Global Financial System Risk Is Soaring Worldwide

Tyler Durden's picture

We warned earlier in the week that the credit risk of the world's financial institutions were on the rise and that trend has worsened as the week ends.


Global Bank Risk is spiking...


European Bank Risk is blowing out in Core and Peripheral nations...


And China Bank credit risk has broken to new cycle highs..


Some idiocysncratic names to keep an eye on...

Deutsche Bank - Europe's largest derivatives exposure (and thus epicenter of collapse should things turn out as bad as the bank's CoCos suggest) - is suffering seriously... It is becomeing very clear that banks are buying protection on DB to hedge their counterparty exposure...


ICBC Bank is among China's largest banks (depending on the volatility of the day) and as China bank risk soars so China's sovereign risk is soaring too with devaluation and systemic crisis co-priced into these contracts...


National Commercial Bank - the largest Saudi bank and proxy for The Kingdom's wealth - is seeing its credit risk explode. As one analyst noted, if NCB has a crisis then Saudi military adevnturism is in grave jeaopardy...


And finally - yes it is spilling over to American banks and their "fortress" balance sheets...


But apart from that "storm in a teacup" - Buy The F**king Dip, right?

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falak pema's picture

Banks and Banco at the roulette!

thesonandheir's picture

Good job we broke up all these TBTF banks after the near miss in 2008 eh?

knukles's picture

Every last single metric (size, concentration, cap adequacy, derivatives, you name it) has gotten worse, not better.
The Banks right now are the Elephants In The Room

Mark my words, there is a world of hurt in the offing.
Ya'll ain't seen nuffin' yet.

BTW, most of us old timers, and i mean by metrics like Medicare cards, aches and pains, etc., understand serious fucking bear markets.  Most folks (newbies today) have no clue.

required reading:

Nobody For President's picture

Yep, when I was 15 my rich uncle (everyone should have a rich uncle) gave me Engel's classic 'How to buy stocks', and as a poor logger kid, I figured that was the coolest way to get rich without breaking a sweat ever.

Started following the market right then - 1954. 

College, army, and I started buying stocks in 1964 and made sure they all had DRIP plans. Reinvested every dividend for the next thirty years. Got wealthy slowly, just like Engel preached. Fundamentals, follow but don't sell unless you have a real reason to, all that old stuff that actually worked in the '60s through the '80s.  Rode out some bear markets, paid attention to the portfolio once a week if that - bought and hold.

Ahh - the good old days before HFTs, direct Fed intervention, and all the shit over the last 15 years, and especially since 2007-09.

Kids, listen to Uncle Knucks - I have never seen a greater potential for a total shitstorm than what has been shaping up the last two years. I'm gonna be putting in a bigger garden this year than ever before, and tomorrow, start pruning the fruit trees for spring...


The Bear Raid happened March 10th 2008 @ 11:00am Bear Stearns time New York shitty, man. Since that juncture the entire Worldwide economy has been completely destroyed, but Hank Paulson, and Timmy Geithner et al, propped it up until all the Crony Capitalists could vacate their positions in the markets. The Controlled Demolition of the entirety of Global Economics is nearing completion as the Central Bankers withdrew QE to Infinity & Beyond, and pretended to up the Interest Rate by a token of gesture in a possible direction. The CB Oligarchs are not immediately introducing QE Infinty & Beyond because this Controlled Demolition is being facilitated by their inaction either way. They will not admit any sort of defeat in the face of defeat, and the CB is just standing here smiling at the World whilst the years of malivestment Mountain come toppling down in a literal earthquake like avalanche of Quadrillions of dollars in debt that will suffocate all existence when the dust settles.


This is why you always see Ben Bernanke smiling in photos.

franzpick's picture

Debtors will be getting sorer as this collapses.

El Dorado's picture

Or they'll receive more easing from Mr. Yellen and we still won't learn our lesson for one more cycle. I can't imagine how big of a housing bubble will get if we start experimenting with negative rates...

KesselRunin12Parsecs's picture
KesselRunin12Parsecs (not verified) Strelnikov Feb 5, 2016 4:01 PM


ebworthen's picture

"Not since Lehman..."

Cramer:  "Bear Stearns if fine!"

ParkAveFlasher's picture

Gold. bitchez!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

brushhog's picture

The thing that makes me shy away from buying anymore gold is the buy-sell spread. We have to buy at 5% over spot...and sell at 5% under so the moment you buy gold you are down 10%. And then of course the government taxes gold gains at a higher 'collectible' rate. I love the idea of gold but there's not many investments which you buy and lose 10% right from the beginning. Not only that but all the gold price suppression has been very successful and manipulating the price. So if they can do that, what kind of safe hedge is gold, anyway?

Dr. Engali's picture

The problem is you're buying gold for all the wrong reasons. Its insurance against a monetary mistake , not an investment and definitely not a trading vehicle.

bshirley1968's picture

First of all, the percentages you are fretting over are miniscule BS.  Second, if you are paying the government taxes on are an idiot.  Drop the "investment" meme crap.  Gold is NOT an investment, it IS a measure of wealth, it iS a store of value, it IS real money, it is NOT printable.  Get onboard or get run over.  Your choice.


RiverRoad's picture

GOLD bitches/bastards...the whole lot of you!

Pareto's picture

OT : Note the VIX.  Hardly moving.  Seems like a long sell-off as opposed to a short sell-off.  Am I wrong?

Kilgore Trout's picture

A plague of Global SIFIs on all financials.

Stormtrooper's picture

Good weekend to vacuum pack some flour and beans, say 1000 pounds each.

apberusdisvet's picture

Hillary doesn't have enough holes for the big swinging bankster dicks.

john_connor's picture

Every US bank is buying CDS on all other banks because all derivatives will paid in full by US taxpayer

surfvin's picture

This demands an emergency rate hike!

kiwimail's picture

Wish I could invest in something that has no counter party risk. Oh, wait----

brushhog's picture

Systemic risk has been there a long time, only now is it becoming measurable with conventional methods.

Bill of Rights's picture

The 10 dollar a barrel oil tax will fix this... Stupid cunt...

R.R.Raskolnikov's picture

The IMF got it under control. Do not worry. Be a good citizin and buy those stocks.

thesonandheir's picture

Hehe the old IMF backup plan, if you didn't like our mass printed dollars try our brand new mass printed SDR instead!

kelley805's picture

J.P. Morgan analysts wrote that the three best leading indicators for recession have been credit spreads, the shape of the yield curve and profit margins.

Here are some signs of a coming recession.

1. U.S. distress ratio started 2016 at 29.6%, the highest since July 2009.

2.  Orders for durable goods fell a seasonally adjusted 5.1% in December 2015.

3.  Investors in high-yield bonds are expecting to see their first negative return since 2008.

4. Default risk spikes

5. Iron ore prices tumble

6. Baltic dry shipping index lowest ever


Here is how to prepare.


Here is how to get your mind off this stuff.


Good luck!

DIGrif's picture

Pumping your own blog on here is pretty low.


global SIFI / charts. Are there versions available that go back on a longer timeline? Who produces them? Thanks.

dimwitted economist's picture

Listening to that Crazy Peter Schiff right now..