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Theresa May’s election triumph will be wrecked by 'Black Wednesday-style' crisis within months, Tim Farron predicts
'Within a matter of months, she will be in the same sort of mess that John Major and Norman Lamont were in after Black Wednesday,’ says the Lib Dem leader
http://www.independent.co.uk/news/uk/po ... 76006.html
Rob Merrick Deputy political editor @Rob_Merrick 9 hours ago5 comments
Theresa May will be dragged down by a “Black Wednesday-style” crisis within months of her expected election triumph, Liberal Democrat leader Tim Farron has predicted.
In a close-of-campaign interview, Mr Farron warned the Prime Minister’s joy would be shortlived – because Brexit would overwhelm her, just as a disastrous European policy swamped John Major’s premiership.
In late 1992, public opinion turned sharply against a Conservative Prime Minister, five months after his own election victory, when sterling crashed out of the Exchange Rate Mechanism (ERM).
Later, the Treasury estimated that the unsuccessful fight to keep the pound in the ERM had cost taxpayers £3.4bn – wrecking the Tories’ reputation for economic competence.
In the same way, Mr Farron said, the folly of Ms May’s Brexit policy would quickly be exposed, forecasting an early collapse of the exit negotiations.
“She may win a landslide like Margaret Thatcher but, within a matter of months, she will be in the same sort of mess that John Major and [Chancellor] Norman Lamont were in after Black Wednesday,” he told The Independent.
“Early on, it will become clear that any free trade deal hinges on adjudication by the European Court of Justice – and I can’t see how she has any wriggle room, politically, to deliver that.”
At a campaign event this week, the Prime Minister vowed: “I am very clear that the European Court of Justice and its jurisdiction in the UK is going to be ended.”
Mr Farron said there could be an attempt to fudge the issue, with adjudication by a body linked to the ECJ, but added: “The Tory party would tear itself to bits over that.
“The chances of her getting that past the likes of Dominic Raab and David Davies – let alone the Bill Cashes of this world – are absolutely zero.”
The Lib Dem leader added that business would be “horrified” by the failure, at the same time as the public was recoiling over fresh cuts to schools, the police and health services.
“Already, two-thirds of headteachers are making redundancies – and that’s before it becomes apparent that we are heading, not for a hard Brexit, but for a granite Brexit,” Mr Farron said.
“It’s almost impossible to see how Theresa May doesn’t have the sort of year that, by Christmas, leaves her looking like John Major and Norman Lamont.”
Asked if that meant he believed the UK leaving the EU with “no deal” was now inevitable – which Ms May has said she would accept – Mr Farron replied: “I suspect it is.”
The interview took place as Mr Farron travelled across the Pennines to Yorkshire, at the end of what appears likely to be a hugely disappointing campaign for his party.
Far from gaining large numbers of seats – thanks to angry Remain-backing voters – the Lib Dems are fighting to cling onto the nine they have, marooned in single figures in the polls.
Last week, Mr Farron pointed to his opposition to the “dementia tax” as his “big offer”, apparently downgrading his calling card at the start of the campaign – a second referendum on any final Brexit deal.
But he denied he had switched tack, saying a further referendum, 1p on income tax to rescue the NHS and social care and fighting the dementia tax had always been his “three points throughout the campaign”.
“I’m confident we will be the only opposition party making gains – although, given that both Labour and the SNP will contract, they may not be saying much,” the Lib Dem leader said.
On his own seat of Westmoreland and Lonsdale, Mr Farron said: “I have never taken it for granted – if I had I would deserve to lose – but it’s looking very good, for what it’s worth.”
'Within a matter of months, she will be in the same sort of mess that John Major and Norman Lamont were in after Black Wednesday,’ says the Lib Dem leader
http://www.independent.co.uk/news/uk/po ... 76006.html
Rob Merrick Deputy political editor @Rob_Merrick 9 hours ago5 comments
Theresa May will be dragged down by a “Black Wednesday-style” crisis within months of her expected election triumph, Liberal Democrat leader Tim Farron has predicted.
In a close-of-campaign interview, Mr Farron warned the Prime Minister’s joy would be shortlived – because Brexit would overwhelm her, just as a disastrous European policy swamped John Major’s premiership.
In late 1992, public opinion turned sharply against a Conservative Prime Minister, five months after his own election victory, when sterling crashed out of the Exchange Rate Mechanism (ERM).
Later, the Treasury estimated that the unsuccessful fight to keep the pound in the ERM had cost taxpayers £3.4bn – wrecking the Tories’ reputation for economic competence.
In the same way, Mr Farron said, the folly of Ms May’s Brexit policy would quickly be exposed, forecasting an early collapse of the exit negotiations.
“She may win a landslide like Margaret Thatcher but, within a matter of months, she will be in the same sort of mess that John Major and [Chancellor] Norman Lamont were in after Black Wednesday,” he told The Independent.
“Early on, it will become clear that any free trade deal hinges on adjudication by the European Court of Justice – and I can’t see how she has any wriggle room, politically, to deliver that.”
At a campaign event this week, the Prime Minister vowed: “I am very clear that the European Court of Justice and its jurisdiction in the UK is going to be ended.”
Mr Farron said there could be an attempt to fudge the issue, with adjudication by a body linked to the ECJ, but added: “The Tory party would tear itself to bits over that.
“The chances of her getting that past the likes of Dominic Raab and David Davies – let alone the Bill Cashes of this world – are absolutely zero.”
The Lib Dem leader added that business would be “horrified” by the failure, at the same time as the public was recoiling over fresh cuts to schools, the police and health services.
“Already, two-thirds of headteachers are making redundancies – and that’s before it becomes apparent that we are heading, not for a hard Brexit, but for a granite Brexit,” Mr Farron said.
“It’s almost impossible to see how Theresa May doesn’t have the sort of year that, by Christmas, leaves her looking like John Major and Norman Lamont.”
Asked if that meant he believed the UK leaving the EU with “no deal” was now inevitable – which Ms May has said she would accept – Mr Farron replied: “I suspect it is.”
The interview took place as Mr Farron travelled across the Pennines to Yorkshire, at the end of what appears likely to be a hugely disappointing campaign for his party.
Far from gaining large numbers of seats – thanks to angry Remain-backing voters – the Lib Dems are fighting to cling onto the nine they have, marooned in single figures in the polls.
Last week, Mr Farron pointed to his opposition to the “dementia tax” as his “big offer”, apparently downgrading his calling card at the start of the campaign – a second referendum on any final Brexit deal.
But he denied he had switched tack, saying a further referendum, 1p on income tax to rescue the NHS and social care and fighting the dementia tax had always been his “three points throughout the campaign”.
“I’m confident we will be the only opposition party making gains – although, given that both Labour and the SNP will contract, they may not be saying much,” the Lib Dem leader said.
On his own seat of Westmoreland and Lonsdale, Mr Farron said: “I have never taken it for granted – if I had I would deserve to lose – but it’s looking very good, for what it’s worth.”
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"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
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'Is The Central Bank’s Rigged Stock Market Ready To Crash On Schedule?':
http://www.activistpost.com/2017/06/cen ... ubscribers&
By David Haggith
'We just saw a major rift open in the US stock market that we haven’t seen since the dot-com bust in 1999. While the Dow rose by almost half a percent to a new all-time high, the NASDAQ, because it is heavier tech stocks, plunged almost 2%. Tech stocks nosedived while others rose to create new highs. Is this a one-off, or has a purge begun for the tech stocks that have driven the nation’s third-longest bull market?
Yesterday’s dramatic “rotational” divergence between tech stocks and the rest of the market, which as Sentiment Trader pointed out the only time in history when the Dow Jones closed at a new all time high while the Nasdaq dropped 2% was on April 14, 1999, stunned many and prompted Bloomberg to write that “a crack has finally formed in the foundation of the U.S. bull market. Now investors must decide if any structural damage has been done.” (Zero Hedge)
This is important because, without the nearly constant lead of those tech stocks, the market would have been a bear a long time ago. Tech stocks created half of the market’s gains in 2017. Financials, which led the Trump Rally, also hit the rocks in recent weeks, at one point erasing almost all of their gains for 2017, though they recovered a little of late. If both continue to falter, the rally rapidly implodes and maybe the whole bull market with it.
The Tech sector suffered its worse high-altitude nose bleeds at the end of May — the biggest outflow in over a year. Said Miller Tabak’s Matt Maley in a note to clients:
Everybody remembers 2000, so they might be getting a little nervous with this development. I just wonder how many people have said to themselves, ‘If AMZN gets to $1,000, I’m going to take at least some profits. (Zero Hedge)
Last Friday, of course, may be a one-off, but it may also be happening because central banks are pulling the plug on their direct ownership of the stock market or, at least, their hoarding of tech stocks. That direct cornering of the stock market largely went unnoticed until this past quarter. Central banks now have enough interest throughout the US stock market to be considered as having cornered the entire stock market, which means they have the capacity to let it fall or to keep it where it is by just refusing to sell their own stocks.
Have central banks rigged the stock market entirely?
Whether or not the market implodes now depends entirely on whether central banks let it fall. If they decide to continue to buy up all the slack, they may be able to keep it artificially afloat a lot longer because they can create infinite amounts of money so long as they keep it all in stocks so that it only creates inflation in stock values, as it has been doing, and not in the general marketplace. We have certainly seen that not much of it trickles from Wall Street down to Main Street. So, there is little worry of creating mass inflation from mass money printing.
I have long suspected that central banks were the only force preventing the crash of the NYSE that I predicted for last year and that started last January, which was the worst January in the New York Stock Exchange’s history. Last week, however, was the first time I read something that indicates I was right about the Fed propping up the stock market in order to take us through an election year by the extraordinary means of buying stocks directly.
In an article titled “Central Banks Now Own Stocks And Bonds Worth Trillions – And They Could Crash The Markets By Selling Them,” Michael Snyder writes,
Have you ever wondered why stocks just seem to keep going up no matter what happens? For years, financial markets have been behaving in ways that seem to defy any rational explanation, but once you understand the role that central banks have been playing everything begins to make sense…. As you will see below, global central banks are on pace to buy 3.6 trillion dollars worth of stocks and bonds this year alone. At this point, the Swiss National Bank owns more publicly-traded shares of Facebook than Mark Zuckerberg…. These global central banks are shamelessly pumping up global stock markets, but because they now have such vast holdings they could also cause a devastating global stock market crash simply by starting to sell off their portfolios…. The truth is that global central banks are the real “plunge protection team”. If stocks start surging higher on any particular day for seemingly no reason, it is probably the work of a central bank. Because they can inject billions of dollars into the markets whenever they want, that essentially allows them to “play god” and move the markets in any direction that they please. But of course what they have done is essentially destroy the marketplace. A “free market” for stocks basically no longer exists because of all this central bank manipulation. (The Economic Collapse Blog)
It is no secret, of course, that central banks were attempting to create a wealth effect by pumping up stocks through their own member banks — buying US bonds back from banks with free overnight interest with the proviso that banks use the income to buy stocks. As I wrote during last year’s stock market plunge, even central bankers finally admitted to that.
What is a secret is the fact that they have started buying stocks directly in order to pump up stock indexes. Federal Reserve chair, Janet Yellen, began talking openly about the possibility of doing that last year when it became obvious that the stock market was failing, and I speculated that the Fed actually started to do what they were talking about covertly through proxies so it wouldn’t show up on their own balance sheet.
Those proxies could have been there own member banks, but it turns out to have been other central banks. Their ability to get other central banks to do that for them could go like this. “We’ll buy $100 billion of your bonds if you agree to buy $100 billion worth of stocks in the US stock market to help us keep this thing up through the election season.” (Replace bonds with whatever else that central bank may need to see happen in the economy that it manages.)
The Swiss National Bank is one of the biggest offenders. During just the first three months of this year, it bought 17 billion dollars worth of U.S. stocks, and that brought the overall total that the Swiss National Bank is currently holding to more than $80 billion.
Have you ever wondered why shares of Apple just seem to keep going up and up and up?
Well, the Swiss National Bank bought almost 4 million shares of Apple during the months of January, February and March.
I wonder how many it bought last year when the stock market needed a recovery team. And that’s just one of the Fed’s friends, who was ready to rush in so as to suppress the Swiss franc. These banks are now following the Chinese model of crash protection. This is exactly what China’s central bank did on a massive scale to prop up its failing stock market and end the crash. It essentially nationalized many of its companies by soaking up all the slop in stocks.
Will central banks now let the rigged stock market crash?
If I was right about the Fed shoring up the stock market through proxies — and it appears now that I was — I also said all of last year that they would most likely only do that long enough to make sure Obama’s team won the election. If their recovery was failing as bad as I believed it was, I figured they’d do anything they could to continue to hold it up long enough to make get Team Obama (Hillary) elected. Trump, during his candidacy, was talking a lot about how Janet Yellen needed to go. So, you know the central bank would definitely want to keep Trump out of power. I noted how the Fed held mysterious closed-door emergency meetings last year, including one immediately called with the president and vice president.
Also, if it became clear to them that their recovery was going to fail, they wouldn’t want their globalist friend, Obama, to take the blame — being globalists themselves — and certainly wouldn’t want themselves to take the blame for a recovery that failed the moment they pulled the stimulator’s plug out of the wall. They’d need a scapegoat, and they would love for it to look like the crash was entirely the fault of anti-globalists. So, their private motto, should Trump win, would be “Trump for Chump” if they knew everything was hopeless (as I’ve been saying it is for a long time because their recovery plan was always a horrible solution).
Now that Trump has stocked his cabinet with Goldman Sachs Execs., however, Trump talks a completely different story about Yellen. She’s good now and valuable, and he says he’d like to see more loose monetary policy, so their reasons to eject him may be less pronounced; but, at the time, they didn’t know for sure if they could own him. And it may be all the more clear to them at this point that their recovery is going to fail as soon as they stop propping up stocks.
Now that it’s clear central banks have been buying enormous flows of US stocks, this could explain why the stock market paradoxically rose right after the Fed announced its rate hike in March. Mysteriously, stock prices made their third largest post-FOMC meeting move upward right after their announced rate hike, an event that would normally send stocks down. Even Goldman Sachs said they found the move mysterious. In fact, Goldman noted that stock prices rose as a result of the Fed’s quarter-point rate increase as they would normally be expected to rise had the Fed lowered its interest target by that much. Goldman’s analysis was that this was “almost certainly not” the central bank’s desired outcome.
Yes, “almost certainly not.” Perhaps I have an explanation for this mystery: The Fed appears now to have had friends in faraway places ready to backstop the market the second the decision was announced. I don’t know that’s what happened right at that moment, but we do know now that central banks have been directly supporting the US market this year and last with massive purchases. For their part, Goldman stayed with calling the event a mystery and said that the anomaly only meant the Fed would have all the more incentive to raise rates again at its next meeting.
I’m a little more suspicious than that and far less a friend of the Fed than Goldman, which practically owns the Fed. I always maintained that the Fed would discover it couldn’t raise rates twice without crashing it’s phony recovery. That, however, would not be true if they have friends of nearly infinite financial power waiting in the wings as the plunge protection team. I’m not as content as Goldman to leave it an unsolved mystery. So, I’m going to put out a hypothesis that goes from Goldman’s “almost certainly not” their intention to cause the market to rise to “Oh, I guess it was their intention”:
If you finally start to realize your recovery does not appear it is going to succeed — that it will never become capable of holding on its own — then you will really want the failure of your recovery to happen at a time when you can scapegoat someone else. One way to do that and not get blamed for the failure is to make sure you secretly give the market a huge jog with the right timing and severity to be sure it crashes on that person’s watch.
To do that clandestinely, have your friends lift the market upon your first rate hike that year. That way you make the rate hike when you know the market cannot fail because friends are ready to prop it up, and you prove to everyone you have full confidence in your recovery, even though the only thing you really have confidence in is your own confidence game. The fact that the market rises when everyone would have expected it to fall gives you lots of justification for another rate hike due to the market’s now “proven” resilience to rate hikes. Then, you make sure your friends don’t lift the market when you make your next rate hike. You’ll appear justified in making the hike, but the market will fall from a greater height because of its artificial lift from your friends with more force as it essentially corrects to what is now essentially a double rate hike (since the first one never got priced in) once the artificial lift is removed.
If that’s too jaundiced and conspiratorial for you, I’ll accept that criticism; but a year ago people probably thought I was overreaching in suggesting the Fed was propping up the stock market with direct purchases of stocks through proxies. While I cannot even yet prove the Fed had anything to do with US stocks being propped up that way, we do now know for certain they were propped up that way and to a very large degree. The Fed’s friends were extremely active last year in doing something that central banks, heretofore, were not known to do (outside of such moves within their own stock markets by Japan’s central bank and China’s):
Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.” (Zero Hedge)
We now know some of that enormous stimulus was spent on US stocks.
This time is different
I’m not saying, by the way, that the Fed has never purchased US stocks. We all know it bought lots of stock when it bailed out automakers and banks in the early days of the Great Recession. At the time, that was a peculiar thing to do, in and of itself; but the policy of soaking up slack in the stock market generally by buying perfectly sound companies as a form of economic stimulus is new in the US. In fact, it was so much something that simply wasn’t done (and should never be done) that the US central bank merely suggested it last year as a brave new approach should their recovery fail, should the economy need a new boost after quantitative easing had lost all of its utility due to diminishing returns and should we find ourselves in a recession. (Clearly proposed as a last-ditch effort.)
Well, having run that flag up the pole without hearing too much objection to the idea, is it too much to think that, when the market did fail badly last January, the Fed found other central banks willing to leap into that role for them? Why not? It was no secret that China’s move of that sort was the only thing that saved China’s stock market (though it also made it no longer a true market by effectively nationalizing many of China’s corporations).
Of course, the Federal Reserve could own stocks directly that are hiding within some broad category on its balance sheet as well as any stocks that it still holds from its direct bailouts. They have already begun talking about starting the unwind of their massive balance sheet this year. If that includes an unwind of stock purchases, it will certainly bring the market down in Trump’s first year. If the Fed isn’t planning a stock-market failure by conspiracy, the question remains, will the Fed allow the stock market to fall even if they are just becoming aware their recovery won’t hold?
While normally we would caution that the Fed may simply step in during any concerted selloff amid the broader market (catalyzed by the tech sector) as it has every single time in the past, this time it may let gravity take hold: after all, not only did the Fed caution during its last FOMC minutes that elevated asset prices have resulted in “increased vulnerabilities” and that “asset valuation pressures in some markets were notable” but as Goldman also warned recently, Yellen may be looking for just the right “shock” with which to reaffirm control over a market which is now interpreting a rate hike as an easing signa (see “Goldman Asks If Yellen Has Lost Control Of The Market, Warns Of Fed “Policy Shock”) (Zero Hedge)
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On the conspiratorial side, that may just be the Fed’s best friend, Goldman Sachs, helping create the excuse the Fed needs for letting the market go. Why would Goldman want that? Well, so long as Goldman casts its bets against the market, they (and maybe this time their clients) could reap large rewards if the Fed lets the market go. They’d come out like champs.
If the Fed’s recovery plan failed too soon after Trump’s inauguration,however, people would not automatically blame him, and any conclusion people reach on their own is far stronger held. That’s how a confidence game works. If the market fell right after he was inaugurated, people would possibly see it as a mess he inherited. If the failure was seen as something baked in during the Obama administration, the Fed would have to own its own abject failure because the Obama administration reigned throughout the Fed’s recovery program. Moreover, if the Fed’s recovery failed during the Obama administration, Trump’s victory would be certain because America always votes it pocketbook.
For the Fed and the globalists to hope to dodge all blame, Trump would have to be in office long enough to do enough or fail enough for people to say, “This is clearly your fault.”
While that was all speculation when I was saying last year, it does seem to be the way things are playing out. And now that it is clear central banks have been soaking up massive amounts of US stocks, it’s a little more than just speculation.
Putting conspiracy aside, this market still looks like it is falling right when I predicted it would
Whether by conspiracy or sheer blindness and idiocy, the Fed is about to raise rates right into a falling economy. GDP in the first quarter went really soft, and I believe, contrary to what the Fed projects, second quarter GDP will come back negative unless great massaged. (In fact, first quarter GDP may have been negative if it were not such a government-manipulated number in the first place.)
One indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon…. As US loans have failed to post any material increase in over 30 consecutive weeks, suddenly the US finds itself on the verge of an ominous inflection point. After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011. Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks. (Zero Hedge)
Why is loan growth finally slowing again? Simple. GDP and loan growth are showing us something that a rigged stock market cannot and will not. The Fed started raising interest rates, and immediately applications for new home mortgages and auto loans started to subside, and the recovery started to falter … just as I said would happen more than a year ago. I’ve maintained all along that the Fed cannot raise interest rates (reduce its economic stimulus) without crashing its recovery (that, however, was without foreseeing when I first said it that they would prop things up via their potent proxies for a short time because that is simply moving central-bank stimulus from being overt to being covert).
Of course, another significant factor that helped the Fed raise interest rates in March was the fact that the financial market was already ahead of them. Interest was rising on its own purely out of speculation over the Trump effect, wherein markets were repositioning (or, at least, appeared to be) for the anticipated fiscal stimulus of Trump’s big tax cuts and the huge debts to be created by his infrastructure spending plans. (However, we also now know the market was rising due to enormous central bank stock purchases. No wonder the rally was so steep, but that now appears to be all unwinding.)
The Fed has a history of knee-capping its own recoveries by raising interest just as the economy is getting wobbly in the knees anyway, so we should not be surprised (even from a non-conspiratorial outlook) if the Fed fails to see its recovery is crashing all around it and raises rates directly into failure.
Just recall how Ben Break-the-banky failed to see the last recession when he was standing right in the middle of it. The Fed has a peculiar talent for that. Sometimes I think conspiracy rises as the most likely answer only because its so hard to be believe that people who are that smart can be that stupid. Yet, Gentle Ben was either supremely stupid in the area of his supposed greatest expertise, or was lying about the lack of recession, which often happens when people are conspiring. So, you choose — stupid or conspiratorial. Either one is still going to take this market down.
You can read more from David Haggith at his site The Great Recession Blog, where this article first appeared.
http://www.activistpost.com/2017/06/cen ... ubscribers&
By David Haggith
'We just saw a major rift open in the US stock market that we haven’t seen since the dot-com bust in 1999. While the Dow rose by almost half a percent to a new all-time high, the NASDAQ, because it is heavier tech stocks, plunged almost 2%. Tech stocks nosedived while others rose to create new highs. Is this a one-off, or has a purge begun for the tech stocks that have driven the nation’s third-longest bull market?
Yesterday’s dramatic “rotational” divergence between tech stocks and the rest of the market, which as Sentiment Trader pointed out the only time in history when the Dow Jones closed at a new all time high while the Nasdaq dropped 2% was on April 14, 1999, stunned many and prompted Bloomberg to write that “a crack has finally formed in the foundation of the U.S. bull market. Now investors must decide if any structural damage has been done.” (Zero Hedge)
This is important because, without the nearly constant lead of those tech stocks, the market would have been a bear a long time ago. Tech stocks created half of the market’s gains in 2017. Financials, which led the Trump Rally, also hit the rocks in recent weeks, at one point erasing almost all of their gains for 2017, though they recovered a little of late. If both continue to falter, the rally rapidly implodes and maybe the whole bull market with it.
The Tech sector suffered its worse high-altitude nose bleeds at the end of May — the biggest outflow in over a year. Said Miller Tabak’s Matt Maley in a note to clients:
Everybody remembers 2000, so they might be getting a little nervous with this development. I just wonder how many people have said to themselves, ‘If AMZN gets to $1,000, I’m going to take at least some profits. (Zero Hedge)
Last Friday, of course, may be a one-off, but it may also be happening because central banks are pulling the plug on their direct ownership of the stock market or, at least, their hoarding of tech stocks. That direct cornering of the stock market largely went unnoticed until this past quarter. Central banks now have enough interest throughout the US stock market to be considered as having cornered the entire stock market, which means they have the capacity to let it fall or to keep it where it is by just refusing to sell their own stocks.
Have central banks rigged the stock market entirely?
Whether or not the market implodes now depends entirely on whether central banks let it fall. If they decide to continue to buy up all the slack, they may be able to keep it artificially afloat a lot longer because they can create infinite amounts of money so long as they keep it all in stocks so that it only creates inflation in stock values, as it has been doing, and not in the general marketplace. We have certainly seen that not much of it trickles from Wall Street down to Main Street. So, there is little worry of creating mass inflation from mass money printing.
I have long suspected that central banks were the only force preventing the crash of the NYSE that I predicted for last year and that started last January, which was the worst January in the New York Stock Exchange’s history. Last week, however, was the first time I read something that indicates I was right about the Fed propping up the stock market in order to take us through an election year by the extraordinary means of buying stocks directly.
In an article titled “Central Banks Now Own Stocks And Bonds Worth Trillions – And They Could Crash The Markets By Selling Them,” Michael Snyder writes,
Have you ever wondered why stocks just seem to keep going up no matter what happens? For years, financial markets have been behaving in ways that seem to defy any rational explanation, but once you understand the role that central banks have been playing everything begins to make sense…. As you will see below, global central banks are on pace to buy 3.6 trillion dollars worth of stocks and bonds this year alone. At this point, the Swiss National Bank owns more publicly-traded shares of Facebook than Mark Zuckerberg…. These global central banks are shamelessly pumping up global stock markets, but because they now have such vast holdings they could also cause a devastating global stock market crash simply by starting to sell off their portfolios…. The truth is that global central banks are the real “plunge protection team”. If stocks start surging higher on any particular day for seemingly no reason, it is probably the work of a central bank. Because they can inject billions of dollars into the markets whenever they want, that essentially allows them to “play god” and move the markets in any direction that they please. But of course what they have done is essentially destroy the marketplace. A “free market” for stocks basically no longer exists because of all this central bank manipulation. (The Economic Collapse Blog)
It is no secret, of course, that central banks were attempting to create a wealth effect by pumping up stocks through their own member banks — buying US bonds back from banks with free overnight interest with the proviso that banks use the income to buy stocks. As I wrote during last year’s stock market plunge, even central bankers finally admitted to that.
What is a secret is the fact that they have started buying stocks directly in order to pump up stock indexes. Federal Reserve chair, Janet Yellen, began talking openly about the possibility of doing that last year when it became obvious that the stock market was failing, and I speculated that the Fed actually started to do what they were talking about covertly through proxies so it wouldn’t show up on their own balance sheet.
Those proxies could have been there own member banks, but it turns out to have been other central banks. Their ability to get other central banks to do that for them could go like this. “We’ll buy $100 billion of your bonds if you agree to buy $100 billion worth of stocks in the US stock market to help us keep this thing up through the election season.” (Replace bonds with whatever else that central bank may need to see happen in the economy that it manages.)
The Swiss National Bank is one of the biggest offenders. During just the first three months of this year, it bought 17 billion dollars worth of U.S. stocks, and that brought the overall total that the Swiss National Bank is currently holding to more than $80 billion.
Have you ever wondered why shares of Apple just seem to keep going up and up and up?
Well, the Swiss National Bank bought almost 4 million shares of Apple during the months of January, February and March.
I wonder how many it bought last year when the stock market needed a recovery team. And that’s just one of the Fed’s friends, who was ready to rush in so as to suppress the Swiss franc. These banks are now following the Chinese model of crash protection. This is exactly what China’s central bank did on a massive scale to prop up its failing stock market and end the crash. It essentially nationalized many of its companies by soaking up all the slop in stocks.
Will central banks now let the rigged stock market crash?
If I was right about the Fed shoring up the stock market through proxies — and it appears now that I was — I also said all of last year that they would most likely only do that long enough to make sure Obama’s team won the election. If their recovery was failing as bad as I believed it was, I figured they’d do anything they could to continue to hold it up long enough to make get Team Obama (Hillary) elected. Trump, during his candidacy, was talking a lot about how Janet Yellen needed to go. So, you know the central bank would definitely want to keep Trump out of power. I noted how the Fed held mysterious closed-door emergency meetings last year, including one immediately called with the president and vice president.
Also, if it became clear to them that their recovery was going to fail, they wouldn’t want their globalist friend, Obama, to take the blame — being globalists themselves — and certainly wouldn’t want themselves to take the blame for a recovery that failed the moment they pulled the stimulator’s plug out of the wall. They’d need a scapegoat, and they would love for it to look like the crash was entirely the fault of anti-globalists. So, their private motto, should Trump win, would be “Trump for Chump” if they knew everything was hopeless (as I’ve been saying it is for a long time because their recovery plan was always a horrible solution).
Now that Trump has stocked his cabinet with Goldman Sachs Execs., however, Trump talks a completely different story about Yellen. She’s good now and valuable, and he says he’d like to see more loose monetary policy, so their reasons to eject him may be less pronounced; but, at the time, they didn’t know for sure if they could own him. And it may be all the more clear to them at this point that their recovery is going to fail as soon as they stop propping up stocks.
Now that it’s clear central banks have been buying enormous flows of US stocks, this could explain why the stock market paradoxically rose right after the Fed announced its rate hike in March. Mysteriously, stock prices made their third largest post-FOMC meeting move upward right after their announced rate hike, an event that would normally send stocks down. Even Goldman Sachs said they found the move mysterious. In fact, Goldman noted that stock prices rose as a result of the Fed’s quarter-point rate increase as they would normally be expected to rise had the Fed lowered its interest target by that much. Goldman’s analysis was that this was “almost certainly not” the central bank’s desired outcome.
Yes, “almost certainly not.” Perhaps I have an explanation for this mystery: The Fed appears now to have had friends in faraway places ready to backstop the market the second the decision was announced. I don’t know that’s what happened right at that moment, but we do know now that central banks have been directly supporting the US market this year and last with massive purchases. For their part, Goldman stayed with calling the event a mystery and said that the anomaly only meant the Fed would have all the more incentive to raise rates again at its next meeting.
I’m a little more suspicious than that and far less a friend of the Fed than Goldman, which practically owns the Fed. I always maintained that the Fed would discover it couldn’t raise rates twice without crashing it’s phony recovery. That, however, would not be true if they have friends of nearly infinite financial power waiting in the wings as the plunge protection team. I’m not as content as Goldman to leave it an unsolved mystery. So, I’m going to put out a hypothesis that goes from Goldman’s “almost certainly not” their intention to cause the market to rise to “Oh, I guess it was their intention”:
If you finally start to realize your recovery does not appear it is going to succeed — that it will never become capable of holding on its own — then you will really want the failure of your recovery to happen at a time when you can scapegoat someone else. One way to do that and not get blamed for the failure is to make sure you secretly give the market a huge jog with the right timing and severity to be sure it crashes on that person’s watch.
To do that clandestinely, have your friends lift the market upon your first rate hike that year. That way you make the rate hike when you know the market cannot fail because friends are ready to prop it up, and you prove to everyone you have full confidence in your recovery, even though the only thing you really have confidence in is your own confidence game. The fact that the market rises when everyone would have expected it to fall gives you lots of justification for another rate hike due to the market’s now “proven” resilience to rate hikes. Then, you make sure your friends don’t lift the market when you make your next rate hike. You’ll appear justified in making the hike, but the market will fall from a greater height because of its artificial lift from your friends with more force as it essentially corrects to what is now essentially a double rate hike (since the first one never got priced in) once the artificial lift is removed.
If that’s too jaundiced and conspiratorial for you, I’ll accept that criticism; but a year ago people probably thought I was overreaching in suggesting the Fed was propping up the stock market with direct purchases of stocks through proxies. While I cannot even yet prove the Fed had anything to do with US stocks being propped up that way, we do now know for certain they were propped up that way and to a very large degree. The Fed’s friends were extremely active last year in doing something that central banks, heretofore, were not known to do (outside of such moves within their own stock markets by Japan’s central bank and China’s):
Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.” (Zero Hedge)
We now know some of that enormous stimulus was spent on US stocks.
This time is different
I’m not saying, by the way, that the Fed has never purchased US stocks. We all know it bought lots of stock when it bailed out automakers and banks in the early days of the Great Recession. At the time, that was a peculiar thing to do, in and of itself; but the policy of soaking up slack in the stock market generally by buying perfectly sound companies as a form of economic stimulus is new in the US. In fact, it was so much something that simply wasn’t done (and should never be done) that the US central bank merely suggested it last year as a brave new approach should their recovery fail, should the economy need a new boost after quantitative easing had lost all of its utility due to diminishing returns and should we find ourselves in a recession. (Clearly proposed as a last-ditch effort.)
Well, having run that flag up the pole without hearing too much objection to the idea, is it too much to think that, when the market did fail badly last January, the Fed found other central banks willing to leap into that role for them? Why not? It was no secret that China’s move of that sort was the only thing that saved China’s stock market (though it also made it no longer a true market by effectively nationalizing many of China’s corporations).
Of course, the Federal Reserve could own stocks directly that are hiding within some broad category on its balance sheet as well as any stocks that it still holds from its direct bailouts. They have already begun talking about starting the unwind of their massive balance sheet this year. If that includes an unwind of stock purchases, it will certainly bring the market down in Trump’s first year. If the Fed isn’t planning a stock-market failure by conspiracy, the question remains, will the Fed allow the stock market to fall even if they are just becoming aware their recovery won’t hold?
