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(Marketwatch)   FED boss says your big bank could fail. DOW futures sag on the overnight trading scams. Start stuffing your mattresses with bank cash and put your helmets on. Monday could be a hard slide   (marketwatch.com) divider line 49
    More: Scary, commercial banks, bank holding companies, creative destruction, investment decisions, financial institutions, deposit insurance, Federal Reserve  
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2202 clicks; posted to Business » on 18 Mar 2013 at 9:34 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



49 Comments   (+0 »)
   
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2013-03-18 09:38:15 AM  
encrypted-tbn2.gstatic.com
 
2013-03-18 09:48:28 AM  
There is a headline there, but I can't make it out from all the insane scribbling around it
 
2013-03-18 10:45:11 AM  
There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.
 
2013-03-18 10:50:02 AM  

Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.


Well it marks first time of raiding people's savings accounts for money. People tend to view that as a really big red flag because it is counter to how the accounts are built. They aren't investments which carry risk. Now you're forcing a level of risk in the system that never existed before.
 
2013-03-18 10:55:22 AM  
Uh-huh. Sounds all nice and good until you lose $1 trillion in value from the system overnight over a panic because Congress won't step in and do something. For fark's sake, we were within weeks of losing all the big insurance companies as assets dropped across the board, and then where would we be?

At the end of the day, the FDIC and every guaranty association is backed by the government. Sure, the companies covered pay into it through premium payments but the system works because the government will absolutely not let the financial industry crumble into dust and everyone knows that. Remove that assurance and you are left with what we went through in the 1800's and early 1900's, one wave after another of financial institution meltdowns as real estate etc went through boom-bust cycles. We still have the boom-bust cycles but business loans, insurance contracts and the like are not affected, or at least weren't until the last crisis and that manifested itself in the liquidity crisis.

And this isn't just about the US economy. If we signal to the world that we won't support our financial system like everyone else does then confidence in the economic policies and stability of the US declines overseas and that affects everyone. Suddenly others aren't as willing to do institution-to-institution business with US banks, we've introduced new risk and that means our companies have to put up more money for transactions.  That means fewer transactions, as institutions have hard limits (supposedly) on the amount of risk they are permitted to take in total and no amount of money up front eliminates that risk. Essentially what it amounts to is the US government downgrading the creditworthiness of its dozen biggest banks.

Now, I happen to be very much anti-big-bank. But there are ways to go about reforming the system without harming everyone in the process and I do not see this as a way forward. Granted, he is talking to CPAC, but the fact that a Fed guy is even presenting something to them is scary. The rest of the system (ie every other country that matters) does not play by our sense of "fairness" in the system. Other countries will step in to protect their core economic assets in the private market. Why our ideologues refuse to acknowledge that this limits what policies are open to us is beyond me. We can pass laws doing anything we want to, but there are always repercussions and when you are dealing with an economic cornerstone you can't let ideology dictate your actions, you must focus on practicality.
 
2013-03-18 11:10:14 AM  
That headline is absurdly stupid.

/ number of farks I give about Cyprus remains zero
// number of adjustments I've made to my trading strategy because of Cyprus remains zero
/// number of investments whoever wrote this idiotic headline holds remains zero
 
2013-03-18 11:11:58 AM  

Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.


That's not a tax, that's flat out robbery. Grabbing peoples savings accounts could very well cause the mother of all runs on the EU banking system.
 
2013-03-18 11:25:07 AM  

Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.


Straight up stealing money from savings accounts tends to do that.
 
2013-03-18 11:41:00 AM  
Not to worry... the Fed has a pile of printed cash to support those stock prices with.  It's A Great Time To Buy!
 
2013-03-18 11:57:10 AM  

AcneVulgaris: Not to worry... the Fed has a pile of printed cash to support those stock prices with.  It's A Great Time To Buy!


Just wait until the runaway inflation hits.

Any time now.
 
2013-03-18 12:10:49 PM  

Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.


It's not a tax, it's theft.

