non-performing loans

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Handelsblatt: "Four German Banks On The Brink"





Several days ago we were confused why, out of the blue, a €1 billion loan BWIC appeared that was dumping German non-performing loans. After all, the whole point of the European "recovery" fable to date has been to deflect all the attention from the "pristine" German banks, up to an including world-record derivatives juggernaut Deutsche Bank,  and to focus on Greece and other insolvent peripheral European nation. Earlier today, German Handelsblatt provided an answer, when it reported that "four German banks are on the brink", i.e., four banks of which three are known, HSH Nordbank, IKB and MunchenerHyp, will likely fail the ECB's stress test whose results are due to be announced next Friday.

 
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Clearly Europe Has A Crushing Deflation Problem... Oh Wait





When Mario Draghi set off on his latest quest to slay Europe's deflation monster, after an endless array of failed alphabet soup programs to inject money into stock markets mysteriously failed to fix Europe's insolvent economy riddled by record unemployment and trillions in non-performing loans, he clearly was guided by this latest Eurobarometer survey of Public Opinion in the European Union, in which virtually everyone across the board admitted that the most important issue facing the common folk in Europe is plunging prices and crushing deflation.

Oh wait... it says rising prices/inflation. Well, that's embarrassing.

 
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Humpday Humor: Zimbabwe's Unemployment Rate Is 4%, 10.7%, 60% Or 95%





While all the western banks are clearly envious at the facility with which Zimbabwe managed to hyperinflate away its debt mountain after simply printing a few trillion in fiat monetary equivalents, which instead of the stock market hit the broader economy, there is much more the "developed" world can learn and is learning from Robert Mugabe domain of experimental yet practical monetarism.

 
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Germany Throws Up Over Draghi Plan To Buy Greek Junk





In a striking admission that Mario Draghi's "strategy" about the ECB's Private QE future, aka ABS monetization plan, is nothing short of converting Europe's central bank into a "bad bank"  repository for trillions in bad and non-performing debt, the FT yesterday reported that "Mario Draghi is to push the European Central Bank to buy bundles of Greek and Cypriot bank loans with “junk” ratings, in a move that is set to exacerbate tensions between Germany and the bank." It is expected that the former Goldmanite will unveil details of a plan to buy hundreds of billions of euros’ worth of private-sector assets at tomorrow's ECB meeting.

 
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"A Printer And A Prayer" - The Three Problems With The Fed "Liquidity Coverage Ratio" Plan





Today we learned that as part of the domestic "macroprudential" effort to ensure firms don't run out of cash in a crisis, the so-called Liquidity Coverage Ratio, US regulators said banks likely will have to raise an additional $100 billion to satisfy the new requirement, the WSJ reported. The disclosure is part of the final draft of the so-called Liquidity Coverage Ratio, released by the Fed earlier today, and which was promptly passed on a 5-0 vote Wednesday that will subject big U.S. banks for the first time to so-called "liquidity" requirements. The Federal Deposit Insurance Corp. and the Treasury Department's Office of the Comptroller of the Currency adopted the rules later in the day.  On the surface, this is all great macroprudential news: forcing banks to hold even more "high quality collateral" is a great idea, to minimize the amount of money taxpayers will have to fork over when the system crashes once again as it certainly will thanks to the unprecedented Fed micromanaging interventions over the past6 years. There are just three problems...

 
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Frontrunning: September 2





  • Ukraine Shifts to Defense Against Russian Incursion (WSJ)
  • U.S. forces carry out operation against al-Shabaab in Somalia (Reuters)
  • Bond Markets Tilt Toward Frankfurt as Draghi Negates Fed (BBG)
  • Another "unexpectedly" - Swiss Economy Unexpectedly Stalls as Euro Area Takes Toll (BBG)
  • Japan's 'Abenomics' feared in trouble as challenges build (Reuters)
  • Germany Imposes Nationwide Ban on Uber's Cab-Hailing Service (WSJ)
  • Japan's 'forward guidance', the GPIF, has "already begun a highly anticipated portfolio reshuffle" (WSJ)
  • Detroit Brings Bankruptcy Plan to Court With Billionaires (BBG)
  • Burger King has maneuvered to cut U.S. tax bill for years (Reuters)
 
