Fed, global central banks move to boost financial system

[The-Noid]

(I think what I write is coarsely correct, but someone with more in depth financial markets knowledge will hopefully chime in with a more complete and accurate explanation):



European banking system apparently depends upon short-term wholesale lending to run their businesses, while U. S. banks may rely more on retail deposit base.

- http://video.cnbc.com/gallery/?video=3000058679 (U. S. money market funds apparently provide some wholesale funding for European banks, but have pulled back)
- http://video.cnbc.com/gallery/?video=3000058810 (so so clip; just points out immediate crisis is lack of wholesale funding for European banks, not soveriegn debt per se)
- http://video.cnbc.com/gallery/?video=3000058830 (Euro-TARP?)


Things like other banks and U. S. money markets (think your high yield money market is really that safe?) who normally provide this funding began pulling back a while ago, and these banks are running out of money to keep their businesses open. It would probably somewhat akin to what happened to a lot of businesses post-Lehman, where they lost their line of credit with bank and were forced out of business as a result.

I think coordinated central bank action was to provide low cost dollars (Fed loans dollars for Euros to ECB at fixed currency exchange rate; there is no credit risk per unless ECB goes under http://video.cnbc.com/gallery/?video=3000059845 ) that somehow that unclogs interbank lending among European institutions. Whether that is because they now have correct collateral to get funding from ECB, or just a shock and awe statement by central banks around the world that we won't let these institutions fail so it is safe to lend to them, I don't know. It was the same type of seizing up of credit markets that happened circa Lehman 2008. I think Steve Leisman also made some comment about how it increases profitability of loan to other banks, etc. so it more accurately reflects risk they are taking, as long as institution you are lending to doesn't go bankrupt before you get your money back.

Remember, this immediate crisis (freezing up of wholesale lending to European banks) and underlying sovereign debt crisis are inter-related, but not quite the same (sovereign debt used to be viewed as risk free and equivalent to cash, and because of way European banking regulations are written, they could use it as collateral to make leveraged speculative bets, possibly at leverage up to 40:1. Problem is 10% reduction in face value of those sovereigns makes the same bank insolvent because of leverage).

Previously Greek debt used to be viewed as good and safe as German debt, but that is obviously not true anymore.

Italian debt, at 7%, on the other hand, may end up being a great deal for brave investor willing to step up and take that risk (U. S., through IMF, using 2% money to buy / "bail out" 7% debt?), but only time (and lack of significant "voluntary" haircuts) will tell...

It's close enough that I don't want to completely nitpick it. The 40:1 leverage has to do with the type of assets and it's not European banking regulations it's Basel which are worldwide standards.

The swap program in a sense should be a risk free transaction for the FED as loans are collateralized by Euros from the ECB. Euro-Dollar basis swaps have a lot of credit risk in them (hence why they were trading 160bps on the 3 month).

I will point out a few quick things.

1.) I am not sure how much this program will be used as you have to have eligible ECB assets to take advantage and get Dollar funding to begin with. The reason the Euro banks have gone to the basis swap short term funding model is you don't need a lot of margin to convert assets to dollars. Whereas going to the ECB requires assets and a hair cut.
2.) Money at OIS + 50bps or ~67 if my math is right or money at OIS + 100bps of 117bps makes it a bit cheaper but you still have to get it. Not a huge deal in my book.
3.) Lending at OIS + 50 bps effectively allows Eurobanks to borrow Dollars cheaper than US banks at the discount rate of 75bps. That seems sketchy to me.

 

[bfdd]

It's not about me personally. About the only thing that would seriously damage our frugal lifestyle would be economic collapse, looting, rioting & revolution, and even then I'm in a better position than most because we have zero debt & positive net worth.

That's the only thing that'll cause any suffering at the top of the pile, too, unless paying higher taxes & enjoying fewer looting opportunities can be defined as suffering. They got theirs, and spread it & hid it all around the globe. Can't touch 'em.

Those are the things that can be done to promote greater equality & more broad based prosperity, limit the power of wealth & enhance the power of little people via responsive govt. It's the only chance we have, because those at the top won't give up anything unless forced to do so. It's wealth that corrupts govt, not vice versa, so the less they have to work with, the less corruption they can create. Concentration of wealth & power isn't self limiting, at all, but rather self reinforcing, so limits must be imposed from the outside if the rest of us are to not be devoured by it. It's the essence & the purpose of egalitarian democracy.

