What a great country this truly is. On Main Street, the squeeze continues, but on Wall Street, life is sweet.
Unfortunately, it is not yet sweet enough to satisfy the Titans of Finance, as the Bloomberg story No Joy on Wall Street as Biggest Banks Earn $63 Billion explains—
Four years ago today, President George W. Bush signed into law the biggest corporate rescue in American history. Even as U.S. unemployment has remained above 8 percent for 43 months, the country’s biggest banks are making almost as much as they ever have.
The combined $63 billion in profit reported by the six largest U.S. lenders over the four quarters through June is more than they earned in any calendar year since the peak in 2006.
Bank of America Corp. made more in the 12-month period than Walt Disney Co. and McDonald’s Corp. combined. Citigroup Inc., which like Bank of America took $45 billion in taxpayer funds from the Troubled Asset Relief Program, earned more than Caterpillar Inc. and Boeing Co. JPMorgan Chase & Co., the largest U.S. bank by assets, had profits of more than $17 billion even after reporting a $5.8 billion trading loss.
Still, Wall Street isn’t enjoying its good fortune.
Those billions of dollars in profits aren’t enough, according to interviews with more than a dozen bank executives and analysts. The lowest leverage in a decade, return on equity at a third of 2006 levels, higher capital requirements, shares trading below book value, declining bonuses, job cuts, the European sovereign-debt crisis and a backlash against bankers have damped the joys of profit, they said.
For Wall Street bankers, the joys of profit are not what they used to be. The unproductive, rent-seeking, parasitic tycoon who run our six largest banks are unhappy, one might even say they are depressed, to be earning a combined 63 billion dollars, which is a mere pittance when one considers the low returns on equity (ROE on their stock). (See here and here for the DOTE take on our Big Banks.)
There are a lot of exquisite details in the Bloomberg article, which you can read at your leisure. I don't have to repeat that stuff here, right?
Perhaps this would be a good time to talk about the Empire's Decline. I don't do that as often as I used to because now, 32 months after I started this blog, America's disintegration is so obvious that I no longer feel the need to argue that we're sliding precipitously down a well-greased chute into Hell. This is not a joy ride for anyone, and if the Bloomberg story is accurate, even the Titans of Finance are not satisfied. (They could never be satisfied, for no amount of money would suffice to fill the holes in their souls.)
On second thought, I will not get into it, for if our Decline is not obvious to anyone who might be reading this, it never will be. I will say that when Henry Blodget exclaims with cutting sarcasm in the video below that "It's Awesome To Be A Banker!", you know that something's up. It is almost impossible to think of something which hasn't been done to appease and prop up America's six biggest banks in the last four years. I suppose we could have simply given them the Keys To The Kingdom, and said "have at it!"
And yet these Parasitic Tycoons are unhappy, for they are not making the kind money they made at the top of the Housing Bubble in 2006. That was a happier time when ROE was much higher than it is now. Wall Street Bankers yearn for the days when leverage was unlimited, and there were ever more suckers to fleece.
However, with the recent arrival of QE3, the sky is once again the limit for the Big Banks.
Thinking about our Decline, I am reminded on the radio this morning that Hopey-Changey squared off against the Bane Capitalist last night, an event I missed because of my desire to have a few more drinks, and the Mittster apparently wiped the floor with the President. And I thought, well, there is a certain justice in that because Hopey-Changey has a track record, and the Bane Capitalist does not.
And if we think about that track record in the context of America's Decline and the continuing Good Fortune of the Big Banks, which are basically the same thing, we are reminded that Barack Obama, through the Good Graces of his Treasury Secretary Tim Geithner and other Wall Street appointees, did everything possible to keep us on that narrow gutter to Hell we are sliding down.
That seems like a good note on which to finish this post. Here's the video from the Daily Ticker story QE3 Good for Homeowners, But Even Better for Banks.