Pye Ian

Pye Ian
Newsbud Senior Analyst & Commentator

Pye Ian is an independent economic and geopolitical researcher as well as a strategic planning and business development advisor. His articles and analyses on international affairs, economic trends and cultural topics have been published in various mainstream and alternative press sources. Mr. Ian’s wider intellectual interests are reflected in his writings on the convergence of foreign affairs, political philosophy, history, global finance and energy policy. He has undergraduate degrees in economics and political science from the University of California and a Master’s degree in finance from Cambridge University. In addition to English, Mr. Ian has proficiency in Farsi.

The Rockefellers and Rothschilds in China: A Long, Intimate Relationship

The history of Wall Street and Anglo-American finance in China is one that is rarely discussed in western media or even academia, whereas knowing it would explain much about both China’s stunning economic rise over the past 70 years, as well as certainly seemingly rising tensions between China and the US today.  It’s hard to tell if there is genuine tension and enmity because of credible rivalry status between the US and China, or if everything is proceeding according to wider, deeper, much longer-term planning based on desired, durable and thus political coordination.  Large US, UK and EU investment banks are new entrants into China’s nascent bond sector, yet also retain longstanding presences pertaining to China’s financial and economic development.  Such factors should be weighed alongside other historical details in evaluating China’s recent threats to ‘dump US Treasury bonds’, as well as to ultimately view any sense of symbiosis which the US and China are serving, and why.  Are banks such as JP Morgan Chase, Goldman Sachs, Citigroup, Standard Chartered, BNP Paribas, Deutsche Bank and others necessarily against a ‘bond run’ and wider trashing of US debt?  Or not so much?  Who benefits?  More specifically, who profits?

In this episode of Money & Fear, we’ll review some monetary and political history involving Wall Street and Beijing in order to weigh the mentioned factors.  Details not shared, let alone analyzed, by mainstream corporate business press supposedly reporting on US-China trade, tariffs and/or currency wars, even.

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Show Notes

JPMorgan's China News Is Great...for China- Bank shareholders may want to temper their excitement

JPMorgan Gains Entry to China's Bond Market, a First for U.S. Banks

JPMorgan gets China corporate bond underwriting license

J.P. MORGAN RECEIVED TYPE-A BOND SETTLEMENT AGENT LICENSE IN CHINA

China's bond market to surpass Japan as world's second largest in five years: UBS

China bond index inclusion to see $286 bln passive inflows -StanChart

Goldman Sachs, China's CIC to launch up to $5 billion fund: sources

China GDP Annual Growth Rate

Foreign Direct Investment in China by Edward Graham & Erika Wada (white paper)

JPMorgan Chase Allowed to Conduct Interbank Bond Settlement

China Moves Forward With Further Bond Market Opening

New China bond licences raise more questions

Why Is China Excluded From Global Bond Indices?

JP Morgan soothes fears of busted flush in China

JPMorgan says panda bond sales to grow, diversify

We haven't heard JPMorgan CEO Jamie Dimon go this dark on China in a long time

Could China's Banks Take Down the Global Economy?

JPMorgan fined for hiring kids of China's elite to win business

Rockefeller family's connection with China

The Oil Prince’s Legacy: Rockefeller Philanthropy in China

America & China, Part 1: Rockefeller Origins

America & China Part II: Interregnum

America & China Part III: The Great Deal

America and China Part IV: The Big Balance Sheet Boondoggle

Masters of Metal: China, the Rothschild Fix, and the “New World Currency”

Trump’s China Entourage: Heavy With Goldman Sachs, Rothschild, CFR Globalists

Books:

Towards Capitalist Restoration?: Chinese Socialism after Mao

Wealth and Power: China's Long March to the Twenty-first Century

Modern China: The Fall and Rise of a Great Power, 1850 to the Present

Memoirs: By David Rockefeller

*For additional footnotes and links refer to the Newsbud article link above

The Yuan Dynasty: China’s Bid to Replace the Dollar

Chinese government officials recently informed Washington of intentions to ‘slow’ or outright ‘halt’ state purchases of US Treasury bonds.  The economic realities underlying Beijing’s report caused noticeable effects on the bond and stock markets.  Wider geopolitical considerations were certainly felt among analysts, government officials and within industry.  With the Trump Administration’s looming trade war against China sitting alongside threats posed to Chinese allies North Korea and Iran, China’s palpable concerns – and China’s perceived need for putting its largest trade partner on notice over said concerns - are hardly a secret to either side or to the rest of the world.  China’s intended move to price energy resources and other commodities in its own currency is interrelated to potential bond dumping issues.  In this episode of Money & Fear, we’ll review the underlying fiscal and political stakes, which make this latest Chinese announcement hard to ignore, and speak to rising risks of approaching conflict between the US and China.

If you’re not a Newsbud member yet, please join and tell others.  It costs practically nothing, yet gives you information you’re not supposed to know, thus empowering you to stay ahead of the herd and think like Establishment planners think.

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Show Notes

China Weighs Slowing or Halting Purchases of U.S. Treasuries

China denies it intends to reduce US Treasury purchases

China is reportedly thinking of halting US Treasury purchases and that's worrying markets

Donald Trump ‘may be ready to press’ the punitive China tariff button

Report Chinese could stop Treasury buying seen as political but hits raw nerve

China just reminded the United States that Beijing is its banker

The Reasons Why China Buys U.S. Treasury Bonds

Explainer: Could China tame its appetite for U.S. Treasuries?

China just sent out a warning, and it went right over Wall Street's head

Bill Gross: Here's why the 25-year bull market for bonds is over

Bond guru Bill Gross signals a new era for Treasury markets

The 3-decade bond bull market is in danger

What Is Behind China's Bond Rout?

So What If China Has $1.32 Trillion In U.S. Treasuries? It Still Can't Crash America's Economy

Foreign governments are dumping Treasurys like never before

Foreign governments are dumping US Treasuries: a chart

China has grand ambitions to dethrone the dollar. It may make a powerful move this year

How China will react to saber-rattling US T-bond ploy

China FX regulator weighs in on US bond-buying story

Fake News from Bloomberg about China’s US Treasury holdings

China sees new world order with oil benchmark backed by gold

China sees new world order with oil benchmark backed by gold II

Russia-China bond market play could kick-start new dollarless financial system

De-Dollarization, Gold, and the prospective role of the Yuan

China's Bond Market Whiplash

Is the US a bigger debt risk than Russia and Botswana? A Chinese rating agency thinks so

B&R to boost use of renminbi in global trade

China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would "Detonate Next Crisis"

China will 'compel' Saudi Arabia to trade oil in yuan — and that's going to affect the US dollar

 A Saudi Palace Coup

Saudis Say Aramco IPO ‘On Track’ as All Options Open for Listing

China May Be Using Aramco IPO To Promote Petroyuan

Aramco Hires JPMorgan, Morgan Stanley, HSBC for IPO Roles

Golden Rule - Why Beijing Is Buying

United States Current Account to GDP – 1980-2018

What is the Deficit as Percent of GDP?

