By Reggie Middleton
It’s official, I’m calling a banking crisis in Europe. Things didn’t go well the last time I did this. Of course, many will say, “But the rating agencies have learned their collective lessons. They would most assuredely warn us if the European banks are close to going bust, right?!!!”. Yeah, right! Reference our past research note on so-called trusted parties in private blockchains for banks. Those interested in purchasing the 22 page report on what is likely the first major bank to fall victim to the coming Pan-European Banking Crisis can do so here. All others, feel free to read on…
Here are some key points: Continue reading »
Full article here:
Thanks to the just released February diary of Fed chief Yellen, we now know exactly when she called Bank of England Governor (and former Goldman Sachs employee) Marc Carney and ECB President (and former Goldman Sachs employee) Mario Draghi.
Can you guess when?
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The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.
As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years? Continue reading »
Over the course of documenting the ECB’s push to phase out the €500 note, we stumbled upon something rather interesting that’s taking place at Greek banks.
Courtesy of a reader, we learned that Piraeus Bank (among others) has begun charging a fee to exchange large denomination bills for small. The charge is listed as 0.15% by the bank and Kathimerini would later report that across the Greek banking sector “exchanging one 500-euro note for smaller bills, [will cost you] 3-5 euros (depending on the bank), while the maximum charge comes to 200-250 euros regardless of the amount a customer wishes to exchange.” Continue reading »
Having discussed the market’s disturbing reaction to Mario Draghi’s desperate “all in” monetary gamble – one which saw an early bout of euphoria followed by one of the most aggressive Euro spikes in history, second only to the “December debacle” and the Fed’s March 2009 announcement of QE1, we were waiting for the just as important reaction by the ECB’s nemesis: the one country that not only has seen hyperinflation first hand (and appears to recall it vividly), but is just as aware where the ECB’s monetary lunacy ends: the Germans.
We got it from Germany’s Handelsblatt, when in an article titled “The dangerous game with the money of the German savers”, the authors provide a metaphorical rendering of what is happening in Europe as follows:
They also paint an oddly accurate caricature of the man behind this last ditch monetary policy:
And write the following:
A determined ECB chief Mario Draghi plows ahead with his negative interest rate policy. The positive effects on the economy are low. Great, however, are the risks: this is the greatest redistribution of wealth in Europe since World War II. Continue reading »
Well, the people wanted a “bazooka-sized” surprise from Draghi, and they got it.
Moments ago the ECB announced not only a 10 bps cut to the deposit rate expected pushing it to -40%, but also announced a 5 bp rate cut to the refinance (pushing it to 0.00%) and the marginal lending rate (now at 0.25%), and also boosted QE by €20bn to €80 billion per month, the addition of afour new targeted TLTROs each with a maturity of 4 years, but the most surprising announcement was that the ECB would also for the first time include investment grade euro-denominated bonds issued by non-bank corporations along the list of assets that are eligible for regular purchases.
In other words, Draghi finally delivered his bazooka. Continue reading »
This is officially an all-out revolution of the financial system where banks are now actively rebelling against the central bank. In a stunningly real rebuttal of Europe’s negative interest rate policy, German newspaper Der Spiegel reported yesterday that the Bavarian Banking Association has recommended that its member banks start stockpiling PHYSICAL CASH.
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Today’s current inflation data dump from across the European nations appears to confirm forward inflation expectations trend (plumbing new record lows). With a considerably bigger than expected decline in prices , pushing Germany, Spain, and France back into deflation, pressure is mounting on Mr.Draghi. As one EU economist exclaimed, “the data send a clear message to the ECB and the only question that remains now is how bold action would be.”
Save us Mario from spending less on the things we need…
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Earlier this month, as retail investors lost confidence in the global economy and broader stock markets, an air of panic began to set in. Reports indicate the lines were literally forming around the block at gold stores throughout London and elsewhere. It was, by all accounts, the very scenario one might expect in an environment where trust in government and central banks has been eroded.
But it’s only the beginning, explains Auryn Resources executive chairman Ivan Bebek in an interview with SGT Report, as nation states and large investors are trying to get their hands on gold as fast as they can:
Before any big move in gold we have always seen extreme volatility or volatility pick up. This was just a taste of what’s to come in the next few years… We’ll look back at this and be reflecting on how minimal this move was compared to what’s going to happen as we go forward… Continue reading »
These are strange monetary times, with negative interest rates and central bankers deemed to be masters of the universe. So maybe we shouldn’t be surprised that politicians and central bankers are now waging a war on cash. That’s right, policy makers in Europe and the U.S. want to make it harder for the hoi polloi to hold actual currency.
