Global Debt Time Bomb explodes soon

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Re: Global Debt Time Bomb explodes soon

Post by J.C. » Sat Dec 31, 2011 8:45 pm

raptor wrote:This is not good news but it is a single refinery business.

The refinery business is a tough business as a pure refinery play, like Petro Plus. They buy crude at market prices and sell refined product at market prices. So if they buy crude at $100/bbl but the price of oil goes down before they refine and sell it, they have a loss on their inventory holdings.

They also have to pay cash up front and wait for their cash on the sales end. In other words it needs a billion dollar revolving loan just to stay in business. In this case the banks are looking at the volatile oil prices and the borrower's balance sheet and collateral...crude oil and refined products. That is a scary borrower. Even more so if lending lines are getting trimmed like they seem to be doing now.
They use futures to hedge their market risk, and they have revolving credit lines for working capital. That is what concerns me most frankly, is that they a line of credit for working capital was frozen. That means the banks see deep problems in the company otherwise they would never do it because they probably have other credit facilities they will take a loss on if they default (which became a lot more likely when their operations were shutdown due to lack of WC).
squinty wrote: Birds gotta fly, fish gotta swim, zombies gotta shuffle around and eatcher brains. Why do sharks eat divers? Why not swim around and starve to death?
Why do tornadoes zero in on trailer parks? Why not just blow around harmlessly? It's the way of the world, man.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Sat Dec 31, 2011 9:11 pm

J.C. wrote: They use futures to hedge their market risk, and they have revolving credit lines for working capital. That is what concerns me most frankly, is that they a line of credit for working capital was frozen. That means the banks see deep problems in the company otherwise they would never do it because they probably have other credit facilities they will take a loss on if they default (which became a lot more likely when their operations were shutdown due to lack of WC).

if they hedge their inventory they need even more working capital to deal with the hedge positions capital requirements.

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Re: Global Debt Time Bomb explodes soon

Post by J.C. » Sun Jan 01, 2012 5:30 pm

raptor wrote:
J.C. wrote: They use futures to hedge their market risk, and they have revolving credit lines for working capital. That is what concerns me most frankly, is that they a line of credit for working capital was frozen. That means the banks see deep problems in the company otherwise they would never do it because they probably have other credit facilities they will take a loss on if they default (which became a lot more likely when their operations were shutdown due to lack of WC).

if they hedge their inventory they need even more working capital to deal with the hedge positions capital requirements.
Better than the alternative I think. I'd be surprised if a refining company wanted to gambool on the oil market. If I were an investor I'd want them to stick to doing what they do well - yes its a capital intensive business.
squinty wrote: Birds gotta fly, fish gotta swim, zombies gotta shuffle around and eatcher brains. Why do sharks eat divers? Why not swim around and starve to death?
Why do tornadoes zero in on trailer parks? Why not just blow around harmlessly? It's the way of the world, man.

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Re: Global Debt Time Bomb explodes soon

Post by SiXiam » Sun Jan 01, 2012 6:40 pm

Daily Mail wrote: 2012 will be 'full of danger and risk' warn Sarkozy and Merkel in their New Year messages
German chancellor Angela Merkel and French president Nicolas Sarkozy have issued grave New Year warnings on the worsening plight of the stricken eurozone.

Their words marked a sombre tenth anniversary for the single currency.
Euro notes and coins were introduced on January 1, 2002, and were hailed by supporters as the start of a new era of unity and prosperity on the continent.

But a decade later, the leaders of France and Germany – the two most powerful countries in the single-currency bloc – delivered bleak messages to their people that the economic crisis will actually worsen, not improve, in 2012.

Mrs Merkel said this year will be even more difficult than last, and vowed to do ‘everything’ to save the single currency.
But she insisted the euro had ‘made everyday life easier and our economy stronger’, claiming Europe will emerge healthier from the current turmoil.

In a ten-minute televised address, Mr Sarkozy admitted that the French people were ending the year ‘more worried about themselves and their children’ and urged them to be stoical.
Mr Sarkozy, who has been trailing in the opinion polls ahead of a re-election battle this year, said 2012 would be a year full of risks and dangers.