B&R to boost use of renminbi in global trade

*For additional footnotes and links refer to the Newsbud article link above

Real Estate Crisis 2.0 What You Need To Know

As is now common knowledge, the 2008 Global Financial Crisis was triggered within the US mortgage and real estate markets.  What’s not so commonly known, however, is that the state of said real estate market – both residential and certainly commercial – remain precarious, with information opaquely presented by sell-side industry cheerleaders, foremost realtors themselves and the institutions which underwrite them.  In this latest episode of Money and Fear, we’ll review data points which reveal what you’re not told enough regarding true supply and demand parameters, continuingly dangerous speculative trends and macro conditions which will negatively affect an already over-extended housing environment that isn’t meeting living needs of either a rising lot of the working public, or certainly of the nation’s swelling under-employed, over-leveraged, poor and homeless populations.

If you’re not a Newsbud member yet, please join and tell others.  It costs practically nothing, yet gives you information you’re not supposed to know, thus empowering you to stay ahead of the herd and think like the Establishment planners think.

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Show Notes

Homeowners: Here's what's in the tax bill for you

Is California Already In Recession?

Is the Real Estate Market Going to Crash?

Are we headed for another housing collapse?

The Cost of a Hot Economy in California: A Severe Housing Crisis

The collapse of brick-and-mortar retail could spiral into a real estate crisis

House flippers triggered the US housing market crash, not poor subprime borrowers

Are we heading toward another subprime mortgage crisis?

The Next Domino To Fall: Commercial Real Estate

BIG HOUSES IN THE U.S. ARE BACK (AND THERE’S A GROWING HOUSING BUBBLE)

When Will there be Another Housing Market Crash? 

Gone Baby Gone - In the wake of the housing crisis, a new breed of real estate investor is destroying America's cities

London's House Prices Are Falling at Their Fastest Rate Since the Financial Crisis

Soon Seattle's Tech Boom Will Not Explain Its Housing Crisis

If the housing bubble bursts, is the US ready?

Inverted Yield Curve in 2018 Is Taking Over Wall Street Outlooks

*For additional footnotes and links refer to the Newsbud article link above

The 2018 Economy? What They Don’t Want You to See

In this latest episode of Money and Fear, we’ll gauge a sense or three of what to expect next year by reemphasizing economic realities today.  We’ll review data and charts that neither the Fed, nor the Bureau of Labor Statistics, nor the mainstream corporate business press want you to see, for fear of any dilution of the very ‘animal spirits’ which they all deem as necessary to keep the equities and Bitcoin gravy trains seem credible.  Viewers like yourselves will then be left with the task of thinking critically about how you want to manage your finances while staying awake to economic reality, rather than fables.

If you’re not a Newsbud member yet, then get on the bus!  It costs practically nothing, yet gives you dangerous, empowering information that only the 0.0001% - yes, only 10,000 or so people in the uber-hyper-elite – are otherwise allowed to have.  Tell others as well while you’re at it, and Happy Holidays to you and yours.

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Show Notes

Economic Forecast 2018-2019: Consumer Spending Grows Slowly

Here’s What’s Going to Happen to the Economy Next Year

US Economic Outlook: For 2018 and Beyond - You don't need a telescope to see the economic outlook

The Global Economy Looks Good for 2018 (Unless Somebody Does Something Dumb)

Economists see slower growth for U.S. than Trump does

The Fed Meeting - A Final Gathering Of Doves?

What to expect from the 2018 housing market - There are a few ways to alleviate issues that will be inherited from 2017

What You're Not Being Told About The Real Economy

Defining The Economy Through Payrolls

The Great Disconnect: Markets vs. Economy

America’s Inequality Machine Is Sending the Dow Soaring

Is the Real Estate Market Going to Crash?

*For additional footnotes and links refer to the Newsbud article link above

The “Pricing” of Bitcoin vs. Gold Is Meant to Herd the Masses

Based on core global economic fundamentals, the gold price should be well north of $10,000 an ounce. Yet because gold is rare, is hoarded by governments and very wealthy, very private plutocrats, because it is intimately related to the value of interest rates and the perception of paper currencies themselves, its price is tactically suppressed.  Meanwhile, Bitcoin - a purposeful distraction from gold - is, in turn, strategically run up to $10,000 at an unprecedented pace, quite possibly by the Deep State’s financial and technological arms, in part so that you feel like you're 'missing out'.

In this latest episode of Money and Fear, we’ll review the power that the pricing of each particular asset class has over the minds of investors and savers, alongside the praise or admonitions issued by banks and pundits which are issued in wider efforts to mold public perceptions of both cryptocurrencies and precious metals.  Tons of data and citations in this show so that you can be armed with knowledge against the urgently assigned hype.  So that you can think about money with some historical sobriety.  If you’re not a Newsbud member yet, please sign up, tune in and spread the news…

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Show Notes

Bitcoin (USD) Price

Is Bitcoin Standing In for Gold?

 We talked to an economist who predicted the Great Recession about the next financial crisis

Is Bitcoin a Threat to Gold?

Why has bitcoin gained so much in the past year?

Bitcoin Heads to Wall Street Whether Regulators Are Ready or Not

Gold and Silver Price Manipulation: The Biggest Financial Crime in History

Did The Fed's Alan Greenspan Admit Gold Is Being Manipulated?

Bitcoin Blows Through $8,000; Gold Hammering Related?

Will $10,000 See Bitcoin Bubble Burst? Rather Put Your Faith in Gold

Round Two: “Bitcoin Price” Vs “Gold Price” In Online Searches

What Is a Bitcoin Dark Pool?

First “Dark Pool” Exchange for Bitcoin: TradeZero Partners Jered Kenna

High-Speed Traders Are Taking Over Bitcoin

High-Frequency Trading Firms Enter Cryptocurrency Markets

Bitcoin hits a record high, but can it rival gold as a safe haven?

Wyre CEO: Bitcoin To Replace Gold In 20 Years, Becoming New Reserve Currency

Is Bitcoin the New Gold?

No, Bitcoin Isn't Going to Replace Gold

Is A Bitcoin "As Good As Gold"?

Round Two: “Bitcoin Price” Vs “Gold Price” In Online Searches

Deutsche Bank Pays $60 Million To Settle Gold-Manipulation Lawsuit

Deutsche Bank Records Said to Show Silver Rigging at Other Banks

Gold Price Manipulation Proven On The Intraday Charts

China's Cryptocurrency Crackdown: Is Bitcoin A Threat?

China is shutting down domestic Bitcoin exchanges

Why Goldman Is About To Become The Biggest HFT Firm In The World

Goldman Gets Serious About High-Speed Trading

CFTC Slaps Goldman Sachs Market Manipulators with $120 Million Penalty

Goldman Sachs exploring bitcoin trading operation

Jamie Dimon Slams Bitcoin as a ‘Fraud’

How Bitcoin became Wall Street's hottest investment

High Hopes As Deutsche Bank Supports Blockchain

Deutsche Bank: ‘End of Fiat Money’ May Be Near

UBS CEO: Blockchain to Play 'Big Role' in Reshaping Industry

Barclays spoke to regulators about bringing bitcoin 'into play'

On Bitcoin, India's Government And Tech Companies Find Common Ground

Mobile Money in India: Does Digitalization Follow Demonetization?

