Former Goldman Sachs boss Lloyd Blankfein says he is worried about hidden secret leverage in the nearly $2 trillion shadow banking market after Blue Owl shut a fund and MFS collapsed

 

I smell a crash coming, says former GOLDMAN boss...

... “One has to worry about opaque assets where there’s illiquidity,” he told Bloomberg in a separate interview. “We’re getting close to the end of late stages of cycles on this and we’re due for a kind of a reckoning.” ...

Bank of America overall profits up 11%, stock trading revenue up 17%

Bank of America on Tuesday posted first-quarter results that topped analysts’ expectations for profit and revenue on stronger-than-expected net interest income and trading revenue. ...

JPMorgan Chase, Morgan Stanley and Goldman Sachs each exceeded analysts’ estimates on a boom in equities trading revenue as banks took advantage of volatility in the quarter.

More.

Trump tariff chaos is literally equity traders' gold

 

 On again, off again, on again tariffs from The Puppet Master have enriched stock traders Goldman Sachs, JP Morgan Chase, and Morgan Stanley. They don't care if stocks go up, or down, as long as they keep going up, going down, going up. Trump chaos is literally traders' gold.

Goldman profit is up 15% from the year earlier period.

Goldman Sachs tops estimates on boom in equities trading revenue

 ... equity trading revenue rose 27%. ... On Friday, rivals JPMorgan Chase and Morgan Stanley each topped expectations for first-quarter results on booming equities trading.

Equities trading revenue surged 48% and 45% at the banks, respectively, thanks to volatility in the opening months of Trump’s tenure amid his efforts to reshape global trade agreements.

 

Now that Democrats have lost everything, The New York Times has nothing to lose by telling the truth about their illegal immigration tsunami under Joe Biden

 

 The numbers in the Times analysis include both legal and illegal immigration. About 60 percent of immigrants who have entered the country since 2021 have done so without legal authorization, according to a Goldman Sachs report based on government data.

The combined increases of legal and illegal immigration have caused the share of the U.S. population born in another country to reach a new high, 15.2 percent in 2023, up from 13.6 percent in 2020. The previous high was 14.8 percent, in 1890.

Story here.

People should give Joe Biden more credit. He promised this immigration disaster, and boy did we get it, good and hard. Nothing sucks like success.

Joe defended it during the Democrat debates in 2019, and invited it during the final 2020 debate with Trump, and America voted for it.

 

 

 

T. A. Frank tries to dial down the hysteria a notch or two: This still isn’t the behavior of a dictator, the press is doing just fine

T. A. Frank for Vanity Fair, here:

Finally, this still isn’t the behavior of a dictator. As much as Trump blusters about libel laws and maligns journalists, the press is doing just fine. A truly dangerous president would cloak his aims in high principles and ask Congress to pass new laws. He would ignore someone like Woodward and say quietly, to henchmen behind the scenes, “Who will rid me of that meddlesome journalist?” He wouldn’t pick up the phone and have a fumbling phone call with Woodward asking if the book was going to be bad, before concluding, glumly, “I assume that means it’s going to be a negative book. But you know, I’m sort of 50 percent used to that. That’s all right. Some are good and some are bad. Sounds like this is going to be a bad one.”

But all of this is, again, one more confirmation of what we already knew: Trump talks tougher than he acts. He also struggles to get his way, everywhere. ... Trump knows how to stoke his base, and he has started to reshape the G.O.P., but he has had a hell of a time implementing his campaign promises. He lacks the self-discipline and intuition.

And the best lines of all:

Why campaign like Pat Buchanan if you staff up like Jeb Bush? ... The man who insulted Goldman Sachs and Saudi princes and promised infrastructure and walls instead hired Goldman Sachs, did the bidding of Saudi princes, and stuck to tax cuts.

Can't very well become Donaldus Magnus if you won't appoint people to fight for and implement your agenda.

