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Deutsche Bank Collapse: The Most Important Bank In Europe Is Facing A Major ‘Liquidity Event’

October 1, 2016

Deutsche Bank Collapse: The Most Important Bank In Europe Is Facing A Major ‘Liquidity Event’

toilet-paper-stock-market-collapse-public-domainThe largest and most important bank in the largest and most important economy in Europe is imploding right in front of our eyes.  Deutsche Bank is the 11th biggest bank on the entire planet, and due to the enormous exposure to derivatives that it has, it has been called “the world’s most dangerous bank“.  Over the past year, I have repeatedly warned that Deutsche Bank is heading for disaster and is a likely candidate to be “the next Lehman Brothers”.  If you would like to review, you can do so here, here and here.  On September 16th, the Wall Street Journal reportedthat the U.S. Department of Justice wanted 14 billion dollars from Deutsche Bank to settle a case related to the mis-handling of mortgage-backed securities during the last financial crisis.  As a result of that announcement, confidence in the bank has been greatly shaken, the stock price has fallen to record lows, and analysts are warning that Deutsche Bank may be facing a “liquidity event” unlike anything that we have seen since the collapse of Lehman Brothers back in 2008.

At one point on Friday, Deutsche Bank stock fell below the 10 euro mark for the first time ever before bouncing back a bit.  A completely unverified rumor that was spreading on Twitter that claimed that Deutsche Bank would settle with the Department of Justice for only 5.4 billion dollars was the reason for the bounce.

But the size of the fine is not really the issue now.  Shares of Deutsche Bank have fallen by more than half so far in 2016, and this latest episode seems to have been the final straw for the deeply troubled financial institution.  Old sources of liquidity are being cut off, and nobody wants to be the idiot that offers Deutsche Bank a new source of liquidity at this point.

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

Bear Market: The Average U.S. Stock Is Already Down More Than 20 Percent

January 11, 2016

Bear Market: The Average U.S. Stock Is Already Down More Than 20 Percent

Angry BearThe stock market is in far worse shape than we are being told.  As you will see in this article, the average U.S. stock is already down more than 20 percent from the peak of the market.  But of course the major indexes are not down nearly that much.  As the week begins, the S&P 500 is down 9.8 percent from its 2015 peak, the Dow Jones Industrial Average is down 10.7 percent from its 2015 peak, and the Nasdaq is down 11.0 percent from its 2015 peak.  So if you only look at those indexes, you would think that we are only about halfway to bear market territory.  Unfortunately, a few high flying stocks such as Facebook, Amazon, Netflix and Google have been masking a much deeper decline for the rest of the market.  When the market closed on Friday, 229 of the stocks on the S&P 500 were down at least 20 percent from their 52 week highs, and when you look at indexes that are even broader things are even worse.

For example, let’s take a look at the Standard & Poor’s 1500 index.  According to the Bespoke Investment Group, the average stock on that index is down a staggering 26.9 percent from the peak of the market…

Indeed, the Standard & Poor’s 1500 index – a broad basket of large, mid and small company stocks – shows that the average stock’s distance from its 52-week high is 26.9%, according to stats compiled by Bespoke Investment Group through Friday’s close.

“That’s bear market territory!” says Paul Hickey, co-founder of Bespoke Investment Group, the firm that provided USA TODAY with the gloomy price data.

So if the average stock has fallen 26.9 percent, what kind of market are we in?

To me, that is definitely bear market territory.

The rapid decline of the markets last week got the attention of the entire world, but of course this current financial crisis did not begin last week.

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

Flowing Toward Abundance

October 22, 2015

Flowing Toward Abundance

Over the last year or so, a neighbor has stocked up eight or ten piles of firewood in his yard, probably fifteen or twenty cords. What’s he going to do with it all? The house has a wood stove, but the family mostly uses the furnace, and burns wood only occasionally to get that cozy, fire-heated feel. It’s going to take them a decade or more to go through all that wood. Some of it is split and stacked, while much of it is strewn over a substantial chunk of their yard.

The wood comes from another neighbor’s multi-acre eucalyptus grove. Some of the trees are huge—three or more feet in diameter, a hundred feet tall. The landowner, Lyn, can pull out seven or eight properly chosen big trees each year and still replace all that biomass in the next year’s growth. It strikes me as a sustainable yield. Several neighbors rely on her for their winter wood; the lot pumps out a good fifteen cords a year, and in our mild climate, you can heat a 2000-square-foot house using only wood by burning about a cord and a half.

The point of my little tale is this: My neighbor with the giant woodpile is thinking that the most secure source of wood is the store of it in his yard. But—to put it in systems language—that’s focusing on stocks over flows. We tend to do that in this culture. However, the real wood storage is the woodlot in Lyn’s yard: the standing, growing trees, getting bigger each year, healthy and enlarging rather than rotting and getting punky on the ground.

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

Olduvai IV: Courage
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Olduvai II: Exodus
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