Wyre's Dunworth: Bitcoin Is Good Investment for Everyone

U.S. Government Report:  China is Threat to Global Bitcoin Economy

Texts

The Gold Cartel:  Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future by Dimitri Speck

The Golden Revolution:  How to Prepare for the Coming Global Gold Standard by John Butler

The New Case for Gold by Jim Rickards

The Death of Money – Ibid.

The Road to Ruin – Ibid.

Blockchain Revolution by Don & Alex Tapscott

*For additional footnotes and links refer to the Newsbud article link above

Global War on Cash and The Blockchain: A One-Two Punch for Complete Control

“Cold hard cash”.  Paper currencies and coinage have been around for centuries.  So why is there a “war” against cash, all of a sudden?  Sure, governments and the central and private banks which control them can claim that this war is meant to prevent crimes and illicit activities, but are there deeper, longer term reasons involved?  Especially considering what “money” is and how it has the capacity to so uniquely dictate human energy?  Could the aim toward complete digitization of cash involve the wanting of complete control over each individual’s economic affairs, and thereby, every person’s ultimate existence?

And how do Bitcoin, other cryptocurrencies and the blockchain in general fit into all of this?  Are, say, the simultaneous push for killing cash and introducing cryptocurrency trading via mobile phones in India purely coincidental?

In this latest episode of Money and Fear, a consideration of the War on Cash will accompany a wider questioning of the blockchain as efforts aimed toward the establishing of a one world monetary order, and as quickly as possible.  What that level of assumed power will entail will also be pondered, for better or for worse.

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Show Notes

The Global War on Cash

 Blockchains And The War on Cash

 The war on cash and its effect on the Blockchain

 The War on Cash: Bitcoin, Blockchain, Banks & Decentralisation

The Blockchain Will Do to the Financial System What the Internet Did to Media

Will Blockchain Technology Replace Cash?

INDIA: ‘RELAXED’ GOLD RULES COULD HAVE ‘WAR ON CASH’ EFFECT

Australian Government May Intensify ‘War on Cash’

As The War On Cash Accelerates, Governments Look To Bitcoin

Spain Joins World War On Cash, Bitcoin Emerges As Viable Alternative

You’re Being Dogged by the War on Cash

Why are governments in Asia suddenly interested in digital cash?

Six big banks to create a blockchain-based cash system led by UBS

Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society

Why Governments Want a Central Bank-Issued Digital Currency

Digital Currency Group forecasts war on physical cash

BANK OF ENGLAND RELEASES KEY PAPER ON DIGITAL CASH AND BLOCKCHAIN

Blockchain and the Power of Singularity

Money is a Neurotransmitter - and other red pills

Money Is Energy: Unblocking the Flow of Your Abundance

Why Elites Are Winning The War On Cash

The War on Cash in South Korea

Texts

*For additional footnotes and links refer to the Newsbud article link above

Hollywood on the Brink: Sex Scandals, Lies, Money & Fear

There’s certainly no love lost here for shamed film producer Harvey Weinstein or his ilk, and there’s zero excuses for his behavior towards women, colleagues, staff and talent.  The recent spate of scandals coming out of Hollywood involving the past sexual assaults and offenses of both high and low-profile executives and creative talent are odd only in the sense of their volume, timing and seemingly coordinated effort.  Yet *where* was the weight of such a coordinated national effort – which apparently involves the mainstream media, law enforcement and even government – in years or decades past?  Why now?  Is it because these violators have been behaving badly at an unprecedented rate and the knowing public can’t take it anymore?  Or could it be because there are subtler political and economic reasons involving Hollywood’s abominable economic performance as of late, which presumably needs punishing by the ruling corporate Elite Establishment?  An Establishment which could veritably be indirectly exploiting populist causes – namely, women’s and children’s rights – to send firm messages to an industry to ‘up its numbers’?

In this latest episode of Money and Fear, we’ll look at the public lambasting of the Harveys of the world against Hollywood’s recent and near-historical box office angst, as well as the further digital challenges to film studio business models in general.  Tune in, and as Public Enemy proclaimed, “Don’t Believe the Hype” …

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Show Notes

US box office suffers worst weekend in 16 years as Hollywood's bleak summer continues

Even superheroes may not be able to save Hollywood’s desperate summer

Time to Panic: Inside the Movie Business’ Summer of Hell

What Caused Hollywood's Summer From Hell? The blame for the industry’s horrendous last few months lies with a decades-long shift in the economics of making movies

Summer Box Office Officially Worst in Over a Decade

Hollywood Is About to Post Its Worst Summer Box Office in Recent Memory

This is Hollywood’s worst summer at the box office in more than a decade

Harvey Weinstein Leaves His Company With A Mixed Box Office Legacy

Summer Box Office Suffers Historic Decline in U.S.

A Fox & Disney Merger Could Mean Bad Things For Netflix

Top Exhibitor AMC Reports Q3 Weakness Amid Studio Merger Talk

As China cools on Hollywood, the movie business looks closer to home for money

21st Century Fox Has Held Merger Talks With Disney—Reports

Media Business Binge-Watches Mega-Merger Drama, Wondering What’s Next

FCC Ends Rule Requiring Broadcasters to Have a Local Studio

Jeff Sessions ducks questions about White House influence on AT&T-Time Warner merger

What Hollywood Can Teach Us About the Future of Work

Discretionary spending to be hit hardest as households cut their spending - There are concerns about just how hard discretionary spending will be hit if there is a dip in the property market

Consumer spending growth slows as rising inflation hits Americans' purchasing power

‘Wolf Warrior II’s’ Massive Success Forces Studios to Rethink China Approach

Texts

Adventures In the Screen Trade by William Goldman

The CIA In Hollywood:  How the Agency Shapes Film and Television by Tricia Jenkins

Spooked:  How the CIA Manipulates the Media and Hoodwinks Hollywood by Nicholas Schou

The Debt Trap:  How leverage affects private equity performance by Sebastien Canderle

Private Equity at Work:  When Wall Street Manages Main Street by Appelbaum and Batt

*For additional footnotes and links refer to the Newsbud article link above

Newsbud Exclusive- The Fed’s Supposed Balance Sheet Tightening: Few Options Left, Tight Rope Walking & Presumed ‘Creative Destruction’.

What will happen as the US Federal Reserve decides to pull away the domestic stimulus punch bowl? How capable are they to do so, considering true economic weaknesses in the system? Will their actions truly be for the good of the US and wider global economies, or is it all part of a much wider, longer term design for collective economic and political synthesis?

Since the 2008 Global Financial Crisis, which commenced in mid-2007 and started receiving major government stimulus and bailouts in late 2008, the Fed has expanded its balance sheet from $897 billion to $4.5 trillion, in unprecedented government economic interventions meant to avoid the onset of another Great Depression. The Fed’s adding of essentially money which they conjured out of thin air, amounted to over $3.5 trillion for buying up toxic securities, and constituted “about 25% of the size of the entire US economy at the time”, per author Simon Black, up from only 7% prior to the 2008 Crisis.

