This page has been archived and commenting is disabled.
A Forensic Analysis Of The Great French Bank Run!
The professional level subscription document detailing the likely causes of a run on our primary bank run candidate is now available for download (Bank Run Liquidity Candidate Forensic Opinion, the retail version containing valuation available here - French Bank Run Forensic Thoughts - Retail Valuation Note). It is presented at a timely fashion for much of the core EU has just implemented short bans on financial companies - exactly as I anticipated several days ago. If history repeats itself (and it usually does), this action will serve as a precursor to the bank run that I have anticipated and warned about over the last few weeks. For those who don't subscribe to the professional BoomBustBlog analysis, yet want an inkling of what is going on in French banking, I have redacted the aforelinked document as a free public preview: French Bank Run Forensic Thoughts - pubic preview for Blog
You know, if it wasn't so damn destructive, it would actually be funny how regulators appear to find it genetically impossible to learn from mistakes - whether it be theirs or somebody elses. In 2008, when the US foolhardedly decided to allow banks to misreport their long term toxic assets bought with excessive, short term leverage, said banks collapsed. It was not as if this was unforeseen. France is anxious to repeat that exercise with its banks and sovereign debt. In 2008, when the US foolhardedly decided to ban shorts on insolvent financial companies, I made a small fortune constructing synthetic short positions with options that skyrocketed in value because regulators dabbled in markets in which they really had no clue. ZeroHedge reminds us that the short ban in the US ended in a 48% drop in financial company share prices.
It should be obvious to anyone who can remember at least 3 years ago that short bans are not good ideas. They spread more panic and uncertainty than they cure - and the banks' business models are based upon faith and full credit. It appears that the French think they can make ths mistake better than the Americans, as CNBC reports SocGen CEO Dismisses Rumors, Says France Is Not US. Of course not, they just act that way when there is an opportunity to efficiently repeat a boneheaded error. Exactly as I warned just TWO days ago in the post "Time To Load Up On Bank Puts? The Futile Attempt To Make The Insolvent Appear Solvent By Interefering With Market Pricing - Short Ban Has Started", I now bring you this afternoon's news - France, Italy, Belgium and Spain Ban Short Sales
France, Italy, Spain and Belgium plan to enact bans on short selling or on short positions, the European Securities and Markets Authority said today.
“Some authorities have decided to impose or extend existing short-selling bans in their respective countries,” ESMA said in a statement on its website. “They have done so either to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field, given the close inter-linkage between some EU markets.”
The most false rumor is what is represented as many of these bank's balance sheets. I warned all BoomBustBloggers last year that this European bank collapse was coming.
It started as:
- a keynote speach in Amsterdam,
- then a research note to subscribers,
The Inevitability of Another Bank Crisis, - followed by blog posts on the same, see Is Another Banking Crisis Inevitable?
- then a full fledged, step by step tutorial on exactly how it will happen....
- The Mechanics Behind Setting Up A Potential European Bank Run Trade and European Bank Run Trading Supplement
- What Happens When That Juggler Gets Clumsy?
- Let's Walk The Path Of A Potential Pan-European Bank Run, Then Construct Trades To Profit From Such
- The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!
- The Fuel Behind Institutional “Runs on the Bank” Burns Through Europe, Lehman-Style!
- Multiple Botched and Mismanaged Stress Test Have Created The Makings Of A Pan-European Bank Run
- France, As Most Susceptble To Contagion, Will See Its Banks Suffer
- Observations Of French Markets From A Trader's Perspective
- On Your Mark, Get Set, (Bank) Run! The D…
- ECB As European Lender Of Last Resort = Institutional Purveryor Of A Pan-European Ponzi Scheme
Over the next few days I will offer advanced trading techniques to allow BoomBustBlog subscribers to monetize their view via the market, despite the attempts by those who do not see to manipulate free markets. In the mean time I will excerpt portions of the Pro/Institutional report on the French bank most at risk for a run, available for download right now - Bank Run Liquidity Candidate Forensic Opinion.
Bank Run Liquidity Candidate Forensic Opinion. Here are a few screen shots from the free public abridged version ( French Bank Run Forensic Thoughts - pubic preview for Blog), that easily demonstrates the problem with the French banks cannot be solved by banning short selling. The problem is inherent in the banks themselves. Please click to enlarge to printer quality...
- advertisements -
Impressive effort alright. Reggie is a pretty amazing guy. His blind spot though seems to be that the ponzi operators have all his info + more. They will fill this void. Liquidity will be provided. Whether it comes from the fed, china, IMF, BIS. The liquidity will arrive. We are up against a well interconected globalist regime. It ain't going down for a simple lack of fiat.
The old rules don't apply.
Reggie you're my financial analyst Hero ;))
The 'drying up' of interbank liquidity could just be another word for the 'Dog Eat Dog' Stage we're now entering (post 2008) where some big players want to snap up other banks assets at big discounts to shore up their own books and survival chances
the 'sponsorship' of the FDIC by some big banks give the vultures first pick and the first bite of the carcass ...wonder who's going to snap-up BoA ?
Watch the "cash assets" line of US branches of foreign banks in Fed H.8.
They are mainly branches of European banks. Till mid-July foreign banks were stashing USD cash at their US branches, whose cash assets went up from $350b last November to $900b in mid-July. In a nutshell, European banks sopped up 90% of the USD liquidity created by QE2, presumably by borrowing it short-term, and put it in their US branches' reserve accounts, to earn 0.25% interest from the Fed.
That $900b of cash that foreign banks had at their US branches as of July 13 was a big part of European banks' liquidity buffer.
According to today's H.8, that number was down to $758b as of Aug. 3. That's $140b of liquidity buffer burned through in three weeks.
And this is the aggregate for all foreign banks that have US branches. Obviously some are burning up their buffers faster than others.
i think Belgium has the most to be worried about
Holy crap Reggie!
What do you do....stay up all night writing this stuff.?
Impressive