Or you can just do like the Bolshevik's and bust a Romanov. Take from them their lives, then their material possessions are of no value to them and you strike fear into the hearts of the other men. I know it's dirty and unpleasant, but nothing will change without it. If you think marching and asking those who have been bought and sold, who care not for us, to change anything you're better off yelling at a wall. At least the wall won't try to turn it on you for going against the grain.

 

[The-Noid]

I'll save you the trouble. This is all a big gamble that may not work because there is no real number being put on the amount of money needed to stabilize Europe and its economies. What is occurring today amounts to providing wiggle room and avoiding having to pay the piper on debt which is being pushed down the road in hopes that the situation may further stabilized enough to actually address the debt monster.

This is further complicated by sheer size and scale of the debts involved amongst so many European nations who all must agree on what the right way is to proceed. Along with deciding what meaningful consequences should be enforced for nations which fail to meet the guidelines of their bail outs and debt curbing rules. As well as how to cover banks if this scenario of one or more nations failing on their debt payments or if confidence is not restored even after a trillion dollars is poured on this blazing debt fire.

However none of this even begins to address what the unintended consequences may occur as a result of all this lending to banks and at what cost this action is imposing on economies of the world.

This is a very unsophisticated post. There is really no gamble. This just allows for time to work on the solvency problem without generating a huge liquidity crisis to match.

In a sense all that is happening is swaps from Euros to Dollars that are collaterilized. Allows Euro banks to borrow dollars from the central bank for collateral. This is not in a sense a monetary expansionary event. It is simply allowing banks to fund assets they already have. I can assure you the last thing on the minds of the Euro banks is how they can grow their balance sheet.

This is a liquidity operation not a solvency operation. It takes some really awful bank run scenarios off but doesn't grow balance sheets.

I like the old fashioned money printing by the ECB which we are well on our way to.

I should also preface this by saying, once the financial crisis really over all the TBTF should be split up. The advantage they have over the rest of the free market banks over their implicit government guarantees is ridiculous.

 

[mshan]

Hi The-Noid:

Your comments are very much appreciated, though I probably have to do some more google research to understand some of the more technical comments you made.

Could you also elaborate on how this coordinated central bank move is really supposed to unclog the European interbank lending system (is it as simple as confidence)?

And, overall, do you view this move as a real positive, (John Manley comment on Friday about two steps forward, one step back, two steps forward, two steps back type move), or was it just temporary short covering, as some Fast Money traders seemed to be saying this evening (PIMCO sugar high type analogy?)?

 

[The-Noid]

Hi The-Noid:

Your comments are very much appreciated, though I probably have to do some more google research to understand some of the more technical comments you made.

Could you also elaborate on how this coordinated central bank move is really supposed to unclog the European interbank lending system (is it as simple as confidence)?

And, overall, do you view this move as a real positive, (John Manley comment on Friday about two steps forward, one step back, two steps forward, two steps back type move), or was it just temporary short covering, as some Fast Money traders seemed to be saying this evening (PIMCO sugar high type analogy?)?

IDK all the trading commentary was about short covering on the open (I covered BAC if only because I said when it hit a 4 handle I was done with it, short and hold from 16 is not an investment strategy) but the last hour of trading actually saw increasing volume and some movement into single stock cash (the day was predominately ETF and futures driven up until the point) off the top of my head I want to say volume was highest since 10/31 , 11/1 ? (MVOL on BBG but I am at home if you want to check). Implied correlations and single stock vols are still too high given the runup to wave the all clear, throw all that into the fact that it was month end and I am sure we saw some window dressing from funds that wanted to show holdings at month's end that performed well.

Short lived or not you really need to take the entire day as a whole.

China cut their RRR's which in itself is a huge story and was good for a few handles overnight, the central bank dollar liquidity (which in itself is not a huge deal, it needs to be followed up with ECB printing, long term lending or increased list of collateral) that was good for a lot of handles and every economic indicator that hit was great. ADP, home sales, PMI etc.

Futures basically flat overnight as well leads me to believe this could be good fora few days or even until the end of the year.

(My opinion only, etc etc.)

 

[DucatiMonster696]

This is a very unsophisticated post. There is really no gamble. This just allows for time to work on the solvency problem without generating a huge liquidity crisis to match.