They are doing in in Cypress since it's a smaller country and thought no one would care that much. It's a testing ground for when they bring it to the rest of the EU and maybe even the western world.
 
2013-03-18 12:47:11 PM  

TIKIMAN87: It's not a tax, it's theft.


HAHAHAhahaahahah this guy thinks there is some kind of difference.
 
2013-03-18 12:50:53 PM  
This slide is looking real hard. The DJIA is down 12 basis points as of 12:45 EDT and the S&P500 is down 32. Everybody panic!!!!
 
2013-03-18 12:52:05 PM  
The big difference between Cyprus and say, Greece, is that they are asking the depositors to take the hit, as opposed to the bondholders.

When they imposed the "haircut" in Greece, the banks holding Greek bonds were immediately decapitalzed.  In essence, they stopped being banks.  They are trying to avoid doing the same thing in Cyprus because they've seen just how well it has worked in Greece.

They are testing out different theories, because the ECB doesn't have clear path out of this mess.  All of the banks everywhere (except maybe in the US due to capital requirements) are over leveraged, and if any of their assets get written down substantially they are all boned.  They are seeing what happens when you play with the liabilities side of the balance sheet this time around.
 
2013-03-18 01:24:59 PM  
The main problem with Cyprus is that the rich there almost universally are tax cheats with under reported incomes that pay almost no taxes. This has been condoned by the government for years. Consequently, the banks are flush with money; unfortunately this will also hit a lot of honest people that have saved. If they had cracked down on tax cheats earlier this might not have happened. Now they are pretty much doomed. DOOMED I SAY.
 
2013-03-18 01:26:33 PM  

Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.


The financial system operates on trust and confidence. What's happening in Cyprus kicks the legs out from under both. And as others have noted, it's not  a tax, it's confiscation, particularly in the case of the accounts that were supposedly protected by deposit insurance.
 
2013-03-18 01:38:45 PM  
He added the "megabanks," -a mere 0.2% of banks and considered "too big to fail," are treated differently from the other 99.8% of banks.

In absolute numbers, yes, 0.2% of the banks. But a better number to report would be what percentage of banking assets does that 0.2% control?
 
2013-03-18 01:39:35 PM  
Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.
 
2013-03-18 01:46:14 PM  

monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.


only because the cyprus politicians keep pushing back the vote. They either vote for it and watch all trust in Eurozone banks go to shiat or their country goes bankrupt and they leave the Eurozone. Either way world markets will take a big hit. That's why they are stalling.
 
2013-03-18 02:08:06 PM  

monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.


Serious tinfoil hat stuff, but I wonder if the goby employs some high speed trading programs, not to make money, but just to stabilize the indexes. Most of the trading is through high speed, and if they wanted, they could move the index stocks in such a way that the other high speed trading algorithms didn't move too much in either direction. We haven't seen any wild swings in some time.
 
2013-03-18 02:47:35 PM  

monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.


The panic is over, time to drink my own piss
 
2013-03-18 02:54:20 PM  

Smeggy Smurf: monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.

The panic is over, time to drink my own piss


Do you drink it neat or on the rocks?
 
2013-03-18 02:55:33 PM  

Smeggy Smurf: monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.

The panic is over, time to drink my own piss


You are supposed to wait until the Sun is going down.
 
2013-03-18 02:56:18 PM  
l3.yimg.com
 
2013-03-18 02:59:47 PM  

Spare Me: Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.

That's not a tax, that's flat out robbery. Grabbing peoples savings accounts could very well cause the mother of all runs on the EU banking system.


the problem here is that the countries of Italy and Spain and Greece are not in the best financial situation and just the fear of this sort of thing can cause bank runs.  Now the precedent has been set in Cyprus.  Would you blame the Italians or Spanish for pulling their money out of banks?  Its not the fault of these people who saved that their country has no money.  And bank runs will lead to bank insolvency.  So then other banks will have to bail out the insolvent banks and it is a domino effect.
 