But he argued it was also ‘full of hope, if we know how to face the challenges’.
Mrs Merkel and Mr Sarkozy last year presided over a string of ‘last-ditch’ summits, all of which failed to halt the sovereign debt crisis sweeping the single currency bloc. Their grim utterances came as economists predicted a deepening of the eurozone crisis.

Forecasters at the Centre for Economics and Business Research said 2012 will be the year the euro starts to disintegrate.
It is predicting that at least one country will quit before the end of the year, adding there was a 99 per cent chance of a break-up in the next ten years. Professor Douglas McWilliams of the CEBR said: ‘I would expect to see most of the French and German banking systems bailed out to compensate for the write-downs on their sovereign debts.

‘They might even be nationalised as well. Many other European banks will go back into crisis.’
A BBC poll of top economists found most are forecasting Europe will sink back into recession next year.

The majority put the chances of a break-up at between 30 and 40 per cent.
The eurozone economy grew by a meagre 0.2 per cent between July and September last year and the single currency ended 2011 down sharply against the U.S. dollar and the Japanese yen.
Fears over the health of southern European economies intensified when the sale of Italian government bonds last week failed to hit its targets, leading to worries that country will struggle to bring its mountainous debts under control.
What is up with these people? Couldn't they wait until next week to make the pessimistic remarks? Its like they want the market to open bad.
Quick, someone check their short positions! :shock:

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Wed Jan 11, 2012 12:47 pm

This is an interesting article. I honestly was surprised by this. I thought they would make more than 2010 but they did not. They returned $79.3 billion to the treasury.

Now you may be asking (& rightly so) how can the Fed make money unless it prints it. It makes money by lending money to banks and certain businesses worldwide. The article cites AIG as an example of both income and a reason for the decline.

However also remember that the Fed has bought US debt in the market. So the US treasury is paying interest to the Fed who then returns the money to the US treasury who then turns around and borrows more money to pay the interest...am I the only one getting dizzy with this explanation. :wink:

http://online.wsj.com/article/SB1000142 ... tHeadlines" onclick="window.open(this.href);return false;
ECONOMYJANUARY 11, 2012
Fed's Lofty Profit Becomes Treasury's Gain
By LUCA DI LEO and MICHAEL S. DERBY

The Federal Reserve turned $76.9 billion of its profits over to the U.S. Treasury last year, close to the record amount transferred to government coffers in 2010 amid gains generated in its expanding portfolio of securities.


The Fed turned $76.9 billion over to the U.S. Treasury last year, owing to a strong profit generated from its expanding portfolio of securities, Jon Hilsenrath reports on the News Hub. Photo: Reuters.

Preliminary unaudited results released by the central bank Tuesday showed the Fed had net income of $78.9 billion in 2011. In 2010, the Fed booked a record $81.7 billion profit and returned $79.3 billion of it to the Treasury.

Though it is earning more and turning more over to the Treasury, the Fed also is taking on more risk. The value of its portfolio of securities, loans and other assets, which has surged from $875 billion before the crisis to $2.9 trillion, could fall. During and after the financial crisis, the Fed extended emergency lending programs and bought securities to support markets.

The central bank has come under attack for taking too many risks with taxpayer money and putting itself in a position to suffer losses.


So far the Fed's crisis-lending programs have produced booming profits. The Fed earned $83.6 billion from interest on its holdings of U.S. Treasurys, federal agency debt and securities held by government-run mortgage-finance firms Fannie Mae and Freddie Mac, the central bank said. Some of its most profitable areas changed in 2011, affecting overall earnings. For example, insurer American International Group Inc., which was bailed out during the crisis in 2008, repaid all its obligations to the New York Fed, meaning the Fed got less interest income from AIG last year compared with 2010.

The Fed could still lose money on its holdings. If inflation rises to the point where the central bank needs to increase interest rates, the interest it pays banks on their reserves could rise at a cost to the Fed. Or it could be forced to sell long-term government bonds at a loss. But Fed officials generally aren't worried about this risk.

Several Fed officials speaking Tuesday sought to keep the central bank's options open for 2012. Esther George used her first speech as Federal Reserve Bank of Kansas City chief to highlight the difficult choices for monetary policy makers. The central banker, who succeeded outspoken former President Thomas Hoenig late last fall, took a more nuanced tone.

