Global financial system implosion begins

[CH1]

Nigerian fraudster spin-off.
Nigerian fintech chief fined $250mn after holdings described as a ‘fiction’ (in FT)
Decision against Dozy Mmobuosi by US court comes after civil complaint by SEC against his Nasdaq-listed companies

Funnily enough Dozy's company Tingo Group Inc has as its president Chris Cleverly - cousin of James Cleverly.
Chris was also accused 3 years ago of a West Ham football club heist involving erstwhile porn supplier to the nation David Sullivan

EXPOSED: Chris Cleverly – the serial fraudster trying to buy West Ham

It has been widely reported that lawyer Chris Cleverly is the key London player in PAI, the company that wishes to buy West Ham and that Cleverly, cousin of Tory high flier James, is colourful. As a diehard hammer I put this article outside paywalls so that supporters of the club, the Ferdinand...

shareprophets.com

Probably this will be a big boost for James in his Tory leadership bid - his relatives clearly move in the right circles!

 

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Private Equity Investors Plead for More Clarity on NAV Loans
Bloomberg July 25, 2024. https://archive.ph/e3PIG



There's also a paywalled FT article, that is broken when I try to read it through archive. Subscribe to the Financial Times

Private Equity’s Favorite Borrowing Tool Sparks Fresh Scrutiny
Bloomberg. September 5, 2024 https://archive.ph/pSbvh

The Bank of England has already warned that it believes NAV financing could hinder financial stability in the UK because of how risky it is for banks. In its June financial stability review, it said such “leverage on leverage” could “expose lenders to risks at the portfolio company level, at the fund level, and at end-investor level.”

‘Double Whammy’
With its latest inquiry, the BOE is primarily worried that many private equity funds began buying up assets in the heyday of the post-Covid era, when low interest rates pushed up prices. The funds are now using those assets to secure the NAV loans, but private valuations are notoriously opaque and hard to value.

One note of concern for the PRA is that if the value of these assets in the underlying portfolio has fallen significantly, banks might not know until it’s too late.

 

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World economy faces pressures similar to 1920s, warns Christine Lagarde
ECB president highlights parallels between two eras but says modern central bankers have tools to manage structural change
FT. September 20 2024 https://archive.is/saaPI

The global economy is facing rifts comparable to the pressures that resulted in “economic nationalism” and a collapse in global trade in the 1920s and ultimately the Great Depression, the president of the European Central Bank has warned.

“We have faced the worst pandemic since the 1920s, the worst conflict in Europe since the 1940s and the worst energy shock since the 1970s,” said Christine Lagarde on Friday, adding that these disruptions combined with factors such as supply chain problems had permanently changed global economic activity.

In a speech at the IMF in Washington two days after the Federal Reserve cut interest rates by 50 basis points, pushing US equity markets to record highs, the ECB president argued that several parallels “between the “two twenties — the 1920s and 2020s — stand out”, pointing to “setbacks in global trade integration” and technological advances in both eras.

The cure is more of the same neo-liberal monetary policies

 

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The QE theory of everything
New Statesman. Feb 2024 https://archive.ph/z7HwI
How the $30 trillion quantitative easing experiment reshaped our world – from Brexit to the dominance of Big Tech.

The principle behind QE is that in a crisis, even if interest rates are already at zero, there is another authority capable of setting interest rates: the bond market.

We may talk about “the stock market”, but most of what’s traded on the world’s financial markets is not shares but debt. Around $130trn in debt is currently being traded. Much of this is bonds, which are agreements to borrow money, pay it back on a certain date, and to pay a regular “coupon” until that date. Bonds are how institutions borrow from financial markets. They’re also traded, and as they’re sold on from investor to investor, their prices and “yield” – the return on owning a bond – change. This yield dictates what prices new bonds can command; the market for old debt sets the price of new borrowing.

Because governments are the biggest and most reliable borrowers, the most fundamental debt that is traded – and by which the price of everything else is reckoned – is government bonds. If you can manipulate the price of government debt, you can change the price of everything from corporate bonds to stocks to houses and cars.

QE proposes that because a central bank such as the BoE (owned by the government, but separate from it) can “print” as much money as it likes, it can buy so many government bonds that their prices will go up, which pushes down the yield on that debt: the cost of borrowing for everyone in the market will fall. This is what the Bank of Japan did in March 2001, and the BoE in March 2009.

This also has another, very significant effect: normally, big investors such as pension funds would pour money into government bonds because they’re safe. But QE lowered the returns on government debt, pushing investment towards other things, such as stocks. “You just have to increase the price of safer assets,” Frances Coppola, who worked in banking for 17 years before writing a book about QE, The Case for People’s Quantitative Easing, explained to me, “and investors will diversify into riskier things.” This combination of cheaper borrowing and more attractive risk, central bankers thought, would increase business investment and stimulate the economy back to growth.

They were wrong. Not only did QE fail to stimulate growth, but it created inequality of a kind not seen for generations, a polarised politics – and another huge asset bubble.

$130trillion

 

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China Weighs $142 Billion Capital Injection Into Top Banks
Bloomberg News. September 26, 2024 https://archive.is/rZyFa

China is considering injecting up to 1 trillion yuan ($142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, according to people familiar with the matter.

The funding will mainly come from the issuance of new special sovereign bonds, said the people, asking not to be identified discussing a private matter. The details have yet to be finalized and are subject to change, the people added. Such a move would be the first time since the global financial crisis in 2008 that Beijing has injected capital into its big banks.

 

[_Russ_]

They make it up as they go along.............as long as the established economic system says "yea thats valid" its all good.
None of it is actually governed by the reality of producing anything of worth.