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Why Are The IMF, The UN, The BIS And Citibank All Warning That An Economic Crisis Could Be Imminent?
Why Are The IMF, The UN, The BIS And Citibank All Warning That An Economic Crisis Could Be Imminent?
The warnings are getting louder. Is anybody listening? For months, I have been documenting on my website how the global financial system is absolutely primed for a crisis, and now some of the most important financial institutions in the entire world are warning about the exact same thing. For example, this week I was stunned to see that the Telegraph had published an article with the following ominous headline: “$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF“. And actually what we are heading for would more accurately be described as a “credit freeze” or a “credit panic”, but a “credit crunch” will definitely work for now. The IMF is warning that the “dangerous over-leveraging” that we have been witnessing “threatens to unleash a wave of defaults” all across the globe…
Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world.
Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF’s Global Financial Stability Report.
This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF’s twice yearly report.
The IMF is actually telling the truth in this instance. We are in the midst of the greatest debt bubble the world has ever seen, and it is a monumental threat to the global financial system.
But even though we know about this threat, that doesn’t mean that we can do anything about it at this point or stop what is about to happen.
…click on the above link to read the rest of the article…
Money and Spheres
Money and Spheres
I’ll include the names Russell Napier, Albert Edwards and David Stockman as serious analysts whose views are especially pertinent. I presume each will exert minimal effect on “the establishment.”
Back to Bill Gross: “The BIS emphatically avers that there are substantial medium term costs of ‘persistent ultra-low interest rates’. Such rates they claim, ‘sap banks’ interest margins…cause pervasive mispricing in financial markets…threaten the solvency of insurance companies and pension funds…and as a result test technical, economic, legal and even political boundaries.’ ‘…The reason [the Fed will commence rate increases] will be that the central bankers that are charged with leading the global financial markets – the Fed and the BOE for now – are wising up; that the Taylor rule and any other standard signal of monetary policy must now be discarded into the trash bin of history.”
…click on the above link to read the rest of the article…
As Economy Heads to Another Crash, BIS Acknowledges: We’re Failing
As Economy Heads to Another Crash, BIS Acknowledges: We’re Failing
World’s Most Powerful Bank Reverses Course, to Avoid a Global Depression
German Economic News, Translation (and closing Note) by Eric Zuesse | Published: 22:07:15 20:10 clock
The Bank for International Settlements (BIS) acknowledges in its annual report that the policy of cheap money has failed. All the trillions in monetary stimulus have produced no growth in the real economy. Central banks cannot salvage the economy. Governments — fiscal stimulus — must now resolve the economic crisis. Political leadership is required.
In November 2008, the Federal Reserve in the US began to purchase many billions in securities, to stabilize the markets after the collapse of Lehman Brothers. Later, the Fed bought also US Treasuries, and cut interest rates to a record low of zero to 0.25 percent. So, they set off a global devaluation race. As a result, between just January 1st and March 12th of 2015, one-fifth of all central banks lowered their key interest rates. China was last to join this currency war, but when they did, their easing of monetary policy helped spark a credit-driven bull market that now produces the biggest Chinese slump in 20 years.
The Basel-based Bank for International Settlements (BIS) is considered the “central bank of central banks.” It was originally founded in 1930 to handle German reparations after the First World War. Today the BIS networks together central banks around the world, and manages on their behalf nations’ gold reserves. Its 85th Annual report analyzes the global financial system, seven years after the 2008 crisis. An entire chapter is devoted to shortcomings of the international monetary and financial system. It says that instead of promoting sustainable and balanced growth of the global economy, this system actually undermines growth long-term.
…click on the above link to read the rest of the article…
In A World Of Artificial Liquidity – Cash Is King
In A World Of Artificial Liquidity – Cash Is King
Global central banks are afraid. Before Greece tried to stand up to the Troika, they were merely worried. Now it’s clear that no matter what they tell themselves and the world about the necessity or even righteousness of their monetary policies, liquidity can still disappear in an instant. Or at least, that’s what they should be thinking.
The Federal Reserve and US government led policy of injecting liquidity into the US and then into the worldwide financial system has resulted in the issuance of trillions of dollars of debt, recycling it through the largest private banks, and driving rates to 0% — or below. The combined book of debt that the Fed and European Central Bank (ECB) hold is $7 trillion. None of that has gone remotely into fixing the real global economy. Nor have the banks that have ben aided by this cheap money increased lending to the real economy. Instead, they have hoarded their bounty of cash. It’s not so much whether this game can continue for the near future on an international scale. It can. It is. The bigger problem is that central banks have no plan B in the event of a massive liquidity event.