The Fed thus owns, per economist and trader Stephen Guilfoyle, “a portfolio bearing an ownership stake of 17% of the entire Treasury market, and 29% of the entire market for mortgage bonds issued by government-related entities that we expect the Fed to try to, if not tackle... at least manage. This is the monster under your bed.” The imminent QT is then, in essence, “the reverse of QE, with reverse effects.”

What that stimulus did was have the Fed buy up long-term US Treasuries and mortgage-backed securities, along with artificially prop up financial asset prices, with wildly asset-bubble-ridden US stock, bond and real estate markets now sitting at all-time highs due to speculation. Meanwhile, the actual US economy suffers from much higher unemployment and lack of consumer and corporate savings than what the government is deciding is fair to report. Plus, the US employment participation rate, which is an often ignored yet key indicator, is still stuck at 60%, below its pre-2008 Crisis peak of 63%, suggesting that the US is up to 8 million jobs short at the very least. The real unemployment rate is at a multiple of what the Bureau of Labor Statistics claims as well. [READ MORE]

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The Dow at 23,000?!? Delirious Equity Markets vs. The Actual U.S. Economy…

The Dow Jones Industrial Average closed above 23,000 last week, yet how and why?!?  The nonfictional US economy is much worse off than the stock indices lead on about.  Increasingly opaque digital means for trading massive volumes through “dark pools” and high frequency trading algorithms beg deep questions over how & why the equities markets seem so untethered from economic reality.  What are the roles of our largest banks, government agencies and their “revolving door” staffing policies in potentially propping up the stock market, and for what ultimate political purposes?  In this latest episode of Money and Fear, we’ll review near flick-of-the-switch mechanisms for ‘goosing’ not just individual company stocks, but whole indices, higher in order to assign the nurtured impression that our economy is humming along just fine while true rates of unemployment, wage growth, household savings and other indicators state otherwise.  Tune in to get ahead of the curve…

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Show Notes

The NYSE Gets Its Very Own Dark Pool

SEC Names J.P. Morgan Executive As Top Regulator of Exchanges

Stock market rigging is no longer a ‘conspiracy theory’

JPMorgan launches new algo-driven 'dark pool' for stocks

NYSE Floor Trader Explains How Stocks Are Traded In Dark Pools

Dark side rises: Unregulated exchanges swamp NYSE

Goldman Mulls Shutting Down Dark Pool

Dark Pool S&P 500: The Best And Worst Of 2016

Deutsche Bank to pay to end 'Dark Pool' probe

Pentagon fears hackers could crash the stock market

https://www.rt.com/usa/407036-pentagon-hackers-crash-stock-market-darpa/

ALGORITHMS TAKE CONTROL OF WALL STREET

The good, the bad, and the ugly of algorithmic trading

Don't confuse Dow Jones records for overall economic prosperity

The Dow and Other Market Indexes Explained

How the Stock Market and Economy Really Work

How The Fed Is Helping To Rig The Stock Market

Dow 23,000: The latest push hides lingering risks

A Stock Market Panic Like 1987 Could Happen Again

U.S. Poverty Statistics

Text:

Dark Pools: The Structure and Future of Off-Exchange Trading and Liquidity

Ralph Nader blasts corporations for stock buybacks he calls 'unimaginative' and greedy

10 Things People Don't Get About Dark Pools: Ross

Goldman Sachs Hires Nasdaq to Run Its Sigma X Dark Pool

Goldman Sachs to launch new 'dark pool' for stocks on Friday

Black Monday 1987 stock crash ghosts loom as Dow crosses 23,000

DARPA ASKS HFT TRADERS HOW HACKERS WILL CRASH THE MARKET

Murdoch Wins His Bid for Dow Jones

Warning: Stay Out Of The Dark Pools

Shining a light on dark pools

How Dark Pools of Liquidity Work and their effect on the U.S. Financial System

$500 Billion In 2013 Corporate Buybacks: Half Of QE Buyback Nation

Dow Hits Another Milestone, But Signs of Caution Loom

25th Anniversary Black Monday 1987 Crash

*For additional footnotes and links refer to the Newsbud article link above

The Federal Reserve is About To Pull The Plug: Prepare For ‘Quantitative Tightening’ & ‘Creative Destruction’

What will happen as the US Federal Reserve decides to pull away the “unconventional” monetary stimulus punch bowl from the US and global economies?  Will their actions truly be for the good of both US and foreign economic and political stability, or is it all part of a much wider, longer term design aimed at nurturing collective chaos en route to a grander planned sense of international ‘synthesis’?  In this latest episode of Money and Fear, we’ll look at both “Quantitative Easing” (QE) as well as its impending policy nemesis, “Quantitative Tightening” (QT), or the Fed’s shrinking of its balance sheet, coupled potentially with hiking interest rates, as ad hoc and imminently unruly processes.  The Fed’s – and foreign central banks’ - latest measures are about to wreak havoc in markets, not unlike what happened nearly a decade ago, which triggered said QE implementation in the first place.  Sober questioning coupled with quantitative data and a sampling of input from leading commentators will be offered for your sense of defense, so tune in.

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Show Notes

Today the music stops

Federal Reserve Will Continue Cutting Economic Life Support

Back To Rehab Or Continue Chasing The Dragon

Gold Investment “Compelling” As Fed May “Kill The Business Cycle”

The Fed Balance Sheet and its $4.5trn Conundrum

The Fed's new frontier: What happens, why it matters and what could go wrong

The consequences of shrinking the Fed’s balance sheet

Wall Street Icon Warns The Fed's Balance Sheet Unwind "Is Very Dangerous For Markets”

The Fed's Balance Sheet Reduction Could Be A Lot More Dangerous Than People Think

Fed plan to reverse QE is fraught with danger

Want To Know What The S&P500 Does Next? Just Look At The Fed's Balance Sheet

The Most Dangerous Balance Sheet in the World

The Fed Is About to Unleash a Monster: Market Recon

The Fed is about to start unwinding its unprecedentedly large balance sheet — and no one knows what will happen

Bank stocks are rising after the Fed announces it will unwind its balance sheet (BAC, GS, C, JPM, KEY, WFC, BBT)

The Fed Is Ready To Begin Chipping Away At $4.5 Trillion Balance Sheet

Deutsche Bank: "This Is The $2.5 Trillion Question"

Fed's Asset Bubbles Now At The Mercy Of The Rest Of The World's Central Bankers.

QT1 Will Lead to QE4

*For additional footnotes and links refer to the Newsbud article link above

The Not So Hidden Hand: Government & Wall Street Manipulation of Stock Markets

Critical Questions for students of Economics and Finance, as well as for retail investors worldwide:  If you were shown how an academic discipline, or an investment marketplace, were rigged, or at the least, not fully what they’re officially sold as being, would you still invest your time, effort and/or hard earned cash?  Or would you want the truth, and to then plan accordingly around it?  Is ‘fitting in’ that important to you to where you’d potentially turn a blind eye to scientific and political realities involving financial corruption?  How long until you lose your shirt on said prescribed gamble?  In this episode of Money and Fear, we’ll review evidence of government and big banking’s manipulation of stock and other markets, and why they’re manipulated.  Short and long term goals for such interventions are considered, and how much more opaque it’ll all become in the future will be covered.  Hard numbers and graphs, advanced trading methods and Fed intervention … all to keep you on you aware of modern money’s painted pictures.

