Friday, July 30, 2010

QE 2.0 and the Insta-Refi


Another week, another slew of bad reports:

* The ECRI Leading Indicator hit -10.7 for the most recent week (the previous revised number is -10.5). (The ECRI is a measure of leading indicators, and both of these numbers were indeed ugly)

* Q2 GDP plunges from revised Q1 number: GDP comes in at a below consensus 2.4%, which a huge drop from the revised Q1 number which came in at 3.7% (from 2.7%), and well below the consensus. Per the revised GDP numbers, the US economy has now shrunk by 4.1% from Q4 2007 to Q2 2009, compared with the 3.7% previous estimate. The Gov't continues to "massage the numbers", quietly adding "revisions" later to cover the ugliness on announcement day.

* Durable Goods came at -1.0%, a major disappointment to consensus which had been hoping to a nice boost from the previous -1.1% number .

* Major plunge in Consumer Confidence, which came at 50.4, below expectations of 51.0, and down almost 10% from the prior 54.3 reading.

The St. Louis Fed's James Bullard issued a paper titled "Seven Faces of The Peril" in which the Fed president pledges that the Fed should immediately recommence purchasing Treasurys if the deflation scenario picks up, which he notes is an increasingly likely probability. Additionally, this week three more Fed governors were approved, all of whom are on board with money printing as the solution to all problems near and far. After eyeballing all of this, a major investment firm today.. the first.. came out with this:

"We think there will be something in the (FOMC) language that maybe reverts back to the language of 2009, around the first time they made this statement, that the Federal Reserve needs to maintain an expanded balance sheet" David Resler, chief North American economist for Normura Securities, told Market News International. Nomura Friday became the first major firm to formally anticipate a change in Fed policy as soon as August 10 to alter course toward some renewed quantitative easing, arguing that without the change, Fed policy is becoming less accommodative week by week.

But the most interesting idea being floated is what's called the "Insta-Refi":

MS and ML's Harley Bassman said that the GSEs (Freddie, Fannie & FHA) should provide some form of autorefi program to take borrowers to market rates. As this would impact a vast majority of the 37 million of mortgages outstanding backed by the government, not only would this housing stimulus have a huge impact on consumption appetites, but it would be a political coup as all of a sudden the administration would find tens of millions of giddy homeowners who are paying far less monthly

My thoughts on these are that first, any more purchases by the Fed of US Bonds would have little effect; bond interest rates are near historic lows as it is, and so the problem isn't an inability to fund the Gov't. The problem is evaporating liquidity on Main Street; fewer and fewer loans are available to both consumers and businesses, constricting economic growth. Bond purchases simply hands money from the Fed to the US Gov't. What Bernanke would love to do is simply begin mailing checks to the American people, but this is not within the ability of the Fed to do so. There would be some immediate results: the equities markets would shoot up and the rates on Bonds would possibly hit all time lows. But this does nothing to solve the major problem facing the US economy.. too much debt at every level.. personal, government and corporate. Until the overall debt level in the US goes down substancially, there will be no recovery.

As for the insta-refi's, given government's ineptitude in other mortgage programs, I simply see a major boondoggle here. While true it would help tens of millions lower their monthly mortgage payments some, it would'nt help too much.. most mortgage holders already have low interest rates as it is. Who would lose in this scenario ? Fannie, Freddie and FHA, which would see their monthly returns diminish as a result, possibly resulting in these entities needing yet more Gov't money to prop them up.

Never in the history of any nation has anything like this even been suggested. The level of government interference in the mortgage markets is stunning. In the 1980s, very few mortgages were guaranteed directly or indirectly by the Gov't. This year, above 90% of all mortgages are US Gov't guaranteed. Then comes this. In my humble opinion, this is yet another brick on the Road to Ruin.

Saturday, July 24, 2010

Vision {Guest Post}

I have only been on this planet for 54 years, but at no time have I been so acutely aware that things are not as they seem. Hard work and saving your money was an ideal to be revered. You worked for a company 20-30 years and they provided a living wage and a pension with healthcare in your retirement. To supplement that was something the government came up with call Social Security and Medicare.

