Please do me a favor and grab a barf bag before you watch the video below:
Here are the statistics from the tech ticker:
"Even if this quarter only matches the third, the banks' revenue will top that of any year except 2009," when the top five banks hauled in $127.8 billion. (Through the first 9 months of 2010, the five firms generated $93.7 billion in revenue, Bloomberg reports.)
Given those tallies, it's no surprise Wall Street bonuses are also expected to be robust this year. Overall pay per employee is expected to be down from the peak years, and more is coming in the form of restricted stock. But the overall bonus pool is projected to hit $144 billion this year, which would be a record, The WSJ reports.
Given the ongoing struggles in the "real" economy, it's no surprise most Americans most definitely do begrudge Wall Street's outsized compensation structure, more especially since these firms only survived 2008 thanks to tax-payer funded bailouts.
As separate Bloomberg survey shows over 70% of Americans think big bonuses should be banned this year while over 85% of those surveyed favor a 50% tax on bonuses exceeding $400,000."
My Take:
I'm sorry folks, I can't help it, I must rant about the bankers after watching this. I know I have done this repeatedly so please forgive me. However, I feel the need to hammer it home again in case some of my newer readers haven't experienced one of my Wall St rants.
Time to let it rip:
OK, so let me get this straight: Wall St gets to pay themselves record compensation based on profits from the money that was given to them by the US taxpayers via the TARP.
A few questions here: Where is our cut Wall St.? It's OUR money you are gambling with. Why don't we get to share in the profits that you never would have made without us bailing you out when you were up to your neck in toxic mortgages?
folks, This makes me LIVID. Where does Wall St get the balls to pay themselves this type of bonus as this country sits in financial ruin?
Why isn't at least half of this money getting paid back to the taxpayer? How does the government allow this to happen? It's just flabbergasting to see something like this when 20% of this nation is unemployed.
Folks, this is the type of stuff you see in 3rd world nations. It's not supposed to happen in the civilized world. Why aren't 2 million Americans marching on DC demanding blood after being flat out looted by Wall St?
Let's not forget, our major banks are INSOLVENT. They wouldn't have changed the mark to market accounting rules if this wasn't the case. This is why most TBTF institutions were trading in the single digits in early 2009. The street was basically betting that these firms were TOAST.
The truth is they would have all FAILED without the bailouts and mark to market changes.
Since this is the reality of the situation: WHY ISN'T THE GOVERNMENT AT LEAST FORCING THE BANKS TO TAKE THEIR PROFITS AND USE THEM TO ABSORB THE LOSSES THAT REMAIN ON THEIR BALANCE SHEET?
This country is about to go tits up and $150 billion would come in pretty handy right now.
You have to wonder: Why are the feds legally allowing the bankers to line their pockets when America sits on the brink of default?
The Bottom Line
Please remember:
Remember this post when America is forced to pay the piper.
Remember this post when your pension fund payout is cut in half.
Remember this post when the retirement age rises to 75.
Remember this post when inflation soars as our dollar turns into toilet paper.
Remember this post when your home is worth 70% less 5 years from now.
Remember this post when our 10 year bond yield rises to "Greece" levels.
Remember this post when stocks collapse.
Wall St created this problem and we were forced to clean up the mess. They have thanked us by paying themselves $150 billion.
Warning: Be prepared to bail them out again folks. This bubble is going to end in tears just like the housing bubble did, and Wall St will be back to pillage the taxpayer a second time. Like subprime, our government debt levels are unsustainable and it's just a matter of time until it all ends in tears.
Mathematically the money cannot be paid back without extreme catastrophic cutbacks in spending and benefits. I am not even sure we can come up with a solution where we are able to pay off our debts.
The fat cats on Wall St obviously could care less. If they did then they never would have never paid themselves such a disgusting amount of money.
Karma is a bitch and one day they will get theirs. Unfortunately, we will probably go right down with them.
Never forget: THERE IS NO FREE LUNCH.
Monday, December 13, 2010
Dollar Falls on Tax Cut Vote
The dollar fell sharply today as Congress prepares to shove through some form of tax cut legislation that will add another $900 billion in Ponzi spending to our deficit:
Quick Take:
Gold and oil were also up sharply on the dollar move. The move in commodities was also fueled by China's decision to not raise rates over the weekend.
Stocks were up slightly which isn't a surprise when you look at the dollar. If/when the tax vote gets done it will be interesting to see how treasuries react. Bonds are down once again in early trading this morning.
What I find interesting here is the fact that the dollar sold off despite the fact that the Chinese failed to hike interest rates rates. You would have thought this would have strengthened the USD. You would also think the dollar would rise as the European debt crisis continues to intensify.
This tells me that perhaps the debt hawks and currency traders are focusing more on out deficit and future government spending.
