Global financial system implosion begins

[gosub]

The real risk is in the shadow lending - not controlled nor even monitored very well

Ambrose Pritchard has done a few pieces on that a while ago

http://www.telegraph.co.uk/finance/...s-Chinas-shadow-banking-grinds-to-a-halt.html

 

[hipipol]

Ambrose Pritchard has done a few pieces on that a while ago

http://www.telegraph.co.uk/finance/...s-Chinas-shadow-banking-grinds-to-a-halt.html

Yep, just months too late
In the previous article the mentioned a reserve ratio of 20% _ that was imposed to prevent the state monitored banks from directly lending to property biz, also to stop them from funding via the grey mkt/shadow banking
Its well worth bearing in mind that until the early 2000s there were NO accountancy schools in China - hardly a priority for a proper communist state
Much of what is quoted is fiction
ALL emerging markets numbers should be treated as subject - meaning variable

 

[yield]

Derivatives markets growing again, with few new protections
NYTimes dealbook. May 13, 2014

Despite slow economic growth in the United States and most of Europe still in or hovering around recession, global derivatives markets are 20 percent larger than in 2007. The Bank for International Settlements announced late last week that the global derivatives market is about $710 trillion. That is not a measurement of credit and market risks, but the figure merits attention from regulators and the public, which continues to suffer the ill effects from weakly managed derivatives portfolios in the global financial crisis. Higher volumes are a strong indication that derivatives players’ operational risk is rising.

Not only is the enormous size of these portfolios of concern, so is the fact that less than 5 percent of the portfolios are regulated and transparent exchange-traded products. The rest is in far more lucrative, opaque over-the-counter products.

As regulations like the Dodd-Frank law and the European Markets Infrastructure Regulation start to be take effect, some aspects of the derivatives markets, like pricing and volumes, will slowly become more transparent. What will remain opaque, however, is how banks sell derivatives to clients, in what jurisdictions derivatives are recorded, the strength of risk management and the extent to which governments and taxpayers can be affected if derivatives are again at the center of a crisis.

What lessons have been learnt from 2008?

 

[Yuwipi Woman]

What lessons have been learnt from 2008?

Bring rope next time:

 

[yield]

Bring rope next time:

There is that. The right people won't get the blame for the mess though.

It'll be Chinese currency depreciation or Russian imperialism that's the fall guy.

We'll see how strong growth is in the USA when quantitative easing ends later in the year.

 

[not-bono-ever]

EMIR is up and running effectively, but the CCPs( them clearing houses and bourses) have quietly told everyone involved that their reporting is too complex and monolithic, that they wont actually be in a position to actutually be checked and scrutinised for at least a year.So much for regulation.

 

[DairyQueen]

There is that. The right people won't get the blame for the mess though.

It'll be Chinese currency depreciation or Russian imperialism that's the fall guy.

We'll see how strong growth is in the USA when quantitative easing ends later in the year.

[SARCASM]... or socialists... [/SARCASM]

 

[Bernie Gunther]

?

 

[DairyQueen]

http://capitalismmagazine.com/2009/...cies-not-capitalism-for-the-financial-crisis/

Edited above post...

 

[Dr Jon]

DB warns it's arrogant coke-head money jugglers to stop behaving like arrogant coke-head money jugglers: they are leaving trails of evidence!
Deutsche Bank warns traders that boasting, indiscreet and vulgar comments 'are not OK'

 

[hipipol]

DB warns it's arrogant coke-head money jugglers to stop behaving like arrogant coke-head money jugglers: they are leaving trails of evidence!
Deutsche Bank warns traders that boasting, indiscreet and vulgar comments 'are not OK'

Dont believe the hype

Deutsche Bank to raise $11 billion with help from Qatar
http://uk.reuters.com/article/2014/05/19/uk-deutsche-bank-capital-idUKKBN0DZ09D20140519


"Deutsche Bank said it would focus on an "accelerated growth programme" by hiring top bankers in the United States, investing some 200 million euros to overhaul retail operations in Germany and Europe, and will hire up to 100 advisers to support its biggest corporate clients. "

The Qataris believe keeping whoring, drinking, clubbing virtual slave labour back to barracks when they complain, etc under the radar
Just a bit a bit reassurance from cash strapped Deutsche that they too can play that game

 

[Dr Jon]

Iran leads the way:

An Iranian businessman convicted of masterminding a $2.6 billion banking scam, the biggest fraud case in the country's history, was hanged on Saturday, state media reported.

link

 

[Bernie Gunther]

I think there'd be a danger of a global rope shortage if such far-sighted policies were adopted with regard to criminal behavior in the City and on Wall Street.

Are all these examples of oversight failure and banking fraud just big ol' mistakes? Are the regulators simply distracted?

