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– Nearly €1 trillion in non-performing loans poses risks to European banks’
– Greece has highest non-performing loans as a share of total credit
– Italy has the biggest pile of bad debt in absolute terms
– Bad debt in Italy is still “a major problem” which has to be addressed – ECB
– Level of bad loans in Italy remains above that seen before the financial crisis
– Deposits in banks in Greece, Cyprus, Italy, Ireland, Czech Republic and Portugal most at risk from bank bail-in

As reported by Bloomberg this week in an important article entitled ‘Five Charts That Explain How European Banks Are Dealing With Their Bad-Loan Problem’:

For European banks, it’s a headache that just won’t go away: the 944 billion euros ($1.17 trillion) of non-performing loans that’s weighing down their balance sheets.

Economists say the pile of past-due and delinquent debt makes it harder for banks to lend more money, hurting their earnings. European authorities are prodding lenders to sell or wind down non-performing credit, but they’re split on how to tackle the issue, and some investors are disappointed by the pace of progress.

There are various ways of calculating soured loans. The European Central Bank advises that non-performing asset indicators should be interpreted with caution because the definition of impaired assets and loss provision differ between countries. The data used below refers to domestic banking groups and standalone banks only, and excludes foreign subsidiaries and controlled branches.

“The data for the Czech banking sector consist of the banks that represent only 6 percent of credit extended by the banks operating in the Czech Republic,” the central bank said by email.

Here are five charts (above and below) using the ECB data that help explain the non-performing loan issue and how banks are tackling it.

…click on the above link to read the rest of the article…

“This Is Where They Completely Lost Their Minds” – Hussman

February 10, 2018

“This Is Where They Completely Lost Their Minds” – Hussman

– Hussman warns ‘the S&P 500 to lose approximately two-thirds of its value over the completion of this cycle’
– ‘the market has lost value, even since 2009, when overvalued, overbought, overbullish conditions were joined by divergent internals’
– Believes the market is going to learn lessons about the crash ‘the hard way’

In an almost prophetic blog post from John Hussman last week, we are warned about the bubble waiting to collapse in the US equity market and the hard lesson investors are about to learn.

Drawing on both his own experience and the work of the much revered Didier Sornette, Hussman looks at the current state of the US equity market, where it sits in its cycle and how it compares to history.

The prognosis is not good. Hussman warns that ” the market has lost value, even since 2009, when overvalued, overbought, overbullish conditions were joined by divergent internals…I expect the S&P 500 to lose approximately two-thirds of its value over the completion of this cycle.”

Of course, the lesson may have finally begun. On Monday February 5th the Dow Jones dropped over 1,000 points, the largest single day drop ever, on a points-basis. Meanwhile, also on the 5th, the S&P500 went negative for 2018 closing down more than 7 percent from a record set in January. Similar action was repeated on the 8th February, with many traders declaring they’d never seen anything like it.

Gold performed well following the rout and we believe gold prices may rise further as the drama leads period of risk aversion and a new found appreciation by investors looking for gold’s hedging and safe haven attributes.

You can hear more about our bubble crash predictions in our Goldnomics podcast. Here we take a look at one of the important financial questions of our day – is this the greatest stock market bubble in history?

…click on the above link to read the rest of the article…

Peak Gold: Global Gold Supply Flat In 2017 As China Output Falls By 9%

February 8, 2018

Peak Gold: Global Gold Supply Flat In 2017 As China Output Falls By 9%

– China gold production falls by 9% to 420.5t in 2017
– Chinese gold demand rose 4% to 953.3t in same period
– China is largest producer and accounts for 15% of global gold production
– China does not export gold. Increasing foreign gold acquisitions to meet demand
– Global gold production flat – 3,269t in ’17 from 3,263t in ’16, smallest increase since ’08
– Peak Gold is here: supply set to fall gradually while global demand remains robust

Financial markets are abuzz with how much money the global economy lost earlier this week when the Dow Jones Index had a bit of a crash – ahem – ‘correction’. Luckily it has (temporarily at least) recovered but there are many other threats to financial markets in 2018 that suggest the ‘Everything Bubble’ is set to burst.

