[Premium] Waiting for Bank of America’s bankruptcy or break up

Read between the lines. Bank of America is on government life support. As a result, it is being forced to shed assets and cut staff in the hope that this will be enough to prevent its having to be bailed out or resolved. Moreover, a shrunken BofA will be easier to deal with when that moment does arrive

U.S. Exposure to Europe – Unknowns Unknowns

As Eurocrats dissemble, ratios that quantify U.S. financial system exposure to European insolvency are dated, even as they are published

The ABCs of Re-hypothecation in Gold and Securities Markets: What You Need to Know

The downfall of MF Global has exposed yet another patch of the underbelly of the brokerage industry. Practices that are routine and legal – and hitherto largely unknown to most investors – can leave a company vulnerable when abused

In Honor of Jon Corzine

Here’s what I’m listening to right now. Prince rocks the house in the video below. Eat your heart out, Jon Corzine

William K. Black on MF Global

Bill Black was on Capital Account talking to Lauren Lyster about MF Global. As usual, Capital Account delves deep into the real issues. Black never disappoints. Video below

News Links: Corzine Rebuffed Internal Warnings on Risks at MF Global

Financial news links for 6 December 2011 featuring stories on MF Global, Facebook, class divides and retail sales

We’re American Airlines, doing what we do best

Here’s the message from AA: “American Airlines filed for reorganization under Chapter 11. We took this action as part of our efforts to secure our long-term success in delivering the highest standards in air travel. We are committed to meeting your travel needs with outstanding customer service and safety, and it will be business as usual at American throughout our reorganization process. More than 80,000 people at American appreciate your loyalty and look forward to continuing to serve you.”

How Would You React To The News Your Local Central Bank Just Went Bust?

Alarm signals have been going off over the last week, not only due to the surge in the yields on Spanish and Italian debt but also due to evidence that the infection (contagion) is now spreading to what was previously considered to be the core (France, Austria) with the evident danger that more countries will lose their triple A rating. This has put the spotlight on the ECB as an institution, but the bank is reluctant to adopt the role of ultimate guarantor. This is not principally due to the so called “inflation fear” – demand driven inflation is extremely unlikely in the Euro Area in the near term – but rather due to a fear of accumulating sizeable losses in the event that large quantities of bonds are purchased and then countries like Italy and Spain have to restructure their debt. Naturally some argue that a central bank can simply accept losses, since the bank doesn’t necessarily need recapitalisation and could be allowed to carry on regardless of the red ink on the bottom line. I am not very convinced by this argument. I think my fears are shared by the Bundesbank, and my intuition is that they are not at all keen to run the experiment just to see what actually happened

Auerback: The more you deflate, the bigger the debt problem will get

Marshall Auerback was on Fox Business talking about the European sovereign debt crisis. He said he is very concerned not just about the national solvency problem in the euro zone but also about the debt deflationary policy remedies now being implemented across the whole of the euro zone. He notes grimly, “the more you deflate these economies, the bigger the public debt problem is going to become.”

Video below

Those MF Global MFs!

We have a good friend with money tied up in the MF Global debacle. As of November 1st, he had close to $100K in his “segregated” futures account with no open positions. He says the MF Global website is shut down and the phones don’t ring when he calls. This guy was a “big swinging Richard” at one of Wall Street’s biggest firms and now trades his own account.

Here is his letter of rebuke to MF Global, which he passed on to us. Can you tell he is a little peeved

Iceland’s Fair Value Vultures

The country is now suffering a second round of economic and financial distress stemming from the collapse of its banking system in October 2008. That crisis caused a huge loss of savings not only for domestic citizens but also for international creditors such as Deutsche Bank, Barclay’s and their institutional clients

The Fed should never buy Italian bonds

If the Federal Reserve were to load up on Italian bonds, the Fed would be exposed to default on foreign currency assets. If Italy defaults, then the Fed is on the hook. Offic