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As The World Turns, The Contagion Spreads: I Can Hear The Pitter-Patter Of Feet Running From European Banks - Are YOU Ready For
In the meantime, contagion spreads...
My last couple of posts have been focused on monetizing this amazingly sharp break in the world equity markets.
- Timely Trading Tips For 8/5/2011
- Game Over For The European Ponzi Scheme? Monetizing Pan-European Sophisticated Ignorance Via US Options, Part 1 For Retail and Professional Realists
I urge all not to forget what has caused this, because if you fully grasp the cause you know that this is now 1 week affair. A LOT of unwinding needs to be done. I'm not saying their won't be short squeeze induced rallies or TPTB won't start QEing use again, but at the end of the day, this shit really must (and will) fall apart at the seams. It's the only path to true economic growth. In the meantime, the contagion spreads:
RBS Posts Wider-Than-Expected Loss on Greek Writedowns, Insurance Payments
Royal Bank of Scotland Group Plc (RBS), Britain’s third-biggest bank, swung into loss in the first half after writing down the value of its Greek debt and setting aside funds to compensate insurance customers.
The net loss was 1.4 billion pounds ($2.3 billion), compared with a profit of 9 million pounds in the year-earlier- period, Edinburgh-based RBS said in a statement today. Analysts had estimated the bank would have a 571 million-pound loss, according to the median estimate of five surveyed by Bloomberg. The lender wrote down its Greek debt by 733 million pounds.
RBS, the last of Britain’s five biggest banks to report results, set aside 850 million pounds to compensate clients who were improperly sold personal-loan insurance. It followed France’s BNP Paribas SA, Credit Agricole SA and Germany’s Deutsche Bank AG in writing down Greek debt after signing the Institute of International Finance’s rescue plan last month.
I have been preaching Pan-European Bank Run for some time, based primarily off of the inevitable writedowns that will need to be taken on profligate state debt. 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
- Greece Is Fulfilling Our Predictions Of Default Precisely As Predicted This Time Last Year
- 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
- Observations Of French Markets From A Trader's Perspective
- On Your Mark, Get Set, (Bank) Run! The D…
Well, it has begun, as both banking counterparties and sovereigns pull liquidity, exactly as described in The Fuel Behind Institutional “Runs on the Bank” Burns Through Europe, Lehman-Style! and The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!
Reference this Bloomberg article, after taking into consideration that UK and German banks have already pulled back exposure (read liquidity)... Denmark Forcing Liquidity Crisis on Banks
The Danish state’s refusal to extend guarantees on bank debt beyond 2013 means even healthy lenders will suffer the fallout of a liquidity squeeze that could be avoided, the head of the Local Bankers Association said.
“There’s nothing wrong with helping banks out with their liquidity, it won’t cost the taxpayer,” Bent Naur, the chairman of the Copenhagen-based group, said yesterday in a phone interview. “The state should prolong the guarantee, not for troubled banks, but for those that meet solvency requirements. That will avoid a liquidity squeeze when everybody needs to refinance at the same time.”
He appears to be missing the point. Insolvency is contagious when the entire pool of banks in question hold similar assets that are devaluing. What the Denmark state is essentially saying is that it will no longer use taxpayer capital to float the solvency of insolvent banks. If said banks were truly healthy and solvent, then they will cater to their own liquidity needs. Alas, they can't because of ALM mismatches (see The Fuel Behind Institutional “Runs on the Bank” Burns Through Europe, Lehman-Style! and The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!) and assets erroneously being carried on the books for materially less than they can be liquidated for. Face it, the Ponzi is crashing, jump off of the boat before it sinks any farther!
Banks in Denmark, home to the European Union’s toughest resolution laws, need to refinance about $35 billion in state- guaranteed debt in the next two years. The government has rejected calls to extend its backing, arguing the industry should instead consolidate.
Read as "Accept true market pricing for your transactions and take you haircuts like men (and women) as you try once agin to add 1 + 1 to equal 3! Haircut! Recogniize Lossss! WHAAAATTT???!!!
Lenders already face higher funding costs as two regional bank failures since February triggered senior creditor losses. Moody’s Investors Service warned in May borrowing costs for Danish lenders will increase “long-term.”
“When we look at the calendar, 2013 isn’t far away,” said Naur, whose association represents 88 lenders in Denmark, Greenland and the Faroe Islands. Helping healthy banks access liquidity won’t prop up insolvent lenders, he said.
