Tag Archives: denial

Who Needs Bankers, We Need God

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In the fall of 2013 I released a public article called “Who Needs God, We Have Bankers”. Over the last 2 years I have often thought of changing the title and releasing it again, but the power of the eternal snooze button from financial reality has stopped me.

After recent events, it seemed time to review the idea of “unlimited debt brings ‘stability’’; go back to sleep”.

The Snooze Button

The one thing about time, is like gravity, there are rules everyone plays by and always will.

Yes, debts had piled up in the trillions since 2013. Yes, it has produced the “wealth effect” assisted by various repetitious algorithmic suppression games, thus creating an even more powerful nirvana in the minds of people.

But the rules of markets and life have not changed since 2013. Thus, the value of asking questions instead of accepting the status quo become even more valuable with each passing year in this central bank/ state promoted mania.

First, let’s review the snooze button from the Oct ’13 article….

“The snooze button; what a great invention. When you have awakened from a deep sleep, and know you can get ready in less time, just hit the snooze button. You know it will still awaken you for your test or to get ready for your 8:00 flight, but in the meantime, you can enjoy a few more moments of precious sleep.

 

However, if you keep hitting snooze and fail to look at the time, you can also awaken to find that the extra sleep has now placed you in a position where you missed the final exam or your flight. The rewards for a few extra moments of sleep have suddenly become very costly.”

…and how Quantitative Easing (or hyper money printing to buy up assets) by central bankers has created the effect of a snooze button among investors worldwide. The higher the prices, the more the sleep, yet higher risk brings a greater need for an alarm to ring.

“Since the largest collapse of financial assets in history in 2008, the major central banks in the world, the Bank of Japan, The People’s Bank of China, the European Central Bank, the Federal Reserve, and the oldest of this group, the Bank of England, have worked together to create the largest asset bubbles ever seen while keeping the public in a perpetual state of blissful sleep. The method is actually quite simple.

 

Offer ultra-cheap credit to the global banks by which they can go promote even wilder speculation. Allow extreme levels of leverage in the system, something the general investor seems to never be aware of along the way. If things start looking weak, make certain the standards for collateral against those loans for speculation are LOWERED, allowing even more reckless behavior into the system.”

Now I ask you, were these statements from my October 2013 article correct at that time? If so, based on the actions of these central banks since 2013 it becomes even more important that we understand them in 2017.

If, so, then it must be true that we have more debt in the world today, higher asset values, more complacency, and greater risk not only our money, but our day-to-day use of it.

Let’s compare the stats.

Fall 2013, Summer 2017

December 1913 – Federal Reserve Act passed, establishing the Federal Reserve. US National Debt, $3 Billion

Fall 2013 – US National Debt – $17,000 billion (17 trillion)

Summer 2017 – US National Debt – $20,000 billion (20 tr.)

October 2013 – The combined balance sheet assets of the European Central Bank, the Federal Reserve, the Bank of Japan, the Bank of England, and the Swiss National Bank had reached $10 trillion. [Remember, this does not include the People’s Bank of China.]

May 2017 – The combined assets of these 5 major banks had reached $15 trillion.

 

The one thing that has become very clear in the summer of 2017, is that US equity markets since the fall of 2013 are substantially higher, the US national debt is more than twice what it was at the October 2007 top ($9 tr.), the NASDAQ 100 has climbed almost 5 times the level it stood 8.5 years ago, five of the major central banks have purchased 50% more in assets than they had in 2013 with debt they created out of thin air, and the global credit growth has contracted sharply since 2015.

Does this look like “financial stability”?

Is it time we should be asking, “Who Needs Bankers, We Need God”?

UN Wants Global Currency To Replace Dollar, UK Telegraph, Sept 7 ‘09

 

The IMF’s SDR; Only Way to Combat the Next Financial Crisis, Business Insider,

Oct 26 ’16

Time for Discussions on the Moral Ramification of “Unlimited Money”?

Have we placed our “faith” in global central bankers, global political meetings and think tanks to take care of the “big stuff” so we can go about our own lives and plans? If so, have we allowed these global groups to become our gods?

When will it be time to return to the past and question the moral ramifications of “unlimited debt” exchanged for artificially inflated “riches”?

Ponder these quotes. Are they not relevant to us today?

