A note of caution for those with deposits in US Banks

Crisis spreads East:

Russia Offers Sberbank, VTB, Gazprombank $44 Billion of Loans

By Alex Nicholson

Sept. 17 (Bloomberg) -- Russia's government will loan the country's three biggest banks, OAO Sberbank, VTB Group and OAO Gazprombank, as much as 1.13 trillion rubles ($44 billion) for at least three months to boost liquidity.

``These are market-making banks capable of insuring the liquidity of the banking system,'' the Finance Ministry said in a statement today. The government and central bank will take more measures to improve liquidity this week, the ministry said.

State-run Sberbank can borrow as much as 754 billion rubles, VTB has a limit of 268.5 billion rubles and Gazprombank can get 103.9 billion rubles, the ministry said. About 400 billion rubles more of unspent budget funds is available to other banks.

Bloomberg.com: Worldwide

HBOS (Halifax, Bank of Scotland) shares down another 40% on the day. Debt rating cut by Fitch.

Is today the tay for them to be bailed out/go bust?

Bloomberg.com: Investment Tools

Breaking news:

Lloyds to rescue HBOS:

BBC NEWS | Business | HBOS in merger talks with Lloyds

This will bring down Lloyds.

^I get the impression the UK government may have given certain guarantees with that LTSB / HBOS "merger"

This is merely the tip of the iceberg as the entire US government is over-leveraged, borrowing $$$ to pay the interest on debt service... Politicians care less as they cannot see beyond the next election...

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Originally Posted by William

^I get the impression the UK government may have given certain guarantees with that LTSB / HBOS "merger"

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I would think so, as why else would Lloyds risk all with taking over a risk such as HBOS? I have been predicting HBOS' demise since the spring and the reason is as simple as why Fannie&Freddie had to be bailed out - the collapsing Housing market. If you are the biggest mortgage provider at a time of a 50% house price crash, you will go broke. F&F found this out, HBOS (the UK's largest mortgage provider) found this out and no doubt many more will too.

Next (in terms of the UK) is Bradford and Bingley and then Alliance & Leicester. I believe that, in this new policy of 'selected' bailout, they will be in the Lehman group, rather than the AIG group.

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Originally Posted by bkkandrew

Crisis spreads East:

Russia Offers Sberbank, VTB, Gazprombank $44 Billion of Loans

By Alex Nicholson

Sept. 17 (Bloomberg) -- Russia's government will loan the country's three biggest banks, OAO Sberbank, VTB Group and OAO Gazprombank, as much as 1.13 trillion rubles ($44 billion) for at least three months to boost liquidity.

``These are market-making banks capable of insuring the liquidity of the banking system,'' the Finance Ministry said in a statement today. The government and central bank will take more measures to improve liquidity this week, the ministry said.

State-run Sberbank can borrow as much as 754 billion rubles, VTB has a limit of 268.5 billion rubles and Gazprombank can get 103.9 billion rubles, the ministry said. About 400 billion rubles more of unspent budget funds is available to other banks.

Bloomberg.com: Worldwide

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Funnily enough, about an hour after I posted this the Russian stock market closed indefinately. The authorities said it would not reopen until a plan could be formulated to prevent a further collapse in stock prices.

Righto, good luck with that!

I thought Santander (sounds like a rock group) had agreed to buy A&L?

As for B&B, I agree. Unfortunately, here in Aus B&B stands for Babcock & Brown - who have lost 80% of their share value in about a week and half!

and watch for what happens with Wachovia (is that US or Russkie?)

^Yeah, just like Lloyds TSB 'agreed' to buy Northern Rock about 5 months before they went bust.

And, of course, Santander are big mortgage players in Spain. Its not like there is a massive house price crash going on there is it?

Er, hold on a minute...

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Originally Posted by bkkandrew

I have been predicting HBOS' demise since the spring

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well, everyone has been predicting that sub prime crash for years, so it's a no brainer that mortgage providers got fucked when the shit hit the fan,

however stressful it can be for the current financial system, it doesn't mean the whole system will collapse, still not sure how you came to that conclusion

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Originally Posted by bkkandrew

Anecdotal reports on a 'silent' run on HBOS in UK amid share price collapse of 50% in two days.

I think that they could be soon too now...

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Could you rewrite your post, I can't make it out. Thanks

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Originally Posted by Butterfly

however stressful it can be for the current financial system, it doesn't mean the whole system will collapse, still not sure how you came to that conclusion

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Because you don't understand much of what I have written on this thread and others.

In simple terms:

During the last 15-years the credit boom created a method of debt resale that had never been tried before. This has intertwined banks in an unprecidented way, leading to the domino effect we now have.

For example, the dear old Bradford & Bingley have a contract with GMAC to buy $4BM of UK mortgages per year. They can't afford this, don't want to (especially as the loans were the shit sub-prime anyway), but are contracted to do this. When they go bust they will stop and GMAC will then suffer a large loss. It is likely that this will lead GMAC to go Chapter 11 itself.

Coupled with very poor fiscal policy, which had the idea you could eliminate recessions at its heart, meant that the credit bubble was re-pumped in 2001 and 2005, when manageable recessions could/should have occurred. The old adage of 'what goes up must come down' is a useful description, as the higher the rise, the harder the fall.

