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Graham Summers Weekly Market Forecast (Dexia Now... Who's Next? Edition)
Things are getting truly desperate in Europe. I’d like to show just how bad they are by way of example: the Belgian bank Dexia, which is now in the process of being nationalized.
For starters, Dexia had 566 billion euros in debt and 19 billion euros in equity as of the end of 2010. Right off the bat, that’s a leverage ratio of 29 to 1. Lehman Brothers was leveraged at 30 to 1 when it collapsed.
Now consider that Belgium’s entire GDP is just 348 billion euros. Dexia has 566 billion euros in assets. Of this 352 billion are loans. Put another way, Dexia’s loan portfolio alone is larger than its home country’s entire economy.
AND THIS BANK PASSED THE STRESS TESTS.
Suffice to say, Europe’s banking system is in far FAR worse shape than anyone over there is admitting. The stress tests were complete and total fiction. And the market is starting to figure this out.
Small wonder then that had both the IMF and the Bank of England have recently warned that the world is facing a “financial meltdown” and “the worst financial crisis in history.”
Ben Bernanke issued his own statement of doom last week as well, stating that his precious recovery is “close to faltering.” For a guy who’s spent TRILLIONS trying to create a recovery to admit things aren’t working out ought to give you an idea of just how bad things will be getting in the near future.
Indeed, stocks were rejected last at a descending trendline from the July top.
We should have at least gotten a bounce to the 38.2% retracement (1,200 on the S&P 500). So if the market fails to get there and simply rolls over here, then we’re going DOWN in a big way FAST.
Here is the reality of the financial system today:
§ The European banking system is facing systemic collapse.
§ The US economy has rolled over and is in a confirmed double dip in the context of a larger DE-pression.
§ The Central Banks and regulators have admitted we are peering into the abyss and they have no clue what to do.
Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What's coming is going to make 2008 look like a joke.
If you have yet to prepare yourself for what’s coming, now is the time to do so. Whether it’s by moving to cash and bullion, opening some shorts, or simply getting out of the markets altogether, now is the time to be preparing for what’s coming (remember, stocks took six months to bottom after Lehman… and that was when the Fed still had some bullets left to combat the collapse).
And if you’re looking for specific ideas to profit from this mess, mr Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.
Good Investing!
Graham Summers
PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years or the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.
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1. Read the ZH article posted on Sunday, 10/9 re: Dexia passing the stress test
2. Write a piece (read: ad) about it for ZH
3. ????
4. Profit!
Dexia did business in many countries besides Belgium so your comparison of it's loans outstanding to Belgium GDP is irrelevant. Only the percentage of loans that might be bad matter in such a comparison not the total amount.
Dear Graham Summers , While I do not think you are wrong in principal.
Did you forecast today's rally. If not, you must have forecast a drop.
So your subscribers are doing just as well as Robert Prechter's much poorer folks.
Why don't you just tell one story.
Cash 100% Cash I mean W.T.F.
Great day to Dump a sh*tload of my profitable stuff from last week. I can't beat 12% in five days (IRA stuff )....
BOOOYAAAHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!
Market figuring what out? Comeon , the algos don't care , Naz up 3.5% , Finance short down 10% , gimme a break . The markets don't care about systemic failure . Booya Booya , load up the truck . Just don't like playing against the house any more . Maybe real estate , tangible lands , certainly not money in a bank or mattress , To hell with Wall Street . OWS give em some light in their utterly corrupt darkness !!
Who's next? These Erste Bank guys in Vienna make exactly the right noises to be next on the list!!!
http://arxiv.org/abs/1107.5728v2
There is your answer
They will never lose, and we the peoples will allways lose
Insult me with a proper comment
TY
PS
Cine e roman pe zerohedge ?
since when did anyone think Europe had a banking system. DB, Barclay's, Soc Gen, UBS, Santander...all fuck ups. Capitalism is a US thing and this is end of days stuff "over there". Sarko and Merkle the turtle are way in over their socialist heads.
Its an absolute pre-requisite that you have to be a total fuck up to be a banker or a bank - these clowns would be fish food if hey worked at anything else. Sometimes I think its all the inbreeding between the bankster tribe that has made them as retarded as they are.