“We must not let our rulers load us with perpetual debt. We must make our election between economy [thrift] and liberty or profusion [abundance] and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds… our people must come [will have] to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their [the government’s] debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must [will] have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers.

 

If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them [the banks], will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered.” – Thomas Jefferson

 

“He who oppresses the poor to make more for himself or who gives to the rich, will only come to poverty.” – Solomon, Proverbs 22:16

 

“Government printing press money distorts economic reality, dilutes morality and is the true source of “income inequality.” Financial speculation rises with the increase in paper money and the general work ethic deteriorates. The something-for-nothing mentality pervades society.” – Bob Livingston, Personal Liberty, The Immorality of Paper Money, July 14 ‘14

 

“The argument that money is apolitical and amoral is equivalent to saying:  we are wealthy and powerful not because the system is designed to concentrate wealth in our hands but because we are lucky, talented and/or divinely deserving”. – Charles High Smith, Why Our Status Quo Failed and Is Beyond Reform (2016), Location 678, Kindle Edition

 

“ And He told them a parable, saying, “The land of a rich man was very productive. And he began reasoning to himself, saying, ‘What shall I do, since I have no place to store my crops?’ Then he said, ‘This is what I will do: I will tear down my barns and build larger ones, and there I will store all my grain and my goods. And I will say to my soul, “Soul, you have many goods laid up for many years to come; take your ease, eat, drink and be merry.”’ But God said to him, ‘You fool! This very night your soul is required of you; and now who will own what you have prepared?’ So is the man who stores up treasure for himself, and is not rich toward God.” – Jesus Christ, Luke 12:16-21

 

A tired, but curious mind

 

 

No Worries, “They” Will Keep It Up

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To the World of 2024,

The title of this post will sound strange to everyone living in 2024. How could people all over the world come to believe that a small group of powerful bankers, central banks, could use their “tools” so that the nations of the world could eventually reach a point where the public at large did not need to be concerned about a major change in prices? No matter what negative event shook global financial markets, these “money fireman” were always standing ready to pour on MORE debt and/or use various manipulative tools to “assist” investment markets until things “returned to normal”.

Let me illustrate with a recent event for us, which by 2024 will be studied as history. It is called the Brexit. This was a public referendum where the British people voted to leave the European Union on June 23rd.  Friday the 24th produced big drops in stock markets around the world.

July21_LossesJune23

Yet the monetary fire hoses were ready, as demonstrated by comments from the big central banks listed in this article on that same Friday.

Central Banks Ready to Pump Billions into System to Calm Jittery Markets After Brexit Shock, Financial Post, June 24, 2016

[US Federal Reserve, European Central Bank, Bank of England, Central Bank Governors and Finance Ministers from the G7, Swiss National Bank, Bank of Japan, People’s Bank of China, Reserve Bank of India, and the Central Bank of the Russian Federation]

July20_Gains.SinceJune24

Four weeks later, not only have the events of June 24th been quickly erased, but they and other high risk developments over this period as seen through “the markets” can be viewed as no big deal. Risk? What is that?

This global “rescue” did not take place during the Great Recession in 2008. This did not take place in 2009 when the Federal Reserve started “temporarily” buying up toxic assets (mortgage backed securities) from the banks in order to free up credit.

This is July 2016, the 89th month since the March 6, 2009 low. It is impossible to believe that “stability” was the goal of central bankers. If the objective was to calm markets, they failed. The view of risk has now become, “This is great. Central bankers will drive up my stock investments very quickly, and if U.S. stocks, push them to new all-time highs!

Declines? What is that? ‘They’ will always keep prices up.”

July21_SPBiggestDrops

The problem, as you know, is that these major central banks have been “rescuing” the nations of the world with more debt since the Great Recession, than any time prior to 2008.

July21_Waiting

So why are there still millions of investors sitting in US stock funds at the highest prices ever recorded, when with each passing week there are myriads of reasons the dominoes should start falling?

