Small Banks: Billions in Troubled Construction Loans

Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders.

According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can’t repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.

WHICH BANKS WILL FEEL THE PAIN?
See a sortable list of small and regional banks with sizable exposure to construction and land loans and with notable delinquency rates.

That will put additional pressure on an already stressed financial system. Banks have begun to dump bad construction and land loans at discounts, curtail new lending and halt construction projects that are under way to preserve capital. Some analysts even see a wave of bank failures as a possibility.

Read moreSmall Banks: Billions in Troubled Construction Loans

US: Total Crash of the Entire Financial System Expected, Say Experts

Investors are fleeing from the U.S. stock market, Sending the Dow to Worst June Since Depression, looking for places to secure their wealth.

There is an unprecedented cash flow of ‘hot money’, which is usually defined as short-term global speculative funds moving among financial markets in search of the highest short-term return, moving into China:
Is China flooded with ‘hot money’ because of an expected meltdown in the U.S.?

Let’s further examine the prospects that we would experience a total crash of the entire financial system:

Fortis Bank Predicts US Financial Market Meltdown Within Weeks

We have seen the Dow suffering it’s worst 1st half since ‘70 accompanied by a lot of bad news for the economy like:
US: Big Trouble for General Motors, Crysler and Ford
America’s Aviation System About To Collapse
Starbucks to cut as many as 12,000 positions
And now the corporations are cheating you at the supermarkets: America’s Shrinking Groceries

The Dollar is being destroyed by the Federal Reserve, which has created in the last three years 4 Trillion Dollars of new money out of thin air: Ron Paul on Iran and Energy June 26, 2008

Ron Paul is further warning that: This coming crisis is bigger than the world has ever experienced
and that: We are at the beginning of a huge Dollar bubble.

The US Federal Reserve intentionally created inflation and that is why its credibility has fallen “below zero” and that is why Barclays warns of a financial storm as Federal Reserve’s credibility crumbles.

More dire warnings:
RBS issues global stock and credit crash alert
Morgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve
Central bank body warns of Great Depression
Credit crisis expands, hitting all kinds of consumer loans
How Low Can The Dollar Go? Zero Value

Investors like Jim Rogers are telling us to “Avoid The Dollar At All Costs” and have told us that the Federal Reserve will fail and that Bernanke should be fired (alhough that isn’t possible because of his contract), because he has created the worst recession in the end and thats why he said: “Abolish the FED” on CNBC 2008.03.12.

The Fed is only doing good for the big corporations on Wall Street. If you would continuously come close to bankruptcy, because you have irresponsibly wasted your money, who will continuously give you billions of Dollars and bail you out, because you might fail? So I agree totally with Marc Faber: ‘Misleading’ Fed Should Let Banks Fail.

Well those corporations are said to be to “Big to Fail”, but they eventually will fail, because the entire system will fail and the Dollar is being destroyed in the process and so the people will end up with nothing, because their life savings are worthless paper. You are already paying the price for this policy, but maybe you haven’t looked at it that way:
The Price Of Food: 2007 – 2008
What inflation really is, is a taxation on monetary assets. And guess who is paying for all of that?

I just love this video. A must see:
The Stock Market and the Monetary System are on the verge of collapse!

Read moreUS: Total Crash of the Entire Financial System Expected, Say Experts

Dow suffers worst 1st half since ’70

Related articles and videos:

Fortis Bank Predicts US Financial Market Meltdown Within Weeks

Barclays warns of a financial storm as Federal Reserve’s credibility crumbles

Jim Rogers: Avoid The Dollar At All Costs

Ron Paul on Iran and Energy June 26, 2008

Marc Faber: ‘Misleading’ Fed Should Let Banks Fail

NEW YORK (Reuters) – The Dow and S&P 500 were little changed on Monday on the final trading day of the second quarter as record oil boosted energy shares, offsetting weak financial stocks amid nagging concerns of further credit losses.

But even with the pause on Monday, the Dow and S&P posted their worst one-month drop since September 2002. The Dow also suffered its worst first half since 1970.

The Nasdaq ended the session lower, hurt by a drop in the shares of Yahoo as it battles with shareholders after takeover talks with Microsoft fell apart.

Read moreDow suffers worst 1st half since ’70

Morgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve


Jean-Claude Trichet is taking a hard line on rates

The clash between the European Central Bank and the US Federal Reserve over monetary strategy is causing serious strains in the global financial system and could lead to a replay of Europe’s exchange rate crisis in the 1990s, a team of bankers has warned.