Now what they didn’t mention what that this was nothing more than a redistribution of wealth from the earners to the elderly. At the time very few people lived beyond the age of 65. Now with modern medicine Medicare has unfunded liabilities in the billions as there are many aged people with Alzheimer’s are sitting in nursing homes and live to the age of 95.

Ergo the system is destined for collapse for the Fed will have to print money to keep the checks coming by 2042 and by some estimates as shown in the graph above even less.
Working hard for a company is not the norm any more. I worked for 20 years for my first company then 3.5 years before the next on closed and 3.5 before the next one drove all the good people out. I was saving all this time and as a result I am not and will never be homeless. I have no mortgage, no car payment and no installment debt as all. I pay off my credit card in full every month.
However, I cannot say that for many other Americans who thought that spending was a way of life. New cars, big boats, fancy vacations and McMansions that they could not afford. Also sending there children to high dollar universities or the children borrowing 50-100k for that diploma.




So what the hell does all that have to do with investing? It isn’t about investing it is about people and how we were money dumb and spending foolish.
Well the problem is they didn’t learn about money. They didn’t know where it came from or who controlled it. To them investing was leaving it all up to the company pension manager (if they were lucky enough to have one) or dumping money in a mutual funds in a 401k plan that they did not understand. So as everyone was tapping their home equity as if an ATM machine was attached to their home they never imagined the frightful reality that would soon hit them like a 2x4 to the head.
 
 

Soon they found that they had lost nearly half of their 401k money, the company they worked for was sold and gutted and the pensions they so took for granted were reduced or paid out in a lump sum. Then the IRS would take its 40% for early withdrawal and all of a sudden the "Golden Years" were not as attainable.



They now owed more than they could sell their house for and home prices plummeted and still are. Those ignorant enough to be in adjustable or interest only homes were faced with bankruptcy, foreclosure or simply walking away. Many chose the latter.
The whole mess went worldwide so Americans weren’t the only sheep that were sheered.
Now let’s get to investing. I started investing in precious metals in 2008 and have since done well. I cut my teeth on investing at the wrong time January 2009. I was gun-shy from the early losses as I really didn’t understand how to invest. I wasted hundreds in brokerage fees getting in and out of positions based on emotion. Then when the market changed direction in March, I got it all back. I bought a variety of companies, but I was focused on the mining industry. I learned how to do rudimentary charting and mostly did quick trades taking profits.




I started a little blog on June of 2009 and it has flourished with 150-200 readers per day and about 10-15 active commentators. All of whom have great insight into the market.
http://queenbee-insidethehive.blogspot.com/
 
What have I learned from all this? That the markets are fickle and many manipulations go on behind the scenes and this I cannot control. When you decide to invest have a plan. One to get in and one to get out. Patience is a virtue, but don’t marry your investment. Keep an eye on the tape and get when the getting is good. Don’t worry about the high frequency traders with their fancy algorithms that make up most of the market. You don’t even come on their radar. They are looking to take down millions and are mostly competing against each other.
Don’t worry about the government officials as they are bought and paid for. The President is nothing more than a figurehead and has very little real power. He is kept in a cocoon and fed numbers that I am sure he does not understand any more than the previous one did. So I am not angry at the politicians. I just don’t see them as the real threat.
The real power is the To Big To Fail Banks. JP Morgan is at the top of the food chain. There are no sovereign countries, there are just peoples who are indebted to the banking cartels.



My advice to you dear reader is this. Get out of debt in any way you can. Save money and learn to invest as 1% on a CD at the bank will not cut it. Maybe buy a farm and live a simpler life. Learn to fix things, grow things and barter with neighbors. As it says in my email signature "The only free man is a debt free man."
Thank you for listening Queenbee
{This is a guest post from Queenbee @ the the fabulous http://queenbee-insidethehive.blogspot.com/ blog.. and many thanks to Queen !}

