The Next Crisis Is The Mother Of All Counter-Party Risks (Part 2)

[This is a long article – part valuable information and part rant. -Bob]

By Gijsbert Groenewegen – Re-Blogged From http://www.Gold-Eagle.com

In Part I I explained the counter-party risk that is all around us – and will come to the fore in the next financial crisis. In this second part I reflect on the rescue operations of the Fed following the 2008/2009 recession and the following QEs and ZIRP policies that have led to diminishing returns and that will ultimately weaken the US dollar: the biggest counter-party risk of all counter-party risks.

Addendum 8 – CDS, Credit Default Swaps. Ultimately it should be considered that when we encounter these systemic events that it will impact the underlying currency.  For example when the pension underfunding gets so problematic that the Government has to print more money to meet and rescue the obligations the counter-party risk will be reflected in the devaluation of the currency or the loss of purchasing power, the goods that you can buy with the same amount of nominal money will tumble.

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Will Donald Trump Reverse the War on Cash?

Re-Blogged From International Man

Jason Burack: It seems that globalism may be on the retreat. What’s your opinion about that, in light of Brexit, Donald Trump winning, and the Italian referendum failing?

Nick Giambruno: I think you’re right, Jason. Right now globalism is on the decline. But let’s define “globalism” before I explain why. This word gets thrown around a lot. But most people don’t really know what it means.

It’s very simple. Globalism is the centralization of power into a couple of global institutions: the EU, the United Nations, the IMF, the World Bank, NAFTA, NATO, and so on. It’s really just a polite way of describing world government, or what George H.W. Bush termed the New World Order.

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Italy’s Bank Rescue Foreshadows Nationalization Of More EU Banks

By John Browne – Re-Blogged From http://www.Silver-Phoenix500.com

On December 7, 2016, Italy’s Prime Minister Matteo Renzi resigned following defeat in a national referendum, that he had supported, that would have changed the country’s parliamentary system. The development, which represents just the latest sign of anti-EU sentiment spreading throughout Europe, was felt acutely by Italy’s troubled banking sector. In particular, the Banca Monte dei Paschi di Siena (MdP) has been teetering on the brink of collapse and now may stand as a case study that may be encountered by other EU member nations.

The advent of the euro currency allowed Eurozone member countries, even those with poor financial health like Italy, to borrow at far lower ‘Germanic’ interest rates than their respective national credit ratings would have allowed. In turn, national borrowers were able to tap into the vast sums of liquidity created under central bank quantitative easing (QE) programs at astonishingly low, and sometimes negative, interest rates. Predictably this has led to a massive misallocation of capital, and billions in potentially non-performing loans.

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Risks Posed By The War On Cash

By Mark O’Byrne & Jan Skoyles – Re-Blogged From http://www.Gold-Eagle.com

Cash is the new “barbarous relic” according to many central banks and regulators. Moreover, some economists believe there is a strong, concerted push for a ‘cashless society’.

Developments in recent days and weeks have highlighted the risks posed by the war on cash and the cashless society.

The Presidential campaign has been dominated for months and again this week by the power of information that has been gathered through unconventional means – whether due to email hacks, leaked microphone tapes or even late-night twitter rants.

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Can You Imagine The Fed Raising Rates In This World?

By John Rubino – Re-Blogged From Dollar Collapse

I know it’s bad form to express sympathy for the people running the world’s central banks. But come on, they’re human beings in an impossible spot with no idea how to escape. The pain they feel is both intense and legitimate, and we should respond with at least a bit of empathy.

Just kidding. It’s schadenfreude all the way down.

The Fed in particular has painted itself into a very tight corner with its never-ending threats to raise interest rates while the rest of the world is still cutting. Millions of words have been written about its reasons for behaving this way and the difficulties of the road it has chosen. But for now it’s enough to note that Yellen et al are still at it, dropping hints that come October rates are really, seriously going up because the US is a healthy, well-run country whose borrowers should borrow more and whose voters should reward incumbent politicians with four more years!

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War on Cash Turns to $20, $50, and $100 Bills

Re-Blogged From Money Metals News

Harvard professor and economist Ken Rogoff is once again leading the chorus of high-level academics and officials who declare cash is only for criminals. He made his case in a recent Wall Street Journal editorial called the “Sinister Side of Cash.” The solution, he declares, is to simply get rid of anything but the smallest bank notes.

In his vision, drug dealers, human traffickers, and tax cheats are everywhere, but they are reliant on cash. Our benevolent central planners can largely incapacitate them by ridding society of anything larger than a $10 bill.

Kingpins won’t know what to do when a single-engine Cessna full of cocaine requires a Boeing 747 full of $1s, $5s, and $10s to make payment.

Rogoff seems to blame cash, not bad people, for facilitating criminal activity. He writes;
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Ireland “Especially Exposed” To “International Shocks”

By Mark O’Byrne – Re-Blogged From http://www.Gold-Eagle.com

Ireland remains especially exposed to another financial shock because of the extremely high levels of public and private debt, the open nature of the economy and Brexit.  Irish Central Bank Governor Philip Lane has warned in a pre-budget letter to Minister for Finance, Michael Noonan.

“Ireland is especially exposed due to the legacy of high public and private debt levels, the sensitivity of small, highly-open economies to international shocks and Brexit-related vulnerabilities,” Ireland’s Central Bank Governor said.

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