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Posted on 12/11/2008 6:03:58 PM PST by rabscuttle385
NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded.
Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.
Dozens of banks have won infusions from the Troubled Asset Relief Program created in early October, just after the Sept 15 bankruptcy filing by Lehman Brothers Holdings Inc (LEHMQ.PK). Some of the funds are being used for acquisitions.
"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.
(Excerpt) Read more at reuters.com ...
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blowhard camera-whore alert.
Do you think most major banks are solvent? Except Wells Fargo and a select set of mid-tier banks, the rest are bankrupt considering their CDS exposures.
ping
Most of them are morally bankrupt as well.
What is CDS exposure?
I liked what Rogers said when the first bailout bill was in the news. When the Fox repoter askes him what he thought we should do he said, “First thing we do is shoot everyone in congress”.
To be fair the only banks that I know are solid are Wells Fargo, Bank of America and US Bank..
I don't know, but I would think a prophylactic would have been in order.
Credit Default Swap - A credit default swap (CDS) is a credit derivative contract between two counterparties. The buyer makes periodic payments to the seller, and in return receives a payoff - if an underlying financial instrument defaults.
The underlying financial instruments, in many cases, are the overvalued mortgages that have lost their values.
CDS stands for Credit Default Swaps, a type of derivative security that acts kinda like insurance (on default of a particular debt). Unfortunately, the "big boys" were making all sorts of crazy bets using CDS. Add that to the fact that CDS, like other types of derivatives, are kinda hard to understand and require complex mathematics and computational power, and that they are loosely regulated...and you have the makings of a perfect financial storm.
Anyone know how HSBC is doing? Trying to decide whether to switch to little local bank, or leave whatever little money we have there.
LOL, so true.
--
Adversity employs great talents; prosperity renders them useless and carries the inept, the corrupted wealthy and the wicked to the top.
May they bear in mind that virtue often contains the seeds of tyranny.
May they bear in mind that it is neither gold nor even a multitude of arms that sustains a state, but its morals.
May each of them keep in his house, in a corner of this field, next to his workbench, next to his plow, his gun, his sword, and his bayonet.
May they all be soldiers.
May they bear in mind that in circumstances where deliberation is possible, the advice of old men is good, but that in moments of crisis youth is generally better informed that its elders.
Denis Diderot
Apostrophe to the Insurgents, 1782
which is why I use a dutch bank. ING direct all the way.
Their "insurance" was always an illusion...
I don’t know....
The whole government is bankrupt.
Too broke to even pay attention
Is a Credit Default Swap one of those insurance vehicles where if small number of failures exist you are covered, but in a situation where there are colossal failures everyone looses?
Kind of like commodities contracts, where if the price goes up you get less for your commodity, but if the price goes down the contract holder files bankruptcy? I have seen that happen. It is Heads I win, Tales you loose. Don’t like that setup.
well, gosh...
comrade obamao
will fix it,
won’t he?
/s
Jim, how are your Chinese and commodity stocks performing?
Glad to see that you’ve found a company that you are comfortable with.
Morgan Stanley downgrades ING, Aegon and Standard Life
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSBNG34501620081211
ING May Shut Down $353 Million in New Zealand Funds (Update2)
(Bloomberg, so no link)
S&P Affirms ING Ratings; Outlook Revised to Negative
http://www.insurancejournal.com/news/international/2008/12/11/96215.htm
The looting of the American people by the financial sector continues, backed by their political lackies.
That type of terminology I can understand.
We are going to need something stronger than a prophylactic to protect us from the job we are going to get from (what someone else named him) Comrad Obama.
I am still in shell shock total dis-belief that he has really been elected.
What a mess!
I wasn’t addressing that point.
Because they bought or sold CDS?
I still think its going to get worse, and there is nothing Obama is going to do to stop it from unraveling.
considering the state many other major banks are in and the problems we’re experincing I’d say that you’ve just given me a significant endorsement. They have “troubles” but aren’t going under and have yet to beg for a bailout.
You don’t have to go into the whole mess of CDS to realize that our banks are insolvent. We’ve always known they were. After all, why is it that we’re constantly afraid of bank runs? Because they none of them cover their demand deposits with currency on hand. That alone makes them bankrupt, and it is nothing but the people’s faith that they’re not going to be the ones screwed if and when the system fails again that keeps the industry afloat.
This, of course, is not a moral crusade on my part. I’m just sayin, is all.
So they got their bailout without having to beg? Did they at least have to ask nicely? (You do know they got about $12 or $13 billion, don't you?)
"Savings and mortgage provider ING Direct has reassured savers that their money is safe following this week's €10bn (£7.8bn) injection of cash by the Dutch government."
http://www.guardian.co.uk/money/2008/oct/25/savings-banks
Full blown Depression by Fall '09...
I predict for the next several months for the economy to lose hundreds of thousands of job each month. Since 2/3rd’s of the economy is consumer spending, its going to get into uncharted waters.
They should hold 100% of their deposits in the vault?
“They should hold 100% of their deposits in the vault?”
I don’t necessarily hold that view. Fractional-reserve banking wouldn’t be so bad if there was no Federal Reserve System, but that’s another matter altogether. All I’m saying is that not covering your demand deposits makes you fundamentally unsound. Again, it’s not a moral judgement.
well they didn’t get OUR money for a bailout :-)
They should hold 100% of demand deposits in the vault?
Jim Rogers is a jerk. He is abrasive. He is a little too chummy with the Chinese. But damn this guy has been 100% right about almost everything over the past 10 years. I remember he told people to sell stocks and buy copper, gold, oil, wheat, corn, etc. back in 2002. He even told people to buy futures and call options on them. He was nearly laughed off the FoxBusiness weekend panel. None of them are laughing now (ex. Copper is up 600% from that day)
I have always sort of distrusted Jim Rodgers because he has been a business partner with George Soros, but he has had some great insights speaking out against the bailouts. He doesn’t seem like a lefty to me.
“They should hold 100% of demand deposits in the vault?”
Did you read what I just posted? I didn’t say they necessarily had to cover their demand deposits. If they wanted to be sound, they would. If they wanted to offer 100% protection to their customers against bank runs, they would. But they’re in it to make money, and that’s their perogative. It doesn’t change the underlying fact, though.
If your think European banks don’t have a problem that you don’t understand the issue.
Yes.
I didn’t say they necessarily had to cover their demand deposits.
I'm sure they appreciate your approval.
If they wanted to be sound, they would.
I guess if profitability wasn't an issue. Maybe you should start a non-profit bank? You could advertise with a picture of a big pile of cash in the vault.
But they’re in it to make money,
The bastards!
It doesn’t change the underlying fact, though.
It's a silly idea.
So you say that banks should take in deposits and hold 100% of them and then pay 0-whatever interest rates on your money and then not do anything with it?
I’m pretty sure you never have started a bank business in your life nor do you have any close to understanding it.
By the way.. if that’s the way you do business.. let me give you 1 million.. promise me 5% and you also have to promise to keep the money buried in your backyard.
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