“We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe,” said a report by Morgan Stanley’s European experts.Morgan Stanley doubts that Europe’s monetary union will break up under pressure, but it warns that corked pressures will have to find release one way or another.

This will most likely occur through property slumps and banking purges in the vulnerable countries of the Club Med region and the euro-satellite states of Eastern Europe.

“The tensions will not disappear into thin air. They will find fault lines on the periphery of Europe. Painful macro adjustments are likely to take place. Pegs to the euro could be questioned,” said the report, written by Eric Chaney, Carlos Caceres, and Pasquale Diana.

The point of maximum stress could occur in coming months if the ECB carries out the threat this month by Jean-Claude Trichet to raise rates. It will be worse yet – for Europe – if the Fed backs away from expected tightening. “This could trigger another ‘catastrophic’ event,” warned Morgan Stanley.

The markets have priced in two US rates rises later this year following a series of “hawkish” comments by Fed chief Ben Bernanke and other US officials, but this may have been a misjudgment.

An article in the Washington Post by veteran columnist Robert Novak suggested that Mr Bernanke is concerned that runaway oil costs will cause a slump in growth, viewing inflation as the lesser threat. He is irked by the ECB’s talk of further monetary tightening at such a dangerous juncture.


Ben Bernanke is reported to be irked by the ECB’s approach

Read moreMorgan Stanley warns of ‘catastrophic event’ as ECB fights Federal Reserve

Oil hits new high as Israel calls strike on Iran ‘unavoidable’

Oil prices leaped to record highs yesterday as Israel warned about Iranian nuclear sites and the dollar slumped on the biggest jump in American unemployment for 22 years.

The global crude price ended a run of lower prices earlier this week as it jumped by more than $9 a barrel to $136.79 (£69.44) – it has risen by over $14, or 10%, in just two days. The week before last saw an all-time high of $135.09 a barrel but, by Wednesday this week, prices had receded to as low as $122.

Already jittery oil markets were sent into spasms by remarks from Israel’s transport minister that an attack on Iranian nuclear sites looked “unavoidable”. Iran is a big Opec oil producer and any attack on the country would threaten oil supplies from the whole region.

Prices were also boosted by a prediction from investment bank Morgan Stanley that crude prices might reach $150 by July 4.

Earlier in the day the dollar – in which oil is priced – had fallen against the euro partly on speculation that the European Central Bank might consider raising interest rates to curb inflation.

But subsequently markets were rocked by a monthly report from the US showing that unemployment suffered its biggest monthly rise since February 1986.

Shares on Wall Street dived after the US unemployment rate unexpectedly??? jumped to 5.5%, intensifying fears that the world’s biggest economy is sliding into recession.

The Dow Jones industrial average lost nearly 300 points, or 2.2%, to around 12,320. In London the FTSE 100 closed the week down 1.5%, or 88 points, at 5,906.

Read moreOil hits new high as Israel calls strike on Iran ‘unavoidable’

Federal Reserve staff move into offices of investment banks to monitor activities

The US Federal Reserve has sent staff into some of Wall Street’s biggest firms and its New York branch is gathering evidence on key traders’ activities as America’s central bank raises its scrutiny of risk to an unprecedented level.

Fed staff have set up shop in Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns to monitor their financial condition just days after Henry Paulson, the US Treasury Secretary, proposed that the Fed become the financial industry’s “risk czar”.

This is the first time in more than a decade that the Fed has put staff in securities firms and is a response, in part, to its decision to extend to investment banks the “discount window” of cheap loans traditionally offered only to the commercial banks. The Fed argues that if it is to act as lender of last resort to the securities firms, it should keep a closer eye on their activities.

The move comes as the central bank’s New York branch separately compiles a list of names and numbers of key traders in specific, esoteric securities such as auction rate preferred securities. These obscure instruments can be traded only at auctions and demand for them has virtually evaporated in recent weeks.

A senior US mutual fund executive, whom the Fed has approached, said: “They are looking in every corner to understand every esoteric financial product – who its traders are, who holds the most, whether its market is liquid and how great the losses could be. They are approaching people like me to find the key players in particular securities and then contacting them to find out the details. I have never heard of that being done before.”