Saturday, July 17, 2010

Spain & the EURibor


A few days ago I put in the order to sell the euro; the drastic move the other way prompted me to take a closer look at what happened, and I think I've found out why. In our own economic crisis of September 2008, the one thing that prompted our leaders to act ($700 billion bailout) was the freezing up of the credit markets. The LIBOR (London Interbank Offer Rate) is the interest rate at which banks will lend to each other; when this skyrockets, it's a sign that banks are not trusting each other and for the most part won't lend to one another unless it's at extremely high rates.. it's a very good measure of banking stress. Europe has their own such market.. it's called the EURibor, and it does the same thing. When the LIBOR's go up, since there are fewer and fewer loans, there is less and less currency circulating in the system, and the value of the currency goes up relative to the amount of goods. Remember $1.99 gas in October 2008 anyone ? This is called deflation.. and while most of us would cheer for $1.99 gas again, the flip side of deflation is that consumers can't get loans to consume and businesses can't get loans to produce.. ie.. a slow constriction of the economy. Without further adieu.. I present to you the EURibor chart: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trichet/Euribor%207.16.jpg

In doing a little bit more digging, I came up with what I think is a reason why: "Spanish banks borrowed a record 126.3 billion euros ($161 billion) from the European Central Bank in June. This represents a 48 percent increase from the €85.6 billion borrowed in May": http://www.bloomberg.com/news/2010-07-14/spanish-banks-boost-ecb-borrowing-48-to-record-126-billion-euros-in-june.html . In other words, absolutely nobody is loaning anything to Spanish banks except for the European Central Bank. As I understand it, Greek and Portuguese banks are in roughly the same shape. It's just this sort of distrust that froze up our own credit markets in the Lehman era and led to our own $700 billion bailout.

Of late, European government bonds have seen their rates stabilize and their CDS rates come down.. a very welcome sign. But not all is well yet; this little tidbit came in last Wednesday: "The just completed auction of Spanish 2025 Obligacions for just under €3 billion, came at a 5.116% yield, a substantially worse level than the last auction as of April 22, which was placed at 4.434%" http://www.zerohedge.com/article/spain-auctions-%E2%82%AC2999-billion-15-year-issue-above-5-yield . This means that while people are willing to the Spanish Gov't money, they want a serious premium to do so. The US does not issue 15 year bonds; but we do have a ten year bond; the rate on it was 2.92%, thus giving you some idea as to where Spain stands in the international bond markets.. and it's about half way between the woodshed and the outhouse. An encouraging note here however: China seems to have stepped in and bought an abnormally large share of Spanish bonds.

These two things speak to the fact that Spain is very far from out of the woods.. and this is a nation who's unemployment rate is already 20%. The Socialist government has tightened the belt some, but any more budget and wage cuts will begin to test the patience of the people. While we are not at the Rubicon as yet, we are approaching it slowly. I would not be surprised to see Ben Bernanke step in and help in one fashion or another; outright purchases of Spanish and other government bonds would ease rates and would help the deflation that is gaining momentum here. Spain's step by step slide is going to have to be addressed. The ECB, EU and IMF all saw it coming.. here's my from last month on this: "The last time the IMF sent a delegation to a country was on April 15th when the IMF together with representatives from the EU and ECB took a jaunt over to Athens. A month later the country was insolvent" : http://themeanoldinvestor.blogspot.com/2010/06/spanish-inquisition.html

Thursday, July 15, 2010

Update 7/15

My Euro trade isn't going like I had hoped; the Euro might yet rally to $1.30. Therefore I'm out on the open and will likely take a $750 loss. Cest 'la vie !

Update: The Euro opened at $1.2825, which means my loss is $1,375. Ouch !

Sunday, July 11, 2010

Kowalski's Perfect World


In a land, far far away, there was a perfect kingdom called Kowalskistan.

Their King, HRH Walter I (aka the Vainglorious) has recently given to the people a new constitution; one intended to ensure basic freedoms and ensure that their financial system would not rob the working men & women of their labors. The financial system is a different one than any that exist today, one designed to reward the hard working. Here's an overview of Walterian Economic Reforms:

* Fair Wage Amendment: In any company that employs ten or more full time employees, or is a publicly traded company, must not pay any one employee any more than eight times that of any other employee. Any company with less than ten full time employees is exempt from this rule. Any company wherein all employees earn the national Per Capita amount (as determined by the Currency Board) shall be exempt.

* Finite Resource Amendment: Any finite natural resource (usually mineral or oil) is the property of the Kingdom's people; any profits derived from these resources shall be divided equally among the adults of the Kingdom. These resources are a limited gift from the Almighty and shall be shared equally among all of the people therein.