There is also an unappreciated threat to the gold market and more particularly a threat to gold mining supply and therefore the likelihood of higher gold prices – that is the threat of ‘peak gold’.

The supply of gold increased last year by the smallest margin since 2008. Ourselves and other market experts who have looked at the data, have been contending for many months now that we are on the cusp of ‘peak gold’.

The FT has now recognised the phenomenon of peak gold or ‘plateau gold’ and covered it this week: Global gold mine supply plateaued in 2017 as China output fell 9%.

China is the world’s largest gold supplier. In 2016 the country produced 453t or 56% more than the second highest gold producing nation of Australia.In 2017 Chinese production fell 9% to just 420.5t.

It also leads global gold demand. The demand comes from not only individuals but also a central bank that is determined to no longer rely on the US dollar.

…click on the above link to read the rest of the article…

Cyber War Coming In 2018?

January 24, 2018

Cyber War Coming In 2018?

– Cyber war is increasing threat – Investors are not prepared for
– Third most likely global risk in 2018 is cyber war say WEF
– “Scale and sophistication of attacks is going to grow”
– EU, US, NATO lay down ground rules for offensive cyber war
– Ireland is viable target for attackers but is ‘grossly unprepared for cyber war’
– UK should expect attack that cripples infrastructure within 2 years
– Trump administration may use nuclear weapons in response to cyber attacks
– Cyber war designed to have a economic impact on countries
– Invest in physical assets as well as digital assets & currencies
– Avoid ETF and digital gold and own physical gold that is allocated and segregated

Cyber-attacks are the third most likely global risk for 2018, behind extreme weather conditions and natural disasters, according to a new report by the World Economic Forum.

Estimated to cost over $1 trillion per year, cyber-attacks are now more expensive than natural disasters which in 2017 brought in a bill of $300 billion.

“We are still under resourced in the amount of effort put into trying to mitigate this risk…Cyber is at or above the scale of natural catastrophes [in terms of financial damage caused] and yet the comparative infrastructure is much smaller in scale,” according to John Drzik of WEF report partner Marsh.

The World Economic Forum’s Margareta Drzeniek-Hanouz, head of economic progress, told a press conference that cyber-risks are affecting society and the economy in “new, broader ways.”

They now impact not just the corporate sector as we usually assume but also government infrastructures and the geopolitical sphere. Arguably we are also seeing them shape societies.

The report’s launch comes at a time when cyber-attack warnings are coming in thick and fast. Governments have been warned this week that they are grossly underprepared for an attack which could see politics taken out of the electorate’s hands, billions wiped from financial markets and chaos generally created between otherwise peaceful nations.

…click on the above link to read the rest of the article…

Global Pension Ponzi – Carillion Collapse One Of Many To Come

January 22, 2018

Global Pension Ponzi – Carillion Collapse One Of Many To Come

Pension Crisis And Deficit of £2.6B At Carillion To Impact UK Pensions

– Carillion collapses leaving a £900 million debt pile and 30,000 pensions at risk
– Carillion PLC share price has collapsed 94% in last twelve months
– Private analysis of Carillion’s pension deficit reveals it to be as high as £2.6 billion
– Figure adds to the UK’s ongoing pension crisis, both private and state are severely underfunded
– UK’s Private Pension Fund already has a levy of £550 million for next twelve months
– UK state pension crisis as state fund to be ‘exhausted by 2033’
– Ensure your pension is funded and properly diversified with gold

Source: Wikimedia

The looming pension crisis has been signalled in the collapse of Carillion. The deficit of latest private sector dead-on-arrival Carillion is officially £580 million. However, private reports suggest it could be as high as £2.6 BILLION.

According to a Sky News investigation: ‘the £2.6 billion figure relates to the cost to Carillion of paying an insurance company to guarantee all of its pension liabilities, and is significant because it is likely to be the sum claimed on behalf of the pension schemes as part of the liquidation process.’