Mario Draghi fired the latest salvo on Monday when he said the European Central Bank would like to ban €500 notes. A day later Harvard economist and Democratic Party favorite Larry Summers declared that it’s time to kill the $100 bill, which would mean goodbye to Ben Franklin. Alexander Hamilton may soon—and shamefully—be replaced on the $10 bill, but at least the 10-spots would exist for a while longer. Ol’ Ben would be banished from the currency the way dead white males like him are banned from the history books. Continue reading »
by James Corbett
February 16, 2016
You might remember that a couple of weeks ago we launched an open source investigation into the war on cash. As I noted at the time, the investigation was spurred by an uptick in anti-cash rhetoric over the last few months from the media, from central bankers and from politicians. Since that investigation took place, however, things have gotten even more in-your-face.
Just four days after we started the investigation Bloomberg came out with an op-ed urging the banksters to “Bring On the Cashless Future.”
Update: in case there was any doubt about the ECB’s true intentions, we just got the official “denial”:
- DRAGHI: ANY ECB ACTION ON EU500 NOTE IS NOT ABOUT REDUCING CASH
Translation: the ECB action is only about reducing physical cash, some 30% of it to be specific.
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The first shot in the global war on cash was just fired, by none other than the ECB, which moments ago Handelsblatt reported…
ECB wants to stop issuing 500 Euro bills – our exclusive https://t.co/LLe2qyhBjK
— Daniel Schäfer (@schaeferdaniel) February 15, 2016
… and Bloomberg confirmed – ECB COUNCIL VOTES TO SCRAP EU500 NOTE: HANDELSBLATT – has voted to scrap the second highest denominated European bank note in circulation: Continue reading »
A Nobel prize winning economist, former chief economist and senior vice president of the World Bank, and chairman of the President’s council of economic advisers (Joseph Stiglitz) says that the International Monetary Fund and World Bank loan money to third world countries as a way to force them to open up their markets and resources for looting by the West.
Do central banks do something similar?
Economics professor Richard Werner – who created the concept of quantitative easing – has documented that central banks intentionally impoverish their host countries to justify economic and legal changes which allow looting by foreign interests. Continue reading »
… as planned by TPTB.
William R. White is the chairman of the Economic and Development Review Committee at the OECD in Paris. Prior to that, Dr. White held a number of senior positions with the Bank for International Settlements (“BIS”), including Head of the Monetary and Economic Department, where he had overall responsibility for the department’s output of research, data and information services, and was a member of the Executive Committee which manages the BIS. He retired from the BIS on 30 June 2008.
Dr. White began his professional career at the Bank of England, where he was an economist from 1969 to 1972. Subsequently he spent 22 years with the Bank of Canada. In addition to his many publications, he speaks regularly to a wide range of audiences on topics related to monetary and financial stability.
In the following interview he shares his views in a totally personal capacity on the current state of the global economy and related monetary and fiscal policies. Continue reading »
JPM estimates that if the ECB just focused on reserves equivalent to 2% of gross domestic product it could slice the rate it charges on bank deposits to minus 4.5%. In Japan, JPM calculates that the BOJ could go as low as -3.45% while Sweden’s is likely -3.27%. Finally, if and when the Fed joins the monetary twilight race, it could cut to -1.3% and the Bank of England to -2.69%.
So a rumor made Deutsche Bank rise as much as 15% in the early hours, closing at +10,20%.
While algos patiently await the only thing that matters for US stocks today which is Janet Yellen’s testimony before Congress. expected to be released at 8:30 am (and previewed here), the rest of the world this morning is a hot mess of schizophrenic highs and lows.
“We have reached that fork in the road within the monetary twilight zone, where Europe’s largest bank is openly defying central bank policy and demanding an end to easy money. Alas, since tighter monetary policy assures just as much if not more pain, one can’t help but wonder just how the central banks get themselves out of this particular trap they set up for themselves.”
Back in September in “How Mario Draghi Can Force The Swiss National Bank To Go ‘Nuclear On Depositors,” we discussed the implications of the ECB’s (likely) decision to plunge further into NIRP-dom at the bank’s December meeting.
In short, DM central banks – with the possible exception of the Fed which is about to create a rather meaningful policy divergence with its core CB brethren – are in a proverbial race to bottom. It’s a beggar-thy-neighbor monetary policy regime and the more stubborn inflation expectations prove to be, the more aggressive the tit-for-tat easing, as everyone involved scrambles to protect their currency in the face of incessant competitive devaluations on all sides.