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Show Notes

Former 'Plunge Protection Team' Member Warns "Blockchain Is Freaking Governments Out"

Former Coordinator of the Plunge Protection Team to be Nominated by Trump for Top Federal Reserve Position

Why the Fed Will Intervene If Stocks Fall Too Far

The ‘invisible hand’ has an iron grip on America

The Government's Influence On The Stock Market

Ex-Plunge Protection Team Whistleblower: "Governments Control Markets; There Is No Price Discovery Anymore"

‘Plunge protection’ behind market’s sudden recovery

Is the Plunge Protection Team in the futures market?

Did the “Plunge Protection Team” Save the Market?

Stranger Than Fiction: The System Is On Full Retard

Conspiracy? Is Goldman Sachs Running the Plunge Protection Team?

Bridge Over Troubled Waters: The Plunge Protection Team at Work?

Could High-frequency trading (HFT) computers manipulate the market?

Market Manipulation: High Frequency Trading

Algorithmic trading ushers in new era of market automation

A Simple Guide To How Algorithms Are Manipulating The Market Right Now

*For additional footnotes and links refer to the Newsbud article link above

Generation Debt: The Student Loan & Wider College Rackets

Questions for students and their parents:  If college cost $750,000, would you still attend, taking out student loans to meet that amount?  How about $500,000?  No?  How about the $50,000 to $250,000 it currently costs, then?  In other words, what is the true price tag for ‘ensuring success’ in society, and why has it been rising so aggressively over the past 50 years?  In turn, what are the actual – versus perceived – dividends of such an “investment”?  In this episode of Money and Fear, we’ll look at the impending Student Debt Crisis and dissipating perceptions of college as an inimitable personal and economic resource.  The size and pace of student loan growth mirrors that of the subprime mortgage fiasco of the prior decade.  We’ll look at how and why while also bluntly asking if college is ‘relevant’ anymore.  We’ll review figures, causes and effects behind this seemingly unfixable economic dilemma, which threatens the nation’s collective solvency and prosperity.

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Show Notes

A Look at the Shocking Student Loan Debt Statistics for 2017

Student Loan Debt In 2017: A $1.3 Trillion Crisis

The US college debt bubble is becoming dangerous

The student debt crisis is worsening at the hands of loan servicers

A New Culprit In The Student Loan Crisis: The Housing Collapse

Is Higher Education A Giant Pyramid Scheme?

College Debt: Necessary Evil or Ponzi Scheme?

Higher Education Is a Giant Ponzi Scheme

Student Loans and Ponzi FinanceAmerica Has Had Enough of Cars and College

Citi just drew an 'eerily reminiscent' parallel between student loans and the subprime mortgage crisis

The economic side effects of the student loan crisis (in 3 charts)

How Student Loans Are Crushing Millennial Entrepreneurialism

5 Solutions We Desperately Need to Solve the Student Loan Crisis

Default rates highlight growing student loan crisis

The student loan crisis is fueled by a weak labor market

Four Reasons Why College Degrees Are Becoming Useless

More Parents Finally Get That College Is A Scam

Seven Reasons Not to Send Your Kids to College

Text #1:  Excellent Sheep:  The Miseducation of the American Elite and the Way to a Meaningful Life by William Deresiewicz

 Text #2:  Weapons of Mass Instruction by John Taylor Gatto

 *For additional footnotes and links refer to the Newsbud article link above

Bitcoin as Conditioner: Rolling Out One World Currency

Forget its price trajectory and the rest of the prescribed hype for a second.  *Why* is Bitcoin a ‘thing’, who said so, when, and what for?  Was it genuinely a product of simple private sector ingenuity during a time of maximum need?  OR, based on the many Establishment-linked constituencies trading, investing or imminently, regulating it, is it a ‘test balloon’ or ‘beta test’ for a much wider, older elite plan for global monetary revision?  In this episode of Money and Fear, we’ll look at Bitcoin, cryptocurrencies and the blockchain from much more nuanced political, historical and philosophical perspectives than sell-side, hyped-up evangelists, or even Bitcoin’s standard critics, are used to considering.  We’ll weigh Bitcoin against periodic appeals from Establishment sources for a ‘one world currency’.  Runaway price movements will be observed against historical “Tulip Bulb Manias” and philosophical considerations regarding “money” will be reconsidered.  Do not miss this one-of-a-kind show to find out what this relatively recent monetary “phenom” is supposed to even mean!

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Show Notes

HOW TO MAKE A MINT: THE CRYPTOGRAPHY OF ANONYMOUS ELECTRONIC CASH, NSA research document, 1996

Is Bitcoin and other cryptocurrencies the result of a government experiment imagined 12 years before Satoshi white paper?

Bitcoin Prehistory

Milton Friedman Predicts Bitcoin In 1999

One world, one money – The Economist Magazine, 1998

Get Ready For A World Currency – The Economist Magazine, 1988

Crypto currencies are mirroring pre-crash banking systems – An ideological dispute over future scale has led to a breakaway version of bitcoin

Digital currencies like bitcoin aren’t real – fund warns investors

Why a Bitcoin Hard Fork Is Unlikely to Faze Investors

Fedcoin: The U.S. Will Issue E-Currency That You Will Use

The IMF and cryptocurrency

BIS Report: DLT ‘Promising’ But ‘A Long Way Off’

The Initial Bitcoin White Paper, October 2008

Text #1:  The Reign of Quantity & the Signs of the Times, by René Guénon

 Text #2:  Men Among the Ruins, by Julius Evola

 *For additional footnotes and links refer to the Newsbud article link above

European Bank Failures: A Bellwether for Another Imminent 2008 Financial Crisis?

Did a series of banks not-so-randomly failing across Europe present a negative bellwether for another imminent 2008 Global Financial Crisis?  How would any average citizen know?  In this inaugural episode of Money and Fear, we’ll review a sampling of bank failures, weigh whether more institutions can and/or will fail, and what it all means for “systemic risks”, “contagion”, and other fun technical words used to nonchalantly summarize global economic mayhem.  We’ll also ask if there is any sense of a wider – or deeper – design to such wealth destruction which would seek financial asset consolidation as a political tool, believe it or not. Do not miss this one-of-a-kind show to find out what co-opted global governments don’t want you to know!

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Show Notes

Newsbud Exclusive- European Bank Failures:  When Do They Go Globally Systemic, and Who Decides?

