Jul 12

Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.

A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin Photo: Reuters

- The wheels are coming off the whole of southern Europe (Telegraph, July 10, 2013):

None of Euroland’s key actors seems willing to admit that the current strategy is untenable. They hope to paper over the cracks until the German elections in September, as if that is going to make any difference.

A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin. It alleges that Greece lacks the “willingness and capacity” to collect taxes. In fact, Athens is missing targets because the economy is still in freefall and that is because of austerity overkill. The Greek think-tank IOBE expects GDP to fall 5pc this year. It has told journalists privately that the final figure may be -7pc. The Greek stabilisation is a mirage.

Italy’s slow crisis is again flaring up. Its debt trajectory has punched through the danger line over the past two years. The country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be beyond the point of no return for a country without its own currency.

Standard & Poor’s did not say this outright when it downgraded the country to near-junk BBB on Tuesday. But if you read between the lines, it is close to saying the game is up for Italy.

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Jul 08

- Greece Calls Europe’s Bluff Again, Gets More Money (ZeroHedge, July 8, 2013):

Five days ago the latest episode of the endless “Europe pays Greece to pay Europe” charade played out when the Eurozone gave Greece its latest three-day “ultimatum” to fix itself or else. Obviously, Greece did not fix itself, but since the three day ultimatum ran out two days ago, and since the BBG ticker for the Greek currency is still not XGD, one can assume that the latest European bluff, especially one coming 2 months before Merkel’s reelection when nothing is allowed to disturb the precarious European house of insolvent cards, was just that: a bluff.

Continue reading »

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Jun 30

- Jim Rogers: “This Is Too Insane–And I’m Afraid We’re All Going To Suffer For The Rest Of This Decade” (Bull Market Thinking, June 26, 2013):

I was able to reconnect with Jim Rogers this morning out of Spain, legendary co-founder of the Quantum Fund with George Soros, author of Hot Commodities, and chairman of the private Beeland Holdings.

It was an especially powerful interview, as Jim spoke towards the relentless downward pressure on gold, the upward explosion in interest rates, central bank money printing, and how to protect yourself ahead of the disastrous times he sees coming.

When asked if we’re seeing forced liquidation leading the smash down in gold this morning, Jim said, “We certainly are. There are a lot of leveraged players who are now being forced to sell. Usually when you have this kind of forced liquidation, you’re getting closer to a bottom, maybe not the final bottom, but certainly close to a bottom. I even bought a little bit [today].”

With regard to the intense bearish news stories being published on gold, Jim suggested investors shouldn’t ”Pay [much] attention to other people. I pay attention to what’s going on…Obviously with gold collapsing I know about that—but I don’t listen to other people.”

Continue reading »

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Jun 20

- Liquidation – Stocks, Bonds, Commodities Collapse (ZeroHedge, June 20, 2013)

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Jun 20

More here:

- Stunning Volume On Gold & Silver Smash In Suspect Trading (King Wolrd News, June 20, 2013):

“And if you need to sell, why are you selling at the worst time of day?  Why are you selling in Asian time, which is always the thinnest section of trading?  Why don’t you wait for London and Chicago to take over?

And the answer is very obvious:  These markets are clearly and blatantly being manipulated.  The people doing it have clear price objectives.  My guess is they want to see a print below $1,300 (on gold) before they are done.  That will allow people (trading for the bullion banks) to make profits on their shorts.

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Jun 15

And who said when Bilderberg Josef Ackerman left Deutsche that things will get very interesting soon enough?

Oh, that was me.


- Deutsche Bank “Is Horribly Undercapitalized… It’s Ridiculous” Says Former Fed President Hoenig (ZeroHedge, June 15, 2013):

Back in May 2012, when we were making fun at the latest iteration of the now fatally discredited European stress tests, we took the first of many jabs at the what may currently be the world’s most systematically important, and undercapitalized, bank in the world:

Finally, if anyone is still confused where the pain is headed next, here is a list from Morgan Stanley of all Euro banks with a Core Tier 1 ratio that is so low, that the banks will soon regret not raising more capital in the period of calm that the ECB’s LTRO bought them.