You guys haven't seen anything until you see what's under the covers we're pulling off of this French bank, very soon (France, As Most Susceptble To Contagion, Will See Its Banks Suffer). These actions forces capital flight, and guess where it flies to???
Go to 21:00 in the video below. Bernanke strategy all along
Yesterday I said expect US rates to go negative, well... Less than a day later...
- advertisements -
Reg the Leg!!!
The Danish state’s refusal to extend guarantees on bank debt beyond 2013 means even healthy lenders will suffer the fallout of a liquidity squeeze ....
Yeah - They are saying that NOW, however, the next government is likely to be a happy coalition of social democrats and socialists lead by a women whom the most prominent attributes are:
0) Blond, Blue eyes, Smartly dressed.
1) A general lack of any knowledge about anything that she has not been briefed on beforehand by her handlers ... as seen on TV even!
2) And yet manages to live in a property in Denmark with her husband paying taxes in Switzerland - An impossible feat for us little people; Residence in Denmark triggers taxation in Denmark of ALL household income with no exception ... except, apparently, when it is Helle Thorning Schmidt.
Elections are coming within three months so it is very easy for the government to position itself as "tough on bankers" when it does not have to do anything about it!
The next government will be even more pig-ignorant, more cleptocratic, and more into special favours for special people than the current one is (which is quite an achievement, but there you go). The only practical problem is that the total debt held by banks and credit unions is about DKK 10,000 Million - around 6 times GDP - there is not enough money to nationalise all of those "assets", nevertheless, they will try!
A good bet will be Danske Bank, they alway get into the shit and then some behind-the-schenery wheels are set in motion and they pull out of it. Another one is SAS, Scandinavian Airlines, who cant run a competitive business due to having Danish, Swedish and Norwegian leadership ... AKA 3 times the parasitic management everyone else have. Vestas Wind Systems will not go bust under a socialist government either - just wait until after the regular August-September downgrade, then buy the calls.
A government run by a special person that is so elite that rules are bending even before she is the prime minister ... this is a very good reason to short DKK and buy SEK and SCF instead - we taxpayers might have to move there, soon!!
Typo: "less" should be "more" in the following:
"assets erroneously being carried on the books for materially less than they can be liquidated for"
first whiff of the darkness what cometh, and it looks like Der Gringo is already long knives and short humour... hmm, 7 junks and one seriously deranged pyschopath, all for giving Reggie a light hearted thumbs up - and it's only Friday of the weekend when the wheels finally fell off in Amerika!! best buck up boys, it's going to be a long long time fore things look this bright in gringolandia agin...you ain't seen nothin yet!
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Another nice one Reggie.
The ONLY chance of hope that we have is if the Markets trip their 10% down breakers EVERY SINGLE DAY NEXT WEEK!
I don't mean to pick on Reggie because he does great work. But personally, I find it very difficult to read his articles. Maybe it's just my ADD, but I think there are
- Too many bolds
- Too many hyperlinks
George Washington's articles have the same problem. To a point, these things help with emphasis, but after a certain amount, they draw the eye away from the message too much. That's the reason advertisers don't mis colors and fonts in words (especially in brand names).
Too hard to read.
AnD i DOn't REaD ANyThinG wITh hEAdLinES LiKE tHiS.
Just my personal opinion.
I agree, his style is sometime distracting!
On one thing he makes me ponder: "Bank Runs".
Implicitly, people must have deposits at the banks, in order to be afraid the banks could fail.
How much are those deposits really worth to banks when liquidity is so freely given?
ah
shouldn't your name really be 'a non "E" mouse'
i've often wondered if the peak of population looms
and our time is bright but short just like a fleeting flower blooms
and maybe there's no going back the tipping point's been crossed
'cause we're all of us the most we'll be - peak people
http://thepeakoilpoet.blogspot.com/2011/08/peak-people.html
shutup
Well said.
Totally agree. It is hard to follow his train of thought to conclusion with all his links and choppy style. But damn he is spot on with his analysis. Reggie rocks.
Agree. No question about his analysis. Top notch. It is simply a quibble with presentation
didn;t see anyone mention Sprott's recent article on Euro Banks ..... came out a week or so ago
http://www.sprott.com/Docs/MarketsataGlance/2011/07_11_The%20Real%20Bank...
