The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps
As anyone who has ever traded CDS (or any other OTC, non-exchange traded product) knows, when you have a short risk position, unless compliance tells you to and they rarely do as they have no idea what CDS is most of the time, you always mark the EOD price at the offer, and vice versa, on long risk positions, you always use the bid. That way the P&L always looks better. And for portfolios in which the DV01 is in the hundreds of thousands of dollars (or much, much more if your name was Bruno Iksil), marking at either side of an illiquid market can result in tens if not hundreds of millions of unrealistic profits booked in advance, simply to make one's book look better, mostly for year end bonus purposes. Apparently JPM's soon to be fired Bruno Iksil was no stranger to this: as Bloomberg reports, JPM's CIO unit "was valuing some of its trades at prices that differed from those of its investment bank, according to people familiar with the matter. The discrepancy between prices used by the chief investment office and JPMorgan’s credit-swaps dealer, the biggest in the U.S., may have obscured by hundreds of millions of dollars the magnitude of the loss before it was disclosed May 10, said one of the people, who asked not to be identified because they aren’t authorized to discuss the matter. "I’ve never run into anything like that,” said Sanford C. Bernstein & Co.’s Brad Hintz in New York. “That’s why you have a centralized accounting group that’s comparing marks” between different parts of the bank “to make sure you don’t have any outliers” .... Jamie Dimon's "tempest in a teapot" just became a fully-formed, perfect storm which suddenly threatens his very position, and could potentially lead to billions more in losses for his firm.How To Lose All Your Money With Goldman Sachs
It
seems the Muppets have been well-and-truly Oscar'd this time.
Combining Goldman's once-in-a-lifetime equity buying opportunity
position recommendation with their short Treasuries trade has produced
an astoundingly un-positive return of -29% in just 48 days
(based on SPY (stocks) and TBT (ultra-short TSYs given duration and
beta). Extrapolated using the only tool that counts (Birinyi's famous
ruler) this means your account is Corzined by Thanksgiving - happy holidays.Germany Will Show More Flexibility
Admin at Marc Faber Blog - 4 hours ago
"Germany will show more flexibility" - latest CNBC interview
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Spanish 10 yr bond yields reach 6.66%/Italian bond yields 5.93%/Failed Italian bond auction/Dow plummets by 160 points with major European indices also falling/ a
Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 5 hours ago
Good
evening Ladies and Gentlemen:
Gold closed at $1563.40 for a gain of $14.80 on the day. Silver rose by
19 cents to $27.96.
Both gold and silver were pummeled early in the session but for the 3rd
time this month did an outside day reversal to the upside to close
higher after early losses on both of our precious metals. Europe opened
with news that the Spanish 10 yr bond yield rose to 6.63%
Greece Should Leave The Euro
Admin at Marc Faber Blog - 8 hours ago
Greece should leave the Euro, on CNBC
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*
Gold Isn't Just For Goldbugs Anymore...
Dave in Denver at The Golden Truth - 9 hours ago
*I don't think China really cares about the Comex other than the fact that
the Comex operators do a great job keeping the price of gold and silver
artificially low for China as the world's largest buyer of gold and silver.*
- Dave in Denver
Anyone who buys into the "gold is in a bubble/bear market" proclamations
being tossed out on CNBC, Bloomberg and other mainstream disinformation
sources needs to examine the real evidence. The real evidence does not
come from some asswipe working for a big bank brokerage firm who examines
pretty lines drawn on a chart or has spent the last 10... more »
Video Interview: Persistence And Success
Admin at Jim Rogers Blog - 10 hours ago
Latest Jim Rogers interview.
Topics: Keys to success, investment success;
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Gold Continues to Attract Buying at the Bottom of its Trading Range
Trader Dan at Trader Dan's Market Views - 10 hours ago
Gold has once again attracted strong buying down near the bottom of its
broad 8 month trading range and has now bounced higher for the day.
Strength in the yellow metal has pulled silver up a tad which was sinking
under the weight of a collapsing copper market.
While some are ready to pronounce gold DEAD as a safe haven asset, the
chart picture denotes otherwise, especially given the broad weakness in the
commodity sector as a whole and the rallying Dollar, which continues its
technical march towards the 84 level on the USDX. Whenever I see gold
moving higher alongside Treasuries an... more »
Biderman & Santschi On Europe's Delusions And Money-Printing Illusions
"People need to stop expecting simple solutions"
is how David Santschi succinctly describes to Charles Biderman the
delusion that so many European leaders (and seemingly US and European
investors) perceive our world. The prevalence of lying and delusion in
Europe is what worries the TrimTabs' chaps the most - especially since
in a Fiat money system (where money is backed by nothing but
confidence) - with the people running the system lying on a grand scale, the chance of systemic failure are very high.
