STOCK MARKET WATCH -- Tuesday, 30 October 2012

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 30 October 2012[font color=black][/font]

SMW for 29 October 2012

AT THE CLOSING BELL ON 26 October 2012
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Dow Jones 13,107.21 +3.53 (0.03%)
[font color=red]S&P 500 1,411.94 -1.03 (-0.07%)
[font color=green]Nasdaq 2,987.95 +1.83 (0.06%)


[font color=green]10 Year 1.75% -0.04 (-2.23%)
30 Year 2.91% -0.04 (-1.36%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .



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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Warpy]

1. Dunno if they'll open tomorrow, open late, or what

With lower Manhattan flooded and water to be pumped out of the tunnels and subways all through the night, not to mention power shut off, who knows what will happen?

ETA: just checked the Wall St. Earthcam and it's out. Nada.

[Tansy_Gold]

2. US Wall Street markets will be closed Tuesday

There's a photo on another DU post with a photo of the darkened NYSE trading floor and I wanted to post that as today's toon but couldn't find a good link. If I do, I'll edit the front page.

[Po_d Mainiac]

10. The sharks got lost

[Demeter]

3. It's quarter to 3

and we are being pelted with rain and wind. The weather report says snow, but not yet. It's 35F, they say. I'm not going out to check until I absolutely have to: 7 AM, when the garbage gets picked up.

I didn't dare put it out last night because of the wind.

[Demeter]

5. It could be snow

It's too dark to tell. Sleet, at least, the way it pings off the window panes.

Michigan is closer to the hurricane center than Maine.

Sandy is bending the jet stream around it. I've never seen the jet stream blow east to west before.

Well, that's one way to make up for the drought. New England gets hardly anything, this time.

Wind chill of 26F.

[Demeter]

11. 9 AM--no improvement but it's lighter, at least

The sleet or ice pellets continue to ping as it rains, the wind blows (the wunderground says 14 mph gust, but that's a lie, it's more) it's not snow, or freezing rain. The windchill is still 27F. Temp of 30F.

I'd say winter is here....or at least, November.

[Ghost Dog]

14. It's a great view from here. I'm expecting a SW gale bringing more torrential rain.

Partly pushed by Sandy and that anomalous jetstream:

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On Sunday night over 75 liters per square meter (~ 3 inches) of rain fell on my village in a 3 hour deluge, so we're already soaked and partially flooded where new building, earth movement and land erosion in recent years has altered watercourses...

[kickysnana]

23. There was an invisible barrier at Eau Claire WI

The outer band of storm barreled in to that point and then stopped dead just before midnight and is now receding.

I did see a report overnight about storm surges on the great lakes and I imagine on any large lake if the winds are strong enough.

Clinton is here today. I just saw him on the noon news.

[Roland99]

25. 67F. Pure sun. 15-20mph winds

my sister in Rhode Island? Lotta wind and rain.

and people were worried when I moved to FL.


Horrifying to read of nearly three dozen deaths from the storm.

[Demeter]

4. The Managerial Divide

[Demeter]

13. The Lost Generations By Jeffrey D. Sachs

http://www.nationofchange.org/lost-generations-1351178782

A country’s economic success depends on the education, skills, and health of its population. When its young people are healthy and well educated, they can find gainful employment, achieve dignity, and succeed in adjusting to the fluctuations of the global labor market. Businesses invest more, knowing that their workers will be productive. Yet many societies around the world do not meet the challenge of ensuring basic health and a decent education for each generation of children.