While normally we would caution that the Fed may simply step in during any concerted selloff amid the broader market (catalyzed by the tech sector) as it has every single time in the past, this time it may let gravity take hold: after all, not only did the Fed caution during its last FOMC minutes that elevated asset prices have resulted in “increased vulnerabilities” and that “asset valuation pressures in some markets were notable” but as Goldman also warned recently, Yellen may be looking for just the right “shock” with which to reaffirm control over a market which is now interpreting a rate hike as an easing signa (see “Goldman Asks If Yellen Has Lost Control Of The Market, Warns Of Fed “Policy Shock”) (Zero Hedge)
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On the conspiratorial side, that may just be the Fed’s best friend, Goldman Sachs, helping create the excuse the Fed needs for letting the market go. Why would Goldman want that? Well, so long as Goldman casts its bets against the market, they (and maybe this time their clients) could reap large rewards if the Fed lets the market go. They’d come out like champs.
If the Fed’s recovery plan failed too soon after Trump’s inauguration,however, people would not automatically blame him, and any conclusion people reach on their own is far stronger held. That’s how a confidence game works. If the market fell right after he was inaugurated, people would possibly see it as a mess he inherited. If the failure was seen as something baked in during the Obama administration, the Fed would have to own its own abject failure because the Obama administration reigned throughout the Fed’s recovery program. Moreover, if the Fed’s recovery failed during the Obama administration, Trump’s victory would be certain because America always votes it pocketbook.
For the Fed and the globalists to hope to dodge all blame, Trump would have to be in office long enough to do enough or fail enough for people to say, “This is clearly your fault.”
While that was all speculation when I was saying last year, it does seem to be the way things are playing out. And now that it is clear central banks have been soaking up massive amounts of US stocks, it’s a little more than just speculation.
Putting conspiracy aside, this market still looks like it is falling right when I predicted it would
Whether by conspiracy or sheer blindness and idiocy, the Fed is about to raise rates right into a falling economy. GDP in the first quarter went really soft, and I believe, contrary to what the Fed projects, second quarter GDP will come back negative unless great massaged. (In fact, first quarter GDP may have been negative if it were not such a government-manipulated number in the first place.)
One indicator has remained a stubbornly fail-safe marker of economic contraction: since the 1960, every time Commercial & Industrial loan balances have declined (or simply stopped growing), whether due to tighter loan supply or declining demand, a recession was already either in progress or would start soon…. As US loans have failed to post any material increase in over 30 consecutive weeks, suddenly the US finds itself on the verge of an ominous inflection point. After growing at a 7% Y/Y pace at the start of the year, which declined to 3% at the end of March and 2.6% at the end of April, the latest bank loan update from the Fed showed that the annual rate of increase in C&A loans is now down to just 1.6%, – the lowest since 2011. Should the current rate of loan growth deceleration persist – and there is nothing to suggest otherwise – the US will post its first negative loan growth, or rather loan contraction since the financial crisis, in roughly 4 to 6 weeks. (Zero Hedge)
Why is loan growth finally slowing again? Simple. GDP and loan growth are showing us something that a rigged stock market cannot and will not. The Fed started raising interest rates, and immediately applications for new home mortgages and auto loans started to subside, and the recovery started to falter … just as I said would happen more than a year ago. I’ve maintained all along that the Fed cannot raise interest rates (reduce its economic stimulus) without crashing its recovery (that, however, was without foreseeing when I first said it that they would prop things up via their potent proxies for a short time because that is simply moving central-bank stimulus from being overt to being covert).
Of course, another significant factor that helped the Fed raise interest rates in March was the fact that the financial market was already ahead of them. Interest was rising on its own purely out of speculation over the Trump effect, wherein markets were repositioning (or, at least, appeared to be) for the anticipated fiscal stimulus of Trump’s big tax cuts and the huge debts to be created by his infrastructure spending plans. (However, we also now know the market was rising due to enormous central bank stock purchases. No wonder the rally was so steep, but that now appears to be all unwinding.)
The Fed has a history of knee-capping its own recoveries by raising interest just as the economy is getting wobbly in the knees anyway, so we should not be surprised (even from a non-conspiratorial outlook) if the Fed fails to see its recovery is crashing all around it and raises rates directly into failure.
Just recall how Ben Break-the-banky failed to see the last recession when he was standing right in the middle of it. The Fed has a peculiar talent for that. Sometimes I think conspiracy rises as the most likely answer only because its so hard to be believe that people who are that smart can be that stupid. Yet, Gentle Ben was either supremely stupid in the area of his supposed greatest expertise, or was lying about the lack of recession, which often happens when people are conspiring. So, you choose — stupid or conspiratorial. Either one is still going to take this market down.
You can read more from David Haggith at his site The Great Recession Blog, where this article first appeared.
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"Flirting Seriously With Anarchy"
Sep 11, 2017 12:46 PM
http://www.zerohedge.com/news/2017-09-1 ... ly-anarchy
Authored by James Howard Kunstler via Kunstler.com,
The stock market is zooming this morning on the news that only 5.7 million people in Florida will have to do without air conditioning, hot showers, and Keurig mochachinos at dawn’s early light Monday, Sept 11, 2017. I’m mindful that the news cycle right after a hurricane goes kind of blank for a day or more as dazed and confused citizens venture out to assess the damage. For now, there is very little hard information on the Web waves. Does Key West still exist? Hard to tell. We’ll know more this evening.
The one-two punch of Harvey and Irma did afford the folks-in-charge of the nation’s affairs a sly opportunity to get rid of that annoying debt ceiling problem. This is the law that established a limit on how much debt the Federal Reserve could “buy” from the national government. Some of you may be thinking: buy debt? Why would anybody want to buy somebody’s debt? Well, you see, this is securitized debt, i.e. bonds issued by the US Treasury, which pay interest, and so there is the incentive to buy it. Anyway, there used to — back in the days when the real interest rate stayed positive after deducting the percent of running inflation. This is where the situation gets interesting.
The debt ceiling law supposedly set limits on how much bonded debt the government could issue (how much it could borrow) so it wouldn’t go hog wild spending money it didn’t have. Which is exactly what happened despite the debt limit because the “ceiling” got raised about a hundred times though the 20th century into the 21st so that the accumulated debt stands around $20 trillion.
Rational people recognize this $20 trillion for the supernatural scale of obligation it represents, and understand that it will never be paid back, so, what the hell? Why not just drop the pretense, but keep on working this racket of the government borrowing as much money was it wants, and the Federal Reserve creating that money (or “money”) on its computers to infinity. Seems to work so far.
Rational people would also suspect that at some point, something might have to give. For instance, the value of the dollars that the debt is issued in. If the value of dollars goes down, then the real value of the bonds issued in dollars goes down, and as that happens the many various holders of bonds already issued — individuals, pension funds, insurance companies, sovereign wealth funds of foreign countries — will have a strong incentive to dump the bonds as fast as possible. Especially if backstage magic by the Fed and its handmaidens, the “primary dealer” banks, keeps working to suppress the interest rates of these bonds at all costs.
Would the Federal Reserve then vacuum up every bond that others are dumping on the market? They would certainly try. The Bank of Japan has been doing just that with its own government’s bonds to no apparent ill effect, though you kind of wonder what happens when a snake eating its own tail finally reaches its head. What’s left, exactly, after it eats that, too? My own guess would be three words: you go medieval. I mean literally. No more engines, electric lights, central heating….
In this land, we face a situation in which both the value of money and the cost of borrowing money would be, at last, completely detached from reality - reality being the real cost and value of all goods and services exchanged for money. Voila: a king-hell currency crisis and the disruption of trade on the most macro level imaginable. Also, surely, a massive disruption in government services, including social security and medicare, but extending way beyond that. And then we go medieval, too. The mule replaces the Ford F-150. And The New York Times finds something to write about besides Russia and trannies.
The value of money and the cost of borrowing it is about as fundamental as it gets in a so-called advanced economy. You can screw around with a lot of things running a society, but when that goes, you’re flirting seriously with anarchy. In the meantime, we’ll see how the social glue holds things together in those parts of Florida that are entering a preview of medieval attractions in the electrical blackout days ahead.
Sep 11, 2017 12:46 PM
http://www.zerohedge.com/news/2017-09-1 ... ly-anarchy
Authored by James Howard Kunstler via Kunstler.com,
The stock market is zooming this morning on the news that only 5.7 million people in Florida will have to do without air conditioning, hot showers, and Keurig mochachinos at dawn’s early light Monday, Sept 11, 2017. I’m mindful that the news cycle right after a hurricane goes kind of blank for a day or more as dazed and confused citizens venture out to assess the damage. For now, there is very little hard information on the Web waves. Does Key West still exist? Hard to tell. We’ll know more this evening.
The one-two punch of Harvey and Irma did afford the folks-in-charge of the nation’s affairs a sly opportunity to get rid of that annoying debt ceiling problem. This is the law that established a limit on how much debt the Federal Reserve could “buy” from the national government. Some of you may be thinking: buy debt? Why would anybody want to buy somebody’s debt? Well, you see, this is securitized debt, i.e. bonds issued by the US Treasury, which pay interest, and so there is the incentive to buy it. Anyway, there used to — back in the days when the real interest rate stayed positive after deducting the percent of running inflation. This is where the situation gets interesting.
The debt ceiling law supposedly set limits on how much bonded debt the government could issue (how much it could borrow) so it wouldn’t go hog wild spending money it didn’t have. Which is exactly what happened despite the debt limit because the “ceiling” got raised about a hundred times though the 20th century into the 21st so that the accumulated debt stands around $20 trillion.
Rational people recognize this $20 trillion for the supernatural scale of obligation it represents, and understand that it will never be paid back, so, what the hell? Why not just drop the pretense, but keep on working this racket of the government borrowing as much money was it wants, and the Federal Reserve creating that money (or “money”) on its computers to infinity. Seems to work so far.
Rational people would also suspect that at some point, something might have to give. For instance, the value of the dollars that the debt is issued in. If the value of dollars goes down, then the real value of the bonds issued in dollars goes down, and as that happens the many various holders of bonds already issued — individuals, pension funds, insurance companies, sovereign wealth funds of foreign countries — will have a strong incentive to dump the bonds as fast as possible. Especially if backstage magic by the Fed and its handmaidens, the “primary dealer” banks, keeps working to suppress the interest rates of these bonds at all costs.
Would the Federal Reserve then vacuum up every bond that others are dumping on the market? They would certainly try. The Bank of Japan has been doing just that with its own government’s bonds to no apparent ill effect, though you kind of wonder what happens when a snake eating its own tail finally reaches its head. What’s left, exactly, after it eats that, too? My own guess would be three words: you go medieval. I mean literally. No more engines, electric lights, central heating….
In this land, we face a situation in which both the value of money and the cost of borrowing money would be, at last, completely detached from reality - reality being the real cost and value of all goods and services exchanged for money. Voila: a king-hell currency crisis and the disruption of trade on the most macro level imaginable. Also, surely, a massive disruption in government services, including social security and medicare, but extending way beyond that. And then we go medieval, too. The mule replaces the Ford F-150. And The New York Times finds something to write about besides Russia and trannies.
The value of money and the cost of borrowing it is about as fundamental as it gets in a so-called advanced economy. You can screw around with a lot of things running a society, but when that goes, you’re flirting seriously with anarchy. In the meantime, we’ll see how the social glue holds things together in those parts of Florida that are entering a preview of medieval attractions in the electrical blackout days ahead.
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The $321 trillion timebomb: Former UK bank boss warns debt may trigger next meltdown
9 Feb, 2018 7:18pm
http://www.nzherald.co.nz/business/news ... d=11991445
The Dow Jones industrial average plunged nearly 1,600 points Monday as two days of steep losses for U.S. stocks brought an end to a period of record setting calm in the market. / AP
Daily Mail
By: James Burton
A worldwide debt binge could trigger the next financial crisis, warns former Bank of England governor Lord King.
Households, companies and governments have borrowed ever-greater amounts of money since the global financial crisis, egged on by central bankers who cut interest rates to record lows.
But with inflation returning as growth picks up a decade on from the crash, investors are braced for steep rises in interest rates.
Fears over higher rates have sent financial markets into a tailspin in recent days, leading to the biggest one-day points fall of all time on Wall Street.
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Given our evidence that China is shovelling new loans to companies with the least ability to pay them back, we think China is heading towards a debt crisis.
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And experts are now warning that higher rates will push up the cost of servicing the world's mammoth debts, with potentially devastating consequences.
King said it was essential to tackle the global debt pile, which stands at £166 trillion ($321t), according to the Washington-based Institute of International Finance.
"The areas of weakness in the current system are really focused on the amount of debt that exists, not just in the US and UK but across the world," King said.
"Debt in the private sector relative to GDP is higher now than it was in 2007, and of course public debt is even higher still."
Although European and US banks have far larger reserves to draw on today, King warned banking disasters in less tightly regulated countries could create a global shock causing panic.
International Monetary Fund chief Christine Lagarde also sounded the alarm last month and researchers believe China is a danger.
9 Feb, 2018 7:18pm
http://www.nzherald.co.nz/business/news ... d=11991445
The Dow Jones industrial average plunged nearly 1,600 points Monday as two days of steep losses for U.S. stocks brought an end to a period of record setting calm in the market. / AP
Daily Mail
By: James Burton
A worldwide debt binge could trigger the next financial crisis, warns former Bank of England governor Lord King.
Households, companies and governments have borrowed ever-greater amounts of money since the global financial crisis, egged on by central bankers who cut interest rates to record lows.
But with inflation returning as growth picks up a decade on from the crash, investors are braced for steep rises in interest rates.
Fears over higher rates have sent financial markets into a tailspin in recent days, leading to the biggest one-day points fall of all time on Wall Street.
Advertisement
Advertise with NZME.
Given our evidence that China is shovelling new loans to companies with the least ability to pay them back, we think China is heading towards a debt crisis.
SHARE THIS QUOTE:
And experts are now warning that higher rates will push up the cost of servicing the world's mammoth debts, with potentially devastating consequences.
King said it was essential to tackle the global debt pile, which stands at £166 trillion ($321t), according to the Washington-based Institute of International Finance.
"The areas of weakness in the current system are really focused on the amount of debt that exists, not just in the US and UK but across the world," King said.
"Debt in the private sector relative to GDP is higher now than it was in 2007, and of course public debt is even higher still."
Although European and US banks have far larger reserves to draw on today, King warned banking disasters in less tightly regulated countries could create a global shock causing panic.
International Monetary Fund chief Christine Lagarde also sounded the alarm last month and researchers believe China is a danger.
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www.abolishwar.org.uk
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http://utangente.free.fr/2003/media2003.pdf
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http://utangente.free.fr/2003/media2003.pdf
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The £166 trillion timebomb: Former Bank governor King warns debt will trigger the next financial meltdown
http://www.thisismoney.co.uk/money/mark ... crash.html
Lord Mervyn King was governor of the Bank of England as crisis hit
He warnsit is essential to tackle global debt pile which stands at £166 trillion
King says private sector debt to GDP is now hiigher than before crash
By James Burton For The Daily Mail
Published: 08:50 AEDT, 8 February 2018 | Updated: 19:57 AEDT, 8 February 2018
A worldwide debt binge could trigger the next financial crisis and tip Britain back into recession, former Bank of England governor Lord King has warned.
Households, companies and governments have borrowed ever-greater amounts of money since the Great Recession, egged on by central bankers who cut interest rates to record lows.
But with inflation returning as growth picks up a decade on from the crash, investors are braced for steep rises in interest rates.
Fears over higher rates have sent financial markets into a tailspin in recent days – leading to the biggest one-day points fall of all time on Wall Street.
Former Bank of England governor Lord King said it was essential to tackle the global debt pile, which stands at £166trillion
And experts are now warning that higher rates will push up the cost of servicing the world's mammoth debts, with potentially devastating consequences.
King said it was essential to tackle the global debt pile, which stands at £166trillion, according to the Washington-based Institute of International Finance.
'The areas of weakness in the current system are really focused on the amount of debt that exists, not just in the US and UK but across the world,' King said.
'Debt in the private sector relative to GDP is higher now than it was in 2007, and of course public debt is even higher still.'
Although European and US banks have far larger reserves to draw on today, he warned banking disasters in less tightly regulated countries could create a global shock causing panic.
International Monetary Fund chief Christine Lagarde also sounded the alarm last month and researchers believe China is a danger.
Benn Steil and Benjamin Della Rocca of the Council on Foreign Relations said a meltdown is rapidly approaching, saying: 'Given our evidence that China is shovelling new loans to companies with the least ability to pay them back, we think China is heading towards a debt crisis.'
Markets have swung wildly as investors grapple with the return of inflation as the global economy takes off and normality returns in the West after sluggish growth.
The recovery has been welcomed, but it is expected to spark a jump in wages and rising prices.
To keep this under control, banks will have to hike interest rates and Peter Tutton of Stepchange Debt Charity warned: 'Even a modest rise in interest rates could tip people who are just about managing into difficulties with mortgage payments and unsecured credit commitments.'
Read more: http://www.thisismoney.co.uk/money/mark ... crash.html
http://www.thisismoney.co.uk/money/mark ... crash.html
Lord Mervyn King was governor of the Bank of England as crisis hit
He warnsit is essential to tackle global debt pile which stands at £166 trillion
King says private sector debt to GDP is now hiigher than before crash
By James Burton For The Daily Mail
Published: 08:50 AEDT, 8 February 2018 | Updated: 19:57 AEDT, 8 February 2018
A worldwide debt binge could trigger the next financial crisis and tip Britain back into recession, former Bank of England governor Lord King has warned.
Households, companies and governments have borrowed ever-greater amounts of money since the Great Recession, egged on by central bankers who cut interest rates to record lows.
But with inflation returning as growth picks up a decade on from the crash, investors are braced for steep rises in interest rates.
Fears over higher rates have sent financial markets into a tailspin in recent days – leading to the biggest one-day points fall of all time on Wall Street.
Former Bank of England governor Lord King said it was essential to tackle the global debt pile, which stands at £166trillion
And experts are now warning that higher rates will push up the cost of servicing the world's mammoth debts, with potentially devastating consequences.
King said it was essential to tackle the global debt pile, which stands at £166trillion, according to the Washington-based Institute of International Finance.
'The areas of weakness in the current system are really focused on the amount of debt that exists, not just in the US and UK but across the world,' King said.
'Debt in the private sector relative to GDP is higher now than it was in 2007, and of course public debt is even higher still.'
Although European and US banks have far larger reserves to draw on today, he warned banking disasters in less tightly regulated countries could create a global shock causing panic.
International Monetary Fund chief Christine Lagarde also sounded the alarm last month and researchers believe China is a danger.
Benn Steil and Benjamin Della Rocca of the Council on Foreign Relations said a meltdown is rapidly approaching, saying: 'Given our evidence that China is shovelling new loans to companies with the least ability to pay them back, we think China is heading towards a debt crisis.'
Markets have swung wildly as investors grapple with the return of inflation as the global economy takes off and normality returns in the West after sluggish growth.
The recovery has been welcomed, but it is expected to spark a jump in wages and rising prices.
To keep this under control, banks will have to hike interest rates and Peter Tutton of Stepchange Debt Charity warned: 'Even a modest rise in interest rates could tip people who are just about managing into difficulties with mortgage payments and unsecured credit commitments.'
Read more: http://www.thisismoney.co.uk/money/mark ... crash.html
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
- Whitehall_Bin_Men
- Trustworthy Freedom Fighter
- Posts: 3234
- Joined: Sat Jan 13, 2007 6:03 pm
- Location: Westminster, LONDON, SW1A 2HB.
- Contact:
Is 9/10ths collapse of Credit Suisse XIV Exchange Traded Notes (ETNs) Fund of unsecured debt securities behind the trillions wiped off stock markets today? - Traders Panic As XIV Disintegrates -90% After The Close
https://www.zerohedge.com/news/2018-02- ... fter-close
https://www.zerohedge.com/news/2018-02- ... fter-close
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
- Whitehall_Bin_Men
- Trustworthy Freedom Fighter
- Posts: 3234
- Joined: Sat Jan 13, 2007 6:03 pm
- Location: Westminster, LONDON, SW1A 2HB.
- Contact:
"Everything Has Gone Wrong": Soros Warns "Major" Financial Crisis Is Coming
https://www.zerohedge.com/news/2018-05- ... sis-coming
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 05/30/2018 - 04:58
http://www.thesecrettruth.com/06021803.mp3
In a speech delivered Tuesday in Paris, billionaire investor George Soros warned that the world could be on the brink of another devastating financial crisis, as debt crises reemerge in Europe and a strengthening dollar pressures both the US's emerging- and developed-market rivals.
And Europe, with Italy dragging worries about the possible dissolution of the euro back to the forefront, won't be far behind. Political pressures like the dissolution of its transatlantic alliance with the US will eventually translate into economic harm. Presently, Europe is facing three pressing problems: The refugee crisis, the austerity policy that has hindered Europe's economic development, and territorial disintegration - not only Brexit, but the threat that countries like Italy might follow suit...
“Brexit is an immensely damaging process harmful to both sides,” the billionaire exclaimed.
Soros
But in the near-term, the US's decision to pull out of the Iran deal is straining Europe's alliance with its most important Western partner just as the strengthening dollar is constricting financial conditions around the world.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Soros's warning comes as Italian 2Y bond yields shoot higher by the most on record:
Italian
Adding to the urgency, it is no longer a "figure of speech" to claim that the EU is in "existential danger," Soros said. It's an obvious reality.
“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said.
To escape the crisis, “it needs to reinvent itself.”
"The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality."
The only way to prevent an all-out collapse, Soros explained, would be a 30 billion euro ($35.4 billion) "Marshall Plan" for Africa that Soros believes would help stem the flow of migrants into Europe, something that, Soros finally admits, is one of the biggest problems facing Europe. The EU, Soros believes, should use its "largely unused" borrowing authority to finance the plan.
“We may be heading for another major financial crisis,” Soros said explicitly.
The alternative, Soros claims, is further "territorial disintegration" of the EU as countries that have largely suffered as a result of the monetary union contemplate leaving. To prevent this, Soros says Europe
ZeroHedge
"Everything Has Gone Wrong": Soros Warns "Major" Financial Crisis Is Coming
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 05/30/2018 - 04:58
TwitterFacebookRedditEmailPrint
In a speech delivered Tuesday in Paris, billionaire investor George Soros warned that the world could be on the brink of another devastating financial crisis, as debt crises reemerge in Europe and a strengthening dollar pressures both the US's emerging- and developed-market rivals.
And Europe, with Italy dragging worries about the possible dissolution of the euro back to the forefront, won't be far behind. Political pressures like the dissolution of its transatlantic alliance with the US will eventually translate into economic harm. Presently, Europe is facing three pressing problems: The refugee crisis, the austerity policy that has hindered Europe's economic development, and territorial disintegration - not only Brexit, but the threat that countries like Italy might follow suit...
“Brexit is an immensely damaging process harmful to both sides,” the billionaire exclaimed.
Soros
But in the near-term, the US's decision to pull out of the Iran deal is straining Europe's alliance with its most important Western partner just as the strengthening dollar is constricting financial conditions around the world.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Soros's warning comes as Italian 2Y bond yields shoot higher by the most on record:
Italian
Adding to the urgency, it is no longer a "figure of speech" to claim that the EU is in "existential danger," Soros said. It's an obvious reality.
“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said.
To escape the crisis, “it needs to reinvent itself.”
"The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality."
The only way to prevent an all-out collapse, Soros explained, would be a 30 billion euro ($35.4 billion) "Marshall Plan" for Africa that Soros believes would help stem the flow of migrants into Europe, something that, Soros finally admits, is one of the biggest problems facing Europe. The EU, Soros believes, should use its "largely unused" borrowing authority to finance the plan.
“We may be heading for another major financial crisis,” Soros said explicitly.
The alternative, Soros claims, is further "territorial disintegration" of the EU as countries that have largely suffered as a result of the monetary union contemplate leaving. To prevent this, Soros says Europe must acknowledge and address the flaws of the euro system. Perhaps the most glaring of which is that the euro created an entrenched two-tiered system of debtors and creditors.
I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me.
But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.
As some will remember, Soros Fund Management - the family office that manages Soros's money, which he has mostly dedicated to his "Open Society" network of NGOs - closed most of its long-EM positions after President Trump defeated Hillary Clinton. Of course, where Soros sees danger, others see opportunity. For example, Mark Mobius "un-retired" last month to open a fund that he hopes will take advantage of opportunities amid the EM carnage, as analysts continue to see EM as the area that's most vulnerable to a re-pricing in USD.
* * *
Read the speech in full below:
The European Union is mired in an existential crisis. For the past decade, everything that could go wrong has gone wrong. How did a political project that has underpinned Europe’s postwar peace and prosperity arrive at this point?
In my youth, a small band of visionaries led by Jean Monnet transformed the European Coal and Steel Community first into the European Common Market and then the EU. People of my generation were enthusiastic supporters of the process.
I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me.
But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.
As a result, many young people today regard the EU as an enemy that has deprived them of jobs and a secure and promising future. Populist politicians exploited the resentments and formed anti-European parties and movements.
Then came the refugee influx of 2015. At first, most people sympathized with the plight of refugees fleeing political repression or civil war, but they didn’t want their everyday lives disrupted by a breakdown in social services. And soon they became disillusioned by the failure of the authorities to cope with the crisis.
When that happened in Germany, the far-right Alternative für Deutschland (AfD) rapidly gained strength, making it the country’s largest opposition party. Italy has suffered from a similar experience recently, and the political repercussions have been even more disastrous: the anti-European Five Star Movement and League parties almost took over the government. The situation has been deteriorating ever since. Italy now faces elections in the midst of political chaos.
Indeed, the whole of Europe has been disrupted by the refugee crisis. Unscrupulous leaders have exploited it even in countries that have accepted hardly any refugees. In Hungary, Prime Minister Viktor Orbán based his reelection campaign on falsely accusing me of planning to flood Europe, Hungary included, with Muslim refugees.
Orbán is now posing as the defender of his version of a Christian Europe, one that challenges the values on which the EU was based. He is trying to take over the leadership of the Christian Democratic parties which form the majority in the European Parliament.
The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality.
What Can Be Done?
The EU faces three pressing problems: the refugee crisis; the austerity policy that has hindered Europe’s economic development; and territorial disintegration, as exemplified by Brexit. Bringing the refugee crisis under control may be the best place to start.
I have always advocated that the allocation of refugees within Europe should be entirely voluntary. Member states should not be forced to accept refugees they don’t want, and refugees should not be forced to settle in countries where they don’t want to go.
This fundamental principle ought to guide Europe’s migration policy. Europe must also urgently reform the Dublin Regulation, which has put an unfair burden on Italy and other Mediterranean countries, with disastrous political consequences.
The EU must protect its external borders but keep them open for lawful migrants. Member states, in turn, must not close their internal borders. The idea of a “fortress Europe” closed to political refugees and economic migrants not only violates European and international law; it is also totally unrealistic.
Europe wants to extend a helping hand toward Africa and other parts of the developing world by offering substantial assistance to democratically inclined regimes. This is the right approach, as it would enable these governments to provide education and employment to their citizens, who would then be less likely to make the often dangerous journey to Europe.
By strengthening democratic regimes in the developing world, such an EU-led “Marshall Plan for Africa” would also help to reduce the number of political refugees. European countries could then accept migrants from these and other countries to meet their economic needs through an orderly process. In this way, migration would be voluntary both on the part of the migrants and the receiving states.
Present-day reality, however, falls substantially short of this ideal. First, and most importantly, the EU still lacks a unified migration policy. Each member state has its own policy, which is often at odds with the interests of other states.
Second, the main objective of most European countries is not to foster democratic development in Africa and elsewhere, but to stem the flow of migrants. This diverts a large part of the available funds to dirty deals with dictators, bribing them to prevent migrants from passing through their territory or to use repressive methods to prevent their citizens from leaving. In the long run, this will generate more political refugees.
Third, there is a woeful shortage of financial resources. A meaningful Marshall Plan for Africa would require at least €30 billion ($35.4 billion) annually for a number of years. EU member states could contribute only a small fraction of this amount. So, where could the money come from?
It is important to recognize that the refugee crisis is a European problem requiring a European solution. The EU has a high credit rating, and its borrowing capacity is largely unused. When should that capacity be put to use if not in an existential crisis? Historically, national debt always grew in times of war. Admittedly, adding to the national debt runs counter to the prevailing orthodoxy that advocates austerity; but austerity is itself a contributing factor to the crisis in which Europe finds itself.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Without going into the details, I want to point out that the proposal contains an ingenious device, a special-purpose vehicle, that would enable the EU to tap financial markets at a very advantageous rate without incurring a direct obligation for itself or for its member states; it also offers considerable accounting benefits. Moreover, although it is an innovative idea, it has already been used successfully in other contexts, namely general-revenue municipal bonds in the US and so-called surge funding to combat infectious diseases.
But my main point is that Europe needs to do something drastic in order to survive its existential crisis. Simply put, the EU needs to reinvent itself.
This initiative needs to be a genuinely grassroots effort. The transformation of the Coal and Steel Community into the European Union was a top-down initiative and it worked wonders. But times have changed. Ordinary people feel excluded and ignored. Now we need a collaborative effort that combines the top-down approach of the European institutions with the bottom-up initiatives that are necessary to engage the electorate.
Of the three pressing problems, I have addressed two. That leaves territorial disintegration, exemplified by Brexit. It is an immensely damaging process, harmful to both sides. But a lose-lose proposition could be converted into a win-win situation.
Divorce will be a long process, probably taking more than five years – a seeming eternity in politics, especially in revolutionary times like the present. Ultimately, it is up to the British people to decide what they want to do, but it would be better if they came to a decision sooner rather than later. That is the goal of an initiative called Best for Britain, which I support. This initiative fought for, and helped to win, a meaningful parliamentary vote on a measure that includes the option of not leaving before Brexit is finalized.
Britain would render Europe a great service by rescinding Brexit and not creating a hard-to-fill hole in the European budget. But its citizens must express support by a convincing margin in order to be taken seriously by Europe. That is Best for Britain’s aim in engaging the electorate.
The economic case for remaining an EU member is strong, but it has become clear only in the last few months, and it will take time to sink in. During that time, the EU needs to transform itself into an organization that countries like Britain would want to join, in order to strengthen the political case.
Such a Europe would differ from the current arrangements in two key respects. First, it would clearly distinguish between the EU and the eurozone. Second, it would recognize that the euro has many unsolved problems, which must not be allowed to destroy the European project.
The eurozone is governed by outdated treaties that assert that all EU member states are expected to adopt the euro if and when they qualify. This has created an absurd situation where countries like Sweden, Poland, and the Czech Republic, which have made it clear that they have no intention to join, are still described and treated as “pre-ins.”
The effect is not purely cosmetic. The existing framework has converted the EU into an organization in which the eurozone constitutes the inner core, with the other members relegated to an inferior position. There is a hidden assumption at work here, namely that, while various member states may be moving at different speeds, they are all heading to the same destination. This ignores the reality that a number of EU member countries have explicitly rejected the EU’s goal of “ever closer union.”
This goal should be abandoned. Instead of a multi-speed Europe, the goal should be a “multi-track Europe” that allows member states a wider variety of choices. This would have a far-reaching beneficial effect. Currently, attitudes toward cooperation are negative: member states want to reassert their sovereignty rather than surrender more of it. But if cooperation produced positive results, sentiment might improve, and some objectives, like defense, that are currently best pursued by coalitions of the willing might attract universal participation.
Harsh reality may force member states to set aside their national interests in the interest of preserving the EU. That is what French President Emmanuel Macron urged in the speech he delivered in Aachen when he received the Charlemagne Prize, and his proposal was cautiously endorsed by German Chancellor Angela Merkel, who is painfully aware of the opposition she faces at home. If Macron and Merkel succeeded, despite all the obstacles, they would follow in the footsteps of Monnet and his small band of visionaries. But that narrow group needs to be replaced by a large upsurge of bottom-up pro-European initiatives. I and my network of Open Society Foundations will do everything we can to help those initiatives....
https://www.zerohedge.com/news/2018-05- ... sis-coming
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 05/30/2018 - 04:58
http://www.thesecrettruth.com/06021803.mp3
In a speech delivered Tuesday in Paris, billionaire investor George Soros warned that the world could be on the brink of another devastating financial crisis, as debt crises reemerge in Europe and a strengthening dollar pressures both the US's emerging- and developed-market rivals.
And Europe, with Italy dragging worries about the possible dissolution of the euro back to the forefront, won't be far behind. Political pressures like the dissolution of its transatlantic alliance with the US will eventually translate into economic harm. Presently, Europe is facing three pressing problems: The refugee crisis, the austerity policy that has hindered Europe's economic development, and territorial disintegration - not only Brexit, but the threat that countries like Italy might follow suit...
“Brexit is an immensely damaging process harmful to both sides,” the billionaire exclaimed.