I expect some fireworks on approval of the tax bill because any deal that's made to juice it up for the Democrats in order to get it through will do nothing to help our deficit. If anything it will likely be filled with more pork that will make things worse.
The Fed is playing with fire and our dollar is it risk. Treasuries have continued selling off as I write this post. Keep an eye on bonds.
Quick Take:
Gold and oil were also up sharply on the dollar move. The move in commodities was also fueled by China's decision to not raise rates over the weekend.
Stocks were up slightly which isn't a surprise when you look at the dollar. If/when the tax vote gets done it will be interesting to see how treasuries react. Bonds are down once again in early trading this morning.
What I find interesting here is the fact that the dollar sold off despite the fact that the Chinese failed to hike interest rates rates. You would have thought this would have strengthened the USD. You would also think the dollar would rise as the European debt crisis continues to intensify.
This tells me that perhaps the debt hawks and currency traders are focusing more on out deficit and future government spending.
I expect some fireworks on approval of the tax bill because any deal that's made to juice it up for the Democrats in order to get it through will do nothing to help our deficit. If anything it will likely be filled with more pork that will make things worse.
The Fed is playing with fire and our dollar is it risk. Treasuries have continued selling off as I write this post. Keep an eye on bonds.
Sunday, December 12, 2010
10 Year Treasury Dump Continues
Well it didn't take the bond vigilante's long to get started this week:
Let's try and put this dump into perspective from a longer term basis:
My Take:
The Fed made it's QE announcement on November 3rd. As you can see above, the bond market has been done nothing but sell treasuries since.
This is no longer a short term knee jerk reaction folks. This is a trend, and it sends a message to Ben that he doesn't control rates in the bond market: Credit traders do!
If this continues and the 10 year heads for 4% it's going to get real ugly in a hurry. What the bond market is telling the Fed that their plan cannot work. You can't finance yourself by printing money. This is an end game not a solution and the bond market knows it.
This situation could rapidly spiral out of control. We all saw how fast the PIIGS got murdered. Don't think it can't happen here. We are pulling the same stunts so why should we expect different results?
The Telegraph had an article that was quite frightening tonight about the dire European debt crisis:
" There will be no Eurobond, no increases in the EU’s €440bn (£368bn) rescue fund, and no mass purchases of Spanish and Italian bonds by the ECB. Nothing. The system is politically and constitutionally paralysed. Spain and Portugal will be left nakedly exposed before their funding crunch in January
What the German people are being asked to do is to surrender fiscal sovereignty and pay open-ended transfers to Southern Europe, taking on a burden up to six times reunification with East Germany.
“If we pool the debts of the countries in the south-west periphery of Europe, we are blighting our children’s future: the debt levels are astronomic,” said Hans-Werner Sinn, head of Germany IFO institute.
The ECB has postponed its threat to pull away the lending props beneath the banking systems of the PIGS. Beyond that it has limited itself to tactical strikes in the small illiquid debt markets of Ireland and Portugal, buying enough bonds to ram down yields and burn a few hedge funds.
The effect has faded within days. It had little impact on Spanish and Italian bonds in any case. Spanish 10-year yields reached 5.45pc last week, far above 5pc level where compound arithmetic comes into play.
Credit Agricole said last week that it would hold back at next week’s auction of Spanish debt because it is not yet clear whether the ECB will back-stop the country. “The risk is simply too large for our appetite,” it said
“Leaders grudgingly do what is needed to prevent disaster at the last minute before it is too late, and the next minute they go back to the behaviour that brought them against the wall in the first place. The eurozone is in bad need of a psychiatrist,” he wrote at VoxEU
Did it not lock in chronic imbalances between North and South? Has it not left victim states trapped in debt deflation or slumps which have gone too far to respond an austerity cure, and from which there seems to be no escape on terms acceptable to Germany?
Should we blame the current hapless leaders, or the guilty men of Maastricht who created this doomsday machine? If the project itself is rotten, surely what the eurozone needs most is an undertaker."
The Bottom Line
Translation? Germany is going to tell the PIIGS to piss off in order to save itself.
Further down in the article you can see that Spain delayed a bond auction.
The fiscal situation of the western economies is now beyond absurd. The only answer the elites have is to continue throwing money at the debt bubble in hopes they can kick the can a little further down the road because they realize the alternative is gruesome austerity that would surely end with social chaos and wars.
The problem here is solvency, and it's going to hit the PIIGS in 2011. Spain has about 6 months of cash left, and it appears that Germany is ready to "walk away" as it logically decides to save itself versus going under with the rest of Southern Europe.
Can you blame them? I would do the exact same thing.
What the stock market refuses to understand is that this crisis is systemic versus individual.