Frank Rich slams Gary Cohn in NY Mag, Cohn fires back in Bloomberg

Frank Rich on the 5th, here:

The Wall Street bandits escaped punishment, as did most of the banking houses where they thrived. Everyone else was stuck with the bill. ... But it’s a measure of how much the country is broken that we just shrug with resignation when the wealthy Democratic Goldman Sachs alum Gary Cohn joins this administration to secure an obscene tax cut, then exits without apology to enjoy his further enrichment at the expense of the safety net for the country’s most vulnerable citizens.

Gary Cohn here on the 6th:

In ’08 Facebook was one of those companies that was a big platform to criticize banks, they were very out front of criticizing banks for not being responsible citizens. I think banks were more responsible citizens in ’08 than some of the social media companies are today. And it affects everyone in the world. The banks have never had that much pull. ... In Washington nothing’s perfect, so I’m not thinking it’s perfect, it’s never going to be perfect. But the fact that we got something really important done, which is corporate tax reform, which made us competitive with the rest of the world, is good.

Jan Hatzius is hysterical: Unemployment rate set to move into overheating territory

Quoted here:

"We are still creating a lot more jobs than the long-term trend which we would put at 100,000 (each month), so when you are adding 200,000, that means the unemployment rate is set to move into overheating territory," Hatzius added.

The 62-year trend for total nonfarm (Jan 1939 - Jan 2001) is 138,143 jobs/month. Since 2001 through Jan 2018 we're off that trend by 46%, with a monthly rate of just 74,014 jobs added a month. Go back 18 years from May 2018 to incorporate present-day job-creation and the monthly rate goes up only to 76,597 jobs/month.

For workers, the last 17-18 years have absolutely SUCKED!

Nothing is overheating here except Jan Hatzius.

For him recovering the missing 13 million + jobs since 2001 would be a catastrophe . . . for the profits of Goldman Sachs. 

Surprise, the tax cuts are showing up in, not your wallet, but enormous stock buy-backs by large corporations, which explains the rising stock market

In other words, so-called sideline cash coming into the market is really nothing more than taxcut cash reallocated to stock buy-backs by corporate America.

Marketwatch reports here:

But now, courtesy of Goldman Sachs, we know where the tax cut is really going. Surprise! It’s paying for stock repurchases by corporations, as Corporate America despairs of investing in much other than dividing the pie provided by near-record profitability into fewer and larger pieces.

Buyback announcements are up 22% this year to $67 billion in just six weeks, Goldman said in a note to clients. This follows a report by benefits consulting firm Aon Hewitt finding that 83% of large companies don’t expect the tax cut to boost salaries at all — just help pay for small bonuses companies like WalMart and AT&T gave workers, which reporters soon discovered were, themselves, skewed toward higher-paid, longer-tenured employees in many cases.

Conservatives don't realize how much Ted Cruz owes to George W. Bush because talk radio never mentions it

How is it that Rush Limbaugh's closest thing to Reagan is a Bushie, hm?

Reported here:

The Bush-Cruz connection is clear. Ted was George W.’s brain when he ran for president. A top policy adviser, Ted maneuvered for Solicitor General in Bush World but settled for a plum at the Federal Trade Commission. Ted’s a Bush man with deep ties to the political and financial establishment.  Ted and wife Heidi brag about being the first “Bush marriage” – they met as Bush staffers. Cruz was an adviser on legal affairs while Heidi was an adviser on economic policy and eventually director for the Western Hemisphere on the National Security Council under Condoleezza Rice. Condi helped give us the phony war in Iraq. Heidi then went to the Bush U.S. Trade Representative as a top deputy to U.S. Trade Rep. Robert Zoellick, who wired Heidi’s membership in the Council on Foreign Relations and job at Goldman Sachs. The bailed-out bank then loaned Cruz $1 million secretly to finance his Senate race. Cruz would also borrow an undisclosed $1 million loan from Citicorp.