Soros
But in the near-term, the US's decision to pull out of the Iran deal is straining Europe's alliance with its most important Western partner just as the strengthening dollar is constricting financial conditions around the world.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Soros's warning comes as Italian 2Y bond yields shoot higher by the most on record:
Italian
Adding to the urgency, it is no longer a "figure of speech" to claim that the EU is in "existential danger," Soros said. It's an obvious reality.
“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said.
To escape the crisis, “it needs to reinvent itself.”
"The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality."
The only way to prevent an all-out collapse, Soros explained, would be a 30 billion euro ($35.4 billion) "Marshall Plan" for Africa that Soros believes would help stem the flow of migrants into Europe, something that, Soros finally admits, is one of the biggest problems facing Europe. The EU, Soros believes, should use its "largely unused" borrowing authority to finance the plan.
“We may be heading for another major financial crisis,” Soros said explicitly.
The alternative, Soros claims, is further "territorial disintegration" of the EU as countries that have largely suffered as a result of the monetary union contemplate leaving. To prevent this, Soros says Europe
ZeroHedge
"Everything Has Gone Wrong": Soros Warns "Major" Financial Crisis Is Coming
Profile picture for user Tyler Durden
by Tyler Durden
Wed, 05/30/2018 - 04:58
TwitterFacebookRedditEmailPrint
In a speech delivered Tuesday in Paris, billionaire investor George Soros warned that the world could be on the brink of another devastating financial crisis, as debt crises reemerge in Europe and a strengthening dollar pressures both the US's emerging- and developed-market rivals.
And Europe, with Italy dragging worries about the possible dissolution of the euro back to the forefront, won't be far behind. Political pressures like the dissolution of its transatlantic alliance with the US will eventually translate into economic harm. Presently, Europe is facing three pressing problems: The refugee crisis, the austerity policy that has hindered Europe's economic development, and territorial disintegration - not only Brexit, but the threat that countries like Italy might follow suit...
“Brexit is an immensely damaging process harmful to both sides,” the billionaire exclaimed.
Soros
But in the near-term, the US's decision to pull out of the Iran deal is straining Europe's alliance with its most important Western partner just as the strengthening dollar is constricting financial conditions around the world.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Soros's warning comes as Italian 2Y bond yields shoot higher by the most on record:
Italian
Adding to the urgency, it is no longer a "figure of speech" to claim that the EU is in "existential danger," Soros said. It's an obvious reality.
“The EU is in an existential crisis. Everything that could go wrong has gone wrong,” he said.
To escape the crisis, “it needs to reinvent itself.”
"The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality."
The only way to prevent an all-out collapse, Soros explained, would be a 30 billion euro ($35.4 billion) "Marshall Plan" for Africa that Soros believes would help stem the flow of migrants into Europe, something that, Soros finally admits, is one of the biggest problems facing Europe. The EU, Soros believes, should use its "largely unused" borrowing authority to finance the plan.
“We may be heading for another major financial crisis,” Soros said explicitly.
The alternative, Soros claims, is further "territorial disintegration" of the EU as countries that have largely suffered as a result of the monetary union contemplate leaving. To prevent this, Soros says Europe must acknowledge and address the flaws of the euro system. Perhaps the most glaring of which is that the euro created an entrenched two-tiered system of debtors and creditors.
I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me.
But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.
As some will remember, Soros Fund Management - the family office that manages Soros's money, which he has mostly dedicated to his "Open Society" network of NGOs - closed most of its long-EM positions after President Trump defeated Hillary Clinton. Of course, where Soros sees danger, others see opportunity. For example, Mark Mobius "un-retired" last month to open a fund that he hopes will take advantage of opportunities amid the EM carnage, as analysts continue to see EM as the area that's most vulnerable to a re-pricing in USD.
* * *
Read the speech in full below:
The European Union is mired in an existential crisis. For the past decade, everything that could go wrong has gone wrong. How did a political project that has underpinned Europe’s postwar peace and prosperity arrive at this point?
In my youth, a small band of visionaries led by Jean Monnet transformed the European Coal and Steel Community first into the European Common Market and then the EU. People of my generation were enthusiastic supporters of the process.
I personally regarded the EU as the embodiment of the idea of the open society. It was a voluntary association of equal states that banded together and sacrificed part of their sovereignty for the common good. The idea of Europe as an open society continues to inspire me.
But since the financial crisis of 2008, the EU seems to have lost its way. It adopted a program of fiscal retrenchment, which led to the euro crisis and transformed the eurozone into a relationship between creditors and debtors. The creditors set the conditions that the debtors had to meet, yet could not meet. This created a relationship that was neither voluntary nor equal – the very opposite of the credo on which the EU was based.
As a result, many young people today regard the EU as an enemy that has deprived them of jobs and a secure and promising future. Populist politicians exploited the resentments and formed anti-European parties and movements.
Then came the refugee influx of 2015. At first, most people sympathized with the plight of refugees fleeing political repression or civil war, but they didn’t want their everyday lives disrupted by a breakdown in social services. And soon they became disillusioned by the failure of the authorities to cope with the crisis.
When that happened in Germany, the far-right Alternative für Deutschland (AfD) rapidly gained strength, making it the country’s largest opposition party. Italy has suffered from a similar experience recently, and the political repercussions have been even more disastrous: the anti-European Five Star Movement and League parties almost took over the government. The situation has been deteriorating ever since. Italy now faces elections in the midst of political chaos.
Indeed, the whole of Europe has been disrupted by the refugee crisis. Unscrupulous leaders have exploited it even in countries that have accepted hardly any refugees. In Hungary, Prime Minister Viktor Orbán based his reelection campaign on falsely accusing me of planning to flood Europe, Hungary included, with Muslim refugees.
Orbán is now posing as the defender of his version of a Christian Europe, one that challenges the values on which the EU was based. He is trying to take over the leadership of the Christian Democratic parties which form the majority in the European Parliament.
The United States, for its part, has exacerbated the EU’s problems. By unilaterally withdrawing from the 2015 Iran nuclear deal, President Donald Trump has effectively destroyed the transatlantic alliance. This has put additional pressure on an already beleaguered Europe. It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality.
What Can Be Done?
The EU faces three pressing problems: the refugee crisis; the austerity policy that has hindered Europe’s economic development; and territorial disintegration, as exemplified by Brexit. Bringing the refugee crisis under control may be the best place to start.
I have always advocated that the allocation of refugees within Europe should be entirely voluntary. Member states should not be forced to accept refugees they don’t want, and refugees should not be forced to settle in countries where they don’t want to go.
This fundamental principle ought to guide Europe’s migration policy. Europe must also urgently reform the Dublin Regulation, which has put an unfair burden on Italy and other Mediterranean countries, with disastrous political consequences.
The EU must protect its external borders but keep them open for lawful migrants. Member states, in turn, must not close their internal borders. The idea of a “fortress Europe” closed to political refugees and economic migrants not only violates European and international law; it is also totally unrealistic.
Europe wants to extend a helping hand toward Africa and other parts of the developing world by offering substantial assistance to democratically inclined regimes. This is the right approach, as it would enable these governments to provide education and employment to their citizens, who would then be less likely to make the often dangerous journey to Europe.
By strengthening democratic regimes in the developing world, such an EU-led “Marshall Plan for Africa” would also help to reduce the number of political refugees. European countries could then accept migrants from these and other countries to meet their economic needs through an orderly process. In this way, migration would be voluntary both on the part of the migrants and the receiving states.
Present-day reality, however, falls substantially short of this ideal. First, and most importantly, the EU still lacks a unified migration policy. Each member state has its own policy, which is often at odds with the interests of other states.
Second, the main objective of most European countries is not to foster democratic development in Africa and elsewhere, but to stem the flow of migrants. This diverts a large part of the available funds to dirty deals with dictators, bribing them to prevent migrants from passing through their territory or to use repressive methods to prevent their citizens from leaving. In the long run, this will generate more political refugees.
Third, there is a woeful shortage of financial resources. A meaningful Marshall Plan for Africa would require at least €30 billion ($35.4 billion) annually for a number of years. EU member states could contribute only a small fraction of this amount. So, where could the money come from?
It is important to recognize that the refugee crisis is a European problem requiring a European solution. The EU has a high credit rating, and its borrowing capacity is largely unused. When should that capacity be put to use if not in an existential crisis? Historically, national debt always grew in times of war. Admittedly, adding to the national debt runs counter to the prevailing orthodoxy that advocates austerity; but austerity is itself a contributing factor to the crisis in which Europe finds itself.
Until recently, it could have been argued that austerity is working: the European economy is slowly improving, and Europe must simply persevere. But, looking ahead, Europe now faces the collapse of the Iran nuclear deal and the destruction of the transatlantic alliance, which is bound to have a negative effect on its economy and cause other dislocations.
The strength of the dollar is already precipitating a flight from emerging-market currencies. We may be heading for another major financial crisis. The economic stimulus of a Marshall Plan for Africa and other parts of the developing world should kick in just at the right time. That is what has led me to put forward an out-of-the-box proposal for financing it.
Without going into the details, I want to point out that the proposal contains an ingenious device, a special-purpose vehicle, that would enable the EU to tap financial markets at a very advantageous rate without incurring a direct obligation for itself or for its member states; it also offers considerable accounting benefits. Moreover, although it is an innovative idea, it has already been used successfully in other contexts, namely general-revenue municipal bonds in the US and so-called surge funding to combat infectious diseases.
But my main point is that Europe needs to do something drastic in order to survive its existential crisis. Simply put, the EU needs to reinvent itself.
This initiative needs to be a genuinely grassroots effort. The transformation of the Coal and Steel Community into the European Union was a top-down initiative and it worked wonders. But times have changed. Ordinary people feel excluded and ignored. Now we need a collaborative effort that combines the top-down approach of the European institutions with the bottom-up initiatives that are necessary to engage the electorate.
Of the three pressing problems, I have addressed two. That leaves territorial disintegration, exemplified by Brexit. It is an immensely damaging process, harmful to both sides. But a lose-lose proposition could be converted into a win-win situation.
Divorce will be a long process, probably taking more than five years – a seeming eternity in politics, especially in revolutionary times like the present. Ultimately, it is up to the British people to decide what they want to do, but it would be better if they came to a decision sooner rather than later. That is the goal of an initiative called Best for Britain, which I support. This initiative fought for, and helped to win, a meaningful parliamentary vote on a measure that includes the option of not leaving before Brexit is finalized.
Britain would render Europe a great service by rescinding Brexit and not creating a hard-to-fill hole in the European budget. But its citizens must express support by a convincing margin in order to be taken seriously by Europe. That is Best for Britain’s aim in engaging the electorate.
The economic case for remaining an EU member is strong, but it has become clear only in the last few months, and it will take time to sink in. During that time, the EU needs to transform itself into an organization that countries like Britain would want to join, in order to strengthen the political case.
Such a Europe would differ from the current arrangements in two key respects. First, it would clearly distinguish between the EU and the eurozone. Second, it would recognize that the euro has many unsolved problems, which must not be allowed to destroy the European project.
The eurozone is governed by outdated treaties that assert that all EU member states are expected to adopt the euro if and when they qualify. This has created an absurd situation where countries like Sweden, Poland, and the Czech Republic, which have made it clear that they have no intention to join, are still described and treated as “pre-ins.”
The effect is not purely cosmetic. The existing framework has converted the EU into an organization in which the eurozone constitutes the inner core, with the other members relegated to an inferior position. There is a hidden assumption at work here, namely that, while various member states may be moving at different speeds, they are all heading to the same destination. This ignores the reality that a number of EU member countries have explicitly rejected the EU’s goal of “ever closer union.”
This goal should be abandoned. Instead of a multi-speed Europe, the goal should be a “multi-track Europe” that allows member states a wider variety of choices. This would have a far-reaching beneficial effect. Currently, attitudes toward cooperation are negative: member states want to reassert their sovereignty rather than surrender more of it. But if cooperation produced positive results, sentiment might improve, and some objectives, like defense, that are currently best pursued by coalitions of the willing might attract universal participation.
Harsh reality may force member states to set aside their national interests in the interest of preserving the EU. That is what French President Emmanuel Macron urged in the speech he delivered in Aachen when he received the Charlemagne Prize, and his proposal was cautiously endorsed by German Chancellor Angela Merkel, who is painfully aware of the opposition she faces at home. If Macron and Merkel succeeded, despite all the obstacles, they would follow in the footsteps of Monnet and his small band of visionaries. But that narrow group needs to be replaced by a large upsurge of bottom-up pro-European initiatives. I and my network of Open Society Foundations will do everything we can to help those initiatives....
--
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
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Banks are preparing for house prices to fall by a third after Brexit
Zoe Drewett Friday 3 Aug 2018
https://metro.co.uk/2018/08/03/banks-pr ... t-7792888/
House prices falling by a third, interest rates soaring by more than 4% and the economy going into recession – it’s the prediction from the Bank of England on what will happen in the event of a no deal Brexit. BOE boss Mark Carney made the dire warning today that there is an ‘uncomfortably high’ risk that Britain will leave the European Union without a deal and it could have devastating consequences. After his comments, the pound sterling plunged to an 11-day low against the dollar. The Governor of the Bank of England Mark Carney said a no deal Brexit is ‘highly undesirable’ (Picture: EPA) Speaking to BBC Radio 4’s Today programme, Mr Carney said that the event of no deal was ‘highly undesirable’ and that Britain and the EU should do everything possible to avoid it. ‘I think the possibility of a no deal is uncomfortably high at this moment,’ he said. Man leaves £5 on ambulance windscreen to thank paramedics for blocking drive ‘Our job is to look at what could go wrong and what we could do to make sure that the bank is in a robust position so it lessens the impact of a no deal Brexit. ‘We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place if there were to be a no deal Brexit.’ Sorry, this video isn't available any more. Mark Carney's no deal warning Bank of England boss Mark Carney (Picture: PA) The Bank of England governer says the financial system and banks will be ready for that ‘undesirable’ scenario, which could include: Commercial and residential property prices going down by more than a third interest rates soaring unemployment increasing to 9% the economy contracting by 4% Mr Carney did add that the UK could ‘withstand’ a no deal scenario and said: ‘We have prepared the financial institutions and banks for a very difficult situation. ‘We should have a transition, it’s in every industry’s interest. ‘We’ll take the two years. We’ll make it enough.’ The BOE governor also said people should still be able to afford their mortgages because of checks put in place. House prices could slump and unemployment rise, the Bank of England boss warned (Picture: PA) ‘More than half of mortgages in this country are fixed rate mortgages,’ he said. ‘When you take out a mortgage, you have to pass an affordability test, and you have to be able to pay a mortgage at 7%. ‘It’s something we put in place so that if costs were to go up, people would be able to meet those mortgages.’
Read more: https://metro.co.uk/2018/08/03/banks-pr ... to=cbshare
Twitter: https://twitter.com/MetroUK | Facebook: https://www.facebook.com/MetroUK/
Zoe Drewett Friday 3 Aug 2018
https://metro.co.uk/2018/08/03/banks-pr ... t-7792888/
House prices falling by a third, interest rates soaring by more than 4% and the economy going into recession – it’s the prediction from the Bank of England on what will happen in the event of a no deal Brexit. BOE boss Mark Carney made the dire warning today that there is an ‘uncomfortably high’ risk that Britain will leave the European Union without a deal and it could have devastating consequences. After his comments, the pound sterling plunged to an 11-day low against the dollar. The Governor of the Bank of England Mark Carney said a no deal Brexit is ‘highly undesirable’ (Picture: EPA) Speaking to BBC Radio 4’s Today programme, Mr Carney said that the event of no deal was ‘highly undesirable’ and that Britain and the EU should do everything possible to avoid it. ‘I think the possibility of a no deal is uncomfortably high at this moment,’ he said. Man leaves £5 on ambulance windscreen to thank paramedics for blocking drive ‘Our job is to look at what could go wrong and what we could do to make sure that the bank is in a robust position so it lessens the impact of a no deal Brexit. ‘We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place if there were to be a no deal Brexit.’ Sorry, this video isn't available any more. Mark Carney's no deal warning Bank of England boss Mark Carney (Picture: PA) The Bank of England governer says the financial system and banks will be ready for that ‘undesirable’ scenario, which could include: Commercial and residential property prices going down by more than a third interest rates soaring unemployment increasing to 9% the economy contracting by 4% Mr Carney did add that the UK could ‘withstand’ a no deal scenario and said: ‘We have prepared the financial institutions and banks for a very difficult situation. ‘We should have a transition, it’s in every industry’s interest. ‘We’ll take the two years. We’ll make it enough.’ The BOE governor also said people should still be able to afford their mortgages because of checks put in place. House prices could slump and unemployment rise, the Bank of England boss warned (Picture: PA) ‘More than half of mortgages in this country are fixed rate mortgages,’ he said. ‘When you take out a mortgage, you have to pass an affordability test, and you have to be able to pay a mortgage at 7%. ‘It’s something we put in place so that if costs were to go up, people would be able to meet those mortgages.’
Read more: https://metro.co.uk/2018/08/03/banks-pr ... to=cbshare
Twitter: https://twitter.com/MetroUK | Facebook: https://www.facebook.com/MetroUK/
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http://utangente.free.fr/2003/media2003.pdf
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REVEALED: The SIX signs the world is heading for the next global financial CRASH
https://www.express.co.uk/finance/city/ ... ock-market
IT has been 10 years since the Lehman Brothers investment bank collapsed in September 2008, sparking the global financial crisis as Wall Street was plunged into meltdown.
By LEVI WINCHESTER
PUBLISHED: 07:36, Thu, Nov 22, 2018 | UPDATED: 13:56, Thu, Nov 22, 2018
The International Monetary Fund (IMF) warned of “large challenges” ahead “to prevent a second Great Depression” in a report released in October.
But is the world really close to the next financial crash?
The economy is typical unpredictable but there are several factors in recent months which have sparked particular volatility in the global market.
Here Express.co.uk looks at some of these variables and what they could mean for the world economy.
PRICE OF GOLD:
Adrian Ash, head of research at BullionVault, said there is a correlation between the price of gold rising when the stock market is underperforming.
The price of gold in British pounds has rocketed by 23.74 percent, or £5.87 per gram, over the course of five years, according to online dealer bullionbypost.co.uk.
In terms of the euro, the price of gold has gone up by 16.63 percent over the last half a decade, with a change of €4.93 per gram.
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The picture is not so positive for the price of the yellow metal in US dollars, with the cost plunging by 1.86 percent over five years to be down $0.75 per gram.
This week has seen the price of gold in US dollars inch up on a weaker currency, sparked by concerns about global economic growth.
For UK investors and savers, gold’s gains since the start of October mirror the 7 percent drop in the FTSE almost exactly, Mr Ash explained.
He told Express.co.uk: “This could be a warning that years of stock-market losses lie ahead.
“Gold tends to do well when other assets do badly, most especially the stock market."
Mr Ash added: “What really counts for gold prices is investment demand, where money comes into the bullion market from other asset classes, seeking safety.
“That's what drove prices higher during the DotCom Crash and then the financial crisis.
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“It's what also spurred prices higher on 2016's Brexit referendum shock.”
global financial crash
Global financial crash: Is the world near the next financial crisis? (Image: GETTY)
New York Stock Exchange on November 20
Global financial crash: The New York Stock Exchange on November 20 (Image: GETTY)
DOW JONES:
The Dow Jones Industrial Average has fallen by almost 1,000 points over the last two days alone.
In fact, October 2018 was among the most volatile months in 118 years for the US stock index, Fox News reported.
But why is the Dow Jones so crucial to the wider global market?
The Dow Jones is price-weighted, meaning stocks with higher share prices are given a greater weight in the index, according to investopedia.com.
Goldman Sachs chief US equity strategist David Kostin said to CNBC: "Put simply, stocks have already started to price in the risk of an economic slowdown.”
Kane Thomas-Mason, a trader with Spreadex, told Express.co.uk: “From a technical perspective the recent double top suggests that we might see a short term down trend and prices don’t look set to break the resistance level around the 26700 mark.
“In addition to this, the majority of technical indicators, including the RSI and MACD, are offering strong sell signals.
However any progress in trade talks between the US and China at the G-20 summit in December could see a trend reversal and prices climb above this point, according to Ms Thomas-Mason.
She said: “The results of this meeting between Trump and Xi will be key and could have a great impact on markets globally.”
bitcoin
Global financial crash: Bitcoin dropped below $5,000 this week (Image: GETTY)
Bitcoin suffers 'worst string of losses in 10 years' says expert
Play Video
CRYPTOCURRENCIES:
Bitcoin was worth more than $14,000 in January but since then, digital assets have lost close to $700 billion of their market value.
This week saw Bitcoin plummet to $4,385.52, marking the first time in more than a year the cryptocurrency has dropped below $5,000.
The cryptocurrency’s decline has also caused BTC rivals including Ether, Litecoin and XRP to join the decline.
Nigel Green, founder and CEO of deVere Group, claimed the fall in Bitcoin and other cryptocurrencies could have a wider impact on the global market, with a tumble having the potential knock-on effect on stocks.
He told Express.co.uk: “This turbulence is likely to have a wider effect on global stocks as cryptocurrencies are alternative assets.”
Mr Green blamed the decline in cryptocurrencies on a combination of uncertainty regarding the Bitcoin Cash hard fork and the growing regulatory scrutiny in the US.
However, he maintained the future is still positive for Bitcoin as he described the cryptocurrency as “the future of money”.
He added: “This was then exacerbated by some investors following ‘the herd’.
“Bitcoin has made-up some of its losses on Wednesday. Whilst it remains unclear if the floor has been found, a long-term upward trajectory for the wider crypto sector can be expected.
“Indeed, the market, I believe, will reach at least 5,000 percent above its present valuation in the next 10 years.
“Why? Because investors know digital, global currencies, in our digitalised, globalised world, are the future of money.”
us interest rates
Global financial crash: Investors have raised concerns over potential rising US interest rates (Image: GETTY)
US INTEREST RATES:
Investors have raised concerns over the potential of rising US interest rates over the next few months, with expectations of further increases pushing up bond yields.
The global market was left rattled over the inflationary impact of rising rates, as stocks in Asia in particular saw a slump in October as investors began to sell.
The Federal Reserve is anticipated for another hike in December, on top of the three other increases already planned in 2018.
But the biggest critic of soaring rates has been US President Donald Trump, who branded the Federal Reserve as “crazy” in a scathing rant.
The Fed snapped back at Mr Trump, claiming the US economy is strong enough that efforts to encourage borrowing and boost economic activity is no longer necessary.
Matt O'Brien, economics report at The Washington Post, said US interest rates “are starting to get a little high by our post-crisis ones”.
Longer-term interest rates show what markets think short-term interest rates are going to average over that time, Mr O’Brien commented.
He added: “Plus a little extra to make up for the risk that inflation ends up being higher than people thought it would.
“So when long-term rates are lower than short-term ones, what’s known as an ‘inverted yield curve’, it’s telling us that markets think the Federal Reserve is going to have to stop raising rates and start cutting them in the near future.
“And when would it do that? Easy: when it’s trying to fight a recession.”
Exchange expert: 'Huge sterling boost' will cause price inflation
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INFLATION:
Global inflation levels have continued to steadily increase over the years, with the biggest rise in recent times being sparked by the 2008 financial crash.
According to data from the International Monetary Fund, the annual percentage change in global inflation in 2018 is 3.8 percent.
James Bateman, chief investment officer, multi asset, Fidelity International, said higher-than-expected inflation rates could prove problematic for the global economy.
He told Express.co.uk: “We expect US inflation to continue to rise throughout 2019, beyond the Fed’s 2 per cent target.
“While our base case is for a moderate increase, the biggest problems in markets often go unnoticed until it’s too late. Higher-than-expected inflation is one of those potential problems.
“We haven’t seen inflation run unchecked in developed economies for several decades, leaving many convinced that central bank independence has tamed it for good.
“These are fertile conditions for complacency, and there is a real risk of inflation spiralling if central banks pull back from further monetary tightening, fearing a market backlash.”
While the Fed may battle for control of inflation, the European Central Bank may not have that luxury, according to Mr Bateman.
He said: “Inflation and PMI data have disappointed in Europe, informing our negative outlook for the bloc.
“We expect downward pressure on the euro, and are negative on European high yield and periphery government debt, for as long as political uncertainty and slow growth define the region.”
facebook
Global financial crash: Shares in Facebook nosedived this week (Image: GETTY)
TECH STOCKS:
As well as the Dow Jones plunging in value, shares in some of the world’s biggest technology giants – including FAANG stocks – have also tumbled this week.
The technology sector took a hit to its stocks for the second day running on Tuesday, with Facebook shares falling by 0.9 percent.
The social media giant dropped 5.7 percent on Monday off the back of a negative Wall Street Journal report claiming the company has adopted a new aggressive leadership style.
Mark Zuckerberg was reported to have said Facebook is at war and “he planned to lead the company accordingly” in the wake of the Cambridge Analytica scandal and how Facebook handled the situation.
The Facebook CEO later dismissed the wave of negative press and said the coverage was causing "bad morale" among members of staff at the social media platform.
Apple shares also fell down another 3 percent on Tuesday, having fallen nearly 4 percent on Monday as the Wall Street Journal claimed the company has slashed production orders for its latest iPhones.
It is now down 22 percent from its October record closing high in the wake of a disappointing holiday quarter sales forecast and weak outlooks from several suppliers.
The company has yet to respond to coverage of the report.
Amazon and Netflix also plummeted by a further 3 percent on Tuesday.
Writing on nasdaq.com, contributor, President of PPCA Inc and Target Date Solutions, Ron Surz, said global markets have been impacted in the past by declines in shares of heavyweight firms.
He said: “At this point, it’s not clear how far the correction will go, but we have experienced toppling markets in the past that were driven by the world’s biggest firms.”
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https://www.express.co.uk/finance/city/ ... uk-germany
UNPREDICTABLE political climates in countries including Britain, the United States and Germany pose the biggest threat to the global economy, according to a panel of experts, as they warned the danger signs of an imminent downturn - and possibly a crash - are already on display.
By HARVEY GAVIN
PUBLISHED: 17:32, Fri, Nov 9, 2018 | UPDATED: 21:02, Fri, Nov 9, 2018
Increasing profit warnings from large corporations, reduced growth forecasts and a tense mood on the stock markets all point towards an economic slump, the group said. And while they identified a series of scenarios which could trigger a worldwide financial crisis, they warned the uncertain political situation in many of the world’s largest economies poses the most immediate threat. Writing in the German business newspaper Handelsblatt, the group of veteran finance writers said traditional alliances, like the ties between the UK and US, would be tested in the event of a crash.
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They wrote: “At the moment, the biggest risk to the world economy is politics itself - or rather, the fact that cooperation among the main economies, such as those that took place during the financial crisis, can no longer be taken for granted.”
The group pointed to US President Donald Trump’s weakened position following the midterm elections this week, Theresa May’s precarious role during the Brexit talks and Angela Merkel’s shock announcement that she should not stand for re-election as Germany’s Chancellor as some of the factors behind the uncertain climate.
On Mr Trump, they warned the midterm results could prove to be the catalyst for even more economic uncertainty.
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Tuesday’s vote saw the President’s Republican party maintain control over the Senate but lose its majority in the House of Representatives.
Financial crisis warning
Financial crisis: Unstable political climates across the world could trigger a major crash (Image: GETTY IMAGES)
Theresa May and Angela Merkel
Traditional allies may not work together in the uncertain political climate, the group warned (Image: REUTERS)
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Democrats in the House have pledged to provide a check on Mr Trump but could bring his legislative agenda to a halt if they choose to.
The group, which includes Dr Jens Muenchath, Christian Rickens and Daniel Schäfer, wrote: “In the best case, the Democratic delegates will slow down the erratic Trump.
“In the worst case, the opposition of President and Congress will cause even more back and forth and thus uncertainty.”
On Brexit, they warned Mrs May’s precarious position attempting to maintain unity in her Conservative Party while negotiating an exit deal which can win the support of enough MPs to pass through the House of Commons added to growing uncertainty in European markets.
The panel said Italy, now run by “hard to predict populists” also posed a major threat with its budget proposals.
The newly elected government in Rome hopes to increase borrowing to make good on its campaign promises but the spending plans fly in the face of EU rules and would increase debt in the cash-strapped country.
Donald Trump
Donald Trump's unpredictable nature is increasing uncertainly, the panel said (Image: EPA)
Theresa May
Theresa May's uncertain position is a risk to the world economy, the group said (Image: GETTY IMAGES)
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They said a financial crash in Italy would put the Mediterranean county would be well beyond the help of bailouts meaning a “state bankruptcy followed by a debt cut would be almost inevitable”.
And they warned Germany’s Angela Merkel, “who is regarded worldwide as a tireless and influential mediator in crisis situations”, is politically weakened after she revealed she would not stand for re-election.
The group added: “It is questionable whether, in a new crisis in the euro area, for example, she will still have the authority to force the leaders of other states to cooperate at the negotiating table.”
Additional reporting by Monika Pallenberg.
World markets on brink: Economic crisis to hit US, Germany, China hardest, Moody's says
https://www.express.co.uk/news/world/10 ... dollar-dow
GROWTH forecasts for the global economy have been slashed by ratings agency Moody’s who say the ongoing trade war between the US and China will cause shocks around the world.
By CIARAN MCGRATH
PUBLISHED: 08:57, Thu, Nov 8, 2018 | UPDATED: 17:21, Thu, Nov 8, 2018
The trade war has is having an impact on global markets (Image: GETTY)
Germany, Japan, South Korea, the US and China are among those who will be hit hardest next year, according to the Moody’s report.
Global economic growth will slow in 2019 and 2020 to just under 2.9 percent, down from an estimated 3.3 percent in 2018 and 2019, Moody’s said.
And the analysis has also suggested there is no end in sight to the disagreement, which could continue “for some time” – a concern previously expressed by Chinese billionaire Jack Ma, who on Tuesday reiterated his concerns about the “stupid” dispute.
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The two superpowers have been at loggerheads ever since US President Donald Trump slapped punishing new tariffs of 25 percent and 10 percent respectively on Chinese steel and aluminium imports, triggering Beijing to respond with levies of its own on American exports.
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Mr Trump has shown no signs of backing down on the issue, and warned on October 30 he had $267 billion in additional tariffs ready if the two countries failed to reach a deal on trade – although he also hinted this was a possibility.
Moody’s said the “geopolitical frictions” between US and China would “likely persist for some time”.
The slowdown is likely to have a negative impact not only on China and the US, but also on other open economies, especially Germany, Japan and South Korea, it said.
Growth in advanced economies will slow but remain solid next year, it predicted – but G20 emerging markets growth will be weak.
Xi Jinping Donald Trump
The trade war between the US and China will cause collateral damage, Moody's has warned (Image: GETTY)
Jack Ma
Jack Ma has called the trade dispute "stupid" (Image: GETTY)
As such, Moody’s also said the dispute would weigh on global trade growth and reshape trade flows and supply chains.
It also suggested the United States-Mexico-Canada Agreement (USMCA) - a new trade deal to replace the North American Free Trade Deal (NAFTA) which Mr Trump has been a vehement critic of - would be ratified next year.
China’s top diplomat, State Councillor Wang Yi, has said a planned meeting between Chinese President Xi Jinping and Mr Trump at the G20 summit in Buenos Aires this month will be of great significance to both sides.
Speaking during a meeting with former US Secretary of State Henry Kissinger, who is on a visit to the country, Yi said China and the United States can and should appropriately resolve their trade dispute through talks.
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Chinese exports
China's exports to the US and the rest of the world grew more than expected in October (Image: GETTY)
Trade war is the most stupid thing in this world
Jack Ma
Speaking at a conference in Shanghai organised by the Chinese government, Alibaba co-founder Mr Ma, who was recently confirmed as China’s richest man, said: "Trade war is the most stupid thing in this world.
"Nobody can stop the free trade.”
In an thinly veiled criticism of Mr Trump’s approach, he suggested the purpose of trade should be to promote peace and communication rather than conflict, branding the rise of “winner-takes-all” protectionist measures promoted by Mr Trump as misguided.
Mr Ma met Mr Trump in New York shortly after his 2016 Presidential election victory, pleading to create one million new US jobs by helping small businesses sell their products in China.
However, the plan has now been shelved, with Mr Ma saying in September: "This promise was on the basis of friendly China-US cooperation and reasonable bilateral trade relations, but the current situation has already destroyed that basis.
"This promise can't be completed."
Research by UBS has revealed a 30 percent drop in imports of products listed as being subject to a package of tariffs imposed by the US Government on July 6.
It was too early to judge the impact of a further round of tariffs totally $200 million which were imposed on September 24.
However, China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates which are due to kick in at the start of next year.
https://www.express.co.uk/finance/city/ ... ock-market
IT has been 10 years since the Lehman Brothers investment bank collapsed in September 2008, sparking the global financial crisis as Wall Street was plunged into meltdown.
By LEVI WINCHESTER
PUBLISHED: 07:36, Thu, Nov 22, 2018 | UPDATED: 13:56, Thu, Nov 22, 2018
The International Monetary Fund (IMF) warned of “large challenges” ahead “to prevent a second Great Depression” in a report released in October.
