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Old 06-24-2016, 04:46 AM   #1
Ross
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Default Financial meltdown stage 2

IMO stage 2 has started .

Pure speculation of course .

Can I prove it , no .

The trigger : BREXIT .

Why : London is a major global financial hub .

US Banks alone had over 240 Trillion in derivatives ( 2015 figures )
and there are extremely close links between British and US banks.

Obviously some of it is going to go sour .

You think the EU or UK could raise even 1 Trillion in cash without diluting
currency value by printing it ? Fat chance .



Yes I understand just about every world leader will say 'no problem we can
cope ' and the press will cooperate for as long as they can by downplaying crisis .
Expect the level of lying to become deafening .


..
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Old 06-24-2016, 05:21 AM   #2
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They'll just prop it up and manipulate it like they always do

I just need everything to hold on until the end of the year so my mortgage will be paid off
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Old 06-24-2016, 07:31 AM   #3
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Dragon said ..
Quote:
They'll just prop it up and manipulate it like they always do
A common sentiment I think .

The most insightful thing I read today was a veteran trader warning
that ''most of the market is still in denial '' .

It is also a confusing piece of information because governments have
to save stock markets if they can . There is no choice because a market
plunge is catastrophic in so many ways .

I think it likely market trading will be halted for days if not weeks very
soon .

If so then the trick is to not be in any market situation that you cannot
sustain . For example having bought stock using a margin loan and being
unable to make interest repayments or face a margin call .

..
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Old 06-26-2016, 10:45 PM   #4
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From post event media analysis I have been assuming BREXIT
will be delayed for as long as possible . Now I read this ....
Quote:
The European Parliament’s chief called Sunday for British Prime Minister David Cameron
to begin formal proceedings to leave the EU at a summit this week.
So perhaps not .

Source

..
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Old 06-27-2016, 12:05 AM   #5
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I was surprised - the EU IS calling for a 'speedy divorce'.

The bitter nastiness is being loudly voiced now & clearly the political toll is being seen. Labour seems to be in meltdown.

Certainly tough & uncertain times ahead for the UK - a Prime Minister to be replaced, Scotland making serious noise about another independence referendum & the process of unwinding their involvement in EU.

The Asian markets are mixed tonight - most are a bit up or a bit down - a rough average of half a percentage point either way.
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Old 06-27-2016, 01:01 AM   #6
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Default IT's all about the Casino Banks, better blame it on Brexit

The ECB, which regulates 129 Eurozone banks, has estimated that these banks are bogged down in €900 billion ($1 trillion) of bad loans

Wolf Ritcher at Wolf Street
June 26, 2016
Dealing with a Financial Crisis under cover of Brexit Chaos

snip>-
The Stoxx 600 banking index, which covers the largest European banks, plunged 14.5% on Friday. It’s down 29.3% year-to-date, 42% from its 52-week high, and 76% from its all-time high in May 2007 before the Financial Crisis and the euro debt crisis knocked the hot air out of the banks.

But to keep panic at bay, Brexit and the resulting political crisis are used to cover up the blooming financial crisis.
snip>-

the source
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Old 06-27-2016, 01:23 AM   #7
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Choke - a very important must read article if I ever saw one.
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Old 06-27-2016, 06:49 AM   #8
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Bread and Circuses

as long as people are entertained by their phones and their food stamps/welfare checks keep coming they don't care

unfortunately

and tptb know this and keep it that way


I've been adding extras to the grocery list for months now and pick up basics every week. coffee ,tea,rice, dried beans,canned meats one or three at a time

some time next month I'm heading to a Mennonite store in Pa to pick up 50# of sugar and 50# of wheat
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Old 06-27-2016, 07:14 AM   #9
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All that free money going to European banks and just days
before end of financial year , what a coincidence .

Nothing to do with ''extend and pretend'' or bankers bonuses .
Of course not .

