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Discussion in 'Finance & Banking' started by Tropo, 21st Apr, 2009.

  1. Tropo

    Tropo Well-Known Member

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    Below is an US info (leak) from non official source, so I would add a bit of salt and vanilla cream to it.

    Here is the supposed report:
    1) Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.
    2) Of the 16 banks that are already technically insolvent, not even one can withstand any disruption of cash flow at all or any further deterioration in non-paying loans.
    3) If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
    4) Of the top 19 banks in the nation, the top five (5) largest banks are undercapitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
    5) Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
    6) Bank of America`s total credit exposure to derivatives was 179 percent of its risk-based capital; Citibank`s was 278 percent; JPMorgan Chase`s, 382 percent; and HSBC America`s, 550 percent.
    It gets even worse: Goldman Sachs began reporting as a commercial bank, revealing an alarming total credit exposure of 1,056 percent, or more than ten times its capital!
    7) Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
     
  2. Chris C

    Chris C Well-Known Member

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    LOL I sent this very article to all my friends yesterday! This "leaked report" seems to be spreading around the net like wildfire!

    It makes me wonder if a few Dow traders bought into it before trading yesterday before the Dow's eventual plunge last night, because it is hard to believe that when BoA posted its 44 cent a share earnings for Q1 (which was well above the expected 5 cents a share) that the market felt this was news that warranted a 24% smack down in BoA stocks.

    I'll also be interested to see if the FED or any of the banks try to squash this rumor, and it will be even more interesting to see that if that eventuated if the market would perceive such defensiveness as an admission of guilt!

    If the report is even vaguely close to true (or even if it's a rumor that gets some traction in the market place) we are in for some very interesting times going forward.

    :D
     
  3. Tropo

    Tropo Well-Known Member

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    "....because it is hard to believe that when BoA posted its 44 cent a share earnings for Q1 (which was well above the expected 5 cents a share) that the market felt this was news that warranted a 24% smack down in BoA stocks."

    Market very often takes a contrary view, that’s is why it is so unpredictable.
     
  4. Chris C

    Chris C Well-Known Member

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    I can appreciate that the market saw much of the earnings as one time windfalls that were not dirven by BoA's traditional banking business, but nonetheless when the market expect 5 cents and gets 44, yet crashes, it has to raise the question was other more vital pieces of information (other than BoA's earnings report) driving the market last night and today...

    :cool:
     
  5. Tropo

    Tropo Well-Known Member

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    Buy on rumour and sell on facts. That’s the name of the game. ;)
    Knowing ‘more vital pieces of information’ is not going to help you.
    I could not care less about any information/earnings report at all.
     
  6. Chris C

    Chris C Well-Known Member

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    So your saying the way to the top is to control the popular media sources and feed the market rumours and speculation and profit both ways?

    :D
     
  7. Tropo

    Tropo Well-Known Member

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    No...I am saying to follow the market reaction caused by any information created by any source.
    A piece of information may cause the market to do nothing, go up or go down.
    What happens in the market is a reflection of the psychology of the market players not the information.

    Oh yes...The only thing you can control is an amount of money you are prepared to lose if you take on trade. :cool: