Collapse of Bank of America?

Has anyone been keeping up with Bank of America lately?   I couldn't help noticing rather alarming developments.   After acquiring Country Wide, Bank of America has been faced with a bunch of lawsuits from multiple entities ranging from the states of Nevada and Arizona, AIG, and a group from Country Wide financial over the past year.    It looks like Bank of America is not only trying to stem the losses from soured mortgage loans as evidence by its recent attempt to sell off its toxic securities to BlackStone, but that it's also trying to raise cash as well by selling off a large portion of its stake in China Construction bank, selling of 5 year bond notes, and its international credit card business all with in a matter of a few months.  This is all occurring AFTER the supposed weak economic recovery and the repayment of all the bail out money to the big banks.  Usually, when a bank is not in keeping with a healthy banking ratio they start selling a lot of their assets both god and bad to raise enough cash to keep going.   If they are unable to do so, they may go the same way of Lehman Brothers.  Let's hope Bank of America does not go the way of the dinosaur, but I'm not holding my breath. 

Can Bank of America stem its losses from soured subprime mortgages and resulting lawsuits?  If news about BAC selling more and more of its good assets continue to hit the headlines, I'm going to be seriously doubtful about its future.  I really think that if Bank of America falls we will experience another global financial meltdown.  The next few months are going to be very interesting to see.

Update:  Looks like BAC already got its bail out package from the government already since 8/10/11 in the form of a $500 million dollar sale of its troubled assets to Fannie Mae and Freddie Mac which are both government entities.  With buddies like that, who says you need congressional approval or the Fed to bail you out?    It does appear though that those assets are rapidly deteriorating in value and that government isn't so happy with the deal in the end.  Hmm, what to do. 

Zero Interest Rates Until 2013?

Hmm, now that the Fed has made the unusual announcement that they were going to keep the interest rates at near zero until mid 2013, that might be enough to buy the banks some time to get rid of their US debt.  That may mean there may not be as severe a crash as last time.  Plus, now that I think about it, since banks have been receiving bail out money and still are not lending and even calling back loans.....  that probably means they are in much better shape and not as over leveraged as they were in 2008.    If that's the case, then this recent downturn may not be as bad as the 2008 crash because the banks aren't as desperate to raise cash to stay in business.  I wonder....   I really hope there is a another "mini" crash though so I can buy more stuff.

Another Crash?

Well, as predicted the week of Aug.2  was indeed very interesting.  I'm guessing that since the US' downgrade in credit rating a lot of big banks found themselves in possession of large amounts of now increasingly illiquid bond/treasuries.    If that's the case then this sell off in the stock market comes as no surprise for the banks now need a source of liquid cash to stay in business.  Best way to raise cash is sell off your assets on the market, both the good and bad until you have enough cash to stay in business.  I wonder how much of a hit precious metals will take this time?  Will it be like in 2008 where financial institutions were chucking out everything and the kitchen sink?   If so, then that presents a rather golden buying opportunity.   Monetary debasement ultimately does not make prices of real assets cheaper after the dust settles and we just got more debasement the second Congress decided to raise the debt ceiling.  Fear and panic do lower prices though and that's only transitory.  My guess is that this sell off may last another 6-9 months and once again the Fed will be called upon to dump cash into the system via Q3. I wonder if this fear and panic will put the brakes on industries that were barely trying to get up off the ground for a few years?  In any case, the dollar is about to crash even further thanks to the raising of the debt ceiling and lack of fixing the debt related to social security and medicare/medcaid..  Interest rates are going to finally rise which will crush the bond market soon.  Actually, I think it started about a week ago already. Eh, that's just my thoughts.   Looks like it's going to be another wild ride again over the next 9 months.  I'm going to stick my neck out here and make a prediction.  I predict further stock market crashing over the next 6-9 months followed by a huge rally that may rival 2009's stock market rally and a giant rally in precious metals once again.  Let's see if I'm right or not.

The College Bubble

I laughed with glee when I heard that the NIA thinks that the US is in a major college education bubble.  Finally, there is someone else out there who thinks so too.  I predict that if things continue with the way things are now, ie the Fed constantly putting more money into the system, foreign countries getting fed up with the Fed's tactics and demanding the US sell its gold/silver piles and doing international trade without the USD, the US will see Greek style riots at public universities and maybe even government establishments.   If the NIA is correct,  then the riots at the universities have already begun.