He is careful to point out that this is not just a European issue, we
in the US are just as delusional, but the European issues are simply
more acute. Simply put, "losses have to be recognized honestly" and
Biderman's bro' asks rhetorically "why on earth are we five years on
still trying to bailout bondholders and banks so they don't lose money
on their crappy debt - it's crazy." The two gentlemen of the Bay Area then describe why money-printing does not solve the problem
as Europe faces solvency, not liquidity, problems (detailing exactly
our thoughts on the fact that so many of the supposed solutions
have/will fail and "there aren't any painless solutions to a debt problem".
Avoiding all EUR-exposure, holding USD cash/TSYs short-term, and gold
as a long-term insurance cover is how they suggest one is positioned.
While the tone is less 'ranty', the content is just as pithy - six
minutes well-spent for a summary of why Europe's (and the US) problems
are far from over - no matter how much hope is placed in CB largesse.Greek Pensioner Hangs Himself In Protest That "Greece Will Be Wiped Off The Map"
"The police does not know me. I have never touched a drink in my
life. Of women and drugs I have never even dreamed of. I have never been
to a kafenio (coffee house), I just worked all day! But I commited one
horrendous crime: I became a professional at age 40 and I plunged
myself in debt. Now, I’m an idiot of 61 years and I have to pay. I hope
my grandchildren are not born in Greece, seeing as there will be no
Greeks here from now on. Let them at least know another language,
because Greek will be wiped off the map! Unless of course there was a
politician with Thatcher’s balls so as to put us and our state in line.
Signed, Alexandros 29/5/2012”
Spain: Bankia Down, Who Is Next?
Bankia is done: at this point the only questions left are i) what will be the final bailout cost ii) who will pay for these costs, and iii) whether the bank has enough beach towels to satisfy the onslaught of manic Spaniards desperate to hand over their €300 euros to the insolvent bank in exchange for some Spiderman-embossed linen. Oh, there is one more question: who is next. Now, as we showed earlier today, in the aggregate the answer is simple: everyone. But, in a very Stalinesque sense, where everyone is merely a statistic, that is essentially the same as saying no one. It is also certainly not helpful to any Spanish readers who may be worried about their deposits (and investments) which in a world of total disinformation, will first be lost before the government advises caution and safety. So instead we go to Goldman Sachs which has conveniently constructed the following analysis, which replicated the loss provision calculation of Bankia, and applies it to the other listed banks. The result: in addition to the €19 billion in bail out costs for Bankia, Spain will need to spend at least another €25 in bailout funding for six other listed banks which include CaixaBank SA, Banco Santander, Banco Popular Espanol, BBVA, Banco Espanol de Credito SA, Bankinter SA.
Spain Is The Most 'Over-Banked' Nation In Europe
Between
headlines of Bankia's demise and the growing deposit outflows from
Spanish banks, perhaps the market is doing its job. According to the EC's Stability Report, via UBS, one measure of bank sector capacity and efficiency (population per bank branch) shows Spain in a dismal worst place with the least efficiency (or highest over-capacity).
Of course, we would suspect that whatever state-funded reach-around
bailout the Spanish government comes up with next will not contain a
'revert staff/branch levels to European norms' provision - better to pay
up for mis-allocation of capital. Nonetheless, the large number of
local bank branches in countries like Germany, France, Italy and
Portugal indicates a potential for further consolidation and
restructuring there also.Enter The Swan
We know the U.S. is a big and liquid (though not really very transparent) market. We know that the rest of the world — led by Europe’s myriad issues, and China’s bursting housing bubble — is teetering on the edge of a precipice, and without a miracle will fall (perhaps sooner, rather than later). But we also know that America is inextricably interconnected to this mess. If Europe (or China or both) disintegrates, triggering (another) global default cascade, America will be stung by its European banking exposures, its exposures to global energy markets and global trade flows. Simply, there cannot be financial decoupling, not in this hyper-connected, hyper-leveraged world.
All of this suggests a global crash or proto-crash will be followed by a huge global money printing operation, probably spearheaded by the Fed. Don’t let the Europeans fool anyone, either — Germany will not let the Euro crumble for fear of money printing. When push comes to shove they will print and fiscally consolidate to save their pet project (though perhaps demanding gold as collateral, and perhaps kicking out some delinquents). China will spew trillions of stimulus money into more and deeper malinvestment (why have ten ghost cities when you can have fifty? Good news for aggregate demand!).