In a sense all that is happening is swaps from Euros to Dollars that are collaterilized. Allows Euro banks to borrow dollars from the central bank for collateral. This is not in a sense a monetary expansionary event. It is simply allowing banks to fund assets they already have. I can assure you the last thing on the minds of the Euro banks is how they can grow their balance sheet.

This is a liquidity operation not a solvency operation. It takes some really awful bank run scenarios off but doesn't grow balance sheets.

I like the old fashioned money printing by the ECB which we are well on our way to.

I should also preface this by saying, once the financial crisis really over all the TBTF should be split up. The advantage they have over the rest of the free market banks over their implicit government guarantees is ridiculous.

Unsophisticated? Maybe it is unsophisticated because I didn't mince my words with jargon but my view on that interview I take as being pretty accurate.

Even the commentators understood that this action taken by central banks today could blow up in our collective faces if the amount of money being loaned to Euro banks ends up being significantly less then is actually needed to instill confidence in world (with a emphasis on US and Euro) markets a week or month form now. They also sure as hell understand that this action doesn't ensure that all nations involved will do the right thing in the end, such as curbing their debt and adhering the the rules and mandates set in place to secure a measure of austerity that the Europeans nations like Germany are seeking before they take the big plunge to risk saving the PIIGS.

Thus when you act without having a sold understanding of the outcome then you are essentially taking a risk, i.e. gamble in hopes that your actions pay off in the intended manner. All the while compounding this risk with hopes that people/nations do not loose confidence in your actions and others behave in a manner that fits your current agenda. This isn't even considering the hope that nothing else arises (wars, natural disasters, civil unrest, etc) that would through a huge monkey wrench into all their efforts.

 

[The-Noid]

Hi The-Noid:

Your comments are very much appreciated, though I probably have to do some more google research to understand some of the more technical comments you made.

Could you also elaborate on how this coordinated central bank move is really supposed to unclog the European interbank lending system (is it as simple as confidence)?

And, overall, do you view this move as a real positive, (John Manley comment on Friday about two steps forward, one step back, two steps forward, two steps back type move), or was it just temporary short covering, as some Fast Money traders seemed to be saying this evening (PIMCO sugar high type analogy?)?

European banks have been funding dollar assets and their carrying costs by using Euro Basis swaps over the last few weeks as liquidity dried up from money markets and commercial paper. (EUBSC Index <GO> or apparently BBG website has it http://www.bloomberg.com/quote/EUBSC:IND) Dollar and dollar funding has been hard to find in the interbank market so what they have been doing is swapping euros for dollars and paying a high rate of interest (The Euro-Dollar Basis Swap Rate), essentially they should be able to borrow at BBA LIBOR but no one is providing dollars at that rate so LIBOR is irrelevant (speaking of which how is everyone doing that swapped LIBOR + spread for CPI at the beginning of the year for the huge inflation that was coming, losing on both ends of a trade is great, the Fed did keep rates low like you thought though) the Euro-Dollar basis is a much more relevant rate. Now banks can fund dollars from the ECB at 63 to 67bps instead of EUBSC which had gone vertical in the last three weeks to quotes in the 160ish from some dealers yesterday.

Why I don't think it matters. Basis swaps require very little margin to fund in FX land and are in themselves hugely leveraged trades. Funding dollars from the ECB requires actual assets and you are going to get EUR:USD - haircut in dollars back for EUR1 in assets. The basis swap rate in theory should be the same as the key rate from the ECB on Dollar assets. Dealers already realize it is a way to skirt the fact that collateral as well as funding are both bad and that is why basis swaps didn't move a great deal. They came in 20 or so odd bps on the announcement and pushed back out almost instantly.

US asset swaps looked a little better though so of the people who got helped, US banks look better on the announcement from a funding perspective. The TED Spread came in a bit as well. US appears to have been helped just as much as anyone or more than anyone from a funding perspective.

Take into account the program starts on December 5th, so the basis swap market may catch up at that point and come in more.

Having said all that, you would be hard pressed to find a single funding metric whether it be Bank Credit Default Swaps, equity prices, Sovereign CDS, Sovereign Spreads, Funding spreads etc that doesn't look better on the back of the intervention so like I said I could see things moving in the right direction f0r a few more days or even the rest of the year. If the ECB prints there is a real good chance this market is off to the races. I mean what are the alternatives, 1 year german paper at -1bps?

 

[mshan]

US asset swaps looked a little better though so of the people who got helped, US banks look better on the announcement from a funding perspective. The TED Spread came in a bit as well. US appears to have been helped just as much as anyone or more than anyone from a funding perspective.

