Global financial system implosion begins

[yield]

So from tentative 13 billion to actual 5.1 billion settlement?

That's just the part for the housing regulator.

RBS handed FX trader messages to UK regulator
Reuters Oct 9, 2013

No sure how big this'll be? More fines pre-privatisation?

Barclays joins banks helping with forex probe
Reuters. Oct 30, 2013

 

[yield]

Forex traders at RBS and Barclays suspended over manipulation claims
Independent. Saturday 02 November 2013

A number of traders at Barclays and the Royal Bank of Scotland have been suspended amid a growing investigation into allegations of possible manipulation of the $5.3trn (£3.3trn) a day foreign currency market.

Six traders at Barclays and two at RBS have been suspended against the backdrop of inquiries by international regulators, including the UK's Financial Conduct Authority. The action follows reports earlier this week that JP Morgan and Citigroup had put senior London-based dealers on leave.

At Standard Chartered, meanwhile, a recently hired currencies trader is believed to have gone on leave of absence. None of the traders in question has been accused of any wrongdoing.

$5.3trillion (£3.3trillion) a day foreign currency market. That's trillion as in a thousand billion. A million million.

 

[gosub]

http://www.bloomberg.com/news/2013-...n-china-s-favor-to-boost-record-reserves.html

 

[Dr Jon]

Big banks rigging the price of Gold to keep their paper pyramid ponzi schemes afloat:
link

 

[yield]

Federal Reserve to taper economic stimulus on heels of strong jobs growth
theguardian.com, Wednesday 18 December 2013

The outgoing chairman of the Federal Reserve, Ben Bernanke, has announced that the US would pull back on its massive economic stimulus program, signalling the beginning of an end to five years of unprecedented government intervention in financial markets.

Bernanke, entering his final days as chairman of the US central bank, surprised many economists who had expected the Fed to wait until the new year to “taper” the so-called quantitative easing (QE) stimulus program.

But following a series of strong jobs growth numbers the Fed’s open markets committee said “cumulative progress” had been made in the US’s economic recovery and it was scaling back its $85bn a month bond-buying programme to $75bn.

Still $75 billion each month. Five years on.

Fed Finds Elixir for Tapering QE as Markets Embrace Rate Outlook
Bloomberg 2013-12-19

Bernanke said that the “cost-benefit ratio” of quantitative easing “moves in a way that’s less favorable” as the size of the Fed’s balance sheet grows. The Fed’s assets rose to a record $3.99 trillion as of Dec. 11, up from $2.82 trillion in September 2012.

$4 trillion. Around 25% of USA GDP. How much are the assets really worth?

S&P cuts EU's AAA rating, European officials dismiss move
Reuters Fri Dec 20, 2013

Credit agency Standard & Poor's cut its triple-A rating of the European Union by one notch on Friday, saying it had concerns about how the bloc's budget was financed, a view EU leaders and other officials dismissed as misguided.

S&P's announcement came the day after the EU reached a deal to overhaul the region's banking sector, an agreement many commentators said fell short of expectations, although S&P said it had not factored into its credit assessment.

"In our opinion, the overall creditworthiness of the now 28 European Union member states has declined," the rating agency said in a statement that came 11 months after it announced it had a 'negative' outlook on the bloc.

"EU budgetary negotiations have become more contentious, signaling what we consider to be rising risks to the support of the EU from some member states."

European officials said they were not surprised by the move to AA+ since S&P recently downgraded the Netherlands and has lowered its view on six other member states - France, Italy, Spain, Malta, Slovenia and Cyprus - in the past year.

The credit ratings agencies aren't credible anyway.

 

[gosub]

On the heels of strong job growth, is it fuck, on the the heels of China not wanting to play any more more like

 

[yield]

China's GDP was a third of the USA's in 2008. In 2012 it was over half.

 

[yield]

Banks warned about exchange rate dangers in 2009
BBC News 23 December 2013

Analysts warned trading at 4pm could have a 'debilitating' effect on investments, costing up to 5% annually.

The London fix is widely used by pension funds and other investors to value portfolios and set a price for deals.

Separate rates are calculated for each pair of currencies, such as the Euro and US Dollar, or the Pound and the US Dollar.

The rates hit the headlines in October, when Barclays suspended six traders, and RBS suspended two traders in connection with the regulators' inquiry. Fifteen banks have been contacted about this issue, including Citigroup, Deutsche Bank and UBS. At this time no-one is formally accused of wrongdoing.
Foreign currency London is the global centre of currency trading

The suggestion is that traders colluded to push through high volumes of trades in the run-up to and during the window to influence rates.

