News Stories

[SaintessHeart]

Bank of America to sell China bank stake for $8.3 billion

(Reuters) - Bank of America Corp is selling about half its stake in China Construction Bank for $8.3 billion, in its latest effort to shed assets and boost capital.

The question raised is not why BofA needs capital, but rather why it chooses to shed stake SPECIFICALLY from a Chinese construction bank.

I smell liquidity problems in the Chinese construction sector, otherwise they wouldn't have make such a decision - combined with the fact that Warren Buffett actually bought out some of their shares, I wonder if he is actually the one who directed this particular operation, or that the bank executives took his advice of doing so......

[synaesthetic]

Originally Posted by Vexx

http://www.regressiveantidote.net/Ar...y_Species.html
is actually a pretty on-target assessment of the plutocrat war to destroy the uppity middle class that appeared in the 20th century. Even Eisenhower called these plutocrats and their minions "stupid" (exact words). Where *are* those guillotines?

Food and gasoline aren't expensive enough yet. Give it time, though. America may have been anesthetized before the plutocrats started raping, but eventually the drugs will wear off and the general public will start to feel what's been shoved up their asses.

[ganbaru]

French NATO jet collides with Lithuanian air force
http://www.reuters.com/article/2011/...77T1E320110830
I'm wondering if it was a Rafale...

[Tom Bombadil]

Originally Posted by SaintessHeart

Bank of America to sell China bank stake for $8.3 billion



The question raised is not why BofA needs capital, but rather why it chooses to shed stake SPECIFICALLY from a Chinese construction bank.

I smell liquidity problems in the Chinese construction sector, otherwise they wouldn't have make such a decision - combined with the fact that Warren Buffett actually bought out some of their shares, I wonder if he is actually the one who directed this particular operation, or that the bank executives took his advice of doing so......

Errh, it is not a Chinese construction bank, it is the Chinese construction bank. Together with agriculture bank, Industrial and Commercial Bank, and bank of China, they make the 4 largest state banks in China. The Construction bank is the second largest with Industrial and Commercial being the largest.

[SaintessHeart]

Originally Posted by Tom Bombadil

Errh, it is not a Chinese construction bank, it is the Chinese construction bank. Together with agriculture bank, Industrial and Commercial Bank, and bank of China, they make the 4 largest state banks in China. The Construction bank is the second largest with Industrial and Commercial being the largest.

Is it considered a central bank (run BY the CCCP and make decisions that has to go through to politicians) or a standalone financial institution (run with interests to the CCCP, but otherwise makes its own decisions)? Chinese legislation tends to blur alot when it comes to state finances and private business.

[Tom Bombadil]

Originally Posted by SaintessHeart

Is it considered a central bank (run BY the CCCP and make decisions that has to go through to politicians) or a standalone financial institution (run with interests to the CCCP, but otherwise makes its own decisions)? Chinese legislation tends to blur alot when it comes to state finances and private business.

It is more of the latter. The central bank in China is People's bank of China, which in a way, is the counterpart to FED in the US (Bank of China is different. It is only bank among the big 4 that's allowed to handle foreign currency. The names are confusing, I know.) Of course, since it is state owned, it is still heavily influence by the policies.

Just found this on the Wall Street journal article on this matter.

The buyers of the stake include Singapore state investment company Temasek Holdings Pte. Ltd. and its wholly owned hedge fund, Seatown, according to people familiar with matter. The two funds were part of a group of buyers that included a Chinese investment fund, the people said. It was unclear how the stake was divided up.

[TinyRedLeaf]

Originally Posted by Tom Bombadil

Just found this on the Wall Street journal article on this matter.

That Temasek has investments in CCB is not really startling — the Singapore sovereign fund has publicy stated its confidence in the long-term value of Chinese banks, and has been the second-largest CCB shareholder for a while. Also, the total consolidated stake, even after taking Seatown's shares into consideration, is not likely to exceed 10 per cent. Compare that against the Chinese government's stake: 59 per cent.

What's surprising is that Temasek is bidding for the BofA stake after having just sold HK$9.4 billion (US$1.2 billion) of CCB stock on July 5. Temasek is acting more short term than usual; it couldn't resist the substantial discount being offered by BofA.

Originally Posted by SaintessHeart

I smell liquidity problems in the Chinese construction sector, otherwise they wouldn't have make such a decision - combined with the fact that Warren Buffett actually bought out some of their shares, I wonder if he is actually the one who directed this particular operation, or that the bank executives took his advice of doing so......

The danger at the moment isn't really in China's banks, hence Temasek's vote of confidence (I'm sceptical, but I suppose it knows something other investors don't). The banks' cash-reserve ratio is now at 21.5 per cent, as Beijing struggles to curb inflation, especially in its property market.

The real worry is over the state of local-government finances, which Moody's claims to be understated by as much as US$540 billion. Beijing says there is no need to panic ("Total debt held by the central and local authorities is less than 50 per cent of the nation’s gross domestic product, 'far lower' than the debt levels seen in European countries."). Others beg to differ. I don't know who to believe any more.

[Vexx]

Sometimes even if you like the administration, it takes freaking forever to get a serious internal problem fixed. Even if it is getting people killed --
(re "Fast and Furious" BATF clusterfuck "how incompetent can we be?"
http://www.nytimes.com/2011/08/31/us...er=rss&emc=rss

[ganbaru]

Irene costs restart Washington budget battle
http://www.reuters.com/article/2011/...77S4XY20110829

[DonQuigleone]

Originally Posted by ganbaru

Irene costs restart Washington budget battle
http://www.reuters.com/article/2011/...77S4XY20110829

Here we go again...

[Xellos-_^]

Originally Posted by DonQuigleone

Here we go again...

just cut defense spending back to End of Clinton Term levels and there will be plenty of money.