The top headline of the day's news sums up why it is not that simple:"Geithner Tried to Curb Bank's Rate Rigging in 2008". The story reports that when Timothy Geithner, at the time he ran the Federal Reserve Bank of New York, learned of "problems" with how interest rates were fixed in London, the financial center at the heart of the Libor Barclaysscandal. He let "top British authorities" know of the issues and wrote an email to his counterparts suggesting reforms. Were his actions ethical, or prudent? A possible interpretation of Geithner's action is that he was "covering his ass", without serious expectation of effecting reform of what he knew to be systemic abuse.

And what, in fact, happened? Barclays kept reporting false rates, seeking to boost its profit. Last month, the bank agreed to pay $450m to US and UK authorities for manipulating the Libor and other key benchmarks, upon which great swaths of the economy depended. This manipulation is alleged in numerous lawsuits to have defrauded thousands of bank clients. So Geithner's "warnings came too late, and his efforts did not stop the illegal activity".

And then what happened? Did Geithner, presumably frustrated that his warnings had gone unheeded, call a press conference? No. He stayed silent, as a practice that now looks as if several major banks also perpetrated, continued.

And then what happened? Tim Geithner became Treasury Secretary. At which point, he still did nothing.

It is very hard, looking at the elaborate edifices of fraud that are emerging across the financial system, to ignore the possibility that this kind of silence – "the willingness to not rock the boat" – is simply rewarded by promotion to ever higher positions, ever greater authority. If you learn that rate-rigging and regulatory failures are systemic, but stay quiet, well, perhaps you have shown that you are genuinely reliable and deserve membership of the club.

Whatever motivated Geithner's silence, or that of the "government official" in the emails to Barclays, this much is obvious: the mainstream media need to drop their narratives of "Gosh, another oversight". The financial sector's corruption must be recognized as systemic.

http://www.theguardian.com/commentisfree/2012/jul/14/global-financial-fraud-gatekeepers

 

[Dr Jon]

I think there'd be a danger of a global rope shortage if such far-sighted policies were adopted with regard to criminal behavior in the City and on Wall Street.

Another reason to grow more Hemp.

ETA
Just spotted this

 

[yield]

Hookers And Blow: How changing the definition of GDP officially jumped the shark
zerohedge 05/23/2014

A year ago it was the US which first "boosted" America's GDP by $500 billion - literally out of thin air - when it arbitrarily decided to include "intangibles" to the components that 'make up' GDP (in the process cutting over 5% from the US Debt/GDP ratio). Then Spain joined the fray. Then Greece. Then the UK. Then Nigeria, which showed those deveoped Keynesian basket cases how it is really done, when it doubled the size of its GDP overnight when it decided to change the base year of its GDP calculations.

Now it is Italy's turn, and like everything else Italy does, this latest "revision" of the definition of GDP easily wins in the style points category. As Bloomberg reports, "Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year."

 

[Coolfonz]

I think the UK will too. Most counries being asked to estimate size of black market, should be interesting in Spain!

 

[yield]

U.S. economy stumbles in first-quarter, but prospects brighter
Reuters. Thu May 29, 2014

The U.S. economy contracted for the first time in three years in the first quarter as it buckled under a severe winter, but there are signs it has rebounded and economists say it could grow as much as 4 percent in the current quarter.

I think it may be connected to the continued tapering of quantitative easing?

If USA growth doesn't pick up I expect them to blame Chinese currency depreciation.

Wal-Mart sales growth weakest in five years, outlook cautious
Reuters Thu May 15, 2014

The company has also been struggling with a sharp cut in benefits under the Supplemental Nutrition Assistance Program, the largest U.S. anti-hunger program. At least one in five of Wal-Mart's customers relies on food stamps.

I think the UK will too. Most countries being asked to estimate size of black market, should be interesting in Spain!

Drugs and prostitution to be included in UK national accounts
theguardian.com, Thursday 29 May 2014

For the first time official statisticians are measuring the value to the UK economy of sex work and drug dealing – and they have discovered these unsavoury hidden-economy trades make roughly the same contribution as farming – and only slightly less than book and newspaper publishers added together.

Illegal drugs and prostitution boosted the economy by £9.7bn – equal to 0.7% of gross domestic product – in 2009, according to the ONS's first official estimate.

A breakdown of the data shows sex work generated £5.3bn for the economy that year, with another £4.4bn lift from a combination of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines.

 

[yield]

RBS could fail due to ‘£100bn black hole’ - with British taxpayers in line to lose their entire £45bn stake
Independent on Sunday 01 June 2014

Shredded: Inside RBS, The Bank That Broke Britain, by the financial journalist Ian Fraser, concludes that the governments led by Gordon Brown and David Cameron have “let the people of Britain down” by failing to reform RBS after it received its mammoth bailout under the stewardship of former chief executive Fred “The Shred” Goodwin.

“The result has been that, at the time of writing, RBS is probably a worse bank than it was under Fred Goodwin,” Fraser said. “If the right moves are now made, RBS could become a great bank again. If they’re not, I doubt it will even exist in 10 years’ time.

“Whatever happens, it now seems impossible that British taxpayers will ever see a return on their £45.5bn investment in the bank,” he writes in the book.