Also, one bank is missing from the list above: Deutsche Bank. CT1/TA: 1.68%. Oops.

That’s right – Deutsche Bank was so bad that it wasn’t even allowed to appear on a screen of Europe’s most undercapitalized banks – and we helpfully pointed out its true capital ratio of just under 2%, and an implied leverage of 60x!

Fast forward 13 months to a Reuters interview with former Kansas City Fed president and FOMC dissenter and sole voice of reason at the Federal Reserve, and current FDIC Vice Chairman Tom Hoenig, who confirmed that once again Zero Hedge was just a year ahead of the curve.

A top U.S. banking regulator called Deutsche Bank’s capital levels “horrible” and said it is the worst on a list of global banks based on one measurement of leverage ratios. “It’s horrible, I mean they’re horribly undercapitalized,” said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. “They have no margin of error.”  Deutsche’s leverage ratio stood at 1.63 percent, according to Hoenig’s numbers, which are based on European IFRS accounting rules as of the end of 2012.

In other words, the slighest systemic shock in Europe and Deustche Bank gets it. And as Deutsche Bank goes, so does Germany, so does Europe, so does the world.

Immediately confirming Hoenig’s (and Zero Hedge’s) observations, was Deutsche’s prompt repeat that “all is well” and that “these numbers” are not like “those numbers.”

“To say that we are undercapitalized is inaccurate because if you look at the Basel framework, we’re now one of the best capitalized banks in the world after our capital raise,” Deutsche Bank’s Chief Financial Officer Stefan Krause told Reuters in an interview, when asked about Hoenig’s comments. “To suggest that leverage puts us in a position to be a risk to the system is incorrect,” Krause said, calling the gauge a “misleading measure” when used on its own.

Of course, DB’s lies are perfectly expected – after all it is a question of fiath. So let’s go back to Hoenig who continues to be one of the few voices of reason among the “very serious people”: Continue reading »

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May 26


YouTube Added: 24.05.2013

Description:

My recent presentation to the 66th Annual CFA Conference in Singapore in which I discuss the disconnect between financial markets and mathematical reality
www.vulpesinvest.com
info@vulpesinvest.com

Grant Williams:

Grant Williams is a portfolio and strategy adviser at Vulpes Investment Management in Singapore. He began his career in finance with Robert Fleming & Co. in London, where he traded Japanese equity warrants. Mr. Williams also worked at Jardine Fleming in Tokyo before returning to Flemings in London, where he helped establish the firm’s pan-Asian convertible trading business. He headed up Asian equity trading at UBS in London and then ran equity trading books at Credit Suisse in New York, Hong Kong, and Sydney. Mr. Williams has a strong focus on precious metals and miners and is a regular speaker at investment conferences around the world. He writes the Things That Make You Go Hmmm… column for Mauldin Economics’ weekly newsletter.

More info on the conference here: 66th CFA Institute Annual Conference

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May 23

- Four Signs That We’re Back in Dangerous Bubble Territory (Peak Prosperity, May 21, 2013):

Stocks, bonds – everything – at risk

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May 09

- Deutsche Bank: “We Fully Understand Why The Authorities Wouldn’t Want Free Markets To Operate Today” (ZeroHedge, May 9, 2013):

A brief stroke of brilliance from Deutsche Bank’s Jim Reid: Continue reading »

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May 06

- Bank Of Ireland Doubles Mortgage Rates, Homeowners Fear More To Come (ZeroHedge, May 2, 2013):

With the Bank of England cutting its wholesale interest (bank) rate to historic lows and now the ECB slashing 50bps off its key rate (as well as remonstrating on the reduction in fragmentation across European nations), it is perhaps perplexing (or simply too obvious) that a bank would raise its mortgage rates. As the Daily Mail reports, government-owned Bank of Ireland (BOI) doubled mortgage rates for 13,500 customers in the UK leaving homeowners with huge increases in their monthly payments. The bank, exploiting small print in the legacy mortgage contracts, will hike the interest cost for 1-in-14 homeowners from 2.25% to 4.99% (raising the spread over the bank rate on these loans from 1.75% to 4.49%). Anger is rife as customers complain “it’s all very frustrating,” adding that they thought this was a ‘tracker’ mortgage but BOI defends their massive rate hike on increased funding costs and the need to maintain higher levels of capital. The disconnect between wholesale gorging provided by the Central Bank and wholesale gouging of the real economy grows ever wider it seems.

