In the week that the suicidal austerity/bailout cycle reached its ‘democratic’ limits across Europe, the bloated brontosaurus that is the banking industry of the Western World, started to thrash about. Again threatening all around it, demanding more be brought to feed it lest it come toppling down on those it has already stripped for their own good, and ready to blame them for getting squashed…

Moody’s were warning on the tendency of institutions to load up on debt to the exclusion of all else, when justifying threats to downgrade Goldman Sachs, Bank of America, RBS, and Barclays, Credit Suisse and Morgan Stanley, to name but a few. Banks like Morgan Stanley have been begging, trying to show what good boys they have been, much more capital, much more liquidity and much less leverage… Turns out Moody’s are really proud of how well the banks have been doing and have noticed all their effort. That, combined with the small matter of banks declaration of government willingness to bail them out, is precisely what has prevented their downgrading to junk. ? Moodys should take a look at what is being imposed on countries so that can happen. Bankers can still have a biscuit before tea and governments and banks shall continue to become ever more intertwined. Till everything else’s death they do part…

The Bankia bailout commentary never failed to amaze me, as the assumption that remained unchallenged was that the role of a government in this was to pour yet more money into a blackhole that is taking everything with it, and do nothing to prepare for what comes after the inevitable. Spain’s banking black hole with its own self-contained property bubble ready to take a nation under.

An English villain emerged into our epic financial tale, in true Hollywood style The London Whale, he who must not be named, working for the JP Morgan’s ‘Achilles heel’, a Greek…

A trade at JP Morgan Chase, which the Financial Times described as a bet, turned into a big steaming dump. Zerohedge commenting that such trades are fairly common… Trading losses of about £2billion, this usually the optimistic tip of the iceberg labelled to head off headlines…apparently the loss wiped billions of dollars from bank’s market capitalisation yesterday, and increased ‘political pressure’ on regulators. Not on JP Morgan. A victory in progression to the Volcker rule, but hardly reassuring for the rest of us, that there hasn’t yet been enough evidence that something is fucked.

I expect a narrative to emerge of JP Morgan’s risk actually being concentrated in our fine English financial centre, which looks to have been lined up be proud to accommodate quite a few similar steaming dumps in the next few months…

The ‘recidivism’ of bankers had been noticed by Moodys, and their tendency to run to load up on debt when crisis has passed. Observant aren’t they? Bankers themselves apparently aren’t worried by the rating warning, because the ratings agencies have no credibility because they have failed to notice how bad things were before…  no pressure apparently heaped on JP Morgan, just political pressure to regulate them…how? I blame the parents.

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