All But One Big Bank Would Fail Real Stress Tests, Which Means In An Actual Crisis It's 2008 All Over Again

So says Bloomberg View here, naming Wells Fargo as the only one which would pass:

The results aren’t pretty. Using a start date of Sept. 30, 2013, the same as that of the Fed's latest round of stress tests, the NYU model gives only one of the six largest U.S. banks -- Wells Fargo & Co., Inc. -- a passing grade. The other five -- JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley -- would have a combined capital shortfall of more than $300 billion. That's not much less than they needed to get themselves out of the last crisis.

Whoops! The 13th Bank Failure Of 2013 Was On Tuesday The 14th!

Well now, that's unusual. The 13th bank failure of 2013 occurred this past Tuesday, May 14th. Usually the FDIC waits until Friday late to close a bank. Can you imagine having closed it the day before, on Monday, May 13th? Me either. I guess the Feds are having a little fun with us. Either that or the FDIC is having a baseball game with Goldman Sachs tonight.

The bank in question which failed on Tuesday was Central Arizona Bank, Scottsdale, Arizona, costing the FDIC a measly $8.6 million.

I Know! Let's Get The Sequestration Cuts From The Banks!

In an editorial on February 20th, here (which has caused quite the hubbub), Bloomberg.com maintained that most big banks are not profitable because their preferred rate to borrow from the government amounts to a gift roughly equal to their stated profits:

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits . . .. In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

No one seems to be inquiring too deeply, however, why the banks are not profitable without continuing massive taxpayer support ($83 billion annually -- remind you of anything beginning with the letter "s" and starting today?).

Gee, could it be because of all those bad mortgages on and off the books which are not performing and cutting into their capital? Ya think?

And maybe, just maybe, the Fed's policies are trying to repair this one thing only, while telling us it's to help with employment, housing, the stock market even, blah, blah, blah, pissing down our backs and tellin' us it's rainin'?

If this were really a free market economy with a private banking industry, we'd have had the equivalent of $85 billion in sequestration spending cuts for years already by not subsidizing these losers.

And another thing we wouldn't have is these big banks. They would have failed already.

Warren Buffett, Amoral Crony Capitalist, Bought An Indulgence From The Left

So says Daniel Mitchell of The Cato Institute, here:

"If you’re an amoral person with political connections, it’s possible to make a lot of money.

"Warren Buffett lined his pockets by making a government-subsidized investment in Goldman Sachs during the financial crisis.

"The rest of us suffered and he got richer, but the left seems to be okay with that perverse form of redistribution because he supports class-warfare tax hikes. Sort of like buying an indulgence in the Middle Ages."

I really like that analogy with the church because it speaks to the failure of all idealist conceptions to deliver on what they promise. This is as true of socialism as it is of capitalism, of fascism as it is of Christianity. All offer a promised land which never seems to arrive, but you have to ask yourself who thought this stuff up.

Like beer to Homer Simpson, it is we who are the cause of and the solution to all of life's problems.

Romney Is A Total Hypocrite On Hard-Money: To Him TARP Preserved The Dollar's Value!

Hard-money conservatives like Larry Kudlow who think Gov. Mitt Romney is actually serious about maintaining the value of the dollar ought to remember that Romney argued in October 2011 that the TARP bailout was designed to keep the currency worth something:

According to Governor Romney, the $700 billion Wall Street rescue package "was designed to keep not just a collapse of individual banking institutions, but to keep the entire currency of the country worth something."

Noting could be further from the truth and Romney knows it.

TARP was not sold as a program to prop-up the dollar; it was sold as a means of keeping credit markets liquid, to keep banks lending to business, so businesses would keep people employed.

Not surprisingly, from that perspective TARP has been a spectacular failure -- because as soon as Congress granted then-Treasury Secretary Henry Paulson a blank check for $700 billion (along with near-dictatorial powers over the American financial services industry and de facto control over the U.S. economy), something changed.

Suddenly, instead of being a program to move illiquid mortgage-backed securities off the books of banks, TARP became a no-strings-attached cash infusion to favored financial institutions and corporations. 

Among the insiders who received the no-strings-attached cash were Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group – that’s what Romney and Cain were defending.

