Banking Issues Not Going Away
Edward Harrison (writing at TBP) notes that the Austrian banking crisis is big in a relative sense:
The Austrian government has nationalized the insolvent bank Hypo Group Alpe Adria (HGAA). The financial institution, which has 40 billion Euros in assets, is the country’s sixth largest bank. But, in relative terms, this is a very large bankruptcy – using GDP at purchasing power parity, an American HGAA would have assets of $2.5 trillion, larger than any of the American banks. So, this is a very big deal and it speaks to the size of Austrian banks’ international exposure, renewed risks in banking and the possibility of contagion.Again, nothing to worry about to sell banking stocks over; another government has already picked up the backstop. Move along.
How about another 400 Billion for Freddie and Fannie? Mish fleshes out the never ending black hole.
The Automatic Earth explains some of the problems with thinking China will replace the US anytime soon.
How many jobs programs are there anyway? No wonder Steve Liesman does not know all the names! Next up, another 150 Billion for various support programs (think keeping state employees at work) and 50 Billion for the usual stuff that never gets done: Schools, highways and more housing junk.
I had a discussion with The Illusion of Prosperity about leverage in the metals markets. Jesse so happened to have this post up today about that very thing. Snippet (from Ted Butler's piece):
JPMorgan, now holds 200 million ounces net short in COMEX silver futures, fully 40% of the entire net short position on the COMEX (minus spreads). As I have previously written, JPMorgan accounted for 100% of all new short selling in COMEX silver futures for September and October, some 50 million additional ounces. As extreme as JPMorgan’s position is, there is a total true net short position of 500 million ounces (100,000 contracts) in COMEX silver futures. Try to put that 500 million ounce short position in perspective. It equals 75% of world annual mine production, much higher than seen in any other commodity.Strange indeed.
Have a good night.