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Posted by on Sep 30, 2011 in Markets, TG Roundup, USA, Worldwide

US Banking Crisis, The Redux


Didn’t they tell us that US banks didn’t need any tax payer help after all?  Guess what, after swindling the tax payer relief and pretending that tax payers were paid back, the gamblers are at it at again. While the world is focused on European sovereign debt, European banks and Bank of America, a new “Bear Sterns” surfaces in US. It is Morgan Stanley (I quoted a Financial Times story about MS in this morning’s update). Last week my favorite blog, Zero Hedge wrote a story about Morgan Stanley’s exposure to French banks.

So if you are looking for a French bank implosion derivative play, look no more.

And naturally, it goes without saying, that adding across MS’ entire European bank exposure is 3 times its market cap, and well over its entire book equity value.

In another post last week, Zero Hedge exposed Morgan Stanley even further.

And that’s your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

MS wasted no time in dismissing the ZH story as a vicious rumor. My official motto is, “never believe a rumor until it has officially been denied.” Watch this video to witness the unfolding of a brand news US banking crisis all over again. Pay attention to the CNBC shills doing their best to discredit the CDS buys, but not the bank management. When will this BS from the media stop?

1 Comment

  1. Right on the money story!
    Most of the leveraged bets are among and between the top 10 banks and as such they tend to get double sometimes triple counted in these kind of totals. That’s no consolation in an Armageddon situation but the damage may be cut in half if not more when they settle between these same banks as there is always a winner on the other side of the trade. The real issue then is actual liquidity collapse. I’m worried about that.