An Unexpected Systemic Crisis Is For Sure

Alasdair Macleod – Re-Blogged From Gold Eagle

Downturns in bank credit expansion always lead to systemic problems. We are on the edge of such a downturn, which thanks to everyone’s focus on the coronavirus, is unexpected.

We can now identify 23 March as the date when markets stopped worrying about deflation and realised that monetary inflation is the certain outlook. That day, the Fed promised unlimited monetary stimulus for both consumers and businesses, and the dollar began to fall.

The commercial banks everywhere are massively leveraged and their exposure to bad debts and a cyclical banking crisis is now certain to wipe many of them out. In this article we look at the global systemically important banks — the G-SIBs — as proxy for all commercial banks and identify the ones most at risk on a market-based analysis.

Continue reading

Bills Are Coming Due

By Associated Press – Re-Blogged From Headline Wealth

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Friday related to the global economy, the work place and the spread of the virus.


UNDER REVIEW: This week, the U.S. reported that a staggering 3.3 million Americans applied for unemployment benefits last week, a five-fold increase over the last high sent in 1982. On Friday, President Donald Trump signed a $2.2 trillion aid package into law. Few believe it will be the last in the aftermath of this viral outbreak. Credit ratings agencies are taking note of the financial standing of the U.S., and other nations.

Continue reading

More Absolutely Crazy Pension News

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

“War” and “pensions” are conceptually about as different as it’s possible to be. But – in a measure of how far into Crazy Town we’ve wandered – they’re both taking the world in the same direction.

If a Middle East (or Asian!) war doesn’t spike oil prices and push the global economy into recession, then pensions will probably produce the same end result. Here’s an excerpt from a much longer New York Times article that should be read in its entirety for a sense of what public finance has become:

A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

Continue reading

How Many Euro Crises Will This Make? It’s Getting Hard To Keep Track

By John Rubino – Re-Blogged From Dollar Collapse

Every few years, it seems, one or another mismanaged eurozone country falls into one or another kind of crisis. This leads to speculation about the end of the common currency, which in turn spooks the global financial markets. Then the ECB conjures another trillion euros out of thin air, buys up and/or guarantees all the offending country’s bonds, and calm returns for a while.

At least, that’s how it’s gone in the past.

The latest crisis has more than the usual number of flash-points and could, therefore, be something new and different. Currently:

Continue reading

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.

Continue reading

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.

Continue reading

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!

Continue reading

European Bankers Back to Begging for Bailouts!

By David Haggith – Re-Blogged From Great Recession Blog

Nothing is more shameless in a bedazzling sort of way than rich banksters standing on the public curb with their hands out. First, we had the admission this past week by a major French bank that Italian banks are so sick (and so too big to fail) they could cause systemic banking failure throughout Europe if not bailed out by over-taxed taxpayers.

Lorenzo Bini Smaghi — who was a member of the European Central Bank’s executive board and who is now Chair of French megabank Societe Generale — said the only way to save European banks, if they start to fall like dominoes due to Italy’s banking problems, is with taxpayer-funded bailouts.

Europe’s banking market faces the risk of a systemic crisis unless governments accept the idea of taxpayer money as the ultimate recourse in a crisis, Bini Smaghi said. Any intervention should be as swift as possible, he said. (Newsmax)

A French CEO says his massive bank and others could fall like dominoes due to Italy’s problems? That has to be good for his falling stocks. So, you ask yourself, why would he say something to spook an already scared stock market?

Then we had Italy’s Prime Minister Matteo Renzi, pressuring Europe to bail out Italy’s banks by pointing out that Italian bank problems with bad loans pale in comparison to Deutsche Bank’s towering derivatives problem over in Germany.

“If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred,” Renzi said. (Zero Hedge)

Gee, you’d think they were trying to talk the EU into a panic … as if it weren’t already there. Considering that 17% of Italy’s bank loans have gone sour (which sounds monumental to me), Deutsche Bank must be bad beyond belief at a hundred times worse! That’d be an undoable 170% bad, which is pretty dang bad!

