Trader Holds $3 Billion of LME Copper –

  Bailed-Out Banks Slip Toward Failure – Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.
 The troubled banks identified by the Journal all have either a Tier 1 capital ratio under the "well-capitalized" 6% level; both a total risk-based capital ratio of under the "well-capitalized" 10% threshold and nonperforming loans of over 10% of their portfolio; or a regulatory order requiring the bank to monitor or boost its capital.
 A Federal Deposit Insurance Corp. spokesman declined to comment on the Journal’s analysis, which also calculated that 814 of the nation’s 7,760 banks and savings institutions are troubled according to these standards, up from 729 at the end of the second quarter. The FDIC’s official list of problem banks, which uses different criteria from the Journal’s analysis, includes 860 financial institutions. The banks aren’t publicly identified.

Unofficial Problem Bank list at 919 Institutions – Note: this is an unofficial list of Problem Banks compiled only from public sources.  Here is the unofficial problem bank list for Dec 24, 2010. Changes and comments from surferdude808:  The FDIC did not release its enforcement actions for November 2010 nor did they close any institutions this week, which contributed to a quiet week for the Unofficial Problem Bank List. There were three removals and two additions this week leaving the list at 919 institutions with assets of $407.9 billion.

Citigroup Too Interwoven to Fail – Citigroup remains too "interwoven" to fail even after the government has plowed billions into rescuing the banking titan and Congress has passed laws taking aim at financial behemoths, Citi Chairman Richard Parsons told CNBC. "It’s not a question of too big to fail," Parsons said in a live interview. "It’s a question of too interwoven in the fabric of the global financial life to fail." Parsons said allowing Citi to fail previously or in the future would be akin to having "the heart, the pump of the economic system fail because then everybody else dies." "It’s probably the most important private financial institution for maintaining our economic strength and presence around the world. You can’t let an institution like that go down," he said. http://www.fiercefinance.com/story/citigroup-too-interwoven-fail/2010-12-08

 

Trader Holds $3 Billion of LME Copper – As commodity prices soar to new records, the ability of a few traders to hold huge swaths of the world’s stockpiles is coming under scrutiny. The latest example is in the copper market, where a single trader has reported it owns 80%-90% of the copper sitting in London Metal Exchange warehouses, equal to about half of the world’s exchange-registered copper stockpile and worth about $3 billion. Single traders also own large holdings of other metals. One trader holds as much as 90% of the exchange’s aluminum stocks. In the nickel, zinc and aluminum alloy markets, single traders own between 50% and 80% of those metals, and one firm has 40%-50% of the LME’s tin stockpiles. While commodities exchanges scrutinize all holdings to ensure a single player isn’t trying to corner the market, and many of the positions are owned by big firms on behalf of clients, the large holdings do result in a concentration of ownership that could skew prices.

As Commodity Prices Rise, Concentration Of Ownership Questioned – The Wall Street Journal is reporting that a single holder has bought 80% to 90% of copper in the London Metal Exchange’s warehouses. As we told you earlier, J.P. Morgan (JPM) was thought to hold 50% to 80% of the exchange’s copper.  But prices of copper hit record levels yesterday. The iShares Silver ETF (SLV) closed at $28.64 a share and has gained more than 73% so far this year. As commodity prices soar, concern is spreading about concentrations in other metals, as well. One trader holds as much as 90% of the LME’s aluminum, according to the WSJ. In the nickel, zinc and aluminum alloy markets, single traders own between 50% to 80% of those metals, according to filings with the exchange. Up to half of all tin held at the LME is also reported to be controlled by a single trader.

U-Turn In Demand: Is $100 A Barrel Oil Around Corner? – As OPEC sets its sights on $100 a barrel oil ahead of this weekend’s next round of meetings, analysts are warning of growing signs that such a scenario could be in the cards early next year. Just a few weeks ago, forecasts for U.S. oil demand pointed to a dip from last December. But consumption patterns in the four-week period ended last week showed a jump of nearly 1 million barrels a day from December 2009, reported David Bird for Dow Jones Newswires. If demand is gaining steam, “the push to what is widely seen as an inevitable run on the $100-a-barrel mark” could be around the corner, he wrote Thursday. In another note on the same day, Barclays Capital analyst Paul Horsnell said that with a week left in the month it’s likely demand will surpass an average of 20 million barrels a day. That would be the first time that’s happened in any month since February 2008, he added.

China Increases Rates to Counter Highest Inflation in Two Years – China raised interest rates for the second time since mid-October to counter the fastest inflation in more than two years and more moves may follow. The benchmark one-year lending rate will rise by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent, effective today, the People’s Bank of China said in a one-sentence statement on its website late yesterday. Premier Wen Jiabao is seeking to slow gains in property values and consumer prices that are making it harder for families to buy homes and pay for food. Bank lending and a wider-than-forecast November trade surplus have pumped more cash into an economy already awash with money. China is tightening after a record expansion of credit to counter the effects of the world financial crisis. The broadest measure of money supply, M2, has surged by 55 percent over the past two years and outstanding yuan-denominated loans have climbed 60 percent to 47.4 trillion.
 
Why don’t Chinese spend more money? – If anyone on the planet can afford to head down to the neighborhood mall and indulge in a shopping spree, you’d think it would be the Chinese. After all, they live in an economy that routinely posts growth rates of 9% or higher, resulting in surging incomes and boundless job opportunities. While much of the world experienced GDP contractions and dramatic spikes in unemployment during the Great Recession, China, supported by massive stimulus programs, barely missed a beat. In theory, as income increases, and the prospects for future earnings become brighter, families should be more willing to postpone savings and spend now. But in China, just the opposite is happening. It’s still proving difficult to convince the average Chinese to part with his or her money, even though his or her stash of cash is bigger than ever. Sure, Chinese consumers are spending more and more each year on items like cars and appliances. But simultaneously, the urban Chinese household saves twice as much of its income today as 20 years ago – from 15% in the early 1990s to over 30% in recent years. Oddly, as Chinese incomes have grown, so has their propensity to save.

The top marginal income tax rate should be about 65%…To maximize real economic growth in the United States, the top marginal income tax rate should be about 65%, give or take about ten percent. Preposterous, right? Well, it turns out that’s what the data tells us, or would, if we had the ears to listen. This post will be a bit more complicated than my usual “let’s graph some data” approach, but not by much, and I think the added complexity will be worth it. So here’s what I’m going to do – I’m going to use a statistical tool called “regression analysis” to find the relationship between the growth in real GDP and the top marginal tax rate. If you’re familiar with regression analysis you can skip ahead a few paragraphs.
 
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