Some central bank entity leaders have admitted this. IMF chief, Christine Lagarde for instance, warned Federal Reserve Chair, Janet Yellen that potential US rate hikes implemented too soon, would incite greater systemic calamity. She’s not wrong. That’s what we’ve come to: a financial system reliant on external stimulus to survive.
These “emergency” measures were supposed to have healed the problems that caused the financial crisis of 2008 — the excessive leverage, the toxic assets wrapped in complex derivatives, the resultant credit and liquidity crunch that occurred when banks lost faith in each other. Meanwhile, the infusion of cheap money and liquidity into banks gave a select few of them more power over a greater pool of capital than ever.
…click on the above link to read the rest of the article…
With Sweden’s QE Officially Broken, The Riksbank Doubles Down: Lowers Rates Even More Negative; Boosts QE
With Sweden’s QE Officially Broken, The Riksbank Doubles Down: Lowers Rates Even More Negative; Boosts QE
It was precisely one week ago when we described how, for the first time in history, QE had officially failed to achieve its stated objective of pushing yields lower (ignoring that the real purpose is to push stock prices higher). In fact, it the outcome was precisely the opposite because as a result of the ongoing QE by Sweden’s Riksbank, and not enough collateral, the “soaking up” of eligible debt made the market so illiquid, buyers were unwilling to touch the bonds until yields rose enough to offset the liquidity risk.
As Danske Bank explained: “Swedish rates continue to trade strong relative to Germany because of a lack of material in the repo market as a result of the Riksbank’s QE program.”
We added that the Riksbank targets about $10 billion in government bond purchases as it tries to revive consumer-price growth after months of deflation. That’s about 14 percent of the market or 3 percent of Sweden’s gross domestic product.
And the punchline: “any efforts to expand asset purchases would deplete Sweden’s already limited sovereign debt supply“, SEB AB and Danske Bank have said.
This also came just days ahead of the latest BIS semiannual report in which it blasted central banks for engaging in wanton, endless QE which has pushed stocks to all time highs only at the expense of bond market liquidity.
So what did the Swedish central bank do? Overnight the Riksbank confirmed that it neither learns from its own mistakes, nor reads BIS reports when at 9:30 CET, it shocked central bank watcher all of whom were expecting no rate change from the bank, and announced it is not only engaging in yet another rate cut, taking the key rate even further into record NIRP territory, from -0.25% to -0.35%…
…click on the above link to read the rest of the article…
“The Collateral Has Run Out” – JPM Warns ECB Will Use Greek “Nuclear Option” If No Monday Deal
“The Collateral Has Run Out” – JPM Warns ECB Will Use Greek “Nuclear Option” If No Monday Deal
(via Corriere)
Although estimates vary, Kathimerini, citing Greek banking officials, puts Friday’s deposit outflow at €1.7 billion. If true, that would mark a serious step up from the estimated €1.2 billion that left the banking system on Thursday and serves to underscore just how critical the ECB’s emergency decision to lift the ELA cap by €1.8 billion truly was. “Banks expressed relief following Frankfurt’s reaction, acknowledging that Friday could have ended very differently without a new cash injection,” the Greek daily said, adding that the ECB’s expectation of “a positive outcome in Monday’s meeting”, suggests ELA could be frozen if the stalemate remains after leaders convene the ad hoc summit. Bloomberg has more on the summit:
Dorothea Lambros stood outside an HSBC branch in central Athens on Friday afternoon, an envelope stuffed with cash in one hand and a 38,000 euro ($43,000) cashier’s check in the other.
She was a few minutes too late to make her deposit at the London-based bank. She was too scared to take her life-savings back to her Greek bank. She worried it wouldn’t survive the weekend.
“I don’t know what happens on Monday,” said Lambros, a 58-year-old government employee.
Nobody does. Every shifting deadline, every last-gasp effort has built up to this: a nation that went to sleep on Friday not knowing what Monday will bring. A deal, or more brinkmanship. Shuttered banks and empty cash machines, or a few more days of euros in their pockets and drachmas in their past – – and maybe their future.
For Greeks, the fear is that Monday will be deja vu, a return to a past not that distant. Before the euro replaced the drachma in 2002, the Greeks were already a European bête noire, their currency mostly trapped inside their nation, where cash was king and checks a novelty.
