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SYSTEMIC RISK IS ON RED ALERT
Since 2009,
I’ve been warning that systemic risk remains high. However, from that time
until today, investors have been willing to bet on the US Federal Reserve (and
the world’s central banks) keeping a lid on things.
Until today.
Greece has
erupted into full-scale, violent riots that could shut down the entire
Government there. SHOULD this happen it’s the beginning of the END GAME for
central bank intervention in the financial system.
Let me
explain.
The only
thing that has maintained investor confidence since the depths of 2009 is the
belief that the central banks can continue to bailout/ intervene to control any
financial problem.
Remember, we
never actually “took the hit” we needed to take in 2008. The same junk debt remains
in the system (it’s just been hidden by loosened accounting standards). The
same enormous derivatives time bomb is still ticking (it’s over $600 TRILLION
in size).
None of
these problems were solved. None were even addressed. All the central banks did
was lend more money to the insolvent big banks. Well, that and damage their
sovereign balance sheets by taking on a ton of garbage debt (the Fed’s balance
sheet is now over $2.8 TRILLION in size).
So in plain
terms, the central banks took systemic risk that existed in the private sector
and allowed it to spread to the public sector.
What does
this mean?
That the
next Crisis won’t just involve banks like Goldman Sachs, it will involve entire
countries (including the US) going belly-up.
We’re already
seeing it in Greece. That situation has made it very clear what happens when
you combine public outrage with Government bankruptcy and systemic insolvency: SHUT-DOWN.
This IS
coming to the US. And it won’t be long. Once the bailout wagon stops (first in
Greece) the ensuing collapse will spread VERY quickly. The reason is quite
simple: Greece is the Bear Stearns of the Sovereign debt Collapse.
So buckle
up, because it was only six months or so after Bear Stearns that the Lehman
disaster unfolded. Given the amount of leverage in the system today, we could
easily see the issues hitting Greece today arriving at the US’s shores before
the year’s end.
So if you’ve
not taken steps to prepare for the coming Crisis, you NEED To download my FREE
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Good
Investing!
Graham
Summers
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What they did was buy worthless assets (commercial papers) from troubled banks and hope that housing prices would go up so that they could then re-assess those commercial papers and sell them without a loss. Housing just never picked up despite the easy interest rates and now they are in a dead-end.
Nothing,
Ultimately what they are doing is a SUPER intelligent move.
They are taking all the houses in the USA,using taxpayer monies, and in the end will own ALL of them.
Free and Clear.
Housing is going too drop another 25%, do they care?.
NO...........why hold they they own them, and we paid for them, and sooner of later they will be valuable assets again(they already are as rentals units).
And YOU & I paid for it.
Smart like a Fox.
You see, I hoped I was alone (and crazy) thinking this might be the plan, but you just confirmed I was wrong obviously.
Truly, putting this again into perspective, this guy really knew what he was talking about :
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
- Thomas Jefferson
I came to this conclusion in summer of 2009. It seems the only logical reason that the fed is buying up all of this soon to be worthless debt. The fed knows it is worthless debt. They are buying the treasuries and the toxic assets in order to formulate the basis for a claim on all of the hard assets backed by them - i.e. real estate mortgages. They wouldn't do that would they? - is the response from the people I shared this theory with. People would be angry - form mobs, riot - etc etc. Then they would just be cut down by the helicoptor or whatever other means the "security forces" use.
You are not alone in this thinking. I have heard it on a couple of occasions - but most regulars (we are all regulars) will not even entertain the idea, or somehow get a flat-line when the subject enters their minds.
Which proves the point, if you don't know how the bubble got here and why it burst, you haven't a clue about how to solve the problems. Hell, you don't even know what the problem is.
Why people trusted them to solve the problems was beyond me back when this predictably started falling aprt.
the last red alert I recall was El Erian on CNBS around the morning after Lehman in response to his wife and the suggestion she go to an ATM and get cash
minute 4
http://video.cnbc.com/gallery/?video=856422699
It's wrong to say that nothing has been solved with regarding the debt issue. There have been tremendous prepays in Mortgage-Backed securities. Banks have boosted their capital. Consumers have made some progress deleveraging, but have farther to go.
And meanwhile, the federal government's deficit, and debt, .....
Exactly, transferring those toxic assets doesnt mean they aren't there still. The fact is that someone, somewhere, is still holding the bag of shit. Who doesnt expect a 20-30% drop in home prices? That drop in asset value is enough to deflate any financial institution near it. When you're leveraged 100: 1 that 1% can really kick your ass. When that 1% is really 30% you can see where the problem is.
