This page has been archived and commenting is disabled.
The Cold Hard Truth Facing Investors Today
The biggest problem facing investors today is that “the rules” of the game change almost every year.
What I mean is that any basic rule investors previously took for granted can and often is thrown out the window by the regulators when they deem it prescient. Indeed, in the last five years we’ve seen:
1) Accounting standards at financial institutions suspended.
2) Capital requirements for banks (Basel III) postponed multiple times.
3) Rampant fraud go unpunished.
4) Obvious insider trading amongst political officials and banking insiders.
5) Central bankers openly admit that they lie to investors.
Why are so many laws and rules being thrown out?
The Powers That Be are committed to propping the system up by any means possible.
Consider Spain.
Spain’s banking system, by any reasonable analysis, is totally bankrupt.
The reason for this is that Spanish banks are all packed to the brim with garbage assets (mortgage loans and Spanish Government bonds… both of which aren’t worth the paper they’re printed on).
Consider the story of Bankia.
Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.
The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion in funding for the bank (all provided by taxpayers of course).
These preference shares were shares that A) yielded 7.75% and B) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors (including said taxpayers).
Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything when the new bank was created.
Bankia was taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.
One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank (again) and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).
When the bailout took place, Bankia shareholders were all but wiped out and forced to take huge losses as part of the deal. The vast majority of these were individual investors, NOT Wall Street or its European equivalent (Bankia currently faces a lawsuit for over 140,000 claims of mis-selling shares).
So that’s two wipeouts in as many years.
The bank was taken public a second time in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.
Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).
Which brings us to today.
Bankia remains completely bankrupt. But its executives and the Spanish Government continue to claim that things are improving and that the bank is on the up and up. Indeed, just a few weeks ago, the Wall Street Journal wrote an article titled “Investors Show Interest in Bankia.”
The story featured a quote from Spain’s Finance Minister that, “… it is logical. The perception of Spain has improved and Banki has improved a lot.”
Bear in mind, this is a bank that has wiped out investors THREE times in the last THREE YEARS. So that’s three different rounds of individual investors being told that Bankia was a great investment and losing everything.
Every single one of these wipeouts was preceded by both bankers and Spanish Government officials claiming that “everything had been fixed” and that Bankia was a success story.
And now the Spanish Government is trying to convince them to line up for a fourth round.
This kind of fraud and lawlessness is unbelievable to me. But it is how the world works today. Those who have power will do anything they can to retain it. This includes, lying, cheating, and stealing.
And while certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.
Those morals are:
1) Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors and the public)
2) Any financial problem that surfaces will be dealt with via fraud or lies rather simply allowing those who screwed up to be fired or go to jail.
3) When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed (not bank executives or politicians).
If I were to be blunt, the investment world has gone insane. If one were rational, one would think that the entire Bankia episode would have resulted in investors fleeing Spain en masse.
It hasn’t. In fact, Spain’s bonds now have lower yields than Treasuries indicating that Spain is fiscally in a better position than the US and less likely to default (incredible given that Spain cannot print money to repay bondholders while the US can).
This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://gainspainscapital.com
This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Best Regards
Phoenix Capital Research
- advertisements -
Hey! Didn't you hear Spain has a new king?
He's not at all happy about you picking on his country and stuff. You should think twice before you show disrespect for your betters. He used to like the cut of your jib but now not so much.
The fundamental part that so many of us are stunned by for the past 13 years is summed up with one simple question: how can so many of us tolerate a system for which the foundation is lies?
It's a question of human psychology that is hard to answer. The closest I can come is to say that humans are driven by our creature comforts. Our standard of living, even now and even outside of the elite, is orders of magnitude above what it was just a hundred years ago. People will rebel when they get hungry. As long as bread and circuses are paid for, the collapse will be gradual. Once the threshold of people genuinely not being able to eat and find shelter is crossed, they will see the elite living high, and all hell will break loose. We're not even close to that yet, however. A small group of people now is cataloguing and noticing the destruction of a system that very successfully created wealth, but when the tipping point is reached (could be many years from now), the debates fought here will seem abstract. At that point, survival will be a much more basic game.
meanwhile; every day is a new high.
....and a new low....
When looking at the causes leading to the decline or collapse of great empires I contend the biggest problem is the massive growth in crony capitalism and corruption. Much of this can be attributed to the ability of those in control "changing the rules" and positioning themselves to benefit at every turn.
The signs of decline may be everywhere but that does not guarantee the end is near. As the foundation crumbles away it is not uncommon for those in power to extend their rule by many tricks and changing the rules in order to gain a new lease on life. More on the subject of how empires collapse in the article below.
http://brucewilds.blogspot.com/2014/05/how-empires-collapse.html
Corruption, who would have thought that?
They want the arms of the patriots before pulling the plug.
great write-up
Investors? There are no investors today. There is only short-term trading. The discussions about what to invest in are filled with the informational diarrhea and chunks of minutiae that are favored by the short-term trader. No real analysis of long-term prospects and goals, how to attain them...
Where can I get some of those Bankia shares? Contrarian investing at its best...and they say its improving.
(I'm so embarrassed, I just upvoted myself unintentionaly. Is that not cool? Three year daily reader, first day as commentor ... sorry, just read the "Polish Blowjob" article, commented, and got too excitded.....as penance, i'll take three of those hot new Bankia shares....)
"Hmmm, what's this letter here from Bankia?.....Let's see......DANGIT!!! Honey, you aren't going to believe this: remember the LAST shellackin' we took from these guys? And the one the year before that? Well guess what? ...."
I don't think that prescient means what you think it means.
1) Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors and the public)
Once is an accident, twice is coincidence, three times is enemy action. If every failure redounds to the benefit of the bankers, then that was what was meant - certainly the meaning was not to protect the individual who got screwed every time.
I don't believe that the pharse should be, or ever should have been "meant to protect". The regulators and regulations have always protected the banks and the banks only, and were always meant to protect the banks.
As long as the sheep stay fed the crooks have nothing to fear....
SEC vanished thirty years ago into some black hole.
Fed is throwing around so many trillions completely unrestrained and unreported that virtually all other factors are neutralized.
Banksters are siphoning off hundreds of billions per year as we are told is required for stability and the good of the people.
The free press has broken down in the US so that twitter is the most reliable news source - and only because it is virtually uncensored - and how long can that last?
The leader of the free world is a nincompoop and brushfires are breaking out all over the world with nobody taking responsibility - not to say that I want *us* to do so, but if nobody stops them, well, soon enough it starts to matter to your investment plans if you see what I mean.
Actually, so far the major visible effect of the banking cabal has been to inflate the markets, and we were all give fair warning by The Bernank in 2008 that it was going to be like this, and who amongst us doesn't wish they'd only *listened* to the man?
I think a lot of people tend to underestimate just how determined the banking cabal is. We have entered year 6 of the worst, unhealthy, manipulated equity markets ever conceived- made possible by co-opted politicians and bankers who have worked diligently to destroy every alternative investment and suspend the rule of law.
I wish this would only end badly but I think it's going to be far worse than that.
To say the market is rigged is an understatement. After over 30 years of trading commodities I will flat out state without any reservations that lies and manipulation run rampant. If you think anyone is looking out for the small independent trader you are wrong. An unholy alliance of the Federal Reserve, the government, and the too big to fail has left the rest of us in a precarious position.
For the big boys, its insider information and computer trading, this includes computing patterns that exploit where stops are placed, this improves their ability to wash the weak out of their positions. The bottom-line is that the higher the market goes the more vulnerable it becomes to a major collapse and sudden downward move. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/07/markets-more-lies-and-munipulatio...