If borrowing money to spend on circumventing the failure necessary to the proper operation of free markets props up the value of the dollar, it hasn't worked very well.

Since the (first!) bailout of Chrysler signed into law by Jimmy Carter in January 1980 you now need $2.73 to buy what $1.00 did then.

Way to go Brownie!

a little hurricane humor there

Romney Doesn't Oppose Obama's Financier Fascism, He's Part Of It

"[D]espite taking office in the midst of a massive financial meltdown, Obama’s administration has not prosecuted a single heavy-hitter among those responsible for the financial crisis. To the contrary, he’s staffed his team with big bankers and their allies. Under the Bush-Obama bailouts the big financial institutions have feasted like pigs at the trough, with the six largest banks borrowing almost a half trillion dollars from uncle Ben Bernanke’s printing press. In 2013 the top four banks controlled more than 40 percent of the credit markets in the top 10 states—up by 10 percentage points from 2009 and roughly twice their share in 2000. Meantime, small banks, usually the ones serving Main Street businesses, have taken the hit along with the rest of us with more than 300 folding since the passage of Dodd-Frank, the industry-approved bill to “reform” the industry. ...

"In a sane world, one would expect Republicans to run against this consolidation of power, that has taxpayers propping up banks that invest vast amounts in backing the campaigns of the lawmakers who levy those taxes. The party would appeal to grassroots capitalists, investors, small banks and their customers who feel excluded from the Washington-sanctioned insiders' game. The popular appeal is there. The Tea Party, of course, began as a response against TARP. ...

"Romney himself is so clueless as to be touting his strong fund-raising with big finance. His top contributors list reads something like a rogue’s gallery from the 2008 crash: Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citicorp, and Barclays."

Read the whole thing from Joel Kotkin, here.

The Next Bailout: Think Fed Leverage at 53:1 is Bad? Try the FHA at 417:1.

So says Fortune (link), or else it's curtains for Ginnie Mae:

The second catalyst [for government support of housing to decline] is the FHA, which looks increasingly like it will need a bailout. In its annual report to Congress, released a few weeks ago, the FHA reported estimated economic net worth of $2.6 billion backing $1.078 trillion insurance in force, for a capital ratio of just 0.24% (or 417x leverage). One year ago, the capital ratio was 0.50%, and in 2007 it was 6.4%.  The FHA's annual report claims it's adequately capitalized, but this conclusion relies on home prices not falling at all from here. ...

The government will have to pony up to recapitalize the FHA. FHA mortgages are fed into Ginnie Mae MBS, and Ginnie Mae MBS are explicitly backed by the full faith and credit of the United States government. So if the FHA runs out of funds, the government will have little choice but to step up. To do otherwise would be a default – not out of the question these days, but not very likely either.

FHA and VA loans fill void left by private lending

Dr. Housing Bubble weighs in with the big picture (link):

The trend for lower home prices has been baked in for nearly a year now. Last summer we had a mini burst of buyers thanks to artificial tax credits and low interest rates. I still view the current market as being designed for the nothing down leverage happy mentality that is present in our society. You have a large number of buyers purchasing homes with 3.5 percent down FHA mortgages and the default rates are soaring in this category. ...



Over half a decade ago I knew the bigger issue would be the cognitive dissonance that would linger from a post-bubble world. Many now realize that what occurred in the housing market was a once in a lifetime spending binge induced by debt. Yet some still think those days are only around the corner. The global debt crisis will not allow that. This is why most of the mortgage market is now dominated by the government. How many foreign governments or investors are going to trust Goldman Sachs or Morgan Stanley when they drop by their door steps with new mortgage backed securities? I think some have learned their lessons well and the data reflects this.


The housing market was bound to have a day of reckoning and it looks like it is slowly unraveling. It was simply impossible to have a shadow inventory growing with banks just ignoring the reality. We are now going into year five of the housing bubble bursting. You have millions of those in foreclosure who have not made a payment in one to even two years.