* Currency Amendment: The Currency of the Realm shall be printed by the Currency Board, who's responsibility is to mint currency and determine how much shall be minted based upon a quarterly reading of the GDP. The currency minted or printed shall be equally divided amongst the Kingdom's people therein; a check shall be mailed by the Board to all adult Kowalskistanis. The Board shall print or mint the currency every three months (if needed) in this manner: The Board shall determine the amount of GDP increase every quarter; they then shall print 1/10th of this amount and distribute it equally among the Kingdom's people. If the Board determines that the economy has not grown, no currency shall be printed or minted. The currency shall be called the Grain Guilder; it will have a worth thus: 100GG will be able to be exchanged for 25 bushels of corn, 15 bushels of wheat, or 125 ft/lb of lumber. At any time the bearer wishes, the Kingdom of Kowalskistan shall exchange one of these grains amounts to the bearer; the particular grain shall be determined by the Kingdom.

* Banking Amendment: All banks in the Kingdom shall not be allowed to loan any more money than they possess to loan out. No bank in the Kingdom shall be bigger than 1% of the total GDP; if it is, the bank shall be broken up into ten smaller banks. The Banking Regulatory Board shall oversee and enforce said rules. Further, all leveraged transactions shall be banned under pain of beheading.

* Tax Amendment: The Kingdom herein forbids taxation upon land and income (no matter the source). In order to raise any tax of any sort, a 2/3rds vote of the people shall be needed. Any tax upon land or income must be approved by a 4/5ths vote of the people on a yearly basis should the government seek to keep the tax intact.

* Government Debt: Debt (actual or implied) can only be taken by the federal government, and must be approved by a 4/5th vote of the people therein on every occasion a debt (actual or implied) is incurred.

The Kowalskistanis, deliriously happy with the Walterian Economic Reforms, have dedicated yet another holiday in the name of the Walter I {the Vainglorious}. It shall be left to posterity (and loyal readers of this humble blog) to pass along judgement of the reforms.

Thursday, July 8, 2010

Monthly Overall Economy Report


Unemployment: "Total nonfarm payroll employment declined by 125,000 in June, and the unemployment rate edged down to 9.5 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000". This is still an overall loss of 125,000 jobs, but the private sector numbers were a mite encouraging. The total percentage of working age adults who work fell again to 58.5%, which is down from 63% three years ago. The only reason the unemployment rate went down was because of the huge increase in the number of people who simply gave up looking.. termed "discouraged workers". Also, many of those who are still employed are making less than they did before.

Railroad Traffic: "Carloads in June 2010 were up 15.8% from June 2009 but down 11.8% from June 2008. Weekly average of 278,312 was down from last month (288,419) and from April (294,758)" This is not the direction they want this to be going. I include this because it's a non-government statistic (and thus more reliable) and is a pretty good indicator of how the real economy is doing. The weekly average was at about 325,000 in Sept 2008 and 343,000 in July 2006, but up from a Lehman-era low in May 2009 of 248,000.
http://www.aar.org/NewsAndEvents/RailTimeIndicators.aspx

Credit Markets: "The latest consumer credit number continues the decline we have seen in recent months, plunging from $2424.4 billion in April to $2415.3 billion in May, a $9.1 billion decline, or 4.5% annualized, on consensus of $2.3 billion. Yet the biggest stunner was the April revision which was whacked from +$1 billion to a revised -$14.9 billion! In other words, there has been a $24 billion decline in consumer credit in the past two months. The biggest hit was, as usual, experienced by revolving credit accounts, which fell by a 10.5 annualized rate to $830.8 billion" http://www.zerohedge.com/article/consumer-credit-plunges-may-april-revised-much-lower-government-only-marginal-lender-two-mon Then we come to the M3 "money supply" numbers.. and here we must say that the Gov't stopped printing these numbers a few years ago, but several sites use the same forumlas to keep up the numbers. The Gov't publishes what's known as the M2 money supply numbers, which tell a completely different story. The M3 numbers are showing deflation, which is to say a slow but sure decline in the money supply: "On 7/2 money supply was $13.353 tillion. On 6/25 money supply was $13.546 trillion. On 6/18 money supply was $13.660 trillion" While these are not drastic falls in money supply, it's quite obviously going in the wrong direction: http://nowandfutures.com/key_stats.html The M2 numbers are as follows: "May: $8.580 trillion. April: $8.498 trillion. March: $8.526 trillion. Feb: $8.550 trillion" June's numbers have yet to come out, but overall the M2 numbers have been around $8.4 and $8.6 trillion pretty consistently since May 2009: http://www.federalreserve.gov/releases/h6/current/