Paul Aston, author of the report, now works in New York at the financial firm TD Securities. He said some investors had started moving away from trading at the fix, but many are still using it.

Asked why regulators had not intervened when his report was written, he said that foreign exchange "is the widest, freest, global market that there is, so in order to have any kind of regulatory effectiveness in this market you have to have very tight co-ordination over multiple jurisdictions," something which would be difficult to achieve.

"I also don't think that regulators were aware of how the market works, or the uses of currencies," he said.

David Ruffley MP, a member of the treasury select committee, told the BBC: "I think it's fairly clear that everyone in this country who has shares in pension funds, and that's most of us one way or the other, will have seen a fall in the value of those shares as a result of this."

"And that's not a politician saying it - it is what a bank was telling its own customers in 2009."

He has written to the Serious Fraud Office, requesting that they run an investigation in parallel to the Financial Conduct Authority's probe.

Free markets? Price discovery?

 

[Falcon]

At the heart of the matter was (and continues to be) the relationship between energy and economic growth. Without increasing supplies of cheap energy, economic growth — as we have known it for a couple of centuries — does not happen anymore. At the center of the economic growth question is credit. Without continued growth, credit can’t be repaid, and new credit cannot be issued honestly — that is, with reasonable assurance of repayment — making it worthless. So, old debt goes bad and the new debt is generated knowing that it is worthless. To complicate matters, the new worthless debt is issued to pay the interest on the old debt, to maintain the pretense that it is not going bad. And then all kinds of dishonest side rackets are run around this central credit racket — shadow banking, “innovative” securities (i.e. new kinds of frauds and swindles, CDOs CDSs, etc.), flash trading, insider flimflams, pump-and-dumps, naked shorts, etc. These games give the impression of an economy that seems to work. But the reported “growth” is phony, a concoction of overcooked statistics and wishful thinking. And the net effect moves the society as a whole in the direction of more destructive ultimate failure.

"Forecast 2014 — Burning Down the House" - Kunstler, 6th Jan 2014 (link)

 

[toblerone3]

But superficially, at least, the world economy seems to be in better shape than it did two or three years ago. There has been an attempt to clean up some of worst (system endangering) finacial derivatives. Meanwhile no-one seems to be talking about sovereign debt default among the PIGS bringing down the Euro. Maybe the linking of long term diminishing EROI with short-term financial criticality was incorrect.

 

[yield]

Now We Know: JPMorgan Chase Is Worse Than Enron
huffingtonpost. 01/06/2014

It's beginning to look as if JPMorgan Chase has had a hand in every major banking scandal of the last decade. In fact, it's the Zelig of Wall Street crime. Take a snapshot of any major bank fraud and chances are you'll see JPMorgan Chase staring out at you from the frame.

Foreclosure fraud, investor fraud, cheating customers, market manipulation, LIBOR... and now, the coup de grace to JPM's tattered reputation: a $2 billion fine for closing its eyes and covering up as Bernie Madoff literally bilked widows and orphans, along with a lot of other families and charities. (Here's a list of investors.)

Does Jamie Dimon, the bank's CEO, still think people don't say enough nice things about him? Do his friends? More importantly, how does the largest bank in the country (measured in assets) get away with being worse than Enron?

That one's easy: By being the largest bank in the country.

The fines they've paid are staggering. Still only a fraction of their profits.

 

[Falcon]

But superficially, at least, the world economy seems to be in better shape than it did two or three years ago… Maybe the linking of long term diminishing EROI with short-term financial criticality was incorrect.

Superficially, the world economy in 1929 looked in better shape than it did two or three years previously.

Then it crashed.

And in 1930, the economy was on the threshold of net energy availability doubling every decade for five consecutive decades (1, 2, 4, 8, 16). It took an extraordinary degree of incompetence not to to sustain growth under those conditions.

We are on the threshold of net energy availability halving every fixed period, indefinitely (1, 0.5, 0.25, 0.125).

I think the statement that linkage between long term diminishing EROI and financial instability may be incorrect has, at best, no basis in observable reality.

 

[gosub]

http://www.telegraph.co.uk/finance/...t-may-push-global-economy-into-deflation.html

 

[yield]

Deutsche quits gold price-setting as regulators investigate fix
Reuters. Fri Jan 17, 2014

Deutsche Bank will withdraw from gold and silver benchmark price setting, it said on Friday, as European regulators investigate suspected manipulation of precious metals prices by banks.