Italian banks are deep into the sour apple bin because their solution to bad loans during the last crisis was to just roll them along by not foreclosing and hope that future economic growth would make the borrowers solvent again, but that kind of economic expansion never came. That left a lot of decay down in the apple bin after the Great Recession, and not too surprisingly the rot has spread. The amount of decay is now four times bigger than it was back then … and it was deadly then! As horrible as that sour mess is, Italy’s premier tells us Deutsche Bank is a hundred times more dangerous than that!

Why are banksters and politicians taking this beggar-thy-neighbor approach by pointing out how bad other European banks are — the Frenchy pointing at Italy, the Italian pointing at Germany? Statements like “Our own banks are so bad they need immediate bailouts, but they’re only a hundredth as bad as yours” are not statements that former central bankers, current megabuck megabank CEOs and prime ministers usually make when they all live or die under the same economy.

When you see a lot of rats like that scurrying together up the stairs of the ship, you might want to make a move for the lifeboats.

The answer must be that it’s a desperate play. European bankers are scared spitless at the abyss that is opening around them. They need to drive fear like a stake into the hearts of the masses and their fellow politicians in order to get the immediate bailouts they lust after if they are going to save themselves while keeping the masses from rebelling Brexit-style against them. These are desperate words from desperate rich guys who see their own money going down the drain if the public doesn’t rescue them.

Italy’s premier wants to inject state cash into failing Italian banks to recapitalize them. That’s because the banks can’t recapitalize by issuing stock when their stock is nearly worthless. I’m sure that sea chests full of state money would give his wealthiest friends nice chairs to sit above the waterline in the lifeboats, but public bailouts are now against the EU’s post-Great-Recession regulations so he’s trying to scare the EU into bending on the regs.

Shameless are the banksters and shameless are their political pals with their “your money or our lives” piggy bankster terror.

How close to falling off a cliff is the EU now that Brexit has kicked them in the ankles?

As Jeff Gundlach said this week, Watch Deutsche Bank shares go to single digits and people will start to panic… you’ll see someone say, ‘Someone is going to have to do something’. (Zero Hedge)

They’re not even waiting that long, Jeff. That is what these bankster and politician statements are all about. To keep the masses from revolting, everyone needs to be made intensely afraid of what will happen as the alternative if the dinosaur banks are not given public CPR, and in Deutsche Bank, they have much to be afraid of, as it towers over the world with over $70 trillion of derivatives exposure.

Let’s hope the public has had enough of putting its lips to the dinosaurs’.

Leave it to mega banksters to get the solutions entirely wrong … again

They never learn from their failures, and they’re hoping the public never learns either … or, at least, that the public can be scared beyond its learning curve. (A hope that failed with the brave British exit. So, the banksters are a little afraid now that the smell of revolt fill the air like gun smoke.)

The only solution to the failure of behemoth banks that bloated banksters can come up with is that taxpayers should bail them out in order to save themselves from having the banks collapse on them. It never enters their minds that, if these banks are already known to be too big to fail, the most obvious solution was to break them up a couple of years ago before the bad stuff hit so that they could be parted out in an organized manner. It’s a little late now, but it would still be better than additional conglomeration:

Smaghi wants to go further than just bailing out the failures. Instead of breaking the behemoths up so they don’t roll over and crush entire nations, Smaghi’s answer is to bail them out and make them bigger:

Both Italy and Germany have too many banks that are not profitable and more consolidation is needed, the chairman said.

