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View Diary: Closely-Watched Court Decision Breaks Bad for Wall St. Has A Day of Reckoning Arrived? (154 comments)

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  •  I wouldn't bet on it (2+ / 0-)
    Recommended by:
    Odysseus, cotterperson

    Esp, in the short run.  Remember JP Morgan's stock went UP when it reported a $6 Billion derivative trading loss last year.

    I expect we will see at a year or more of bloviating about the "fundamental soundness" of the system.

    It's also possible that we will continue to see a Japan type situation, where the central bank keeps propping up the bank's balance sheets as they are allowed to slowly write down the crap.  

    Personally, I'm voting for another 2008 style liquidity crisis in the next few years.

    Labor was the first price paid for all things. It was not by money, but by labour, that all wealth of the world was originally purchased. - Adam Smith

    by boatwright on Wed Feb 06, 2013 at 05:25:45 AM PST

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    •  Morgan went up because they soundly beat (2+ / 0-)
      Recommended by:
      cynndara, FG

      their earnings estimate despite that loss.

      http://finance.yahoo.com/...

      Sorry to disappoint you but there won't be a crisis due to high Basel III and Dodd-Frank demands on capital reserves.

      At least there won't be one until another wave of deregulation from the right loosens those standards.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Wed Feb 06, 2013 at 05:45:37 AM PST

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      •  Basel III ???? (6+ / 0-)

        Basel III requires a liquidity ratio of 3%.

        It seems to me if we see a likely strong downward market correction in financials and commodities, since the banks are now heavily into HIGHLY leveraged derivatives that have a notational value more than all the money in the world, we may painfully discover that this 3% disappears overnight.

        Remember what happened to the supposedly good as gold derivatives based on home mortgages?  In 2007 the banks were making record profits.  In 2008 they were in the deepest hole in financial history.

        A conservative old banker once told me: Most bankers are idiots.  They succumb to childish joy when as young long officers they realize that they can create money with the stroke of a pen, AND collect interest on it seemingly forever.  It is a kind of magic they never get over.

        Labor was the first price paid for all things. It was not by money, but by labour, that all wealth of the world was originally purchased. - Adam Smith

        by boatwright on Wed Feb 06, 2013 at 08:00:33 AM PST

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