Read moreFederal Reserve staff move into offices of investment banks to monitor activities

Investment banks are borrowing from Fed

NEW YORK (Reuters) – Investment banks Goldman Sachs Group Inc , Lehman Brothers Holdings Inc and Morgan Stanley are testing a new program that allows investment banks to borrow directly from the Federal Reserve, according to people at the banks.In a bid to stabilize jittery markets, the Fed said on Sunday that it would allow investment banks to borrow from its discount window using a wide range of investment-grade securities as collateral.

(Hey, hey lets spend all our money and then just ask Uncle Bernanke for a few more billions.
Come on guys lets do that. Uncle Bernanke can print a few billions for us if we are broke.
Good to have him around. Life is so good. – The Infinite Unknown
)

Read moreInvestment banks are borrowing from Fed

Banks face “new world order,” consolidation: report

bear-sterns-wwwreuterscom.jpeg

NEW YORK (Reuters) – Financial firms face a “new world order” after a weekend fire sale of Bear Stearns and the Federal Reserve’s first emergency weekend meeting since 1979, research firm CreditSights said in a report on Monday.

More industry consolidation and acquisitions may follow after JPMorgan Chase & Co on Sunday said it was buying Bear Stearns for $236 million, or $2 a share, a deep discount from the $30 price on Friday and record share price of about $172 last year.

“Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the wounded broker for a token amount of $2 per share,” CreditSights said. “The reality check is that there are many challenged major banks, brokers, thrifts, finance/mortgage companies, and only a handful of bona fide strong U.S. banks.”

Read moreBanks face “new world order,” consolidation: report

Biggs’s Tips for Rich: Expect War, Study Blitz, Mind Markets

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Jan. 30 (Bloomberg) — Barton Biggs has some offbeat advice for the rich: Insure yourself against war and disaster by buying a remote farm or ranch and stocking it with “seed, fertilizer, canned food, wine, medicine, clothes, etc.”

The “etc.” must mean guns.

“A few rounds over the approaching brigands’ heads would probably be a compelling persuader that there are easier farms to pillage,” he writes in his new book, “Wealth, War and Wisdom.”

Biggs is no paranoid survivalist. He was chief global strategist at Morgan Stanley before leaving in 2003 to form hedge fund Traxis Partners. He doesn’t lock and load until the last page of this smart look at how World War II warped share prices, gutted wealth and remains a warning to investors. His message: Listen to markets, learn from history and prepare for the worst.

“Wealth, War and Wisdom” fills a void. Library shelves are packed with volumes on World War II. The history of stock markets also has been ably recorded, notably in Robert Sobel’s “The Big Board.” Yet how many books track the intersection of the two?

Read moreBiggs’s Tips for Rich: Expect War, Study Blitz, Mind Markets

Foreigners buy stakes in U.S. at record pace

Last May, a Saudi Arabian conglomerate bought a Massachusetts plastics maker. In November, a French company set up a new factory in Adrian, Michigan, adding 189 automotive jobs to an area accustomed to layoffs. In December, a British company bought a New Jersey maker of cough syrup.For much of the world, the United States is now on sale at discount prices. With credit tight, unemployment growing and worries mounting about a potential recession, American business and government leaders are courting foreign money to keep the economy growing.

Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads into the world’s largest market.

Last year, foreign investors poured a record $414 billion into securing stakes in U.S. companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm.

Read moreForeigners buy stakes in U.S. at record pace

Bear Stearns gets emergency funds

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Bear Stearns is one of the best-known US Wall Street firms

US bank Bear Stearns has got emergency funding, in a move that raises fears that one of Wall Street’s biggest names is on the verge of collapsing.

JP Morgan Chase will provide the money to Bear Stearns for 28 days with the Federal Reserve of New York’s backing.

Read moreBear Stearns gets emergency funds

Russian Mafia in bed with Wall Street, CEO says

Every day, thousands of Americans look to invest their money in stocks, and many of them go through brokers and traders to simplify the process.Unfortunately, according to Overstock.com CEO Patrick Byrne, a majority of those purchasers will be victims of Wall Street’s criminal tactics and will help line the pockets of corrupt brokers and lawyers. Byrne, a Utahn who founded Overstock.com, talked to a crowd in the Union on Monday about how New York financial media and law firms have teamed up with big-wig business elites to create massive amounts of profit at the cost of American consumers.

Read moreRussian Mafia in bed with Wall Street, CEO says