You would think that, if ever there was a no-brainer for what not to do, making too-big-fail banks bigger would be it; but, as I wrote at the start of the Great Recession, even George Bush’s solution was to double down on the size of banks, which he was first to publicly call “too-big-to fail”:

Whenever one of our economic titans teetered on the edge of bankruptcy this past year, the peril from its collapse to everything in its shadow pressured the executive branch to create a deal over the weekend before the market opened again on Monday. The masterminds of mayhem rushed in to pump some “good” news into Wall Street ahead of the market opening to avert disaster. At every turn, the government’s answer to the risk of corporate obesity was to take two weak and wobbly mammoths and cobble them together into some bigger and more ungainly creature. Each resulting conglomeration came out looking like Frankenstein’s monster with all its seams showing. Thus, many of the following solutions were amalgamated during midnight hours in the board room laboratories of the Washington Wunderkind. (“Collapse of the Colossus“)

They’re too big to fail, so solve their problems by doubling them in size? I don’t know how you get any dumber than that even by hitting yourself over the head repeatedly with suitcases full of money. The solution advocated for busted banks that require taxpayer bailouts is, according to Bush back then and Smaghi now, to conglomerate the failing monstrosities into even larger institutions.

History is repeating itself in such a manner that I could just change the names of banks in my article and republish the same article today that I wrote about this nonsense years ago:

J.P. Morgan Chase and Company, a name that was already a mouthful of earlier conglomerations, gulped down a belly full of Bear. I guess that would make them the J.P. Morgan, Chase, Bear, Stearns, and Company. The Federal Reserve helped prepare the Bear to make it more palatable for Morgan to eat. Apparently that role is the meaning behind their nickname “Fed.” Somehow the Fed thought a dying beast fed on Bear would be an improvement on the “too big to fail” scale.

Fat on Bear, you’d think the beast would have been satisfied for a little while, but within a month it felt the need to digest the largest bank failure in world history — Washington Mutual. Again, the Fed cooked the meal. I won’t even try to squeeze that addition into J.P.’s burgeoning name, except to say that the feeding frenzy was mutual. And with that, J.P and Companies acquired a bank that was even a different breed from itself. An investment bank consumed a consumer bank.

Sighs. We never learn a thing … even on the obvious stuff. The worst part is that nearly a decade on, the public keeps sucking this swill up. Well … until Brexit. Let’s hope Brits stay the course and others join their revolt.

Smaghi’s got a smoggy brain if he really believes his own solution, but that’s a group-think peril in the banking industry anyway. It’s ludicrous to believe you can make giant corporations more efficient by stuffing two of them into the same suit. It is far beyond merely ludicrous to think that you can take one extremely unhealthy supersized corporation and make it healthier by stuffing another dying giant inside of it! That’s like curing cancer by feeding the patient a diet of fried tumors.

At an early point, sure, making a business bigger creates economies of scale … if both of the businesses you marry together are reasonably healthy. At some point, however, that nasty old Law of Diminishing Returns I keep ragging about kicks in. The periphery of the corporation becomes too far removed from the center to be well managed. No one really understands everything the business is doing. Employees can hide among the masses to where no one knows someone is not working because no one even knows what that guy’s job is. One branch doesn’t know it is repeating the work of another branch. Etc.

If banksters like Smaghi really believe these banks cannot sink without capsizing all of Europe in their wake, then the responsible thing to do is to begin a “Ma Bell” on them — start tearing them down into smaller, more efficient, profitable companies. Time for reorganization. That way they the worst parts can crash safely on their own later on without any help from the rest of us.

The answer is certainly not to start rerevising all the newly revised regulations, as Smaghi and others are rapidly recommending. Why would we want to return to the starting point of the last massive crash?

Will the public be beggared or buggered…British style?

I wonder if European taxpayers are angry enough yet to revolt against Smaghi’s suggestion. The rest of Europe doesn’t seem as brave as the Brits. Take Greece, for example, which chose to stay in perpetual bondage to its German dominatrix. Even in the UK, the peasant revolt is dicey. Brexit was certainly a vote against this kind of elitist arrogance, but already many Brits are scrambling to find ways to overturn their own democratic decision because massive changes inevitably cause a volatile repositioning in markets. Revolts aren’t tidy.

You’d think after the Great Recession all central banks would have stopped allowing consolidation of the massive banks they oversee. Well, you’d think that if you believed they were really all that concerned about banks being too big to fail. That everything they do continues to make big banks bigger shows all they really care about is getting taxpayers to bail out their cronies.