It all really boils down to stealing from the public to save and
protect banks. ..
Quote:
The thing is, banks that need to raise equity capital must have inflated stock prices or
else existing investors get crushed. If Deutsche Bank has to raise €30 billion in capital by
issuing shares at €3 a share, existing shareholder will essentially be wiped out,
and raising equity capital may no longer be possible. So the name of the game is to
manipulate up bank stocks before issuing new shares. But it may be too late.
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Old 06-27-2016, 10:28 AM   #10
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thats because they back the politicians. nice tight circle of money exchanging hands and we're the suckers who provide it unwillingly
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Old 06-27-2016, 10:38 AM   #11
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Just noticed that the DOW is down ~300 points this am, but FAR MORE IMPORTANTLY, the 10 Year treasury is trading below 1.5%, an extreme flight to safety... this move (roughly .25%) is HUGE and likely will trigger some CDS calls (Credit default swaps)...

The room full of mousetraps had its first big mousetrap set off, and it's looking like a lot more are going off... this "party" is far from over...

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Old 06-27-2016, 10:51 AM   #12
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Quote:
Originally Posted by Ross View Post
All that free money going to European banks and just days
before end of financial year , what a coincidence .

Nothing to do with ''extend and pretend'' or bankers bonuses .
Of course not .

It all really boils down to stealing from the public to save and
protect banks. ..
Well, that's getting blown up rather quickly, lots of bank stock are crashing ATM, even US banks are getting hammered (and rightfully so). I'd post links, but I'm not sure if the articles will be up to date by the time I post them, it's going that fast...

Also of interest, the GBP-US Dollar is now I£=$1.31 US, sinking like a rock... more CDS and derivitives getting activated... the flight to safety continues, and I suspect US treasuries might be trading negative before the week is out...

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Old 06-27-2016, 11:37 AM   #13
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It is fugly in Europe - several significant stocks, especially in the UK are down, (over the last 2 trading sessions), somewhere in the 30-40% range... airlines, home builders, investment banks... massive flight to safety.

Yeah - gonna be an interesting summer.
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Old 06-27-2016, 01:43 PM   #14
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The EU has just sealed its fate...

http://www.zerohedge.com/news/2016-0...ecide-its-fate

Quote:
Schulz: "The British have violated the rules. It is not the #EU philosophy that the crowd can decide its fate". #TBC https://twitter.com/gzibordi/status/747242697119891457
That's the president of the European Union being quoted there... *smh*

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Old 06-27-2016, 08:08 PM   #15
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The pirates have just run up the "Skull and Cross Bones"
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Old 06-27-2016, 10:42 PM   #16
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http://wolfstreet.com/2016/06/27/eur...hits-us-banks/

Quote:
uropean bank stocks just experienced their worst two-day plunge ever in the post-Brexit fallout that rained down on the already blooming European banking crisis.

Healthy big banks would get over Brexit and the political turmoil it is spawning, particularly non-UK banks. But there are no healthy big banks in Europe. And non-UK banks are crashing just as hard, and some harder. This is about a banking crisis morphing into a financial crisis.

These bank stocks got crushed on Friday. And they got crushed again today. Italian banks have been reduced to penny stocks. Spanish banks are getting closer. Commerzbank, Germany’s second largest bank, and still partially owned by the German government as a consequence of the last bailout, is well on the way.
LOTS more at the link... gotta admit, haven't read Wolf before, but love his writing!

Considering what's going on, methinks keeping a REALLY close eye on banks would be a good idea (not to mention having a few hundred in cash stashed under the mattress)...

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Old 06-27-2016, 11:07 PM   #17
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I knew many European banks weren't in great shape. I had no idea it was THAT bad. Those are truly horrific one & two day drops & clearly, a number of banks are getting worryingly close to true bottom... going under; barring a spendy bailout.
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Old 07-06-2016, 10:50 PM   #18
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If you examine the above chart it is quite clear that the derivative
exposure of Deutsche Bank is many times the total Gross Domestic Product
of Germany .