Nearly 30,000 UK workers’ pensions are at risk thanks to Carillion management’s total mismanagement of a company that has seen its share price collapse 94% in the last 12 months.

Carillion’s 27,500-member pension scheme was placed on an ‘at risk list’ in autumn 2017. Arguably, it like many other pension funds should have been there many months ago.

Sadly, Carillion is just the latest in a very long string of serious company collapses that have highlighted the major pension crisis in the UK and around the Western world. It also likely signals that we may be on the verge of many, many more very large corporate bankruptcies in the UK due to massive debt levels and unfunded liabilities.

…click on the above link to read the rest of the article…

How Gold Bullion Protects From Conflict And War

October 19, 2017

– Gold and silver’s historical role in conflict shaped the world today and the modern financial system
– Gold played an important function in the great conflicts up to and throughout the 20th century
– Gold and the effective use of bullion played a crucial role in the outcome of the American Civil War
– Gold was an important economic agent in both World Wars, conferring a huge advantage on the allies
– In a world beset with risks of war both in the Middle East and with North Korea, Russia and China … gold will protect

Gold and silver have played important roles during periods of conflict and have protected people but also protected nations and conferred power. HSBC Chief Precious Metals analyst James Steel has written a fascinating piece for this month’s Alchemist about this.

The article takes us through the major wars and conflicts from the 15th century to modern times. Each major war serves as a reminder that success is as much down to the management of bullion and finance as it is about the role of gold and silver.

…the way bullion was used, moved, stored and shifted had profound effects on long-term economic or military success. Indeed, the role of gold and silver in wars not only in influenced the shape of the world today, but laid the foundations for the modern financial system.

When managed effectively we see how important gold and silver were for victorious countries. Central bankers and politicians of today should use the following historical examples of military successes to appreciate the importance of a strong source of bullion and conservative financial planning both in and out of peacetime.

…click on the above link to read the rest of the article…

Puerto Rico Without Electricity, Wifi, ATMs Shows Importance of Cash, Gold and Silver

October 14, 2017

– Most of Puerto Rico remains in the dark and without power three weeks after storm
– With widespread power failures, Puerto Rico remains cash only with retailers only accepting cash and few consumer having cash
– Shortages of food, fuel and medicine with infrastructure repairs delayed
– Power could be ‘out for months’ as 85% of people remain off the grid
– Around 75% of ATMs disconnected
– Electronic forms of payment including bitcoin have been rendered non viable
– Puerto Rico’s accidental ‘cashless society’ shows risks of cashless society and importance of holding cash, gold and silver out of the financial and digital systems

Aerial photo of flooding in Puerto Rico. Washington Post

Puerto Rico has been destroyed by two savage hurricanes which have plunged the island into darkness and despair. The landscape of ruined homes and entire towns resembles Hiroshima after the man made disaster of a nuclear bomb being dropped on the city.

More than three weeks since Hurricane Maria hit the island, 3.7 million American citizens are on the precipice of a humanitarian disaster. The majority of these people are desperate for food, water, electricity and shelter. They are desperate for cash that will allow them to secure these basic necessities.

Over 84% of the island remains without power and 37% of people are without access to water. Without power, much of the population is does not have electricity to charge their phones and iphones. Very few have wifi and this is severely impacting their ability to communicate and conduct their lives.

Inevitably, the future of Puerto Rico now lies in the wrangling hands of government and financial organisations, all of which seem to be pointing the finger of blame at one another.

…click on the above link to read the rest of the article…

Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms

September 22, 2017

Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms

There is a £1 trillion debt time bomb hanging over the United Kingdom. We are nearing the end of the timebomb’s long fuse and it looks set to explode in the coming months.

No one knows how to diffuse the £1 trillion bomb and who should be taking responsibility. It is made up of two major components.

£710 billion is the terrifying size of the UK pensions deficit
£200 billion is the amount of dynamite in the consumer credit time bomb

How did the sovereign nation that is the United Kingdom of Great Britain and Northern Ireland get itself so deep in the red?

This is not a problem that is bore only by the Brits. In the rest of the developed world a $70 trillion pensions deficit hangs heavy.