But is the world really close to the next financial crash?
The economy is typical unpredictable but there are several factors in recent months which have sparked particular volatility in the global market.
Here Express.co.uk looks at some of these variables and what they could mean for the world economy.
PRICE OF GOLD:
Adrian Ash, head of research at BullionVault, said there is a correlation between the price of gold rising when the stock market is underperforming.
The price of gold in British pounds has rocketed by 23.74 percent, or £5.87 per gram, over the course of five years, according to online dealer bullionbypost.co.uk.
In terms of the euro, the price of gold has gone up by 16.63 percent over the last half a decade, with a change of €4.93 per gram.
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The picture is not so positive for the price of the yellow metal in US dollars, with the cost plunging by 1.86 percent over five years to be down $0.75 per gram.
This week has seen the price of gold in US dollars inch up on a weaker currency, sparked by concerns about global economic growth.
For UK investors and savers, gold’s gains since the start of October mirror the 7 percent drop in the FTSE almost exactly, Mr Ash explained.
He told Express.co.uk: “This could be a warning that years of stock-market losses lie ahead.
“Gold tends to do well when other assets do badly, most especially the stock market."
Mr Ash added: “What really counts for gold prices is investment demand, where money comes into the bullion market from other asset classes, seeking safety.
“That's what drove prices higher during the DotCom Crash and then the financial crisis.
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“It's what also spurred prices higher on 2016's Brexit referendum shock.”
global financial crash
Global financial crash: Is the world near the next financial crisis? (Image: GETTY)
New York Stock Exchange on November 20
Global financial crash: The New York Stock Exchange on November 20 (Image: GETTY)
DOW JONES:
The Dow Jones Industrial Average has fallen by almost 1,000 points over the last two days alone.
In fact, October 2018 was among the most volatile months in 118 years for the US stock index, Fox News reported.
But why is the Dow Jones so crucial to the wider global market?
The Dow Jones is price-weighted, meaning stocks with higher share prices are given a greater weight in the index, according to investopedia.com.
Goldman Sachs chief US equity strategist David Kostin said to CNBC: "Put simply, stocks have already started to price in the risk of an economic slowdown.”
Kane Thomas-Mason, a trader with Spreadex, told Express.co.uk: “From a technical perspective the recent double top suggests that we might see a short term down trend and prices don’t look set to break the resistance level around the 26700 mark.
“In addition to this, the majority of technical indicators, including the RSI and MACD, are offering strong sell signals.
However any progress in trade talks between the US and China at the G-20 summit in December could see a trend reversal and prices climb above this point, according to Ms Thomas-Mason.
She said: “The results of this meeting between Trump and Xi will be key and could have a great impact on markets globally.”
bitcoin
Global financial crash: Bitcoin dropped below $5,000 this week (Image: GETTY)
Bitcoin suffers 'worst string of losses in 10 years' says expert
Play Video
CRYPTOCURRENCIES:
Bitcoin was worth more than $14,000 in January but since then, digital assets have lost close to $700 billion of their market value.
This week saw Bitcoin plummet to $4,385.52, marking the first time in more than a year the cryptocurrency has dropped below $5,000.
The cryptocurrency’s decline has also caused BTC rivals including Ether, Litecoin and XRP to join the decline.
Nigel Green, founder and CEO of deVere Group, claimed the fall in Bitcoin and other cryptocurrencies could have a wider impact on the global market, with a tumble having the potential knock-on effect on stocks.
He told Express.co.uk: “This turbulence is likely to have a wider effect on global stocks as cryptocurrencies are alternative assets.”
Mr Green blamed the decline in cryptocurrencies on a combination of uncertainty regarding the Bitcoin Cash hard fork and the growing regulatory scrutiny in the US.
However, he maintained the future is still positive for Bitcoin as he described the cryptocurrency as “the future of money”.
He added: “This was then exacerbated by some investors following ‘the herd’.
“Bitcoin has made-up some of its losses on Wednesday. Whilst it remains unclear if the floor has been found, a long-term upward trajectory for the wider crypto sector can be expected.
“Indeed, the market, I believe, will reach at least 5,000 percent above its present valuation in the next 10 years.
“Why? Because investors know digital, global currencies, in our digitalised, globalised world, are the future of money.”
us interest rates
Global financial crash: Investors have raised concerns over potential rising US interest rates (Image: GETTY)
US INTEREST RATES:
Investors have raised concerns over the potential of rising US interest rates over the next few months, with expectations of further increases pushing up bond yields.
The global market was left rattled over the inflationary impact of rising rates, as stocks in Asia in particular saw a slump in October as investors began to sell.
The Federal Reserve is anticipated for another hike in December, on top of the three other increases already planned in 2018.
But the biggest critic of soaring rates has been US President Donald Trump, who branded the Federal Reserve as “crazy” in a scathing rant.
The Fed snapped back at Mr Trump, claiming the US economy is strong enough that efforts to encourage borrowing and boost economic activity is no longer necessary.
Matt O'Brien, economics report at The Washington Post, said US interest rates “are starting to get a little high by our post-crisis ones”.
Longer-term interest rates show what markets think short-term interest rates are going to average over that time, Mr O’Brien commented.
He added: “Plus a little extra to make up for the risk that inflation ends up being higher than people thought it would.
“So when long-term rates are lower than short-term ones, what’s known as an ‘inverted yield curve’, it’s telling us that markets think the Federal Reserve is going to have to stop raising rates and start cutting them in the near future.
“And when would it do that? Easy: when it’s trying to fight a recession.”
Exchange expert: 'Huge sterling boost' will cause price inflation
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INFLATION:
Global inflation levels have continued to steadily increase over the years, with the biggest rise in recent times being sparked by the 2008 financial crash.
According to data from the International Monetary Fund, the annual percentage change in global inflation in 2018 is 3.8 percent.
James Bateman, chief investment officer, multi asset, Fidelity International, said higher-than-expected inflation rates could prove problematic for the global economy.
He told Express.co.uk: “We expect US inflation to continue to rise throughout 2019, beyond the Fed’s 2 per cent target.
“While our base case is for a moderate increase, the biggest problems in markets often go unnoticed until it’s too late. Higher-than-expected inflation is one of those potential problems.
“We haven’t seen inflation run unchecked in developed economies for several decades, leaving many convinced that central bank independence has tamed it for good.
“These are fertile conditions for complacency, and there is a real risk of inflation spiralling if central banks pull back from further monetary tightening, fearing a market backlash.”
While the Fed may battle for control of inflation, the European Central Bank may not have that luxury, according to Mr Bateman.
He said: “Inflation and PMI data have disappointed in Europe, informing our negative outlook for the bloc.
“We expect downward pressure on the euro, and are negative on European high yield and periphery government debt, for as long as political uncertainty and slow growth define the region.”
Global financial crash: Shares in Facebook nosedived this week (Image: GETTY)
TECH STOCKS:
As well as the Dow Jones plunging in value, shares in some of the world’s biggest technology giants – including FAANG stocks – have also tumbled this week.
The technology sector took a hit to its stocks for the second day running on Tuesday, with Facebook shares falling by 0.9 percent.
The social media giant dropped 5.7 percent on Monday off the back of a negative Wall Street Journal report claiming the company has adopted a new aggressive leadership style.
Mark Zuckerberg was reported to have said Facebook is at war and “he planned to lead the company accordingly” in the wake of the Cambridge Analytica scandal and how Facebook handled the situation.
The Facebook CEO later dismissed the wave of negative press and said the coverage was causing "bad morale" among members of staff at the social media platform.
Apple shares also fell down another 3 percent on Tuesday, having fallen nearly 4 percent on Monday as the Wall Street Journal claimed the company has slashed production orders for its latest iPhones.
It is now down 22 percent from its October record closing high in the wake of a disappointing holiday quarter sales forecast and weak outlooks from several suppliers.
The company has yet to respond to coverage of the report.
Amazon and Netflix also plummeted by a further 3 percent on Tuesday.
Writing on nasdaq.com, contributor, President of PPCA Inc and Target Date Solutions, Ron Surz, said global markets have been impacted in the past by declines in shares of heavyweight firms.
He said: “At this point, it’s not clear how far the correction will go, but we have experienced toppling markets in the past that were driven by the world’s biggest firms.”
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https://www.express.co.uk/finance/city/ ... uk-germany
UNPREDICTABLE political climates in countries including Britain, the United States and Germany pose the biggest threat to the global economy, according to a panel of experts, as they warned the danger signs of an imminent downturn - and possibly a crash - are already on display.
By HARVEY GAVIN
PUBLISHED: 17:32, Fri, Nov 9, 2018 | UPDATED: 21:02, Fri, Nov 9, 2018
Increasing profit warnings from large corporations, reduced growth forecasts and a tense mood on the stock markets all point towards an economic slump, the group said. And while they identified a series of scenarios which could trigger a worldwide financial crisis, they warned the uncertain political situation in many of the world’s largest economies poses the most immediate threat. Writing in the German business newspaper Handelsblatt, the group of veteran finance writers said traditional alliances, like the ties between the UK and US, would be tested in the event of a crash.
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They wrote: “At the moment, the biggest risk to the world economy is politics itself - or rather, the fact that cooperation among the main economies, such as those that took place during the financial crisis, can no longer be taken for granted.”
The group pointed to US President Donald Trump’s weakened position following the midterm elections this week, Theresa May’s precarious role during the Brexit talks and Angela Merkel’s shock announcement that she should not stand for re-election as Germany’s Chancellor as some of the factors behind the uncertain climate.
On Mr Trump, they warned the midterm results could prove to be the catalyst for even more economic uncertainty.
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Tuesday’s vote saw the President’s Republican party maintain control over the Senate but lose its majority in the House of Representatives.
Financial crisis warning
Financial crisis: Unstable political climates across the world could trigger a major crash (Image: GETTY IMAGES)
Theresa May and Angela Merkel
Traditional allies may not work together in the uncertain political climate, the group warned (Image: REUTERS)
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Democrats in the House have pledged to provide a check on Mr Trump but could bring his legislative agenda to a halt if they choose to.
The group, which includes Dr Jens Muenchath, Christian Rickens and Daniel Schäfer, wrote: “In the best case, the Democratic delegates will slow down the erratic Trump.
“In the worst case, the opposition of President and Congress will cause even more back and forth and thus uncertainty.”
On Brexit, they warned Mrs May’s precarious position attempting to maintain unity in her Conservative Party while negotiating an exit deal which can win the support of enough MPs to pass through the House of Commons added to growing uncertainty in European markets.
The panel said Italy, now run by “hard to predict populists” also posed a major threat with its budget proposals.
The newly elected government in Rome hopes to increase borrowing to make good on its campaign promises but the spending plans fly in the face of EU rules and would increase debt in the cash-strapped country.
Donald Trump
Donald Trump's unpredictable nature is increasing uncertainly, the panel said (Image: EPA)
Theresa May
Theresa May's uncertain position is a risk to the world economy, the group said (Image: GETTY IMAGES)
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They said a financial crash in Italy would put the Mediterranean county would be well beyond the help of bailouts meaning a “state bankruptcy followed by a debt cut would be almost inevitable”.
And they warned Germany’s Angela Merkel, “who is regarded worldwide as a tireless and influential mediator in crisis situations”, is politically weakened after she revealed she would not stand for re-election.
The group added: “It is questionable whether, in a new crisis in the euro area, for example, she will still have the authority to force the leaders of other states to cooperate at the negotiating table.”
Additional reporting by Monika Pallenberg.
World markets on brink: Economic crisis to hit US, Germany, China hardest, Moody's says
https://www.express.co.uk/news/world/10 ... dollar-dow
GROWTH forecasts for the global economy have been slashed by ratings agency Moody’s who say the ongoing trade war between the US and China will cause shocks around the world.
By CIARAN MCGRATH
PUBLISHED: 08:57, Thu, Nov 8, 2018 | UPDATED: 17:21, Thu, Nov 8, 2018
The trade war has is having an impact on global markets (Image: GETTY)
Germany, Japan, South Korea, the US and China are among those who will be hit hardest next year, according to the Moody’s report.
Global economic growth will slow in 2019 and 2020 to just under 2.9 percent, down from an estimated 3.3 percent in 2018 and 2019, Moody’s said.
And the analysis has also suggested there is no end in sight to the disagreement, which could continue “for some time” – a concern previously expressed by Chinese billionaire Jack Ma, who on Tuesday reiterated his concerns about the “stupid” dispute.
PROMOTED STORY
The two superpowers have been at loggerheads ever since US President Donald Trump slapped punishing new tariffs of 25 percent and 10 percent respectively on Chinese steel and aluminium imports, triggering Beijing to respond with levies of its own on American exports.
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Mr Trump has shown no signs of backing down on the issue, and warned on October 30 he had $267 billion in additional tariffs ready if the two countries failed to reach a deal on trade – although he also hinted this was a possibility.
Moody’s said the “geopolitical frictions” between US and China would “likely persist for some time”.
The slowdown is likely to have a negative impact not only on China and the US, but also on other open economies, especially Germany, Japan and South Korea, it said.
Growth in advanced economies will slow but remain solid next year, it predicted – but G20 emerging markets growth will be weak.
Xi Jinping Donald Trump
The trade war between the US and China will cause collateral damage, Moody's has warned (Image: GETTY)
Jack Ma
Jack Ma has called the trade dispute "stupid" (Image: GETTY)
As such, Moody’s also said the dispute would weigh on global trade growth and reshape trade flows and supply chains.
It also suggested the United States-Mexico-Canada Agreement (USMCA) - a new trade deal to replace the North American Free Trade Deal (NAFTA) which Mr Trump has been a vehement critic of - would be ratified next year.
China’s top diplomat, State Councillor Wang Yi, has said a planned meeting between Chinese President Xi Jinping and Mr Trump at the G20 summit in Buenos Aires this month will be of great significance to both sides.
Speaking during a meeting with former US Secretary of State Henry Kissinger, who is on a visit to the country, Yi said China and the United States can and should appropriately resolve their trade dispute through talks.
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Chinese exports
China's exports to the US and the rest of the world grew more than expected in October (Image: GETTY)
Trade war is the most stupid thing in this world
Jack Ma
Speaking at a conference in Shanghai organised by the Chinese government, Alibaba co-founder Mr Ma, who was recently confirmed as China’s richest man, said: "Trade war is the most stupid thing in this world.
"Nobody can stop the free trade.”
In an thinly veiled criticism of Mr Trump’s approach, he suggested the purpose of trade should be to promote peace and communication rather than conflict, branding the rise of “winner-takes-all” protectionist measures promoted by Mr Trump as misguided.
Mr Ma met Mr Trump in New York shortly after his 2016 Presidential election victory, pleading to create one million new US jobs by helping small businesses sell their products in China.
However, the plan has now been shelved, with Mr Ma saying in September: "This promise was on the basis of friendly China-US cooperation and reasonable bilateral trade relations, but the current situation has already destroyed that basis.
"This promise can't be completed."
Research by UBS has revealed a 30 percent drop in imports of products listed as being subject to a package of tariffs imposed by the US Government on July 6.
It was too early to judge the impact of a further round of tariffs totally $200 million which were imposed on September 24.
However, China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates which are due to kick in at the start of next year.
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"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
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"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
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Manic Tuesday as firms such as Barclays and JP Morgan gear up for Brexit vote turmoil
https://www.thisismoney.co.uk/money/art ... rmoil.html
By Helen Cahill, Financial Mail On Sunday
21:01, 08 Dec 2018
The City is gearing up for a manic night on Tuesday following the vote on Brexit
Banks, stockbrokers and advisers are braced for a night of chaos
The outcome of the vote is due after the London stock market closes on Tuesday
City traders are gearing up for a caffeine-fuelled all-nighter as investors grapple with the fallout from the crucial vote on Theresa May’s Brexit deal.
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Banks, stockbrokers and advisers are braced for a night of chaos on trading floor.
The vote will be held late on Tuesday, with the outcome due after the London stock market closes.
Pressure: Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in +5
Pressure: Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in
Bank of England issues recession warning over no-deal Brexit
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Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in.
If events drag on to the early hours, JP Morgan’s teams in the New York office will take over from London colleagues.
In Barclays’ investment bank, traders will be in the office earlier on Tuesday to prepare ahead of the vote, while analysts and economists will be on standby to brief clients.
Currency trading will be the focus overnight as markets deliver a verdict on what the vote means for the UK economy.
1
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One source at a major spreadbetting firm, which allows individual investors to bet on market movements, said last night they would be ordering pizzas to keep staff from going hungry through the night. They have also booked out rooms at a hotel next door so traders can take short naps during quieter periods.
Traders at Samuel & Co Trading have even set up a mini golf course to keep staff entertained and will bring sleeping bags into the office.
On Wednesday, domestic stocks will take centre stage as traders analyse the political fallout, the chances of a no-deal Brexit or even a General Election, which might lead to a Labour government under Jeremy Corbyn.
How will the Brexit deal vote affect business? A run-down of the most likely scernarios +5
How will the Brexit deal vote affect business? A run-down of the most likely scernarios
Carney: 'British businesses are unprepared for a no-deal Brexit'
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Investment platforms such as AJ Bell and Hargreaves Lansdown are gearing up for a spike in online traffic when the market opens on Wednesday.
Danny Cox, of Hargreaves Lansdown, said: ‘We are increasing staffing levels on our helpdesk and support functions on the Wednesday morning by around 40 per cent to cater for what could be a very busy opening period of trading.’
Away from the trading floor, bankers and consultants are teeing-up to help clients plan for the weeks ahead.
Lloyds bankers will be staying late on Tuesday and coming in early on Wednesday to monitor events and take check-in calls with any concerned clients.
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Accounting giant PwC is hosting internal briefings to make sure its consultants are up to date on events so they can advise clients, both in the UK and abroad.
While PwC hasn’t made any specific predictions about how the vote will pan out, the organisation has spent time scenario planning so that it is prepared for all possible outcomes and can inform clients through webcasts, briefing notes and newsletters sent out as events unfold.
James Stewart, KPMG’s head of Brexit, said there had been a significant pick-up in calls in recent weeks as clients try to understand what the vote means for their businesses.
Stewart added: ‘We are seeing much more client activity around Brexit over the past two weeks. That’s a mix of small businesses who have only just realised they need to act, and larger businesses who are activating their plans.’
STOCK MARKET WATCH LIST
Ted Baker boss Ray Kelvin hit the headlines when the retailer appointed a law firm to investigate its ‘hugging culture’, but hedge funds aren’t showing his company’s shares much love.
They were already betting against the fashion brand, but raised their short positions in the FTSE 250 firm on Monday after the hugging scandal.
Data from analyst IHS Markit shows a notable increase in short interest positions from 6.6 per cent on Friday last week to 7.4 per cent on Monday in a wager worth about £50 million. Short-sellers, who in this case include New York-headquartered BlackRock and London-based Marshall Wace, borrow shares, sell them and then buy them back at what they hope is a lower price, pocketing the difference in the process.
Just minutes before the markets closed on Friday, the company revealed that Kelvin was to take a ‘leave of absence’ while the allegations are investigated.
The share price took a sharp dive, but could have further to go when markets reopen tomorrow morning, meaning that the short-sellers could cash in again.
Apart from its own shareholders, the other main victim of Thomas Cook’s recent woes has been rival TUI.
Thomas Cook blamed the warm UK summer for stopping people travelling abroad in search of sun. But scribblers at City broker Bernstein think TUI is a very different business with cruises and hotels that are less reliant on one or two crucial seasons.
They reckon TUI’s annual results on Thursday could kick-start the shares after a slump of nearly 40 per cent since May.
Bernstein says the shares are so cheap that any new investors would be getting TUI’s tour division for free.
If Purplebricks, the so-called hybrid estate agent, was one of the shares to own last year after a stunning stock market performance, then it was one to sell in 2018.
The shares tanked by about 60 per cent amid a slowdown in the UK market, even though it expanded abroad.
Rival Emoov, which earlier this year merged with Sarah Beeny’s Tepilo and online lettings agency Urban, went into administration last week, underlining the scale of the challenge for online agents.
Purplebricks reveals first-half results on Thursday. Could it perhaps decide to snap up Emoov’s property listings which are up for grabs?
https://www.thisismoney.co.uk/money/art ... rmoil.html
By Helen Cahill, Financial Mail On Sunday
21:01, 08 Dec 2018
The City is gearing up for a manic night on Tuesday following the vote on Brexit
Banks, stockbrokers and advisers are braced for a night of chaos
The outcome of the vote is due after the London stock market closes on Tuesday
City traders are gearing up for a caffeine-fuelled all-nighter as investors grapple with the fallout from the crucial vote on Theresa May’s Brexit deal.
ADVERTISEMENT
Banks, stockbrokers and advisers are braced for a night of chaos on trading floor.
The vote will be held late on Tuesday, with the outcome due after the London stock market closes.
Pressure: Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in +5
Pressure: Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in
Bank of England issues recession warning over no-deal Brexit
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Barclays and JP Morgan have both called on bankers to stay late into the night to make sure clients can continue to trade stock futures and currency as the result comes in.
If events drag on to the early hours, JP Morgan’s teams in the New York office will take over from London colleagues.
In Barclays’ investment bank, traders will be in the office earlier on Tuesday to prepare ahead of the vote, while analysts and economists will be on standby to brief clients.
Currency trading will be the focus overnight as markets deliver a verdict on what the vote means for the UK economy.
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One source at a major spreadbetting firm, which allows individual investors to bet on market movements, said last night they would be ordering pizzas to keep staff from going hungry through the night. They have also booked out rooms at a hotel next door so traders can take short naps during quieter periods.
Traders at Samuel & Co Trading have even set up a mini golf course to keep staff entertained and will bring sleeping bags into the office.
On Wednesday, domestic stocks will take centre stage as traders analyse the political fallout, the chances of a no-deal Brexit or even a General Election, which might lead to a Labour government under Jeremy Corbyn.
How will the Brexit deal vote affect business? A run-down of the most likely scernarios +5
How will the Brexit deal vote affect business? A run-down of the most likely scernarios
Carney: 'British businesses are unprepared for a no-deal Brexit'
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Investment platforms such as AJ Bell and Hargreaves Lansdown are gearing up for a spike in online traffic when the market opens on Wednesday.
Danny Cox, of Hargreaves Lansdown, said: ‘We are increasing staffing levels on our helpdesk and support functions on the Wednesday morning by around 40 per cent to cater for what could be a very busy opening period of trading.’
Away from the trading floor, bankers and consultants are teeing-up to help clients plan for the weeks ahead.
Lloyds bankers will be staying late on Tuesday and coming in early on Wednesday to monitor events and take check-in calls with any concerned clients.
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Accounting giant PwC is hosting internal briefings to make sure its consultants are up to date on events so they can advise clients, both in the UK and abroad.
While PwC hasn’t made any specific predictions about how the vote will pan out, the organisation has spent time scenario planning so that it is prepared for all possible outcomes and can inform clients through webcasts, briefing notes and newsletters sent out as events unfold.
James Stewart, KPMG’s head of Brexit, said there had been a significant pick-up in calls in recent weeks as clients try to understand what the vote means for their businesses.
Stewart added: ‘We are seeing much more client activity around Brexit over the past two weeks. That’s a mix of small businesses who have only just realised they need to act, and larger businesses who are activating their plans.’
STOCK MARKET WATCH LIST
Ted Baker boss Ray Kelvin hit the headlines when the retailer appointed a law firm to investigate its ‘hugging culture’, but hedge funds aren’t showing his company’s shares much love.
They were already betting against the fashion brand, but raised their short positions in the FTSE 250 firm on Monday after the hugging scandal.
Data from analyst IHS Markit shows a notable increase in short interest positions from 6.6 per cent on Friday last week to 7.4 per cent on Monday in a wager worth about £50 million. Short-sellers, who in this case include New York-headquartered BlackRock and London-based Marshall Wace, borrow shares, sell them and then buy them back at what they hope is a lower price, pocketing the difference in the process.
Just minutes before the markets closed on Friday, the company revealed that Kelvin was to take a ‘leave of absence’ while the allegations are investigated.
The share price took a sharp dive, but could have further to go when markets reopen tomorrow morning, meaning that the short-sellers could cash in again.
Apart from its own shareholders, the other main victim of Thomas Cook’s recent woes has been rival TUI.
Thomas Cook blamed the warm UK summer for stopping people travelling abroad in search of sun. But scribblers at City broker Bernstein think TUI is a very different business with cruises and hotels that are less reliant on one or two crucial seasons.
They reckon TUI’s annual results on Thursday could kick-start the shares after a slump of nearly 40 per cent since May.
Bernstein says the shares are so cheap that any new investors would be getting TUI’s tour division for free.
If Purplebricks, the so-called hybrid estate agent, was one of the shares to own last year after a stunning stock market performance, then it was one to sell in 2018.
The shares tanked by about 60 per cent amid a slowdown in the UK market, even though it expanded abroad.
Rival Emoov, which earlier this year merged with Sarah Beeny’s Tepilo and online lettings agency Urban, went into administration last week, underlining the scale of the challenge for online agents.
Purplebricks reveals first-half results on Thursday. Could it perhaps decide to snap up Emoov’s property listings which are up for grabs?
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
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Deliberately caused by this of course
The ending of QE by Mario Draghi is not going well
IMF warns storm clouds gathering for global economy
https://uk.reuters.com/article/us-imf-e ... KKBN1OA0SG
One of the International Monetary Fund’s top officials warned on Tuesday that storm clouds were gathering over the global economy and that governments and central banks might not be well- equipped to cope.
Eurozone growth hits 4-year low on trade worries, France unrest: Survey
Fri Dec 14, 2018 02:57PM [Updated: Fri Dec 14, 2018 03:18PM ]
https://www.presstv.com/Detail/2018/12/ ... n-protests
A new survey shows that business growth in the eurozone has hit a four-year low in December amid concerns about a global trade war and the recent violent anti-government protests in France.
The survey, conducted by data firm IHS Markit, showed Friday that the composite eurozone PMI fell to 51.3 points from 52.7 points in November. However, a reading above 50 points indicates business is still growing.
According to IHS Markit, new business inflows almost stalled, job creation slipped to a two-year low and business optimism deteriorated.
"An undercurrent of slowing economic growth was exacerbated by protests in France and ongoing weak demand for autos," said the firm.
The IHS Markit's survey for France indicated that business in the country has flipped into reverse, with the index plunging to 49.3 in December from 54.2 in November.
Thousands of demonstrators wearing yellow vests have been gathering in major French cities since November 17 to initially protest President Emmanuel Macron’s controversial fuel tax hike — which he later dropped — and the high costs of living in France.
French authorities earlier said more than 1,700 protesters had been arrested and that 200 people, including 17 police forces, had been injured in confrontations during the protests.
Read more:
Police heavily deployed to contain protests across France
Over 1,000 arrests as 'Yellow Vests' protests continue
France in flames as 'yellow vests' hit streets despite Macron concessions
"While some of the slowdown reflected disruptions to business and travel arising from the 'yellow vest' protests in France, the weaker picture also reflects growing evidence that the underlying rate of economic growth has slowed across the euro area as a whole," IHS Markit's Chief Business Economist Chris Williamson said.
"Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area," he added.
Williamson noted that the data point to a weak economic expansion of 0.3 percent in the final quarter of 2018 for the eurozone.
He said data in December alone indicate that GDP growth is slowing to a 0.1 percent rate and forward-looking information, including orders and sentiment, show demand growth is stalling
The survey results come a day after the European Central Bank announced that it would halt its €2.6tn stimulus program in January despite concerns that the eurozone is poised to slow down over the next couple of years.
Mario Draghi, the ECB boss, warned that rising uncertainty had forced the bank to downgrade its outlook for the currency bloc next year and the effects would continue to be felt in 2020.
Draghi added that growth would be limited to 1.7 percent in 2019, “owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”
The ending of QE by Mario Draghi is not going well
IMF warns storm clouds gathering for global economy
https://uk.reuters.com/article/us-imf-e ... KKBN1OA0SG
One of the International Monetary Fund’s top officials warned on Tuesday that storm clouds were gathering over the global economy and that governments and central banks might not be well- equipped to cope.
Eurozone growth hits 4-year low on trade worries, France unrest: Survey
Fri Dec 14, 2018 02:57PM [Updated: Fri Dec 14, 2018 03:18PM ]
https://www.presstv.com/Detail/2018/12/ ... n-protests
A new survey shows that business growth in the eurozone has hit a four-year low in December amid concerns about a global trade war and the recent violent anti-government protests in France.
The survey, conducted by data firm IHS Markit, showed Friday that the composite eurozone PMI fell to 51.3 points from 52.7 points in November. However, a reading above 50 points indicates business is still growing.
According to IHS Markit, new business inflows almost stalled, job creation slipped to a two-year low and business optimism deteriorated.
"An undercurrent of slowing economic growth was exacerbated by protests in France and ongoing weak demand for autos," said the firm.
The IHS Markit's survey for France indicated that business in the country has flipped into reverse, with the index plunging to 49.3 in December from 54.2 in November.
Thousands of demonstrators wearing yellow vests have been gathering in major French cities since November 17 to initially protest President Emmanuel Macron’s controversial fuel tax hike — which he later dropped — and the high costs of living in France.
French authorities earlier said more than 1,700 protesters had been arrested and that 200 people, including 17 police forces, had been injured in confrontations during the protests.
Read more:
Police heavily deployed to contain protests across France
Over 1,000 arrests as 'Yellow Vests' protests continue
France in flames as 'yellow vests' hit streets despite Macron concessions
"While some of the slowdown reflected disruptions to business and travel arising from the 'yellow vest' protests in France, the weaker picture also reflects growing evidence that the underlying rate of economic growth has slowed across the euro area as a whole," IHS Markit's Chief Business Economist Chris Williamson said.
"Companies are worried about the global economic and political climate, with trade wars and Brexit adding to increased political tensions within the euro area," he added.
Williamson noted that the data point to a weak economic expansion of 0.3 percent in the final quarter of 2018 for the eurozone.
He said data in December alone indicate that GDP growth is slowing to a 0.1 percent rate and forward-looking information, including orders and sentiment, show demand growth is stalling
The survey results come a day after the European Central Bank announced that it would halt its €2.6tn stimulus program in January despite concerns that the eurozone is poised to slow down over the next couple of years.
Mario Draghi, the ECB boss, warned that rising uncertainty had forced the bank to downgrade its outlook for the currency bloc next year and the effects would continue to be felt in 2020.
Draghi added that growth would be limited to 1.7 percent in 2019, “owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”
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ECB ends €2.5tn eurozone QE stimulus programme
https://www.bbc.co.uk/news/business-46552147
13 December 2018
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Mario DraghiImage copyrightGETTY IMAGES
Image caption
European Central Bank chief Mario Draghi
The European Central Bank has confirmed it is ending its huge net asset purchase programme to stimulate the eurozone economy this month.
The ECB has stopped its bond-buying scheme, worth €30bn a month, despite a recent slowdown in the bloc's recovery.
The move, first announced in June, is a big step towards unwinding the policies brought in to stabilise the eurozone in the wake of the financial crisis.
The ECB said it was keeping its main interest rate on hold at zero per cent.
The ECB began its asset purchase programme in 2015, years after the UK and US took similar action to shore up their economies.
It has so far pumped more than two trillion euros into the bloc's economy, while maintaining ultra-low interest rates.
The bank argues this has countered deflation and staved off a deeper economic crisis, but it has long signalled it would gradually wind the programme down.
BBC graph
Analysis
Dharshini David, economics correspondent
It's official: the ECB has confirmed it will cease its crisis bail-out programme, quantitative easing. It was last of the major central banks to embark on the scheme of pumping funds into the economy via bonds in 2009.
Since then it has injected more than €2tn, intended to be used by financial institutions to boost credit, and so demand across the economy.
Before the financial crisis, QE had been largely untried. Its potential impact was unknown - and is still unclear. In the UK, the Bank of England estimates that funds played a very significant role in boosting activity.
However, there is evidence that a large part of the funds were concentrated in the assets held by the wealthiest - from property to shares - boosting their value.
QE was a controversial project, not least with European politicians. And it is for political, rather than economic, reasons that it's been ceased: growth across the eurozone is lukewarm.
The ECB isn't removing its support altogether; it will reinvest existing QE money once bonds mature.
But economists question if the ECB may soon have to take further action to stimulate growth and, with interest rates at rock bottom, what shape that will take.
https://www.bbc.co.uk/news/business-46552147
13 December 2018
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Mario DraghiImage copyrightGETTY IMAGES
Image caption
European Central Bank chief Mario Draghi
The European Central Bank has confirmed it is ending its huge net asset purchase programme to stimulate the eurozone economy this month.
The ECB has stopped its bond-buying scheme, worth €30bn a month, despite a recent slowdown in the bloc's recovery.
The move, first announced in June, is a big step towards unwinding the policies brought in to stabilise the eurozone in the wake of the financial crisis.
The ECB said it was keeping its main interest rate on hold at zero per cent.
The ECB began its asset purchase programme in 2015, years after the UK and US took similar action to shore up their economies.
It has so far pumped more than two trillion euros into the bloc's economy, while maintaining ultra-low interest rates.