2013-03-18 03:34:17 PM  

max_pooper: This slide is looking real hard. The DJIA is down 12 basis points as of 12:45 EDT and the S&P500 is down 32. Everybody panic!!!!


I put down my dog so that I wouldn't be tempted to eat him when the end times come.
 
2013-03-18 03:34:54 PM  

monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.


Goddamnitsomuch!
 
2013-03-18 03:58:11 PM  

monoski: Looks like a false alarm. Dow has gotten most of its early morning losses back and financials are looking stable.


Given that the Dow doesn't represent anything meaningful, who cares?
 
2013-03-18 04:04:53 PM  

MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?


Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.
 
2013-03-18 04:15:39 PM  
So how about that market slide huh? 60 points. What a collapse.

I'm sure Ben has a hearing lined up in the next few days to get rid of that pesky loss.
 
2013-03-18 04:25:03 PM  

JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.


That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?
 
2013-03-18 04:30:54 PM  

MrEricSir: JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.

That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?


Hmm.. I'm pretty sure the Dow Jones Industrial Average, an index of 30 major American publicly traded companies, is a yardstick directly tied to the market itself.
 
2013-03-18 05:23:59 PM  

max_pooper: MrEricSir: JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.

That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?

Hmm.. I'm pretty sure the Dow Jones Industrial Average, an index of 30 major American publicly traded companies, is a yardstick directly tied to the market itself.


You left out the most important thing -- the Dow indexes the share price of 30 major American publicly traded companies. That alone is worthless.
 
2013-03-18 06:01:43 PM  

MrEricSir: max_pooper: MrEricSir: JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.

That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?

Hmm.. I'm pretty sure the Dow Jones Industrial Average, an index of 30 major American publicly traded companies, is a yardstick directly tied to the market itself.

You left out the most important thing -- the Dow indexes the share price of 30 major American publicly traded companies. That alone is worthless.


I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price. You then claimed that the DJIA wasn't a yardstick tied directly to the market. When it was pointed out that it is tied to the market, you claimed that share price doesn't matter. What is your point?
 
2013-03-18 06:17:39 PM  

max_pooper: MrEricSir: max_pooper: MrEricSir: JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.

That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?

Hmm.. I'm pretty sure the Dow Jones Industrial Average, an index of 30 major American publicly traded companies, is a yardstick directly tied to the market itself.

You left out the most important thing -- the Dow indexes the share price of 30 major American publicly traded companies. That alone is worthless.

I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price. You then claimed that the DJIA wasn't a yardstick tied directly to the market. When it was pointed out that it is tied to the market, you claimed that share price doesn't matter. What is your point?


Oh dear. Please tell me you're not an investor. That's just... yikes.

My point is that if you're going to pick a "yardstick" to measure performance, at least pick something that actually measures the performance. Is that so crazy?
 
2013-03-18 07:59:56 PM  

max_pooper: The "market" usually refers to the American stock market where the one and only gauge is share price.


And volume and dividend disbursements and splits and buybacks and all the other things that can be calculated indirectly based on formulas applied to the given metrics.

I guess in some insanely, impractically and pointlessly restrictive sense what you said is technically true in that the only thing the market itself actually directly measures is a stock's price, but as a comment it has no apparent practical value and I'm not sure what you're trying to imply by it because it requires that you completely ignore all the other metrics that indirectly sprout from the process of trading a company's stock.
 
2013-03-18 08:28:37 PM  

MrEricSir: max_pooper: MrEricSir: max_pooper: MrEricSir: JohnBigBootay: MrEricSir: Given that the Dow doesn't represent anything meaningful, who cares?

Sure, in and of itself, it means nothing. But it tracks so closely with the broader market that it might as well mean something. You can just about bet that if it's up on the day, so is the broad market. That's why they cal it a bellwether. It's pretty goddam rare that the dow is down and the market as a whole is up and vice versa. You know what, I'll say it - you're wrong. The dow does mean something. It's a proven reliable yardstick for how the market as a whole is doing.