Why Italy’s Banks Could Ignite a Eurozone Crisis, Marketwatch, 7/21/16

UK Property Funds Suspend Trading, Freeze Assets, Investopedia, 7/6/16

(Bank of Japan governor) Kuroda: Helicopter Money is Illegal, FT, 4/28/16

Something Big Is Coming: Bernanke to “Secretly” Meet With Kuroda; “Helicopter Money” on the Agenda, Zero Hedge, 7/7/16

Yen Soars, Stock Slide After Kuroda Says “No Need or Possibility for Helicopter Money”, Zero Hedge, 7/21/16

The financial industry was taught, and thus passed on to Main Street investors, the idea that no matter what happens, the American stock market ALWAYS comes back. Why study lessons from 400 years of financial history? What’s wrong with US and world debt loads’ soaring?

We have seen interest rates drop since the 1980s. In the US, the highest levels ever seen were in 1981 when the yield on 10 year US Treasuries reached 15.84. Now this month, on July 5th, the yield on the 10 year hit a low of 1.37. This low was the lowest ever in American history.

If we can all look back and agree that it was obvious that rates would fall from the highest levels on record in 1981, can we not also agree that rates at some point would rise?

While this 36 period has rewarded bond investors who have seen prices rise as yields have fallen, are these same investors considering this piece of history?

July22_HistoryofInterestRates

“The greatest of all secular bear bond markets, which began in April of 1946, and probably ended in September 1981, carried prime long American corporate bond yields from their lowest recorded yields to their highest. The yield index rose from 2.46 to 15.49% for seasoned prime issues and up to 16.5% (industrials) and 18.0% (utilities) for high-quality new issues… If a constant maturity thirty-year 2 ½% bond had been available throughout this second bear market of the century, its prices could have declined from 101 in 1946 to 17 in 1981, or 83%.” – A History of Interest Rates, Third Edition Revised (1996), Sidney Homer and Richard Sylla, pg 366-367

Having become a world where our own experience supersedes the lessons from history, how should public perception change when stocks go down, and rates rise?

July22_Dow

July22_USTreasuries36Years

In 2024, the answer will be yet another story from the annals of financial manias. Everyone will understand that “the state” could never stop investment prices from deflating, since they were the very ones whose actions and polices over inflated them since 2008.

Sadly, this has created not only enormous financial problems across societies, but reduced the critical importance of ethics in a sound financial and economic system.

“Dishonesty wasn’t really a solution, it was simply easier.” – Charles Hugh Smith, economist

“It’s not just the political system that’s rigged, it’s the whole economy.” – Presidential Candidate Donald Trump at the Republican National Convention, July 21, 2016

 

A Curious Mind

 

The “Experience” Market Bubble

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May31_Secret

“There is truth deep down inside of you that has been waiting for you to discover it, and that Truth is this: you deserve all good things life has to offer. You know that inherently, because you feel awful when you are experiencing the lack of good things. All good things are your birthright!” – The Secret (2007), 41 weeks in top the five NY Times Hardcore Advice List; it opens my article, Fear and Perception, released on November 1, 20017, two days after Hong Kong’s Hang Seng stock index hit its highest level ever. So much for “all good things” being a “birthright”.

 

Four months earlier, on Thursday, July 19, 2007, I released a group email to all paid and free subscribers of Best Minds Inc. The email stated the following:

“Evidence is mounting that we are in the final throes of this worldwide, credit-fueled bubble. The wobbling dominoes certainly merit the attention of all investors and advisors.”

That same day, the Dow closed above 14,000 for the first time. It began its descent the next day, but roared back up to close 8 days above this level in October 2007 before starting its downward march through what is now known as the Great Recession. It would take until February 1, 2013, and the public watching the largest ongoing bailout of global banks ever, before the Dow would once again close above 14,000.

So if investors wanted to “experience” wealth, why was July 2007 a harbinger that their wealth was about to be taken from them? Because financial facts at the top of financial bubbles are very different from financial feelings.

By July 2007 I had already seen the Philly Banking Index decline since February. I had contacted a few of my Wall Street level sources for areas I should be watching. One individual told me to pay close attention to two big hedge funds at Bear Stearns that were close to being shut down. Their total value at the end of 2006 was close to $20 billion. On July 16, 2007, the two funds were closed. One source stated that one fund’s assets were valued at zero and the second at 9 cents on a dollar.

July20.07_Dow

July20_BKX

 

Two Big Funds At Bear Stearns Face Shutdown, WSJ, June 20, 2007

“Two big hedge funds at Bear Stearns Cos. were close to being shut down last night as a rescue plan developed over several days fell apart in a drama that could have wide-ranging consequences for Wall Street and investors.

