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Wall Street is back
The Economist ^ | May 11, 2013

Posted on 05/13/2013 10:11:18 AM PDT by 1rudeboy

American investment banks dominate global finance once more. That’s not necessarily good for America

FOR a few tense weeks in 2008, as investment-bank executives huddled behind the imposing doors of the New York Federal Reserve, Wall Street seemed to be collapsing around them. Lehman Brothers filed for bankruptcy, Merrill Lynch collapsed into the arms of Bank of America. American International Group (AIG) and Citigroup had to be bailed out and the rot seemed to be spreading. Hank Paulson, the treasury secretary at the time, recalled in his memoir that: “Lose Morgan Stanley and Goldman Sachs would be next in line—if they fell the financial system might vaporise.”

Across the Atlantic, European politicians saw this as the timely comeuppance of American capitalism. Angela Merkel, Germany’s chancellor, blamed her peers in Washington for not having regulated banks and hedge funds more rigorously. European banks saw the crisis as their chance to get one up on the American banks that had long dominated international finance. Barclays quickly pounced on the carcass of Lehman Brothers, buying its American operations in what Bob Diamond, the head of its investment bank at the time, called “an incredible opportunity” to gain entry to the American market. Deutsche Bank, a German giant, also expanded to take market share from American rivals. The dominance that American firms had long exerted over global capital markets seemed to have come to an abrupt end.

Almost five years on it is Europe’s banks that are on their knees and Wall Street that is resurgent.

(Excerpt) Read more at economist.com ...


TOPICS: Business/Economy; Editorial; Foreign Affairs; Government
KEYWORDS: bho44; bhodjia; bhoeconomy; wallstreet
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To: F15Eagle
OK they’re not toxic - according to *you*.

They're guaranteed. They trade above par. Tell me your definition of toxic.

So, if that is so, why is QE3 necessary?

I don't think it is, but with the idiot we have in the White House........

41 posted on 05/13/2013 5:34:17 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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Comment #42 Removed by Moderator

To: F15Eagle
OK, they’re “guaranteed”. Expand on that please.

Agency MBS is guaranteed. Even if the borrower defaults, payments are made to the bond holder.

What with the deficit just growing and growing.

Yes, Bush spent way too much. Obama makes Bush look like a skinflint.

The Fed buying program does not add to the deficit.

43 posted on 05/13/2013 6:20:33 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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Comment #44 Removed by Moderator

To: F15Eagle
...the fed buying up $40 billion a month in housing debt - almost 1/2 trillion a year as toxic debt.  Explain to me why...

Ah, now I follow you --so Bloomberg says the Fed's buying $40B/month in MBS's.  Well, sort of. 

It's true that back then the FOMC did say they'd buy 'em up to $40B/mo. and the record of what they actually did buy shows they'd started already w/ $800B worth of MBS's and they've been selling some off while they've been buying.  What's interesting is that mortgage interest rates have fallen to 3.5% (as was the Fed's reason for all this stuff in the first place) and the low interest rates helped make the default rate drop to 1% (also the Fed's goal) so that means the Fed's current $1.12T holdings is raking in $28B per month profit.  That all means also that the MBS's are still selling at face value so as of today they're not "toxic". 

OK, the sky might fall tomorrow and if it does then we can call the MBS's "toxic"; until then we can continue cutting a profit.

45 posted on 05/13/2013 6:42:32 PM PDT by expat_panama
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To: F15Eagle
Cool. Where do those payments come from?

The agencies buy mortgages, package them and resell them. They charge a fee.

So the private bankers take the responsibility for the $480 billion?

Taxpayer funds aren't used. The Fed has a printing press. What private bankers?

46 posted on 05/13/2013 6:55:21 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: expat_panama
the Fed's current $1.12T holdings is raking in $28B per month profit.

Your number is off, they only made a total of $91 billion last year.

47 posted on 05/13/2013 6:57:14 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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Comment #48 Removed by Moderator

To: F15Eagle
The Federal Reserve is not, essentially, an organization of private bankers?

Nope. It's the government.

If they’re printing money, are they not putting that against something on some sort of balance sheet?

The money they create is their liability, their asset is the bond (Treasury or MBS) they buy.

I guess one could say the loans are assets, and the printing of the money are the liabilities

During the crisis they made lots of loans, not now. Just bond purchases.

49 posted on 05/13/2013 7:16:01 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
...mortgage interest rates have fallen to 3.5% (as was the Fed's reason for all this stuff in the first place) and the low interest rates helped make the default rate drop to 1% (also the Fed's goal) so that means the Fed's current $1.12T holdings is raking in $28B per month profit...

Your number is off, they only made a total of $91 billion last year.

Huh.

Let's see my number was from the Fed links @ $28B = $1.12T X (3.5% - 1%) --wait a sec, that should also have ÷ 12mo./yr so the $28B is per year.  Aw what the heck, $28B/yr is still not "toxic".   BTW, where did the $91B come from? 

This is all way past my bed time...

50 posted on 05/13/2013 7:19:23 PM PDT by expat_panama
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Comment #51 Removed by Moderator

To: expat_panama

http://online.wsj.com/article/SB10001424127887324081704578233592472455634.html


52 posted on 05/13/2013 7:31:14 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: F15Eagle
Interesting. I’ve always been told the Federal Reserve is *not* the U.S. gov’t.

It's an "independent" agency.

53 posted on 05/13/2013 7:32:44 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: F15Eagle
...Federal Reserve is *not* the U.S. gov’t.  Although the President does appoint the chairman...

lol --the President appointed the CEO of General Motors too, but with the Fed it was started by act of congress, the President names all the bank governors and the senate confirms all nominations.   The fed's executives report to the Treasury and congress who pays for the Fed's buildings and employee salaries.

54 posted on 05/14/2013 4:02:59 AM PDT by expat_panama
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To: Toddsterpatriot

Dang, that’s a subscriber only article. np, sometimes the WSJ makes things up anyway which is why it’s always nice to get stuff directly from the source & not hearsay from someone else. Please let me know where the WSJ says that they heard that $91B number. tx.


55 posted on 05/14/2013 4:12:57 AM PDT by expat_panama
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Comment #56 Removed by Moderator

To: expat_panama

http://www.bloomberg.com/news/2013-03-15/fed-remits-88-4-billion-to-treasury-in-audited-financial-report.html


57 posted on 05/14/2013 1:59:09 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: F15Eagle
The truth is that it is a privately owned central bank. It is owned by the banks that are members of the Federal Reserve system.

No it isn't. If it was, why give $89 billion of $91 billion in earnings to the Treasury?

We do not know how much of the system each bank owns, because that has never been disclosed to the American people.

Bull. They have to buy a certain amount of "shares", based on their capital.

The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

See? Not private stock.

Foreign governments and foreign banks do own significant ownership interests in the member banks that own the Federal Reserve system.

No, foreign banks can't buy "shares".

But until the exact ownership shares of the Federal Reserve are revealed, we will never know to what extent the Fed is foreign-owned.

Who is this guy? He's funny!

http://theeconomiccollapseblog.com/

Never mind. LOL!

58 posted on 05/14/2013 2:08:04 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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Comment #59 Removed by Moderator

To: F15Eagle

Yeah, lots of silly people say silly stuff.


60 posted on 05/14/2013 4:41:06 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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