The bank argues this has countered deflation and staved off a deeper economic crisis, but it has long signalled it would gradually wind the programme down.
BBC graph
Analysis
Dharshini David, economics correspondent
It's official: the ECB has confirmed it will cease its crisis bail-out programme, quantitative easing. It was last of the major central banks to embark on the scheme of pumping funds into the economy via bonds in 2009.
Since then it has injected more than €2tn, intended to be used by financial institutions to boost credit, and so demand across the economy.
Before the financial crisis, QE had been largely untried. Its potential impact was unknown - and is still unclear. In the UK, the Bank of England estimates that funds played a very significant role in boosting activity.
However, there is evidence that a large part of the funds were concentrated in the assets held by the wealthiest - from property to shares - boosting their value.
QE was a controversial project, not least with European politicians. And it is for political, rather than economic, reasons that it's been ceased: growth across the eurozone is lukewarm.
The ECB isn't removing its support altogether; it will reinvest existing QE money once bonds mature.
But economists question if the ECB may soon have to take further action to stimulate growth and, with interest rates at rock bottom, what shape that will take.
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http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
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[html]<blockquote class="twitter-tweet" data-lang="en-gb"><p lang="en" dir="ltr">Someone f***ed up at Sky. <br><br>This guy is an economist & former Syriza supporter (Very Left leaning party that lost power in Greece), they thought he was going to be very pro-EU... he blames Greece's problems on the Euro.<br><br>Even has a warning for our Labour Party!<br><br>Oops. <a href="https://t.co/qM8RUXdOnt">pic.twitter.co ... Ont</a></p>— Richard Lane (@Centrist101) <a href="https://twitter.com/Centrist101/status/ ... c%5Etfw">8 July 2019</a></blockquote>
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Profiting Without Producing: How Finance Exploits Us All -- A lecture by Costas Lapavitsa
[youtube]http://www.youtube.com/watch?v=6GoQWkyVZq4[/youtube]
https://www.youtube.com/watch?v=6GoQWkyVZq4
The lecture by Costas Lapavitsas, Professor of Economics at the School of Oriental and African Studies, University of London celebrates the release by Verso Press of Profiting Without Producing: How Finance Exploits Us All. Lapavitsas explores the roots of the recent economic crisis in terms of "financialization," the most salient feature of which is the rise of financial profit, in part extracted directly from households through financial expropriation, and discusses the options available for controlling finance and resolutions to the current crisis.
The event was moderated by Cornel Ban, Assistant Professor of International Relations at Boston University and a specialist in the political economy of crises and transitions.
Costas Lapavitsas's research interests include the relationship of finance and development, the structure of financial systems, and the evolution and functioning of the Japanese financial system.
The event was jointly sponsored by the Center for the Study of Europe, the Center for the Study of Asia, the Program in East Asian Studies, and the Undergraduate Economics Association at Boston University.
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>[/html]
Profiting Without Producing: How Finance Exploits Us All -- A lecture by Costas Lapavitsa
[youtube]http://www.youtube.com/watch?v=6GoQWkyVZq4[/youtube]
https://www.youtube.com/watch?v=6GoQWkyVZq4
The lecture by Costas Lapavitsas, Professor of Economics at the School of Oriental and African Studies, University of London celebrates the release by Verso Press of Profiting Without Producing: How Finance Exploits Us All. Lapavitsas explores the roots of the recent economic crisis in terms of "financialization," the most salient feature of which is the rise of financial profit, in part extracted directly from households through financial expropriation, and discusses the options available for controlling finance and resolutions to the current crisis.
The event was moderated by Cornel Ban, Assistant Professor of International Relations at Boston University and a specialist in the political economy of crises and transitions.
Costas Lapavitsas's research interests include the relationship of finance and development, the structure of financial systems, and the evolution and functioning of the Japanese financial system.
The event was jointly sponsored by the Center for the Study of Europe, the Center for the Study of Asia, the Program in East Asian Studies, and the Undergraduate Economics Association at Boston University.
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www.thisweek.org.uk
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www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
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www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
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"We can't trust you not to use the period of an election campaign to drive our country off a no-deal cliff edge that will crash our economy, destroy jobs and industries, cause shortages of medicine and food and endanger peace in Northern Ireland.
https://www.bbc.co.uk/news/uk-politics-49998384
https://www.bbc.co.uk/news/uk-politics-49998384
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
- Whitehall_Bin_Men
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The Global Economic Reset Begins With An Engineered Crash
https://www.zerohedge.com/news/2019-03- ... ered-crash
Wed, 13 Mar 2019
Authored by Brandon Smith via Alt-Market.com,
For a few years now, since at least 2014, the phrase “global economic reset� has been circulating in the financial world. This phrase is used primarily by globalist institutions like the International Monetary Fund (IMF) to describe an event in which the current system as we know it will either die out or evolve into a new system where “multilateralism� will become the norm. The reset is often described in an ambiguous way. IMF banking elites will usually mention the end results of the shift, but they say little about the process to get there.
What we do know is that the intent of the globalists is to use this reset to create a more centralized monetary system and micro-managed global economy. At the core of this new structure would be the IMF along with perhaps the BIS and World Bank. It is a plan that has been supported openly by both western and eastern governments, including Russia and China.
As noted, the details are few and far between, but the IMF describes the use of open borders and human migrations during the reset as a means to transfer capital from various parts of the world. It is a novel if not utterly insane way to transfer wealth that only makes sense if you understand that the globalist goal is to deliberately conjure a geopolitical catastrophe.
Synchronized Global Slowdown Is Coming to an End, Leuthold's Paulsen Says
The IMF also asserts that blockchain technology will make capital transfer easier and more efficient in this future environment, which explains the enthusiastic globalist support for developments in blockchain technology and cryptocurrencies despite the notion in cryptocurrency circles that blockchain would somehow make the bankers “obsolete�.
The IMF also acknowledges that in the meantime a slowdown in capital flows has occurred, and that this slowdown is ongoing since the crash of 2008. What they do not explicitly admit is that the crash of 2008 never ended, and that the decline we are witnessing today is merely an extension of the recession/depression that started ten years ago.
Certain facts have become obvious to anyone with any sense over the past year. First, as the Federal Reserve began tightening stimulus policies by raising interest rates and cutting assets from their balance sheet, the global economy began to return to steep declines not seen since the credit crisis. I predicted this outcome in my article 'Party While You Can – Central Bank Ready To Pop The Everything Bubble', published in January of 2018. The plunge has started in almost every sector of the economy, from housing, to autos to credit markets to retail. Now, even jobs, numbers which are highly manipulated to the upside, are beginning to falter.
The assertion in the mainstream media is that this recessionary downturn is new. This is not the case. What began in 2008 was an epic implosion of multiple national economies, and what we are seeing in 2019 is the final culmination of that process - The end game.
It is not a coincidence that the downturn started right after the Fed began tightening stimulus measures in 2017. With only a minor increase in interest rates and moderate cuts to their balance sheet, all the conditions the economy suffered in 2008 are suddenly returning. What this tells us is that the US economy and parts of the global economy cannot survive without constant and ever expanding central bank stimulus.
The moment the stimulus goes away, the crash returns.
Does this mean that central banks will try to keep QE going forever? No, it does not. So far, the Fed has not capitulated at all from the path of tightening. In fact, the Fed nearly doubled its normal balance sheet cuts from January 30th to the end of February, dumping over $65 billion in a 30 day period. The Fed also has not changed its dot plot projections for two more interest rate hikes this year. This means all the talk the past two months of the Fed going “dovish� was nonsense. Setting aside their rhetoric and looking at their actions, the Fed has been as hawkish as ever.
The only people who might find this to be news are most stock market daytraders, who ignore all other failing indicators and seem content to base their economic projections on equities alone. Set aside the fact that stocks plunged in December into near bear market territory. The bounce in January and February has convinced them that the Fed is stepping in and will not allow the economy to tank. But the "plunge protection team" is about to pull the rug out from under their feet after training them like Pavlovian dogs to salivate at the sound of the word "accommodation".
Their mindset is based on a host of incorrect assumptions.
To be clear, while the Fed paid lip service to “accommodation� in their public statements, it was not the central bank that stepped in monetarily to stall falling stocks. That was actually the Chinese central bank, pumping billions in stimulus into global markets at just the right moment.
Chinese stimulus coupled with pension fund buying at the start of this year saved stocks from losses beyond 20%, but markets have met resistance on the way up. Without renewed stimulus measures from the Fed, equities have topped out multiple times and refuse to move towards their previous highs. This suggests that the two month bounce is over, and that stocks will now fall back down to December lows and beyond. If the projections I made in January are correct, then the Dow will fall into the 17,000 - 18,000 point range from the end of March through April.
The facade is slowly but surely melting away, not just in economics, but everywhere. I predicted both the success of the Brexit vote as well as Trump's win in 2016 based on the theory that the globalists would allow or even help populists to gain a political foothold, only to crash the economic system on their heads and then blame them for the disaster. So far my theory is proving correct.
Trump's trade war continues unabated despite claims by many that it would be over quickly. Currently, there are no plans for a March summit between Trump and Xi, and the possibility of a summit anytime soon has come into question as Trump's negotiations with North Korea fell to shambles last month. The negotiations are a farce and are not meant to succeed. I continue to hold to my position that the trade war is a planned distraction and that Trump is playing a role in a globalist scripted drama.
The facade of Donald Trump as a “populist candidate� is quickly ending. His cabinet is loaded with think-tank ghouls and banking elites, so this should come as little surprise. But there are still some analysts out there that naively believe that Trump is playing “4D chess� and that he is not the pied piper he now appears to be. What I see is a president that claimed during his campaign that he would “drain the swamp� of elites, then stacked his cabinet with some of the worst elites in Washington D.C. What I see is a president who argued against Fed stimulus measures and the fake stock market during his campaign, and who now has attached himself to the stock market so completely that any crash will now be blamed on him no matter the facts. What I see is a willing scapegoat; a president that is going to fail on purpose.
In terms of the Brexit, I still predict that there will be a “no deal� event, and that this is by design. The Brexit deal with the EU is slated to be decided in the next few weeks. A “no deal� outcome would be a perfect excuse for a major financial crisis in Europe, which is why I think it will happen. While sovereignty movements in the US will get the blame for the crash through Trump, sovereignty movements in the UK will get the blame for a crash in Europe through Brexit.
It is important to remind the public that this narrative is entirely false.
The economy has been in a state of animated death since 2008. Central bank stimulus acted as a kind of fiscal formaldehyde, keeping the visible signs of the crash at bay for 10 years but also creating a bubble even larger and more destructive than the one before. The “Everything Bubble� has now been primed to explode with maximum damage in mind.
The Fed started the tightening process for a reason; the establishment is ready to start the “global economic reset�, and they have their populist scapegoats in place. The crash in fundamentals returned in mid-2018, and I believe that crash will finally be acknowledged publicly by the media in mid-2019.
The point of it all is described in the very IMF interviews and documents I linked to above – Total centralization of the global economic framework, managed by the IMF. They describe it as “multilateralism� or a “multipolar world order�; this is meant to fool us into believing that the reset is about “decentralization�. It isn't. They intend to move us from one unipolar economic structure to another unipolar economic structure that is even more centralized. That is all.
The crash itself is simply a means to an end. It is a tool to gain fiscal and psychological leverage against the public. The everything bubble was created for a reason. The Fed has tightened into economic weakness over the past year for a reason. The timing of Trump's trade war and summit failures have happened for a reason. The timing of the Brexit chaos is happening now for a reason. The globalists are pulling the plug on economic life support today; the crash is engineered, and sovereignty movements are supposed to take the blame.
The best option at this time is to continuously force the issue of central bank culpability. Liberty activists have to keep the focus on them and their criminal participation in economic sabotage, and we cannot assume that any government or political leader will be friendly to our cause. The globalists have started the crisis, and we must finish it by making sure they are held accountable.
https://www.zerohedge.com/news/2019-03- ... ered-crash
Wed, 13 Mar 2019
Authored by Brandon Smith via Alt-Market.com,
For a few years now, since at least 2014, the phrase “global economic reset� has been circulating in the financial world. This phrase is used primarily by globalist institutions like the International Monetary Fund (IMF) to describe an event in which the current system as we know it will either die out or evolve into a new system where “multilateralism� will become the norm. The reset is often described in an ambiguous way. IMF banking elites will usually mention the end results of the shift, but they say little about the process to get there.
What we do know is that the intent of the globalists is to use this reset to create a more centralized monetary system and micro-managed global economy. At the core of this new structure would be the IMF along with perhaps the BIS and World Bank. It is a plan that has been supported openly by both western and eastern governments, including Russia and China.
As noted, the details are few and far between, but the IMF describes the use of open borders and human migrations during the reset as a means to transfer capital from various parts of the world. It is a novel if not utterly insane way to transfer wealth that only makes sense if you understand that the globalist goal is to deliberately conjure a geopolitical catastrophe.
Synchronized Global Slowdown Is Coming to an End, Leuthold's Paulsen Says
The IMF also asserts that blockchain technology will make capital transfer easier and more efficient in this future environment, which explains the enthusiastic globalist support for developments in blockchain technology and cryptocurrencies despite the notion in cryptocurrency circles that blockchain would somehow make the bankers “obsolete�.
The IMF also acknowledges that in the meantime a slowdown in capital flows has occurred, and that this slowdown is ongoing since the crash of 2008. What they do not explicitly admit is that the crash of 2008 never ended, and that the decline we are witnessing today is merely an extension of the recession/depression that started ten years ago.
Certain facts have become obvious to anyone with any sense over the past year. First, as the Federal Reserve began tightening stimulus policies by raising interest rates and cutting assets from their balance sheet, the global economy began to return to steep declines not seen since the credit crisis. I predicted this outcome in my article 'Party While You Can – Central Bank Ready To Pop The Everything Bubble', published in January of 2018. The plunge has started in almost every sector of the economy, from housing, to autos to credit markets to retail. Now, even jobs, numbers which are highly manipulated to the upside, are beginning to falter.
The assertion in the mainstream media is that this recessionary downturn is new. This is not the case. What began in 2008 was an epic implosion of multiple national economies, and what we are seeing in 2019 is the final culmination of that process - The end game.
It is not a coincidence that the downturn started right after the Fed began tightening stimulus measures in 2017. With only a minor increase in interest rates and moderate cuts to their balance sheet, all the conditions the economy suffered in 2008 are suddenly returning. What this tells us is that the US economy and parts of the global economy cannot survive without constant and ever expanding central bank stimulus.
The moment the stimulus goes away, the crash returns.
Does this mean that central banks will try to keep QE going forever? No, it does not. So far, the Fed has not capitulated at all from the path of tightening. In fact, the Fed nearly doubled its normal balance sheet cuts from January 30th to the end of February, dumping over $65 billion in a 30 day period. The Fed also has not changed its dot plot projections for two more interest rate hikes this year. This means all the talk the past two months of the Fed going “dovish� was nonsense. Setting aside their rhetoric and looking at their actions, the Fed has been as hawkish as ever.
The only people who might find this to be news are most stock market daytraders, who ignore all other failing indicators and seem content to base their economic projections on equities alone. Set aside the fact that stocks plunged in December into near bear market territory. The bounce in January and February has convinced them that the Fed is stepping in and will not allow the economy to tank. But the "plunge protection team" is about to pull the rug out from under their feet after training them like Pavlovian dogs to salivate at the sound of the word "accommodation".
Their mindset is based on a host of incorrect assumptions.
To be clear, while the Fed paid lip service to “accommodation� in their public statements, it was not the central bank that stepped in monetarily to stall falling stocks. That was actually the Chinese central bank, pumping billions in stimulus into global markets at just the right moment.
Chinese stimulus coupled with pension fund buying at the start of this year saved stocks from losses beyond 20%, but markets have met resistance on the way up. Without renewed stimulus measures from the Fed, equities have topped out multiple times and refuse to move towards their previous highs. This suggests that the two month bounce is over, and that stocks will now fall back down to December lows and beyond. If the projections I made in January are correct, then the Dow will fall into the 17,000 - 18,000 point range from the end of March through April.
The facade is slowly but surely melting away, not just in economics, but everywhere. I predicted both the success of the Brexit vote as well as Trump's win in 2016 based on the theory that the globalists would allow or even help populists to gain a political foothold, only to crash the economic system on their heads and then blame them for the disaster. So far my theory is proving correct.
Trump's trade war continues unabated despite claims by many that it would be over quickly. Currently, there are no plans for a March summit between Trump and Xi, and the possibility of a summit anytime soon has come into question as Trump's negotiations with North Korea fell to shambles last month. The negotiations are a farce and are not meant to succeed. I continue to hold to my position that the trade war is a planned distraction and that Trump is playing a role in a globalist scripted drama.
The facade of Donald Trump as a “populist candidate� is quickly ending. His cabinet is loaded with think-tank ghouls and banking elites, so this should come as little surprise. But there are still some analysts out there that naively believe that Trump is playing “4D chess� and that he is not the pied piper he now appears to be. What I see is a president that claimed during his campaign that he would “drain the swamp� of elites, then stacked his cabinet with some of the worst elites in Washington D.C. What I see is a president who argued against Fed stimulus measures and the fake stock market during his campaign, and who now has attached himself to the stock market so completely that any crash will now be blamed on him no matter the facts. What I see is a willing scapegoat; a president that is going to fail on purpose.
In terms of the Brexit, I still predict that there will be a “no deal� event, and that this is by design. The Brexit deal with the EU is slated to be decided in the next few weeks. A “no deal� outcome would be a perfect excuse for a major financial crisis in Europe, which is why I think it will happen. While sovereignty movements in the US will get the blame for the crash through Trump, sovereignty movements in the UK will get the blame for a crash in Europe through Brexit.
It is important to remind the public that this narrative is entirely false.
The economy has been in a state of animated death since 2008. Central bank stimulus acted as a kind of fiscal formaldehyde, keeping the visible signs of the crash at bay for 10 years but also creating a bubble even larger and more destructive than the one before. The “Everything Bubble� has now been primed to explode with maximum damage in mind.
The Fed started the tightening process for a reason; the establishment is ready to start the “global economic reset�, and they have their populist scapegoats in place. The crash in fundamentals returned in mid-2018, and I believe that crash will finally be acknowledged publicly by the media in mid-2019.
The point of it all is described in the very IMF interviews and documents I linked to above – Total centralization of the global economic framework, managed by the IMF. They describe it as “multilateralism� or a “multipolar world order�; this is meant to fool us into believing that the reset is about “decentralization�. It isn't. They intend to move us from one unipolar economic structure to another unipolar economic structure that is even more centralized. That is all.
The crash itself is simply a means to an end. It is a tool to gain fiscal and psychological leverage against the public. The everything bubble was created for a reason. The Fed has tightened into economic weakness over the past year for a reason. The timing of Trump's trade war and summit failures have happened for a reason. The timing of the Brexit chaos is happening now for a reason. The globalists are pulling the plug on economic life support today; the crash is engineered, and sovereignty movements are supposed to take the blame.
The best option at this time is to continuously force the issue of central bank culpability. Liberty activists have to keep the focus on them and their criminal participation in economic sabotage, and we cannot assume that any government or political leader will be friendly to our cause. The globalists have started the crisis, and we must finish it by making sure they are held accountable.
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
- TonyGosling
- Editor
- Posts: 18479
- Joined: Mon Jul 25, 2005 2:03 pm
- Location: St. Pauls, Bristol, England
- Contact:
Ex-Bank Of England boss: UK is neglecting deep problems with economy
[youtube]http://www.youtube.com/watch?v=V-SYCErRu18[/youtube]
https://www.youtube.com/watch?v=V-SYCErRu18
Britain is neglecting deep problems with its economy because of its fixation with Brexit, former Bank of England governor Lord Mervyn King has told Sky News.
Lord King said there would have to be a new election and new parliament to resolve the crisis - and said their Brexit strategy should be "just do it".
Speaking on the fringes of the International Monetary Fund's annual meetings in Washington DC, the former governor warned that the global economy - including the UK - risked becoming trapped in a "great stagnation" with incomes paralysed for years.
World economy is sleepwalking into a new financial crisis, warns Mervyn King
Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss
https://www.theguardian.com/business/20 ... ervyn-king
Larry Elliott: The global economy needs to change fast
Sun 20 Oct 2019 12.42 BSTLast modified on Sun 20 Oct 2019 19.05 BST
Shares
2,527
A full moon rises behind skyscrapers at UK’s banking headquarters at Canary Wharf in east London.
Lord King said resistance to new thinking meant a repeat of the financial chaos of the 2008-09 period was looming. Photograph: Toby Melville/Reuters
The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.
Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.
Giving a lecture in Washington at the annual meeting of the International Monetary Fund, King said there had been no fundamental questioning of the ideas that led to the crisis of a decade ago.
“Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,� he said. “By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.�
UK should leave EU with no deal, says former Bank of England governor
Read more
He added that the US would suffer a “financial armageddon� if its central bank – the Federal Reserve – lacked the necessary firepower to combat another episode similar to the sub-prime mortgage sell-off.
King, Mark Carney’s predecessor as Bank of England governor, said that following the Great Depression of the 1930s there had been new thinking and intellectual change.
“No one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy. That needs to change.�
The former Bank governor said the economic and political climate had rarely been so fraught, citing the US-China trade war, riots in Hong Kong, problems in key emerging countries such as Argentina and Turkey, the growing tensions between France and Germany over the future direction of the euro, and the increasingly bitter political conflict in the US at a time when the willingness of the US to act as the world’s policeman was disappearing.
Lord Mervyn King.
FacebookTwitterPinterest
Lord Mervyn King. Photograph: Murdo Macleod/The Guardian
“Ripples on the surface of our politics have become breaking waves as the winds of change have gained force,� he said.
Advertisement
King said the world economy was stuck in a low growth trap and that the recovery from the slump of 2008-09 was weaker than that after the Great Depression.
“Following the Great Inflation, the Great Stability and the Great Recession, we have entered the Great Stagnation.� King said that in 2013 the former US Treasury secretary Larry Summers had reintroduced the concept of secular stagnation, a permanent period of low growth in which ultra-low interest rates are ineffective: “It is surely now time to admit that we are experiencing it.�
Standard models were unhelpful in two important areas of economic policy – getting the world economy out of its low growth trap, and preparing for the next financial crisis.
Business Today: sign up for a morning shot of financial news
Read more
“Conventional wisdom attributes the stagnation largely to supply factors as the underlying growth rate of productivity appears to have fallen. But data can be interpreted only within a theory or model. And it is surprising that there has been so much resistance to the hypothesis that, not just the United States, but the world as a whole is suffering from demand-led secular stagnation.�
King said the world entered and departed from the global financial crisis with a distorted pattern of demand and output. To escape permanently from a low growth trap involved a reallocation of resources from one component of demand to another, from one sector to another, and from one firm to another.
“There has been excess investment in some parts of the economy – the export sector in China and Germany and commercial property in other advanced economies, for example – and insufficient in others – infrastructure investment in many western countries. To bring about such a shift of resources – both capital and labour – will require a much broader set of policies than simply monetary stimulus.�
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
He added: “It is the failure to face up to the need for action on many policy fronts that has led to the demand stagnation of the past decade. And without action to deal with the structural weaknesses of the global economy, there is a risk of another financial crisis, emanating this time not from the US banking system but from weak financial systems elsewhere.�
Advertisement
King said it was time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians to make legislators aware of how vulnerable they would be in the event of another crisis.
He said: “Congress would be confronted with a choice between financial armageddon and a suspension of some of the rules that were introduced after the last crisis to limit the ability of the Fed to lend.�
[youtube]http://www.youtube.com/watch?v=V-SYCErRu18[/youtube]
https://www.youtube.com/watch?v=V-SYCErRu18
Britain is neglecting deep problems with its economy because of its fixation with Brexit, former Bank of England governor Lord Mervyn King has told Sky News.
Lord King said there would have to be a new election and new parliament to resolve the crisis - and said their Brexit strategy should be "just do it".
Speaking on the fringes of the International Monetary Fund's annual meetings in Washington DC, the former governor warned that the global economy - including the UK - risked becoming trapped in a "great stagnation" with incomes paralysed for years.
World economy is sleepwalking into a new financial crisis, warns Mervyn King
Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss
https://www.theguardian.com/business/20 ... ervyn-king
Larry Elliott: The global economy needs to change fast
Sun 20 Oct 2019 12.42 BSTLast modified on Sun 20 Oct 2019 19.05 BST
Shares
2,527
A full moon rises behind skyscrapers at UK’s banking headquarters at Canary Wharf in east London.
Lord King said resistance to new thinking meant a repeat of the financial chaos of the 2008-09 period was looming. Photograph: Toby Melville/Reuters
The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.
Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.
Giving a lecture in Washington at the annual meeting of the International Monetary Fund, King said there had been no fundamental questioning of the ideas that led to the crisis of a decade ago.
“Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,� he said. “By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.�
UK should leave EU with no deal, says former Bank of England governor
Read more
He added that the US would suffer a “financial armageddon� if its central bank – the Federal Reserve – lacked the necessary firepower to combat another episode similar to the sub-prime mortgage sell-off.
King, Mark Carney’s predecessor as Bank of England governor, said that following the Great Depression of the 1930s there had been new thinking and intellectual change.
“No one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy. That needs to change.�
The former Bank governor said the economic and political climate had rarely been so fraught, citing the US-China trade war, riots in Hong Kong, problems in key emerging countries such as Argentina and Turkey, the growing tensions between France and Germany over the future direction of the euro, and the increasingly bitter political conflict in the US at a time when the willingness of the US to act as the world’s policeman was disappearing.
Lord Mervyn King.
FacebookTwitterPinterest
Lord Mervyn King. Photograph: Murdo Macleod/The Guardian
“Ripples on the surface of our politics have become breaking waves as the winds of change have gained force,� he said.
Advertisement
King said the world economy was stuck in a low growth trap and that the recovery from the slump of 2008-09 was weaker than that after the Great Depression.
“Following the Great Inflation, the Great Stability and the Great Recession, we have entered the Great Stagnation.� King said that in 2013 the former US Treasury secretary Larry Summers had reintroduced the concept of secular stagnation, a permanent period of low growth in which ultra-low interest rates are ineffective: “It is surely now time to admit that we are experiencing it.�
Standard models were unhelpful in two important areas of economic policy – getting the world economy out of its low growth trap, and preparing for the next financial crisis.
Business Today: sign up for a morning shot of financial news
Read more
“Conventional wisdom attributes the stagnation largely to supply factors as the underlying growth rate of productivity appears to have fallen. But data can be interpreted only within a theory or model. And it is surprising that there has been so much resistance to the hypothesis that, not just the United States, but the world as a whole is suffering from demand-led secular stagnation.�
King said the world entered and departed from the global financial crisis with a distorted pattern of demand and output. To escape permanently from a low growth trap involved a reallocation of resources from one component of demand to another, from one sector to another, and from one firm to another.
“There has been excess investment in some parts of the economy – the export sector in China and Germany and commercial property in other advanced economies, for example – and insufficient in others – infrastructure investment in many western countries. To bring about such a shift of resources – both capital and labour – will require a much broader set of policies than simply monetary stimulus.�
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
He added: “It is the failure to face up to the need for action on many policy fronts that has led to the demand stagnation of the past decade. And without action to deal with the structural weaknesses of the global economy, there is a risk of another financial crisis, emanating this time not from the US banking system but from weak financial systems elsewhere.�
Advertisement
King said it was time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians to make legislators aware of how vulnerable they would be in the event of another crisis.
He said: “Congress would be confronted with a choice between financial armageddon and a suspension of some of the rules that were introduced after the last crisis to limit the ability of the Fed to lend.�
www.lawyerscommitteefor9-11inquiry.org
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
- TonyGosling
- Editor
- Posts: 18479
- Joined: Mon Jul 25, 2005 2:03 pm
- Location: St. Pauls, Bristol, England
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Civil unrest around the world is impacting financial markets
In Europe, Asia, Africa, the Middle East and South America, street protests are spooking investors.
https://www.aljazeera.com/ajimpact/civi ... 36887.html
Demonstrators shout slogans during an anti-government protest in Nabatieh, Lebanon, in a scene that could be from any number of current global hot spots
2 days ago
The alarming spread of street protests and civil unrest across the world in recent weeks looms large on the radar of global financial markets, with investors wary that the resulting pressures on stretched government budgets will be one of many consequences.
Money managers and risk analysts seeking a common thread between often unconnected sources of popular anger - from Hong Kong to Beirut and Cairo to Santiago - reckon the unrest is particularly worrying following years of modest economic growth and relatively low joblessness.
If, as many fear, the world is slipping back into its first recession in more than a decade, then the root causes of restive streets will only deepen and force embattled governments to loosen purse strings further to fund better employment, education, healthcare and other services to placate protesters.
More generous fiscal policies in a world already drowning in debt and heading into another downturn may unnerve creditors and bondholders - especially those holding government debt as an insurance against recession and a haven from volatility.
"Protests per se are unpredictable for investors by definition and fit a pattern of rising political risks that have affected market perceptions in almost all geographies," said Standard Chartered Bank strategist Philippe Dauba-Pantanacce.
"Investors will get more nervous when they see that a country's IMF [International Monetary Fund] package or investment promises are conditioned on fiscal consolidation and that the first austerity measures are followed by massive protests."
More broadly, popular pushback against debt reduction and austerity raises serious questions about how mushrooming debt loads can be sustained, even after massive central bank interventions to underwrite it in recent years.
Spreading economic malaise
According to the IMF this month, a global downturn half as severe as the one spurred by the last financial crisis in 2007-2009 would result in $19 trillion of corporate debt being considered "at risk" - defined as debt from firms whose earnings would not cover the cost of their interest payments, let alone pay off the original debt.
Rising bankruptcies would, in turn, risk spurring rising job losses and yet more unrest.
Marc Ostwald, global strategist at ADM Investor Services, said he saw many of the protests as "straws that break the camel's back" - tipping points in a broad swathe of long-standing complaints about inequality, corruption and oppression, variations on the broader themes of populism and anti-globalisation.
But Ostwald said there was a worry for financial markets that have embraced debt piles for years due to central banks printing money and buying bonds.
"At some point, the smothering impact of QE [quantitative easing] will run its course," Ostwald said, as governments "desperately need to borrow money to prop up their economies - particularly as social unrest rises".
Of the dozens of protest movements that have emerged in recent years, here are some of the most prominent ones:
Hong Kong
The restive city-state has been battered by five months of often-violent protests after the Hong Kong government tried to bring in legislation that would have allowed extraditions to mainland China. The plan has been formally withdrawn, but it is unlikely to end the unrest as it meets only one of five demands pro-democracy protesters have made.
On Tuesday, authorities announced $255m in relief measures for the city's economy - particularly in its transport, tourism and retail industries. This followed a more sizeable $2.4bn package in August to support underprivileged people and businesses.
The Hang Seng, one of Asia's most prominent share markets, is down 12 percent since the protests started. Although it has been recovering some ground over the last two months, it has continued to lag behind other major markets.
Lebanon
Hundreds of thousands of people have been flooding the streets of Lebanon for nearly two weeks, furious at a political class they accuse of pushing the economy to the point of collapse.
Prime Minister Saad Hariri announced on Monday a symbolic halving of the salaries of ministers and lawmakers, as well as steps towards implementing long-delayed measures vital to fixing the finances of the heavily indebted state.
Markets are increasingly worried it will all end in default. The government's bonds are now selling at a 40 percent discount, as credit default swaps - which investors use as insurance against those risks - have soared.
Iraq
Similar factors were behind deadly civil unrest in Iraq that flared in early October. More than 100 people died in violent protests across a country where many citizens, especially young people, felt they had seen few economic benefits since fighters from the ISIL group were defeated in 2017.
The government responded with a 17-point plan to increase subsidised housing for the poor and stipends for the unemployed, as well as training programmes and small loans initiatives for unemployed youth.
Egypt
Protests against President Abdel Fattah el-Sisi broke out in Cairo and other cities across Egypt in September following online calls for demonstrations against alleged government corruption, as well as recent austerity-focused measures.
Protests are rare under the former army chief, and about 3,400 people have been arrested since they began, including about 300 protesters who have since been released, according to the Egyptian Commission for Rights and Freedoms, an independent body.
The country's main stock market dropped 10 percent over three days as the demonstrations kicked off, although it has since recovered over half of that ground.
Beginning in late 2010, anti-government protests roiled Tunisia. By early 2011, they had spread into what became known as the Arab Spring wave of protests and uprisings, which ended up toppling not only Tunisia's leader but those of Egypt, Libya and Yemen, too. The uprising in Syria developed into a civil war that continues to be waged today.
Ethiopia
A total of 16 people have been killed in at least four cities since fierce clashes broke out on Wednesday against the reformist policies of Nobel Prize-winning Prime Minister Abiy Ahmed.
The greater freedoms that those policies bring have unleashed long-repressed tensions between Ethiopia's many ethnic groups, as local politicians claim more resources, power and land for their own regions. Ethiopia is due to hold elections next year.
Chile
At least 15 people have died in Chile in protests that started over a hike in public transport costs, but have grown to reflect simmering anger over intense economic inequality as well as costly health, education and pension systems seen by many as inadequate.