People are not feeling pain yet because the government keeps sending out handouts in the form of employment benefits and welfare. We are seeing other forms of stimulus as well: Many homeowners are deciding to stimulate themselves(ok, get your mind out of the gutter, you know what I mean) by deciding to stop paying the mortgage knowing that it will take 2 years or more to get evicted.
This gives many families an extra few grand to "play with" every month. Unfortunately, most Americans are too retarded to realize that they should be socking away the money instead of spending it on vacations and flatscreen TV's.
What will end up making this financial crisis different is it will be the governments that go broke before the sheeple. The people will then be next as the government scrambles to pay the bills. The "free money" checks will stop getting mailed and the public sector will me massively slashed in a dramatic attempt to save the system.
Party on America because this is going to be the last one you will see for awhile if ever.
My Take:
The Fed made it's QE announcement on November 3rd. As you can see above, the bond market has been done nothing but sell treasuries since.
This is no longer a short term knee jerk reaction folks. This is a trend, and it sends a message to Ben that he doesn't control rates in the bond market: Credit traders do!
If this continues and the 10 year heads for 4% it's going to get real ugly in a hurry. What the bond market is telling the Fed that their plan cannot work. You can't finance yourself by printing money. This is an end game not a solution and the bond market knows it.
This situation could rapidly spiral out of control. We all saw how fast the PIIGS got murdered. Don't think it can't happen here. We are pulling the same stunts so why should we expect different results?
The Telegraph had an article that was quite frightening tonight about the dire European debt crisis:
" There will be no Eurobond, no increases in the EU’s €440bn (£368bn) rescue fund, and no mass purchases of Spanish and Italian bonds by the ECB. Nothing. The system is politically and constitutionally paralysed. Spain and Portugal will be left nakedly exposed before their funding crunch in January
What the German people are being asked to do is to surrender fiscal sovereignty and pay open-ended transfers to Southern Europe, taking on a burden up to six times reunification with East Germany.
“If we pool the debts of the countries in the south-west periphery of Europe, we are blighting our children’s future: the debt levels are astronomic,” said Hans-Werner Sinn, head of Germany IFO institute.
The ECB has postponed its threat to pull away the lending props beneath the banking systems of the PIGS. Beyond that it has limited itself to tactical strikes in the small illiquid debt markets of Ireland and Portugal, buying enough bonds to ram down yields and burn a few hedge funds.
The effect has faded within days. It had little impact on Spanish and Italian bonds in any case. Spanish 10-year yields reached 5.45pc last week, far above 5pc level where compound arithmetic comes into play.
Credit Agricole said last week that it would hold back at next week’s auction of Spanish debt because it is not yet clear whether the ECB will back-stop the country. “The risk is simply too large for our appetite,” it said
“Leaders grudgingly do what is needed to prevent disaster at the last minute before it is too late, and the next minute they go back to the behaviour that brought them against the wall in the first place. The eurozone is in bad need of a psychiatrist,” he wrote at VoxEU
Did it not lock in chronic imbalances between North and South? Has it not left victim states trapped in debt deflation or slumps which have gone too far to respond an austerity cure, and from which there seems to be no escape on terms acceptable to Germany?
Should we blame the current hapless leaders, or the guilty men of Maastricht who created this doomsday machine? If the project itself is rotten, surely what the eurozone needs most is an undertaker."
The Bottom Line
Translation? Germany is going to tell the PIIGS to piss off in order to save itself.
Further down in the article you can see that Spain delayed a bond auction.
The fiscal situation of the western economies is now beyond absurd. The only answer the elites have is to continue throwing money at the debt bubble in hopes they can kick the can a little further down the road because they realize the alternative is gruesome austerity that would surely end with social chaos and wars.
The problem here is solvency, and it's going to hit the PIIGS in 2011. Spain has about 6 months of cash left, and it appears that Germany is ready to "walk away" as it logically decides to save itself versus going under with the rest of Southern Europe.
Can you blame them? I would do the exact same thing.
What the stock market refuses to understand is that this crisis is systemic versus individual.
People are not feeling pain yet because the government keeps sending out handouts in the form of employment benefits and welfare. We are seeing other forms of stimulus as well: Many homeowners are deciding to stimulate themselves(ok, get your mind out of the gutter, you know what I mean) by deciding to stop paying the mortgage knowing that it will take 2 years or more to get evicted.
This gives many families an extra few grand to "play with" every month. Unfortunately, most Americans are too retarded to realize that they should be socking away the money instead of spending it on vacations and flatscreen TV's.
What will end up making this financial crisis different is it will be the governments that go broke before the sheeple. The people will then be next as the government scrambles to pay the bills. The "free money" checks will stop getting mailed and the public sector will me massively slashed in a dramatic attempt to save the system.
Party on America because this is going to be the last one you will see for awhile if ever.
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