Time To Load Up On Denmark CDS - Moody's Cuts Nine Danish Financial Institutions: Luxor Thesis In Play
Last time we looked at Denmark it it was in the context of Luxor Capital which had some very ugly things to say about the Scandinavian country in "Rotten Contagion To Make Landfall In Denmark: CDS Set To Soar As Hedge Funds Target Country." Now, 6 months later, Moody's has finally gotten the memo: "Moody's Investors Service has today downgraded the ratings for nine Danish financial institutions and for one foreign subsidiary of a Danish group by one to three notches. The short-term ratings declined by one notch for six of these institutions. The rating outlooks for five banks affected by today's rating actions are stable, whereas the rating outlooks for two banks and for all three specialised lenders affected by today's rating actions are negative The magnitude of some of today's downgrades reflects a range of concerns, including the risk that some institutions' concentrated loan books deteriorate amidst difficult domestic and European conditions, with adverse consequences on their ability to refinance maturing debt. The latter concern is exacerbated by structural changes in the terms of Danish covered bonds and the mix of underlying assets that lead to increased refinancing risk. While Moody's central scenario remains that financial institutions show some resilience to what will likely be a prolonged difficult environment - and the revised rating levels for most Danish financial institutions continue to reflect low risks to creditors - today's rating actions reflect the view that these risks have increased."BTFD...(buy the f...ing dips)...
Gold Rips And Stocks Dip As Risk Assets Recouple To Reality
If
we had a penny for every equity rally away from credit reality that
converged back to credit's less-hopiness, we would now have made 5
pennies in the last 6 trading days. We pointed out last night that
equities surged into the close on small average trade size as credit
remained far less sanguine and the now-ubiquitous open in Europe started
the reversion as stocks fell rapidly, below Friday's close - tracking back with high-yield credit's deterioration. HYG gave up yesterday's gains and pops back under fair-value but rather notably, investment grade credit (IG) underperformed significantly today
- which is unusual in a sell-off day and signals either more fallout
from JPM reaching for hedges (IG9 10Y 166bps offered +5bps) or
investors grabbing the cheapest macro overlay from a carry perspective.
Gold and Silver outperformed admirably on the day, however the upward
move appears to be more of a reaction back to equity, treasury, and USD
reality as the afternoon saw the 4 markets recouple and trade together
(after disconnecting notable yesterday). Treasury yields dropped the most in 7 months to new record lows in 10Y and close for 30Y. Both implied correlation (systemic risk) and VIX (normal vol) jumped higher
today as the latter moved almost 3 vols to close above 24% (its biggest
pop in almost 3 months). A heavier volume open at highs, close at lows
day for stocks with little to signal capitulation in terms of trade size
- and across broader risk-assets, stocks appear to have room to fall - even after ES suffered its worst loss of the year today.The Facebook Backlash Begins
While it may come as no surprise to market-watchers, the market for over-priced internet IPOs seems to have become a little soft. Bloomberg is reporting that Kayak,
which first filed to go public in November 2010 and put its plans on
hold earlier this year because of choppy market conditions, is delaying
its IPO. The online-travel service roadshow was just postponed and guess who the lead bank on Kayak's IPO was - yep, Morgan Stanley.FaceBerg Diverges From Founder Age
A
$27 handle... that is all. Just two brief (billionaire-list-demoting)
weeks ago, Mark Zuckerberg passed 28 years old, any guesses where the FB
stock price will be when he passes 29?What Is The Upside In Chesapeake?
Three weeks ago, when the hit campaign on Chesapeake was in full swing, we made a simple prediction: hate the company for whatever reasons but not because of the balance sheet.
We explained that "under ZIRP, when every basis point of debt return
over 0% is praised, and an epic scramble ensues among hedge for any
yielding paper no matter how worthless, the balance sheets of companies
just do not matter. In other words, for companies that have massive leverage, high interest rates, negative cash flow, which all were corporate death knells as recently as 2008, the capitalization structure is completely irrelevant."