.

However, Fraser claims the “true villains of the piece” are the “politicians, central bankers, regulators and the Basel Committee on Banking Supervision” who allowed people like Goodwin believe they could “get away with virtually anything, whilst defying financial gravity and existing above the law”.

Fraser writes: “Morality and ethics were thrown out the window and we saw the mis-selling of rip-off products on an epic scale – including the scandals of payment protection insurance and interest-rate swap agreements sold to small- and medium-sized enterprises.

“The Treasury, the FSA [Financial Services Authority] and the Bank of England all turned a deaf ear to the complaints from the banks’ millions of ‘victims’ and paid scant heed to the overall balance-sheet strength – capital, liquidity and asset quality – of British banks.

“And, at various stages between 1988 and 2008, British politicians also outsourced critical aspects of banking regulation and supervision to the private sector body, the Basel Committee on Banking Supervision, which enabled the bankers to write their own rules. That, in itself, was an error easily as bad as any committed by Goodwin. So he is right. We can’t just blame it all on him.”

“The result has been that, at the time of writing, RBS is probably a worse bank than it was under Fred Goodwin,”

 

[gosub]

http://blogs.telegraph.co.uk/financ...hdogs-rattled-by-lack-of-fear-in-the-markets/

 

[ska invita]

http://blogs.telegraph.co.uk/financ...hdogs-rattled-by-lack-of-fear-in-the-markets/

theres no fear as the lesson learnt is we are too big to fail.

 

[Dr Jon]

What else did governments expect to happen when they bailed out these vermin?
The puppets had their strings pulled, I guess. Mervyn King issued warnings about moral hazard: he was replaced by an imported Goldmanite.

The money-juggling fuckers should've been left to crash and burn.

 

[ska invita]

What else did governments expect to happen when they bailed out these vermin?
The puppets had their strings pulled, I guess. Mervyn King issued warnings about moral hazard: he was replaced by an imported Goldmanite.

The money-juggling fuckers should've been left to crash and burn.

im not sure...there are even some free marketeers who would agree with that but the effects on us normal people could've been so much worse as a result - i think it was a golden moment to utterly restructure/regulate/nantionalsie the banking sector - the fact its basically business as usual is mindbogling to me. Though i expect, as im sure you do too, that there'll be another crash and maybe that time they'll be forced to do something more radical

 

[Dr Jon]

Government could have guaranteed personal deposits and pensions and it would have cost far less than the billions trillions they've had to print to bail these fuckers out.

Politicians are puppets of the elite / highest bidder, so no hope there...

 

[gosub]

We aren't short of lampposts round our way

 

[Dr Jon]

... and world demand for transplantable organs continues to grow...

 

[quiquaquo]

http://www.independent.co.uk/news/b...-to-lose-their-entire-45bn-stake-9466823.html

RBS could collapse thanks in part to this cunt who went mental over choice of biscuits: http://www.dailymail.co.uk/news/art...uit-RBS-staff-terrified-boss-book-claims.html

 

[yield]

German inflation plunge paves way for ECB rate cut
Independent. Tuesday 03 June 2014

The Frankfurt-based central bank has come under pressure to take action to avert the danger of deflation in the single-currency bloc.

Economists now expect ECB President Mario Draghi to announce a further cut in its main interest rate on Thursday to 0.1 per cent as well as introducing a negative deposit rate for banks. This will effectively charge lenders for keeping reserves at the central bank, with the goal of boosting credit to the wider economy.

Negative interest rates?

Former Head of BIS Worried About Cost of QE
forbes.com. 4/27/2014

We just saw the last chapter of that long history. This is the last of a whole series of bubbles that have been blown. In the past, monetary policy has always succeeded in pulling up the economy. But each time, the Fed had to act more vigorously to achieve its results. So, logically, at a certain point, it won’t work anymore. Then we’ll be in big trouble.

 

[hipipol]

Sod whatever they say - net/net this is a Euro devaluation strategy
The idea seem to be that ANY yield will be better than an overnight charge for parking cash
Bizarrely the dont seem to realise that anyone with half a head will now lend OUTSIDE the Eurozone for higher returns both on the interest rate and the FX uptick
Example:-
Lend Bocconi construction Euro 10m @ 3.5% for six months to build some houses in Milan
Yield = Euro 175,000
Lend El-Minari Construction Euro 10m @ 5% for six months to build houses in Dubai
Yield = Euro 250,000 plus the FX appreciation - I would have loaned in Diram, converting back to Euro 6 mos from now should add an extra 2% should current trends prevail, ie another 200,000 Euros
More like Japan than they seem to think
Classic carry trade opportunity just like Japan had for all those years

 

[Dr Jon]

Just spotted this public information broadcast:

 

[hipipol]

here we go
Sterling-Euro rate 1.5c our way in the last hr
CAC up 1.5% as France realises that this is an effectively a Euro devalue play
Dax + 0.5
Footsie flat
I feel a weekend in Spain coming on!!!!!!!