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Global financial system implosion begins

Idaho said:
Not a nice day for equities. US markets really tanking.
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I see the bond market has gone into an inverted yield curve too.

Bad shit going down.

Buy tinned toms and dried pasta, AK47s and toilet roll.

(There is another recession coming)
 
Idaho said:
Hmm... That's a very arbitrary comparison point!

If you ignore that month, then we are bobbling around a low point that is below 2017.
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If you want to talking about things tanking, you have to compare it to what tanking really means. It doesn’t mean 5% off its record high.
 
kabbes said:
If you want to talking about things tanking, you have to compare it to what tanking really means. It doesn’t mean 5% off its record high.
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The FTSE 100 is currently knocking on the door of 7100 after posting the ath of 7700 just a few weeks ago. 3 weeks for the UK's key index to lose over 8% - this is against a backdrop of sterling assets being unprecedentedly cheap. If you are still tracking the 100 or 250 then you either have inside knowledge, the faith of Job or are just waiting and hoping.
 
Idaho said:
The FTSE 100 is currently knocking on the door of 7100 after posting the ath of 7700 just a few weeks ago. 3 weeks for the UK's key index to lose over 8% - this is against a backdrop of sterling assets being unprecedentedly cheap. If you are still tracking the 100 or 250 then you either have inside knowledge, the faith of Job or are just waiting and hoping.
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It’s an 8% drop from peak though, not trend. 7132 as we stand looks... ok-ish. Not great, not a collapse or anything.

The FTSE 100 is really odd at the moment though because it is largely companies who trade heavily outside the U.K. and so their value is propped up by a weak pound, as you say, but also hit by US trade wars and so on. The 250 is a better sign of the U.K. itself and that has been suppressed for a while because of Brexit.

Both of these indices are pretty stable over the year though, or the last 12 months. They peaked last August and troughed last December but if you smooth that high and low it’s all fairly steady. Frankly, things going up and down across a 10% range doesn’t mean much.
 
On a related note. An old semi-db pension I have has sent out a really confusing and convoluted pamphlet about changes they are making. Basically they know they don't have enough money in the pot to meet their obligations a decade or two down the line, so they are automatically moving everyone from a default of a mix of equities, bonds and cash to a default "growth" option that is clearly far more risky. Of course they don't say that in a sentence, but spread across 10 pages of charts, graphs, detailed jargon blurb and glossy photos of happy (but surprisingly young) retired people polishing surfboards.
 
kabbes said:
It’s an 8% drop from peak though, not trend. 7132 as we stand looks... ok-ish. Not great, not a collapse or anything.

The FTSE 100 is really odd at the moment though because it is largely companies who trade heavily outside the U.K. and so their value is propped up by a weak pound, as you say, but also hit by US trade wars and so on. The 250 is a better sign of the U.K. itself and that has been suppressed for a while because of Brexit.

Both of these indices are pretty stable over the year though, or the last 12 months. They peaked last August and troughed last December but if you smooth that high and low it’s all fairly steady. Frankly, things going up and down across a 10% range doesn’t mean much.
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The problem with this approach is that it's only invalidated once the indexes have dropped over 10% - and then it's too late.
 
Since that “the markets are tanking” post of a week ago, they’re up by about 2.5% in the U.K. and 3.5% in the US, thus recovering the amount they lost that day. Basically, the FTSE has been pissing about at around this level (between 6700 and 7700, centring on 7200) ever since the beginning of 2017, most certainly stymied as a result of Brexit uncertainty. Meanwhile, the US is up about 30% in that time, in spite of the inevitable occasional downward jump along the way. But that’s just the prices — total return includes the dividend yields, which add 3% p.a. In the U.K. and 2% in the US.

I think this thread has a lot of reporting of the downward jumps but little follow-up to note these weren’t the start of a lasting trend. Anybody reading it would think returns over the last few years has been heavily negative. Meanwhile capital continues to concentrate wealth via corporate friendly policies, allowing companies to entrench their dominance over labour. Global corporations make bigger and bigger profits, with stock prices to match this. There may be downward blips as a result of systemic failures but it’s hard to see the long term trend being interrupted for too long each time.
 