Alternatively, some other, far bigger, company with a pristine balance
sheet and lower quality assets could swoop in and do a full management
purge, removing the Mclendon overhang, firing the disgraced Board and
commingling liabilities while boosting the quality of its assets. Think
the TBTF putches from September 2008. Because at the end of the day,
it is all about the quality of the assets. And the reality is that CHK
has some quality assets, which, however, are burdened by many legacy
issues. There is of course the issue of near all time record gas
prices. But there in lies the rub: the prices are already at near all
time lows. They could continue sliding, or in a world in which hard
assets (and even gaseous) are becoming more and more precious by the
day, they could go up. In which case CHK would be a very interesting
bet. Needless to say, two weeks after our preliminary CHK assessment,
Carl Icahn put his money, or rather $775 million of it to be precise,
to essentially confirm what we had said previously. Which brings us to
the next question: is CHK really worth more? Well, in keeping with the
tradition of keeping it simple, we have decided to present one
delightfully simple chart from Bloomberg, which shows where the biggest
downside in the stock comes from - it's well-known leverage - as well
as where the upside is hiding - its asset base - which has the lowest
valuation of its peers.The Good, Bad, And Ugly Of Emerging Markets
With
Europe now seemingly in exile from even the bravest knife-catcher
value-manager, and, despite media protestation, US equities facing weak
macro data and a fiscal cliff of epic proportions; it is no surprise
that everyone and their mom thinks emerging markets are the place to be.
However, as UBS notes today, not all EM balance sheets (whether
government, corporate, or private) are the same and they break down the low, medium, and high risk balance sheets across Asia, LatAm, and EMEA.
As is evident in Europe, high debt levels are detrimental to economic
growth and equity returns. Solid government accounts generally reward
policymakers in such markets with valuable policy flexibility, while
healthy consumer balance sheets allow credit growth to be a strong
domestic growth driver. In a slow and uncertain global growth
environment, pillars to support growth are crucial and are market
differentiators - especially if global contagion spreads as we suspectLagarde On Taxes And Diplomacy: It's All TurboTax To Me
What is it about IMF heads and inserting foot, or some other appendage, in mouth, or some other orifice?What Does Gold Know That Stocks Don't?
A quick glance at today's cross asset class market moves shows a clear standout. The massive outperformance of Gold
(relative to USD strength, Stock weakness, and Treasury yields
tumbling). However, focusing on a slightly longer-term context shows
that it appears you can't keep a good gold market down
as it has merely recovered from its over-zealous selling pressure of
earlier in the week - to resync with FX, stocks, and bonds. Most
importantly, as we pointed out yesterday, it is now clear once again that 'sexy, smart' stocks knew nothing then (for the fourth time this week) - but keep on believing, as we will focus on 'other' asset classes as a signal.Jim,
This is the new big thing in gold – capital adequacy ratios.
CIGA Luis Ahlborn Sequeira
The big new thing in gold – capital adequacy ratios Ross Norman looks at the implications for gold of an increased focus on the assets banks are allowed to hold as tier one capital. Author: Ross Norman
Posted: Tuesday , 29 May 2012
LONDON (SHARPS PIXLEY) – Forgive the hyperbole in the headline but we wanted to get your attention as something quite profound is happening that could propel gold to record new highs. Yes, potentially the biggest thing since the birth of the gold ETF and the liberalization of the Chinese gold market in 2003. A decade on and we have grounds for saying that gold may well see a significant leg higher… the big new thing in gold. I’ll explain…
Banking capital adequacy ratios, once the domain of banking specialists are set to become centre stage for the gold market as well as the wider economy. In response to the global banking crisis the rules are to be tightened in terms of the assets that banks must hold and this is potentially going to very much favor gold. The Basel Committee for Bank Supervision (or BCBS) as part of the BIS are arguably the highest authority in banking supervision and it is their role to define capital requirements through the forthcoming Basel III rules.
In short, they are meeting to consider making gold a Tier 1 asset for commercial banks with 100% weighting rather than a Tier 3 asset with just a 50% risk weighting as it does today. At the same time they are set to increase the amount of capital banks must set aside as well. A double win potentially.
Hitherto banks have been much dis-incentivised to hold gold while being encouraged to hold arguably riskier assets such as equity capital, currencies and debt instruments, none of which have fared too well in the crisis. With this potential change in capital adequacy requirements. bank purchases of gold would drive up its value relative to other high quality qualifying assets, increasing its desirability for regulatory purposes further. This should result in gold being re-priced to bring it on a par with all other high quality assets.
Currently banks have to have core Tier 1 capital ratio of 4% of which will rise to 6% from the beginning of next year. In addition to its store of value merits, central to the argument in favor of gold as a bank reserve is its countercyclical nature to most other assets in that it tends to be inversely correlated. Gold is ideal as it bears no credit risk. it involves no other counter-party and it is no one’s liability. It is a reserve asset diversifier if you like.