Because taxpayers have not insisted on breaking up big banks for taxpayer protection, it has not happened. Until they demand it, as the Brits demanded Brexit, it never will happen! It is not a concept that would ever occur to imperial banksters. It is not the way their kept politicians think either.

After a decade of unbearable banking behavior that has spiraled right back to where we started … only higher up for a bigger fall, revolt could easily break out everywhere. But don’t expect the public to be smart. They’ve been completely blind while the banksters buggered them so far. Just expect them to be mad as hornets when you stir up their bin of rotten apples.

Brexit is an organized revolt with a clear objective of extraction from a bloated and failing enterprise, but it will still be incredibly messy. The domino effect of what fails because of the extraction will take months to play out. With surgery, there is blood and there is swelling, and there is pain.

I expect a growing number of simply angry revolts to occur from this point forward that will be far messier. They will look more like terrorist explosions than surgery because people don’t know the right answers. As a result, the public anger at getting raped again is not likely to have much helpful focus. People will be right to be angry — very right — but will they have any idea that size reduction is a big part of what really needs to happen? I think they will just be pushed by fear toward even greater globalization as the only answer big enough to save them.

Sadly, big is the problem.

So, back to my economic predictions

Anger may cause more nations to splinter off of Europe, but that depends on how messy Brexit becomes. If the dust settles in Europe in the next few months as it already has here in the US, other nations will be encouraged to break away. But I’m not so sure Europe will let the dust settle.

Right now banksters and politicians appear to be doing their best to kick the dust up into the air in order to terrorize everyone else into fear of breaking away and into giving their money to banksters. I think Europe will make the UK’s break as ugly of a divorce as possible in order to make all other nations afraid of doing the same thing — just as Germany did with Greece when Grexit was essentially being voted upon.

Whatever remains of Europe, you can be certain the central powers that be will use fear to tighten the reins of power. It may be a smaller Europe, but it will be even more centralized. Because of how trends are shaping up, I think we are about to repeat another devastating lesson from history: European power appears likely to become more Germanic, and that has never been a good thing.

For some reason that nation, more than any other, gravitates toward an obsessive-compulsive need to control Europe. Germany continually believes its ways are superior so that it SHOULD control Europe. While Germans may not be thinking of overt control, their thinking seems to run like this: “We must make them see that our ways are economically superior because then they will become as economically sound as we are,” Deutsche Bank notwithstanding.

Thus, Merkel and her German kommandants push Germanic discipline on the rest of Europe like they are force-feeding broccoli to a baby. In doing so they appear completely blind to how they are stoking the fires of enraged rebellion. (For example, Merkel never saw that force-feeding immigration would empower the Brexit vote.) Merkel has already aggregated European power around herself. Even though she doesn’t hold Europe’s most powerful position, she wields more influence over Europe than anyone as she marches them all to the German way.

Ironically, a single bank in that fiscally disciplined nation — Deutsche Bank — appears most likely to be the force that takes the entire European shambles goose-stepping over the cliff:

Today, we got the most definitive confirmation yet that the noose is tightening not only around Italy, but Germany itself … when none other than David Folkerts-Landau, the chief economist of Deutsche Bank, has called for a multi-billion dollar bailout for European banks. Speaking to Germany’s Welt am Sonntag, the economist said European institutions should get fresh capital for a recapitalization following a similar bailout in the US. What he didn’t say is that the US bailout took place nearly a decade ago. In the meantime Europe’s financial sector was supposed to be fixed courtesy of “prudent” fiscal and monetary policy. It wasn’t…. “Europe is seriously ill and needs to address very quickly the existing problems, or face an accident,” said the chief economist. (Zero Hedge)

Yes, the most likely bank to bust first appears to be German, and it is monstrous in size … as Italy more than eagerly pointed out. But that’s what happens when centralized power becomes too disconnected from its periphery because of size. It pushes stubbornly for what the center wants, causing something like Brexit to break off the outer edge. That, in turn causes other fractures that run right back to the center.