Central banks have trapped us on the conveyor belt to Communism - but disaster can be averted


It isn't the Central Banks though that don't fully get it. Had an automated text from LLoyds last Sunday telling me if I put money in that day would reduce my overdraft payment....But along with other high street banks, while they keep access to their ATM's open all weekend (in an increasingly cashless society) they automated paying in machines are locked away from access outside hours.

Saw the difference between command economies and capitalist ones in a compare and contrast between Philippines and Cuba - in a command economy stuff only happens when attention is paid to it. Capitalism allows for stuff to happen beyond to scope of the control freaks (all be it possibly within the black economy). Vulture capitalism, and the drive towards the cashless society may well have driven us towards communism. But its not going to get there (I think).

The Lloyds Bank in question has 4 ATM''s that are capable of being topped up during that weekend, That to me, indicates a demand for cash for purchases as likely as not stuck up peoples noses or down pubs on drinks that won't show on mortgage appraisals, yet the volumes of cash transacted in same said during week are so low that they no longer feel the need to protect their cashiers with the same sort of glass that currently prevents me from putting cash in out of hours. And I do need to pay cash in...(for reasons that are reasonable, and legal I might add,) -as do other people carrying out off book work for one reason or another.
 
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Idaho said:
The FTSE 100 is currently knocking on the door of 7100 after posting the ath of 7700 just a few weeks ago. 3 weeks for the UK's key index to lose over 8% - this is against a backdrop of sterling assets being unprecedentedly cheap. If you are still tracking the 100 or 250 then you either have inside knowledge, the faith of Job or are just waiting and hoping.
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Just to show how these short terms ups and downs shouldn't be overreacted to, here is the FTSE 100 now:
ftse 100.PNG '

Although it is a tiny bit down on its average price over the last 6 months, it's nonetheless there or thereabouts. Note that investing on 15 August, however -- the day of the post I'm replying to -- would have seen you with a 3.8% return if you cashed out today.

Meanwhile, the FTSE 250 has regained everything it lost in its early August drop:

ftse 250.PNG

An investment on 15 August would have yielded a 7.4% if divested today.

No inside knowledge or the faith of Job. Just market volatility doing its thing. Fundamentally, these top 350 UK companies are still making plenty of money and announcing plenty of dividends. Markets always go through ups and downs but an 8% drop over a few weeks is not particularly significant in the grand scheme of things any more than is an 8% gain over a similar time period.
 
Big banks score win as U.S. regulator proposes easing post-crisis derivatives rules
September 17, 2019
The proposal, by the Federal Deposit Insurance Corporation, could potentially free $40 billion across the nation’s largest banks, according to a 2018 survey by the International Swaps and Derivatives Association (ISDA), the global trade group that has been lobbying for the rule change for years.

The proposal is subject to public comment and will likely face resistance from Democratic lawmakers and consumer groups, who have warned that chipping away at regulations put in place following the 2007-2009 financial crisis could sew the seeds of the next one.
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Why is the Federal Reserve pouring money into the financial system? https :// www.ft.com/ content/345da16e-d967-11e9-8f9b-77216ebe1f17
17/09/19
One of the most important sources of financial market lubrication came under severe strain this week, raising concerns that the Federal Reserve’s attempt to unwind post-financial crisis intervention may have gone too far.

Repurchase agreements are the grease that keeps the financial system’s wheels spinning, allowing different market participants to borrow and lend to each other to cover short-term cash needs.

On Tuesday, the wheels stopped turning. The so-called repo rate soared to a high of 10 per cent, when it typically trades in line with the Federal Reserve’s target interest rate of between 2 per cent and 2.25 per cent. The New York branch of the Fed had to step in and inject tens of billions of cash into the system in an attempt to restore order, doubling down on Wednesday with a second short-term injection.
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An interesting thing happened this week. The overnight lending rate (the rates banks charge each other to lend each other cash) spiked on Monday and Tuesday. It seemed a lot of banks decided they didn't have enough cash on hand.

The lack of cash circulating in short-term money markets has pushed up the effective fed funds rate, the actual level at which banks lend to each other overnight. As a result, Hills says the CME’s tracker of rate decision probabilities may be reflecting the odds for the effective fed funds rate to remain elevated due to this week’s funding squeeze, rather than expectations for the fed funds target range going forward. The effective fed funds rate, the actual level at which banks lend overnight, jumped above the interest rate on reserves that bank keep in excess of their reserve requirements (IOER) by 15 basis points as of Monday.