This is a treble win for gold – it would be a major endorsement of its role in preserving wealth and as a store of value from the highest financial authority, it would lead to significant purchases of gold by major financial institutions and it would lead to a reappraisal of its value with respect to other Tier 1 capital such as quality sovereign debt. Under the new rules gold could become a very significantly larger proportion of a reserve pool which is about to grow very much larger.
More…
May 30, 2012, at 10:19 am
by Jim Sinclair in the category In The News |
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by Jim Sinclair in the category In The News |
Print This Post | Email This PostJim Sinclair’s Commentary
The European Central Bank announced it has not approved a bailout for Spanish bank Bankia using ECB credit facilities.
Whatever is required will be provided here and there. QE to infinity is as sure as death and taxes, except sooner.
According to the National Association of Realtors, the index of
pending home sales dropped in April by 5.5% following a revised 3.8%
gain reported for March. The Street’s median forecast called for a 1%
rise in the measure for April.
Jim Sinclair’s Commentary
This entire drama is going to resolve itself sooner than anticipated.
Scramble for safety as Spain fears grow By Vivianne Rodrigues in New York
In the US, eurozone fears were compounded after a report showed pending home sales dropped by the most in a year, sending the S&P 500 index down more than 1 per cent. The broad measure of US stocks is on track to close the month of May 6 per cent lower.
The FTSE All-World equity index is down 1.6 per cent as the FTSE Eurofirst 300 sees a loss of 1.5 per cent and after the Asia-Pacific region slid 0.7 per cent. The Vix index, a measure of expected US equity volatility known as the “fear gauge”, is up 11 per cent to 23.3.
Traditional “risk-off” strategies are being deployed with vigour across the market.
The euro has dropped below $1.24, the Reuters-Jefferies CRB commodities basket is at its lowest since October 2010 and perceived havens are seeing strong demand.
Benchmark US Treasury yields are down 12 basis points to 1.62 per cent, the lowest in more than 60 years, while the dollar index has risen 0.5 per cent to flirt with a two-year high, a move that leaves gold down 0.9 per cent to $1,542 an ounce.
More…
Fed at full strength for first time since 2006 as Stein sworn in By Jim Puzzanghera
May 30, 2012, 8:54 a.m.
WASHINGTON — Jeremy C. Stein was sworn in Wednesday as the seventh member of the Federal Reserve Board of Governors, putting the panel at full strength for the first time since before the Great Recession hit.
Stein, a Harvard economics professor and former Obama administration official, took the oath of office from Fed Chairman Ben S. Bernanke in the central bank’s Washington board room, the Fed said.
Jerome H. Powell, a former Treasury official from the administration of President George H.W. Bush, was sworn in last week.
The term for Fed governors is 14 years, but Stein and Powell are filling unexpired terms. Stein will serve until Jan. 31, 2018, filling the seat vacated by Kevin M. Warsh in April 2011. Powell’s term lasts until Jan. 31, 2014. He filled the seat left open when Frederic S. Mishkin resigned in August 2008.
With the addition of Powell and Stein, the Fed board is back to its full compliment of members for the first time since April 28, 2006. The Great Recession officially began in December 2007. Although it technically ended in June 2009, the Fed has struggled to help get the economy rolling since then.
More…
Jim Sinclair’s Commentary
There are more plans than people in Euroland. The bottom line is whatever is required will be produced with QE to infinity.
EU Weighs Direct Aid to Banks, Euro Bonds as Crisis Antidote By James G. Neuger – May 30, 2012 10:11 AM GMT-0300
The European Commission challenged Germany’s remedies for the financial crisis, calling for direct euro-area aid for troubled banks and insisting on a “roadmap” for common bond issuance.
The commission, the European Union’s central regulator, sided with Spain in proposing that the planned permanent rescue fund, the European Stability Mechanism, inject cash to banks instead of channeling the money via national governments.
“Flexibility and speed of action will be of the essence,” Jose Barroso, the commission’s president, told reporters in Brussels today. He sought “not only flexibility in terms of instruments, but also in terms of speed of reaction of the so- called firewalls, in this case of the ESM.”
Proposals for more liberal use of European bailout money face resistance in creditor countries such as Germany, Finland and the Netherlands, the scenes of growing taxpayer opposition to adding to the 386 billion euros ($479 billion) already pledged to fight the crisis.