Why is the challenge of education unmet in so many countries? Some are simply too poor to provide decent schools. Parents themselves may lack adequate education, leaving them unable to help their own children beyond the first year or two of school, so that illiteracy and innumeracy are transmitted from one generation to the next. The situation is most difficult in large families (say, six or seven children), because parents invest little in the health, nutrition, and education of each child...Yet rich countries also fail. The United States, for example, cruelly allows its poorest children to suffer. Poor people live in poor neighborhoods with poor schools. Parents are often unemployed, ill, divorced, or even incarcerated. Children become trapped in a persistent generational cycle of poverty, despite the society’s general affluence. Too often, children growing up in poverty end up as poor adults. A remarkable new documentary film, The House I Live In, shows that America’s story is even sadder and crueler than that, owing to disastrous policies. Starting around 40 years ago, America’s politicians declared a “war on drugs,” ostensibly to fight the use of addictive drugs like cocaine. As the film clearly shows, however, the war on drugs became a war on the poor, especially on poor minority groups.

In fact, the war on drugs led to mass incarceration of poor, minority young men. The US now imprisons around 2.3 million people at any time, a substantial number of whom are poor people who are arrested for selling drugs to support their own addiction. As a result, the US has ended up with the world’s highest incarceration rate – a shocking 743 people per 100,000! The film depicts a nightmarish world in which poverty in one generation is passed on to the next, with the cruel, costly, and inefficient “war on drugs” facilitating the process. Poor people, often African-Americans, cannot find jobs or have returned from military service without skills or employment contacts. They fall into poverty and turn to drugs. Instead of receiving social and medical assistance, they are arrested and turned into felons. From that point on, they are in and out of the prison system, and have little chance of ever getting a legal job that enables them to escape poverty. Their children grow up without a parent at home – and without hope and support. The children of drug users often become drug users themselves; they, too, frequently end up in jail or suffer violence or early death.

What is crazy about this is that the US has missed the obvious point – and has missed it for 40 years. To break the cycle of poverty, a country needs to invest in its children’s future, not in the imprisonment of 2.3 million people a year, many for non-violent crimes that are symptoms of poverty. Many politicians are eager accomplices to this lunacy. They play to the fears of the middle class, especially middle-class fear of minority groups, to perpetuate this misdirection of social efforts and government spending....A comparison of the US and Sweden is therefore revealing. Using comparable data and definitions provided by the Organization for Economic Cooperation and Development, the US has a poverty rate of 17.3%, roughly twice Sweden’s poverty rate of 8.4%. And America’s incarceration rate is 10 times Sweden’s rate of 70 people per 100,000. The US is richer on average than Sweden, but the income gap between America’s richest and poorest is vastly wider than it is in Sweden, and the US treats its poor punitively, rather than supportively. One of the shocking realities in recent years is that America now has almost the lowest degree of social mobility of the high-income countries. Children born poor are likely to remain poor; children born into affluence are likely to be affluent adults. This inter-generational tracking amounts to a profound waste of human talents. America will pay the price in the long term unless it changes course. Investing in its children and young people provides the very highest return that any society can earn, in both economic and human terms.

PERHAPS MOST DAMNING---ECONOMIC "TRACKING" PRODUCES MONSTERS LIKE MITT ROMNEY, THE KOCH BROTHERS, AND MOST OF DC AND WALL STREET....

[Demeter]

6. The Dark Age Of Money by James C. Kennedy

http://www.zerohedge.com/news/2012-10-25/guest-post-dark-age-money

If you often wonder why ‘free market capitalism’ feels like it is failing despite universal assurances from economists and political pundits that it is working as intended, your intuition is correct. Free market capitalism has become a thing of the past. In truth free market capitalism has been replaced by something that is truly anti-free market and anti-capitalistic...Beginning sometime around 1970, the U.S. and most of the ‘free world’ have diverged from traditional “free market capitalism” to something different. Today the U.S. and much of the world’s economies are operating under what I call Monetary Fascism: a system where financial interests control the State for the advancement of the financial class. This is markedly different from traditional Fascism: a system where State and industry work together for the advancement of the State.