Collapse of Veneto banks would create systemic crisis: undersecretary

Italian Banks, A German Bank and The Euro

The Italian Banking Crisis: Fear of the Walking Dead

Trump’s America Is Facing a $13 Trillion Consumer Debt Hangover

JPMorgan Tells Banks to Partner Up as U.S. Deposit Drain Looms

Text #1:  Alchemists of Loss:  How Modern Finance and Government Intervention Crashed the Financial System by Kevin Dowd & Martin Hutchinson

Text #2: The Death of Money: The Coming Collapse of the International Monetary System by Jim Rickards

Text #3: The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis – Ibid.

*For additional footnotes and links refer to the Newsbud article link above

 

European Bank Failures: When Do They Go Globally Systemic, and Who Decides?

(USD 1 = .87 Euro)

The 2007 – 2009 Financial Crisis was not a one-off historical event, and it was most certainly global in scope.  Yet the means deployed to quell and contain it by the world’s central and private banks, as well as their corresponding governments and other regulatory bodies, ultimately served to kick fiscal and monetary cans down the road.  Various central bank balance sheets ballooned to unprecedented debt levels, foremost being the books of the US Federal Reserve, which saw its balance sheet climb from $869 billion to over $4.5 trillion in a decade of both treating, and preventing a reprise of, said crisis.

Yet, the problems that led to the first crisis are still latent – and threaten at clearly larger scales – within the world economy.  So, when and how would the ‘second leg’, as it were, of this extended global deflationary cycle commence?  What event(s) would trigger it, and could said event(s) be prudently forecast, let alone prevented?

European Banking Contagion 

Four European banks have failed over the past eight months alone, giving strong indications that another 2007 corrective brink may be at hand.  These institutions were Banco Popular of Spain, and three Italian banks - Monte dei Paschi di Siena (MPS), Veneto Banca and Banca Popolare di Vicenza.  Popular was taken over by rival Spanish Banco Santander with help from the EU, MPS was taken over by the Italian government in a state recapitalization, and the latter two banks were also assumed by Rome in order to split their “good” versus “bad” assets and liabilities between Intesa Sanpaolo, Italy’s largest bank, and the Italian state, respectively.

Notedly, no state aid was provided to Banco Popular in its sale to Santander.  Popular apparently had financial books in better shape than did MPS upon its takeover.  Per analyst Don Quijones , “[i]n fact, if anything, Popular had a better problem loan ratio on its balance sheet than MPS. While the Spanish entity was ‘resolved’ through the cancellation and redemption of its convertible and subordinated shares and bonds, MPS was recapitalized with government money.”

Private versus public economic priorities evidently become lucid through such desperate cleanup exercises, among other items.

Intesa bought the “good bank” assets of both latter failed banks while the “bad bank” assets, including non-performing loans (NPLs), subordinated bonds and non-functional legal arrangements were bought by the Italian state, which will pass the costs onto taxpayers, as per the advice of Rothschild Bank, advisor to the Italian Treasury.  Italian citizens will bear the €5bn - €6bn arrived at immediate cost of these twin bailouts, on top of their lost savings.  Senior bondholders received protection by Rome whereas junior creditors and the banks’ shareholders lost their shirts via this “rescue”.

In what has come to be fairly predictable denial behavior, merely weeks before the Veneto and Vicenza seizures, and per finance analyst and writer Wolf Richter, “Italy’s Minister of Economy Pier Carlo Padoan insisted that the two banks would not be wound down. Last year, to dispel the mountain of evidence to the contrary, he insisted that that there would be no need of any future bail outs; and that, furthermore, Italy did not even have a banking problem.”  Said denials officially precede what they deny could or will happen, yet which then often do, and this latest theater is thus seemingly no different from denials floated prior to the worst of 2008’s failures.

Public Outrage, Private Blessings

The use of taxpayer money for the Veneto and Vicenza bailouts went against provisions established by the European Commission and European Central Bank (ECB), ultimately revealing the frantic stakes reached in conducting such emergency measures, despite lack of admissions from banking and government officials.  These bailouts sidestepped a 2016 EU law involving the need for the specially designated Single Resolution Board to coordinate matters.

Yet said board, taking the lead from the ECB, “decided that resolution of the banks under the new EU rules was ‘not warranted in the public interest’”.  There were political reasons for handling the twin banks’ bailouts with such haste but also presumably reasons involving the need for averting systemic fiscal risks spiking.  The former reasons tend to be emphasized in the mainstream corporate press; the latter, not so much.

Despite established EU protocols for handling distressed banks and public objections raised by EU bureaucrats over these twin Italian bailouts, signals here point toward tacit blessings having been given by the EU and ECB because “Italy was able to argue there was regional economic risk from the failure of two important regional lenders.”  Confidence would’ve suffered dramatically, and the two lenders had failed to raise private capital as prescribed since the beginning of 2017.  By contrast, Santander raised some €7bn to fund Popular’s takeover.

Warning in early June of the potential for a systemic crisis, the Italian Economy Undersecretary Pierpaolo Baretta stated that, the “collapse of two regional banks in Italy's Veneto region [would’ve triggered] a systemic crisis [that’d have] risked dragging down the whole domestic economy.”  Brussels got out of the way of timber falling, and especially by avoiding their prescribed “bail-in”[i] procedures, which would’ve caused outright public panic in said instances.  Per US based geopolitical analyst George Friedman,

The bail-in is a formula for bank runs.  Rome wants to make sure depositors don’t lose their deposits. A run on the banks would guarantee a meltdown …The bail-in rule exists because Berlin doesn't want to bail out banking systems using German money.

Additionally, and as per Analyst Don Quinones, the

Italian government decided to commit €17 billion in taxpayer funds to bail out senior bondholders and depositors. This includes a €5 billion capital injection for Intesa, which is getting the good assets and liabilities, such as deposits. The €5 billion is to protect Intesa against losses from those assets. Prohibited “state aid” under EU rules? No problem. It has now been cleared by the EU Commission. [emphasis added]

This is all a mere hint of what’s expected to come further, both in Italy as well as other plagued EU economies.  Why?  For one, monstrously unprecedented levels of public and private continental debt.

How ‘Systemic’ Could It Get?

The twin Venetian bank failures are consistently portrayed as small and thus relatively insignificant events.  This is judged based on the collective €60bn price tag of bailing them out - certainly not a loss figure to sneeze at - yet that nonetheless is indeed modest by comparison to Italy’s wider economy, which retains a nearly $2tn GDP.  Still, said summary ignores the systemic basis of risks which sit latent in many institutions due to their derivatives and off balance sheet exposures.  Per Economist Francisco Pereira, though “there were disagreements over the prospect of contagion given the small size of the banks, the Italian government, the Commission and some within the ECB clearly felt the risk that it might impact other bank bonds, or even Italian sovereign debt, was still too big and dangerous to ignore.”

As of Fall 2016, the stock index of Italian banks and that of Deutsche Bank (DB) of Germany, which retains over $46+ trillion of gross derivatives risk exposure as well as questions regarding its solvency health, had been “moving in tandem” despite DB and said Italian banks carrying different surface challenges.

I.E. DB doesn’t have the Italians’ NPL problems.  And yet, why the correlated graphical movements?  Perhaps because DB is also so exposed to Italy that an Italian banking crisis would eventually pose contagion to a multiple size of what happened in 2008?