Via The Daily Mail,

Thousands of homeowners are facing a huge increase in their mortgage repayments after the Bank of Ireland doubled rates overnight.

will affect some 13,500 UK customers,

Continue reading »

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May 05


YouTube Added: 03.05.2013

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May 04


YouTube Added: 29.04.2013

Commentary:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
- Alan Greenspan

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
- John Maynard Keynes

Quantitative easing = printing money = creating money out of thin air = increasing the money supply = inflation = hidden tax on monetary assets = theft!

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Apr 28


YouTube Added: 24.04.2013

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Apr 26

- Just Say Nein: Bundesbank Rejects OMT (Again) (ZeroHedge, April 25, 2013):

The last few minutes have seen markets taking a decidedly negative stance. Led by FX carry, risk-assets in general are rolling over. Some attributed it to Bernanke waking the devil from his slumber:

  • *BERNANKE SAYS VULNERABILITIES REMAIN IN FINANCIAL SYSTEM

but it appears that the decision of Germany’s Top court is the market-moving event:

  • *BUNDESBANK REJECTS OMT IN OPINION FOR TOP COURT: HANDELSBLATT

Instantaneously EUR is tumbling, financials are dropping, and the ‘promise’ of Draghi’s tail-risk killer is perhaps being removed. Remember, the high court is due to vote in June on whether the ESM is constitutional under German law and this rejection of ‘OMT’ leaves that decision much more in limbo than the market was expecting.

Via Bloomberg: Continue reading »

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Apr 18

Compare Ambrose Evans-Pritchard’s article to …

- Former Assistant Secretary of the Treasury Dr. Paul Craig Roberts: The Assault On Gold – Assault On Gold UPDATE


- Fed and Bank of Japan caused gold crash (Telegraph, Ambrose Evans-Pritchard April 17, 2013):

Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy.

It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist. The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25pc of GDP.

German car sales fell 17pc in March. That should puncture the last illusions that Germany is about to pull Europe out of a self-inflicted slump.

As you can see from the chart below, the divergence between stock markets and the Deutsche Bank index of raw materials is astonishing to behold, so like the pattern in early 1929. Continue reading »

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Apr 18

- Egan-Jones Downgrades Germany From A+ To A, Outlook Negative (ZeroHedge, April 17, 2013):

The more you try to shut them up, the more they have to say…Just out from Egan-Jones

4/17/2013: Federal Republic Of Germany: EJR lowered A+ to A (Neg.) (S&P: AAA) (3413Z GR)

Continue reading »

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Apr 18

- Farage Unleashed: “You Are Common Criminals” (ZeroHedge, April 17, 2013):

“Years ago, Mrs Thatcher recognized the truth behind the European Project,” UKIP’s Nigel Farage reminds his European Parliament ‘colleagues’, “she saw that it was about taking away democracy from nation states and handing that power to largely unaccountable people.” In one of his most wonderfully vitriolic remonstrations, the fiery Farage blasts Europe’s leadership, “this European Union is the new communism.” Slamming Olli Rehn and his Troika cohorts for “resorting to the level of common criminals and stealing people’s money”, Farage warns, rather chillingly, that, “it is power without limits. It is creating a tide of human misery and the sooner it is swept away the better.” Simply put, he concludes, the European Parliament is living out a federal fantasy which is no longer sustainable.

Full Transcript:

Years ago, Mrs Thatcher recognised the truth behind the European Project. She saw that it was about taking away democracy from nation states and handing that power to largely unaccountable people.

Knowing as she did that the euro would not work she saw that this was a very dangerous design. Now we in UKIP take that same view and I tried over the years in this parliament to predict what the next moves would be as the euro disaster unfolded.

