European Banks Crash For 4th Straight Week

[galdur]

Continued article:

As the yen soars, Japan is being pushed into a self-reinforcing recession. After 20+ years of borrowing to fund fiscal stimulus, money-printing, bond-buying, etc., Japan has run out of options. Weakening the yen was the last best hope to boost exports and inflation.
The strengthening yen is an economic crisis for Japan.

Meanwhile, the strengthening dollar pushed China into its own crisis. China's currency, the renminbi (RMB, a.k.a. yuan), is a special case because its relative value is pegged to the USD by Chinese monetary authorities. The peg was about 9 to the USD in 2005, and in the following decade China pushed the yuan up to 6 to the dollar.

A currency peg means the pegged currency goes up and down with the master currency. As the dollar soared, it dragged the yuan higher, making China's exports more expensive. Given the stagnation of China's debt-bubble dependent economy, the last thing chinese authorities wanted to see was a faltering export sector.

As the USD rose, the pressure to devalue the yuan also rose. If you think your money is about to lose 20% of its value due to a devaluation, what can you do to protect your wealth? Get your cash out of the currency that's being devalued and into a currency that's strengthening.

Just the possibility of a yuan devaluation has sparked an unprecedented capital flight of cash flooding out of China into USD and assets such as homes in British Columbia and chateaux in France. Capital flight is not a sign of a flourishing economy or evidence that the monied class trusts the currency or the economy.

Recently, China has taken baby-steps to devalue the yuan: not enough to trigger global panic but more than enough to trigger capital flight and deep unease.

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[galdur]

Don´t miss the charts in the article...


As a result, China desperately wants a weaker dollar, as a weaker dollar will weaken the yuan and relieve the pressure on Chinese exports and demands for devaluation.
Many savvy observers have concluded that the recent G20 meeting in Shanghai led to an informal accord to weaken the dollar to prop up the global economy's shaky foundations--and most acutely, to relieve the pressure on China's yuan, which threatened to destabilize the faltering global economy.
But now the world faces the consequences of a weakening USD: a crisis triggered by a stronger yen. The USD has been yo-yoing in a trading range for a year, as the Federal Reserve has yo-yoed between hawkish declarations of rising rates (which make the USD more attractive and thus stronger) and dovish backtracking (we're never going to raise rates), which then push the USD lower.
No wonder the Fed is wobbling: it can't please both Japan and China. If the dollar plummets, China is delighted but Japan is pushed into crisis. If the USD continues its march higher, Japan is "saved" but China will be forced to devalue the yuan or watch its export sector decline.
As I often note, no nation or empire ever devalued its way to dominance or even prosperity. Rather, the devaluation of one's currency is the kiss of death, as everyone quickly learns your money is a ball that can quickly lose air or go flat.
Here's my take: Japan has no options left. China, on the other hand, can devalue the yuan as the USD strengthens. Indeed, a very good case can be made that China should devalue the yuan, as a practical adjustment to new global realities.
The Fed has a stark choice, and the 2-minute warning just sounded. It can break the informal Shanghai Accord to strengthen the USD to save Japan from the slow-moving catastrophe of a soaring yen, or it can let the USD weaken further to placate China and the commodity-dependent economies.
What it can't do is please everybody. This is the inevitable consequence of manipulating markets: you end up being unable to please anyone, because your constant manipulation has created unsustainable carry trades and speculative gambles.
The FX market is about to blow up in the Fed's face, and there's nothing they can do about it. What central banks fear most are markets that are not tightly controlled by central banks. The world's central banks are about to sit down to a banquet of consequences arising from seven long years of relentless manipulation.

http://www.oftwominds.com/blogapr16/yen-yuan-USD4-16.html

[tabnloz]

Deutsche Bank is one to think about. If the rumoured Shanghai Accord further damages the EU area (by strengthening Euro, deepening the  malaise), then there may be an issue.

This is from their own internal rating measures:

 - Investment grade to junk ratio of 2:1 ie 50% of its credit is junk.
 - Bad risk exposures outweigh good by 30%
 - 746% of its equity is exposed to medium/high to already defaulted exposure.
 - This bank is heavily supported by the tens of billions of euro of the ECBs LTRO and TLTRO (bank welfare) lending facilities, and it's still not nearly enough.
 - If their derivative & OTC exposures reach negative extremities they are on the hook. At the moment asset risk is priced by fair value instead of notional value.

The source for this is from Reggie Middleton's blog, taken from Deutsche bank's own documents. Of course he is not saying it is DB, just a major TBTF EU bank. So, if it isn't DB, its some other massive zombie institution.