…click on the above link to read the rest of the article…
Is The 505 Trillion Dollar Interest Rate Derivatives Bubble In Imminent Jeopardy?
Is The 505 Trillion Dollar Interest Rate Derivatives Bubble In Imminent Jeopardy?
All over the planet, large banks are massively overexposed to derivatives contracts. Interest rate derivatives account for the biggest chunk of these derivatives contracts. According to the Bank for International Settlements, the notional value of all interest rate derivatives contracts outstanding around the globe is a staggering 505 trillion dollars. Considering the fact that the U.S. national debt is only 18 trillion dollars, that is an amount of money that is almost incomprehensible. When this derivatives bubblefinally bursts, there won’t be enough money in the entire world to bail everyone out. The key to making sure that all of these interest rate bets do not start going bad is for interest rates to remain stable. That is why what is going on in Greece right now is so important. The Greek government has announced that it will default on a loan payment that it owes to the IMF on June 5th. If that default does indeed happen, Greek bond yields will soar into the stratosphere as panicked investors flee for the exits. But it won’t just be Greece. If Greece defaults despite years of intervention by the EU and the IMF, that will be a clear signal to the financial world that no nation in Europe is truly safe. Bond yields will start spiking in Italy, Spain, Portugal, Ireland and all over the rest of the continent. By the end of it, we could be faced with the greatest interest rate derivatives crisis that any of us have ever seen.
The number one thing that bond investors want is to get their money back. If a nation like Greece is actually allowed to default after so much time and so much effort has been expended to prop them up, that is really going to spook those that invest in bonds.
…click on the above link to read the rest of the article…
Why Central Banks Hate Physical, Love “Earmarked” Gold, And What Is The Difference
Why Central Banks Hate Physical, Love “Earmarked” Gold, And What Is The Difference
Several days ago we showed the dramatic conclusion of what happened to Czechoslovakia’s gold which had been placed at the Bank of England for safekeeping days after Germany annexed the central European republic ahead of the start of World War II. We hate the spoil the punchline for those who haven’t read the post yet, but the her it is: it was gone; it was all gone.
And all of this happened with the explicit assistance of the Bank of International Settlements which was formed in 1930 to promote the free flow of capital and global economic growth. Instead, time and again, what the BIS has proven its only mission to be, is to facilitate the spread of intangible assets and fiat currencies while it quietly confiscates, sequesters and aggregates (for a select group of individuals) he world’s physical assets. Mostly gold.
In fact, until the advent of the BIS, gold held by central banks came in one version. Physical.
It was only after the BIS arrived on the scene did gold’s macabre doppelganger, so-called paper, registered or “earmarked“, gold emerge for the first time.
Courtesy of Adam LeBor’s book exposing the history and inner workings of the BIS, “The Shadowy History of the Secret Bank that Runs the World“, below is a brief story of how earmarked gold came into being.
* * *
The Czechoslovak gold affair also highlighted how the bank’s increasingly sophisticated gold operations were growing in reach and importance. The BIS’s gold trades were a primitive forerunner of today’s globalized economy where vast sums instantly fly back and forth at the touch of a keyboard. The technology available in the 1930s was far more primitive, but the principle of buying and selling assets sight unseen and without taking physical possession is the same.
…click on the above link to read the rest of the article…
What Happens When You Hand Over Your Gold To The Bank Of England For “Safekeeping”
What Happens When You Hand Over Your Gold To The Bank Of England For “Safekeeping”
“The Bank for International Settlements is the bank which sanctions the most notorious outrage of this generation— the rape of Czechoslovakia.”
— George Strauss, Labor MP, speaking in the House of Commons, May 1939
“the Bank for International Settlements should be liquidated before it
furnished any more sinews of war to Germany, and that the odd
relationship between the British government and the Bank of England
should be re-examined without delay.”