As we outlined in great detail in the post linked above, the ECB’s ultra dovish lean has the potential to create a lot of problems for the Riksbank, the Norges Bank, and the SNB. Continue reading »
… here are some shocking statistics on how we got there, and which we all take for granted, courtesy of BofA:
- There have been 606 global rate cuts since LEH
- $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
- The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
- European central banks operating negative rate policies (Swiss policy rate currently -0.75%; Sweden’s policy rate currently -0.35
- Just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary “without hesitation”
- $6.3 trillion global government bonds currently yielding <0%
- $20.0 trillion global government bonds currently yielding <1%
But wait, there’s more in describing what BofA says is the most immense and long-lasting monetary stimulus, i.e., bubble, in history:
“The conditions in the economies of the rest of the world have undoubtedly proved weaker compared with a few months ago, in particular in the emerging economies. Global growth forecasts have been revised downwards. This slowdown is probably not temporary.”
Undoubtedly, the most amusing this about the prospect of more easing from the ECB (as telegraphed by Mario Draghi last week) and the BoJ (where Haruhiko Kuroda just jeopardized his status as monetary madman par excellence by failing to expand stimulus) is that both Europe and Japan both recently slid back into deflation despite trillions in central bank asset purchases.
In other words, the market expects both Draghi and Kuroda to double- and triple- down on policies that clearly aren’t working when it comes to altering inflation expectations and/or boosting aggregate demand. Indeed, both Goldman and BofAML said as much last week. For those who missed it, here’s Goldman’s take Continue reading »
For now, negative rates as a policy tool remain a “work in progress”, judging by the current inflation levels across Europe. But the rise in household savings rates amid so much central bank support is paradoxical to us, and mimics what we highlighted in the credit market earlier this year. Companies in Europe are deleveraging, not releveraging, and are buying back bonds not stock. Continue reading »
– The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play (ZeroHedge, Sep 4, 2015):
The most important piece of news announced today was also, as usually happens, the most underreported: it had nothing to do with US jobs, with the Fed’s hiking intentions, with China, or even the ongoing “1998-style” carnage in emerging markets. Instead, it was the admission by ECB governing council member Ewald Nowotny that what we said about the ECB hitting a supply brick wall, was right. Specifically, earlier today Bloomberg quoted the Austrian central banker that the ECB asset-backed securities purchasing program “hasn’t been as successful as we’d hoped.”
Why? “It’s simply because they are running out. There are simply too few of these structured products out there.” Continue reading »
– How Western Governments Will Steal Your Land, Part I (Sprott Money, Aug 19, 2015):
This was a difficult piece to write, and an equally difficult piece to title, because the people who most need to see this message are simultaneously the least-likely to read it. How do you steal anything? Boiled down, there are only two procedures: doing so via brute-force (i.e. robbery), or doing so by deception (i.e. fraud).
This is primarily a warning about the latter form of stealing, although ultimately there will be brute-force employed, for any who attempt to resist the mass-foreclosures and mass-evictions which are now imminent. To explain how your land will be stolen from (most of) you – by fraud – first requires a brief lesson in economics, conducted via a simple, hypothetical scenario. Continue reading »
– Both ECB And BOJ Warn More QE May Be Response To Chinese Currency War (ZeroHedge, Aug 13, 2015):
Minutes from the ECB’s most recent policy meeting reveal that Mario Draghi and company have a number of concerns about the pace of economic growth in the euroarea and about the outlook for inflation which, much to the governing council’s surprise, “remains unusually low.”
Board members also took note of increasingly volatile EGB markets and made special mention of the second bund VaR shock which took place at the first of June, something the central bank attributes to “overvaluation [and] one?way market positioning related to the public sector purchase programme.” In other words: “our bad.” Continue reading »
– Greek Economy Faces Total Collapse As Doctors Flee, Retail Sales Plunge 70% (ZeroHedge, July 28, 2015):
Back in May we outlined the cost to the Greek economy of each day without a deal between Athens and creditors.
At the time, a report from the Hellenic Confederation of Commerce and Enterprises showed that 60 businesses closed and 613 jobs were lost for each business day that the crisis persisted without a resolution.
Since then, things have deteriorated further and indeed, with the imposition of capital controls, businesses found that supplier credit was difficult to come by, leading to the very real possibility that Greece would soon face a shortage of imported goods, something many Greeks clearly anticipated in the wake of the referendum call as evidenced by the lines at gas stations and empty shelves at grocery stores.
– Europe’s New Colonialism: ECB Rejects Greek Request To Reopen Stock Market (ZeroHedge, July 26, 2015):
It has been one month since Greek capital controls were imposed, and as we explained earlier, Greece is nowhere closer to having its deposit limits lifted. In fact, with several more months of capital controls at least, the Greek banks are likely to suffer ongoing balance sheet impairments which will ultimately result in depositor bail-ins, with Germany already pushing for haircuts on deposits over €100,000.
However, when it comes to banks there is at least still the illusion that Greece has some residual sovereignty. The reality is that it does not, as Greece is no longer an independent nation, and as of July 15, the Greek “In Dependence” day, every Greek decision needs to get pre-approval from both the ECB, Brussels and, naturally, Berlin. Continue reading »