We are all in this boat because we apparently didn’t learn from the massive man made crisis that was the 2008 financial crisis.

The ‘we’ is referring to UK individuals who are on average holding £14,367 of debt. It refers to the pension fund managers who are ignoring the fact they hold more liabilities than assets. It refers to banks and mortgage and loan providers who give loans to people who are already indebted and who will struggle to pay the debt back. It refers to a compliant media who do not have ask hard questions about irresponsible lending practices and cheer lead property bubbles due to getting significant revenues from the banking and property sectors.

And, ultimately the ‘we’ is the government who peddled such terrible monetary policy that it has brought us as close to nuclear financial disaster as we have been since 2008.

…click on the above link to read the rest of the article…

Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards

August 30, 2017

Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards

– Trump could be planning a radical “reboot” of the U.S. dollar
– Currency reboot will see leading nations devalue their currencies against gold
– New gold price would be nearly 8 times higher at $10,000/oz
– Price based on mass exit of foreign governments and investors from the US Dollar
– US total debt now over $80 Trillion – $20T national debt and $60T consumer debt
– Monetary reboot or currency devaluation seen frequently – even modern history
– Buy gold eagles, silver eagles including monster boxes and gold bars
– Have a 10% allocation to gold, smaller allocation to silver

Editor: Mark O’Byrne

Source: Agora Financial

A new monetary standard which will see the dollar “reboot” and gold be revalued to $10,000/oz according to best-selling author and Pentagon insider Jim Rickards.

A monetary ‘reboot’ is not unprecedented

Articles about an imminent return to the gold standard are not exactly infrequent in the gold world and it can be easy to become immune to them and dismiss them without considering the facts and case being made.

Many of the articles are not just based one ever-wishful daydreams. Much of it comes from information that is true about today and is then applied to situations that we have seen in the past.

Rickards makes this point himself. A monetary reset is not unheard of. Since the Genoa Accord in 1922 there have been a further eight reboots. The most recent was in 2016 in what Rickards refers to as the Shanghai Accord which purportedly saw deals done that would allow China to ease without leading to a sharp correction in the US stock market.

Rickards isn’t the only one who is speculating that there could be some big monetary changes on the horizon. In March intelligence service Stratfor wrote:

…click on the above link to read the rest of the article…

U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

August 22, 2017

U.S. Treasury Secretary: I Assume Fort Knox Gold Is Still There

US Treasury Secretary Steve Mnuchin visits Fort Knox Gold
Later tweeted ‘Glad gold is safe!’
Only the third Treasury Secretary to visit the fortified vault, last visit was 1948
Last Congressional visit was 1974
Speculation over existence of gold in Fort Knox is rife
Concerns over Federal Reserves lack of interest in carrying to an audit on gold
Gold was last counted in 1953, nine years before Mnuchin was born
Mnuchin may be looking to prevent countries and states from worrying about and repatriating their gold

US Treasury Secretary ‘assumes’ the gold is still in Fort Knox, 64 years after it was audited.

The fortified facility is reportedly surrounded by 30,000 soldiers, tanks, armored personnel carriers, attack helicopters, and artillery. Despite this, there is still concern as to whether the gold is there.

As he headed in, Mnuchin told an audience “I assume the gold is still there…It would really be quite a movie if we walked in and there was no gold.”

With a background in Hollywood it was unsurprising that Mnuchin’s imagination appeared to be getting carried away with tales of finding the $200 billion of gold missing.

Missing gold: fact or fiction?

An empty Fort Knox is an issue far removed from the hills of Hollywood and has far more basis in reality than many give it credit for.

For many decades campaigns have been led for the US Treasury and government to audit the gold and to testify to its existence.

The gold has not been ‘counted’ since 1953. This was less than 20 years after Fort Knox was built. Since then there has been no official count or audit.