— “Sees British Hands Tied on Czech Gold,” New York Times, June 6, 1939
When Nazi Germany annexed the Czechoslovak border province of the Sudetenland in September 1938, it immediately absorbed a good part of the country’s banking system as well as most of Czechoslovakia’s strategic defenses. By then the country’s national bank had prudently transferred most of its gold abroad to two accounts at the Bank of England: one in the name of the BIS, and one in the name of the National Bank of Czechoslovakia itself. (Countries had deposited some of their gold reserves in a sub-account at the BIS account in London to ease gold sales and purchases.) Of the 94,772 kilograms of gold, only 6,337 kilograms remained in Prague. The security of the national gold was more than a monetary issue. The Czechoslovak reserves, like those of Republican Spain, were an expression of nationhood. Carved out of the remains of the Austro-Hungarian Empire in 1918, the Czechoslovak Republic was a new and fragile nation. A good part of the gold had been donated by the public in the country’s early years. Josef Malik, the governor of the national bank, and his fellow Czechs believed that, even as the Nazis’ dismembered their homeland, if the national gold was safe, then something of the country’s independence would endure.
…click on the above link to read the rest of the article…
Meet The Secretive Group That Runs The World
Meet The Secretive Group That Runs The World
Over the centuries there have been many stories, some based on loose facts, others based on hearsay, conjecture, speculation and outright lies, about groups of people who “control the world.” Some of these are partially accurate, others are wildly hyperbolic, but when it comes to the historic record, nothing comes closer to the stereotypical, secretive group determining the fate of over 7 billion people, than the Bank of International Settlements, which hides in such plain sight, that few have ever paid much attention.
This is their story.
First unofficial meeting of the BIS Board of Directors in Basel, April 1930
* * *
The following is an excerpt from TOWER OF BASEL: The Shadowy History of the Secret Bank that Runs the World by Adam LeBor. Reprinted with permission from PublicAffairs.
The world’s most exclusive club has eighteen members. They gather every other month on a Sunday evening at 7 p.m. in conference room E in a circular tower block whose tinted windows overlook the central Basel railway station. Their discussion lasts for one hour, perhaps an hour and a half. Some of those present bring a colleague with them, but the aides rarely speak during this most confidential of conclaves. The meeting closes, the aides leave, and those remaining retire for dinner in the dining room on the eighteenth floor, rightly confident that the food and the wine will be superb. The meal, which continues until 11 p.m. or midnight, is where the real work is done. The protocol and hospitality, honed for more than eight decades, are faultless. Anything said at the dining table, it is understood, is not to be repeated elsewhere.
…click on the above link to read the rest of the article…
One Last Look At The Real Economy Before It Implodes – Part 4
One Last Look At The Real Economy Before It Implodes – Part 4
In the first three installments of this series, we examined the realities behind supply and demand, unemployment and personal debt, and national debt. As has been proven in each consecutive article with ample evidence, mainstream establishment numbers are, for the most part, utter garbage. They are not legitimate. They are meaningless.
The figures and stats that do have some truth to them are so obscured from the public view and unreported by the media that they may as well be state secrets. The average person has no clue of their existence because his primary sources of information are establishment-dominated. Even MSM talking heads and economic “analysts” are so mesmerized by the false version of the economic world that they have no point of reference when suddenly confronted with singular facts. Some people call this catastrophic behavior a “positive feedback loop.” It is a mainstream echo chamber that has become a financial tomb.
Now that I have covered the lies within our economy that I can prove absolutely, it is time to move on to the lies that are more difficult to pin down. These lies often slip past our investigations because the hard data that could be used to expose them is simply not available to the general public. In fact, much of the data is not even available to government officials. I am, of course, talking about the hard data behind the activities of central banks across the globe — the International Monetary Fund, the Bank for International Settlements and the Federal Reserve in particular. In this installment, we will explore the purpose of these lies; to hide the imminent destruction of our currency — by hook, by crook and by fiat.
…click on the above link to read the rest of the article…
BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles, It Is Avoiding Bubbles In The First Place
BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles, It Is Avoiding Bubbles In The First Place
On one hand there are hard-core Keynesians who will wave the flag of inflation as the only cure to a world drowning in debt, even after the mushroom cloud results of their policies going off around the globe “assure” GDP hits +? once every window in the world is shattered and has to be replaced…
… on the other, you have the BIS which with every passing day is becoming the citadel of Austrian thought, the latest example thanks to the BIS’ most recent quarterly review in which we read that not only is deflation not the “monster” the Bank of Japan and other Keynesian acolytes would like to make it appear…
The evidence from our long historical data set sheds new light on the costs of deflations.It raises questions about the prevailing view that goods and services price deflations, even if persistent, are always pernicious. It suggests that asset price deflations, and particularly house price deflations in the postwar era, have been more damaging. And it cautions against presuming that the interaction between debt and goods and services price deflation, as opposed to debt’s interaction with property price deflations, has played a significant role in past episodes of economic weakness.
