This article is all about failure. I don’t really know where to begin with these charts. They pretty much speak for themselves. I have annotated them slightly to demonstrate that there are some interesting correlations between who specifically failed and who specifically got bailed out. When you begin to look at these charts as a representation of the industry as a whole, you can see that the financial system is in no way any better today than it was a couple of years ago.
First up is AIG’s chart. This is one for the history books: A textbook example of failure in its purest form. From this day forth, AIG shall be known as the sacrificial lamb of the financial sector for taking the role of the ‘financial fall-guy’. There really isn’t much to be said other than: the global financial markets fell apart, AIG couldn’t pay out their derivatives contracts to Goldman Sachs (and others), they failed miserably, and the taxpayers were called upon (robbed) to bail out the beneficiaries of said derivatives contracts.
mmmm banker brains!
We are experiencing the dawn of a new era (dawn of the dead anyone?): One in which zombie banks walk amongst the living. Wikipedia defines a zombie bank as: “a financial institution with an economic net worth that is less than zero, but which continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support.” I think AIG fits the bill quite well, don’t you? In today’s financial industry, the new banker mantra should be: “Every bank dies – Not every bank truly lives,” and AIG exemplifies the start of the zombification process. For all intents and purposes they are now undead.
The Sacrificial Lamb of The Financial Sector
Another winner of the epic failure contest was/is Citigroup. I bet you that Saudi Prince Alwaleed Bin Talal is extremely happy to have invested in this company! The chart look quite similar to that of AIG’s …almost to the point where one can make a baseless guess that AIG probably wrote too many credit-default-swaps for/against Citigroup…and well, one thing led to another and both went kaput. It sure is a good thing we bailed these guys out too!
Zombies are everywhere, better get your shotguns ready.
Citigroup Failure
Yet another epic failure is Bank of America. Although the magnitude of failure is not as severe as the previous two charts, it is still pretty close. Have a look for yourself (mmm brains). Bank of America got enough of a bailout to survive the zombie-apocalypse…only slightly. They are definitely half-dead. I would venture a guess and say that Bank of America shouldn’t have been underwriting credit cards for illegal immigrants, among other things… This chart also demonstrates how taking on a failing company such as Merrill Lynch will cause you nothing but trouble. It is my personal, and purely speculative prediction, that Bank of America will officially fail or be broken up in the coming months or years ahead.
Bank of Failmerica
The next chart is that of Wells Fargo. This chart is so crazy volatile that I don’t even know what to say. In my opinion it looks like an insane pump-and-dump scheme. For most of early 2008, the stock was trading around $27.00 However, by September of 2008 the stock was flying high over $37.50 per share. In six months it was down under $8.00 (nice 80% dump). This is an epic failure if I’ve ever seen one. By May of ‘08 the stock magically soared back up to ~$27.50 and has been hovering around there ever since. Chalk up another undead bank on the list please! Can you smell the bailout? If you cannot, I labeled it for you in clear red lettering on the chart.
Oh The Wells Fargo Wagon is A Failing
The Financial Crisis
JP Morgan is yet another company who was coincidentally lucky enough to receive heaping spoonfuls of bailout when the shit hit the fan. These guys took over Washington Mutual and basically gave Chase instantaneous access to the entire West Coast of the United States in the blink of an eye. Before the meltdown, Chase was predominantly an East-coast brand. I used to bank with Wamu, and I specifically recall predicting their failure to many of my coworkers. Once the FDIC announced that JP Morgan Chase was taking over, I breathed an enormous sigh of relief. These guys are THE BANKING ESTABLISHMENT. Nothing, and I mean nothing will ever take down JP Morgan Chase. They are just as bad as any other bank, but at least I know they are one of the apex predators in the financial food chain. Look at their chart, it shows you that failure is not something that JPM will accept (even if that means robbing the American taxpayers). Notice the $USD (dollar index) starts going negative at the same time JPM gets their bailout. Although correlation does not always equal causation, in this case I’d be pretty certain that the printing presses at the FED/Treasury had everything to do with the reflation of JPM stock.
JP Morgan Chase Bailout
So there you have it folks. Interpret this as you should so desire, and hopefully don’t lose your money in the process.
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