…click on the above link to read the rest of the article…

Shrinkflation In Ireland – Real Inflation Much Higher Than Reported

June 28, 2017

Shrinkflation In Ireland – Real Inflation Much Higher Than Reported

Shrinkflation – Real inflation much higher than reported and realised
Shrinkflation is taking hold in consumer sector
Important consumer, financial, monetary and economic issue being largely ignored by financial analysts, financial advisers, economists, central banks and the media.
Food becoming more expensive as consumers get less for price paid
A form of stealth inflation, few can avoid it
Brexit is the scapegoat for shrinkflation by the media and companies
Consumers blame retailers rather than central banks
Gold hedge has doubled in value since 2007

Editor: Mark O’Byrne

Shrinkflation: no one left untouched

600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.

One of the words reportedly up for consideration was shrinkflation. It did not make the final cut and as a result continues to be defined by the authority as ‘a portmanteau, made from combining shrink: ‘to become or make smaller in size’, with the economic sense of inflation: ‘a general increase in prices and fall in the purchasing value of money’.

In order for a word to be accepted into the OED it must have been in use for at least five years. But the latest list suggests that this isn’t the case and exceptions can be made. The inclusion of ‘superbrat’, a word which is usually associated with the behaviour of John McEnroe in the 1970s, actually dates back to the the 1950s.

Yet, shrinkflation continues to elude the world’s authority on the English language. This seems bizarre to us given both the word and the phenomenon and something consumers have been experiencing for a number of years.

Although it is understandable in the context of an important consumer, financial and economic issue which is being largely ignored by financial analysts, financial advisers, economists and the media.

…click on the above link to read the rest of the article…

Pension Crisis In U.S. and Globally Is Unavoidable

April 10, 2017

Pension Crisis In U.S. and Globally Is Unavoidable

Pension Crisis In U.S. and Globally Is Unavoidable

There is a really big crisis coming.

Think about it this way. After 8 years and a 230% stock market advance the pension funds of Dallas, Chicago, and Houston are in severe trouble.

But it isn’t just these municipalities that are in trouble, but also most of the public and private pensions that still operate in the country today.

Currently, many pension funds, like the one in Houston, are scrambling to slightly lower return rates, issue debt, raise taxes or increase contribution limits to fill some of the gaping holes of underfunded liabilities in their plans. The hope is such measures combined with an ongoing bull market, and increased participant contributions, will heal the plans in the future.

This is not likely to be the case.

This problem is not something born of the last “financial crisis,” but rather the culmination of 20-plus years of financial mismanagement.

An April 2016 Moody’s analysis pegged the total 75-year unfunded liability for all state and local pension plans at $3.5 trillion.

That’s the amount not covered by current fund assets, future expected contributions, and investment returns at assumed rates ranging from 3.7% to 4.1%. Another calculation from the American Enterprise Institute comes up with $5.2 trillion, presuming that long-term bond yields average 2.6%.

With employee contribution requirements extremely low, averaging about 15% of payroll, the need to stretch for higher rates of return have put pensions in a precarious position and increases the underfunded status of pensions.

With pension funds already wrestling with largely underfunded liabilities, the shifting demographics are further complicating funding problems.

One of the primary problems continues to be the decline in the ratio of workers per retiree as retirees are living longer (increasing the relative number of retirees), and lower birth rates (decreasing the relative number of workers.)

…click on the above link to read the rest of the article…

Cashless Society – Risks Posed By The War On Cash

October 23, 2016

Cashless Society – Risks Posed By The War On Cash

Cash is the new “barbarous relic” according to many central banks, regulators, and some economists and there is a strong, concerted push for the ‘cashless society’.

cashless_society

Developments in recent days and weeks have highlighted the risks posed by the war on cash and the cashless society.

The Presidential campaign has been dominated for months and again this week by the power of information that has been gathered through unconventional means – whether due to email hacks, leaked microphone tapes or even late-night twitter rants.

Both presidential candidates have got things to say when it comes to the gathering of information and both are for it. Hillary Clinton sees a thin line between national security and your personal privacy. Donald Trump has openly said that he is open to mass surveillance and as he puts it, putting the country before personal liberty.

Neither candidate is afraid to say that they support information snooping and gathering for the sake of national security. In the ‘punch and judy’ show that has been the U.S. election, important financial and economic matters have been eschewed in favour of salacious allegations regarding alleged sexual advances etc.