But not even me, in my most pessimistic of speeches would have imagined, Mr Rehn, that you and others in the Troika would resort to the level of common criminals and steal money from peoples’ bank accounts in order to keep propped up this total failure that is the euro.
Continue reading »

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Apr 17

- Buy PHYSICAL Gold. NOW: The Discount of a Lifetime: Or Why You Must Abandon the Fake Paper Gold Market (Gordon Gekko’s Blog, April 17, 2013):

They just showed their hands. The paper Ponzi pyramid is wobbling. It’s time to go in for the kill.

Let me explain. But first let’s get a handle on what’s happening:

“We’ve traded gold for nearly four decades and we’ve never … ever… EVER… seen anything like what we’ve witnessed in the past two trading sessions,”

Dennis Gartman, via The New York Times

“This is an orchestration (the smash in gold).  It’s been going on now from the beginning of April.  Brokerage houses told their individual clients the word was out that hedge funds and institutional investors were going to be dumping gold and that they should get out in advance…it is the Fed’s concern with the dollar because the dollar is being printed in huge quantities at the same time that other countries are abandoning the use of the dollar as international payment.

The exchange value of the dollar is (being) threatened, and if that collapses the Fed loses control over interest rates.  Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail.  So it’s an act of desperation because they’ve got to establish in people’s minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies.

Continue reading »

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Apr 17

“Cyprus’ Bottom”

Flashback: “Brown’s Bottom”


- Cyprus Finance Minister Sees Gold Sale Within Next Months (Bloomberg, April 17, 2013):

The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiades said.“The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.”

Cypriot President Nicos Anastasiades is trying to unlock 10 billion euros ($13.2 billion) of loans from the euro area and the International Monetary Fund. To do so, he must come up with a further 11 billion euros through measures including a tax on bank deposits of more than 100,000 euros at the country’s two biggest banks, the sale of assets and gold and other tax measures.

Continue reading »

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Apr 15

- Which Country’s Gold Will Be Sold Next? (ZeroHedge, April 15, 2013):

The first time the Status Quo/Troika tried to force a (not so) stealthy gold confiscation on an insolvent European country was back in early 2012, when as part of the most recent Greek bailout MOU, it was disclosed that “Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.” However, the public outcry was so loud that the Troika had no choice but to shelve its plans and proceed with a full scale bondholder restructuring instead. Fast forward to last week, when Europe’s appetite for physical gold came back with a bang, this time as part of the Cyprus “Debt Sustainability Analysis“, and subsequent comments from Mario Draghi, demanding that tiny Cyprus, whose opposition, already weakened by the confiscation of uninsured deposits would be far less vocal than Greece’s, sell off €400MM, or virtually all of its sovereign gold, over 10 of its 13.9 total tons, to cover the excess costs of its ever ballooning sovereign bailout. Continue reading »

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Apr 12

- I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets! (ZeroHedge, April 12, 2013)

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Apr 12

- Cyprus Central Bank In Shambles Following Third Board Member Resignation (ZeroHedge, April 12, 2013):

Perhaps the most underfollowed story of the day is the blatant takeover of the Cypriot Central bank by the ECB, which as we reported earlier, has been ordered to sell their gold by the ECB’s Mario Draghi, even though the disposition decision of the “independent” central bank of the now insolvent nation is supposedly theirs. First it was this:

  • PANICOS DEMETRIADES SAYS CYPRUS CENTRAL BANK INDEPENDENCE UNDER ATTACK,
  • DEMETRIADES SAYS GOVT WANTS TO SELL GOLD WITHOUT CONSULTATION.

And now we learn that not one, not two, but three board members of the central bank have called it a day:

  • THIRD BOARD MEMBER OF THE CYPRUS CENTRAL BANK RESIGNS – CYBC

We are sure there are at least a few more board members who can resign topped off by Panicos himself bailing, before the entire central bank implodes, and there is nobody left in charge of the now obsolete monetary policy apparatus. What happens then: will Goldman appoint a new “technocratic” Board and governor, or will the country finally confirm that all European lies about member bank Independence is just one big lie?