Merrill Lynch & Co., one of the hedge funds’ lenders, said it would move to seize collateral — much of it mortgage-backed debt — from the two funds and sell it, according to documents reviewed by The Wall Street Journal.”

Since this is all history now, everyone can say, “Oh, I knew that the markets were going to fall.” However, in July 2007, the mood was very different.

On Sunday, July 22nd, I ran into a financial advisor at my church. He had signed up for my free educational services, so had received the group email on the 19th.

“Hey, are you still looking for a collapse?” he said sarcastically.

“We all have our opinions”, I stated, and walked off.

A few weeks later, anyone reading headlines knew we had entered a credit crisis. However, since we are wired to desire more, and the financial industry feeds the idea that every decline is merely a correction before soaring higher, by October, breaking 14,000 again was seen as normal, and looking for prices to be cut in half seen as nothing more than “naysayers”.

July17_Dow

July2009_BKX

However, we all know today, that history was about to change the perception of investors in 2008. By the time these comments were made by President George W. Bush to the American people, we had already seen the collapse of Bear Stearns in March and the bankruptcy of Lehman Brothers and the nationalization of AIG in September. Like today, these events did not come because there were no financial facts supporting we were living in a financial bubble in 2007, but because the feeling from rising prices built on “unlimited” cheap debt was far more “positive” while it lasted.

[President George W. Bush, The Economy & The Bailout: Primetime Address to the Nation, Washington, DC, September 24, 2008]

“Good evening. This is an extraordinary period for America’s economy. Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. We’ve seen triple-digit swings in the stock market. Major financial institutions have teetered on the edge of collapse, and some have failed. As uncertainty has grown, many banks have restricted lending. Credit markets have frozen. And families and businesses have found it harder to borrow money.

 

We’re in the midst of a serious financial crisis, and the federal government is responding with decisive action….

 

In close consultation with Treasury Secretary Hank Paulson, Federal Reserve Chairman Ben Bernanke, and SEC Chairman Chris Cox, I announced a plan on Friday. First, the plan is big enough to solve a serious problem. Under our proposal, the federal government would put up to $700 billion taxpayer dollars on the line to purchase troubled assets that are clogging the financial system. In the short term, this will free up banks to resume the flow of credit to American families and businesses. And this will help our economy grow….”

It is no longer September 2008. It is now June 2016. The problems from the ultra cheap loans into the trillions that lead to the credit crisis of 2008 were never addressed. Global debt is now over $200 trillion, an increase of over $60 trillion since Q4 2007 when the Dow left its 14,000.

At the end of May 2016, the Dow is still hanging close to its all time high from over a year ago, and yet has seen two plunges from its 18,000 twice, both declines taking the Dow down over 2500 points in less than a month.

Yet even the most powerful financial organizations in the world continue to reveal that 7 years of “unlimited debt and intervention” have not created a strong growing economy.

The IMF Slashes World Growth Forecasts Again, CNBC, April 12, 2016

Global growth continues, but at an increasingly disappointing pace that leaves the world economy more exposed to negative risks. Growth has been too slow for too long,” IMF Chief Economist Maurice Obstefeld told a media conference on Tuesday, according to prepared remarks.

G7: Global Economic Growth An ‘Urgent Priority’, Al Jazeera, May 27, 2016

The leaders of the G7 group have said the world economy is an urgent priority and cautioned that a British vote to leave the European Union would seriously threaten global growth.

Act Now, Or Risk Another Deep Downturn, OECD Warns Policymarkets, Yahoo Finance, June 1, 2016

In the OECD’s (an international economic organization of 34 nations) latest economic outlook published on Wednesday, the organization said that global growth had “languished over the past eight years as OECD economies have struggled to average only 2 percent per year, and emerging markets have slowed, with some falling into deep recession”….

 

“The need is urgent. The longer the global economic remains in the low-growth trap, the more difficult it will be to break the negative feedback loops, revive market forces, and boost economies to the high-growth path. As it is, a negative shock could top the world back into another deep downturn,” Mann said.

World Bank Cuts Global Growth Forecast on Weak Demand, Commodity Prices, Financial Express, June 7 ’16

The World Bank slashed its 2016 global growth forecast on Wednesday to 2.4 percent from the 2.9 percent estimated in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows….

