Bubble Finance Is Based On “THE SYSTEMIC FALSIFICATION OF FINANCIAL PRICES” !

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Guest post…

 

 

Hi Everyone:

 

My apologies for including so much material in this letter.  I was simply overwhelmed by important items.  Honestly I was leaving things out that I would have really liked to include.  I’m just going to mention that this emails subject title came from the Mike Savage article directly below.

 

Boy, I sure hope you folks bought your physical precious metals (and other good stuff).  Things are getting ugly out there, and…………I DON’T THINK THEY’RE GOING TO BE IMPROVING ANY TIME SOON!!!

 

                                                                                                                                              Leo

 

 

 

Mike Savage

 

Eerily Familiar

 

Mike Savage

 

Does any of this current situation seem even remotely similar to what was going on just prior to all hell breaking loose in 2008?

 

The bank shares are tanking around the globe and particularly in Italy it seems the cliff is in full view.

 

There were four bail-ins in the last 12 months in Italy and, because of the dire straits of their banks, the government itself is trying to avoid any more bail-ins and survive a looming referendum.

 

The Brexit vote is being used as “the” excuse but more likely it is because Italian banks are sitting on $401 billion in of bad debts. (Wall Street Journal). According to this article by Simon Nixon (WSJ) that the system is short some 40 Billion Euros in capital. Just last week, Matteo Renzi, Italian Prime Minister floated the idea of a 40 billion euro bailout and was swiftly shot down by Germany and Brussels. Later in the week it was announced that a $150 billion bailout of Italian banks was agreed to so that the Italian banks could make it through the rest of the year. I guess when the rules in place threaten the survival of politicians or banks the rules are changed. This should be no surprise!

 

From the Wall Street Journal again: “If Italy is forced to stick to the rules, it could face multiple bank failures, which could mean heavy losses for many ordinary retail savers, who own up to 250 billion euro of bank bonds.

 

Where will this “money” come from? According to the Financial Times “Italy is also discussing the use of funds from Treasury-owned Cassa Depositi e Prestiti and State Pension Funds to recapitalize banks”.

 

The EU state aid rules, according to Bloomberg, “normally require shareholders and junior creditors to share losses can be waived in “exceptional circumstances” under the bloc’s treaties”. Don’t forget that, just like here, according to the FDIC, depositors are creditors of the bank! Hence bail-in rather than bailout.

 

I guess that this is a little more significant than what is being reported since there is a bailout currently underway in Italy. Who’s next?

 

Don’t think that this is the only sore spot. According to Harry Dent, “At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs.”

 

” At 18% (Italy’s non-performing loans) they’re no longer technically bankrupt. They ARE bankrupt!”

 

” Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet”.

Similar to my remarks about many pension plans here and with our own banks- this is with a lot of confidence in central banking and historically high valuations on stocks, bonds and real estate!

 

Speaking of our banks, they just recently completed the stress tests. There was only one bank that failed and another that has to resubmit its plan. While this sounds pretty good on the surface, this entire system is only as good as its weakest link as they are all intertwined with derivative exposure and shared losses as far as the eye can see. ANY failure could lead to cascading failures across the globe. If this were to get out of hand it would likely act as a global margin call and would be devastating to most.

 

It appears to me that there are signs everywhere of an impending storm that is gaining strength. Bond yields are plunging globally. If you think yields on 10-year US Treasury debt is low at 1.4% and less, try Swiss bonds that have a negative yield all the way out to 50 YEARS! Gold and silver are moving up daily despite the efforts of the major banks and central banks to keep the price as low as possible.

 

As I write this gold is up 28% YTD and many mining stocks are up much more. Silver and silver stocks have also broken out- easily outperforming all of the major averages by a lot! After the last 4 years it has been forgotten that gold has outperformed all of the major averages by 100s of percent since the year 2000.

As I listen to the “experts” discuss whether this stock market pullback is a buying opportunity on the financial game shows I remember a Wall Street Journal article that shows just how confounding markets can be:

 

” After Lehman Brothers fell over in September 2008, equities slumped, then rallied back to their previous levels within a week. Brexit isn’t Lehman but the stock market is behaving similarly. In 2008 shareholders made an epic mistake: They assumed Lehman would be manageable. This time the assumption is that central banks will ride to the rescue and corral any problems”. If so, where were they in the early days of October 2008? In addition, what have they actually “fixed” since 2008?