Systemic problems.
Central banking.
Do I see a common denominator?
Why has he stopped posting his DXY chart? Oh, because he was wrong.
Systemic risk, you say?
IMF to the rescue!
Yeah!!! They can fix it.
The thing to watch for is panicked money movements - we may see a huge rally in the dollar as people pile out of the Euro. I think we may be getting close to something like this.
Red alert on both sides of the pond. Yoyo for weeks to come; its the name of the game today total volatility, before QE-3 or...
If governments fail, the last thing I would worry about is protecting "wealth". I'd be putting sand bags up around my house.
spartan,
save your $$ and back.
IF .gub fails, you will be forcibly removed from your home, even if safer than 98% of the rest.
Why do you think the TSA group, and every swinging phallic symbol LE /NatGd units, are doing massive training runs.Using Apaches?.
I am well prepared, but not against Apaches
What I had HOPED would not happen, is now a 100% planned/designed event.
Be ready for forced relocation, and confiscation of ALL material goods you possess, and even likely separation fro your families.
Apaches are easy. Take one heavy duty home made rocket - attach a 1mm nylon string X 1000ft to tail. Aim and fire. More effective than you think. Why do you think they fly so high above Gaza
Interesting...I can't say with certainity it won't happen as you describe. However, if the government fails, who will be forcing the relocations and doing the confiscating? In other words, who will these government thugs be, and how and with what will they be compensated for their efforts?
The daily Graham Summers commercial..time to change the tune Graham before people tune you out completely..how about ending with a link to some hot chick or something to keep eyeballs on your cut & paste drivel
"Systemic Risk" is so 2009...Now we just call them "Shiny Happy Fits of Rage"
They kicked the can down the road for 3 years, they have known the wall was looming ahead. It is now here. So false flag anyone?
No.. it's definitly red flags. This is not going to be pleasent for anyone..we...the common folk...are going to take some kind of hit no matter where we are in Life. The Wealthy but not Uber-Rich are not at all happy in this either because they cannot be comfortable without the buffer of Middle class supporting. Ever since my NameSake went down in flames the question not answered still sits there. When will be the day of reckoning?
Mr. Lehman
Nailed on.
the bit about the default making its way to the U.S. "next year" seems a bit optimistic.
Fiscal year starts October 1. :D
Spot on.
Sprott on.
Cortez on CNBC says the Euro has put a top in and he sees Euro @ 1.20
Ok... so when to get into Silver?
watch out for rebound it will be awesome.
Silver is mainly an industrial metal. If things go to pot, it is not clear that Silver won't tank too.
Silver is mainly an industrial metal
No, no, no. Silver BECAME an industrial metal quite recently. It's still money, has been for thousands of years. You must have been born...in the 1980's?
lulz
Silver or paper. Silver or paper...
Hmmmm, I choose silver.
But if you buy paper, you can leverage a much larger investment, and thus make much more money!
LOL
With the price of gold being at an all time high, and probably going higher, silver is viewed more and more as the poor man's gold.
And the lower class is coming to be more and more the poor man's middle class.
Only if they outlaw minting it.
Lots of people, myself included, see silver as money. The chinese, Indians, Turks, Germans, and all the other guys buying aren't just lookin' to coat their solar cells ...
physical silver market is very small commodity market. And the paper mkt weighs heavily on it under PD supervision and manip.
When silver becomes relevant for these purposes, the paper markets will be exposed. Transactions will be accepted in real things, not B.S. notes backed by collective ignorance of the masses and the manipulation of the truly evil.
ah, I been hearin' that story for too long now. I've sold it all and am sticking with dollars from now. I can't go wrong. This was the perfect time to get into dollars, just before the deflation starts and the dollar goes to the moon.
LOL
Yesterday.
Yesterday? Then I timed the market precisely. I received a $100 bag, yesterday.
Said my math was wrong....I'm pretty good with math....
I purchased a $100 bag myself yesterday. Avg price was $35.30
What she look like...?
Like your mother....
Gold, silver and platinum are a great diversification. If you do not have any PMs, that should be Priority One for anyone looking to protect their wealth.
Consider buying survival items just in case things really get BAD.
---
Since Graham promotes his stuff here, I invite any readers to send me a gmail at my name above for a link to my blog. Just reassure me you'll behave. My blog explores subjects that I have explored with you here at Zero Hedge. Since it is in my own name, I do not post the link here. "140 ZH-ers cannot be wrong."
DCRB, another recommendation you may want to add is to get your passport updated.
what do you think about Palladium? probably too late already?