… but more importantly and as Zero Hedge has said from day one, the BIS now says the solution to an asset bubble is not some incomprehensible jibberish of “macroprudential regulation” or a “bubble-busting” SWAT team at the Fed, not another asset bubble (especially not one which leads to house price deflation, the same that is slamming the Chinese economy at this moment), which by now has become clear to all is the only “tool” in a central banker’s aresnal, and the remedy to debt isnot even more debt.
…click on the above link to read the rest of the article…
Dollar Demand = Global Economy Has Skidded Over the Cliff (March 18, 2015)
Dollar Demand = Global Economy Has Skidded Over the Cliff
Borrowing in USD was risk-on; buying USD is risk-off.
There is a lively debate about the global demand for U.S. dollars:
Global finance faces $9 trillion stress test as dollar soars (Telegraph.co.uk)
Is There a US$ Shortage? Will it Sink the Global Economy? Again? (Mish)
The Dollar Squeeze – How Problematic Is It? (Acting Man)
The Global Dollar Funding Shortage Is Back With A Vengeance And “This Time It’s Different”(Zero Hedge), which references a Bank for International Settlements (BIS) paper: Global dollar credit: links to US monetary policy and leverage.
“Unless you enjoy multivariate regression analysis I suggest skimming the BIS working paper. Major points I got were:Correspondent Mark G. went through the BIS report and offered these insightful comments:
1. Almost all of the dollar denominated debt and bond growth since 2009 was generated by the global shadow banking system. Banks per se were smaller players in issuing this debt, and US-based banks (i.e. the ones in reach of Federal Reserve life preservers) were minor. Sovereign wealth funds are large players in this. When we think of huge sovereign wealth funds held by major hydrocarbon exporters then the pucker factor rises.
One implied result of the BIS paper is that it will be extremely difficult or impossible for Federal Reserve emergency liquidity operations to stem a panic, even if the Fed is inclined to do so. AEP in the Telegraph article stated this more directly. The real problem is that modern bailout operations have large fiscal components as well as monetary components. Looking at the Bundestag’s chronic heartburn with Greece and the EFSF is educational. Alternatively, consider how well proposals for a larger TARP type program aimed primarily at foreign entities would be received by the US Congress. And especially in 2016.
…click on the above link to read the rest of the article…
Here’s a $9 Trillion Question
Here’s a $9 Trillion Question
(Bloomberg) — When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.
That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.
The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy. From the housing markets in Canada and Hong Kong to capital flows into and out of China and Turkey, the question isn’t whether there will be spillovers — it’s how big they will be, and where they will hit the hardest.
“Liquidity conditions globally will start to tighten,” said Paul Sheard, chief global economist at Standard & Poor’s in New York. “Emerging markets won’t be the only game in town. You will have a U.S. economy that is growing more strongly and also offering rising interest rates and a return on capital that is starting to vie for new investment opportunities around the world.”
The broad trade-weighted dollar has strengthened 12.3 percent since June, and it’s forecast to advance further as the Fed tightens while the European Central Bank starts buying sovereign debt and Japan extends record stimulus. The stronger greenback will be the main channel through which the rest of the world feels the effects of a tighter Fed policy, according to Joseph Lupton, a senior global economist at JPMorgan Chase & Co. in New York.
…click on the above link to read the rest of the article…
Here’s a $9 Trillion Question
Here’s a $9 Trillion Question
(Bloomberg) — When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.
That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.
The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy. From the housing markets in Canada and Hong Kong to capital flows into and out of China and Turkey, the question isn’t whether there will be spillovers — it’s how big they will be, and where they will hit the hardest.
“Liquidity conditions globally will start to tighten,” said Paul Sheard, chief global economist at Standard & Poor’s in New York. “Emerging markets won’t be the only game in town. You will have a U.S. economy that is growing more strongly and also offering rising interest rates and a return on capital that is starting to vie for new investment opportunities around the world.”
The broad trade-weighted dollar has strengthened 12.3 percent since June, and it’s forecast to advance further as the Fed tightens while the European Central Bank starts buying sovereign debt and Japan extends record stimulus. The stronger greenback will be the main channel through which the rest of the world feels the effects of a tighter Fed policy, according to Joseph Lupton, a senior global economist at JPMorgan Chase & Co. in New York.
…click on the above link to read the rest of the article…