 

Debt is higher, imbalances are more pronounced in almost all asset classes, derivative exposure is higher, global trade is tanking, many countries are experiencing depression-like conditions and this is all taking place where central bank intervention is off the charts! Excuse me for not having a whole lot of faith in the masters of the universe. It appears all they can do is “print” money and buy stuff- a great job while it lasts but as usual they have gone too far and are now being exposed as their plans are not playing out as advertised.

 

As David Stockman has so eloquently said “Bubble finance is based on the systemic falsification of financial prices. That’s the essence of ZIRP and NIRP”. “The trouble is, financial prices cannot be falsified indefinitely. At length, they become the subject of a pure confidence game and the risks of shocks and black swans that even the central banks are unable to offset. Then the day arrives in traumatic and violent aspect.”

 

It appears to me in looking at Japan and how their “intervention” in their markets has failed, looking at major banks with tens of trillions in derivative exposure (each) and the instability in most markets that this day of reckoning could be far closer than many imagine.

 

If the banks in Europe collapse- all will likely collapse right along with them. This could lead to a fear that I have had for years taking place- a global margin call. This could lead to many, if not most markets going no bid. That means that there could be no willing buyers for the massive selling taking place most likely by margin clerks around the globe. Seeing as how nobody really knows exactly how much the banks have in derivative exposure (I have seen US banks have 572 trillion in interest rate bets alone and it is said that total derivative are somewhere over a quadrillion dollars) do you expect the central banks could fix a problem here with a few trillion dollars?

 

If this happens the price tag would likely be a quadrillion dollars. Is there ANYONE out there that ever imagined that this number even existed as recently as 7 years ago? We get to learn new numbers all the time, as the authorities appear to keep expanding an increasingly unstable bubble to the point of no return.

 

A GREAT question is what assets should you own in this situation. The correct answer just may help save your financial well being. I’ll give you my opinion- if you still have a 60/40 stock and bond split I believe you will be sadly disappointed!

 

Be Prepared!

 

Mike Savage, ChFC Financial Advisor

2642 Route 940 Pocono Summit, Pa 18346

(570) 730-4880

Raymond James Financial Services, Inc. Member FINRA/SIPC

 

 

https://www.youtube.com/watch?v=5S5JFHyRgHE  This is a Greg Hunter interview of Gregory Mannarino (TradersChoice.net).  I’m not going to mince words here, THIS IS THE MOST INSIGHTFUL MANNARINO INTERVIEW I’ve ever heard.  MUST WATCH !!!!!!

 

http://kingworldnews.com/danger-the-world-is-now-on-the-verge-of-the-largest-destruction-of-wealth-in-history/  This is another of Egon von Greyerz’s  excellent, simply explained articles regarding our global monetary plight.  Although he doesn’t say it in so many words, it doesn’t take too much reading between the lines to sense that he believes the monetary “ostriches” among us are perilously close to a dodo’s date with destiny.

 

 https://www.youtube.com/watch?v=Pe9WC8ZYR4M  This is an excellent Greg Hunter Interview of Gerald Celente, publisher of the Trends Journal, who really calls a spade a spade as he declares “I believe the crash is already happening”.

 

https://www.youtube.com/watch?v=1vPOUnah3fw  This is a Greg Hunter interview with Rob Kirby of Kirby analytics.  Mr. Kirby is not one to soft sell our country’s problems.  He pretty much tells it with a serious OUCH!

 

http://www.zerohedge.com/news/2016-07-05/peak-fbi-corruption-meet-bryan-nishimura-found-guilty-removal-and-retention-classifi  I’m sorry to say this, but this article just makes me want to PUKE!  This is just a typical BIG GOVERNMENT follow up to the giant witch hunt when Edward Snowden revealed how our government was unlawfully spying on all of us and he had to flee for his life.  There is NO RULE OF LAW in this country when connected people like dear, sweet, LYING, FRAUDULENT, CORRUPT Hillary are not prosecuted for absolute unlawful acts, while citizens like Snowden are chased to the ends of the earth for being a whistleblower.

 

 

http://www.zerohedge.com/news/2016-07-10/over-13-trillion-negative-yielding-debt-pain-1-spike-rates-would-inflict  “Without saying it, the WSJ also admits the bond market is now completely broken, as it no longer responds to traditional signals”.

 

http://www.zerohedge.com/news/2016-07-13/french-intel-chief-warns-migrant-sex-attacks-push-nation-brink-civil-war  Sounds like things are getting seriously crazy in Europe with the out of control refugee thing.

 

 

 

 

 

http://thecrux.com/conspiracy-fact-natos-russia-war-push/  This is a short 15 min. video, but covers a VERY IMPORTANT subject, and that is that some of the “bad guys” out there that are always disrupting peace in the world are OUR OWN LEADERS.