"I view monetary policy as attempting to walk a fine line," she said. "On the one hand, today's policy settings are designed to encourage risk-taking and to stimulate much-needed growth across our economy. But on the other hand, experience has shown that pushing risk-taking too far can cause the mispricing of risk, the misallocation of capital and the ultimate weakening of financial firms' balance sheets."

Cleveland Fed president Sandra Pianalto and San Francisco Fed chief John Williams—who vote on the Fed's policy-setting committee in 2012—signaled their support for the central bank's easy-money policies. "I have supported our policy decisions, and there is evidence that they have been effective," Ms. Pianalto said. "Going forward I will continue to weigh the costs and benefits of further policy actions."

The Fed's results came out on the same day that Republican lawmakers took central-bank officials to task for advocating more steps to help the housing market. In a letter to Chairman Ben Bernanke, Sen. Orrin Hatch (R., Utah) criticized a Fed paper published last week calling for more action to stabilize the market.The paper, an unusual step for the Fed, came as officials at the central bank worried that millions of Americans can't refinance their home loans and take advantage of low interest rates.Mr. Hatch said the Fed shouldn't move so aggressively into housing policy. Publishing a paper and advocating policy positions on housing oversteps the Fed's mandates of keeping unemployment and inflation low, he wrote. Sen. Bob Corker (R., Tenn.) also spoke out Tuesday against such steps by the Fed.

The other thing to note is that the TED spread seems to have leveled off as the Euro news went to the back burner.

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[Greece] Parents Turning Out Their Children into Streets.

Post by Merovech » Wed Jan 11, 2012 2:43 pm

As we all know Greece is in trouble.

Saw this article today and it made me ill.

Seems Greek Children are being abandoned because the parents "Cant Afford them".
Image

Children 'dumped in streets by Greek parents who can't afford to look after them any more'

Youngsters abandoned as parents struggle
4-year-old found clutching note: 'I can't afford her'
Country also running out of medicine
Aspirin stocks low as austerity measures bite

By Lee Moran
Last updated at 7:05 PM on 11th January 2012

Children are being abandoned on Greece's streets by their poverty-stricken families who cannot afford to look after them any more.

Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis.

Read more: http://www.dailymail.co.uk/news/article ... -them.html" onclick="window.open(this.href);return false;
What does a month worth of food really look like?: http://tinyurl.com/pvymvrw
Suburban Family Tornado Shelter and Preparation: http://tinyurl.com/na8qsfr
Cast Iron Skillets for Everyday Use and Beyond: http://tinyurl.com/onu62yj

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Re: Global Debt Time Bomb explodes soon

Post by J.C. » Wed Jan 11, 2012 8:52 pm

This comes off as a little sensational but there is no doubt it is very tough times in Greece right now. I think this is maybe what the beginning of a true debt crisis looks like, and I don't know if there is any way out for them. I think we are seeing the beginning of what will be a slow but serious and long lasting slide into a more-or-less failed State.
Washington Post wrote: Unemployment has surged to 18.8 percent from 13.3 percent only a year ago. Overburdened public hospitals are facing acute shortages of everything from syringes to bandages because of budget cuts, with hiring freezes forcing the mothballing of operating rooms even as more unemployed are relying on the public health system. Rates of homelessness, suicide, crime and HIV cases from intravenous drug use are jumping.
http://www.washingtonpost.com/world/in- ... story.html" onclick="window.open(this.href);return false;
squinty wrote: Birds gotta fly, fish gotta swim, zombies gotta shuffle around and eatcher brains. Why do sharks eat divers? Why not swim around and starve to death?
Why do tornadoes zero in on trailer parks? Why not just blow around harmlessly? It's the way of the world, man.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Wed Jan 11, 2012 9:07 pm

There is no doubt in my mind that austerity measures in Greece will result in misery for many people. This happened in the Ex-USSR, Argentina and other countries that faced similar economic problems.