Monetary Fascism was created and propagated through the Chicago School of Economics. Milton Friedman’s collective works constitute the foundation of Monetary Fascism. Knowing that the term ’Fascism’ was universally unpopular; Friedman and the Chicago School of Economics masquerade these works as ‘Capitalism’ and ’Free Market’ economics. The foundation of Friedman’s corrupting principle is that the investor (money to be more precise) has no duty, obligation or covenant to anyone or anything. Friedman’s ‘Market’ is not subject to ‘any’ human standard of morality, political limitations or national interests. Money is free to act without bounds or conventions. Nothing is prohibited as long as the market can provide a “clearing price”.
The fundamental difference between Adam Smith’s free market capitalism and Friedman’s ‘free market capitalism’ is that Friedman’s is a hyper extractive model, the kind that creates and maintains Third-World-Countries and Banana-Republics, without geo-political borders If you say that this is nothing new, you miss the point. Friedman does not differentiate between some third world country and his own. The ultimate difference is that Friedman has created a model that sanctions and promotes the exploitation of his own country, in fact every country, for the benefit of the investor, money the uber-wealthy. He dressed up this noxious ideology as ‘free market capitalism’ and then convinced most of the world to embrace it as their economic salvation. As improbable as it sounds, this ideology has the near-universal support of most economists, the media, universities, the Federal Reserve, the U.S. Treasury, nearly every member of The U.S. Congress and most everyone you know. Today Friedman’s ideology is accepted, to some degree, by nearly every country in the world. But ultimately this exploitive model is not sustainable at any level, or for anyone or any nation.

The ultimate difference between Friedman’s ideology and Smith is simply this: Smith was in fact a Mercantilist. True, he opposed the custom of hoarding gold and other Mercantilist practices, but ultimately he was a Mercantilist. Smith promoted “free trade” with the goal of improving the English merchant’s advantage, and thus the State’s. Nothing expresses this more clearly that the title of his book An Inquiry into the Nature and Causes of the Wealth of Nations. Mercantilism is based on the relative wealth of one Nation State over the other, not the plunder of the State and its peoples for the benefit of the individual. Smith believed in the power of the State and recognized that it was only by the power of the State that free enterprise could succeed and thrive. In a world without the State, he sided with Lock, “life was brutish and short”. Consequently one had obligations to the State and the people who make up the state: the working man. According to Smith every butcher, baker, craftsman and merchant would seek out his own self-interest and that economic advantage would ultimately benefit his fellow Englishman and the Crown. Smith’s arguments against some precepts of Mercantilism were intended to give the English tradesman a greater advantage, nothing more. The intended effect was to enrich one’s State above all others as an alternative to the primitive act of war, the traditional means to National enrichment. Smith viewed things as a zero sum game. And as England was the undisputed master of global exploitation at this time, exploitation of other Nations was fair game...Free market capitalism, as conceived by Smith, was Nationalistic in nature and as the Nation State became wealthier, so did its people and industry. This relationship required shared obligations and shared rewards between the State and its people.

Traditional Fascism, as conceived by Mussolini or Hitler, had an aggressive Nationalistic disposition where the State promoted Industry above all others in order to strengthen the State relative to its perceived rivals. Hitler and Mussolini believed that as the State lifted industry, industry lifted the people – dignity and pride in one’s nation were foundational principles...Monetary Fascism, as conceived by Friedman, uses the powers of the state to put the interest of money and the financial class above and beyond all other forms of industry (and other stake holders) and the state itself. In democracies and first world nations this is achieved through lobbying, campaign donations, financial incentives, revolving door regulators and through other means. As such, the state is co-opted into altering regulations / legislation, diverting investigations / prosecutions or creating tax loopholes for the benefit of the financial class/ industry. Ultimately these actions undermine state's sovereignty...For the rest of the world state interests and sovereignty are undermined through the IMF, The World Bank and other global monetary agencies. Monetary Fascism has a strong preference for political rather than capital investments. These investments are designed to sustain and support the preferences and activities of the financial class as it manipulates and create ever larger out-sized rent opportunities or constructs risk-diverting transactions that aggregate a ‘risk-arbitrage premium’ to one side of a transaction and transfers all future losses to the other...