 

http://news.goldseek.com/GoldenJackass/1468007046.php  This is a compilation of materials that the famous Jim Willie, editor of the Hat Trick Letter, has chosen to disseminate to the general public.  Some good stuff here.

 

http://thecrux.com/bill-bonner-planet-debt/  The government must keep the low interest rate planet spinning.

 

http://www.newswithviews.com/Barnewall/marilyn232.htm  A case of Hillary being “too big to jail”, and a system that is “corrupt enough to fail” the rule of law and the American people.

 

 

 

There Is No Rule Of Law Either…

Posted July 13th, 2016 at 11:05 PM (CST) by Bill Holter & filed under Bill Holter. 

I finished my last writing with the question “will we still have the rule of law?” and commented what a can of worms this topic is. While I knew the question of the rule of law would certainly come up later this year, I had no idea how quickly! Normally forensic logic is a process of “connecting dots”, in this instance the “dots” are more like one giant blob of crap covering the page entirely. On many previous occasions we have seen election fraud, market riggings and bogus economic reports, the corruption is now no longer contained or done in secret… it is done in public. Maybe so the public can “see it”? Let’s take a look at “law”.

We have heard stories where the police are confiscating cash during traffic stops where the driver/passenger then has to prove “how or where” they got the money. In many cases, even after proof is delivered …the money is not returned. We also have recently seen where Oklahoma troopers/officers have technology to swipe debit cards and clear balances because “you might buy drugs or commit a crime” with that cash. Does this scare you? It should!

A week or so back, we heard of Bill Clinton meeting with Attorney General Loretta Lynch on an airport tarmac. Within a week, James Comey (who turns out to have many past trails crossing the Clinton’s path)

http://21stcenturywire.com/2016/07/13/fbi-director-comey-board-member-of-clinton-foundation-connected-bank-hsbc/ recommended no charges for Hillary’s mishandling of classified information. This was the ultimate George Carlin joke, “it’s a big club and you ain’t in it”! The average Joe now knows because he has seen with his own eyes, the law does not pertain to the elite …but it and then some does pertain to you. While on the subject of public servants, I believe the breakdown in the rule of law truly reared its ugly head upon the death of Justice Antonin Scalia. How is it possible that an autopsy was mandatory for “Prince” but not for a Supreme Court Justice? Another public servant, Supreme Court Justice Ginsberg recently badmouthed Donald Trump in a very public fashion. “Impartiality”?

Of course we have seen some bad shootings. Two recently where blacks were shot and killed by police, which in turn was followed by police being shot or shot at in Georgia, Tennessee and Dallas. (Where was the media for LaVoy Finicum?). Next up will apparently be this Friday as information has surfaced that a list of protests will occur in three dozen major U.S. cities.

http://offgridsurvival.com/majorcivilunrest-blmpantherschaos/. There are also rumors of more than 10,000 being bussed in to protest the Republican convention for what is being called the “summer of chaos”. This, courtesy of the globalists and of course George Soros.

The rule of law has not solely been repealed within the U.S.. The world court in Hague recently ruled the Chinese have no claim to occupied islands

http://www.bloomberg.com/news/articles/2016-07-12/china-no-historic-right-to-south-china-sea-resources-court-says. To this I was quite surprised because many rulings and treaties after WWII clearly void Japanese claim to any and all of them. Now we will wait to see how this progresses. I would assume the Chinese will take the attitude of ignoring the ruling entirely with a stance of “we are here, come and take it”. Mr. Putin has and is clearly preparing to stand with China. No matter what happens, it cannot be good. It will either be war, or the U.S. loses more face and credibility. Because this ruling will force action, it is no doubt a step forward in strength and resolve by China and a step backward for the U.S..

The important thing to take from this writing is the fact that the previous “de facto” lack of law has now become “public” and in your face REAL! The mayor of Atlanta even mentioned the “National Guard” in passing yesterday. Please understand this, once the National Guard is called out anywhere …they will be called out everywhere. What was unthinkable will become the new normal. This will be your beginning to martial law which will sweep the country very rapidly.

I have said all year long, I believed the odds of having a November election were slightly less than a coin flip. I will now update that as I believe the odds have risen to somewhere between 65-70% …no election. Am I wrong? I believe we will very soon see. We will see the aftermath of protests this coming Saturday morning and also see whether or not the Republican convention is completed.