"it needs to be followed up with ECB printing, long term lending or increased list of collateral"

Interesting.

I think there was some comment on CNBC today about 2 - 3 year financing (?) for European banks (unfortunately I don't remember when or who, so I can't link video clip). It may have been a Steve Liesman comment (?)

Maybe this rally really does have some legs...

 

[The-Noid]

Unsophisticated? Maybe it is unsophisticated because I didn't mince my words with jargon but my view on that interview I take as being pretty accurate.

Even the commentators understood that this action taken by central banks today could blow up in our collective faces if the amount of money being loaned to Euro banks ends up being significantly less then is actually needed to instill confidence in world (with a emphasis on US and Euro) markets a week or month form now. They also sure as hell understand that this action doesn't ensure that all nations involved will do the right thing in the end, such as curbing their debt and adhering the the rules and mandates set in place to secure a measure of austerity that the Europeans nations like Germany are seeking before they take the big plunge to risk the PIIGS.

Thus when you act without having a sold understanding of the outcome then you are essentially taking a risk, i.e. gamble in hopes that your actions pay off in the intended manner. All the while compounding this risk with hopes that people/nations do not loose confidence in your actions and others behave in a manner that fits your current agenda. This isn't even considering the hope that nothing else arises (wars, natural disasters, civil unrest, etc) that would through a huge monkey wrench into all their efforts.

The number is unlimited or am I missing something? This is an unlimited operation...

If unlimited isn't a big enough number, what is?

Without a SIFI bank failure the EU can manage through their problems to a final solution. With a SIFI failure (look at the SIFI list, 8 of top 10 are in EU/UK) it takes any chance of Europe coming up with a solvency solution off the table. Even Italy which is seen as the biggest mess the citizens of Italy have enough liquid (yes liquid ~9T of unencumbered assets) assets to pay off the Sovereign debt 6x over. Europe is still a very rich region, the crisis is simply moving faster than they can handle right now.

 

[The-Noid]

Interesting.

I think there was some comment on CNBC today about 2 - 3 year financing (?) for European banks (unfortunately I don't remember when or who, so I can't link video clip). It may have been a Steve Liesman comment (?)

Maybe this rally really does have some legs...

Need to be longer. They need medium term debt. Some sort of 1 year loan with automatic ability to roll for 4 years would be OK.

 

[Nemesis 1]

This is a very unsophisticated post. There is really no gamble. This just allows for time to work on the solvency problem without generating a huge liquidity crisis to match.

In a sense all that is happening is swaps from Euros to Dollars that are collaterilized. Allows Euro banks to borrow dollars from the central bank for collateral. This is not in a sense a monetary expansionary event. It is simply allowing banks to fund assets they already have. I can assure you the last thing on the minds of the Euro banks is how they can grow their balance sheet.

This is a liquidity operation not a solvency operation. It takes some really awful bank run scenarios off but doesn't grow balance sheets.

I like the old fashioned money printing by the ECB which we are well on our way to.

I should also preface this by saying, once the financial crisis really over all the TBTF should be split up. The advantage they have over the rest of the free market banks over their implicit government guarantees is ridiculous.

Well!(john wayne stlye) Whats the collateral That the Central Banks are getting?Than ya can tell me what men actually own these banks?Can Ya tell that? Well! Can ya give a list of those names? I think your full of it. Fella!

 

[LegendKiller]

Need to be longer. They need medium term debt. Some sort of 1 year loan with automatic ability to roll for 4 years would be OK.

Basel III covers that, or at least tries to address it through liquidity ladders. IMHO, it doesn't go far enough. The capital rules are kinda nonsensical though.

 

[The-Noid]

Well whats the collateral That the Central Banks are getting and what men actually own these banks Until you give a list of those names you are full of it.

There is a list of what the ECB accepts as collateral.

The Rothschild own some secret share class and in turn definitely own the ECB the Fed, the BOE, (not the BOJ because it is public) 90% of Europe, Isreal, Russia, Luxembourg, the Caymans and other banking centers and have a net worth of ~$7T...correct?

 

[werepossum]

This is true. I find it fascinating that the stock market is jumping incredibly on this news, when the truth is this action is a placeholder on something terrible. The market should be tanking right now.

The stock market is bizarre. A company can announce it is laying off 5,000 workers and its stock jumps like crazy, even though everyone knows a healthy company doesn't lay off 5,000 workers (who presumably were hired to turn a profit for the company.)