David Folkerts-Landau, the chief economist of Deutsche Bank joins French bank CEO Smaghi and Italian Premier Renzi is saying that a bank bailout has become so quickly urgent that Europe must break its new banking regulations to allow a bailout immediately, or the crash will begin. His conclusion does not seem very Germanic:

Strictly adhering to the rules would cause greater harm than if they were suspended.

Rules that Germany championed may have to be broken if they hurt Germany, instead of periphery states like Greece. Apparently, the dominatrix loves to crack the whip but not receive it. I anticipate Merkel will put the whip away now that it appears its sting could snap her own behind, but she may be too slow in giving up her own ideas.

It’s all part of the next leg down in the Epocalypse — first Brexit, then European banking stocks collapse, then some major European bank gives Europe its Lehman Brüders moment … and over the cliff they all go.

Deutsche Bank stock is now worth just 8% of its peak 2007 value. It’s already been a loooong ride downhill for one of Europe’s most iconic banks, but Brexit kicked DB in the crotch, because almost 20% of its revenues came from the UK, bringing its stock down to a groveling “crash value” now of $12.60 a share. One of the world’s largest and oldest banks looks ready to fall into the gaping abyss of the Epocalypse. No wonder European banksters are screaming “Bailout!”

CONTINUE READING –>

Here Comes The Next Trillion-Dollar Bailout

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

As boxers like to say, it’s the punch you don’t see that knocks you out.

In a world where a growing part of the financial system is hidden from view and excluded from official statistics, those are words to remember. A couple of examples from the 2008-2009 crisis:

  • Fannie Mae and Freddie Mac were private companies through which the federal government funneled a lot of mortgage debt and to which it granted a kind of de facto backing, though it asserted confidently that this would never be needed. When the real estate bubble (inflated in large part by Fannie and Freddie) popped, government — read taxpayers — had to assume responsibility for pretty much the whole $10 trillion US housing sector.
  • Over-the-counter derivatives are largely hidden by bank and hedge fund accounting tricks, but when that market blew up in 2008 it turned out that AIG, the world’s biggest insurance company, had enough of the instruments to bring down the whole financial system. The result was another huge bailout with taxpayer cash.

Continue reading

News Flash: There Is No Greek Deal

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

Any editor, analyst or commentator who claims that a “Greek bailout deal has been reached” is lying.

Greece has NOT reached a bailout deal in any way shape or form. What DID happen was Greece’s Prime Minister agreed to try and push a new austerity program through Greece’s parliament.

IF he can do this, and IF the Greek government agrees to the austerity program then NEGOTIATIONS (not a deal) can begin as to whether or not Greece should receive another bailout.

Put simply, Greece has THREE DAYS to agree to an austerity program in which it will hand over assets worth 25% of its GDP to the EU… at which time TALKS (again not a deal) COULD begin regarding a potential third Greek Bailout.

Continue reading

Law vs Legislation

cropped-bob-shapiro.jpg   By Bob Shapiro

In our society, and every society, there are rules. Ideally, all the rules are applied equally, and nobody feels put out by having to abide by them.

Some rules evolved naturally, as a consequence of some activity which people engaged in. That’s why in the US, and in many countries, we drive on the right. We decided, when we still were using horses and buggies, that keeping to the right – even when walking on the sidewalk – facilitated movement.

Continue reading

Europe’s Template For Dealing With Crises (Capital & Border Controls) is Coming To The US

By Graham Summers – Re-Blogged From http://www.Gold-Eagle.com

More and more analysts are beginning to take note of the “War on Cash.” However, they’re missing the fact that the actual template for what’s coming to the US first appeared in Europe back in 2012.

Back in March of 2012, when the EU Crisis first began to spin out of control, then Prime Minister of France Nicolas Sarkozy openly called for the renegotiation of the Schengen Treaty: the treaty that established the 26-nation EU as a “borderless” entity in which individuals could move from one country to another with little difficulty and which also made trade among EU members easier.