[Ithekro]

Well we are supposedly pulling out of Afghanistan this year, Iraq as well, and the support for NATO in Libya should be finished soon since we have no need to occupy anything.

[SaintessHeart]

Originally Posted by Tom Bombadil

It is more of the latter. The central bank in China is People's bank of China, which in a way, is the counterpart to FED in the US (Bank of China is different. It is only bank among the big 4 that's allowed to handle foreign currency. The names are confusing, I know.) Of course, since it is state owned, it is still heavily influence by the policies.

Just found this on the Wall Street journal article on this matter.

I was fine with the article, until this line took the cake :

Last week, CCB President Zhang Jianguo told Reuters the two companies were in talks to extend their current cooperation agreement for another five years.

The Chinese has plenty of retail experience already. Why do they need more? I suspect it is more of an attempt to avoid the yuan from rising when the Americans pull out their US dollars, which results in greater costs for the Chinese construction sector as the money supply becomes less diluted.

Then again, it could be paranoia.

Originally Posted by TinyRedLeaf

That Temasek has investments in CCB is not really startling — the Singapore sovereign fund has publicy stated its confidence in the long-term value of Chinese banks, and has been the second-largest CCB shareholder for a while. Also, the total consolidated stake, even after taking Seatown's shares into consideration, is not likely to exceed 10 per cent. Compare that against the Chinese government's stake: 59 per cent.

Note : By their law, a foreign body (meaning, non-citizen of China) cannot own more than 49% in ANY Chinese company.

What's surprising is that Temasek is bidding for the BofA stake after having just sold HK$9.4 billion (US$1.2 billion) of CCB stock on July 5. Temasek is acting more short term than usual; it couldn't resist the substantial discount being offered by BofA.

This isn't a time to buy-and-hold, so I get what Temasek is actually doing. But if they wanted more bang for their buck, why not wait for awhile and go for Euro bonds?

Interest rates are bound to rise (though maturity is nowhere in sight) for that one. CCB probably won't have much earnings IMO, but something tells me that them peeps working in there are not watching the potential black-coloured red markings on the Chinese balance sheets.

The danger at the moment isn't really in China's banks, hence Temasek's vote of confidence (I'm sceptical, but I suppose it knows something other investors don't). The banks' cash-reserve ratio is now at 21.5 per cent, as Beijing struggles to curb inflation, especially in its property market.

The real worry is over the state of local-government finances, which Moody's claims to be understated by as much as US$540 billion. Beijing says there is no need to panic ("Total debt held by the central and local authorities is less than 50 per cent of the nation’s gross domestic product, 'far lower' than the debt levels seen in European countries."). Others beg to differ. I don't know who to believe any more.

When in doubt, don't buy, or get ready to short it all the way to hell.

EDIT :

Obama shakes up gun agency over botched Mexico sting

(Reuters) - The Obama administration announced on Tuesday a major shake-up of the U.S. agency that botched an attempt to track weapons smuggled to drug cartels in Mexico after guns were allowed to flow freely over the border.

Sounds like a work campaign for 2012.

Also :

Exclusive: Bank of America kept AIG legal threat under wraps

(Reuters) - Top Bank of America Corp lawyers knew as early as January that American International Group Inc was prepared to sue the bank for more than $10 billion, seven months before the lawsuit was filed, according to sources familiar with the matter.

[synaesthetic]

Originally Posted by ganbaru

Irene costs restart Washington budget battle
http://www.reuters.com/article/2011/...77S4XY20110829

This is... just downright vile.

Seriously, Republicans? "Cut off poor peoples' welfare or we're not going to help hurricane victims?"

Seriously?

How can anyone take these buffoons seriously anymore? How can anyone possibly believe that they have anyone's best interests at heart other than their own?

[Ithekro]

It doesn't say that anywhere in the article. Please don't read into things like that, it give a poor impression.

it says they may have to cut something from somewhere to have enough money for immediate aid. I does not say were and it also says the request to cut things will likely be ignored.

[synaesthetic]

Originally Posted by Ithekro

It doesn't say that anywhere in the article. Please don't read into things like that, it give a poor impression.

it says they may have to cut something from somewhere to have enough money for immediate aid. I does not say were and it also says the request to cut things will likely be ignored.

I'm not talking about what's actually happening. I'm talking about what Cantor is implying with his words. I'm not stupid enough to believe that they'll actually get what they want--but just the audacity to say something like that?

I hope it does as much for Cantor's popularity as Romney's corporations-are-people nonsense.

[Ithekro]

The budget is so tight they are having to root through the sofa cushions for change. Unlike say six years ago with Katrina and the emergency aid that was put out.

[Decagon]

Originally Posted by SaintessHeart

The Chinese has plenty of retail experience already. Why do they need more? I suspect it is more of an attempt to avoid the yuan from rising when the Americans pull out their US dollars, which results in greater costs for the Chinese construction sector as the money supply becomes less diluted.

Then they'd just buy more Yen, forcing the Japanese CB to buy dollars. Two birds, one stone.

This isn't a time to buy-and-hold, so I get what Temasek is actually doing. But if they wanted more bang for their buck, why not wait for awhile and go for Euro bonds?

They probably see more room for gains in China if China loosens the Yuan more. This might be relatively cheap considering how recent market turbulence also pushed more money into Singapore and strengthened your currency vs the dollar.

[synaesthetic]

Originally Posted by Ithekro

The budget is so tight they are having to root through the sofa cushions for change. Unlike say six years ago with Katrina and the emergency aid that was put out.

Which is a situation of their own making. Here's an idea--how about we take that disaster relief out of their enormously-bloated paychecks?

[Ithekro]

That would be something.