With the euro-area crisis and associated uncertainty escalating rapidly of late, safe-haven assets are outperforming, with the notable exception of gold. Why are high-quality government bonds rallying to new highs, while gold sinks to a six-month low? A key explanation is surprisingly simple if technical: Government bonds are Tier1 capital assets, [...]
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Shaky home equity lines of credit (HELOC) loans are overwhelming major banks’ Tier 1 capital which means they need more capital to meet Basel III requirements. B of A, Wells Fargo, Citigroup, and JPMorgan Chase together have about 40% of all home equity loans. B of A estimates that only about $5 billion, or [...] It didn’t take long for the Wall Street Journal and the government to catch up with The Daily Capitalist, which surprises me since they usually take much longer. But here’s yesterday’s headline, which came out after I published Part II of my “State of the Economy Part II” article on real estate, banking, and credit liquidity: “TARP [...] |
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