Continue reading

Is Your Bank Account Safe?

cropped-bob-shapiro.jpg   By Bob Shapiro

How much money do you have in the Bank? I’m not asking your net worth. Rather, whether your net worth is positive or negative, how much do you keep in savings accounts, checking accounts, certificates of deposit, Christmas club, and other accounts with your local bank?

You do realize that, whatever the amount, you are earning interest that’s below the rate of price increases as measured by the understated CPI? The purchasing power of your money in the bank is going down even as the nominal, tiny returns you receive are taxable income.

Continue reading

Bail-Ins and the Next Crisis

cropped-bob-shapiro.jpg   By Bob Shapiro

In 2007, a Financial Crisis, initially largely involving Sub-Prime Mortgages, hit the US. Many large banks and other financial institutions were on the brink of bankruptcy, and a few slightly smaller ones did fail.

We’re told that the FDIC exists to protect depositors, but the FDIC’s fund is so small, at $25 Billion, compared to depositor’s money at risk, at $9,283 Billion, that it’s considered a joke within the industry.

FDIC Deposits & Derivatives
Sub-Prime Loans, then also called Liar Loans, were packaged, using Fannie & Freddie guarantees, into Collateralized Debt/Mortgage Securities, and sweetheart deal ratings were extorted out of the three major ratings agencies. These, together with other derivatives, totaled almost $300 Trillion of bets made by the various financial institutions.

These derivatives were marketed widely in the US, and also in Europe. When the underlying Sub-Prime mortgages started defaulting, the prices on CMSs plunged – this is what almost crashed Europe!

To try to prevent the “End of the Financial World as We Know It,” the US Government embarked on massive bailouts of the stupidly run, “Too Big To Fail” institutions, at taxpayer expense. These bailouts have never ended, and the US FED added ZIRP (Zero Interest Rate Policy), QE1, Operation Twist, QE2, and QE3 on top of the bailouts  .

There has been something of a public uproar over the bailouts, so the idea of a “Bail-In” was tried out in Cyprus a few years ago. A Bail-In is where the law allows depositors to lose their money before others. Deposits are “converted” into stock of the institution so that it can continue mismanaging its affairs without interruption. That stock loses value very quickly.

Since the Bail-Ins “worked” well in Cyprus, the practice has been adopted by most Western governments, including here in the US. So, if you have money in an account with one of the Too Big To Fail banks, and there’s another financial crisis, you’re going to lose part or all of your money! Here’s a list of the 29 banks in this category worldwide:

Too Big To Fail Banks

The Sub-Prime loans fell from about $125 Billion in 2007 to $60 Billion by 2009, so everything is under control now, right? No, not right!

The FED’s ZIRP has caused yet another bubble to be blown, this time for Sub-Prime auto loans. These loans have rates around 20%, with loan amounts as high as 115% of the car price. With these, Sub-Prime loans are back up to $120 Billion.

And now, Fannie & Freddie are starting to rev up their loans again, with down payments as low as 3% of equity. Sub-Prime is likely to be a problem again soon.

And all those derivatives, in the 100s of Trillions, are still weighing on the liability side of the Big Banks. With Bail-Ins protecting these financial institutions with your money, you may want to look at that list again and make sure your accounts are elsewhere.

But, you still aren’t in the clear. If you have a pension, there’s a good chance that all your money in the pension fund may be invested in debt of these banks. It’s your money so it’s up to you to find out and tell your pension to stop.

Action Item: Bail-Ins violate the fiduciary responsibility of the financial institutions which benefit at depositors expense.

  • Congress should pass a law, and the President should sign it, outlawing the practice known as Bail-In, returning to the use of bankruptcy proceedings. Bankruptcy should disqualify the managers from continuing at the helm of the institution.
  • Depositors should be returned to the head of the line of who gets their money first in case of a bankruptcy.
  • Managers of financial institutions which use high leverage or risky investments should be held personally liable if those investments go bad.
  • No business should be considered Too Big To Fail. If incompetent managers are allowed to stay in charge as they run the business into the ground, the business should be allowed to go into bankruptcy, an the owners should bear the loss.