Chilean President Sebastian Pinera announced an ambitious raft of measures on Tuesday aimed at quelling the unrest - including a guaranteed minimum wage, a hike in the state pension offering and the stabilisation of electricity costs.
Ecuador
Violent protests at the start of October forced Ecuadorean President Lenin Moreno to scrap his own law to cut expensive fuel subsidies that have been in place for four decades.
Ecuador had estimated the cuts would have freed up nearly $1.5bn per year in the government budget, helping to shrink the fiscal deficit as part of a $4.2bn IMF loan deal that Moreno had signed.
Bolivia
Mass protests and marches broke out in Bolivia this week after the opposition said that vote-counting in the country's presidential election over the weekend was rigged in favour of current leader Evo Morales.
The unrest - already the biggest test of Morales's rule since he came to power in 2006 - could spread if his declaration of outright victory is confirmed. Monitors, foreign governments and the opposition already called for a second-round vote.
France
The Gilets Jaunes movement named after the fluorescent yellow safety vests that all French motorists must carry began a year ago to oppose fuel-tax increases, but quickly morphed into a broader backlash against President Emmanuel Macron, rising economic inequality and climate change.
Macron swiftly reversed the tax hikes and announced a range of other measures worth more than 10 billion euros ($11.1bn) to boost the purchasing power of lower-income voters in France. That was followed up with another package of tax cuts in April.
Extinction Rebellion
This London-bred movement is pushing for political, economic and social changes to avert the worst devastation of climate change. Extinction Rebellion protesters began blockading streets and occupying prominent public spaces late last year.
Following 11 days of back-to-back protests in April, the United Kingdom government symbolically declared a "climate emergency". The movement is developing alongside the growing #FridaysForFuture movement led by Swedish teenager Greta Thunberg and prompting schoolchildren to boycott class on Fridays.
Global warming protests have been particularly strong in Germany, where the government there recently launched a policy specifying that any spending pushing the government's budget into deficit must be on climate-focused investments.
Incoming European Commission President Ursula von der Leyen has also introduced an ambitious European Green Deal that would include the support of 1 trillion euros ($1.11 trillion) in sustainable investments across the bloc.
In Europe, Asia, Africa, the Middle East and South America, street protests are spooking investors.
https://www.aljazeera.com/ajimpact/civi ... 36887.html
Demonstrators shout slogans during an anti-government protest in Nabatieh, Lebanon, in a scene that could be from any number of current global hot spots
2 days ago
The alarming spread of street protests and civil unrest across the world in recent weeks looms large on the radar of global financial markets, with investors wary that the resulting pressures on stretched government budgets will be one of many consequences.
Money managers and risk analysts seeking a common thread between often unconnected sources of popular anger - from Hong Kong to Beirut and Cairo to Santiago - reckon the unrest is particularly worrying following years of modest economic growth and relatively low joblessness.
If, as many fear, the world is slipping back into its first recession in more than a decade, then the root causes of restive streets will only deepen and force embattled governments to loosen purse strings further to fund better employment, education, healthcare and other services to placate protesters.
More generous fiscal policies in a world already drowning in debt and heading into another downturn may unnerve creditors and bondholders - especially those holding government debt as an insurance against recession and a haven from volatility.
"Protests per se are unpredictable for investors by definition and fit a pattern of rising political risks that have affected market perceptions in almost all geographies," said Standard Chartered Bank strategist Philippe Dauba-Pantanacce.
"Investors will get more nervous when they see that a country's IMF [International Monetary Fund] package or investment promises are conditioned on fiscal consolidation and that the first austerity measures are followed by massive protests."
More broadly, popular pushback against debt reduction and austerity raises serious questions about how mushrooming debt loads can be sustained, even after massive central bank interventions to underwrite it in recent years.
Spreading economic malaise
According to the IMF this month, a global downturn half as severe as the one spurred by the last financial crisis in 2007-2009 would result in $19 trillion of corporate debt being considered "at risk" - defined as debt from firms whose earnings would not cover the cost of their interest payments, let alone pay off the original debt.
Rising bankruptcies would, in turn, risk spurring rising job losses and yet more unrest.
Marc Ostwald, global strategist at ADM Investor Services, said he saw many of the protests as "straws that break the camel's back" - tipping points in a broad swathe of long-standing complaints about inequality, corruption and oppression, variations on the broader themes of populism and anti-globalisation.
But Ostwald said there was a worry for financial markets that have embraced debt piles for years due to central banks printing money and buying bonds.
"At some point, the smothering impact of QE [quantitative easing] will run its course," Ostwald said, as governments "desperately need to borrow money to prop up their economies - particularly as social unrest rises".
Of the dozens of protest movements that have emerged in recent years, here are some of the most prominent ones:
Hong Kong
The restive city-state has been battered by five months of often-violent protests after the Hong Kong government tried to bring in legislation that would have allowed extraditions to mainland China. The plan has been formally withdrawn, but it is unlikely to end the unrest as it meets only one of five demands pro-democracy protesters have made.
On Tuesday, authorities announced $255m in relief measures for the city's economy - particularly in its transport, tourism and retail industries. This followed a more sizeable $2.4bn package in August to support underprivileged people and businesses.
The Hang Seng, one of Asia's most prominent share markets, is down 12 percent since the protests started. Although it has been recovering some ground over the last two months, it has continued to lag behind other major markets.
Lebanon
Hundreds of thousands of people have been flooding the streets of Lebanon for nearly two weeks, furious at a political class they accuse of pushing the economy to the point of collapse.
Prime Minister Saad Hariri announced on Monday a symbolic halving of the salaries of ministers and lawmakers, as well as steps towards implementing long-delayed measures vital to fixing the finances of the heavily indebted state.
Markets are increasingly worried it will all end in default. The government's bonds are now selling at a 40 percent discount, as credit default swaps - which investors use as insurance against those risks - have soared.
Iraq
Similar factors were behind deadly civil unrest in Iraq that flared in early October. More than 100 people died in violent protests across a country where many citizens, especially young people, felt they had seen few economic benefits since fighters from the ISIL group were defeated in 2017.
The government responded with a 17-point plan to increase subsidised housing for the poor and stipends for the unemployed, as well as training programmes and small loans initiatives for unemployed youth.
Egypt
Protests against President Abdel Fattah el-Sisi broke out in Cairo and other cities across Egypt in September following online calls for demonstrations against alleged government corruption, as well as recent austerity-focused measures.
Protests are rare under the former army chief, and about 3,400 people have been arrested since they began, including about 300 protesters who have since been released, according to the Egyptian Commission for Rights and Freedoms, an independent body.
The country's main stock market dropped 10 percent over three days as the demonstrations kicked off, although it has since recovered over half of that ground.
Beginning in late 2010, anti-government protests roiled Tunisia. By early 2011, they had spread into what became known as the Arab Spring wave of protests and uprisings, which ended up toppling not only Tunisia's leader but those of Egypt, Libya and Yemen, too. The uprising in Syria developed into a civil war that continues to be waged today.
Ethiopia
A total of 16 people have been killed in at least four cities since fierce clashes broke out on Wednesday against the reformist policies of Nobel Prize-winning Prime Minister Abiy Ahmed.
The greater freedoms that those policies bring have unleashed long-repressed tensions between Ethiopia's many ethnic groups, as local politicians claim more resources, power and land for their own regions. Ethiopia is due to hold elections next year.
Chile
At least 15 people have died in Chile in protests that started over a hike in public transport costs, but have grown to reflect simmering anger over intense economic inequality as well as costly health, education and pension systems seen by many as inadequate.
Chilean President Sebastian Pinera announced an ambitious raft of measures on Tuesday aimed at quelling the unrest - including a guaranteed minimum wage, a hike in the state pension offering and the stabilisation of electricity costs.
Ecuador
Violent protests at the start of October forced Ecuadorean President Lenin Moreno to scrap his own law to cut expensive fuel subsidies that have been in place for four decades.
Ecuador had estimated the cuts would have freed up nearly $1.5bn per year in the government budget, helping to shrink the fiscal deficit as part of a $4.2bn IMF loan deal that Moreno had signed.
Bolivia
Mass protests and marches broke out in Bolivia this week after the opposition said that vote-counting in the country's presidential election over the weekend was rigged in favour of current leader Evo Morales.
The unrest - already the biggest test of Morales's rule since he came to power in 2006 - could spread if his declaration of outright victory is confirmed. Monitors, foreign governments and the opposition already called for a second-round vote.
France
The Gilets Jaunes movement named after the fluorescent yellow safety vests that all French motorists must carry began a year ago to oppose fuel-tax increases, but quickly morphed into a broader backlash against President Emmanuel Macron, rising economic inequality and climate change.
Macron swiftly reversed the tax hikes and announced a range of other measures worth more than 10 billion euros ($11.1bn) to boost the purchasing power of lower-income voters in France. That was followed up with another package of tax cuts in April.
Extinction Rebellion
This London-bred movement is pushing for political, economic and social changes to avert the worst devastation of climate change. Extinction Rebellion protesters began blockading streets and occupying prominent public spaces late last year.
Following 11 days of back-to-back protests in April, the United Kingdom government symbolically declared a "climate emergency". The movement is developing alongside the growing #FridaysForFuture movement led by Swedish teenager Greta Thunberg and prompting schoolchildren to boycott class on Fridays.
Global warming protests have been particularly strong in Germany, where the government there recently launched a policy specifying that any spending pushing the government's budget into deficit must be on climate-focused investments.
Incoming European Commission President Ursula von der Leyen has also introduced an ambitious European Green Deal that would include the support of 1 trillion euros ($1.11 trillion) in sustainable investments across the bloc.
www.lawyerscommitteefor9-11inquiry.org
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
- TonyGosling
- Editor
- Posts: 18479
- Joined: Mon Jul 25, 2005 2:03 pm
- Location: St. Pauls, Bristol, England
- Contact:
Civil unrest around the world is impacting financial markets
In Europe, Asia, Africa, the Middle East and South America, street protests are spooking investors.
https://www.aljazeera.com/ajimpact/civi ... 36887.html
Demonstrators shout slogans during an anti-government protest in Nabatieh, Lebanon, in a scene that could be from any number of current global hot spots
2 days ago
The alarming spread of street protests and civil unrest across the world in recent weeks looms large on the radar of global financial markets, with investors wary that the resulting pressures on stretched government budgets will be one of many consequences.
Money managers and risk analysts seeking a common thread between often unconnected sources of popular anger - from Hong Kong to Beirut and Cairo to Santiago - reckon the unrest is particularly worrying following years of modest economic growth and relatively low joblessness.
If, as many fear, the world is slipping back into its first recession in more than a decade, then the root causes of restive streets will only deepen and force embattled governments to loosen purse strings further to fund better employment, education, healthcare and other services to placate protesters.
More generous fiscal policies in a world already drowning in debt and heading into another downturn may unnerve creditors and bondholders - especially those holding government debt as an insurance against recession and a haven from volatility.
"Protests per se are unpredictable for investors by definition and fit a pattern of rising political risks that have affected market perceptions in almost all geographies," said Standard Chartered Bank strategist Philippe Dauba-Pantanacce.
"Investors will get more nervous when they see that a country's IMF [International Monetary Fund] package or investment promises are conditioned on fiscal consolidation and that the first austerity measures are followed by massive protests."
More broadly, popular pushback against debt reduction and austerity raises serious questions about how mushrooming debt loads can be sustained, even after massive central bank interventions to underwrite it in recent years.
Spreading economic malaise
According to the IMF this month, a global downturn half as severe as the one spurred by the last financial crisis in 2007-2009 would result in $19 trillion of corporate debt being considered "at risk" - defined as debt from firms whose earnings would not cover the cost of their interest payments, let alone pay off the original debt.
Rising bankruptcies would, in turn, risk spurring rising job losses and yet more unrest.
Marc Ostwald, global strategist at ADM Investor Services, said he saw many of the protests as "straws that break the camel's back" - tipping points in a broad swathe of long-standing complaints about inequality, corruption and oppression, variations on the broader themes of populism and anti-globalisation.
But Ostwald said there was a worry for financial markets that have embraced debt piles for years due to central banks printing money and buying bonds.
"At some point, the smothering impact of QE [quantitative easing] will run its course," Ostwald said, as governments "desperately need to borrow money to prop up their economies - particularly as social unrest rises".
Of the dozens of protest movements that have emerged in recent years, here are some of the most prominent ones:
Hong Kong
The restive city-state has been battered by five months of often-violent protests after the Hong Kong government tried to bring in legislation that would have allowed extraditions to mainland China. The plan has been formally withdrawn, but it is unlikely to end the unrest as it meets only one of five demands pro-democracy protesters have made.
On Tuesday, authorities announced $255m in relief measures for the city's economy - particularly in its transport, tourism and retail industries. This followed a more sizeable $2.4bn package in August to support underprivileged people and businesses.
The Hang Seng, one of Asia's most prominent share markets, is down 12 percent since the protests started. Although it has been recovering some ground over the last two months, it has continued to lag behind other major markets.
Lebanon
Hundreds of thousands of people have been flooding the streets of Lebanon for nearly two weeks, furious at a political class they accuse of pushing the economy to the point of collapse.
Prime Minister Saad Hariri announced on Monday a symbolic halving of the salaries of ministers and lawmakers, as well as steps towards implementing long-delayed measures vital to fixing the finances of the heavily indebted state.
Markets are increasingly worried it will all end in default. The government's bonds are now selling at a 40 percent discount, as credit default swaps - which investors use as insurance against those risks - have soared.
Iraq
Similar factors were behind deadly civil unrest in Iraq that flared in early October. More than 100 people died in violent protests across a country where many citizens, especially young people, felt they had seen few economic benefits since fighters from the ISIL group were defeated in 2017.
The government responded with a 17-point plan to increase subsidised housing for the poor and stipends for the unemployed, as well as training programmes and small loans initiatives for unemployed youth.
Egypt
Protests against President Abdel Fattah el-Sisi broke out in Cairo and other cities across Egypt in September following online calls for demonstrations against alleged government corruption, as well as recent austerity-focused measures.
Protests are rare under the former army chief, and about 3,400 people have been arrested since they began, including about 300 protesters who have since been released, according to the Egyptian Commission for Rights and Freedoms, an independent body.
The country's main stock market dropped 10 percent over three days as the demonstrations kicked off, although it has since recovered over half of that ground.
Beginning in late 2010, anti-government protests roiled Tunisia. By early 2011, they had spread into what became known as the Arab Spring wave of protests and uprisings, which ended up toppling not only Tunisia's leader but those of Egypt, Libya and Yemen, too. The uprising in Syria developed into a civil war that continues to be waged today.
Ethiopia
A total of 16 people have been killed in at least four cities since fierce clashes broke out on Wednesday against the reformist policies of Nobel Prize-winning Prime Minister Abiy Ahmed.
The greater freedoms that those policies bring have unleashed long-repressed tensions between Ethiopia's many ethnic groups, as local politicians claim more resources, power and land for their own regions. Ethiopia is due to hold elections next year.
Chile
At least 15 people have died in Chile in protests that started over a hike in public transport costs, but have grown to reflect simmering anger over intense economic inequality as well as costly health, education and pension systems seen by many as inadequate.
Chilean President Sebastian Pinera announced an ambitious raft of measures on Tuesday aimed at quelling the unrest - including a guaranteed minimum wage, a hike in the state pension offering and the stabilisation of electricity costs.
Ecuador
Violent protests at the start of October forced Ecuadorean President Lenin Moreno to scrap his own law to cut expensive fuel subsidies that have been in place for four decades.
Ecuador had estimated the cuts would have freed up nearly $1.5bn per year in the government budget, helping to shrink the fiscal deficit as part of a $4.2bn IMF loan deal that Moreno had signed.
Bolivia
Mass protests and marches broke out in Bolivia this week after the opposition said that vote-counting in the country's presidential election over the weekend was rigged in favour of current leader Evo Morales.
The unrest - already the biggest test of Morales's rule since he came to power in 2006 - could spread if his declaration of outright victory is confirmed. Monitors, foreign governments and the opposition already called for a second-round vote.
France
The Gilets Jaunes movement named after the fluorescent yellow safety vests that all French motorists must carry began a year ago to oppose fuel-tax increases, but quickly morphed into a broader backlash against President Emmanuel Macron, rising economic inequality and climate change.
Macron swiftly reversed the tax hikes and announced a range of other measures worth more than 10 billion euros ($11.1bn) to boost the purchasing power of lower-income voters in France. That was followed up with another package of tax cuts in April.
Extinction Rebellion
This London-bred movement is pushing for political, economic and social changes to avert the worst devastation of climate change. Extinction Rebellion protesters began blockading streets and occupying prominent public spaces late last year.
Following 11 days of back-to-back protests in April, the United Kingdom government symbolically declared a "climate emergency". The movement is developing alongside the growing #FridaysForFuture movement led by Swedish teenager Greta Thunberg and prompting schoolchildren to boycott class on Fridays.
Global warming protests have been particularly strong in Germany, where the government there recently launched a policy specifying that any spending pushing the government's budget into deficit must be on climate-focused investments.
Incoming European Commission President Ursula von der Leyen has also introduced an ambitious European Green Deal that would include the support of 1 trillion euros ($1.11 trillion) in sustainable investments across the bloc.
In Europe, Asia, Africa, the Middle East and South America, street protests are spooking investors.
https://www.aljazeera.com/ajimpact/civi ... 36887.html
Demonstrators shout slogans during an anti-government protest in Nabatieh, Lebanon, in a scene that could be from any number of current global hot spots
2 days ago
The alarming spread of street protests and civil unrest across the world in recent weeks looms large on the radar of global financial markets, with investors wary that the resulting pressures on stretched government budgets will be one of many consequences.
Money managers and risk analysts seeking a common thread between often unconnected sources of popular anger - from Hong Kong to Beirut and Cairo to Santiago - reckon the unrest is particularly worrying following years of modest economic growth and relatively low joblessness.
If, as many fear, the world is slipping back into its first recession in more than a decade, then the root causes of restive streets will only deepen and force embattled governments to loosen purse strings further to fund better employment, education, healthcare and other services to placate protesters.
More generous fiscal policies in a world already drowning in debt and heading into another downturn may unnerve creditors and bondholders - especially those holding government debt as an insurance against recession and a haven from volatility.
"Protests per se are unpredictable for investors by definition and fit a pattern of rising political risks that have affected market perceptions in almost all geographies," said Standard Chartered Bank strategist Philippe Dauba-Pantanacce.
"Investors will get more nervous when they see that a country's IMF [International Monetary Fund] package or investment promises are conditioned on fiscal consolidation and that the first austerity measures are followed by massive protests."
More broadly, popular pushback against debt reduction and austerity raises serious questions about how mushrooming debt loads can be sustained, even after massive central bank interventions to underwrite it in recent years.
Spreading economic malaise
According to the IMF this month, a global downturn half as severe as the one spurred by the last financial crisis in 2007-2009 would result in $19 trillion of corporate debt being considered "at risk" - defined as debt from firms whose earnings would not cover the cost of their interest payments, let alone pay off the original debt.
Rising bankruptcies would, in turn, risk spurring rising job losses and yet more unrest.
Marc Ostwald, global strategist at ADM Investor Services, said he saw many of the protests as "straws that break the camel's back" - tipping points in a broad swathe of long-standing complaints about inequality, corruption and oppression, variations on the broader themes of populism and anti-globalisation.
But Ostwald said there was a worry for financial markets that have embraced debt piles for years due to central banks printing money and buying bonds.
"At some point, the smothering impact of QE [quantitative easing] will run its course," Ostwald said, as governments "desperately need to borrow money to prop up their economies - particularly as social unrest rises".
Of the dozens of protest movements that have emerged in recent years, here are some of the most prominent ones:
Hong Kong
The restive city-state has been battered by five months of often-violent protests after the Hong Kong government tried to bring in legislation that would have allowed extraditions to mainland China. The plan has been formally withdrawn, but it is unlikely to end the unrest as it meets only one of five demands pro-democracy protesters have made.
On Tuesday, authorities announced $255m in relief measures for the city's economy - particularly in its transport, tourism and retail industries. This followed a more sizeable $2.4bn package in August to support underprivileged people and businesses.
The Hang Seng, one of Asia's most prominent share markets, is down 12 percent since the protests started. Although it has been recovering some ground over the last two months, it has continued to lag behind other major markets.
Lebanon
Hundreds of thousands of people have been flooding the streets of Lebanon for nearly two weeks, furious at a political class they accuse of pushing the economy to the point of collapse.
Prime Minister Saad Hariri announced on Monday a symbolic halving of the salaries of ministers and lawmakers, as well as steps towards implementing long-delayed measures vital to fixing the finances of the heavily indebted state.
Markets are increasingly worried it will all end in default. The government's bonds are now selling at a 40 percent discount, as credit default swaps - which investors use as insurance against those risks - have soared.
Iraq
Similar factors were behind deadly civil unrest in Iraq that flared in early October. More than 100 people died in violent protests across a country where many citizens, especially young people, felt they had seen few economic benefits since fighters from the ISIL group were defeated in 2017.
The government responded with a 17-point plan to increase subsidised housing for the poor and stipends for the unemployed, as well as training programmes and small loans initiatives for unemployed youth.
Egypt
Protests against President Abdel Fattah el-Sisi broke out in Cairo and other cities across Egypt in September following online calls for demonstrations against alleged government corruption, as well as recent austerity-focused measures.
Protests are rare under the former army chief, and about 3,400 people have been arrested since they began, including about 300 protesters who have since been released, according to the Egyptian Commission for Rights and Freedoms, an independent body.
The country's main stock market dropped 10 percent over three days as the demonstrations kicked off, although it has since recovered over half of that ground.
Beginning in late 2010, anti-government protests roiled Tunisia. By early 2011, they had spread into what became known as the Arab Spring wave of protests and uprisings, which ended up toppling not only Tunisia's leader but those of Egypt, Libya and Yemen, too. The uprising in Syria developed into a civil war that continues to be waged today.
Ethiopia
A total of 16 people have been killed in at least four cities since fierce clashes broke out on Wednesday against the reformist policies of Nobel Prize-winning Prime Minister Abiy Ahmed.
The greater freedoms that those policies bring have unleashed long-repressed tensions between Ethiopia's many ethnic groups, as local politicians claim more resources, power and land for their own regions. Ethiopia is due to hold elections next year.
Chile
At least 15 people have died in Chile in protests that started over a hike in public transport costs, but have grown to reflect simmering anger over intense economic inequality as well as costly health, education and pension systems seen by many as inadequate.
Chilean President Sebastian Pinera announced an ambitious raft of measures on Tuesday aimed at quelling the unrest - including a guaranteed minimum wage, a hike in the state pension offering and the stabilisation of electricity costs.
Ecuador
Violent protests at the start of October forced Ecuadorean President Lenin Moreno to scrap his own law to cut expensive fuel subsidies that have been in place for four decades.
Ecuador had estimated the cuts would have freed up nearly $1.5bn per year in the government budget, helping to shrink the fiscal deficit as part of a $4.2bn IMF loan deal that Moreno had signed.
Bolivia
Mass protests and marches broke out in Bolivia this week after the opposition said that vote-counting in the country's presidential election over the weekend was rigged in favour of current leader Evo Morales.
The unrest - already the biggest test of Morales's rule since he came to power in 2006 - could spread if his declaration of outright victory is confirmed. Monitors, foreign governments and the opposition already called for a second-round vote.
France
The Gilets Jaunes movement named after the fluorescent yellow safety vests that all French motorists must carry began a year ago to oppose fuel-tax increases, but quickly morphed into a broader backlash against President Emmanuel Macron, rising economic inequality and climate change.
Macron swiftly reversed the tax hikes and announced a range of other measures worth more than 10 billion euros ($11.1bn) to boost the purchasing power of lower-income voters in France. That was followed up with another package of tax cuts in April.
Extinction Rebellion
This London-bred movement is pushing for political, economic and social changes to avert the worst devastation of climate change. Extinction Rebellion protesters began blockading streets and occupying prominent public spaces late last year.
Following 11 days of back-to-back protests in April, the United Kingdom government symbolically declared a "climate emergency". The movement is developing alongside the growing #FridaysForFuture movement led by Swedish teenager Greta Thunberg and prompting schoolchildren to boycott class on Fridays.
Global warming protests have been particularly strong in Germany, where the government there recently launched a policy specifying that any spending pushing the government's budget into deficit must be on climate-focused investments.
Incoming European Commission President Ursula von der Leyen has also introduced an ambitious European Green Deal that would include the support of 1 trillion euros ($1.11 trillion) in sustainable investments across the bloc.
www.lawyerscommitteefor9-11inquiry.org
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
- TonyGosling
- Editor
- Posts: 18479
- Joined: Mon Jul 25, 2005 2:03 pm
- Location: St. Pauls, Bristol, England
- Contact:
Stimulus Bill Allows Federal Reserve to Conduct Meetings in Secret; Gives Fed $454 Billion Slush Fund for Wall Street Bailouts
https://wallstreetonparade.com/2020/03/ ... -bailouts/
By Pam Martens and Russ Martens: March 26, 2020 ~
The U.S. Senate voted 96-0 late yesterday on a massive bailout of Wall Street banks versus a short-term survival plan for American workers thrown out of their jobs – and potentially their homes. The text of the final bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people. The House of Representatives has yet to vote on the bill.
The bill provides specific sums that can be made as loans or loan guarantees to passenger airlines ($25 billion), cargo airlines ($4 billion), and loans and loan guarantees to businesses necessary to national security ($17 billion). But when it comes to the money going to the Federal Reserve and then out the door to Wall Street, the legislation says only this:
“Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….”
Why does the Federal Reserve need $454 billion from the U.S. taxpayer to bail out Wall Street when it has the power to create money out of thin air and has already dumped more than $9 trillion cumulatively in revolving loans to prop up Wall Street’s trading houses since September 17, 2019 – long before there was any diagnosis of coronavirus anywhere in the world.
The Fed needs that money to create more Special Purpose Vehicles (SPVs) — the same device used by Enron to hide its toxic debt off its balance sheet before it went belly up. With the taxpayers’ money taking a 10 percent stake in the various Wall Street bailout programs offered by the Fed, structured as SPVs, the Fed can keep these dark pools off its balance sheet while levering them up 10-fold.
White House Economic Adviser Larry Kudlow acknowledged plans by the Fed to leverage the money at a White House press briefing this week, stating that the money the Treasury is handing over to the Fed would result in “$4 trillion in Federal Reserve lending power.”
The Fed has already created one of these SPVs. On March 17, the Fed said it was creating a Commercial Paper Funding Facility (CPFF) that would work like this:
“The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund (ESF). The Federal Reserve will then provide financing to the SPV under the CPFF. Its loans will be secured by all of the assets of the SPV.”
The Fed also used SPVs during the 2007-2010 financial crisis to buy toxic debt from Bear Stearns to facilitate its takeover by JPMorgan Chase and to prop up AIG, a giant insurer that had gorged on Wall Street’s tricked-up derivatives. Those programs became known as Maiden Lane I, II and III.
Adding to the suspicions that the Fed doesn’t want to have to battle Freedom of Information Act (FOIA) requests (sunshine law requests) again in court, as it did and lost during the last financial crisis to keep its outrageous $29 trillion bailout program to Wall Street a secret from the public, the Senate-approved stimulus bill repeals the sunshine law for the Fed’s meetings until the President says the coronavirus threat is over or the end of this year. That could make any FOIA lawsuits to unleash details of what’s going on next to impossible since it has been codified in a federal law. The bill states the following:
SEC. 4009. TEMPORARY GOVERNMENT IN THE SUNSHINE ACT RELIEF. (a) IN GENERAL.—Except as provided in subsection 8 (b), notwithstanding any other provision of law, if the Chairman of the Board of Governors of the Federal Reserve System determines, in writing, that unusual and exigent circumstances exist, the Board may conduct meetings without regard to the requirements of section 552b of title 5, United States Code, during the period beginning on the date of enactment of this Act and ending on the earlier of— (1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 20 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.
This could mean that the American taxpayer may never learn why it went into debt to the tune of $454 billion if no records are being maintained.
Wall Street’s mega banks and their primary regulator, the Federal Reserve, are no longer just a threat to the safety and soundness of the U.S. banking system — together they are an unparalleled and unprecedented threat to the idea of democracy as we understand it.
We find it difficult to believe that Senators Bernie Sanders, Elizabeth Warren, Sherrod Brown and Jeff Merkley would vote in favor of this legislation – given their in-depth knowledge of what the Fed did during the last financial crisis. The public deserves an honest explanation from each of them.
https://wallstreetonparade.com/2020/03/ ... -bailouts/
By Pam Martens and Russ Martens: March 26, 2020 ~
The U.S. Senate voted 96-0 late yesterday on a massive bailout of Wall Street banks versus a short-term survival plan for American workers thrown out of their jobs – and potentially their homes. The text of the final bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people. The House of Representatives has yet to vote on the bill.
The bill provides specific sums that can be made as loans or loan guarantees to passenger airlines ($25 billion), cargo airlines ($4 billion), and loans and loan guarantees to businesses necessary to national security ($17 billion). But when it comes to the money going to the Federal Reserve and then out the door to Wall Street, the legislation says only this:
“Not more than the sum of $454,000,000,000…shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system….”
Why does the Federal Reserve need $454 billion from the U.S. taxpayer to bail out Wall Street when it has the power to create money out of thin air and has already dumped more than $9 trillion cumulatively in revolving loans to prop up Wall Street’s trading houses since September 17, 2019 – long before there was any diagnosis of coronavirus anywhere in the world.
The Fed needs that money to create more Special Purpose Vehicles (SPVs) — the same device used by Enron to hide its toxic debt off its balance sheet before it went belly up. With the taxpayers’ money taking a 10 percent stake in the various Wall Street bailout programs offered by the Fed, structured as SPVs, the Fed can keep these dark pools off its balance sheet while levering them up 10-fold.
White House Economic Adviser Larry Kudlow acknowledged plans by the Fed to leverage the money at a White House press briefing this week, stating that the money the Treasury is handing over to the Fed would result in “$4 trillion in Federal Reserve lending power.”
The Fed has already created one of these SPVs. On March 17, the Fed said it was creating a Commercial Paper Funding Facility (CPFF) that would work like this:
“The Treasury will provide $10 billion of credit protection to the Federal Reserve in connection with the CPFF from the Treasury’s Exchange Stabilization Fund (ESF). The Federal Reserve will then provide financing to the SPV under the CPFF. Its loans will be secured by all of the assets of the SPV.”
The Fed also used SPVs during the 2007-2010 financial crisis to buy toxic debt from Bear Stearns to facilitate its takeover by JPMorgan Chase and to prop up AIG, a giant insurer that had gorged on Wall Street’s tricked-up derivatives. Those programs became known as Maiden Lane I, II and III.
Adding to the suspicions that the Fed doesn’t want to have to battle Freedom of Information Act (FOIA) requests (sunshine law requests) again in court, as it did and lost during the last financial crisis to keep its outrageous $29 trillion bailout program to Wall Street a secret from the public, the Senate-approved stimulus bill repeals the sunshine law for the Fed’s meetings until the President says the coronavirus threat is over or the end of this year. That could make any FOIA lawsuits to unleash details of what’s going on next to impossible since it has been codified in a federal law. The bill states the following:
SEC. 4009. TEMPORARY GOVERNMENT IN THE SUNSHINE ACT RELIEF. (a) IN GENERAL.—Except as provided in subsection 8 (b), notwithstanding any other provision of law, if the Chairman of the Board of Governors of the Federal Reserve System determines, in writing, that unusual and exigent circumstances exist, the Board may conduct meetings without regard to the requirements of section 552b of title 5, United States Code, during the period beginning on the date of enactment of this Act and ending on the earlier of— (1) the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 20 U.S.C. 1601 et seq.) terminates; or (2) December 31, 2020.
This could mean that the American taxpayer may never learn why it went into debt to the tune of $454 billion if no records are being maintained.
Wall Street’s mega banks and their primary regulator, the Federal Reserve, are no longer just a threat to the safety and soundness of the U.S. banking system — together they are an unparalleled and unprecedented threat to the idea of democracy as we understand it.
We find it difficult to believe that Senators Bernie Sanders, Elizabeth Warren, Sherrod Brown and Jeff Merkley would vote in favor of this legislation – given their in-depth knowledge of what the Fed did during the last financial crisis. The public deserves an honest explanation from each of them.
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www.actorsandartistsfor911truth.org
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www.mp911truth.org
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www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/
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Coronavirus May Light Fuse on ‘Unexploded Bomb’ of Corporate Debt
28/04/2020
http://www.defenddemocracy.press/corona ... rate-debt/
A surge of risky borrowing by companies around the world leaves the global economy especially exposed to the potential costs of the outbreak.
By Peter S. Goodman
March 11, 2020
To grasp why the most important central banks — from the Fed to the Bank of England to the Bank of Japan — are now leaping into action as if the world were on fire, it helps to examine the subject of corporate debt.