Germany's largest bank and some of its rivals are taking a battering over a series of other scandals and inquiries regarding manipulation of interest rates and foreign exchange.

On Wednesday, global investigations into alleged currency market manipulation intensified as U.S. regulators descended on Citigroup's London offices and Deutsche suspended several traders in New York, sources told Reuters.

Deutsche is one of five banks involved in the twice-daily gold fix for global price setting and said it was quitting the process after withdrawing from the bulk of its commodities business.

 

[teqniq]

Chicago Alderwoman Proposes City Stop Doing Business With JPMorgan Chase After It Admits to Illegal Actions

 

[toblerone3]

Superficially, the world economy in 1929 looked in better shape than it did two or three years previously.

Then it crashed.

And in 1930, the economy was on the threshold of net energy availability doubling every decade for five consecutive decades (1, 2, 4, 8, 16). It took an extraordinary degree of incompetence not to to sustain growth under those conditions.

We are on the threshold of net energy availability halving every fixed period, indefinitely (1, 0.5, 0.25, 0.125).

I think the statement that linkage between long term diminishing EROI and financial instability may be incorrect has, at best, no basis in observable reality.

So you're predicting another crash based on the unproven link between diminishing EROI. But the thread title is "implosion begins ....". NOT "implosion will begin". So you got it wrong last time as you explicitly linked diminishing EROI with what was happening (ie the near collapse of the global financial system in 2008-11) not with what was going to happen. Now you are effectively making a fresh prediction despite being wrong last time. This is is fine, everyone is allowed to make mistakes and there are still questions about credit and energy to be asked. But perhaps people need to start being upfront in explaining why the meltdown did not occur.

 

[gosub]

http://www.economonitor.com/blog/20...sses-the-point-in-redefining-leverage-ratios/


back to 3%. Next time round the whirligig will be different, these fuckers have absolutely no notion of moral hazard

 

[Falcon]

So you're predicting another crash based on the unproven link between diminishing EROI. But the thread title is "implosion begins ....". NOT "implosion will begin". So you got it wrong last time as you explicitly linked diminishing EROI with what was happening (ie the near collapse of the global financial system in 2008-11) not with what was going to happen. Now you are effectively making a fresh prediction despite being wrong last time. This is is fine, everyone is allowed to make mistakes and there are still questions about credit and energy to be asked. But perhaps people need to start being upfront in explaining why the meltdown did not occur.

What "other crash"?

If you understand why a chicken continues to flap its wings after it has been decapitated, you will grasp the difference between appearing to be functional, and being functional.

The appearance of financial continuity is being maintained only to the extant that the ongoing injection of colossal quantities of synthetic debt (i.e. debt which has no collateral in physical reality) is sustainable.

The burden of that debt (which is assumed to redeemable by our children under the naive assumption of continued growth) is - by definition - irredeemable. Each additional unit of synthetic debt dilutes the value of all debt. There is a point at which confidence in the value of the system falls below some threshold, triggering an equity withdrawal positive feedback loop.

We therefore now have a system which works until it doesn't. The system is functionally insolvent, and has therefore crashed, in any sense that matters.

 

[gosub]

You are out of date on QE, they stopped recently, after China said it won't buy any more.

Having reached the credit limit of nation states, we now go back to increasing bank debt ratios.

Tense based pedantry. Other than that not disagreeing - 5 years of printing money and below inflation 'growth' to get stock markets back to where the were, whilst millions have been added to the number of unemployed. Gives an idea of the size of the hole.
Fixes have been sticking plaster rather than reform. And golden good byes rather than jail seems the norm

 

[Falcon]

You are out of date on QE, they stopped recently, after China said it won't buy any more.

I think gosub is being ironic. But just so the facts are clear:

A reduction in the program to $65 billion a month from the current $75 billion could be announced at the end of the Jan. 28-29 meeting
- Wall Street Journal, 20th Jan (link - subscription required)

 

[gosub]

http://www.bloomberg.com/news/2013-...n-china-s-favor-to-boost-record-reserves.html

Federal Reserve to taper economic stimulus on heels of strong jobs growth
theguardian.com, Wednesday 18 December 2013

Still $75 billion each month. Five years on.

Fed Finds Elixir for Tapering QE as Markets Embrace Rate Outlook
Bloomberg 2013-12-19

$4 trillion. Around 25% of USA GDP. How much are the assets really worth?