Now whether or not the article is sensationalism is an entirely different issue.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Jan 12, 2012 4:24 pm

A good article on zombie banks.

http://wallstreetpit.com/88635-there-st ... nks-around" onclick="window.open(this.href);return false;
Are there still a lot of “zombie” banks “out there”?
I believe there are. Although the FDIC only closed 92 banks in calendar year 2011, the number of banks in the United States shrunk by more than double this number. In the third quarter alone, only 26 banks were closed yet a total of 61 banks left the banking system. While the number of banks closed in the 12-month period ending September 30 was around 100 in number, the banking system had 271 fewer banks. So for 2011 it seems as if the number of banks leaving the banking system were two- to three-times the number of banks that the FDIC actually closed.
There was cheering when the number of banks listed on the FDIC’s problem list fell in the third quarter to 844 banks, down from 865 banks the quarter before. But, this means that although the problem list dropped by 21 banks, 61 banks, most of them troubled in one way or another, dropped out which means that maybe around 40 new problem banks got added to the FDIC’s list. (link)
My point here is that I don’t believe that either Europe or the United States is finished with its banking problems.

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Re: Global Debt Time Bomb explodes soon

Post by Blast » Thu Jan 12, 2012 4:45 pm

raptor wrote:There is no doubt in my mind that austerity measures in Greece will result in misery for many people. This happened in the Ex-USSR, Argentina and other countries that faced similar economic problems.

Now whether or not the article is sensationalism is an entirely different issue.
Did similar stuff occur in Iceland when it crashed a few years ago? I don't recall any stories like that.
-Blast

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Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Thu Jan 12, 2012 4:57 pm

Blast wrote:Did similar stuff occur in Iceland when it crashed a few years ago? I don't recall any stories like that.
-Blast
yes. They are pleased (now) that they just defaulted and didn't refinance it. A large amount of pain in 18 months is superior to re-financing the debt and having nothing for 30 years.
Don't confuse a belligerent and aggressive attitude with the strength, training, and conditioning needed to prevail in a fight. How do you know you have the Will To Win, if you don't even have the will to train?

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Re: Global Debt Time Bomb explodes soon

Post by Blast » Thu Jan 12, 2012 5:17 pm

phil_in_cs wrote:
Blast wrote:Did similar stuff occur in Iceland when it crashed a few years ago? I don't recall any stories like that.
-Blast
yes. They are pleased (now) that they just defaulted and didn't refinance it. A large amount of pain in 18 months is superior to re-financing the debt and having nothing for 30 years.
There's a lesson in that but I don't think the right people learned it. :(
-Blast

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Re: Global Debt Time Bomb explodes soon

Post by Krustofski » Thu Jan 12, 2012 6:25 pm

The market seems to trust Italy and Spain, which takes at least a bit of pressure off them.
Irish Times wrote:Italy and Spain auction bonds

European stocks and US index futures rose as Spain sold almost double the amount planned and Italy's borrowing costs declined at debt sales today. [...]

http://www.irishtimes.com/newspaper/bre ... ing19.html" onclick="window.open(this.href);return false;
The Telegraph wrote:Italy and Spain pass key bond tests

Italian and Spanish borrowing rates fell sharply in key bond auctions on Thursday in a sign of improved market confidence as Italian Prime Minister Mario Monti urged Europe to do more to boost growth. [...]

http://www.telegraph.co.uk/finance/fina ... tests.html" onclick="window.open(this.href);return false;
Italy and Spain aren't Greece. Yes, they are knee deep in debt. But they have what Greece hasn't: A relatively healthy real economy. Heavy industry. Decent infrastructure. They have at least the potential to overcome the crisis. With Greece, nobody believes that anymore.
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Thu Jan 12, 2012 6:29 pm

IMO Italy remaining stable is critical to the euro's stability. Italy is "too big" to rescue. You should keep an eye on it's debt sales.

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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Jan 13, 2012 11:27 am

If you have any doubt that B of A faces real problems this article is a must read. Not saying B of A will crater in fact it is "too big" to fail but It has real problems.


http://online.wsj.com/article/SB1000142 ... &mg=id-wsj" onclick="window.open(this.href);return false;
Bank of America Ponders Retreat
By DAN FITZPATRICK And JOANN S. LUBLIN

Bank of America Corp. has told U.S. regulators that it is willing to retreat from some parts of the country if its financial problems deepen, according to people familiar with the situation.


Bloomberg News
Bank of America Chief Executive Brian Moynihan is under pressure to improve the bank's performance.

Executives at the Charlotte, N.C., financial giant put the potential move on a list of emergency scenarios submitted to the Federal Reserve last year, these people said. While people close to Bank of America insist that no retreat is imminent, even the possibility of selling branches and losing customers it spent huge sums to lure underscores the depth of its problems.