For years, wonks bearing spreadsheets have warned that corporations around the planet were developing a dangerous addiction to debt. Interest rates were so low that borrowing money was essentially free, enticing companies to avail themselves with abandon. Something bad was bound to happen eventually, leaving borrowers struggling to make their debt payments. Lenders would grow agitated, tightening credit for everyone. The world would confront a fresh crisis.
Something bad is now happening. As the coronavirus outbreak spreads, halting factories from China to Italy, sending stock markets plunging and prompting fears of a worldwide recession, historic levels of corporate debt threaten to intensify the economic damage. Companies facing grave debt burdens may be forced to cut costs, laying off workers and scrapping investments, as they seek to avoid default.
Read more at https://www.nytimes.com/2020/03/11/busi ... -debt.html
Worldwide debt more than triple economic output as central bank shift loomsWorldwide debt more than triple economic output as…Foreign debt of 1 trillion liras underscores Turkish corporate woesForeign debt of 1 trillion liras underscores Turkish…World Bank concerned about “global debt wave”World Bank concerned about “global debt wave”Will Ecuador once again set an example of courage in the face of creditors?Will Ecuador once again set an example of courage in…Some Countries Are Better Armored for Epidemics Than OthersSome Countries Are Better Armored for Epidemics Than OthersHow the EU bank has made £7.2BILLION profit from Greece’s financial crisisHow the EU bank has made £7.2BILLION profit from…
SOURCEwww.nytimes.com
TAGSdebt
Search Defend Democracy Press
28/04/2020
http://www.defenddemocracy.press/corona ... rate-debt/
A surge of risky borrowing by companies around the world leaves the global economy especially exposed to the potential costs of the outbreak.
By Peter S. Goodman
March 11, 2020
To grasp why the most important central banks — from the Fed to the Bank of England to the Bank of Japan — are now leaping into action as if the world were on fire, it helps to examine the subject of corporate debt.
For years, wonks bearing spreadsheets have warned that corporations around the planet were developing a dangerous addiction to debt. Interest rates were so low that borrowing money was essentially free, enticing companies to avail themselves with abandon. Something bad was bound to happen eventually, leaving borrowers struggling to make their debt payments. Lenders would grow agitated, tightening credit for everyone. The world would confront a fresh crisis.
Something bad is now happening. As the coronavirus outbreak spreads, halting factories from China to Italy, sending stock markets plunging and prompting fears of a worldwide recession, historic levels of corporate debt threaten to intensify the economic damage. Companies facing grave debt burdens may be forced to cut costs, laying off workers and scrapping investments, as they seek to avoid default.
Read more at https://www.nytimes.com/2020/03/11/busi ... -debt.html
Worldwide debt more than triple economic output as central bank shift loomsWorldwide debt more than triple economic output as…Foreign debt of 1 trillion liras underscores Turkish corporate woesForeign debt of 1 trillion liras underscores Turkish…World Bank concerned about “global debt wave”World Bank concerned about “global debt wave”Will Ecuador once again set an example of courage in the face of creditors?Will Ecuador once again set an example of courage in…Some Countries Are Better Armored for Epidemics Than OthersSome Countries Are Better Armored for Epidemics Than OthersHow the EU bank has made £7.2BILLION profit from Greece’s financial crisisHow the EU bank has made £7.2BILLION profit from…
SOURCEwww.nytimes.com
TAGSdebt
Search Defend Democracy Press
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'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
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- Posts: 3234
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TOO BIG TO FAIL?
Deutsche Bank Money Laundering Scandal Could Create Greatest Economic Crisis in History
The leak of the FinCEN Files over the weekend has rocked global markets and augurs a financial crisis of epic proportions as Deutsche Bank hovers over the precipice.
https://www.mintpressnews.com/fincen-de ... is/271395/
by Raul Diego September 21st, 2020 By Raul Diego
Deutsche Bank, along with several of the world’s biggest commercial banks, are embroiled in a global money laundering scandal that spans over two decades, as documents leaked to BuzzFeed show the movement of $2 Trillion in illicit cash through the Western banking establishment.
The cache of Suspicious Activity Reports (SARs) detailing years of potentially illegal banking transactions were shared with 108 news organizations in 88 countries, according to the International Consortium of Investigative Journalists (ICIJ). These records are a requirement for any financial institution that engages in dollar-denominated transactions anywhere in the world and are filed with the Treasury Department’s intelligence unit, the Financial Crimes and Enforcement Network or FinCEN.
The more than 2,100 SARs released to the press are considered “historical” documents by the implicated banks, who responded with their usual Pontius Pilate routine when reached for comment by the media and washed their hands of the matter by claiming to have fulfilled their legal obligation before the U.S. Treasury “as part of our partnership with regulators and law enforcement to protect the global financial system,” as a Deutsche Bank statement puts it.
The Trump-linked German bank is, by far, the most beset by the suspicious activity records totaling well over half of the $2 Trillion-dollar sum the FinCEN Files trace, with approximately $1.3 Trillion of it moving through the scandal-plagued financial institution. Most of the press coverage in the U.S., so far, has focused on the ties to Russian oligarchs and assorted narratives that are hovering over election-year American political discourse. Deutsche Bank’s central role, nevertheless, betrays a far greater problem as the bank’s potential collapse could send the financial world into a tailspin and result in the greatest economic crisis in history.
1MDB
As European bank stocks tumble amid the revelations, FinCEN condemned the unlawful disclosure of the SARs to the press and warned that it could “impact the national security of the United States.” Meanwhile, the U.S. Justice Department is in the middle of the largest asset-recovery effort in U.S. history, filing its latest complaint regarding $300 Million the department is attempting to recover for an $11.7 Billion Malaysian sovereign wealth fund called 1MDB, one of the major cases highlighted by ICIJ in its report on the leaked SARs.
Absent from most coverage of the FinCEN leaks, however, is how all of these banks and financial institutions are not only laundering trillions, but are doing so together and in consort with each other, as is plainly demonstrated in the 1MDB fraud case. Most publications point the finger at JP Morgan Chase as the entity that moved more than $1 Billion for Jho Low, one of the 1MDB’s central figures, but they fail to mention the role of Goldman Sachs, which orchestrated a significant part of the scheme that defrauded the Malaysian people and led to criminal charges against 17 of its current and former executives, including Goldman Sachs former vice-chairman and now president of Chinese mega eCommerce platform Alibaba, Michael Evans.
The Malaysian government recently agreed to drop charges against Goldman Sachs after a $2.5 Billion-dollar settlement was reached with the giant investment bank; nearly a fourth of the $10.5 billion-dollar debt hole it created for Malaysia’s ruling coalition, resulting in the cancelation of major infrastructure projects. Deutsche Bank was also involved in the multi-pronged attack of the Western financial vultures on the Malay through the provision of hundreds of millions in stock-buy-back loans through the 1MDB fund for the former prime minister, who was convicted in July of graft.
A Hit Job?
The ostensible purpose of the 1MDB fund was to finance infrastructure projects, like the oil and gas pipeline projects shelved as a result. But, according to a report by Business Insider, the money “veered into lavish spending,” such as art purchases, and, quite fittingly, to the production of the “The Wolf of Wall Street” – a story about the unmitigated fraud and graft that the very same people and institutions ensnared in this scandal carry out day in and day out.
It is reported that former Goldman Sachs CEO, Lloyd Blankfein, met with the disgraced Malaysian PM and the fugitive businessman, Jho Low, before the fund’s debut in 2009. Another lawsuit brought against Goldman Sachs details the investment bank’s “central role in a long-running effort to corrupt former executives” of An Abu Dhabi wealth fund called International Petroleum Investment Corporation and its subsidiary, Aabar Investments, which partnered with the 1MDB, calling it “a massive, international conspiracy to embezzle billions of dollars.”
Few can argue with that characterization, but as the chickens come home to roost, it is important to keep an eye on who gets exposed and who doesn’t; who gets punished and who doesn’t. The FinCEN Files are meant to draw most of the attention to Deutsche Bank and has all the hallmarks of a premeditated hit on one of the lynchpins of the prevailing financial structure. Much like Lehman Brothers and Bear Sterns were sacrificed for the subprime mortgage crisis and opened the door for even greater consolidation among the “too-big-to-fail” banks, a calculated take-down of Deutsch Bank will, no doubt, allow for a similar consolidation to occur at a far larger scale.
Feature photo | The towers of the Deutsche Bank in Frankfurt, Germany. Michael Probst | AP
Raul Diego is a MintPress News Staff Writer, independent photojournalist, researcher, writer and documentary filmmaker.
Republish our stories! MintPress News is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 International License.
1MDB DEUTSCHE BANK FINCEN GOLDMAN SACHS
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Deutsche Bank Money Laundering Scandal Could Create Greatest Economic Crisis in History
The leak of the FinCEN Files over the weekend has rocked global markets and augurs a financial crisis of epic proportions as Deutsche Bank hovers over the precipice.
https://www.mintpressnews.com/fincen-de ... is/271395/
by Raul Diego September 21st, 2020 By Raul Diego
Deutsche Bank, along with several of the world’s biggest commercial banks, are embroiled in a global money laundering scandal that spans over two decades, as documents leaked to BuzzFeed show the movement of $2 Trillion in illicit cash through the Western banking establishment.
The cache of Suspicious Activity Reports (SARs) detailing years of potentially illegal banking transactions were shared with 108 news organizations in 88 countries, according to the International Consortium of Investigative Journalists (ICIJ). These records are a requirement for any financial institution that engages in dollar-denominated transactions anywhere in the world and are filed with the Treasury Department’s intelligence unit, the Financial Crimes and Enforcement Network or FinCEN.
The more than 2,100 SARs released to the press are considered “historical” documents by the implicated banks, who responded with their usual Pontius Pilate routine when reached for comment by the media and washed their hands of the matter by claiming to have fulfilled their legal obligation before the U.S. Treasury “as part of our partnership with regulators and law enforcement to protect the global financial system,” as a Deutsche Bank statement puts it.
The Trump-linked German bank is, by far, the most beset by the suspicious activity records totaling well over half of the $2 Trillion-dollar sum the FinCEN Files trace, with approximately $1.3 Trillion of it moving through the scandal-plagued financial institution. Most of the press coverage in the U.S., so far, has focused on the ties to Russian oligarchs and assorted narratives that are hovering over election-year American political discourse. Deutsche Bank’s central role, nevertheless, betrays a far greater problem as the bank’s potential collapse could send the financial world into a tailspin and result in the greatest economic crisis in history.
1MDB
As European bank stocks tumble amid the revelations, FinCEN condemned the unlawful disclosure of the SARs to the press and warned that it could “impact the national security of the United States.” Meanwhile, the U.S. Justice Department is in the middle of the largest asset-recovery effort in U.S. history, filing its latest complaint regarding $300 Million the department is attempting to recover for an $11.7 Billion Malaysian sovereign wealth fund called 1MDB, one of the major cases highlighted by ICIJ in its report on the leaked SARs.
Absent from most coverage of the FinCEN leaks, however, is how all of these banks and financial institutions are not only laundering trillions, but are doing so together and in consort with each other, as is plainly demonstrated in the 1MDB fraud case. Most publications point the finger at JP Morgan Chase as the entity that moved more than $1 Billion for Jho Low, one of the 1MDB’s central figures, but they fail to mention the role of Goldman Sachs, which orchestrated a significant part of the scheme that defrauded the Malaysian people and led to criminal charges against 17 of its current and former executives, including Goldman Sachs former vice-chairman and now president of Chinese mega eCommerce platform Alibaba, Michael Evans.
The Malaysian government recently agreed to drop charges against Goldman Sachs after a $2.5 Billion-dollar settlement was reached with the giant investment bank; nearly a fourth of the $10.5 billion-dollar debt hole it created for Malaysia’s ruling coalition, resulting in the cancelation of major infrastructure projects. Deutsche Bank was also involved in the multi-pronged attack of the Western financial vultures on the Malay through the provision of hundreds of millions in stock-buy-back loans through the 1MDB fund for the former prime minister, who was convicted in July of graft.
A Hit Job?
The ostensible purpose of the 1MDB fund was to finance infrastructure projects, like the oil and gas pipeline projects shelved as a result. But, according to a report by Business Insider, the money “veered into lavish spending,” such as art purchases, and, quite fittingly, to the production of the “The Wolf of Wall Street” – a story about the unmitigated fraud and graft that the very same people and institutions ensnared in this scandal carry out day in and day out.
It is reported that former Goldman Sachs CEO, Lloyd Blankfein, met with the disgraced Malaysian PM and the fugitive businessman, Jho Low, before the fund’s debut in 2009. Another lawsuit brought against Goldman Sachs details the investment bank’s “central role in a long-running effort to corrupt former executives” of An Abu Dhabi wealth fund called International Petroleum Investment Corporation and its subsidiary, Aabar Investments, which partnered with the 1MDB, calling it “a massive, international conspiracy to embezzle billions of dollars.”
Few can argue with that characterization, but as the chickens come home to roost, it is important to keep an eye on who gets exposed and who doesn’t; who gets punished and who doesn’t. The FinCEN Files are meant to draw most of the attention to Deutsche Bank and has all the hallmarks of a premeditated hit on one of the lynchpins of the prevailing financial structure. Much like Lehman Brothers and Bear Sterns were sacrificed for the subprime mortgage crisis and opened the door for even greater consolidation among the “too-big-to-fail” banks, a calculated take-down of Deutsch Bank will, no doubt, allow for a similar consolidation to occur at a far larger scale.
Feature photo | The towers of the Deutsche Bank in Frankfurt, Germany. Michael Probst | AP
Raul Diego is a MintPress News Staff Writer, independent photojournalist, researcher, writer and documentary filmmaker.
Republish our stories! MintPress News is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 International License.
1MDB DEUTSCHE BANK FINCEN GOLDMAN SACHS
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President Donald Trump, second from right, with Secretary of State Rex Tillerson, right, Vice President Mike Pence, and others, listen during a meeting with Malaysian Prime Minister Najib Razak in the Cabinet Room of the White House, Sept. 12, 2017, in Washington. (AP/Alex Brandon)
Trump’s ‘Drain The Swamp’ Promise Proves Hollow
8 Comments
--
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
http://aangirfan.blogspot.com
http://aanirfan.blogspot.com
Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
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The $20 TRILLION threat that could trigger the next financial meltdown
4 Jan, 2020 07:46 / Updated 6 months ago
https://www.rt.com/business/475559-next ... n-trigger/
A number of recent reports suggest that the financial risk from climate change could be much greater than previously anticipated, and that entire asset classes could come under fire as temperatures continue to rise.
Trillions of dollars of market value could go up in smoke due to climate change.
The damage hits the global economy in multiple ways. The first is the most obvious. Physical damage from more powerful natural disasters is on the rise. 2017 and 2018 were the costliest back-to-back years for economic losses related to natural disasters, according to risk and reinsurance firm Aon.
ALSO ON RT.COM
Half the world's banks are too weak to survive downturn - McKinsey
But the danger grows worse when the physical damage starts to reprice portions of entire asset classes. One glaring example is the real estate market along coastlines, which will see both physical damage and a dramatic repricing as the threat becomes increasingly clear. That happens through a variety of mechanisms – people move away, zoning ordinances restrict building, insurance companies withdraw support, investors withdraw capital, etc.
If sea levels rise by 6 feet by 2100, an estimated $900 billion in US homes “would be literally – and in turn financially – underwater,” the Center for American Progress (CAP) wrote in a November report.
The end result is the sector becomes worth a fraction of what it once was. And this is just one aspect of climate change affecting just one particular sector.
READ MORE
Global economy faces ‘awfully high’ risk of recession in the next 12-18 months, warns Moody’sGlobal economy faces ‘awfully high’ risk of recession in the next 12-18 months, warns Moody’s
This gets to another aspect of climate risk. Governments are surely going to act – eventually – to address climate change, which could transform what is and isn’t valuable. A new report from Principles for Responsible Investment finds that the inevitable tightening of climate policies will wipe out $2.3 trillion in value from a range of fossil fuel companies. Principles of Responsible Investing (PRI) is a group representing investors with $86 trillion of assets under management.
Industry groups always point out that as long as there is demand, they will continue to meet that demand. However, as the impacts of climate change grow worse, the likelihood of a policy backlash grows in corresponding fashion. The world is now on track to warm by 3 degrees Celsius by the end of the century, double the rate that scientists and governments are aiming for.
“It’s highly improbable that governments will be allowed to let the world glide to 2.7C without being compelled into forceful action sooner,” Fiona Reynolds, CEO of PRI wrote last month. PRI sees an “inevitable policy response” by 2025, and because the industry has dragged its feet and because governments have delayed action, the policy response will likely be “forceful, abrupt and disorderly.” The energy transition could have been much smoother had action been taken years ago.
PRI says that the fossil fuel sector could lose a third of its current value as high-cost coal, oil and gas reserves become stranded assets. According to historian Adam Tooze, there is between $1 and $4 trillion in energy assets that could become stranded, and $20 trillion in the broader industrial sector.
But an even larger concern is how the long list of impacts affecting a variety of industries that are all interwoven infects the broader financial system. “Stress at a large, complex, and interconnected financial institution—a firm that is systemically important—or correlated stress across smaller firms all exposed to the same risks could transmit stress throughout the financial system,” CAP wrote.
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Global disasters ‘not so deadly’ but second most costly last year
The outlook that there is a disorderly disruption across a class of financial assets is becoming increasingly mainstream. “This kind of scenario—protracted denial followed by panic-driven decarbonization—is what concerns the central bankers most of all. And it is closest to our reality,” Adam Tooze wrote in Foreign Policy earlier this year.
In fact, there is speculation that the combined effect of a massive re-pricing of assets with the growing physical damage related to climate change could set off a financial crisis. Banks, insurance companies and other financial intermediaries are enmeshed in the oil and gas complex. As those assets are written down in value, the financial toll could multiply. Trillions of dollars in value could be erased.
For now, governments continue with relatively meager reforms, although the extent of inaction varies depending on the government. With the rules still largely on a business-as-usual track, investment continues to pour into sectors that are at risk from climate disruption. The oil industry has funneled $50 billion into projects that are not aligned with the Paris Climate agreement since 2018 – projects that would become unviable in a carbon-constrained world.
4 Jan, 2020 07:46 / Updated 6 months ago
https://www.rt.com/business/475559-next ... n-trigger/
A number of recent reports suggest that the financial risk from climate change could be much greater than previously anticipated, and that entire asset classes could come under fire as temperatures continue to rise.
Trillions of dollars of market value could go up in smoke due to climate change.
The damage hits the global economy in multiple ways. The first is the most obvious. Physical damage from more powerful natural disasters is on the rise. 2017 and 2018 were the costliest back-to-back years for economic losses related to natural disasters, according to risk and reinsurance firm Aon.
ALSO ON RT.COM
Half the world's banks are too weak to survive downturn - McKinsey
But the danger grows worse when the physical damage starts to reprice portions of entire asset classes. One glaring example is the real estate market along coastlines, which will see both physical damage and a dramatic repricing as the threat becomes increasingly clear. That happens through a variety of mechanisms – people move away, zoning ordinances restrict building, insurance companies withdraw support, investors withdraw capital, etc.
If sea levels rise by 6 feet by 2100, an estimated $900 billion in US homes “would be literally – and in turn financially – underwater,” the Center for American Progress (CAP) wrote in a November report.
The end result is the sector becomes worth a fraction of what it once was. And this is just one aspect of climate change affecting just one particular sector.
READ MORE
Global economy faces ‘awfully high’ risk of recession in the next 12-18 months, warns Moody’sGlobal economy faces ‘awfully high’ risk of recession in the next 12-18 months, warns Moody’s
This gets to another aspect of climate risk. Governments are surely going to act – eventually – to address climate change, which could transform what is and isn’t valuable. A new report from Principles for Responsible Investment finds that the inevitable tightening of climate policies will wipe out $2.3 trillion in value from a range of fossil fuel companies. Principles of Responsible Investing (PRI) is a group representing investors with $86 trillion of assets under management.
Industry groups always point out that as long as there is demand, they will continue to meet that demand. However, as the impacts of climate change grow worse, the likelihood of a policy backlash grows in corresponding fashion. The world is now on track to warm by 3 degrees Celsius by the end of the century, double the rate that scientists and governments are aiming for.
“It’s highly improbable that governments will be allowed to let the world glide to 2.7C without being compelled into forceful action sooner,” Fiona Reynolds, CEO of PRI wrote last month. PRI sees an “inevitable policy response” by 2025, and because the industry has dragged its feet and because governments have delayed action, the policy response will likely be “forceful, abrupt and disorderly.” The energy transition could have been much smoother had action been taken years ago.
PRI says that the fossil fuel sector could lose a third of its current value as high-cost coal, oil and gas reserves become stranded assets. According to historian Adam Tooze, there is between $1 and $4 trillion in energy assets that could become stranded, and $20 trillion in the broader industrial sector.
But an even larger concern is how the long list of impacts affecting a variety of industries that are all interwoven infects the broader financial system. “Stress at a large, complex, and interconnected financial institution—a firm that is systemically important—or correlated stress across smaller firms all exposed to the same risks could transmit stress throughout the financial system,” CAP wrote.
ALSO ON RT.COM
Global disasters ‘not so deadly’ but second most costly last year
The outlook that there is a disorderly disruption across a class of financial assets is becoming increasingly mainstream. “This kind of scenario—protracted denial followed by panic-driven decarbonization—is what concerns the central bankers most of all. And it is closest to our reality,” Adam Tooze wrote in Foreign Policy earlier this year.
In fact, there is speculation that the combined effect of a massive re-pricing of assets with the growing physical damage related to climate change could set off a financial crisis. Banks, insurance companies and other financial intermediaries are enmeshed in the oil and gas complex. As those assets are written down in value, the financial toll could multiply. Trillions of dollars in value could be erased.
For now, governments continue with relatively meager reforms, although the extent of inaction varies depending on the government. With the rules still largely on a business-as-usual track, investment continues to pour into sectors that are at risk from climate disruption. The oil industry has funneled $50 billion into projects that are not aligned with the Paris Climate agreement since 2018 – projects that would become unviable in a carbon-constrained world.
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A Perfect Storm is Brewing in Banking and Finance
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perfect storm
10 Comments
Tags Central BanksEconomic PolicyThe FedInflationBusiness Cycles Interventionism
06/17/2022
Now that interest rates are rising with much further to go, the global banking system faces a crisis on a scale like no other in history. Central banks loaded with financial securities acquired through QE face growing losses, and their balance sheet liabilities are now significantly greater than their assets—a condition which in the private sector is termed bankruptcy. They will need to be recapitalized urgently to retain credibility.
Furthermore, banking regulators have made a prodigious error in their oversight of the commercial banking system by focusing almost solely on bank balance sheet liquidity as the principal determinant of risk exposure. And on the few occasions in the past when they have demanded banks increase their own capital, it has always been through the creation of preference shares and pseudo-equities to avoid diluting the true shareholders. The consequence is that the level of leverage for common equity shareholders in the global systemically important banks has risen to stratospheric levels.
The regulators may be comfortable with their liquidity approach, but they have ignored the periodic certainty of a contraction in bank credit and the consequences for banks’ equity interests. Meanwhile, G-SIBs have asset to common equity ratios often more than fifty times, with some in the eurozone over seventy. It is hardly surprising that most G-SIBs are valued in the equity markets at substantial discounts to book value.
G-SIBs have accumulated excessive exposure to financial assets, both on-balance sheet and as loan collateral. With vicious bear markets now evident and further interest rate rises guaranteed by falling purchasing powers for currencies, the one thing regulators have not allowed for is now happening: like a deepening meteorological low, bank credit is contracting into a perfect storm.
Jamie Dimon’s recent warning that his bank (JPMorgan Chase) faces hurricane conditions confirms the timing. Central banks, bankrupt in all but name, will be tasked with rescuing entire commercial banking networks, bankrupted by a collapse in bank credit.
Why Are Markets Crashing?
It is becoming clear that financial assets are in a bear market, driven by persistent rises in producer inputs and consumer prices, which in turn are pushing interest rates and bond yields higher. So far, investors have been reluctant to lose trust in their central banks which have been instrumental in supporting financial markets. But this is now being tested, more so in the summer months as global food shortages develop.
We have increasing evidence that bank credit is either contracting or on the verge of doing so. This was the message loud and clear from Jamie Dimon’s recent description of economic conditions being raised from storm to hurricane force, and his follow up comments about what JPMorgan Chase was doing about it. Rarely do we get the dollar-world’s most senior banker giving us such a clear heads-up on a change in lending policies, which we know will be shared by all his competitors. And the fact that the bank’s senior economist was tasked with rowing back on Dimon’s statement indicates that the Fed, or perhaps Dimon’s colleagues, know that he should not have made public their greatest fears.
Contracting bank credit always ends in a crisis of some sort. With a long-term average of ten years, this cycle of bank credit has been exceptionally long in the tooth. Before we even consider the specific factors behind a withdrawal of credit, we can assume that the longer the period of credit expansion that precedes it, the greater the slump in economic activity that follows.
Not only is this the culmination of a cyclical bank credit expansion, but it is of a larger trend set in motion in the mid-eighties. Following the inflationary seventies, which was book-ended with the abandonment of the Bretton Woods Agreement and Paul Volcker’s 20 percent prime rates, a means had to be devised to ensure that fiat currencies would be stabilized in a lower interest rate environment. By ensuring demand for dollars would always be sufficient to maintain its purchasing power, then all other currencies that were loosely pegged to it would be similarly able to retain purchasing power without the prop of high interest rates.
Consciously or unconsciously, the planners deployed a variation on the Triffin dilemma. Robert Triffin was an economist who in the 1960s pointed out that a reserve currency would have to ensure that there is sufficient supply of it for it to fulfil the reserve currency role. He concluded that the supplier of the reserve currency would have to run irresponsible short-term monetary policies to ensure the supply is made available, for the likely detriment of long-term monetary and economic prospects.
In the mid-eighties the planners put in place the mechanism for creating Triffin’s demand for the dollar. Deficits would be run by the US government, as Triffin had explained, and dollar bank credit would be expanded. The creation of bank credit outside the US banking system would be permitted in the form of the Eurodollar market. And the growth of shadow banking went unhampered.
Major banks were encouraged to buy into brokers, eventually absorbing them into their operations completely. London’s big-bang was what this was all about, followed by the Glass-Steagall Act being rescinded to allow the American money-center banks to enter brokerage and investment banking activities in their domestic markets as well as offshore. The purpose of financializing the dollar was to ensure there would always be speculative and portfolio demand for it.
The policy has fundamentally overturned the way free markets behave, making them increasingly driven by central bank interest rate policies instead of by non-financial factors. Time preference became progressively less important relative to Fed policy. Whenever the dollar slipped, by lowering interest rates instead of raising them the Fed could encourage foreign portfolio buying. Lower interest rates increased flows of currency and credit into financial assets instead of debasing the currency in the non-financial economy.
It has not been a perfect system, because prices of goods and services still increased reflecting the expansion of currency and credit, but at a slower pace than one might have expected, given the increased quantity of circulating media. Furthermore, calculation methods applied to consumer price indices all had the effect of reducing the apparent pace of price increases. And it was in everyone’s interest to buy into this perpetual system of wealth creation.
Thus, the creation of extra bank credit was directed increasingly into financial speculation in bond and equity markets. There were bubbles, such as the dotcoms in the late-1990s and in mortgage financing preceding the financial crisis of 2008/09. Despite these interruptions, the US authorities made sure that global investment flows primarily supported US financial interests. Thus, the wealth effect was created in America, and consequently through the internationalization of valuations in the jurisdictions of its major allies. And to the extent that credit expansion drove up financial asset prices, the effect was mostly ring-fenced within the financial economy, and was not recorded in official consumer price indices.
As markets caught on, interest rates declined to the point where they disappeared altogether. But as Triffin observed, policies to ensure that a currency is available as the world’s reserve are economically destructive in the long run, and the whole trend set in motion from London’s big bang onwards has now concluded with rising interest rates. It amounts to a super cycle of bank credit expansion certain to end more dramatically than a single cycle. Therefore, this bear market and its systemic issues can be expected to be of a greater magnitude than those which followed the dotcoms and the Lehman failure.
With interest rates so far beneath the rate at which prices are rising, which is mainly the consequence of earlier monetary debasement, losses are now accumulating for all those who bought into the financialization story and have failed to bail out of it. Top of a hubristic list are the central banks themselves which augmented monetary expansion with the acquisition of substantial bond portfolios through quantitative easing. Those assets are now collapsing in value, wiping out central bank equity many times over. The central banks themselves will need recapitalizing before they can tackle the problems of a widespread systemic collapse in the commercial banking network.
With a perfect storm forming in financial markets and the banks, we are witnessing the end of a global economic system which has denied the realities of free markets ever since President Hoover believed that the US Government could improve and then save the American economy in 1929. His errors were magnified by the neo-Keynesians’ hero, Franklin Roosevelt with his New Deal. A Second World War and post-war socialization of capital with a minimized gold standard followed. Every failure has been met with a new doubling down on capitalism.
And every failure has increased the power of the state over its people and diminished their freedom. The drift away from a world of progress, where people were free to exchange the fruits of their labor with the intermediation of sound money, enabling them to succeed or fail by their own efforts, has led to the ultimate failure: a looming collapse of the whole statist system.
Since the last fig-leaf of gold convertibility was finally abandoned fifty-one years ago, the final phase of our decline has been covered up by the increasing financialization of western economies, substituting paper wealth for real prosperity. The function of fiat currency has been to perpetuate this illusion, an illusion that is finally coming to an end.
In the financial and economic violence which we now face, it is difficult to anticipate the order of a series of events within the overall crisis. The outturn could be very different, but logic suggests the following. Interest rates will rise until bank failures materialize. Meanwhile, financial assets will have fallen in value, possibly very quickly. Then we can expect monetary policy to expand to rescue the commercial banks, suppress bond yields and to finance soaring government deficits.
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The Curious Case of Ilya ShapiroJeff Deist
The Beltway is no place for loyalty.
A Perfect Storm is Brewing in Banking and Finance
Forget Jerome Powell's fanciful "soft landing" or the notion that the Fed can pull another rabbit from its hat. The banking system is headed for a crash and monetary authorities likely will make things worse.
The Great Crash of 2022Kristoffer Mousten Hansen
Anyone who doubts whether we are in a recession can stop doubting. The Fed's reverse repos show that we're headed for a crash.
The Fed Is Winging It: A 75 Basis Point Hike "Seemed like the Right Thing"Ryan McMaken
When asked to quantify how a 75-point hike is better than a 50-point one, Powell had no answer. And will it work? Powell could only say "we'll know when we get there."
No, It's Not "Greed" or "Price Gouging" That's Driving up Gas PricesRyan McMaken
By late 2021, fueled by trillions in newly printed money, gasoline prices had surged to ten-year highs. Now, even in inflation-adjusted terms, gasoline prices are surging to new highs.
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10 Comments
Tags Central BanksEconomic PolicyThe FedInflationBusiness Cycles Interventionism
06/17/2022
Now that interest rates are rising with much further to go, the global banking system faces a crisis on a scale like no other in history. Central banks loaded with financial securities acquired through QE face growing losses, and their balance sheet liabilities are now significantly greater than their assets—a condition which in the private sector is termed bankruptcy. They will need to be recapitalized urgently to retain credibility.
Furthermore, banking regulators have made a prodigious error in their oversight of the commercial banking system by focusing almost solely on bank balance sheet liquidity as the principal determinant of risk exposure. And on the few occasions in the past when they have demanded banks increase their own capital, it has always been through the creation of preference shares and pseudo-equities to avoid diluting the true shareholders. The consequence is that the level of leverage for common equity shareholders in the global systemically important banks has risen to stratospheric levels.
The regulators may be comfortable with their liquidity approach, but they have ignored the periodic certainty of a contraction in bank credit and the consequences for banks’ equity interests. Meanwhile, G-SIBs have asset to common equity ratios often more than fifty times, with some in the eurozone over seventy. It is hardly surprising that most G-SIBs are valued in the equity markets at substantial discounts to book value.
G-SIBs have accumulated excessive exposure to financial assets, both on-balance sheet and as loan collateral. With vicious bear markets now evident and further interest rate rises guaranteed by falling purchasing powers for currencies, the one thing regulators have not allowed for is now happening: like a deepening meteorological low, bank credit is contracting into a perfect storm.
Jamie Dimon’s recent warning that his bank (JPMorgan Chase) faces hurricane conditions confirms the timing. Central banks, bankrupt in all but name, will be tasked with rescuing entire commercial banking networks, bankrupted by a collapse in bank credit.
Why Are Markets Crashing?
It is becoming clear that financial assets are in a bear market, driven by persistent rises in producer inputs and consumer prices, which in turn are pushing interest rates and bond yields higher. So far, investors have been reluctant to lose trust in their central banks which have been instrumental in supporting financial markets. But this is now being tested, more so in the summer months as global food shortages develop.
