.
The bank said selling it reduces its risk-weighted assets by €14 billion.
More…
Crédit Agricole offloads assets By Dan McCrum and Nicole Bullock in New York, and Scheherazade Daneshkhu in Paris
March 15, 2012 6:54 pm
Crédit Agricole has handed the remains of a closed business in its investment bank over to BlueMountain, a US hedge fund, as European banks seek new ways to boost capital.
The hedge fund has in effect taken over what is left of Crédit Agricole’s structured credit market-making business that ceased operations three years ago, comprising thousands of outstanding derivative contracts related to corporate bonds.
The deal will cut the French bank’s risk-weighted assets by €14bn, helping it to meet upcoming capital requirements set by European regulators, according to Jean-Yves Hocher, the chief executive of Crédit Agricole CIB. “Most of the Western European banks are coping with a lack of liquidity and the need to deleverage,” he told the Financial Times.
BlueMountain, which focuses on debt and derivatives investments, has created an investment vehicle called Alpine to wind down the portfolio of derivatives, funded by capital from its existing funds and fresh money from its investors.
More…
Credit Agricole Sells Derivatives Portfolio to BlueMountain By Fabio Benedetti-Valentini – Mar 16, 2012 9:35 AM GMT-0300
Credit Agricole SA (ACA), France’s third- largest bank, cut risk-weighted assets by 14 billion euros ($18 billion) as its investment-banking unit sold derivatives assets to BlueMountain Capital Management LLC.
The sale to the New York-based investment firm was part of plans set out last year to bolster capital, said Bertrand Hugonet, a spokesman for the corporate- and investment banking unit of Credit Agricole in Paris, confirming an earlier Financial Times report. He didn’t provide further details.
Credit Agricole posted its first annual loss in 2011 as it set aside provisions for Greek sovereign bonds and wrote down financial investments. The French bank, which is cutting fewer assets than larger rivals BNP Paribas SA (BNP) and Societe Generale SA, is refocusing its corporate and investment bank by closing operations in 21 countries, while remaining active in 32, and ending its equity-derivatives business, it said in December.
More…
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