Usually, this is seen as a temporary state of affairs because banks have no incentive to borrow from another bank when it could simply withdraw funds on deposit at the Fed, but the persistence of the fed funds rate above the IOER has raised questions whether the central bank is losing its grip over its benchmark interest rate.

Market participants have pointed to the sharp jump in the repurchase rate, or repo rate, on Monday and Tuesday as the most recent trigger for the higher fed funds rate. This key interest rate represents the amount that banks, dealers and hedge funds are charged for borrowing funds for a short period of time, in return for collateral such as Treasurys. This rate jumped as high as 8% on Tuesday, according to ICAP, even though it is usually expected to stick near the fed funds rate.

Investors tend to be nervous about a climb in repo rates as they’re usually associated with banking crises and credit crunches. Repo rates spiked back in the 2008 financial crisis when banks were unwilling to lend to each other amid questions about their solvency.

Analysts say a perfect storm of factors may have been responsible for the spike in repo rates this week.

The U.S. Treasury Department is rebuilding its cash reserves, after running them down to keep the government open, before Congress finally raised the federal debt ceiling in July. To do that the Treasury has been issuing a deluge of short term debt and parking the funds in its Treasury General Account (TGA) at the Fed.

In addition, the deadline for corporate tax payments in September fell on Monday. Investors pulled billions of dollars from short-term funding markets as companies redirected those funds to the Treasury Department. Analysts also cited the settlement of several debt auctions on Monday, and the lack of space on bond dealers' balance sheets.
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There’s a cash shortage on Wall Street — and it’s forcing the Fed to stem a surge in repo rates
 
'The men who plundered Europe': bankers on trial for siphoning €60bn
21/09/19
They have been called “the men who plundered Europe”: a group of cowboy traders, seasoned tax lawyers and mathematical whizz kids who are alleged to have conspired in the heart of the City of London to siphon at least €60bn in taxpayers’ money from the state coffers of several EU countries.

In Britain, the so-called “cum-ex” scandal, named after the complex derivatives juggling act employed, gained little attention amid the frenzied debate around the UK’s departure from the European Union when the fraud scheme was discovered in 2017.

But in continental Europe what Le Monde has described as the “robbery of the century” has done almost as much to shape the view of Britain as Brexit itself. Dutch media has called it “organised crime in pinstripe suits” and one of the original German whistleblowers saying he now welcomes Britain’s exit from the EU in the hope it could weaken the influence of London investment banking on European financial institutions.
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This week, a British former investment banker involved in developing the scheme for the first time gave the public an insight into how the scheme worked and what spurred on its architects.

Speaking at a regional court in Bonn, Martin Shields, one of two former bankers on trial for 34 instances of serious tax fraud between 2006 and 2011, painted a picture of a London banking scene which lured in the brightest scientists from the country’s top universities and used them to boost their profit margins – without teaching them about the moral and legal consequences of their actions in return.
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Idaho said:
And how much return if you cashed out today? ;)
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0.8%, actually, for the FTSE 100.

That’s the market, eh? Ups and downs. Like I said before, I don’t think you can treat short term +\-5% as anything more than a blip.
 
everyone involved in this is as guilty as fuck. i have no sympathy for the traders, they knew exactly what they were doing but the senior directors had made it very clear about low balling and the impact to the reputation of the banks on the markets. a bullshit and bluster race to the bottom for all the big boys
 
In a statement, the SFO said: "Following a thorough investigation and a detailed review of the available evidence, there will be no further charges brought in this case. This decision was taken in line with the test in the Code for Crown Prosecutors."

The code states that the evidence must support a realistic prospect of conviction and must be in the public interest.
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No realistic prospect of conviction because the people involved are too well-connected is it?
 
ska invita said:
bank run on Italy’s Monte dei Paschi bank

Chief executive Fabrizio Viola did not say how much money savers had withdrawn, or when the outflow began, though he said the fall in deposits was “limited” and that the bank could cope with it as he sought to reassure customers and investors.