Source:  SeekingAlpha.com

Per Friedman again, since “Italy is the fourth largest economy in Europe, [hers] is the mother of all systemic threats … [T]he IMF recently said Deutsche Bank is the single largest contributor to systemic risk in the world. A rippling default through Europe will hit Deutsche Bank”, let alone trigger an EU-wide banking crisis which would most certainly spread immediately across the Atlantic.

Relatedly last Fall, the Bank of Italy categorized the nation’s top three banks UniCredit, Intesa Sanpaolo and Monte dei Paschi as “systemically important institutions”.  Hence the bailout of MPS, and per Reuters, the categorization of UniCredit as “Italy’s only globally systemically important institution (G-SIFI)”, alongside all three Italian banks also being labelled as “Other Systemically Important Institutions” (O-SII).

What – or better yet, who – could or even would tip the perceptual balance into “crisis mode”?  During negotiations for bailing out MPS, not only did JPMorgan walk away, but so did two prominent New York hedge funds – Fortress and Elliott - despite being offered an 80% mark down on MPS’ NPLs, which was clearly not enough to attract and keep such private investors.  The government then stepped in.  Can it continue to under such continuing perceptual duress and growing lack of confidence?

Wider Banking Consolidation Agenda

As with the 2007 – 2009 Crisis, there is an inevitable, widespread, transatlantic shrinkage expected in the number of banks out there, and not only by acute fiscal necessity, but seemingly by longer term design as well.  In such a game, the largest global banks routinely stand to assign, rearrange or outright ‘hoover up’ the assets of ‘expendable’ banks deemed to be culled.  In Europe, the “Club Med” or Mediterranean nations’ banks are seemingly more expendable and ripe for consolidation versus, say, German or French mega-banks like BNP Paribas, Société Générale and Deutsche Bank.

Per Analyst Pascal Straeten,

the capital of the top EU banks averages 4.5% of total assets (versus 6.6% with the top US banks) […] Two of France’s biggest banking institutions, namely BNP Paribas and Société Générale, have capital of only 4% of total assets as of end 2016 while Deutsche Bank sits at the bottom of the barrel with 3.5% …

Additionally, as always, the northern EU countries are imposing their will onto their southern brothers with middleman the ECB and the EU Commission acting as middlemen. Look at how much austerity is being imposed on the citizens of Greece, Spain, Portugal and Italy; look at the restructuring measures being imposed on the Spanish and Italian banks, but not too much onto the French or German banks. To illustrate this point, look at the Spanish bank Banco Popular, until recently Spain’s sixth largest banking institution, is no longer alive. Its assets, including a massive portfolio of small-business clients, now belong to Banco Santander, Spain’s biggest bank. The fact that neither German nor French banks have suffered a similar fate is a clear demonstration of the double standard ingrained in the EU’s finance industry.

Per an oddly frank admission within the otherwise City/Wall Street establishment-abiding FT of London,

“Bank consolidation is definitely the hidden agenda at the EU level — they want to move to a US-style model centred around a few larger players,” says a hedge fund manager specialising in bank debt. “The only issue is that this cannot be done without victims: big banks don’t want to buy small banks when they are going concerns,” he adds. [sic]

Who assigns and executes such ‘wash and rinse cycles’, how frequently, and why, ultimately?  Is the European Commission itself co-tasked with such bank consolidation duties?  “Clearly this [I.E. Deciding the fate of European lenders]  is putting way too much power on the European Commission — the European Commission is not supposed to be a resolution authority; it is only supposed to deal with competition,” per this cited head of research at a European investment firm.

Relatedly, JPMorgan was recruited to help save the twin Italian banks but ultimately walked away, and presumably not just for fiscal reasons; said bank is the most powerful in the US, and one of the top five in the world.  Hence it will tend to influence wider global banking practices, trends and strategies.  The desire for wider EU banking consolidation is palpable as the inevitability of another global financial meltdown nears.  JPMorgan recently ordered US domestic consolidation among mid-sized banks, per the Federal Reserve’s imminent (I.E. As early as December 2017) balance sheet shrinkage, which it deems as eventually presenting funding problems for said tiers of banks.  This event begged structural and systemic questions over JPMorgan’s relationship with the Fed itself.

How much have the 2008 and imminent global financial crises served, or will serve, for wider, sweeping macro-strategic imperatives and expected ‘debt jubilees’ among the West’s largest banks?  For global financial ‘governing bodies’ such as the IMF and Bank for International Settlements?  What extensive, longer term international money order is being sought through part and parcel ‘creative destruction’ involving such periodic transcontinental asset consolidations via seemingly nonlinear chaos?

Italian Economy Generally Weak, as is the Wider EU Economy

Said three Italian banks were merely reflective of wider, more disturbing trends in the country’s economy.  Italy’s general NPL ratio is close to 14% of its overall banking industry’s loan book, and close to 12% of Italy’s GDP itself as of the end of 2016.  Italy

belongs to the EU country group with the highest level of non-performing loans, with an NPL coverage ratio of 49% (as of December 2016), above the 45% EU average. Within such an environment of financial duress, almost any bank failure could send shockwaves through the system, pushing other banks closer to the tipping point.

Italy’s general banking foundation is so fragile, and a viable market for accommodating deteriorated credit so lacking, that it has not been able, per Don Quinones again, “to offload their estimated €360 billion of non-performing loans, many of them with very weak, if any remaining, collateral underpinning them. Yet on average, they are marked at around 50 cents on the euro.”

Per Reuters last Fall, “Italian banks are widely seen as undercapitalised and they are struggling under a pile of bad loans left behind by a deep recession that ended in 2013.” [sic]

Source:  FT.com

Macroeconomically speaking, Italy’s debt to GDP ratio is in excess of a shocking 130%, its national youth unemployment is north of 37%, with overall official unemployment at 11.3% (well over twice official US unemployment) and the labor force participation rate is only at 65%.  Deeper public and institutional confidence has been negatively affected because of this reckless finance gamesmanship over the years, only to be followed by such wanton bailing out of banks inevitably buckling under said gamesmanship.

Source: FT.com

Per Analyst Iakov Frizis, according “to research on Italian bank balance sheets conducted by Mediobanca Research, out of 500 Italian banks, 114 are at risk, exposed to an excessive amount of credit that surmounts the net value of their tangible assets.”  These 114 have Texas ratios[ii] north of 100%, “meaning that they don’t have enough capital to cover all the bad stuff on their books.”

Additionally, Intesa Sanpaolo and UniCredit, Italy’s largest banks, have weak general solvency data registered and are clearly reliant upon the broader collective stability of Italy’s overall banking industry.  UniCredit is the largest lender yet cannot help in such bailouts because it already has raised €13bn this year for salvaging itself as a going concern.

Source:  TheMarketMogul.com

Genoa-based Banca Carige, Italy’s ninth largest, founded in 1483 and carrying over €26bn in assets, is another problem case, having been told by the ECB to fix its asset quality issues lest it too be culled.  Carige has lost over €2bn over the past four years, and although technically in better shape than the previously closed three banks, still faces a third cash call since 2014.  It will also face troubles in ridding its books of bad loans, especially as the Italian and wider EU economies sour further.  Will Carige require the same controversial treatment by the state which Veneto and Vicenza just received?