 

[The-Noid]

Basel III covers that, or at least tries to address it through liquidity ladders. IMHO, it doesn't go far enough. The capital rules are kinda nonsensical though.

BASEL III is DOA unless Europe gets its banking system in order. No way the huge amounts of capital that are needed can be raised. My hope is the Fed says no to all dividends on the next stress test as there simply is no reason any of them should be paying a dividend in the current time. I don't think the SIFI rules even go far enough. Banks need huge amounts of capital as they have become such intertwined animals. Banks that have simple books, need 8 or 9&#37; capital. Banks that have giant derivative books that rely on every other bank staying in business need huge amounts of capital. 12+%. Banking systems worldwide due to their huge interconnectness now need huge amounts of capital. It is not simply banking anymore.

On an aside, when people talk about "The Gold Standard" they do realize under the gold standard there was huge amounts of lending correct? I keep hearing talking about abolishing the Fed and going back to gold. I think what they mean is abolishing the Fed and having full reserve banking. Even under the gold standard there was fractional reserve banking. Banks were just prone to failure as they were unable to generate enough liquidity in the form of gold to satisfy the depositors In a sense Europe is in the same boat, they have assets in Dollar denominated form and now need to generate liquidity in the form of dollars to satisfy their depositors (counter-parties). The choices are either to swap other assets into dollars giving the dollars to bank, print dollars or have the banks sell more assets to generate dollars thus driving the price down of dollar denominated assets. In a sense were we on the gold standard this would be a gigantic deflationary event as (using the Dollar as an example for gold) Europe could not generate gold via swaps or printing and thus would simply have failed banks which is an obvious deflationary event. The one good thing about our horrible centrally planned world at the current time is it is hard for a bank to fail and these swap lines have made it even harder.

 

[Nemesis 1]

There is a list of what the ECB accepts as collateral.

The Rothschild own some secret share class and in turn definitely own the ECB the Fed, the BOE, (not the BOJ because it is public) 90% of Europe, Isreal, Russia, Luxembourg, the Caymans and other banking centers and have a net worth of ~$7T...correct?

Ha! I see,so your point is what exactly?

 

[LegendKiller]

BASEL III is DOA unless Europe gets its banking system in order. No way the huge amounts of capital that are needed can be raised. My hope is the Fed says no to all dividends on the next stress test as there simply is no reason any of them should be paying a dividend in the current time. I don't think the SIFI rules even go far enough. Banks need huge amounts of capital as they have become such intertwined animals. Banks that have simply books, need 8 or 9% capital. Banks that have giant derivative books that rely on every other bank staying in business need huge amounts of capital. 12+%. Banking systems worldwide due to their huge interconnectness now need huge amounts of capital. It is not simply banking anymore.

I know several banks that can already meet b3 targets, both for liq and capital. However, with the goodwill problem hanging over them (that alone is 300bn), among others, they still have issues. I don't see anybody taking 12% capital. I hasn't been simple banking for over a decade.

 

[The-Noid]

I know several banks that can already meet b3 targets, both for liq and capital. However, with the goodwill problem hanging over them (that alone is 300bn), among others, they still have issues. I don't see anybody taking 12&#37; capital. I hasn't been simple banking for over a decade.

Yes, didn't DB say it could but even the EU stress tests found they needed capital, which had much lower requirements than B3 SIFI? They have until 2018 by then the asset quality should have really eroded. It's fairly impossible to tell where any of the Euro banks are at and with asset quality eroding on a daily basis and additional collateral/margin from credit downgrades which have become a daily occurrence for netting it is interesting. There's obviously going to be capital raises and with assets of ~35T in the SIFI banks, 1% capital raise is 350B.

8:1 leverage on bad capital and 13-14:1 on TCE seems like it would have been better for a SIFI.

 

[bfdd]

Noid, the only things we're saving are corrupt institutions. You're really ok with this?

 

[The-Noid]

Noid, the only things we're saving are corrupt institutions. You're really ok with this?

Not at all, I think all the TBTF should be split into many parts. There is a difference between saving them and breaking them up however and letting them fail. Within 10 years I would like to see BAC/C/GS/JPM/STT/WFC/BCS/HSBC/RBS/BNP/C Agr/SocGen/DB/STD/UBS/CS and possible ING, Standard Chartered, Lloyds (even though it is basically a government ward) Mitsubishi, Nomura, China Construction Bank, Mizuho and the Bank of China all split up into little tiny pieces and possibly some others that I can't think of.