Among the 7,400 U.S. banks and savings institutions, Bank of America, J.P. Morgan Chase & Co. and Wells Fargo & Co. are the only coast-to-coast giants. For the past 20 years, Bank of America and predecessor NationsBank Corp. relentlessly acquired other financial institutions in a form of manifest destiny that shook the U.S. banking industry. The 1998 takeover of BankAmerica Corp., of San Francisco, and 2004 purchase of FleetBoston Financial Corp., Boston, left the combined bank with sizable muscle in nearly every large metropolitan area in the country.

Over the course of its long expansion, Bank of America, currently the country's second-largest bank by assets, pushed its way into every nook and cranny of the financial system. But in doing so the bank left itself more exposed than any major bank to the severe economic downturn of 2008-2009, the weak recovery since and a litany of mortgage-related lawsuits.

Bank of America stumbled at a time when the entire U.S. banking industry was going through its worst crisis since the 1930s, prompting a federal bailout of many of the nation's largest financial institutions. Still, some of Bank of America's worst wounds, particularly its 2008 purchase of Countrywide Financial Corp., were self-inflicted.


Its share price has tumbled 55% in the past year, the worst performance of any major U.S. bank. In the third quarter, J.P. Morgan leapfrogged Bank of America to become the biggest U.S. bank by assets.

Bank of America Chief Executive Brian Moynihan put a possible geographic retrenchment on the list submitted in the middle of last year to Fed officials. Also on the list is a potential sale of a separate class of shares tied to the performance of Merrill Lynch & Co., the securities firm owned by Bank of America, according to people familiar with the matter. Merrill was sinking when Bank of America swooped in to buy the firm in 2008, but has since turned itself around. The Fed, which acts as the company's primary regulator, asked for documentation about contingency plans last year in response to uncertainty about a U.S. recovery and the downward swing in Bank of America's share price.

The drastic moves would be seriously considered only if Bank of America needs to raise more capital to cushion itself from mortgage woes and other turmoil. The exercise wasn't intended to force immediate action but rather to prepare Bank of America if its situation worsened, according to a person familiar with the Fed's approach. But Mr. Moynihan, other top executives and directors of the sprawling bank are grappling with scenarios that were unthinkable even during the worst moments of the financial crisis.

The 52-year-old Mr. Moynihan was promoted to CEO in 2010 to fix a bad situation inherited from predecessor Kenneth D. Lewis, who pushed hard for the Countrywide acquisition. "I see these times as a vindication of our model," Mr. Lewis said in 2007 after announcing the agreement to buy Countrywide. The deal has haunted Bank of America ever since, saddling the company with huge losses and legal woes.

So far, Mr. Moynihan has made progress retooling Bank of America into a leaner and more focused company. That is a shift away from its longstanding emphasis, especially before the financial crisis, on growth.

Mr. Moynihan declined to comment through a bank spokesman.

"We are a less risky, smaller, better capitalized, and more streamlined company since Brian became CEO," the spokesman said. "The progress we have made has not been done without challenges and setbacks, but…we believe will deliver long-term value for shareholders." He added that the bank had shed billions in noncore businesses and assets and reorganized the company and its leadership under Mr. Moynihan.

Financial results due next Thursday are expected to show only a tiny profit at Bank of America for 2011. In addition to its other woes, the bank is being squeezed by an industrywide revenue decline, tougher regulations and rocky financial markets.

The pressure is mounting on Mr. Moynihan, and some directors and executives are frustrated by some of his decisions and recent public-relations gaffes, especially a plan to charge customers $5 per month to make purchases with a debit card, according to people familiar with the matter. Bank of America abandoned the plan after it invoked political fury and became a punch line on late-night talk shows. This week, the company decided to ask advertising agencies to compete for a new campaign designed to improve Bank of America's tarnished brand.

Mr. Moynihan, who joined Bank of America when it bought Fleet, has struggled to convince regulators that he has done enough to steady the bank, which has $2.2 trillion in assets and branches in nearly every state.