Here's the link

https://blog.veritaseum.com/index.php/homes/1-blog/176-so-called-trusted-parties-bank-collapse-the-ecb-and-blockchains-watch-as-i-call-the-next-bear-stearns-again

[Rizla2345]

Austria Just Announced A 54% Haircut Of Senior Creditors In First "Bail In" Under New European Rules

Just over a year ago, a black swan landed in the middle of Europe, when in what was then dubbed a "Spectacular Development" In Austria, the "bad bank" of failed Hypo Alpe Adria - the Heta Asset Resolution AG - itself went from good to bad, with its creditors forced into an involuntary "bail-in" following the "discovery" of a $8.5 billion capital hole in its balance sheet primarily related to ongoing deterioration in central and eastern European economies.

Austria had previously nationalized Heta’s predecessor Hypo Alpe-Adria-Bank International six years ago after it nearly collapsed under the bad loans it ran up when it grew rapidly in the former Yugoslavia. Having burnt through €5.5 euros of taxpayers’ money to prop up Hypo Alpe, Finance Minister Hans Joerg Schelling ended support in March 2015, triggering the FMA’s takeover.

This was the first official proposed "Bail-In" of creditors, one that took place before similar ad hoc balance sheet restructuring would take place in Greece and Portugal in the coming months. Or rather, it wasn't a fully executed "Bail-In" for the reason that creditors fought it tooth and nail.

And then today, following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG......

http://www.zerohedge.com/news/2016-04-10/austria-just-announced-54-haircut-senior-creditors-first-bail-under-new-european-rul

[Kakmakr]

Are we in for a next phase of Bail-outs for banks or are they finally going to fail? They cannot sustain negative interest rates for long periods, before things will start to collapse. I always say, if people start buying gold in large quantities, things are pretty bad.

Some people are even hoarding copper and silver to protect their wealth. ^hmmmmm^

[Rizla2345]

We are about to get confirmation that earnings growth for America's biggest companies was negative in the first quarter, compared to the same period a year ago.

When aluminum giant Alcoa releases its results on Monday, it will mark the unofficial start of the heaviest reporting season for S&P 500 companies.

The final scoreboard is expected to show a 9.1% earnings drop for the quarter, according to FactSet senior earnings analyst John Butters.

But the actual decline will likely be smaller, he said. Analysts have ended up being too pessimistic about most quarters since Q2 2013.

Still, earnings would be negative for a third straight quarter....

https://finance.yahoo.com/news/standby-terrible-news-wall-street-100000025.html

[Pab]

Deutsche Bank is one to think about. If the rumoured Shanghai Accord further damages the EU area (by strengthening Euro, deepening the  malaise), then there may be an issue.

This is from their own internal rating measures:

 - Investment grade to junk ratio of 2:1 ie 50% of its credit is junk.
 - Bad risk exposures outweigh good by 30%
 - 746% of its equity is exposed to medium/high to already defaulted exposure.
 - This bank is heavily supported by the tens of billions of euro of the ECBs LTRO and TLTRO (bank welfare) lending facilities, and it's still not nearly enough.
 - If their derivative & OTC exposures reach negative extremities they are on the hook. At the moment asset risk is priced by fair value instead of notional value.

The source for this is from Reggie Middleton's blog, taken from Deutsche bank's own documents. Of course he is not saying it is DB, just a major TBTF EU bank. So, if it isn't DB, its some other massive zombie institution.

Here's the link

https://blog.veritaseum.com/index.php/homes/1-blog/176-so-called-trusted-parties-bank-collapse-the-ecb-and-blockchains-watch-as-i-call-the-next-bear-stearns-again

Thanks for article and for opening that tread.In a case of banks bailout i can say no,that time it will be much bigger crisis related to derrivatives,no money to cover that and many EU zone countries will not agree
Path situation.but behind that we have nationalism movements rise based on islamic fobia,all that islamic terror has been created for that purpose,crash and next war like a solution as it was from 1929 to1939

[galdur]

Now they´re getting seriously worried about dirty bombs. There was a conference about a week ago.

It´s the prefect terror weapon. And the drones make it easy to get wide dispersal of radioactive material. Imagine one going off over Manhattan. It wouldn´t need to be a big thing, the psychological impact would be immense. As would be the cleanup costs.

[ronaldinho_07]

Well the banks always wanna more money that isnt new at all ,the only difference is that with the financial problems banks are more exposed then before.

[galdur]

Italian Banks Halted Limit-Down

INTESA, UNICREDIT HALTED IN MILAN; LIMIT DOWN

Who could have seen that coming?