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Chart Of The Day: One Of Every Two Cyprus Loans Is In Default





Far be it for us to comment that anything like "fundamentals" matters anymore, or that, blasphemy, bad news is anything but good news, however what the Central Bank of Cyprus revealed today is a little troubling to say the least: as of the most recent, June, data, the total percentage of non-performing loans in the Cypriot banking system just rose to a mind-blowing 45%, up from 44.3% in May, and nearly double the 23.6% which was reported at March 2013 when the local banking system cratered, leading to the first European forced "bail-in" of (mostly Russian) depositors.

 
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The G-20's Solution To Systemically Unstable, "Too Big To Fail" Banks: More Debt





Another day, another brilliant scheme from the think-tank that is the G-20: prevent systemic collapse from TBTF banks loaded up with record amounts of debt by forcing them to... issue more debt.

 
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Is The Correction Over?





While the markets are currently suggesting that the "dip" is over, there are several immediately prevailing risks that could catch unwitting investors.

 
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As Chinese Credit Plummets US Stocks Soar On Hopes Of More PBOC Easing; But Is Conventional Wisdom Again Wrong?





Conventional wisdom, now so habituated to getting all the cheap credit it can get, did not anticipate such a dramatic collapse in Chinese credit last month, is eagerly expecting a proportional response from the PBOC, one which would potentially involve significant easing, which is precisely what US equities priced in today when they closed near the highs of the day, even as there was not a single piece of good macroeconomic news overnight. Pretty cut and dry right? Well not really. Recall that as we reported in the last week of July something odd was revealed: namely that China quietly unveiled and implemented its Pledge Supplementary Lending line, or as it is increasingly better known: China's QE.

 
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The Wonders Of The Modern World: China's Amazing Tower Of Garbage





When it comes to ancient wonders of the world, there is the tower of Babel, and to a lesser extent, the leaning tower of Pisa. Sadly, modern wonders leave something to be desired: case in point, this 30 metres high garbage mountain at the crossroad of Huanghe avenue and Zhufeng street of Shijiazhuang, central China's Hebei province. The garbage mountain has been piled up as high as a 9-story Building in the last 30 years. The local village committee now is dealing with these wastes: best of luck. And to think all it took were several trillion in non-performing loans...

 
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Overnight Futures Levitation Mode Engaged But Subdued





Despite yesterday's lackluster earnings the most recent market levitation on low volume was largely due to what some considered a moderation in geopolitical tensions after Europe once again showed it is completely incapable of stopping Putin from dominating Europe with his energy trump card, and is so conflicted it is even unable to impose sanctions (despite the US prodding first France with BNP and now Germany with the latest DB revelations to get their act together), as well as it being, well, Tuesday, today's moderate run-up in equity futures can likely be best attributed to momentum algos, which are also rushing to recalibrate and follow the overnight surge in the AUDJPY while ignoring any drifting USDJPY signals.

 
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Frontrunning: July 17





  • Bubble Paranoia Setting in as S&P 500 Surge Stirs Angst (BBG)
  • But how will math PhDs determine "fair value" - Wall Street Techs Take Secrets to Next Job at Their Peril (BBG)
  • U.S., EU Escalate Russia Sanctions as Putin Holds Firm (Bloomberg)
  • Australia Becomes First Developed Nation to Repeal Carbon Tax (WSJ)
  • Gaza humanitarian truce goes into force, hours after tunnel clash (Reuters)
  • Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (BBG)
  • ECB Asset Buying Far Off and May Not Come, Hansson Says (BBG)
  • Time Warner win would make Murdoch U.S. media king (Reuters)
  • Costly Vertex Drug Is Denied, and Medicaid Patients Sue (WSJ)
  • China Rallying for All Wrong Reasons to Top-Rated Analyst (BBG)
  • GM recalls some cars with problematic switches; judges others safe (Reuters)
 
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