In other words nothing can save DB if even a small part of it goes bad
and BREXIT has probably had that effect .


Source of chart .


..
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Old 07-07-2016, 03:53 PM   #19
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Quote:
If you examine the above chart it is quite clear that the derivative
exposure of Deutsche Bank is many times the total Gross Domestic Product
of Germany .
Yes, but the net exposure is much, much smaller. With Lehman, hundreds of billions of notional value of derivative contracts distilled down to net of about $600 million in the end (i.e. about a 1:1000 net to notional ratio).

There are much bigger threats out for the big banks than the notional balance of derivative contracts - for example, the CLO/CMO markets are out of control again, and student loan debt is a ticking time bomb. We are also in midst of yet another colossal real estate bubble, and souring loans could easily take down the banks. Government spending remains out of control. There are deflationary pressures.

OTOH, if I were a hedge fund investor, overuse of derivative contracts is a serious concern. Those guys often don't have have enough diversification and don't net off exposures like the banks do. If they bet the wrong direction, a bunch of them could go down in flames.
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Old 07-07-2016, 05:01 PM   #20
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Applying that ratio to Deutsche Bank gives a number of around 5 Billion-still more than enough to blow that bank to pieces...

it was excessive leveraging and a real estate market that turned sour that killed Lehman, and very likely will do in DB as well-I've heard reports that DB is running somewhere around 40:1 leveraging, meaning if the value of the assets DB holds falls 2.5%, DB is wiped out...compare that to Lehman, which was running 30:1 leveraging...

Besides real estate, I've been hearing that DB is heavy into shipping loans (to the tune of about 6-7 billion) and those loans are sinking like the Titanic... with a market cap of roughly 20 billion, it won't take much to torpedo DB, and in turn, pretty much destroy the entire banking industry worldwide...

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Old 07-07-2016, 09:51 PM   #21
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Germany - bank failure imminent .

Quote:
Europe's Bank Crisis Arrives In Germany: €29 Billion Bremen Landesbank
On The Verge Of Failure


Source article .
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Old 07-07-2016, 10:06 PM   #22
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Unconfirmed rumor has it that ...

Quote:
The big immediate threat for Deutsche Bank though has to do with their problems in hiding debt for the Sovereign nations applying for the Eurozone.

For example, Greece and Italy couldn’t have their debt ratios over certain levels, so what Deutsche Bank did was they turned nice big chunks of Sovereign debt into currency swaps.
For an example of how this works: Suppose you have a $250,000 bad business loan that is stinking up your credit report.
So you call up your favorite Deutsche banker (or Goldman or Morgan- pick your criminal enterprise that is your personal favorite) and you tell him,
look I have a $250,000 debt here and I want to make it go away. They say OK, we can do something clever here.
We can pay off your debt so your credit report looks good, and we can establish this $250,000 Euro swap, and we’ll keep it off the books!
..
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Old 07-08-2016, 12:51 PM   #23
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We can pay off your debt so your credit report looks good, and we can establish this $250,000 Euro swap, and we’ll keep it off the books!
That's true, but someone has to be on the other side of that swap. In other words, someone (other than DB) has to assume the risk that the borrower will default. Typically, this is a hedge fund (banks are not allowed to invest in these types of swaps), which is why I noted above that the swap market is more of a threat to hedge funds than banks.
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Old 07-08-2016, 08:51 PM   #24
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Sysiphus said ..
Quote:
That's true, but someone has to be on the other side of that swap.
If the story is true then the DB sovereign debt currency swaps ( so called )
were effectively fraud with no hedge funds involved .

As I read it DB are holding foreign debt dishonestly described as a currency
swap .

..
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Old 07-08-2016, 09:20 PM   #25
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What meltdown?

US Markets have basically shrugged off the BREXIT. What's next?
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