I was n't being that ironic, My thinking was along similar lines to Neil Woodford in December that stock market had only really risen coz their was no where else for the QE money to go, and would correct when it stopped. I was surprised when the Dow rose on the back of reduction of QE news.
The Chinese news should trump all of that (not widely reported ) but if the Basel 3 movements (again not widely reported) allow banks to increase their leverage (with new added risk factor for government bonds post Greece) they theoretically still have a potential market for new print runs. But its just makes for a bigger bonfire .

But the switch in the shell game is definitely on, in 6 months we won't be whinging about central bankers diluting it will be private bankers diluting again behind closed doors.

 

[yield]

Emerging markets selloff picks up, hitting Europe, U.S.
Reuters. Fri Jan 24, 2014

A full-scale flight from emerging market assets accelerated on Friday, setting global shares on course for their worst week this year and driving investors to safe-haven assets including U.S. Treasuries, the yen, and gold.

Wall Street opened lower, extending selling to a second day. Concerns about slower growth in China, reduced support from U.S. monetary policy and political problems in Turkey, Argentina and Ukraine drove the selling.

The Turkish lira hit a record low. Argentina's peso fell again after the central bank abandoned its support of the currency.

The declines mirror moves from last June when developing country stocks fell almost 18 percent over about two months and hit global shares.

The broad nature of this selloff combines country-specific problems with the reality that reduced U.S. Federal Reserve bond buying reduces liquidity that has in the past boosted higher-yielding emerging markets assets.

See also
Venezuela creates dual-rate forex system; critics cry devaluation
Reuters. Wed Jan 22, 2014

 

[Yuwipi Woman]

I read this story this morning and could see some of the parallels he was pointing out. Luckily "Dr. Doom" is usually wrong:

Many speakers compare 2014 to 1914 when WWI broke out & no one expected it. A black swan in the form of a war between China & Japan?"

He then tweeted some of the reasoning behind this train of thought.

"Echoes of 1914: backlash against globalization, gilded age of inequality, rising geopolitical tensions, ignoring tail risks."

While Roubini is renowned for his bubble warnings and doom scenarios, his concerns weren't drawn out of thin air, but rather taken mainly from the lips of Japanese Prime Minister Shinzo Abe.

According to reports from both The Financial Times and BBC, Abe said on Wednesday that China and Japan were in a "similar situation" to that of Britain and Germany ahead of World War I.

http://money.msn.com/investing/post--dr-doom-sees-parallels-to-1914-in-asia

 

[yield]

I read this story this morning and could see some of the parallels he was pointing out. Luckily "Dr. Doom" is usually wrong:
http://money.msn.com/investing/post--dr-doom-sees-parallels-to-1914-in-asia

I can't see the similarities? I hope I'm not wrong.

Japan while it has less numerical sea power but complete naval supremacy without USA intervention. Technological more developed with experienced personnel.

China would get a bloody nose if it makes a military push for the Diaoyu/Sentaku Islands

 

[yield]

HSBC faces £70bn capital hole, warn Hong Kong analysts
Yahoo – Thu, Jan 16, 2014 (Can't find orginal Telegraph article)

HSBC could have overstated its assets by more than £50bn and ultimately need a capital injection of close to £70bn before the end of this decade, according to an incendiary report published by a Hong Kong-based research firm .

Forensic Asia on Tuesday began its coverage of Britain’s largest banking group with a ‘sell’ recommendation, warning the lender had between $63.6bn (£38.7bn) and $92.3bn of “questionable assets” on its balance sheet, ranging from loan loss reserves and accrued interest to deferred tax assets, defined benefit pension schemes and opaque Level 3 assets.

http://www.bbc.co.uk/news/business-25861717

 

[Barking_Mad]

The above came after reports of HSBC not allowing UK customers to withdraw large sums of cash. They've said that this was a fraud prevention issue and staff have misunderstood tw change in policy...

 

[Rimbaud]

The above came after reports of HSBC not allowing UK customers to withdraw large sums of cash. They've said that this was a fraud prevention issue and staff have misunderstood tw change in policy...

That may well be true, however if they were trying to prevent a bank run they're hardly going to publicly state that that was the reason, if they did that they most certainly WILL end up with a bank run regardless...

 

[Barking_Mad]

Agreed.

 

[Artaxerxes]

Regarding your editorial "Censors on Campus" (Jan. 18): Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its "one percent," namely its Jews, to the progressive war on the American one percent, namely the "rich."

http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286
http://online.wsj.com/news/articles/SB10001424052702304549504579316913982034286

Rich people are like Jews apparently, a misunderstood minority.

 

[Barking_Mad]

HSBC's share price today: Down 1.5%. Some people are a bit nervous it would seem?