AND THE REST IS HISTORY...MUCH MORE DETAIL AND DESPAIR AT LINK

I'LL LEAVE YOU WITH HIS CONCLUSIONS:

...consider what Friedman’s ‘free market’ banking system has done to Iceland, Ireland, Spain, Greece, Estonia, etc. How many western nations has Islam overthrown? Not one, and by comparison that should scare you...The predictable long term outcome is a steep decline into a very dark Monetary Feudalism. When asked in an interview what humanities’ future looked like, Eric Blair, better known as George Orwell, said “Imagine a boot smashing a human face forever.”

Welcome to the Dark Age of Money.

[Demeter]

8. A Big Storm Requires Big Government

http://www.nytimes.com/2012/10/30/opinion/a-big-storm-requires-big-government.html

Most Americans have never heard of the National Response Coordination Center, but they’re lucky it exists on days of lethal winds and flood tides. The center is the war room of the Federal Emergency Management Agency, where officials gather to decide where rescuers should go, where drinking water should be shipped, and how to assist hospitals that have to evacuate.

Disaster coordination is one of the most vital functions of “big government,” which is why Mitt Romney wants to eliminate it. At a Republican primary debate last year, Mr. Romney was asked whether emergency management was a function that should be returned to the states. He not only agreed, he went further. “Absolutely,” he said. “Every time you have an occasion to take something from the federal government and send it back to the states, that’s the right direction. And if you can go even further and send it back to the private sector, that’s even better.” Mr. Romney not only believes that states acting independently can handle the response to a vast East Coast storm better than Washington, but that profit-making companies can do an even better job. He said it was “immoral” for the federal government to do all these things if it means increasing the debt...It’s an absurd notion, but it’s fully in line with decades of Republican resistance to federal emergency planning. FEMA, created by President Jimmy Carter, was elevated to cabinet rank in the Bill Clinton administration, but was then demoted by President George W. Bush, who neglected it, subsumed it into the Department of Homeland Security, and placed it in the control of political hacks. The disaster of Hurricane Katrina was just waiting to happen. The agency was put back in working order by President Obama, but ideology still blinds Republicans to its value. Many don’t like the idea of free aid for poor people, or they think people should pay for their bad decisions, which this week includes living on the East Coast.

Over the last two years, Congressional Republicans have forced a 43 percent reduction in the primary FEMA grants that pay for disaster preparedness. Representatives Paul Ryan, Eric Cantor and other House Republicans have repeatedly tried to refuse FEMA’s budget requests when disasters are more expensive than predicted, or have demanded that other valuable programs be cut to pay for them. The Ryan budget, which Mr. Romney praised as “an excellent piece of work,” would result in severe cutbacks to the agency, as would the Republican-instigated sequester, which would cut disaster relief by 8.2 percent on top of earlier reductions.

Does Mr. Romney really believe that financially strapped states would do a better job than a properly functioning federal agency? Who would make decisions about where to send federal aid? Or perhaps there would be no federal aid, and every state would bear the burden of billions of dollars in damages. After Mr. Romney’s 2011 remarks recirculated on Monday, his nervous campaign announced that he does not want to abolish FEMA, though he still believes states should be in charge of emergency management. Those in Hurricane Sandy’s path are fortunate that, for now, that ideology has not replaced sound policy.

[Hotler]

12. I just read all twelve pages.....

I have no hope. I see no future. I have no fight left in me. Stay safe one and all. Peace

[Demeter]

15. The Hope Is Found In This

The topic has been named and described, which means it can be discussed, which means changes can be proposed.

My proposal is shut down all US markets for a month or two, not just a couple days.
Squeeze out the gamblers, the HFT jockeys, the whales and the sharks and the vultures.

Look how quiet the rest of the world is, with the US out of play. It could give the peoples of the planet a chance to get a handle on their economies.