That's the same argument you always hear about horoscopes. If you're going to pick a yardstick, why not pick one that's directly tied to the market itself?

Hmm.. I'm pretty sure the Dow Jones Industrial Average, an index of 30 major American publicly traded companies, is a yardstick directly tied to the market itself.

You left out the most important thing -- the Dow indexes the share price of 30 major American publicly traded companies. That alone is worthless.

I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price. You then claimed that the DJIA wasn't a yardstick tied directly to the market. When it was pointed out that it is tied to the market, you claimed that share price doesn't matter. What is your point?

Oh dear. Please tell me you're not an investor. That's just... yikes.

My point is that if you're going to pick a "yardstick" to measure performance, at least pick something that actually measures the performance. Is that so crazy?


I usually don't jump into Fark pissing matches but I give this one solidly to max_pooper
 
2013-03-18 08:46:59 PM  

relaxitsjustme: I usually don't jump into Fark pissing matches but I give this one solidly to max_pooper


And now we have two Farkers who don't understand how the Dow works.
 
2013-03-18 09:28:06 PM  

max_pooper: I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price.


There's a lot more than just share price. Market capitalization, dividend yield, and P/E ratio are a few simple examples.

A company's share price can literally change change by a factor of 50 overnight in a split (or a reverse split) but this doesn't mean that the company is suddenly 50x more or less valuable. It just means that the accountants have moved some numbers around, multiplying and dividing as needed so that everything else balances out.

The Dow index is also fudged for stock splits. The formula to calculate the index is to add up the share prices of all of the component stocks and then divide the total by a magic number. When a stock splits, that magic divisor is also adjusted so that the index value does not change. What does change is the relative contribution that each stock makes to the overall index, i.e. what percentage change there is in the index for a 1% change in one of the component stocks. It's a rather silly way of calculating an index and it's not something that anyone should take too seriously.
 
2013-03-18 09:31:25 PM  
www.edrants.com
"They're still blaming the bankers, I'm still safe."
 
2013-03-18 09:33:19 PM  

Ivo Shandor: max_pooper: I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price.

There's a lot more than just share price. Market capitalization, dividend yield, and P/E ratio are a few simple examples.

A company's share price can literally change change by a factor of 50 overnight in a split (or a reverse split) but this doesn't mean that the company is suddenly 50x more or less valuable. It just means that the accountants have moved some numbers around, multiplying and dividing as needed so that everything else balances out.

The Dow index is also fudged for stock splits. The formula to calculate the index is to add up the share prices of all of the component stocks and then divide the total by a magic number. When a stock splits, that magic divisor is also adjusted so that the index value does not change. What does change is the relative contribution that each stock makes to the overall index, i.e. what percentage change there is in the index for a 1% change in one of the component stocks. It's a rather silly way of calculating an index and it's not something that anyone should take too seriously.


You don't understand the concept of a stock index.
 
2013-03-18 09:43:11 PM  
As far as MrEricSir is concerned, it's best not to engage. He posted this a few days ago: "If you look at the top companies in the US, you won't find MBAs running the show". When I posted a link to an article in the US News and World Report that stated "But the Fortune 500 executives who completed both college and graduate school collectively earned about 200 M.B.A.'s and about 140 other graduate degrees.", he thanked me for posting a link that supported his statement. I didn't bite.

Unlike most of us who post to inform and learn from others, this person comes here to bait, then fling insults at anyone who tries to disagree. Fark is full of witty trolls, and I rather enjoy some of their posts. But MrEricSir is a clod, and his troll posts are completely devoid of finesse or wit.
 
2013-03-19 08:34:22 AM  

max_pooper: Ivo Shandor: max_pooper: I really don't understand what point you are trying to make. The "market" usually refers to the American stock market where the one and only gauge is share price.

There's a lot more than just share price. Market capitalization, dividend yield, and P/E ratio are a few simple examples.