Retail Sales: "The US Census Bureau today announced advanced estimates of US food and retail sales for May were $362.5 billion, down 1.2% from the previous month, but 6.9% higher than May of 2009" Again going in the wrong direction. June's numbers will come out in a few days. Remember that retail sales represent about 2/3rds of the US economy, and so this is a vital statistic. Next time I do this monthly report I'll wait until this number comes out because of it's importance. http://www.census.gov/retail/marts/www/marts_current.pdf

Overall: We're doing better than in early 2009 on nearly all counts, but not nearly as well as 2008. These last reports seem to indicate that deflation is gaining momentum and the economic recovery has stalled. June's retail report will be of vital importance; my guess is that it will be down from May's numbers.

Update 8am: Putting in an order to "sell" one Euro at $1.2650. It seems that the rally has stalled, and I'm still of the belief that parity with the USD is only a matter of time.

Update 6pm: "Sold" one Euro at $1.2650. This is added to the two copper positions I maintain.. "short" one contract from $3.07 and "short" one more from $3.02.

Monday, July 5, 2010

Dear President Obama


Our leaders.. President Obama, Larry Summers, Tim Geithner, Nancy Pelosi & Helicopter Ben.. despite all outward reassurances that all is well.. are all crapping their pants after the last few weeks of terrible economic reports. One and all of these people have taken to one (or more) of the flask, cigarettes or ibuprofin pills. Bernanke in particular see's whats really going on.

In October 1929, the stock market crashed. This was the start of the Great Depression.. sort of. Throughout 1930 and into 1931, the stock market actually rallied quite nicely. By late 1931, things were getting worse as deflation began a death grip on the economy, and the stock market took another ugly dive into 1932. Alas.. we have arrived at late 1931. Here's a short recap:

* Housing: The federal tax refund to first time home buyers has ended; the result was that new home sales plunged by an unprecedented 32.7%, nearly double the expected -18.7, compared to a previous reading of 14.7%. The median sales price of new houses sold in May 2010 was $200,900, lowest since December 2003, and drop of 9.6% YoY.

* Unemployment: The number from last week came in at 9.5%.. actually a little down. But why was that ? Because the number of people who have given up looking skyrocketed. The "labor participation rate".. the percentage of working age folk in US who are employed.. dipped again from 58.7% to 58.5%.. and this was down from 63% three years ago. Despite government numbers massaging, unemployment.. and underemployment.. is going up. The U6 unemployment number.. the most accurate, and thus no longer reported officially.. is at 17%.

* States: California, the poster child so far of state mismanagement, has seen state workers suffer a 14% decline in wages thanks to forced furloughs. The Governator has announced that a little over 200,000 state workers are being reduced to the $7.25/hr minimum wage.. and still there is a huge budget gap. But the Governator can take a little comfort.. the state of Illinois has surpassed California in the budget catastrophe category. The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene." In effect, Illinois has simply stopped paying it's bills.

* Baltic Dry Index: The Baltic Dry Index, which measures shipping tonnage and thus manufacturing and trade activity, fell 3.5% in May, the sixth month in a row it's declined and the steepest monthly decline since early 2009. This is a very important measurement of how the economy is doing; many economists list this index as well as railroad traffic indices (which are also declining) as the most important of all statistics printed.

There has been increasingly loud rumors of another round of "quantative easing".. ie.. money printing by The Fed. The rumors are that it will be a massive amount of it.. one rumor lists $5 trillion. Paul Krugman would be ecstatic. But what effect would this have on the price of basic goods ? It would likely stop deflation for quite a while.. but it does not solve the basic problem of the US (and most of the developed world) economy.. debt. Massive currency manipulation will, in some way, unleash destructive forces completely unforseen by those who unleash it. My original thought was that this would not happen before Election Day.. but at the current rate of disintegration, I now think at least part of it will be done by summer's end. It is, to an extent, an admission that everything is not going well.. and thus political dynamite, which is why is has not already happened.