Ultimately the burden falls largely on the middle class. The Federal Reserve has a primary mission to protect banks. That is their bottom line. They are not looking out for the best interest of homeowners or working Americans. For the cost of the bailouts and shadow loans, they could have paid off close to every mortgage in the country. Yet even principal reductions were never on the radar because to do that, it would be to admit a financially broken system. Instead they opted to give out $7.7 trillion in backdoor loans to banks and forced the public to deal with “free market” solutions. An interesting situation no doubt but the problems we are now facing are based on this two-tiered system.



Confounded Interest points out (link) just how high the FHA default rates are:

As of October 2011 17.02% of FHA loans were at some stage of delinquency. The serious delinquency rate is 9.05%.


Clearly another government sponsored enterprise is repeating the mistakes of the past as we speak, having destroyed its capital base with non-performing loans swelling its balance sheet. FHA obviously should require down payments which are much higher than 3.5 percent in order to strengthen its bottom line, but it's probably too late to avoid bailing it out for the mistakes it has already made.

The Fed Still Refuses to Document for the GAO the Exigent Circumstances Justifying Loans to Non-Primary Dealers

See the story here.

We're talkin' affiliates of Merrill Lynch, Goldman Sachs, Morgan Stanley and Citigroup.

None dare call it fascism.

The True Born Sons of Liberty want The Fed to end.

Suez Canal Moves 2.5 Percent of Global Oil Production

So says an article at Bloomberg.com here:

About 2.5 percent of global oil production moves through Egypt via the Suez Canal and the adjacent Suez-Mediterranean Pipeline, according to Goldman Sachs Group Inc. The waterway carries more than 2.2 million barrels of oil a day.


The US Department of Energy puts the figure closer to 1.8 million barrels per day in 2009, here, in the canal itself. The Suez Canal is unable to accommodate the newer tankers in the Very Large Crude Carrier and Ultra Large Crude Carrier classes. 

Here's Why Your Government Stalled on the FOIA for Two Years

Because the American taxpayer has bailed out the whole world, that's why. We're now the biggest suckers in history.

And the following information wouldn't have been released either, except for the Dodd-Frank legislation:

Citigroup ($2.2 trillion)

Merrill Lynch ($2.1 trillion)

Morgan Stanley ($2 trillion)

Bear Stearns ($960 billion)

Bank of America ($887 billion)

Goldman Sachs ($615 billion)

JPMorgan Chase ($178 billion)

Wells Fargo ($154 billion)

Swiss bank UBS ($165 billion)

Deutsche Bank ($97 billion)

Royal Bank of Scotland ($92 billion)

Fannie Mae and Freddie Mack ($1.25 trillion)

General Electric ($16 billion)

Harley-Davidson Inc. ($2.3 billion)

Caterpillar Inc. dealers ($733 million)

The story from yahoo.com is totally irresponsible for saying the Fed didn't take part in an appeal to the Supreme Court with a group of commercial banks seeking to prevent the disclosure of the names of institutions receiving emergency loans in 2008. Hell, the Fed appealed all the way up the line until it came time to appeal to the Supreme Court or comply with two (2! II! Zwei!) orders from lower courts to disclose the information. And we still don't have that.

Has anyone painted a clearer picture of the bankruptcy of our largest institutions and industries?

Only a fool would keep his money in a bank now.

Hell, only a fool would keep money.

Corporate Cash Really Isn't

Mish has an interesting post which contrasts "corporate cash" with corporate debt. The upshot is the cash is concentrated in just four big financials (Goldman Sachs, JP Morgan Chase, Citigroup and Bank of America), and overall in about 50 companies. But corporates with cash are also in debt up to their eyeballs, so much so that the debt outweighs the cash by a TARP-size bailout amount:

As you can see, the total cash (in green) for the top 50 companies is $3.71 trillion, which sure sounds like a hell of a lot of cash, and it would be were it not for the debt (in red) totaling $4.45 trillion.

Read it all and see the graphic here.