A company's share price can literally change change by a factor of 50 overnight in a split (or a reverse split) but this doesn't mean that the company is suddenly 50x more or less valuable. It just means that the accountants have moved some numbers around, multiplying and dividing as needed so that everything else balances out.

The Dow index is also fudged for stock splits. The formula to calculate the index is to add up the share prices of all of the component stocks and then divide the total by a magic number. When a stock splits, that magic divisor is also adjusted so that the index value does not change. What does change is the relative contribution that each stock makes to the overall index, i.e. what percentage change there is in the index for a 1% change in one of the component stocks. It's a rather silly way of calculating an index and it's not something that anyone should take too seriously.

You don't understand the concept of a stock index.


No, he's absolutely right. Planet Money just did an episode on this exact topic. He's right. You're wrong. The Dow isn't just "a stock index", it is a particular sort of stock index that behaves in a particular way due to its underlying structure. That episode is something that those who don't already know this would do well to seek out.

No serious market professional looks to the Dow.
 
2013-03-19 08:58:22 AM  

Atomic Spunk: But MrEricSir is a clod, and his troll posts are completely devoid of finesse or wit.


Troll? I dunno. Go compare his posts here to a lot of the posts on MarketWatch articles and tell me you still think he's a troll.

There's a whole weird subculture of people on the internet who post on sites like MarketWatch as if they're expert traders when, in reality, their commentary suggests to even a novice trader that they've never actually held a position (well, at least not a market position...) in their entire life. Typically they take on a "EVERYTHING IS ALWAYS ON THE VERGE OF BEING DOOMED" bent like they desperately want to see catastrophic market collapses.

It's bizarre.
 
2013-03-19 09:30:49 AM  
Dallas Fed boss begins looking for a new gig in 3, 2, 1 ....
 
2013-03-19 09:34:15 AM  

DKinMN: No serious market professional looks to the Dow.


That. The DOW is the Cartoon Network of financial indices.
 
2013-03-19 02:03:07 PM  

HotIgneous Intruder: DKinMN: No serious market professional looks to the Dow.

That. The DOW is the Cartoon Network of financial indices.


And you guys are the Cartoon Network of the financial tab.  Every market professional and rank amateur alike looks at the DJIA.  It's probably the most widely reported stock index in the world.  You might not be basing your individual buy and sell decisions on it but if you follow the financial news you can't help but know what it's doing, if by osmosis if nothing else.  But to just dismiss the DJIA with a wave of your hand is farking retarded.  Is the DJIA a broader markets leading indicator or a following indicator?  What is the DJIA futures market doing?  How does that correlate to overall market sentiment?  Is the DJIA moving with or against the broader market indexes?  If so is that bullish or bearish?  You want to ignore it fine, but whether I have my money off or on the table you better believe what the DJIA is doing is part of the equation.
 
2013-03-19 02:03:58 PM  

Atomic Spunk: As far as MrEricSir is concerned, it's best not to engage. He posted this a few days ago: "If you look at the top companies in the US, you won't find MBAs running the show". When I posted a link to an article in the US News and World Report that stated "But the Fortune 500 executives who completed both college and graduate school collectively earned about 200 M.B.A.'s and about 140 other graduate degrees.", he thanked me for posting a link that supported his statement. I didn't bite.

Unlike most of us who post to inform and learn from others, this person comes here to bait, then fling insults at anyone who tries to disagree. Fark is full of witty trolls, and I rather enjoy some of their posts. But MrEricSir is a clod, and his troll posts are completely devoid of finesse or wit.


Duly noted. Thanks for the heads up
 
2013-03-19 07:10:45 PM  

TIKIMAN87: Tyrone Slothrop: There is something seriously wrong with the financial industry when a tax in Cyprus can cause world-wide panic.

It's not a tax, it's theft.

They are doing in in Cypress since it's a smaller country and thought no one would care that much. It's a testing ground for when they bring it to the rest of the EU and maybe even the western world.




When did Europe move?
 
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