 

The downgraded World Bank forecast follows a similar move by the International Monetary Fund, which cut its growth forecasts two months ago.

May2016_Dow

May2016_BKX

 

With all the strong concerns about the global economy slowing from the world financial organizations listed above, shouldn’t both investors and advisors be asking WHY does the Dow keep returning to its first in history 18,000 level, and ignoring headlines like the ones above?

Remember 2007 when the Dow went to 14,000 for the first time in 2007? Remember how the KBW Bank Index was dropping months ahead of the broader US stock indices. As of May 31, 2016, the KBW Bank Index, after two big drops, and two big rallies, is still down 12.4% lower than its 2015 high. Are the big banks telling everyone something?

Unlimited Debt and State Intervention Was Wrong From the Start

We are quickly running out of time to sit silent and ignore this 800-pound gorilla. We must choose between two paths. The first is to continue to ignore this problem, the lessons from the 2000-2002 and 2007-2009 collapse, and the destruction straight ahead to the lives of people all over the world. We must embrace the expansion of the state and the constant “assistance” we have seen since 2009 by central banks around the world through additional trillions in ongoing bailouts in our financial markets, even the direct actions to buy up certain markets in order to artificially inflate them for a few years.

The second is to face these real world problems. We must start quickly by talking about these problems, that will impact every individual, community, school, and place of worship across our nation, and for that matter, world.

Will we speak out? Will we sit silent? One thing is for certain, hoping for more corruption of our markets and economy by central bankers and global politicians is immoral.

The trouble is finding ways to talk about what our globalist, materialist centered world has come to believe is permanent, which never was: the path to riches from bankrupting the nations.

Everyone needs to consider the hard facts presented in one of my recent articles, When Rare Data Screams, Listen. Anyone who remembers the double-digit CD rates from the early 1980s really needs to check this one out. This is history!

image014

* 1981 – Annual high in the Dow was 1,050. US national debt crosses $1 trillion for the first time. 2015 – Annual high in the Dow hits 18,351 on May 19th. The last day of 2015 the national debt hits 18.9 trillion.

 

A Curious Mind

 

 

Optimism Didn’t Help Greeks or Chinese

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If you are reading this in 2024, you will wonder why we ignored so many warnings and so much history. Hopefully, this will help you understand 2015.

I am an American. In my country, nothing is sought more in our society than optimism. We buy books, go to seminars, and entertain ourselves in the pursuit of optimistic experiences. At first glance, this appears like a very good trend. Solomon wrote 3,000 years ago about the importance of hope and optimism when he stated, “A joyful heart is good medicine, but a broken spirit dries up the bones”.

But what if we are faced with world trends around us that can not be solved merely by the power of positive thinking. What if the fuel to this optimism, money, continues to move in a direction where there is less of it for everyone; either because of fewer jobs, or because we enter a period when financial assets deflate because creating trillions more in debt has reached its limits?

No matter how much our minds conceive and believe, we will have to live through a period with less, not more.

In the global financial world, there are two trends that continue warning us all that we are coming into such a period. Yet we seem so focused on the near term experience, that we even now fail to realize that the idea of “unlimited money” based on “unlimited debt” was never a sustainable path. Eventually, “all time high” stock headlines based on “all time low” borrowing costs must stop and change directions.

Google’s 16% Leap Lifts NASDAQ To New High, USA Today, 7/7/15

German Bund Yields Tumble Toward Zero Amid ECB Stimulus, Greece Jitters, WSJ, 4/16/15

 

Warning From the Top of the Financial World

BIS.Logo

Recently, the highest authority in the financial world, the Bank of International Settlements, released these comments in their 85th annual report on June 28th:

“Interest rates have never been so low for so long…Between December 2014 and end-May 2015, on average around $2 trillion in global long-term sovereign debt, much of it issued by euro area sovereigns, was trading at negative yields…. Such yields are unprecedented. Policy rates are even lower than at the peak of the Great Financial Crisis in both nominal and real terms…. There is something deeply troubling when the unthinkable threatens to become routine.