More…
Jim Sinclair’s Commentary
Totally correct, but markets listen now to MSM MOPE.
Time will prove Taleb 100% correct.
Wednesday, May 30, 2012
May 30 (Bloomberg) — Nassim Taleb, author of "The Black Swan," said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area’s superior deficit situation.
Europe’s lack of a centralized government is another reason it’s preferable to invest in the region, said Taleb, a professor of risk engineering at New York University whose 2007 best- selling book argued that history is littered with rare events that can’t be predicted by trends.
A breakup of the euro "is not a big deal," Taleb said yesterday at an event in Montreal hosted by the Alternative Investment Management Association. "When they break it up, there will be a lot of fun currencies. This is why I am not afraid of Europe, or investing in Europe. I’m afraid of the United States."
The budget deficit as a proportion of gross domestic product in the U.S. amounted to 8.2 percent at the end of 2011, government figures show. That’s twice the 4.1 percent ratio for euro-region countries, according to data compiled by Bloomberg.
"Of course Europe has its problems, but it’s in much better shape than the United States," Taleb said. He voiced similar concerns about U.S. prospects at a conference in Tokyo in September.
More…
Jim Sinclair’s Commentary
I would like to add one more and probably the biggest reason for
this. That is the sundering of demand for the dollar as the settlement
mechanism in Asian trade.
Central banks not selling dollars into this mirror image rally are brain dead.
Renminbi’s mysterious rise: trade finance or interest arbitrage? May 29, 2012 2:09 pm by Robert Cookson
Something funky is going on with the renminbi.
Swift, the global payments network – essentially an all-seeing eye over the global banking system – has released some intriguing new data about the international use of the Chinese currency.
While the renminbi accounts for just 0.34 per cent of all international payments, this year it has accounted for 4 per cent of global issuance of letters of credit (LCs), instruments used to finance trade.
Or to put it another way, the renminbi is one of the least-used currencies in the world when it comes to all payments, in sixteenth position, but it is now the third-biggest currency for LCs, after the dollar and the euro (see chart.) This is all the more remarkable because international transactions in renminbi only became possible three years ago.
More…
By Greg Hunter’s USAWatchdog.com
Dear CIGAs,
You know things are heating up when the banks start with scare tactics. In Greece, the bankers are in full court press to sway voters for next month’s election. Reuters reported yesterday, “In a report released ahead of an election on June 17 that may determine whether the country stays in the single currency, the country’s biggest bank said the risk of Athens exiting the euro was no longer just a theoretical possibility, warning that the fallout from such a move would be dramatic. ‘An exit from the euro would lead to a significant decline in the living standards of Greek citizens,’ the NBG wrote ahead of a vote which parties opposed to austerity measures that have kept Greece in the euro so far have a chance of winning.” (Click here for the complete Reuters story.) What would you expect from bankers who want the people to keep them in business as debt slaves? There is never any mention of pain for some gain. In Iceland, the people voted not to pay back much of their sour debt and, now, the country is in a real recovery. (Click here for more about Iceland’s comeback.)
I am not saying the problem is not real—it is. But what is the best way to fix it? Isn’t it funny how bankruptcy and criminal prosecution are never mentioned as a way to clear away the deadwood and start anew? Instead, the answer is always more money printing for even bigger bailouts anytime there is another approaching calamity. For example, yesterday, this story from the UK featured comments from the Bank of England if the Euro falls apart. It said, “A senior official for the Bank said the measures would ‘again play [their] part in mitigating the impact’ of Greece or other countries leaving the single currency. The comments come after the head of the IMF suggested last week that British interest rates may have to be cut to zero if the economic situation deteriorates. The Bank has already completed a quantitative easing programme, effectively printing more money worth £325billion and this may be extended again.” (Click here for the complete story from The Telegraph.)
Most people have no idea just how big the bank insolvency problem really is in Europe and beyond. Egon von Greyerz, who is a managing partner at Matterhorn Asset Management, said “trillions of dollars” will eventually be needed to save the financial system this time. Yesterday, Egon von Greyerz said, “The bail out for Spain’s Bankia is now up to $25 billion in refinancing requirements, but that’s just the beginning. We’re looking at country after country here where the dominos are falling. The refinancing requirements worldwide are getting astronomical, and they will escalate at a faster rate. I’ve said to you that I expect the requirements to be in the tens of trillions of dollars, and that’s just for governments. If you add to that corporate debt, private debt, mortgage debt, you are talking about sums that are hard to imagine.” (Click here to read and hear the complete interview on King World News.)
More…
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