I know that many are very opposed to “guns” and believe the world would be a safer place without them, I personally do not understand the logic. I would only point out, there are no atheists in a foxhole and no anti-gun advocates when there are no police and you are the only one without a gun. The rule of law has and is breaking down …and doing so in very public fashion. We are facing societal breakdown right in the face and unfortunately this will play right into globalist hands. You see, the mass of “helpless” will BEG for safety and security in lieu of liberty. For years “safety and security” have been offered in the place of liberty. The next six months are extremely crucial for the direction of our country and the world. Sadly, for many it will mean a choice between liberty and death …”safety be damned’!

Standing watch, locked and loaded.

Bill Holter
Holter-Sinclair collaboration
Comments welcome bholter@hotmail.com

 

 

Charting The Epic Collapse Of The World’s Most Systemically Dangerous Bank

It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed.

After a hard-hitting sequence of scandals, poor decisions, and unfortunate events,Visual Capitalist’s Jeff Desjardins notes that Frankfurt-based Deutsche Bank shares are now down -48% on the year to $12.60, which is a record-setting low.

Even more stunning is the long-term view of the German institution’s downward spiral.

With a modest $15.8 billion in market capitalization, shares of the 147-year-old company now trade for a paltry 8% of its peak price in May 2007.

Courtesy of: Visual Capitalist

a)THE BEGINNING OF THE END

If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful.

In recent times, Deutsche Bank’s investment banking division has been among the largest in the world, comparable in size to Goldman Sachs, JP Morgan, Bank of America, and Citigroup. However, unlike those other names, Deutsche Bank has been walking wounded since the Financial Crisis, and the German bank has never been able to fully recover.

It’s ironic, because in 2009, the company’s CEO Josef Ackermann boldly proclaimed that Deutsche Bank had plenty of capital, and that it was weathering the crisis better than its competitors.

It turned out, however, that the bank was actually hiding $12 billion in losses to avoid a government bailout. Meanwhile, much of the money the bank did make during this turbulent time in the markets stemmed from the manipulation of Libor rates. Those “wins” were short-lived, since the eventual fine to end the Libor probe would be a record-setting $2.5 billion.

The bank finally had to admit that it actually needed more capital.

In 2013, it raised €3 billion with a rights issue, claiming that no additional funds would be needed. Then in 2014 the bank head-scratchingly proceeded to raise €1.5 billion, and after that, another €8 billion.

b)A SERIES OF UNFORTUNATE EVENTS

In recent years, Deutsche Bank has desperately been trying to reinvent itself.

Having gone through multiple CEOs since the Financial Crisis, the latest attempt at reinvention involves a massive overhaul of operations and staff announced by co-CEO John Cryan in October 2015. The bank is now in the process of cutting 9,000 employees and ceasing operations in 10 countries. This is where our timeline of Deutsche Bank’s most recent woes begins – and the last six months, in particular, have been fast and furious.

Deutsche Bank started the year by announcing a record-setting loss in 2015 of €6.8 billion.

Cryan went on an immediate PR binge, proclaiming that the bank was “rock solid”. German Finance Minister Wolfgang Schäuble even went out of his way to say he had “no concerns” about Deutsche Bank.

Translation: things are in full-on crisis mode.

In the following weeks, here’s what happened:

  • May 16, 2016: Berenberg Bank warns that DB’s woes may be “insurmountable”, noting that DB is more than 40x levered.
  • June 2, 2016: Two ex-DB employees are charged in ongoing U.S. Libor probe for rigging interest rates. Meanwhile, the UK’s Financial Conduct Authority says there are at least 29 DB employees involved in the scandal.
  • June 23, 2016: Brexit decision hits DB hard. The bank is the largest European bank in London and receives 19% of its revenues from the UK.
  • June 29, 2016: IMF issues statement that “DB appears to be the most important net contributor to systematic risks”.
  • June 30, 2016: Federal Reserve announces that DB fails Fed stress test in US, due to “poor risk management and financial planning”.

Doesn’t sound “rock solid”, does it?

Now the real question: what happens to Deutsche Bank’s derivative book, which has a notional value of €52 trillion, if the bank is insolvent?

 

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July 12, 2016

Berlin, Germany

 

In early 1870, the Kingdom of Prussia and French Empire were about to go to war.

 

It was one of countless conflicts between the dozens of European kingdoms and empires throughout the 18th and 19th centuries, and this one was over before it even started.

 

Prussia’s military might was legendary. They had recently beaten the pants off of Austria and Denmark, and they’d go on to neutralize or capture over 80% of French soldiers within a matter of months, while losing just 2% of their own.

 

Very few wars have been so one-sided.

 

And yet despite its nearly unparalleled military successes and clear dominance in European politics, Prussia lacked something critical: financial power.