 

The economies hit by a balance sheet recession are still struggling to return to healthy expansion…

 

Domestic policy regimes have been too narrowly concerned with stabilizing short-term output and inflation and have lost sight of slower-moving but more costly financial booms and busts…Short term gain risks being bought at the cost of long – term pain.”[Bold my own]

Now I ask you, did that sound positive? Any student of market history, whether they are a curious teenager or global central banker, can learn about booms and busts dating back to the establishment of the Amsterdam Exchange in 1610, and the Dutch Tulip Bulb Mania that peaked in February 1637. The problem today is not a lack of information on history, but our desire to ignore it.

Moving on. Consider this news headline. Is it merely theatrics, or do the actual words from the BIS report reveal a landscape that is extremely high in risks to all investors….you know, something that would be considered “negative”.

 

The World Is Defenseless Against the New Financial Crisis, Warns BIS, UK Telegraph, 6/28/15

UKTelegraph_BISWarns_June28.15.

So why don’t more individuals, whether inside the financial industry or the public at large, discuss why governments reaching “lowest in history” borrowing costs alongside stock investors embracing “all time highs”, is not sustainable. Why are “bearish” market pundits, the highest authority in the global financial system, and history itself being ignored by the majority in 2015?

Easy. The experience of rising equity markets, and central planners intervening to make certain stocks “never” decline again, has created the illusion of ”all gains, no pain”. Is it that hard to see where this is going next?

2015-07-17_NASDAQ20.1

 

The Dam Story

In 2006, I read a book called Collapse: How Societies Choose to Fail or Succeed (2005) by Dr. Jared Diamond, Professor of Geology at UCLA. While his work is on systemic risks to the environment, I believe you will see how this story could apply to our human desire to have financial stability, even to the point of ignoring repeated systemic warnings that will bring changes for ALL of us.

Collapse_book“Consider a narrow river valley below a high dam, such that if the dam burst, the resulting flood of water would drown people for a considerable distance downstream. When attitude pollsters ask people downstream of the dam how concerned they are about the dam’s bursting, it’s not surprising that fear of a dam burst is lowest far downstream, and increases among residents increasingly close to the dam. Surprisingly though, after you get to just a few miles below the dam, where fear of the dam’s breaking is found to be the highest, the concern then falls off to zero as you approach closer to the dam! That is, the people living immediately under the dam, the ones most certain to be drowned in a dam burst, profess unconcern. That’s because of psychological denial: the only way of preserving one’s sanity while looking up every day at the dam is to deny the possibility that it could burst.

 

If something that you perceive arouses in you a painful emotion, you may subconsciously suppress or deny your perception in order to avoid the unbearable pain, even though the practical results of ignoring your perception may prove ultimately disastrous. The emotions most often responsible are terror, anxiety, and grief.” [pgs 435 & 436]

Is there any sign of a dam or two breaking in the financial world? Anyone keeping up with current developments in the world of money immediately brings to mind the recent stories on Greece and China.

TwoFlags.Greece.China

Let’s investigate these two stories; a lock down of a country’s banking system and wiping out 20% -35% of a nation’s stock wealth in less than 2 months.

In both cases, what has just financially hammered the lives of tens of millions of people, are stories where these same individuals had warnings for years, then months leading up to recent events.

 

Greeks Being Warned

Greek Bank Run Continues: Greek Domestic Deposits Lowest in Decade, Forbes, 5/30/15

“The standard view of the Greek debt crisis is that all everyone has to do is agree upon the reform program and that will be that. And that’s a reasonable enough view except that there’s one other thing that could happen. The Greek banks could run out of money….

Deposits at Greek banks are at their lowest level in more than 10 years amid broad concerns about the country’s economic prospects that have hammered shares in Greek lenders this year.”

 

Greeks Shocked; How Could This Happen?

Greek Banks Prepare to Plan To Raid Deposits to Avert Collapse, Financial Times, 7/4/15

“Greek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, bankers and businesspeople with knowledge of the measures said on Friday.

The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000, sketch out an increasingly likely scenario for at least one bank, the sources said.

A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000.”

Greek Banks Set To Open Again on Monday – But ATM Limits To Stay, The Daily Express, 7/17/15

“The banks have been shut since June 29 after capital controls were put in place to stop the Greek financial institutions collapsing over fears that the country could crash out of the eurozone.

Cash points have been running with withdrawal limits of €60 and money cannot be transferred in or out of the country….