We have increasing evidence that bank credit is either contracting or on the verge of doing so. This was the message loud and clear from Jamie Dimon’s recent description of economic conditions being raised from storm to hurricane force, and his follow up comments about what JPMorgan Chase was doing about it. Rarely do we get the dollar-world’s most senior banker giving us such a clear heads-up on a change in lending policies, which we know will be shared by all his competitors. And the fact that the bank’s senior economist was tasked with rowing back on Dimon’s statement indicates that the Fed, or perhaps Dimon’s colleagues, know that he should not have made public their greatest fears.
Contracting bank credit always ends in a crisis of some sort. With a long-term average of ten years, this cycle of bank credit has been exceptionally long in the tooth. Before we even consider the specific factors behind a withdrawal of credit, we can assume that the longer the period of credit expansion that precedes it, the greater the slump in economic activity that follows.
Not only is this the culmination of a cyclical bank credit expansion, but it is of a larger trend set in motion in the mid-eighties. Following the inflationary seventies, which was book-ended with the abandonment of the Bretton Woods Agreement and Paul Volcker’s 20 percent prime rates, a means had to be devised to ensure that fiat currencies would be stabilized in a lower interest rate environment. By ensuring demand for dollars would always be sufficient to maintain its purchasing power, then all other currencies that were loosely pegged to it would be similarly able to retain purchasing power without the prop of high interest rates.
Consciously or unconsciously, the planners deployed a variation on the Triffin dilemma. Robert Triffin was an economist who in the 1960s pointed out that a reserve currency would have to ensure that there is sufficient supply of it for it to fulfil the reserve currency role. He concluded that the supplier of the reserve currency would have to run irresponsible short-term monetary policies to ensure the supply is made available, for the likely detriment of long-term monetary and economic prospects.
In the mid-eighties the planners put in place the mechanism for creating Triffin’s demand for the dollar. Deficits would be run by the US government, as Triffin had explained, and dollar bank credit would be expanded. The creation of bank credit outside the US banking system would be permitted in the form of the Eurodollar market. And the growth of shadow banking went unhampered.
Major banks were encouraged to buy into brokers, eventually absorbing them into their operations completely. London’s big-bang was what this was all about, followed by the Glass-Steagall Act being rescinded to allow the American money-center banks to enter brokerage and investment banking activities in their domestic markets as well as offshore. The purpose of financializing the dollar was to ensure there would always be speculative and portfolio demand for it.
The policy has fundamentally overturned the way free markets behave, making them increasingly driven by central bank interest rate policies instead of by non-financial factors. Time preference became progressively less important relative to Fed policy. Whenever the dollar slipped, by lowering interest rates instead of raising them the Fed could encourage foreign portfolio buying. Lower interest rates increased flows of currency and credit into financial assets instead of debasing the currency in the non-financial economy.
It has not been a perfect system, because prices of goods and services still increased reflecting the expansion of currency and credit, but at a slower pace than one might have expected, given the increased quantity of circulating media. Furthermore, calculation methods applied to consumer price indices all had the effect of reducing the apparent pace of price increases. And it was in everyone’s interest to buy into this perpetual system of wealth creation.
Thus, the creation of extra bank credit was directed increasingly into financial speculation in bond and equity markets. There were bubbles, such as the dotcoms in the late-1990s and in mortgage financing preceding the financial crisis of 2008/09. Despite these interruptions, the US authorities made sure that global investment flows primarily supported US financial interests. Thus, the wealth effect was created in America, and consequently through the internationalization of valuations in the jurisdictions of its major allies. And to the extent that credit expansion drove up financial asset prices, the effect was mostly ring-fenced within the financial economy, and was not recorded in official consumer price indices.
As markets caught on, interest rates declined to the point where they disappeared altogether. But as Triffin observed, policies to ensure that a currency is available as the world’s reserve are economically destructive in the long run, and the whole trend set in motion from London’s big bang onwards has now concluded with rising interest rates. It amounts to a super cycle of bank credit expansion certain to end more dramatically than a single cycle. Therefore, this bear market and its systemic issues can be expected to be of a greater magnitude than those which followed the dotcoms and the Lehman failure.
With interest rates so far beneath the rate at which prices are rising, which is mainly the consequence of earlier monetary debasement, losses are now accumulating for all those who bought into the financialization story and have failed to bail out of it. Top of a hubristic list are the central banks themselves which augmented monetary expansion with the acquisition of substantial bond portfolios through quantitative easing. Those assets are now collapsing in value, wiping out central bank equity many times over. The central banks themselves will need recapitalizing before they can tackle the problems of a widespread systemic collapse in the commercial banking network.
With a perfect storm forming in financial markets and the banks, we are witnessing the end of a global economic system which has denied the realities of free markets ever since President Hoover believed that the US Government could improve and then save the American economy in 1929. His errors were magnified by the neo-Keynesians’ hero, Franklin Roosevelt with his New Deal. A Second World War and post-war socialization of capital with a minimized gold standard followed. Every failure has been met with a new doubling down on capitalism.
And every failure has increased the power of the state over its people and diminished their freedom. The drift away from a world of progress, where people were free to exchange the fruits of their labor with the intermediation of sound money, enabling them to succeed or fail by their own efforts, has led to the ultimate failure: a looming collapse of the whole statist system.
Since the last fig-leaf of gold convertibility was finally abandoned fifty-one years ago, the final phase of our decline has been covered up by the increasing financialization of western economies, substituting paper wealth for real prosperity. The function of fiat currency has been to perpetuate this illusion, an illusion that is finally coming to an end.
In the financial and economic violence which we now face, it is difficult to anticipate the order of a series of events within the overall crisis. The outturn could be very different, but logic suggests the following. Interest rates will rise until bank failures materialize. Meanwhile, financial assets will have fallen in value, possibly very quickly. Then we can expect monetary policy to expand to rescue the commercial banks, suppress bond yields and to finance soaring government deficits.
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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: Getty
When commenting, please post a concise, civil, and informative comment. Full comment policy here
Load Comments
What is the Mises Wire?
Mises Wire offers contemporary news and opinion through the lens of Austrian economics and libertarian political economy.
Submitting articles to Mises Wire
Reprints, Permissions & Copyrights
The views expressed on Mises Wire and mises.org are not necessarily those of the Mises Institute.
Most Popular Wire Articles
The Curious Case of Ilya ShapiroJeff Deist
The Beltway is no place for loyalty.
A Perfect Storm is Brewing in Banking and Finance
Forget Jerome Powell's fanciful "soft landing" or the notion that the Fed can pull another rabbit from its hat. The banking system is headed for a crash and monetary authorities likely will make things worse.
The Great Crash of 2022Kristoffer Mousten Hansen
Anyone who doubts whether we are in a recession can stop doubting. The Fed's reverse repos show that we're headed for a crash.
The Fed Is Winging It: A 75 Basis Point Hike "Seemed like the Right Thing"Ryan McMaken
When asked to quantify how a 75-point hike is better than a 50-point one, Powell had no answer. And will it work? Powell could only say "we'll know when we get there."
No, It's Not "Greed" or "Price Gouging" That's Driving up Gas PricesRyan McMaken
By late 2021, fueled by trillions in newly printed money, gasoline prices had surged to ten-year highs. Now, even in inflation-adjusted terms, gasoline prices are surging to new highs.
Economics in One Lesson
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'Suppression of truth, human spirit and the holy chord of justice never works long-term. Something the suppressors never get.' David Southwell
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Martin Van Creveld: Let me quote General Moshe Dayan: "Israel must be like a mad dog, too dangerous to bother."
Martin Van Creveld: I'll quote Henry Kissinger: "In campaigns like this the antiterror forces lose, because they don't win, and the rebels win by not losing."
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Re: Banking Collapse? Coming to a Branch Near You!
Commercial property’s moment of truth
Interest rates have peaked and activity in several sectors is picking up, but some fear bad news is still to emerge
https://www.ft.com/content/1a78d9d9-305 ... e88a562df4
Joshua Oliver in London and Antoine Gara in New York 24 October 2024
Citypoint was the City of London’s first skyscraper. When it was built in the 1960s, as an office for British Petroleum, it was the tallest building completed in the square mile since St Paul’s Cathedral in 1710.
Today, the tower near Moorgate station is again leading the market in City real estate — but in a different way.
Brookfield, the Canadian investment group, last month put Citypoint on the market, seeking offers over £500mn. If it sells, it would be the largest office building to change hands in the City in more than two years.
The hiatus in dealmaking has been the main outward symptom of a downturn in commercial real estate that began after interest rates started to rise in March 2022. Higher rates make the debt that is the lifeblood of real estate deals much more expensive.
Prices across commercial property, a category that includes shops, offices, hotels and warehouses, have fallen about 20 per cent from their peak in 2022, analysts estimate.
But predictions of a crash akin to the one that followed the 2008-10 financial crisis have so far not materialised. Relatively few buildings in distress have surfaced, and only a handful of lenders have been hit by bad loans.
The question is whether the storm is now over for the battered commercial property sector, or the worst is yet to come. Lagging valuations mean investors and lenders can avoid facing up to bad news about falling property value immediately. Financial damage from the downturn may emerge for years after the market starts to recover.
The lack of deals has made it harder for valuers to pin down exactly what properties across the multi-trillion-dollar market are worth. In parts of the sector, like big London offices, there is scant market evidence.
Citypoint was last independently appraised for its lenders in March 2023 at £670mn. But rating agency S&P put its value at £431mn in August, down from £457mn in autumn 2023. The key issue is whether it can sell for more than the roughly £460mn of debt secured against the building.
The Citypoint sale is comparatively transparent because of its high profile and the disclosures required for the commercial mortgage-backed securities linked to the building.
But some investors warn there are worse realities lurking within unsold portfolios. “The beauty of our industry is that it is so opaque and inconsistent,” says one senior executive at a private equity group.
“Some managers will be more honest. And some have been more optimistic. I think it’s all over the place. And we won’t really know until the transaction volume picks back up.”
Not all property investors conduct third-party valuations like the one applied to Citypoint, relying instead on their own appraisals.
The beauty of our industry is that it is so opaque and inconsistent. Some managers will be more honest. And some have been more optimistic. I think it’s all over the place
Hamid Moghadam, chief executive of Prologis, the largest US-listed commercial landlord managing around $200bn, says some managers are posting “phoney baloney” returns because they have not written down property values to reflect market reality during the downturn.
“The strategy in that case is just to hold your breath long enough that values come back and you never have to write it down,” he adds. “But I don’t think that is the right way of treating your investors.”
Any investors who are “holding their breath” on old valuations will be running out of air. Now that interest rates seem to have peaked, dealmaking is picking up. Other large London office buildings, including one known as the “Can of Ham” owing to its distinctive shape, are also now on the market. Larger portfolios of warehouses, retail parks and apartments are changing hands.
This resurgence will be welcomed by those who want to realise their investments or hope to buy at discounted prices. But it also brings a moment of truth on pricing.
Peter Papadakos, head of European research at advisory firm Green Street, says values will become clear as more properties are pushed on to the open market.
“That is where the truth comes out,” he adds.
Brookfield has brought Citypoint to market in part because the debt against the building, which was extended last Christmas at a higher interest rate, falls due in January.
The building is also owned by a fund within the group that dates back to 2012 and is largely selling its remaining assets. Overall, the fund has reported strong performance, with a realised 18 per cent net internal rate of return — an industry measure of annual returns. Brookfield declined to comment on how it valued the building for fund investors.
The Canadian group, which also co-owns London’s Canary Wharf and flagship offices in Manhattan, has invested around £40mn improving Citypoint, boosting its occupancy rate to around 90 per cent and securing better rents.
Black and white photo looking through a sculpture at Britannic House building, now called Citypoint
When Britannic House was built in the 1960s, as an office for British Petroleum, it was the tallest building completed in the square mile since St Paul’s Cathedral in 1710 © Getty Images
View through a modern sculpture of Citypoint building
The skyscraper, which was refurbished in 2000 and renamed Citypoint, is on the market and its owner Brookfield is looking for offers of $500mn and above © Charlie Bibby/FT
It is trying to sell at a challenging time.
Transaction volumes globally fell 45 per cent from 2022 to 2023 and have since flatlined at the lowest levels in a decade, according to MSCI. Its analysts said deals had been held up by “a mismatch in buyer and seller pricing expectations that must narrow further for liquidity to return”.
In the US, MSCI’s measure of property-related financial distress reached nearly $100bn in June, but remained far short of the almost $200bn recorded at the previous peak in 2010. “Do not go get your ‘I Survived the Great Pricing Reset’ T-shirt quite yet,” MSCI analysts wrote.
Investors also debate whether current pricing in markets hit by the shock of higher borrowing costs and geopolitical events is the best way to measure an asset’s long-term value.
Green Street estimates that across the industry many real estate investment trusts and institutional funds are still valuing their properties at roughly 10-15 per cent over what could be achieved right now.
The picture varies widely. In areas like apartment blocks, warehouses and some retail properties, rising rents and customer demand are giving investors confidence. Offices are more troubled, partly because of uncertainty about the level of demand in a post-pandemic world of hybrid working. But values also vary hugely depending on location, age and quality.
Scrutiny over valuations has been felt acutely by a few large investment trusts managed by property giants including Blackstone and Starwood Capital.
$780mnAmount investors wanted to withdraw from the $9.4bn Sreit fund last month but received just $31mn in cash
During the pandemic, the two famed investment groups were the most successful on Wall Street in attracting investment from wealthy individuals using private funds that offered limited opportunity for withdrawals.
Their two funds, Blackstone Real Estate Income Trust and Starwood Real Estate Income Trust, collectively attracted over $60bn between 2017 and 2022, and went on a buying spree that peaked in 2020 and 2021 when property values were high and interest rates were near zero.
Both Breit and Sreit have considerable leeway when it comes to valuing assets and were slow to mark down property values when interest rates began to rise quickly in 2022.
But fund investors formed their own views, pulling about $20bn out of both funds since late 2022 and forcing managers to limit redemptions in order to conserve cash and reduce the amount of property they had to sell.
Blackstone’s executives offloaded some of Breit’s most profitable assets, including a stake in the Bellagio Hotel in Las Vegas. The vehicle also secured $4.5bn of new investment from the University of California in early 2023 to bolster liquidity and avert a fire sale. But the return guarantees it promised the university have created a $751mn liability on Blackstone’s balance sheet.
Since 2022, Blackstone has sold $27bn of property at an average premium of 4 per cent to carrying value. In recent months, redemptions have slowed sharply and Blackstone has paid out investors’ requests in full. President Jonathan Gray said this month the fund was on track to begin drawing new money again.
The company said the semi-liquid structure of Breit had worked as intended. It added that rising prices, falling debt costs and lower levels of new construction activity “all point to a continuing recovery in commercial real estate”.
Starwood sold fewer properties, because founder Barry Sternlicht believed real estate markets were in panic mode. To meet about $5bn in redemption requests, Starwood sold $2.8bn of assets but also used internal cash and drew down almost all of a $1.5bn credit line.
Starwood was able to sell its properties “within 2 per cent of Sreit’s gross carrying values”, it has told investors, implying about a 4 per cent discount to their marks when including debt.
But by paying back investors with its own cash, Starwood has depleted its coffers and in May was forced to restrict quarterly redemptions from up to 5 per cent of the fund’s net assets to just 1 per cent. The move caused a furore among Sreit’s investors.
In September, Sreit met just 4 per cent of redemption requests, according to public filings. Investors had placed orders to withdraw nearly $780mn from the $9.4bn fund last month but received just $31mn in cash, the filings state.
The fund has begun marketing properties like apartments and logistics facilities in recent weeks, say two people familiar with the matter, adding that it has received some price indications above the most recent valuations.
The company declined to comment, but Sternlicht previously told investors that redemption restrictions on Sreit could last into mid-2025 “in anticipation of a lower interest rate environment and an improved real estate capital markets picture”.
It will probably take years for real estate pricing, and the damage to investors and lenders, to fully shake out.
On the plus side, lower overall debt levels going into this reset in pricing have made the sector more resilient compared with the years after the 2008 financial crisis.
Lenders’ attitudes and tolerance towards bad loans and troubled properties are the key factors in whether managers can ride out the downturn without ever having to fully address the trough in property values.
“We are never going to see a large enough quantum of distressed sales that the volume of distressed sales itself will impact on the overall pricing of commercial real estate,” says Green Street’s Papadakos.
“In the [global financial crisis] we did have a lot of distressed sales that cascaded those values even deeper into the red.
“This time, the valuations will trickle down to flat for a long time. Maybe for 24 to 36 months,” he adds. The recovery will be “protracted . . . because no one is forced to do anything”.
Aerial view of Citypoint and Barbican Centre in London
Citypoint and the Barbican in 2006. Citypoint’s previous owners paid £650mn in 2007 but defaulted on their loans in 2012, paving the way for Brookfield’s acquisition of the building © Getty Images
View from the ground looking up at the Citypoint building with grey clouds in the background
Citypoint was last independently appraised for its lenders in March 2023 at £670mn. But S&P put its value at £431mn in August, down from £457mn in autumn 2023 © Charlie Bibby/FT
In the UK, nearly 80 per cent of property loans had a loan-to-value ratio below 60 per cent, according to Bayes Business School’s mid-year report. Default rates have risen, but only to 2-4 per cent on bank loans and 14 per cent for debt funds set up specifically to finance real estate, Bayes said.
Raimondo Amabile, co-chief executive officer of PGIM Real Estate, says lenders are showing “a lot of patience” for assets that may currently be worth less relative to the loans against them, but where there is solid income and the situation is improving as interest rates fall.
Only some subsectors are causing headaches for lenders. “Behind the scenes, there is a lot going on in the office sector. If you go to talk to the banks, there is a lot — 90 per cent [of actual or potential distress] is office and the other 10 per cent is struggling retail,” he says.
“Is this going to generate a huge wave of distress in the market? No,” he reasons, because these troubled assets are too small a part of commercial real estate overall.
Mark Carney, the former Bank of England governor, told the FT this month that post-financial crisis regulations meant that banks were stronger and real estate risks were less concentrated.
“When there have been hits . . . it is more broadly diversified,” he said. “There are pockets of more acute risk in commercial real estate. I think those are increasingly recognised and marked.”
Property values are stabilising, and beginning to rise in some sectors like US residential properties and European logistics. Most investors expect that positive trend will gather momentum as more interest rate cuts come through.
One big risk to that recovery is a divergence between central bank interest rates and actual borrowing costs. Baseline borrowing costs in major financial markets have risen in the past month, even though policy rates have remained unchanged or fallen.
Blackstone’s Gray previously told the FT that a significant risk to real estate would be if the large scale of government deficits around the world led to a rise in the cost of capital “separate and apart from inflation”.
“This recovery would take longer if you [had] that,” he said.
Debt repayment deadlines are not the only factor pushing properties on to the market. Investment managers, especially those with time-limited funds, are under increasing pressure to return cash to their investors.
Papadakos says many managers “need desperately” to exit, especially if they are trying to raise a new fund. “If you go around asking a pension fund for £500mn, they will probably tell you: ‘give me [back] the £350mn that I gave you in 2021’,” he says.
Selling can be double-edged if the price agreed implies a mark down to the rest of the portfolio. Under pressure from lenders and investors, managers can try to sell those properties that will change hands at or close to their book value.
Normally, the market crashes. There are a couple of years of ‘extend and pretend’. They realise there is no solution. And then they end up in [non-performing loan] sales
Provided borrowing costs remain stable or decline, most market analysts expect commercial real estate will not experience a squeeze akin to the one following the global financial crisis.
Amabile of PGIM predicts that many distressed loans will ultimately be sold by the banks to opportunistic funds, which buy them well below face value in the hope of recouping value later on.
“Normally, the market crashes. There are a couple of years of ‘extend and pretend’. They realise there is no solution. And then they end up in [non-performing loan] sales,” he says.
It was through a distressed debt deal that Brookfield acquired Citypoint. The building’s previous owners had paid £650mn in 2007, just before the market crashed, and defaulted on their loans in 2012. Brookfield bought the debt in 2014 and took full control of the building in 2016. The price they paid was enough for the lenders to recoup their money, according to press reporting at the time.
The building’s history is a reminder that there are winners and losers in the trading game around prime commercial properties, but the play never stops.
Interest rates have peaked and activity in several sectors is picking up, but some fear bad news is still to emerge
https://www.ft.com/content/1a78d9d9-305 ... e88a562df4
Joshua Oliver in London and Antoine Gara in New York 24 October 2024
Citypoint was the City of London’s first skyscraper. When it was built in the 1960s, as an office for British Petroleum, it was the tallest building completed in the square mile since St Paul’s Cathedral in 1710.
Today, the tower near Moorgate station is again leading the market in City real estate — but in a different way.
Brookfield, the Canadian investment group, last month put Citypoint on the market, seeking offers over £500mn. If it sells, it would be the largest office building to change hands in the City in more than two years.
The hiatus in dealmaking has been the main outward symptom of a downturn in commercial real estate that began after interest rates started to rise in March 2022. Higher rates make the debt that is the lifeblood of real estate deals much more expensive.
Prices across commercial property, a category that includes shops, offices, hotels and warehouses, have fallen about 20 per cent from their peak in 2022, analysts estimate.
But predictions of a crash akin to the one that followed the 2008-10 financial crisis have so far not materialised. Relatively few buildings in distress have surfaced, and only a handful of lenders have been hit by bad loans.
The question is whether the storm is now over for the battered commercial property sector, or the worst is yet to come. Lagging valuations mean investors and lenders can avoid facing up to bad news about falling property value immediately. Financial damage from the downturn may emerge for years after the market starts to recover.
The lack of deals has made it harder for valuers to pin down exactly what properties across the multi-trillion-dollar market are worth. In parts of the sector, like big London offices, there is scant market evidence.
Citypoint was last independently appraised for its lenders in March 2023 at £670mn. But rating agency S&P put its value at £431mn in August, down from £457mn in autumn 2023. The key issue is whether it can sell for more than the roughly £460mn of debt secured against the building.
The Citypoint sale is comparatively transparent because of its high profile and the disclosures required for the commercial mortgage-backed securities linked to the building.
But some investors warn there are worse realities lurking within unsold portfolios. “The beauty of our industry is that it is so opaque and inconsistent,” says one senior executive at a private equity group.
“Some managers will be more honest. And some have been more optimistic. I think it’s all over the place. And we won’t really know until the transaction volume picks back up.”
Not all property investors conduct third-party valuations like the one applied to Citypoint, relying instead on their own appraisals.
The beauty of our industry is that it is so opaque and inconsistent. Some managers will be more honest. And some have been more optimistic. I think it’s all over the place
Hamid Moghadam, chief executive of Prologis, the largest US-listed commercial landlord managing around $200bn, says some managers are posting “phoney baloney” returns because they have not written down property values to reflect market reality during the downturn.
“The strategy in that case is just to hold your breath long enough that values come back and you never have to write it down,” he adds. “But I don’t think that is the right way of treating your investors.”
Any investors who are “holding their breath” on old valuations will be running out of air. Now that interest rates seem to have peaked, dealmaking is picking up. Other large London office buildings, including one known as the “Can of Ham” owing to its distinctive shape, are also now on the market. Larger portfolios of warehouses, retail parks and apartments are changing hands.
This resurgence will be welcomed by those who want to realise their investments or hope to buy at discounted prices. But it also brings a moment of truth on pricing.
Peter Papadakos, head of European research at advisory firm Green Street, says values will become clear as more properties are pushed on to the open market.
“That is where the truth comes out,” he adds.
Brookfield has brought Citypoint to market in part because the debt against the building, which was extended last Christmas at a higher interest rate, falls due in January.
The building is also owned by a fund within the group that dates back to 2012 and is largely selling its remaining assets. Overall, the fund has reported strong performance, with a realised 18 per cent net internal rate of return — an industry measure of annual returns. Brookfield declined to comment on how it valued the building for fund investors.
The Canadian group, which also co-owns London’s Canary Wharf and flagship offices in Manhattan, has invested around £40mn improving Citypoint, boosting its occupancy rate to around 90 per cent and securing better rents.
Black and white photo looking through a sculpture at Britannic House building, now called Citypoint
When Britannic House was built in the 1960s, as an office for British Petroleum, it was the tallest building completed in the square mile since St Paul’s Cathedral in 1710 © Getty Images
View through a modern sculpture of Citypoint building
The skyscraper, which was refurbished in 2000 and renamed Citypoint, is on the market and its owner Brookfield is looking for offers of $500mn and above © Charlie Bibby/FT
It is trying to sell at a challenging time.
Transaction volumes globally fell 45 per cent from 2022 to 2023 and have since flatlined at the lowest levels in a decade, according to MSCI. Its analysts said deals had been held up by “a mismatch in buyer and seller pricing expectations that must narrow further for liquidity to return”.
In the US, MSCI’s measure of property-related financial distress reached nearly $100bn in June, but remained far short of the almost $200bn recorded at the previous peak in 2010. “Do not go get your ‘I Survived the Great Pricing Reset’ T-shirt quite yet,” MSCI analysts wrote.
Investors also debate whether current pricing in markets hit by the shock of higher borrowing costs and geopolitical events is the best way to measure an asset’s long-term value.
Green Street estimates that across the industry many real estate investment trusts and institutional funds are still valuing their properties at roughly 10-15 per cent over what could be achieved right now.
The picture varies widely. In areas like apartment blocks, warehouses and some retail properties, rising rents and customer demand are giving investors confidence. Offices are more troubled, partly because of uncertainty about the level of demand in a post-pandemic world of hybrid working. But values also vary hugely depending on location, age and quality.
Scrutiny over valuations has been felt acutely by a few large investment trusts managed by property giants including Blackstone and Starwood Capital.
$780mnAmount investors wanted to withdraw from the $9.4bn Sreit fund last month but received just $31mn in cash
During the pandemic, the two famed investment groups were the most successful on Wall Street in attracting investment from wealthy individuals using private funds that offered limited opportunity for withdrawals.
Their two funds, Blackstone Real Estate Income Trust and Starwood Real Estate Income Trust, collectively attracted over $60bn between 2017 and 2022, and went on a buying spree that peaked in 2020 and 2021 when property values were high and interest rates were near zero.
Both Breit and Sreit have considerable leeway when it comes to valuing assets and were slow to mark down property values when interest rates began to rise quickly in 2022.
But fund investors formed their own views, pulling about $20bn out of both funds since late 2022 and forcing managers to limit redemptions in order to conserve cash and reduce the amount of property they had to sell.
Blackstone’s executives offloaded some of Breit’s most profitable assets, including a stake in the Bellagio Hotel in Las Vegas. The vehicle also secured $4.5bn of new investment from the University of California in early 2023 to bolster liquidity and avert a fire sale. But the return guarantees it promised the university have created a $751mn liability on Blackstone’s balance sheet.
Since 2022, Blackstone has sold $27bn of property at an average premium of 4 per cent to carrying value. In recent months, redemptions have slowed sharply and Blackstone has paid out investors’ requests in full. President Jonathan Gray said this month the fund was on track to begin drawing new money again.
The company said the semi-liquid structure of Breit had worked as intended. It added that rising prices, falling debt costs and lower levels of new construction activity “all point to a continuing recovery in commercial real estate”.
Starwood sold fewer properties, because founder Barry Sternlicht believed real estate markets were in panic mode. To meet about $5bn in redemption requests, Starwood sold $2.8bn of assets but also used internal cash and drew down almost all of a $1.5bn credit line.
Starwood was able to sell its properties “within 2 per cent of Sreit’s gross carrying values”, it has told investors, implying about a 4 per cent discount to their marks when including debt.
But by paying back investors with its own cash, Starwood has depleted its coffers and in May was forced to restrict quarterly redemptions from up to 5 per cent of the fund’s net assets to just 1 per cent. The move caused a furore among Sreit’s investors.
In September, Sreit met just 4 per cent of redemption requests, according to public filings. Investors had placed orders to withdraw nearly $780mn from the $9.4bn fund last month but received just $31mn in cash, the filings state.
The fund has begun marketing properties like apartments and logistics facilities in recent weeks, say two people familiar with the matter, adding that it has received some price indications above the most recent valuations.
The company declined to comment, but Sternlicht previously told investors that redemption restrictions on Sreit could last into mid-2025 “in anticipation of a lower interest rate environment and an improved real estate capital markets picture”.
It will probably take years for real estate pricing, and the damage to investors and lenders, to fully shake out.
On the plus side, lower overall debt levels going into this reset in pricing have made the sector more resilient compared with the years after the 2008 financial crisis.
Lenders’ attitudes and tolerance towards bad loans and troubled properties are the key factors in whether managers can ride out the downturn without ever having to fully address the trough in property values.
“We are never going to see a large enough quantum of distressed sales that the volume of distressed sales itself will impact on the overall pricing of commercial real estate,” says Green Street’s Papadakos.
“In the [global financial crisis] we did have a lot of distressed sales that cascaded those values even deeper into the red.
“This time, the valuations will trickle down to flat for a long time. Maybe for 24 to 36 months,” he adds. The recovery will be “protracted . . . because no one is forced to do anything”.
Aerial view of Citypoint and Barbican Centre in London
Citypoint and the Barbican in 2006. Citypoint’s previous owners paid £650mn in 2007 but defaulted on their loans in 2012, paving the way for Brookfield’s acquisition of the building © Getty Images
View from the ground looking up at the Citypoint building with grey clouds in the background
Citypoint was last independently appraised for its lenders in March 2023 at £670mn. But S&P put its value at £431mn in August, down from £457mn in autumn 2023 © Charlie Bibby/FT
In the UK, nearly 80 per cent of property loans had a loan-to-value ratio below 60 per cent, according to Bayes Business School’s mid-year report. Default rates have risen, but only to 2-4 per cent on bank loans and 14 per cent for debt funds set up specifically to finance real estate, Bayes said.
Raimondo Amabile, co-chief executive officer of PGIM Real Estate, says lenders are showing “a lot of patience” for assets that may currently be worth less relative to the loans against them, but where there is solid income and the situation is improving as interest rates fall.
Only some subsectors are causing headaches for lenders. “Behind the scenes, there is a lot going on in the office sector. If you go to talk to the banks, there is a lot — 90 per cent [of actual or potential distress] is office and the other 10 per cent is struggling retail,” he says.
“Is this going to generate a huge wave of distress in the market? No,” he reasons, because these troubled assets are too small a part of commercial real estate overall.
Mark Carney, the former Bank of England governor, told the FT this month that post-financial crisis regulations meant that banks were stronger and real estate risks were less concentrated.
“When there have been hits . . . it is more broadly diversified,” he said. “There are pockets of more acute risk in commercial real estate. I think those are increasingly recognised and marked.”
Property values are stabilising, and beginning to rise in some sectors like US residential properties and European logistics. Most investors expect that positive trend will gather momentum as more interest rate cuts come through.
One big risk to that recovery is a divergence between central bank interest rates and actual borrowing costs. Baseline borrowing costs in major financial markets have risen in the past month, even though policy rates have remained unchanged or fallen.
Blackstone’s Gray previously told the FT that a significant risk to real estate would be if the large scale of government deficits around the world led to a rise in the cost of capital “separate and apart from inflation”.
“This recovery would take longer if you [had] that,” he said.
Debt repayment deadlines are not the only factor pushing properties on to the market. Investment managers, especially those with time-limited funds, are under increasing pressure to return cash to their investors.
Papadakos says many managers “need desperately” to exit, especially if they are trying to raise a new fund. “If you go around asking a pension fund for £500mn, they will probably tell you: ‘give me [back] the £350mn that I gave you in 2021’,” he says.
Selling can be double-edged if the price agreed implies a mark down to the rest of the portfolio. Under pressure from lenders and investors, managers can try to sell those properties that will change hands at or close to their book value.
Normally, the market crashes. There are a couple of years of ‘extend and pretend’. They realise there is no solution. And then they end up in [non-performing loan] sales
Provided borrowing costs remain stable or decline, most market analysts expect commercial real estate will not experience a squeeze akin to the one following the global financial crisis.
Amabile of PGIM predicts that many distressed loans will ultimately be sold by the banks to opportunistic funds, which buy them well below face value in the hope of recouping value later on.
“Normally, the market crashes. There are a couple of years of ‘extend and pretend’. They realise there is no solution. And then they end up in [non-performing loan] sales,” he says.
It was through a distressed debt deal that Brookfield acquired Citypoint. The building’s previous owners had paid £650mn in 2007, just before the market crashed, and defaulted on their loans in 2012. Brookfield bought the debt in 2014 and took full control of the building in 2016. The price they paid was enough for the lenders to recoup their money, according to press reporting at the time.
The building’s history is a reminder that there are winners and losers in the trading game around prime commercial properties, but the play never stops.
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http://utangente.free.fr/2003/media2003.pdf
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www.rethink911.org
www.patriotsquestion911.com
www.actorsandartistsfor911truth.org
www.mediafor911truth.org
www.pilotsfor911truth.org
www.mp911truth.org
www.ae911truth.org
www.rl911truth.org
www.stj911.org
www.v911t.org
www.thisweek.org.uk
www.abolishwar.org.uk
www.elementary.org.uk
www.radio4all.net/index.php/contributor/2149
http://utangente.free.fr/2003/media2003.pdf
"The maintenance of secrets acts like a psychic poison which alienates the possessor from the community" Carl Jung
https://37.220.108.147/members/www.bild ... rg/phpBB2/