 

Prussia’s economy was robust and healthy. But businesses across all German kingdoms depended almost exclusively on the British banking system to conduct international trade.

 

It was similar to how nearly the entire world depends on Wall Street mega-banks today for global trade. Germany lacked its own strong financial system.

 

So on March 10, 1870, King Wilhelm I of Prussia (soon to be German Emperor) granted a banking license to a trio of local entrepreneurs and gave them explicit instructions to establish a banking powerhouse.

 

And that’s exactly what they did. The bank was called Deutsche Bank, and it eventually grew into one of the largest banks in the world.

 

Deutsche Bank has seen a lot in its years; multiple world wars and the devastation of Europe. Hyperinflation in the Weimar Republic. Nazi Germany.

 

The bank even outlasted its own country, as the Kingdom of Prussia was formally abolished in 1947.

 

But as the world learned in 2008 when the 158-year old investment bank Lehman Brothers went bust, even giant, centuries-old financial institutions can collapse.

 

Banking is such a bizarre industry when you think about it.

 

Regular, everyday people like you and I fork over our hard-earned savings to banks.

 

They take our money and do some of the most insane things with it… whether loaning it to jobless, homeless people, or buying the negative-yielding debts of bankrupt governments.

 

You and I would never do anything so foolish with our own funds. Yet we hand everything over to banks and give them full license to engage in this madness.

 

And even when their decisions blow up and they go to the taxpayer with hat in hand for a bailout, they prove that they have memories like goldfish.

 

Today, banks are up to the same tricks as they were 10 years ago, except they’ve taken things to a whole new level.

 

And Deutsche Bank is leading the charge.

 

One of the major issues in the 2008 crisis was that banks were over-leveraged and had very thin levels of capital.

 

In other words, the banks’ rainy-day reserve funds as a percentage of their overall balance sheets were extremely low, so even a small loss in their investment portfolios would cause financial Armageddon.

 

That’s precisely what happened.

 

Lehman Brothers famously had a capital ratio of less than 3% of its assets. So when the value of its assets fell by more than 3%, the bank was finished.

 

Well-capitalized banks are supposed to have double-digit capital levels while making low risk investments.

 

Deutsche Bank, on the other hand, has a capital level of less than 3% (just like Lehman), and an incredibly risky asset base that boasts notional derivatives exposure of more than $70 trillion, roughly the size of world GDP.

 

Even the IMF has stated unequivocally that Deutsche Bank poses the greatest risk to global financial stability.

 

And the IMF would be right… except for all the other banks.

 

Because, meanwhile in Italy, nearly the entire Italian banking system is rapidly sliding into insolvency.

 

Italian banks are sitting on over 360 billion euros in bad loans right now and are in desperate need of a massive bailout.

 

IMF calculations show that Italian banks’ capital levels are among the lowest in the world, just ahead of Bangladesh.

 

And this doesn’t even scratch the surface of problems in other banking jurisdictions.

 

Spanish banks have been scrambling to raise billions in capital to cover persistent losses that still haven’t healed from the last crisis.

 

In Greece, over 35% of all loans in the banking system are classified as “non-performing”.

 

This is astounding. But what’s even more incredible is that the ratio of non-performing loans has actually been increasing for several years since the country’s supposed bailout.

 

Banks in Cyprus and Portugal are hemorrhaging cash and reporting widespread losses.

 

And banks’ stock prices across the region have practically collapsed in recent weeks as investors have started to realize that Bancopalypse 2.0 may be upon us.

 

(Oh, and lest anyone think that the United States is a banking safe haven, it’s worth noting that the non-performing commercial loan ratio in the US banking system has tripled in 18-months… but we’ll save that for another time.)

 

Here’s the bottom line: the banking crisis of 2008 never fully healed.

 

It just got shuffled under the carpet while the public was fed a phony narrative that everything is fantastic.

 

This turned out to be a gigantic farce; many of the world’s banking systems are just as risky as they were back in 2008.

 

Do yourself a favor: don’t keep 100% of your savings trapped in a risky banking system.

 

What’s the point? They’re only paying you 0.1% anyhow. Why take on so much risk?

 

If you have savings of even more than $10,000 (and definitely if you’re in the six to seven figure range), move some funds to a stronger, better capitalized banking system abroad.

 

And definitely consider owning precious metals, plus holding at least a month’s worth of expenses in physical cash in a safe at your home.

 

Given how low interest rates are, you won’t be any worse off. But should Bancopalypse 2.0 be upon us, cash and gold could end up being a phenomenal insurance policy.

 

Until tomorrow,

Simon Black

Founder, SovereignMan.com

 

 

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