Economic Collapse Blog thinks the time is nigh:
… a major banking collapse was coming to Europe, and now it is finally unfolding. Let’s start with Deutsche Bank… Overall, the stock price is now down a staggering 36 percent since 2016 began, and Deutsche Bank credit default swaps are going parabolic…
In addition to Deutsche Bank, the list of other “too big to fail” banks in Europe that appear to be in very serious trouble includes Commerzbank, Credit Suisse, HSBC and BNP Paribas. Just about every major bank in Italy could fall on that list as well, and Greek bank stocks lost close to a quarter of their value on Monday alone. Financial Armageddon has come to Europe, and the entire planet is going to feel the pain…
Credit Suisse is the most important bank in Switzerland, and they announced a fourth quarter loss of 5.8 billion dollars. The stock price has fallen 34 percent year to date, and many are now raising questions about the continued viability of the bank.
The danger is that beneath the machine is a derivative market of unimaginable size that depends on the credit-worthiness of everyone involved in it:
Along with credit default swaps and other exotic instruments, the total notional derivatives value is about $1.5 quadrillion – about 20% more than in 2008, beyond what anyone can conceive, let alone control if unexpected turmoil strikes.
The late Bob Chapman predicted it. So does Paul Craig Roberts. It could “destroy Western civilization,” he believes. Financial deregulation turned Wall Street into a casino with no rules except unrestrained making money. Catastrophic failure awaits. It’s just a matter of time.
Ellen Brown calls the “derivatives casino…a last-ditch attempt to prop up a private pyramid scheme” – slowly crumbling under its own weight.
For years, Warren Buffett called derivatives “financial time bombs” – for economies and ordinary people.
Unless collateralized or guaranteed, their worth depends on the creditworthiness of counter-parties.
Eliminate the credit-worthiness of enough of those entities, and much of that wealth could evaporate, which will further reduce credit worthiness of others. With $1.5 quadrillion in wealth, a not-so-large slice of that pie can have a massive effect.
There is a tendency to think this is just same shit, different day, but on Free Republic, one insider thinks differently:
The collapse of the banks in Europe is dragging down stock prices all over the continent.
It’s also dragging down stock prices in the U.S.Won’t say who I work for, but I work in the Banking Sector (High Wealth) and our stock price has dropped just over $21 recently.
We had a near record Q4/2015. The January equity plunge has so scared/concerned our Senior Management that the announcement went out last Thursday that all salaries are frozen until at least October, we have a hiring freeze (big deal, we’ve had that for five+ years now..) and we’re cutting consultants left and right. Layoff’s are coming and non-mission critical / non regulatory requirement projects are being slashed.
It’s BAD. Whatever’s coming is a big bowl of BAD. We didn’t get these kinds of cuts in 2008/2009.
Frankly, it’s obvious that our Senior Management is starting to panic, and that’s making me nervous.
My feeling is the real collapse is a decade or more away, and it will be a decade or longer affair, possibly including major war and plague. But in between now and then, we need a major correction to push everything down quickly and then allow for one last bubble of enthusiasm that will let the eggheads milk the last little bits of what is left in the system. Without that correction we would just stagnate as everyone pulls everything they have out of the system slowly, and everything heads down gradually.
Democrats know that correction is coming, and that is why they didn’t run a credible candidate this time around. They know coming on the heels of Obama, they will get blamed for the downturn, and the inevitable passing of $24 trillion in national debt. The interesting thought is, what level of bad could be so bad that they would just surrender the race for the highest office in the land?
My guess is plan A would be to wait until Trump or Cruz take over, and then they pull the rug out, to keep from sullying Obama. The one bug in the system is everyone knows that is the plan, and since the eggheads want to beat the rabble out of the markets, the eggheads may have to pull the plug early to get out first.
The game is figuring out exactly when it begins.
[…] By Anonymous Conservative […]
Numerous banks are battening down the hatches, as are at least some credit card companies.
The perception of limitless wealth was born in and fueled by the bond market. There’s a credible rationale for counting derivatives as part of the Total Bond Ocean. The Bond Ocean is where credit creation was turned into “wealth,” and it is the Bond Ocean where evaporating trust (in the underlying issuers of IOU’s) will lead to a perception of wealth destruction never seen in recorded history.
Wealth will return to the ether from where it arose. The chaos will come because
1. It’s unclear who actually owns the few assets that were rehypothecated across vast amounts of IOU’s/derivatives.
2. Productive capital was consumed and/or allowed to rust away during the period where visions of unlimited wealth and resources danced in people’s heads.
#2 means that the ability to PRODUCE the stuff of high living standards has shrunk, and recognition of its loss will cause average living standards to dive.
Add in open conflict over race, ethnicity, class and political culture and then catalyze with a pandemic, a few food scares and such and you’ll have your apocalypse.
Question is, how can we profit from the crash?
I think the key would be to find or create businesses supplying necessities, that could still source their supplies and materials in the collapse, and had an established outlet to distribute them that wouldn’t see interruption due to the chaos.
I envision a business that sells a service to harden homes against intrusion. Compare homes in Argentina to homes in the USA. The former are clearly hardened. Job #1 is to make the doors kick-in proof.
Another choice would be to sell landscaping that is security conscious. I once read about a firm that planted hedgerows of shrubs with long, needle-sharp thorns as an alternative to barbed wire fence.
Hardening homes built during peace for times characterized by chaos might be a growth opportunity, as might be designing and building the gates, etc. needed to turn typical suburban subdivisions into gated communities.
Now that is brilliant.
Agreed. Alt-Right needs to network. I have capital to invest.
Claim land.
” on Free Republic, one insider thinks …..”
Scratchin’ my head on this one.
what makes you think it is still 10 years out?
this will occur (imho) on the parabolic we are currently on. I personally think the puppet masters aren’t ready for a collapse but I also think they don’t have control of all the details or how the their actions don’t always give the desired results.
Could be right. I just think there is a little more to bleed out, so they will give at least one more mini-crash, another mini-bubble where we are told it is all OK, and then let it all go.
But I have no crystal ball, and the debt spiral is picking up.
The danger is that beneath the machine is a derivative market of unimaginable size that depends on the credit-worthiness of everyone involved in it:
There is no possible universe where this works long-term.