As I have said before, this is the end of the financial system as we know it - not the end of the world. Life will move on.

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Originally Posted by who

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Originally Posted by bkkandrew

Anecdotal reports on a 'silent' run on HBOS in UK amid share price collapse of 50% in two days.

I think that they could be soon too now...

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Could you rewrite your post, I can't make it out. Thanks

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When this all started breaking this afternoon (Thai time), I was typing fast again (with all fingers :) ) and I meant there was a lot of anocdotal reports of about 2-3BN sterling withdrawels. I called this silent as it was on-line, rather than the obvious queueing at the branch type.

Events rather overtook me to bother editing the post.

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Originally Posted by Butterfly

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Originally Posted by bkkandrew

I have been predicting HBOS' demise since the spring

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well, everyone has been predicting that sub prime crash for years, so it's a no brainer that mortgage providers got fucked when the shit hit the fan,

however stressful it can be for the current financial system, it doesn't mean the whole system will collapse, still not sure how you came to that conclusion

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I agree with you about collapse. The US Treasury just lent the Fed 40B and of course when that filters through the banking system that will amount to 200B. That could cause short term rates to edge up a smidgen but if things went too far the Fed could always require the retail banks to hold an equal amount of Tbills as reserves (at no interest).
We shall muddle through but it is satisfying to see all the Wall St hot shot boys get knocked on their ass.

In my opinion the term 'no brainer' is a no brainer.

Back to AIG:

BBC NEWS | South Asia | Rush to cancel AIG policies

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The Singapore office of insurance giant AIG has been besieged by people desperate to cancel their policies.
The rush follows an announcement by the US Federal Reserve that it is launching an $85bn (£48bn) rescue package to save AIG from bankruptcy.

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The link has a video as well. It seems the Singaporeans don't think much of the FED's intervention!

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Originally Posted by bkkandrew

Back to AIG:

BBC NEWS | South Asia | Rush to cancel AIG policies

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The Singapore office of insurance giant AIG has been besieged by people desperate to cancel their policies.
The rush follows an announcement by the US Federal Reserve that it is launching an $85bn (£48bn) rescue package to save AIG from bankruptcy.

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The link has a video as well. It seems the Singaporeans don't think much of the FED's intervention!

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They don't understand it. But better safe than sorry and the Chinese are a very conservative lot.

Now that the Feds have a possible 80% ownership stake in AIG they seem to have every reason to see it succeed.

Rumour now hitting that Lloyds TSB getting cold feet over the HBOS salvage plan. IG Index now quoting down 47p to 137p.

Announcement to SE said: talks may not lead to an agreement.

Robert Peston (of the BBC) now at the centre of a whirlwind that is the whole HBOS / Lloyds TSB issue:

Guy Fawkes' blog of parliamentary plots, rumours and conspiracy: Who Told Peston?

S&P’s sovereign rating committee chairman John Chambers sayg USA's AAA rating "not God given".

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"USAAA: “No God-given gift”

The US Triple A rating, that is.

So says S&P’s sovereign rating committee chairman John Chambers in an interview with Reuters.

There’s no God-given gift of a AAA rating, and the U.S. has to earn it like everyone else

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FT Alphaville » Blog Archive » USAAA: “No God-given gift”

So even the ratings agencies are catching up with the fact that the the US is in danger of debt default.

Maybe John Chambers reads this thread.:rolleyes:

US markets just closed.

Dow Jones lost about 4.3% or 475 points to 10585

S&P500 lost 4.8% or 59 points to 1154

Nasdaq lost 5.0% or 86 points to 1637

Most big financial institutions got panned with many setting lows not seen for about 10 years. The market traded on fear and anxiety today, many shunned stocks and bought gold which rose over 90$ per ounce which is a record intraday rise, last seen in 1982.

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Originally Posted by bkkandrew

Because you don't understand much of what I have written on this thread and others.

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I understand more than you do actually hence my question how you come to such silly conclusion that the entire financial system will collapse ? a bit of a stretch like your WW3 predictions with Russia

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Originally Posted by Spin

Nasdaq lost 5.0% or 86 points to 1637

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There were more money lost during the dotboom crash than now, NASDAQ used to trade above 4,000 and now it's 1637, that's a drop of 60%

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Originally Posted by Butterfly

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Originally Posted by bkkandrew

Because you don't understand much of what I have written on this thread and others.

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I understand more than you do actually hence my question how you come to such silly conclusion that the entire financial system will collapse ? a bit of a stretch like your WW3 predictions with Russia

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Originally Posted by Spin

Nasdaq lost 5.0% or 86 points to 1637

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There were more money lost during the dotboom crash than now, NASDAQ used to trade above 4,000 and now it's 1637, that's a drop of 60%

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The Dow and S&P represent vastly more money than does the NASDAQ, not to mention the Russel 5000.

But I agree, in general, with your 'don't panic, only part of the sky' is falling.

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Originally Posted by Butterfly

a bit of a stretch like your WW3 predictions with Russia

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I have never made any such predictions. I wish you would not lie.