The bank still is operating under a secret U.S. sanction known as a memorandum of understanding, which puts the bank under stricter oversight, despite steps taken by Mr. Moynihan to consolidate risk controls and shed assets. Regulators have warned the board that the sanction could escalate to a more formal, public enforcement action if they aren't satisfied with the results of the ongoing shake-up. Bank of America recently submitted a new capital plan to the Fed as part of a new round of banking-industry stress tests.

In his first two years as CEO, Mr. Moynihan sold assets deemed nonessential, wrestled with the mortgage mess and scrambled to shore up Bank of America's balance sheet to help cushion the company from future economic shocks. To cut costs, Bank of America last fall announced 30,000 job cuts, or 10% of its overall work force, and thousands of additional job cuts are expected this year.

Some analysts said Bank of America is likely to shrink the size of its core banking operations no matter what happens to the company's financial situation. The reason: As Bank of America tightens its belt, smaller cities that are less profitable than big ones look increasingly expendable. The company already has signaled that it plans to get rid of 750 of its 5,700 branches in the next few years.

About $60 billion of the bank's roughly $1 trillion in deposits are scattered across 310 geographic areas with a population of less than 500,000 each, according to research firm FIG Partners. "These small, seemingly irrelevant cities could be quite meaningful for another small bank," the firm said in a recent report.

As the troubles pile up, Mr. Moynihan also has been bruised by public-relations stumbles. He hinted publicly that a dividend increase was likely, and then the Fed rejected the company's request. Last year Mr. Moynihan said share sales wouldn't be needed to raise new capital, and then late in the year the bank announced a plan to issue billions in common stock, although bank officials said the sale wasn't solely designed to raise capital.

Before the debit-card retreat, the chief executive privately rejected a suggestion by Joseph Price, Bank of America's consumer-banking chief, that Bank of America take more time to learn whether the fee would work, said people familiar with the discussion. The message was "we are not going to learn anything more" by proceeding slowly, this person added.

A Bank of America spokesman said, "Although Brian approved the reversal of the debit-fee decision, he wasn't at the center of the original decision-making that was done by the business leaders who made the decision."

The bank's openness about the charge was part of a larger push by Mr. Moynihan to ensure greater transparency around fees imposed by the bank.

Bank of America announced the $5-a-month debit-card fee in an employee memo in September but dropped the fee before it was implemented. Mr. Price left the bank in September. He couldn't be reached for comment, and his lawyer wouldn't discuss the incident.

Unlike predecessors Mr. Lewis and Hugh L. McColl Jr., a former Marine who ran the bank for 18 years, Mr. Moynihan has always had a delicate grip on the bank's top job.

Directors picked him after talks with an outside candidate collapsed. The unanimous vote that led to Mr. Moynihan's promotion came after director William P. Boardman, a former Visa International Inc. chairman, changed his "no" vote to keep it from going public, according to people familiar with the situation.

Mr. Boardman, who retired from the board last year, dropped his opposition to Mr. Moynihan because he worried it would damage outside confidence in Bank of America, these people said.

Directors knew from the start that Mr. Moynihan, an Ohio-born lawyer, would have his hands full. Shortly after he joined Bank of America, an internal assessment by the bank concluded that he failed to communicate effectively, didn't include enough people in decisions, tended to micromanage and surrounded himself with people who weren't experienced enough, according to people familiar with the report.

Still, higher-ranking executives thought Mr. Moynihan had great potential, so they tried to coach him, these people said. But after a clash with other executives over the 2007 takeover of private-banking operation U.S. Trust from Charles Schwab Corp., Mr. Moynihan was told again that he needed to be more inclusive, people familiar with the situation said.

Since becoming CEO in January 2010, Mr. Moynihan has made numerous attempts to be more open and seek out advice, according to people close to him. For example, after there was internal criticism about a public appearance for Mr. Moynihan following the financial crisis, the bank sought help for Mr. Moynihan from several executive coaches about how to communicate more effectively.

But some directors and executives became troubled by what they saw as confusion among some of his lieutenants.

Bank of America's finance chief and chief accounting officer learned about the bank's decision to publicly disclose in a securities filing the Fed's denial of the dividend-increase request only when news outlets published headlines, according to people familiar with the situation. Mr. Moynihan approved the filing.

A director who backed the decision to promote Mr. Moynihan to chief executive said his handling of the matter showed a "very inexperienced team dealing with a situation it had never dealt with before."

