Loading ...Heads Up Optional or The Entire Eurozone Banking System Is Effectively Bankrupt
World faces wave of epic debt defaults, fears central bank veteran
Ambrose Evans-Pritchard, 19th January 2016, telegraph.co.uk
Now behind some type of pay wall, long quote so you don’t have to bother trying to access it:
“The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned. The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,” said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS). Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” he said. It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he told The Telegraph on the eve of the World Economic Forum in Davos. The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians. The next task awaiting the global authorities is how to manage debt write-offs – and therefore a massive reordering of winners and losers in society – without setting off a political storm. Mr White said Europe’s creditors are likely to face some of the biggest haircuts. European banks have already admitted to $1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed. The European banking system may have to be recapitalized on a scale yet unimagined, and new “bail-in” rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.” [Bolding & Italics my own.]
Post GFC 1, US & UK taxpayers recapped their banks, European taxpayers didn’t recap theirs.
If you have any sizeable financial assets in the Eurozone, convert it into real, income-generating assets (real estate, farmland, etc), now IMHO.
I’ve just assumed the neckline for DB is broken sometime in 2018 and is ~ $8.50. Maybe they can kick the can down the road until 2019, who knows really. Thankfully, DB looks bullish to me for the time being, heading up towards $25-$30.
“No one could have seen this coming…”
Looks like I picked a bad couple of decades to quit sniffing glue.
Thanks for the post Jenkins. Ive gone from the (there is no way this can continue camp) all the way over to the (this mess will continue a lot longer than I can imagine camp). Im now in the (it will happen when it happens and life will live on camp). There is no doubt that the shits going to hit the fan at some time problem for me is Im not good enough to know when that time will come. What I do know is, I never made a dime following all the shy is falling crowds. In fact, I lost hundreds of thousands in the value of my physical in doing so. Time will tell if Im wrong again with my new direction. Thanks again for the post!
You’re welcome Optional. All of this is highly complex. Problem is, I suspect if things do *really* fall apart, in terms of the Western financial system, it will happen in 3 days. That’s the problem, no time. I fully expect everything to fall apart but I’m hoping for as long as possible before it does really. The more time I have, the more time I’ll have to prepare.
Yes it will happen in the end, but it could have one last hurrah if they turn on the afterburners again! Optional, I was also in the there is no way this can continue camp, then the 2nd one, and now I am torn between it will all go wrong in 2018 to it might go on for another 10 years in a rinse cycle repeat. So we get a crash between now and 2018, and then we start all over again for another 10 years and commodities will soar as we try and build our way out!
The real issue in Europe is Italy, which is in a real mess and the mass immigration from Africa is getting worse. Meanwhile, the leaders of the EU are just ringing their hands and doing nothing of any value to help. Shambles and a drinking session in a local pub springs to mind!
I thought a drop to approximately 1550 $SPX, then rally to ~ 5000, then permanent collapse.
The EU elite wants mass immigration into Europe IMHO. France, Germany & the UK are already destroyed demographically and they are attempting to flood Italy with migrants in order to destroy Central Europe too.
Countries represent a barrier to the United States of Europe so the EU is attempting to destroy them by dissolving them with mass immigration.
I think the EU is basically being run for the benefit of big corporate and big corporate wants cheap labour, hence the high immigration. They were not, however, expecting the flood gates to open from Africa. For that we can blame Mr Cameron and Mr Sarcozy and the mess they made of Libya and, of course Blair and bush for Iraq!
They only wanted the cheap labour until the robots are available in bigger numbers, and then the crap will really hit the fan, as what will the EU do with all of the cheap labour that will still be available? Spain had this issue when the building boom ended in 2008 with high crime, but this will be much worse.
Too many people and the solution is war to wipe the slate clean, all the sabre rattling in the media is just to prepare the masses mentally for what is to come.