Hope Turns To Nope As US Stocks Slump Red, Italian Banks Halted Limit-Down

http://www.zerohedge.com/news/2016-04-12/hope-turns-nope-us-stocks-slump-red-italian-banks-halted-limit-down

[HeroCat]

Banks in EU are very strong, because Germany and France are very rich countries, so banks hace a lot of money. Some small bank problems are not important for whole EU market. 

[galdur]

Banks in EU are very strong, because Germany and France are very rich countries, so banks hace a lot of money. Some small bank problems are not important for whole EU market. 

True, Deutsche Bank is just small fry that´s not important for the whole EU market. Credit Suisse is a tiny Swiss bank of no consequence.

[galdur]

When you have major cracks showing in banks like DB and CS and actually other big ones it´s impossible to just ignore it. It´s a sign of systemic weakness. The system starts collapsing from below, smaller banks go first then the larger ones.

[thejaytiesto]

EU banks are crashing in silence untill some time whan it will explode
Not only German but itaian,spanish,french very much,dutch
thay are all related,but if will brexit will be euroexit also
Euro currency has to fail EU needs reforms all will crash

US is not any better, just because they have a ton printed money doesn't mean their economy is recovering. In essence the entire system is fucked, no one trust it anymore and it's getting worse as more and more people that was giving lessons on morality end up being exposed as people that had offshores accounts. No one wants to pay taxes and people is tired of getting robbed. Bitcoin and gold are the only winners in the long term.

[galdur]

EU banks are crashing in silence untill some time whan it will explode
Not only German but itaian,spanish,french very much,dutch
thay are all related,but if will brexit will be euroexit also
Euro currency has to fail EU needs reforms all will crash

US is not any better, just because they have a ton printed money doesn't mean their economy is recovering. In essence the entire system is fucked, no one trust it anymore and it's getting worse as more and more people that was giving lessons on morality end up being exposed as people that had offshores accounts. No one wants to pay taxes and people is tired of getting robbed. Bitcoin and gold are the only winners in the long term.

Yes, it´s the confidence that is actually cracking. It´s one big confidence game. Confidence is the foundation.

When the trust in governments and banks starts to fail as we´re seeing happening now and will be seeing more of, well that´s probably the beginnings of a collapse. How it will develop and when exactly it´ll happen is impossible to tell but it seems extremely likely in the near future, maybe in the next couple years. But then again it could happen later this year. There are other cards in play, war terrorism and more, which could influence this.

[Pab]

Banks in EU are very strong, because Germany and France are very rich countries, so banks hace a lot of money. Some small bank problems are not important for whole EU market. 

Germany banks are full of derivatives,French banks are same nightmare like French economy
All that is balancing on the edge of catastrophe,frauds,money laundering,Panama papers Deutche Bank has 40000 firms like that all over the world irms were Drugs cartels,w eapon traders,and top politicians are meeting each other

French and Germans banks are tick tack nuclear economic mega bomb

[calkob]

The collapse of traditional markets can only be a good thing for bitcoin and the bitcoin related industries 

[iv4n]

Ship is slowly sinking, and I don't wish to make some theories but they are making it, and they will fix it. I enjoy watching this games they play, to me they are funny. One day people will see that all that is just one big lie.
They just wish more money, that is the only game they know. Cause of that I would like bitcoin to grow, and to open shops around the world and in that case I can cancel all my banking cards and credits, to just forget about them.

[galdur]

After the stock market crash of 1987, The Federal Reserve embarked on a path that led to the biggest debt bubble in the history of the world. The day after the 1987 crash (Oct. 20, 1987) Alan Greenspan, Chairman of the Fed, announced to the world that The Fed stood ready to provide whatever liquidity was needed by the banking system to prevent the crash from turning into a systemic financial crisis. That was the day the Fed “put” was born.... read more

http://www.zerohedge.com/news/2016-03-31/2016-end-global-debt-super-cycle

[stan.distortion]

Ship is slowly sinking, and I don't wish to make some theories but they are making it, and they will fix it. I enjoy watching this games they play, to me they are funny. One day people will see that all that is just one big lie.
They just wish more money, that is the only game they know. Cause of that I would like bitcoin to grow, and to open shops around the world and in that case I can cancel all my banking cards and credits, to just forget about them.

Or more often they're wishing for less debt and can't see the wood for the trees, they just see the debt hanging over them and can't see beyond that for long enough to realise what the debt really is. What's even worse is that's happening to entire countries, not just individuals with loans they've little hope of ever repaying but whole nations enslaved as debtors.

Kind of OT but came across this the other day, well worth a read:
http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-anthropologist-david-graeber.html