[AnneD]

21. Every storm cloud has a silver lining my friends.....

Sandy's silver lining is that for at least several days, our pockets remain unpicked by the market place thieves.

I am embarrassed to say we are having picture perfect weather here.....but I am in absolute sympathy for the folks in the eastern seaboard. Our electricity crews left Houston in their cherry pickers day before yesterday. Many of the Storm Prep people on the East coast got invaluable training here during Ike and got to do a first run through during Irene. They have been in contact with our folks here fine tuning the response.

The amateur scientist in me cannot help be fascinated by watching these storm calls collide. I don't think we have been able to observe this before. I fear that some people may get caught with their pants down like some did with Ike when it hit Galveston.

Wishing you all warmth and safety.

AnneD

[Demeter]

7. UBS to slash 10,000 jobs in fixed income exit

I JUST CANNOT WRAP MY HEAD AROUND THE IDEA OF A BANK HAVING 10,000 EMPLOYEES, LET ALONE THAT BEING ONLY A FRACTION OF THE EMPLOYEES....I'M SO STUCK IN THE 50'S.

http://news.yahoo.com/ubs-slash-10-000-jobs-fixed-income-exit-054642079--sector.html

UBS unveiled plans to wind down its fixed income business and fire 10,000 bankers in one of the biggest bonfires of finance jobs since the implosion of Lehman Brothers in 2008. The move will focus the Zurich-based lender and wealth manager around its private bank and a smaller investment bank, ditching much of the trading business that saw it lose $50 billion in the financial crisis and one suspected rogue trader lose $2.3 billion last year.

Chief Executive Sergio Ermotti, a former Merrill Lynch banker who took over after the trading scandal, is spearheading the three-year investment banking overhaul that is aimed at saving 3.4 billion Swiss francs ($3.63 billion), on top of existing cuts of 2 billion francs. The Swiss bank will separate many fixed-income activities in order to wind down positions in businesses it will exit as they are no longer profitable due to far tougher capital rules on riskier business introduced after the crisis. Current investment bank co-head Carsten Kengeter will leave UBS's top management board to head the discontinued unit.

The remaining investment bank, comprised of equities, foreign exchange trading, corporate advice, and precious metals trading, will be run by Andrea Orcel, a recent Ermotti hire from Bank of America who currently co-runs the unit with Kengeter. "The net impact of all these changes will be transformational for the firm," chairman Axel Weber and Ermotti told shareholders in a letter. "Our overall earnings should be less volatile, more consistent and of higher quality."

The measures translate to a 15 percent staff cut, taking UBS's overall staff to 54,000, from 63,745 now.

Roughly 2,500 jobs will be cut in Switzerland, with the remainder mainly in London and the United States, where UBS runs considerable trading operations out of Stamford, Connecticut...

MUCH MORE

[Demeter]

9. NYSE to test new plan; trading floor undamaged by storm

http://news.yahoo.com/nyse-test-storm-plan-trading-floor-undamaged-044218916--finance.html

NYSE Euronext said it plans to test a new contingency plan to help resume stalled U.S. equity trading, and added that its famed trading floor is not yet damaged by Sandy, one of the biggest storms to hit the United States.

U.S. stock markets will be closed for a second day on Tuesday, as Wall Street turns its attention to whether markets would be able to resume functioning on the month's final trading day on Wednesday. Wednesday is a key trading day because it marks the end of the month, when traders price portfolios. The bond markets will also close on Tuesday, with traders aiming to reopen on Wednesday. Sandy forced the first weather-related shutdown of U.S. stock market in 27 years right in the middle of the earnings season, prompting dozens of companies to delay their quarterly results.

If the NYSE headquarters and trading floor are unavailable on Wednesday, trading in NYSE-listed securities will be executed on the Arca exchange, the exchange operator said in a notice issued to traders late Monday. NYSE Arca will offer firms the ability to test the opening and closing auctions on NYSE Arca on Tuesday from 8 a.m. Eastern Time (ET) until 12 noon ET, the exchange said. Opening auctions will run at 9:30 a.m. ET (1330 GMT) and closing auctions will run at 12 noon (1600 GMT), the exchange said.