Access to your information is one thing, it is how it is read and what is done with it that is pertinent. In a cashless society information replaces cash. How that information is interpreted is entirely subjective and the chances of any recourse when someone has misread your cash transaction seem to be increasingly slim.

Trump_&_Clinton

This information gives more power to unaccountable banks and corporations. It removes power and liberty from individuals and small to medium enterprises.

Opinion is divided among economists and there are many economists who share our concerns about the risks of the cashless society.

…click on the above link to read the rest of the article…

Bank Bail Ins Begin as EU Bank “Bailed In” In Austria

April 11, 2016

Bank Bail Ins Begin as EU Bank “Bailed In” In Austria

Bank bail ins in the EU are here after Austria’s financial markets regulator FMA imposed a hefty haircut on creditors in an Austrian bank. Creditors in the bank Heta Asset Resolution will receive less than half of their money back according to the country’s financial regulator, the FMA.

Senior bondholders in the so called “bad bank” could expect to receive around €0.46 for each euro which would be paid from the realisation of assets by 2020, according to the FMA statement. It said that this had been calculated using “very conservative” assumptions.

“This package of measures also ensures the equal treatment of creditors. Orderly resolution is more advantageous than insolvency proceedings,” the FMA said.

Bond maturities, however, will be extended to 31 December 2023 as “all currently outstanding legal disputes will realistically only be concluded by the end of 2023”. “Only at that point will it be possible to finally distribute the assets and to liquidate the company,” the regulator said.

In November 2015, the largest collection of creditors, which included Pacific Investment Management Co (PIMCO), Commerzbank , FMS Wertmanagement AoeR and a collection of distressed debt investors, proposed to extend bond maturities for 30 years in return for repayment in full.

Representatives of Austrian province Carinthia and creditors of the failed regional lender are to meet in London tomorrow to try to break the impasse over a bond buyback scheme, an Austrian newspaper reported. Carinthia, a southern Austrian province, guaranteed the debt of local lender Hypo Alpe Adria before the bank collapsed and now faces the threat of insolvency if it had to honour the 10.8 billion euro ($12.3 billion) debt in full.

Heta Asset Resolution was formed to wind down the bank but regulators froze Heta’s debt repayments after discovering a gaping capital hole at the bad bank.

…click on the above link to read the rest of the article…

Diversify Into Gold As An “Insurance Policy” Against Geopolitical Risk

March 26, 2016

Diversify Into Gold As An “Insurance Policy” Against Geopolitical Risk

“Investors could be forgiven for heading for the hills given the tumultuous start to 2016,” so writes Andrew Oxlade in The Telegraph today who advises investors to diversify into gold as an “insurance policy”:

We have long been advocates of exposure to gold as an insurance policy. This was demonstrated once again in the recent sell-off when the price of bullion surged from $1,061 (£762) an ounce on New Year’s Day to $1,246 (£895) by early February. In times of fear, gold is in demand. The price also rises when inflation becomes a danger.

Deflation remains the bigger threat for now, which is partly why gold has been a poor investment in recent years, but the money printing excesses of central banks could yet unleash inflation. In the meantime, the gold price offers some protection during repeat episodes of buckling confidence.

Gold in GBP – 5 Years

The Telegraph, like GoldCore, had warned of such turbulence at the start of the year. John Ficenec, editor of the Questor column, warned of the real risk of volatility and falls in stock markets.

We believe that the tragic events in Brussels show the continued very high degree of geopolitical risk and the need for an insurance policy.

Further attacks are quite possible, including in the U.S., and this should support gold.

Geopolitical risk is frequently underestimated and it would be unwise to discount the risk of a September 11 style attack in the coming months. Intelligence agencies and ISIS themselves are warning of such attacks and investors need to be diversified to hedge this growing risk.

It gives us no pleasure to be the bearer of this bad news but it is important that the reality of the real risks of today are considered in order to protect and grow wealth in these uncertain times.

…click on the above link to read the rest of the article…

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