Given the bank's mammoth size and many challenges, some board members also suggested to Mr. Moynihan that it would be wise of him to name an operations chief, according to people familiar with the discussions. The Bank of America spokesman said Mr. Moynihan had envisioned appointed a chief operating officer since the day he took over as CEO.

In September, Mr. Moynihan installed two executives as co-chief operating officers. One of them, Thomas Montag, had openly sought the CEO job before Mr. Moynihan got it.

Directors also told Mr. Moynihan that they wanted quicker updates about mortgage losses and lawsuits, and the chief executive has tried to keep the board more informed, according to people familiar with the situation.

Mr. Moynihan also took the unusual step of traveling around the U.S. with Charles Holliday Jr., Bank of America's chairman, last summer to ask each director for input about the company's strategy. The CEO is trying to "demonstrate a great partnership with [his] chairman," said one person close to the company.

Another person familiar with the board's recent discussions about Mr. Moynihan said they are working hard to help him improve his performance. "Who else is going to run the ship?" this person said. "That's a dilemma."

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Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Fri Jan 13, 2012 12:02 pm

Pulling back and closing non-profitable branches would be a good thing, right?
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Jan 13, 2012 12:14 pm

phil_in_cs wrote:Pulling back and closing non-profitable branches would be a good thing, right?
It is certainly good for cash flow. However it would be a shift for B of A both in terms strategy and public acknowledgement of the obvious problems they have.

They paid a hell of lot of money to get into these markets and maintain a market presence.

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Re: Global Debt Time Bomb explodes soon

Post by CaptBrainFreeze » Fri Jan 13, 2012 1:17 pm

Italy just took a two level credit downgrade hit according to breaking news Bloomberg.
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Jan 13, 2012 1:18 pm

France lost its AAA rating. It is down to AA. Germany will retain its AAA rating.

http://online.wsj.com/article/SB1000142 ... TopStories" onclick="window.open(this.href);return false;

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Re: Global Debt Time Bomb explodes soon

Post by CaptBrainFreeze » Fri Jan 13, 2012 1:29 pm

Austria next?
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Jan 13, 2012 1:40 pm

CaptBrainFreeze wrote:Austria next?
In December, S&P placed 15 of the 17 euro-zone countries on watch for possible downgrades, citing new systemic stresses that are pressuring the euro zone's credit standing as a whole. The biggest question for financial markets has been whether France will lose its triple-A rating after showing signs of fiscal slippage during its economic slowdown over the past year.

They are all at risk of a downgrade. The only two countries that were excluded in the December announcement were Greece (which had already been downgraded recently) and Cyprus (which had been cut earlier in October to BBB).

There really have not been significant and material changes made in the EU debt problems since December.

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Re: Global Debt Time Bomb explodes soon

Post by phil_in_cs » Fri Jan 13, 2012 1:44 pm

raptor wrote:France lost its AAA rating. It is down to AA. Germany will retain its AAA rating.

http://online.wsj.com/article/SB1000142 ... TopStories" onclick="window.open(this.href);return false;
Don't I recall that only nations w/ AAA ratings can contribute to the ECB bailout funds? While there are other nations besides Germany in the EU w/ AAA credit, only Germany is large enough to matter.

Germany and France could revise the rules so that AA and AAA nations can contribute, of course.
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Re: Global Debt Time Bomb explodes soon

Post by raptor » Fri Jan 13, 2012 1:50 pm

phil_in_cs wrote:
raptor wrote:France lost its AAA rating. It is down to AA. Germany will retain its AAA rating.

http://online.wsj.com/article/SB1000142 ... TopStories" onclick="window.open(this.href);return false;
Don't I recall that only nations w/ AAA ratings can contribute to the ECB bailout funds? While there are other nations besides Germany in the EU w/ AAA credit, only Germany is large enough to matter.

Germany and France could revise the rules so that AA and AAA nations can contribute, of course.
Any country's money is welcome in the bailout fund. :D

I do not recall that rule but I would shocked if the ECB bailout fund turned away bailout capital.

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Re: Global Debt Time Bomb explodes soon

Post by CaptBrainFreeze » Fri Jan 13, 2012 1:55 pm

France, protesters gathering in front of S & P offices chanting "We are not sheep!"
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