Here's my Top 10 links from around the Internet at 12 midday in association with NZ Mint.
I welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream.See all previous Top 10s here.
Today it is the US banks that have torn their groin muscles and are out of the tournament...
1. US bank stock panic - Reuters reports US banks stock slumped this morning on growing fears about what a European banking crisis would mean for them.
The P word was used.
Mitsubishi UFJ even stepped in to say it would support Morgan Stanley.
Bank of America's website has been up and down all evening, which is not inspiring confidence.
This all feels a lot like it felt exactly three years ago when Lehman Brothers was collapsing.
There is some real ugliness brewing inside the banking systems of Europe and America.
Analysts and investors said the sharp sell-off in financial stocks in recent weeks has been reminiscent of the financial crisis. Bank of America and Citi hit intraday lows not seen since the market bottomed in March 2009, while Morgan Stanley hadn't traded at its intraday low since December 2008.
"I remember in '08, when all hell was breaking loose, these were the levels where you thought there was going to be no bank tomorrow," said Jamie Lissette, founder of The Hammerstone Group, a Westport, Connecticut-based firm that operates discussion forums for investors.
Nancy Bush, a veteran bank-stock analyst and contributing editor at SNL Financial, described the sell-off as a "panic." She predicted that the volatility of recent months will continue. "You get great relief rallies when it looks like things are getting resolved in Europe," she said. "Then it just sinks back into the mire. It'll just keep going up and down until there is a sense that things have finally stabilized."
In a sign of support, Japanese lender Mitsubishi UFJ Financial Group Inc, which has a large stock investment and joint venture with Morgan Stanley, released a statement reiterating a commitment to its U.S. partner.
2 CDS spreads for US banks blow out - Bloomberg reports on the carnage in trading around US bank debt and the credit default swaps (CDS) on that debt.
The cost to protect the debt of Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) surged to the highest levels since the weeks after Lehman Brothers Holdings Inc.’s bankruptcy as concern intensified that Europe’s debt crisis will infect the global banking system.
Contracts on Morgan Stanley, the New York-based owner of the world’s largest retail brokerage, soared 92 basis points to a mid-price of 583 basis points as of 4:30 p.m. in New York, the highest since October 2008, according to London-based data provider CMA. Those on Goldman Sachs increased 65 basis points to a mid-price of 395.
Traders pushed the cost of protecting banks and U.S. companies higher after German Finance Minister Wolfgang Schaeuble opposed moves to increase the scale of the euro rescue fund, complicating efforts to prevent a Greek default. Swaps on Bank of America Corp. (BAC) jumped to a record and a measure of U.S. corporate credit risk rose to the most since May 2009.
3. America's big banks are America's financial Vietnam - So says Peter G Miller in this fine piece of polemic wrapping together the banks' various failings and how they gotten even more dangerous since the Lehman crisis of 2008.
Three years ago the most-powerful instutitions in America were the nation’s largest banks and brokerages, Wall Street for short. While millions of people were losing their homes, their jobs and their savings, the nation’s elite extracted a $700 billion line-of-credit from Uncle Sam. Now Wall Street is our financial Vietnam. It’s broken. The old cures and postponements won’t work. Everyone knows it.
“High risk mortgage lending and shortcomings in consumer protections for mortgage borrowers were among the most important underlying causes of the housing bubble and the financial crisis that resulted,” according to Sheila Bair, past chairman of the FDIC.
“Not only did the proliferation of high-risk subprime and nontraditional mortgage products help to push home prices up during the boom, but excessive reliance on foreclosure as a remedy to default have helped to push home prices down since the peak of the market over four years ago.”
4. Cloud powered facial recognition is terrifying - This is quite some piece in the Atlantic on the amazing implications of putting photos on the web and then having the software change on you.
The implications are profound.
Unlike Groucho Marx, unfortunately, the cloud never forgets. That's the logic behind a new application developed by Carnegie Mellon University's Heinz College that's designed to take a photograph of a total stranger and, using the facial recognition software PittPatt, track down their real identity in a matter of minutes. Facial recognition isn't that new -- the rudimentary technology has been around since the late 1960s -- but this system is faster, more efficient, and more thorough than any other system ever used. Why? Because it's powered by the cloud.
With Carnegie Mellon's cloud-centric new mobile app, the process of matching a casual snapshot with a person's online identity takes less than a minute. Tools like PittPatt and other cloud-based facial recognition services rely on finding publicly available pictures of you online, whether it's a profile image for social networks like Facebook and Google Plus or from something more official from a company website or a college athletic portrait. In their most recent round of facial recognition studies, researchers at Carnegie Mellon were able to not only match unidentified profile photos from a dating website (where the vast majority of users operate pseudonymously) with positively identified Facebook photos, but also match pedestrians on a North American college campus with their online identities.
5. So much for that grand plan - The WSJ's WashingtonWire blog reports Barack Obama's big jobs bill, touted as the saviour only a few weeks ago, is dead on the floor of Congress.
“The president continues to say, ‘Pass my bill in its entirety,’” Mr. Cantor said in a press briefing. “As I’ve said from the outset, the all-or-nothing approach is just unacceptable.”
6. Even the Accountants are grumpy - Bloomberg reports The International Accounting Standards Board (IASB) has said that allowing banks to hold no capital against government bonds is risky.
You betcha.
Read this story to find out everything you need to know about the European and US banks. And no wonder the confidence levels are low.
It’s “extremely risky to have a capital regime which says for certain types of assets you don’t need to put aside any capital,” Hans Hoogervorst, IASB chairman, told lawmakers in Brussels today.“There’s no such thing as a safe asset,” Hoogervorst said. “That’s why we’re in difficulty now -- because we allowed our financial industry to essentially run with zero capital.”
7. Dr Copper set to fall again - The copper price's collapse in recent weeks has been a harbinger of Chinese hard landing doom. Now Reuters reports the CME has raised margin requirements for copper and platinum futures, which is likely to hit copper again.
Something for Wolly to chew on.
8. Bill Gross' latest newsletter - The PIMCO maestro is always worth a read. Here are the highlights:
- Long-term profits cannot ultimately grow unless they are partnered with near equal benefits for labor.
- There is only a New Normal economy at best and a global recession at worst to look forward to in future years.
- If global policymakers could focus on structural as opposed to cyclical financial solutions, New Normal growth as opposed to recession might be possible.
9. The problem with not bailing out banks - The BBC's Robert Peston is in pensive mood on the live-again issue of bank bailouts.
Equity and debt markets haven't imploded today, but my goodness bankers are feeling jumpy.
Having spoken to a load of them, there is a presumption that something bad and inescapable is round the next corner.
We live in a time of paradox, such that governments' understandable desire to shelter taxpayers from bank losses is increasing the fragility of the banking system at this juncture - and making it more likely that the banking crisis of 2008 will rise from the dead to haunt us as a renewed financial and economic horror.
10. Totally irrelevant video about a cyclist in a scrapyard - Quite spectacular in a cycling sort of way. HT MarcusLush via twitter.
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