It’s a waiting game, due in part to perception management by governments and banks which directly influence them.  There’s a tactical delaying factor at work as far as debt handling goes, alongside generally desperate hoping for a rapid turnaround in the Italian economy’s performance.  Possibly overly ambitious – even reaching – national economic growth forecast figures have been issued by the IMF and internal organizations.  One rosy depiction states that “Confindustria, the Italian employer federation, last week increased its 2018 growth forecast to 1.1 percent from 1.0 percent. But even those forecasts might have been jeopardized had the distressed Venetian banks been left to fester.”  Yes, but how did their bailing out necessarily lead to boosted collective consumer – let alone institutional – confidence?  Especially as, again, more “zombie banks” litter the Italian financial landscape, waiting to roam at night?

The same source cited above then goes on to provide negative caveats regarding Italy’s weaknesses:

The [GDP] growth numbers are still too low to fully dispel the risk that Italy’s NPL problem will prove an economic drag. And Rome cannot rescue bigger banks the same way; only robust growth of, say, 2 percent to 2.5 percent per year can hope to make a real dent in the NPL problem given the fact that many of the NPL are in obsolete industries like clothing and textiles for which growth is largely irrelevant. Private capital inflow into the banks is still required to finance the write down of these loans which often are carried on the banks’ books at inflated prices.

Note the flippant criticism of “clothing and textiles” (why not lambast the added banalities of the Italian food, olive oil, wine and tourism industries while they’re at it?) as obsolete for “growth”.  Because Italy must essentially and effectively mimic German machine manufacturing, exporting, aggressive technology and Anglo-American finance innovation, to truly become a viable “player” alongside other “growth” economies, correct?  Because Italy clearly cannot continue to remain, in essence, *Italian*?  We’re sure there are drastic emergency pedagogical measures available – via distance learning or otherwise – for getting millions of leisurely Italians to learn how to code within six months…

Per Frizis again, Italy faces a three-pronged national banking problem:  A seemingly unresolvable bad loan issue, a housing crisis due to correcting property prices which further threaten collateral sanctities for bank lending, and a dysfunctional, “politicized governance of lending institutions” which holds back collective financial sector performance.  Meaning:  Bail out all the tepid financial institutions you want, Rome and / or the ECB/EC/EU – you still will not structurally resolve the matters at hand.

What would otherwise push these banks over the cliff?  A systemic event triggered foremost by a derivatives meltdown, either within Italy or certainly elsewhere, due to the opaquely defined counterparty relationships between institutions which have traded them, and the wider nature of how derivatives risks go from “net” to “gross” fairly quickly – thus defying prescribed definitions – thereby spreading contagion across borders.

Too Much Global Debt – and thus Risk – As Is

Systemic risk could easily spread from a financially, pandemically plagued Europe to the US, considering that, despite announced governmental figures painting economic indicators as generally healthy, the state of the US economy is much more precarious than advertised.

Per veteran bond king Bill Gross, market risk is at its highest since the pre-2008 Crisis era due to central bank policies for low-and negative-interest rates “artificially driving up asset prices while creating little growth in the real economy and punishing individual savers, banks and insurance companies.”

Very similar sober sentiments are shared by other senior investors, including Paul Singer of the Elliott hedge fund, who very recently admonished investors and the public that

“distorted” monetary and regulatory policies have increased risks for investors almost a decade after the financial crisis.

“I am very concerned about where we are,” Singer said … “What we have today is a global financial system that’s just about as leveraged -- and in many cases more leveraged -- than before 2008, and I don’t think the financial system is more sound.”

The US consumer debt picture isn’t pretty.  Per Bloomberg,

In the first quarter [2017], 17 percent of U.S. consumers said they were likely to default on a loan payment over the next year, up from 12 percent in the third quarter, before the election … 

The percentage of debt that’s at least 90 days delinquent rose to 3.37 percent in the first quarter, the second consecutive quarterly gain, according to data from the New York Fed. It’s the first time those delinquency figures have risen twice in a row since the end of 2009 and beginning of 2010. About 46 percent of Americans surveyed by the Federal Reserve could not pay a hypothetical $400 emergency expense, or would have to borrow to do so, according to a 2016 report …

Mortgage debt has been growing slowly since 2012. The fastest-growing types of borrowings have been student loans, credit cards and auto debt. For much of this debt, there is either no collateral, like credit card loans, or collateral whose value declines over time, such as cars …

Further, there is little to no wage growth in the US economy, which hampers not just consumption trends but savings and investment.  On top of this, consumers are more reliant on credit to make their way.  Per Bloomberg again,

Americans faced with lackluster income growth have been financing more of their spending with debt instead. There are early signs that loan burdens are growing unsustainably large for borrowers with lower incomes. Household borrowings have surged to a record $12.73 trillion, and the percentage of debt that is overdue has risen for two consecutive quarters. And with economic optimism having lifted borrowing rates since the election and the Federal Reserve expected to hike further, it’s getting more expensive for borrowers to refinance.

Italy’s banking fiasco can thus easily infect not simply its neighboring EU economies, but thereby rapidly spread across the Atlantic, tipping over North American financial institutions into crisis as well.  The dynamics, esoteric or exoteric, involved in such a worst-case scenario must be scrutinized as they are matters of both national and world security.  For the serious observer, the tools required for said scrutiny by necessity will extend well beyond surface-level academic and even corporate prescribed tools.

Source:  Bloomberg

Source:  Ibid.

[i] A “Bail-In” involves “rescuing a financial institution on the brink of failure by making its creditors and depositors take a loss on their holdings. A bail-in is the opposite of a bail-out, which involves the rescue of a financial institution by external parties, typically governments using taxpayers’ money. Typically, bail-outs have been far more common than bail-ins, but in recent years after massive bail-outs some governments now require the investors and depositors in the bank to take a loss before taxpayers. Source:  http://www.investopedia.com/terms/b/bailin.asp

[ii] “The Texas ratio takes the amount of a bank's non-performing assets and loans, as well as loans delinquent for more than 90 days, and divides this number by the firm's tangible capital equity plus its loan loss reserve. A ratio of more than 100 (or 1:1) is considered a warning sign.” Texas Ratio http://www.investopedia.com/terms/t/texas-ratio.asp#ixzz4mmC7OgNP

# # # #

Pye Ian, Newsbud Senior Analyst & Commentator, is an independent economic and geopolitical researcher as well as a strategic planning and business development advisor.  His articles and analyses on international affairs, economic trends and cultural topics have been published in various mainstream and alternative press sources. Mr. Ian’s wider intellectual interests are reflected in his writings on the convergence of foreign affairs, political philosophy, history, global finance and energy policy. He has undergraduate degrees in economics and political science from the University of California and a Master’s degree in finance from Cambridge University. In addition to English, Mr. Ian has proficiency in Farsi.