Therefore, Mr President.. despite all attempts to the contrary.. there is literally no escape from this economic collapse. Be it deflationary or inflationary, the result will be the same. My suggestion.. however painful in the short term.. is to work on a way to repudiate all debt, declare national bankruptcy, eliminate the Federal Reserve and the fiat money system, and replace it with a system whereby currency is introduced into the economic system via checks made out to the people and not via loans made out to the people. A currency standard who's value is based upon a basket of commodities.. lets say that 100 New Dollars would equal 25 bushels of corn, or 15 bushels of wheat, or 30 pounds of copper, or.. or.. or.. with the party expected to cough up the commodity getting the choice which commodity he will cough up. The current system is, at it's heart, meant as a way for banks to tax the people via the currency. It's robbery, and however painful, it indeed must end. Instead of a legacy rivaling that of Herbert Hoover, you could have one rivaling that of Thomas Jefferson. The rest of the world, also hopelessly indebted (most of it anyways), would likely follow you into a new age of people power and would welcome the demise of the era of banker induced serfdom for the masses. Thomas Jefferson would welcome you with open arms in Heaven.
Oh yeah.. and drop a suitcase nuke on the leaky oil well.. the Russians did it and it worked out just fine.

Your Most Sincere & Humble Veteran & Serf,

Mr.Kowalski

Sunday, July 4, 2010

European Bank Catastrophe


First and foremost, today is the 4th of July.. a day meant to celebrate our Independence from the British Empire. For those who's history is a tad shady, it was nothing short of a remarkable feat.. a rag tag (literally rags) collection of colonial farmers, fisherman and merchants with help from France intent on liberating themselves from the unjust taxes imposed on them by the world's greatest superpower of the day, the British Empire. Today's equivalent would be California defeating the United States, with the aid of Mexico, and secured by a crushing defeat of the United States Army by Californian rebels at a battle (Yorktown). The odds against this were literally incalculable. Their bravery and improbable victory, at a very high cost in lives, should never be forgotten. It's more than BBQ's and fireworks, folks.

On to today's subject.. the catastrophic state of European banks. Throughout most of the 20th Century, US banks were leveraged at 10-1 (that is, ten dollars in loans for every dollar in the vault). Therefore, if one tenth of the bank's loans went belly up, the bank is toast. In the 1980s, with the benign neglect of Alan Greedspan, banks leveraged themselves ever upward.. resulting in a leverage ratio at some big banks at 25-1.. and this ratio did not include the credit default swaps they had written. This led to mortgages and credit cards being handed out to anyone with a pulse.. with predictiable results. Sept 2008 nearly crashed the US banking system, thanks to this wreckless lending.

The European banks, not to be outdone by their Yankee cousins across the pond, leveraged themselves up even further.. in some cases sixty and seventy to one, nevermind credit default swaps. Worse, much of these loans ($1.7 trillion) were to Eastern European countries, who's political and economic stability were shaky. Worst of all, were also given to loaning huge sums of money to other EU banks, thus ensuring that should one go down, it would very likely take down others with them because of these loans as well as CDS's. For example, America's largest bank, Citibank, has roughly $2.2 trillion in assets. Britain, one sixth the size of the US, has three banks larger than this; France has two.

As the EU countries slowly begin to implode.. Greece is but the first of many.. the security of the banking system comes increasingly into question. Perhipery nations, to whom EU banks have loaned hundreds of billions, are also very shaky.. Rumania and Hungary in the last few weeks look pretty grim. Today, Ambrose's article is about Spain and their $1.1 trillion of external debt and how they are likely to need the EU/IMF bailout by summer's end. Already EU banks have essentially stopped loaning to each other, a sign of fear.. and rightly so. Only the ECB loans to EU banks.. this is a very bad sign.

Over a long enough period of time, this ends in one of two ways.. both of which lead to grinding Depressions on the Olde Continent. The first is hyperinflation in order to save the banks. The second is complete and utter collapse of the financial system and repudiation of debt. Anybody buying the official line "the economy continues to recover" are utter fools. This is coming.. my guess is that they'll hold it together this year, but 2011 is my guess for the financial apocalypse.

Here's an excellent graph on this: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/trichet/World%27s%20top%2050%20banks.jpg