The bailout proposes Greek tax hikes, pension reforms and tighter supervision of the government’s finances in return for €86billion (£61bn) of cash.

The measures are more severe than those rejected by Greeks in a national referendum a little ever a week ago and condemn the country to years of economic woe.”

ATMLines

 

Chinese Being Warned

China Investors: Stock Market Fever, Financial Times, 4/10/15

“Retail money is pouring into tech st0cks and other ‘concepts’ = and the buoyant mood is spreading.

Sun Shuming could barely contain his joy. With one hand holding aloft a glass of champagne and the other making a thumbs-up sign, Mr. Sun beamed as a bank of cameraman snapped away on the floor of the Hong Kong exchange. Shares in GF Securities, the brokerage he runs, had just jumped 40 per cent within moments of going public on Friday morning.”

 
Chart Of the Day: Over 4 Million New Chinese Trading Accounts Opened Last Week, Zero Hedge, 4/28/15

ZH_ChinaBokerageAccounts.April2015

 

Chinese Shocked; How Could This Happen?

The Really Worrying Crisis is Happening in China, Not Greece, UK Telegraph,7/9/15

While all Western eyes remain firmly focused on Greece, a potentially much more significant financial crisis is developing on the other side of world. In some quarters, it’s already being called China’s 1929 – the year of the most infamous stock market crash in history and the start of the economic catastrophe of the Great Depression.

In any normal summer, a 30 percent fall in the Chinese stock market – a loss of value roughly equivalent to the UK’s entire economic output last year – after an ascent which had seen share prices more than double within the space of a year would have been front page news across the globe….

The parallels with 1929 are, on the face of it, uncanny. After more than a decade of frantic growth, extraordinary wealth creation and excess, both economies – America in 1929 and China today – are at roughly similar stages of economic development. Both these booms, moreover, are in part explained by extremely rapid credit growth. Indeed, China’s credit boom dwarfs that of even the “roaring Twenties”. Borrowed money, or margin investing, played a major role in both these outbreaks of speculative excess….

China Makes Selling for Big Investors Illegal, Zero Hedge, 7/8/15

Having corralled selling by the National Social Security fund earlier this week and after discouraging local reporters from mentioning selling in the press, China has now made it illegal for big investors to dump shares over the next six months.

ChinaInvestors_AfterCrash

 

A Lesson for Everyone, Whether Big Investor or Small Depositor

The answer is clear for everyone. We like our lives and world to be neat and orderly. We like to look ahead, and see a nothing on the tracks.

Yet, either from our own life, or that of others, we know this is not the real world. We know this is not what history teaches. Greece and China are merely part of a series of whistles being blown off in the distance, warning of changes to come.

Train.Orchard.JohnnyJones

We have watched as billions surpass trillions then top 200 trillion in global debt. As stocks and bonds have soared since 2008, central planning pundits have promised that by creating more pressure on the global system from rising debt levels, the dam was actually getting stronger. The 2008 “financial flood” that destroyed $60 trillion globally, well, those problems have been corrected.

A nation’s banking system being closed to its depositors and tens of millions of investors watching their stock holdings get cut 20-35% in the last 2 months are warning us that relying on a smooth impregnable global interconnected system to always be ready to support our plans in the future, is a totally fallacious idea.

There is no “hold on and eventually the world comes around to our desires”.

Whether cracks in the dam, or wealth in the electronic casino that can vanish by the trillions in weeks, when a system under enormous pressure finally breaks, it can prove very unforgiving.

DamBreaks

We have been here before. We would like to ignore painful money bedtime stories and the history we have already lived through. But even a search engine will not let us forget our past anymore.

Rush on Northern Rock Continues, BBC News, 9/15/07

“The rush of customers taking money out of Northern Rock continued for a second day on Saturday, amid concerns over its emergency Bank of England loan.
Banking sources suggest that on Friday alone clients pulled out £1bn – or 4-5% of retail deposits.”

“Do not store up for yourselves treasures on earth, where moths and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there your heart will be also.” – Matthew 6:19-21

 
“While they were saying, ‘Peace and safety!’, then destruction will come upon them suddenly like labor pains upon a woman with child, and they will not escape.” – I Thessalonians 5:3

A Curious Mind