Enjoy
Greg
<--- Reggie Rocks!
<--- Anybody can see the train coming off these tracks.
Both right. Reggie just passes on what he sees from another perspective.
I've been sitting here, ready for the big one since the tech wreck.
It has served me well.
Best of luck to the human race, and the Chinese.
You know what's going to happen eventually, don't you? (sarcastic replies welcome!)
I'm smelling consensus here: next time the ImPotus takes the chopper to Camp Vlad I mean David, we simply drive this guy up and into the West Wing and dare any body to say boo - including Michelle & company..."distancing from chains of command"? ...interesting...with all the time he spends over the pond, you suppose Reginald would recognize the phrase Coup de E'tat? Hardest part will be the drive in, anybody with a spare armored vehicle?
you are a complete douche. STFU and then killself.
rgds
where you lead, we will follow genius...minus english as second language issues...er. just to be clear, that be for u serf boy,,,we surfers donna need serfs btw...so back in the box with u!
Just make sure you want the old ball and chain to get it all.
Cyber Threat Resembles Pre-9/11 Terror Threat, Says Former CIA Counterterrorism Chief
Government leaders don't understand the gravity of the threat of cyber attacks or the implications, ex-CIA official tells Black Hat attendees.
http://www.wallstreetandtech.com/data-security/231300305?cid=nl_wallstreettech_daily
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On Aug. 4, BIDS saw volume hit 136 million shares, its fifth day with more than 100 million shares traded since the dark pool first passed that milestone on July 21. BIDS' average daily volume in July was 72 million shares, up from about 65 million shares in June. (BIDS double counts its volume, a standard practice for dark pools.)
http://www.tradersmagazine.com/news/bids-new-highs-dark-pool-ats-108013-1.html?ET=tradersmagazine:e974:55405a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=tm_weekly_080511
So, the EU is all in, and Germany is on the hook again. Did anyone expect a different outcome? Notice police forces and armies are starting to distance themselves from their established chains of command?
I can claim I was right, too. Some quotes from my writings:
Tue, 08/02/2011:
"Now the run into new T-bonds is gonna start. US still is a safe haven - for the time being. But it is. Nevermind all the doomers for now."
Tue, 07/19/2011:
"People will rush to buy T-bonds, Americans at least as hard as others, although they are against a higher debt ceiling. No matter the interest is just 2% or even negative."
Sat, 07/16/2011:
"But what if there comes a run into the T-bonds? Panic in the eurozone, China cooling down, US economy flattening ... gamblers looking for a safe haven can turn the bonds into gold. Would be a major setback for many doomprophets. Could it be?"
there is a new sheriff in town, his name is reggie......
...Hammond.
http://www.youtube.com/watch?v=u1QX-Vruyjc
Simply Nobody else could pull off this kind of daily and perpetual self advertising without looking overdone....Reggie rides the razor's edge of rightness! ....SURFMONKEY RULES!
gotta be said, the trading info posts cut right to the chase and made 260% in 48 hours, when the time came he was ready, making cash and telling others how to do so too.
self promotion from people who actually have a clue is fine with me
absolutely:
in fact, after watching the RT video part, I have decided that, in their last sane moment, Mericans actually elected this man as their first BLACK president, and by means of some CIA.NSA hokum smokum several degrees above the "CHADS" issue, have been subsequently deluded into believing that the Kenyan dude is POTUS instead...
this Middleton thing is code: the man is clearly a morphing of Cassius ClayakaMuhammed Ali with Eddie Murphy(Beverly Hills Cops destroyed honkey police state Amerika before it was even thought of! too bad it was ahead of itself...) in a kind of brew that would have actually got us all out of this mess had he been allowed into the WH by "Secret Service"
This man deserves to serve time in the Big House:
the one on Pennsylvania Ave
Blue suit coat, red tie. Is Reggie gonna run ?
It is time to fix money, Reggie.
The way to do so is kill the fraud factories, starting with every last mother f-ing one of them that accepted TARP, around the world.
Fraud factories have divided, swindled, and stolen the American virtues of life and have no concience.
Hopefully you have been trading out of fraud-confetti into assets, survival preparation, you name it, anything is a better store of wealth than the house of incorporated theft and bullshit at the present.
Some accepted TARP in lieu of the fact that they had already been defrauded. Look at the whole picture.
RM : The day you buy the eiffel tower you become my hero!