Global Systemic Risk Is Rising Rapidly Again

Tyler Durden's picture

The risk of the 30 most systemically important financial institutions (SIFI) in the world has risen over 30% in the last three weeks as the effects of LTRO fade and encumbrance becomes the new reality. This less-manipulated, government-bank-reacharound-driven bond-market sense of reality has retraced almost 40% of its improvement from its peak last November at 311bps to its best level mid-March at 171bps. The current 226bps level is extremely elevated and as one would expect is dominated by European and US banks (with US banks on average trading wider than Europeans - which may surprise many but Europeans dominate the worst names - most specifically the Spanish banks).


Source: Capital Context

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SheepDog-One's picture

Damn! And just when they had everything certified 100% totaly fixed!

Vampyroteuthis infernalis's picture

The LTRO drug is out of the system. Banks need a new liquidity hit or the junkie will start shaking.

SheepDog-One's picture

So now the effective lifespan of trillions in liquidity hits is about 2-3 weeks. Ok got it.

ZeroConfidence's picture

Down to 10 - 15 days next round...

HelluvaEngineer's picture

AAPL's gonna be allright though, right?

yabyum's picture

But, there are some good banks right? RIGHT?

Sudden Debt's picture

Yep, the guinypig "bank" I bought for my kids will survive 2012.... But one day... It to will break.... They all do eventually....

Samual Adams's picture

Up Up and Away!!   AAPL and systemic risk are not the only things rising....  Robot Coppers,(practically free) ya see.   It's not the Military Robot Cop, it's the guy driving the damn thing that is your enemy.  That is until they are self aware.  Then it's the guy who built it and wrote the code, and the police chief and mayor or approved it for use in your town, etc.

Sky net is expanding.

SheepDog-One's picture

Hell those are old school robots, these are what theyre wroking on now, theyll chase you down and kill you anywhere.

Boston Dynamics Big Dog (new video March 2008) - YouTube

Samual Adams's picture

Yeah the Big Dog.  Helluva robot.  Put some facial recognition or biometric scan on that sucker and you are Green 2 Green.

All your liberty belong to us!   Unleash the Hounds!   Remember too, it's easier to command a robot to kill you than it is a person to pull the trigger.

They are already arresting people Proles by 'evidence' gathered by Predator Drones.

john39's picture

The AI combat drones are well into development.  if we don't stop this mess now, tomorrow may be too late.

q99x2's picture

Liquid metal couldn't stop John Connor.

CClarity's picture

Morgan Stanley spreads similar to Spanish banks?  It really doesn't make sense now.  9 months ago maybe, but not today.  Who are the big players in these spreads?

chrisd's picture

Good, it seems purchasing the equity of these companies when risk is peaking is a sure fire way to make money

MFL8240's picture

Look at the recent reports from this Federal reserve, we are to believe that the world is imploding and the US which is the most heavily indebted is doing just fine.  

slewie the pi-rat's picture


as we zeroHeads know so well: 

  • risk has been inderpriced, BiCheZ!
q99x2's picture

Anything happens and you can count on me to help guard the Getty.

Hobbleknee's picture

Can someone please explain to me why it's so hard for them to just add some zeros in the computer?

Bubble's picture

Where's the 'London Whale' when you need him to crush these CDSs and help us all bury our heads in the sand?

tjp's picture

What does BPS mean? Thank you.

taeonu's picture

Basis Point - BPS

A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and  0.01% = 1 basis point. 

So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points.

Read more:

"The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it." - John Kenneth Galbraith