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Apr 12

- EMU plot curdles as creditors seize Cyprus gold reserves (Telegraph, April 11, 2013):

First they purloin the savings and bank deposits in Laiki and the Bank of Cyprus, including the working funds of the University of Cyprus, and thousands of small firms hanging on by their fingertips.

Then they seize three quarters of the country’s gold reserves, making it ever harder for Cyprus to extricate itself from EMU at a later date.

The people of Cyprus first learned about this from a Reuters leak of the working documents for the Eurogroup meeting on Friday.

It is tucked away in clause 29. “Sale of excess gold reserves: The Cypriot authorities have committed to sell the excess amount of gold reserves owned by the Republic. This is estimated to generate one-off revenues to the state of €400m via an extraordinary payout of central bank profits.”

This seemed to catch the central bank by surprise. Officials said they knew nothing about it. So who in fact made this decision?

Continue reading »

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Apr 12

- Mario Draghi Orders Cyprus To Sell Gold To Cover Bailout “Shortfall” (ZeroHedge, April 11, 2013):

Update, and sure enough:

  • PANICOS DEMETRIADES SAYS CYPRUS CENTRAL BANK INDEPENDENCE UNDER ATTACK,
  • DEMETRIADES SAYS GOVT WANTS TO SELL GOLD WITHOUT CONSULTATION.
  • CYPRUS CENTRAL BANK GOV DEMETRIADES SAYS HE AND HIS FAMILY RECEIVED DEATH THREATS

As a reminder, Panicos holds the now obsolete position of head of the Cyprus Central Bank.

* * *

As was noted two days ago (so certainly not the news catalyst for today’s gold sell off as some are trying to make it appear) as part of its bailout expansion by 35%, Cyprus announced, then refuted, then re-admitted, it would need to fund a portion of the incremental €7 billion in cash demands by selling €400 million, or nearly all 13.9 tons, of its central bank gold. Today, we learn that this demand came from none other than the head of the ECB Mario Draghi. Bloomberg reports: “European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks.”

Of course, to make it seem that the Cyprus central bank is “independent”, the “European creditors today left a possible gold sale in the hands of the Cypriot central bank, which manages 13.9 metric tons of the metal, according to the World Gold Council.” Naturally, it would not be very politically correct to give the impression that it is none other than the collateral and asset-starved European central bank that is effectively running local monetary policy of its member states, and certainly would not make Cypriots, already devoid of their uninsured bank deposits, happy that the next demand by the ECB for the privilege of staying in the EUR is for them to hand over the only real asset their country has.

More from Bloomberg:

“The decision is going to be taken by the central bank,” Draghi said after a meeting of euro-area finance officials in Dublin. “What’s important, however, is that what is being transferred to the government budget out of the profits made out of the sales of gold should cover first and foremost any potential loss that the central bank might have from its ELA.”

Continue reading »

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Apr 12

- Carmen Reinhart: “No Doubt. Our Pensions Are Screwed.” (ZeroHedge, April 11, 2013):

“The crisis isn’t over yet,” warns Carmen Reinhart, “not in the US and not in Europe.” Known for her deep understanding that ‘it’s never different this time’, the Harvard economist drops the truth grenade a number of times in this excellent Der Spiegel interview. Sweeping away the sound and fury of a self-serving Federal Reserve or BoJ, she chides, “no central bank will admit it is keeping rates low to help governments out of their debt crises. But in fact they are bending over backwards to help governments to finance their deficits,” and guess what, “this is nothing new in history.”

After World War II, all countries that had a big debt overhang relied on financial repression to avoid an explicit default. After the war, governments imposed interest rate ceilings for government bonds; but, nowadays, she explains, “monetary policy is doing the job. And with high unemployment and low inflation that doesn’t even look suspicious. Only when inflation picks up, which is ultimately going to happen, will it become obvious that central banks have become subservient to governments.”

Nations “seldom just grow themselves out of debt,” as so many believe is possible, “you need a combination of austerity, so that you don’t add further to the pile of debt, and higher inflation, which is effectively a subtle form of taxation,” with the consequence that people are going to lose their savings. Reinhart succinctly summarizes, “no doubt, our pensions are screwed.”