"We stress that, as of now, there has been no damage to the NYSE Euronext headquarters that would impair trading floor operations," NYSE said in the notice. The NYSE's headquarters is a few hundred yards (metres) up the street from areas of lower Manhattan that have been evacuated. The contingency plan was described as "precautionary" given the unpredictability of the storm that has flooded parts of New York city. Nasdaq OMX said in a trader alert late on Monday it would operate its production system in a testing capacity from 7:30 a.m. (1130 GMT) to 12 p.m. (1600 GMT). In the event that the markets are able to open on Wednesday but the NYSE headquarters and trading floor in lower Manhattan are unavailable for trading, NYSE Arca would open and trade Tape A equities as usual. NYSE and the smaller NYSE MKT would remain closed as per the contingency plan...

[EconomyInCrisis]

16. Spam deleted by bluesbassman (MIR Team)

[Po_d Mainiac]

18. Welcome to DU n/t

[Demeter]

19. See the above post

[Tansy_Gold]

27. Don't spam

If you want to link to your website, that's fine, but don't be spammin' DU with links that don't relate to the OP.

You're fine posting economic news and such here, but if all you're doin' is linking to drive traffic to your website, that can be frowned upon.

Just so all you guys know: I've already served on a jury where one of EIC's posts was hidden for spamming. I don't want to see someone with good information to share with us be mirted unnecessarily.

On the other hand, if you're an invader, EIC, I hope you don't expect mercy from SMW. . . . . We're a pretty ruthless bunch. In a good way, of course.



TG

[xchrom]

17. got my internet back just a while ago -- i oughta be insulted

[Demeter]

20. Never! Not from me

oh, you mean the internet?

[xchrom]

22. You can insult me anytime...

[Roland99]

24. Stop Manipulating Bank Earnings With Loan-Loss Reserves, Currency Comptroller Warns

http://www.zerohedge.com/news/2012-10-30/stop-manipulating-bank-earnings-loan-loss-reserves-currency-comptroller-warns

Readers of Zero Hedge know well that one of the most abhorred (by us) accounting gimmicks employed by banks each and every quarter over the past 3 years to boost their bottom line, is to engage in loan-loss reserve releases: a process which has absolutely no associated cash flow benefit, but merely boosts EPS for GAAP purposes. In some cases, like this quarter's absolutely farcical JPM earnings release, the abuse is beyond the pale, as the offending bank releases reserves even as it reports surging non-performing loans: two processes which in a normal world can not coexist. Yet quarter after quarter banks keep on doing this, and in fact a big part of Q3's to date EPS outperformance is courtesy of financial company "earnings", of which, in turn, loan losses amount to about 50% of the entire blended financials bottom line. Yet while we can rage and warn, nothing usually happens until there is a market crash due to the gross manipulation of reality that such an activity entails. Luckily, this time someone with more clout in the legacy establishment has now stood up to warn about the mounting dangers associated with the relentless abuse of loan-loss reserve releases: none other than the US Comptroller of the Currency.

From WSJ:

The U.S. could stop banks from boosting their earnings by cutting back on reserves held against future loan losses, a top bank regulator said Monday, arguing that the economy remains too rocky for financial institutions to lower their cushions.

Comptroller of the Currency Thomas Curry has been warning for several months about the practice of bank-reserve releases, which occur when banks add less to their loan-loss reserves than they write off for uncollectible loans. The difference has bolstered banking profits in recent quarters.

Mr. Curry repeated his criticism in a speech before a group of bank risk managers in Dallas, citing the potential for future losses in residential and commercial real estate.

"I remain very concerned that too many institutions are continuing to reduce provisions solely to boost earnings," Mr. Curry said.

[Demeter]

26. That was really cheerful reading

Next!