From a capital markets perspective you would have imo better banks going back to Glass-Steagal (but it needs to be done worldwide otherwise there is huge competitive arb) and you would have some of the biggest IPOs of all time for some good franchises.

USB has proven you can run a bank like a bank and still make money. Cantor Fitz is proving and has proved you can run a securities firm like a securities firm and still make money. You don't need to get into every facet of the world economy from commodities to business advising to securities trading to credit cards to retail lending to business to government lending, etc. etc...full disclosure I may own some USB or I may not I am not sure if my stop hit or not.

 

[The-Noid]

Ha! I see,so your point is what exactly?

I believe more or less that I answered your actual question (the collateral requirements for the ECB are listed and fairly stringent although not SNB stringent but I digress) and also made fun of you for thinking that there is some secret consortium outside the scope of the world that owns these banks...it seemed obvious didn't it?

 

[Jhhnn]

BASEL III is DOA unless Europe gets its banking system in order. No way the huge amounts of capital that are needed can be raised. My hope is the Fed says no to all dividends on the next stress test as there simply is no reason any of them should be paying a dividend in the current time. I don't think the SIFI rules even go far enough. Banks need huge amounts of capital as they have become such intertwined animals. Banks that have simply books, need 8 or 9% capital. Banks that have giant derivative books that rely on every other bank staying in business need huge amounts of capital. 12+%. Banking systems worldwide due to their huge interconnectness now need huge amounts of capital. It is not simply banking anymore.

Derivatives, particularly synthetic derivatives, are the devil. Something originally intended to mitigate risk has now become justification for greater risk and systemic weakness. Those that aren't banned outright need to be standardized & moved onto an exchange, like commodities.

It's not debt per se that caused the Ownership Society crash in 2008, but rather the illusions of safety in hedging that allowed for the creation of so much of it. That's the situation in Europe today, plus systemic weakness incurred wrt the losses of the ownership society. They're still under capitalized because of that. Some of them, I suspect, and some of our own TBTF institutions are pretty much zombies, their only real assets being the backing of the central banks & govt.

Moral hazard? Shee-it, Sherlock- it's a license to steal.

 

[bfdd]

Alright, Noid I see your point there and I would like to see something similar as well, but without forcing the hand it will never happen. I would rather the whole fucking thing fail and have ALL of us suffer, than prolong the suffering of the "99&#37;" so to speak while floating the rest. It's bullshit and it needs to stop.

 

[The-Noid]

Derivatives, particularly synthetic derivatives, are the devil. Something originally intended to mitigate risk has now become justification for greater risk and systemic weakness. Those that aren't banned outright need to be standardized & moved onto an exchange, like commodities.

It's not debt per se that caused the Ownership Society crash in 2008, but rather the illusions of safety in hedging that allowed for the creation of so much of it. That's the situation in Europe today, plus systemic weakness incurred wrt the losses of the ownership society. They're still under capitalized because of that. Some of them, I suspect, and some of our own TBTF institutions are pretty much zombies, their only real assets being the backing of the central banks & govt.

Moral hazard? Shee-it, Sherlock- it's a license to steal.

Can you give me an example of derivative that isn't a synthetic derivative? I have never heard the terms used interchangeably like that. I mean there are cash CDO's and synthetic CDO's but I have never heard derivative and synthetic derivative.

Traditional derivative, swap on oil, futures on oil price with exchange for physical. Synthetic derivative swap on UBS Oil Index TR?

 

[The-Noid]

Alright, Noid I see your point there and I would like to see something similar as well, but without forcing the hand it will never happen. I would rather the whole fucking thing fail and have ALL of us suffer, than prolong the suffering of the "99&#37;" so to speak while floating the rest. It's bullshit and it needs to stop.

TBTF needs to end but it needs to be done in a way that extracts the franchises and takes away the systemic risk. I don't really feel like living through a depression just because of the mistakes they made and unfortunately that is the risk that the TBTF put us through on a daily basis. Lot's needs to be done to fix both the economy and banks worldwide. As a nation we are fairly productive and the cost of labor has come down. There is going to be a few years of hard slog but I do think we come out the other side in better shape.

Maybe you are right though maybe the US needs a reboot. Simply put it seems like in this world there are too many people that have too much money.