This will take 3 minutes to read – read it. Understand what she is saying. Continue reading »

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Apr 10

- The Next Capital Control: Banning The €500 Bill (ZeroHedge, April 9, 2013)

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Apr 06

- Bank Of England Admits “Stocks Don’t Reflect Economic Reality” (ZeroHedge, April 5, 2013):

The Bank of England’s Financial Policy Committee (BoEFPC) warns there is “evidence of the re-emergence of… behavior in financial markets not seen since before the financial crisis,” citing the increased issuance of synthetic products and added that banks have “little margin for error against a backdrop of low growth in the advanced economies,” despite what we are told about their ‘fortress balance sheets. Bloomberg Businessweek adds that the BoE were careful not to scare the public, they add, events currently “did not appear indicative of widespread exuberance in markets. But developments would need to be monitored closely.” This following the Fed’s warnings of ‘froth’ in the credit markets suggests central bans are considerably more concerned at blowing bubbles than they want to admit in public. ECB’s Weber recently commented that he feared, “the recent rally in financial markets could be a misleading signal,” which appears confirmed by the BoEFPC noting that equity performance since mid-2012, “in part reflected exceptionally accommodative monetary policies by many central banks… But market sentiment may be taking too rosy a view of the underlying stresses.”

Via Bloomberg BusinessWeek,

The Bank of England said rising equity markets don’t reflect the underlying economic situation and warned that investors may be underestimating risks in the financial system.

Gains by equities since mid-2012 “in part reflected exceptionally accommodative monetary policies by many central banks,” the BOE’s Financial Policy Committee said today in London in the minutes of its March 19 meeting. “It was also consistent with a perception among some contacts that the most significant downside risks had attenuated. But market sentiment may be taking too rosy a view of the underlying stresses.”

Continue reading »

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Apr 04

- Mario Draghi Responds To Zero Hedge: “There Is No Plan B” (ZeroHedge, April 4, 2013):

This happened earlier today, at the ECB press conference:Scott Solano, DPA: Mr Draghi, I’ve got a couple of question from the viewers at Zero Hedge, and one of them goes like this: say the situation in Greece or Spain deteriorates even further, and they want to or are forced to step out of the Eurozone, is there a plan in place so that the markets don’t basically collapse? Is there some kind of structural system, structural safety net, especially in the area of derivatives? And the second questions is: you spoke earlier about the Emergency Liquidity Assistance, and what would have happened to the ELA in Cyprus, the approximately €10 billion, if the country had decided to leave the Eurozone?

Mario Draghi, ECB: Well you really are asking questions that are so hypothetical that I don’t have an answer to them. Well, I may have a partial answer. These questions are formulated by people who vastly underestimate what the Euro means for the Europeans, for the Euro area. They vastly underestimate the amount of political capital that has been invested in the Euro. And so they keep on asking questions like: “If the Euro breaks down, and if a country leaves the Euro, it’s not like a sliding door. It’s a very important thing. It’s a project in the European Union. That’s why you have a very hard time asking people like me “what would happened if.” No Plan B.

Secondly, I think the ECB has shown its determination to fight any redenomination risk. And OMT with its precise rules and acting within its mandate, is there to this purpose. So that’s the answer to the first question.

The second question was about the ELA, but again it’s related to “if Cyprus leaves”  and again we don’t have that in mind, so…. No Plan B.

Informative. We do have three follow up questions: Continue reading »

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Apr 03

- The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse (Economic Collapse, April 2, 2013):

Have you ever wondered how the big banks make such enormous mountains of money?  Well, the truth is that much of it is made by gambling recklessly.  If they win on their bets, they become fabulously wealthy.  If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”.  Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts.  So if they win, they win big.  If they lose, someone else will come in and clean up the mess.  This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks.  If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street.  But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened.  In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.

Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?

Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them.  In a recent article, Ron Paul explained how the situation played out once the bets started to go bad… Continue reading »

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Apr 02

- The Great Cyprus Bank Robbery (Ron Paul, April 1, 2013):

The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.

Continue reading »

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