Italian bank shares have lost 20% so far this year as investors, already rattled about global economic growth, have sold out of a sector with low profitability and about 200 billion euros ($218 billion) of loans that are unlikely to be repaid.

Monte Paschi - Italy’s third-biggest bank - has lost the most ground as it is perceived to be the most vulnerable; it has the highest level of bad loans as a proportion of assets and was the worst performer in a health check of eurozone lenders in 2014.

The Tuscan-based bank’s stock, which had plunged 15% on Monday and 14.4% on Tuesday, was suspended from trading several times after falling 18.2% on Wednesday. The plunge helped dragged down all other Italian banking stocks, with Carige shedding 12.7% and Banco Popolare falling more than 6%.

Viola said the plunge in Monte Paschi shares was not a reflection of the bank’s fundamentals, which he said had improved in the last quarter of 2015.
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yield said:
Deutsche Bank woes deepen in Monte Paschi fraud case
16 May 2017
Deutsche Bank AG, on trial in Milan for allegedly helping Banca Monte dei Paschi di Siena SpA conceal losses, must face accusations that it was running an international criminal organization at the time.
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One of the largest banks in the world an alleged international criminal organization. Too big to fail.
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Italian court convicts Deutsche Bank, Nomura in Monte Paschi derivative trial
08/11/19
MILAN (Reuters) - An Italian court has convicted 13 former bankers from Deutsche Bank, Nomura and Monte dei Paschi di Siena over derivative deals that prosecutors say helped the Tuscan bank hide losses in one of the country’s biggest financial scandals.
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In recent years, instances of bankers being convicted of fraud have been relatively rare and experts said any conviction in this case would come as a surprise.

While few executives from major global banks have faced criminal charges for their roles in the financial crisis, there have been several convictions of senior bankers at smaller European lenders.

In 2017, four former managers of Spanish savings bank Caja de Ahorros del Mediterraneo, and former International Monetary Fund chief Rodrigo Rato were jailed by Spain's High Court in similar corruption cases related to the financial crisis.
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Since this thread has popped up again, it’s worth noting as a data point that US and EU markets are at record levels. The U.K. is about 5% down on its peak position, no doubt due to Brexit uncertainty and its impact on the £, but it’s actually close to its peak ignoring the early 2018 blip.

I’ve certainly no doubt that at some point in the next 6 months, there will be another of the regular 5% dips, but traders right now certainly don’t seem to feel it’s all tanking. So either we should acknowledge that or we should accept that they know nothing and we should ignore their views during a downturn as much as we ignore them in the market peaks (fine by me).
 
Hello all. It's over 10 years since I created this thread. In that period, my conviction has strengthened that there are no supply solutions to our energy predicament that can maintain energy growth, and that we are on the verge of a likely catastrophic contraction of the energy supply that will cause widespread malfunction of the global economic system.

In my government lobby and advocacy role, I've recently prepared some basic primers in the form of short ("five minute") essays for non-technical audiences to improve understanding of the current status of the energy system. The aim is to improve the quality of energy transition planning at decision making level in government and industry.

Here are links to some of them - they are intended to be read in sequence:
The broad situation is that maintaining supply growth by oil for another 20 years would consume 60% of current and future oil discoveries, and cost some $15 trillion dollars. But before then, the energy system will enter its contraction phase and, because of the oil accelerated forward by post-2008 emergency monetary policy (i.e. synthetic debt), the aggressive contraction rate will trigger collapse of the financial system. During that process, there will be a wholesale flight into coal and other fuels of last resort, accelerating climate change emissions. The only rational energy transition strategy available to us under these circumstances is radical demand destruction.
 
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U.S. banks' reluctance to lend cash may have caused repo shock: BIS
December 8, 2019
LONDON (Reuters) - The unwillingness of the top four U.S. banks to lend cash combined with a burst of demand from hedge funds for secured funding could explain a recent spike in U.S. money market rates, the Bank for International Settlements said.

Cash available to banks for short-term funding all but dried up in late September, and interest rates deep in the plumbing of U.S. financial markets climbed into double digits.

That forced the Fed to make an emergency injection of billions of dollars for the first time since the global financial crisis more than a decade ago.
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