Topic: Monetary reset
In a Nutshell
The financialization of our modern day credit driven economy and the unprecedented explosion of debt in the past four decades have slowly but surely driven our monetary system to a dead end. Unless preempted by a major war, the impact to our society when the monetary reset unfolds will not be smooth.
We go into mid-level details on topics contributing to the monetary reset, many of which are not covered, intentionally or otherwise, by mainstream media in the hope that you won’t get broadsided by this financial pickup truck when it hits and complain “Nobody saw this coming”.
Herded along by the Financial Stability Board, governments of leading economies endorsed a framework during the past G20 Summit whereby depositors’ money will be used to rescue a failing bank when the global derivatives casino blows up again next time.
The derivatives market, the trigger of the 2008 global financial crisis, has since gotten even bigger and more concentrated into fewer hands. A mutually assured destruction awaits the global economy next time it goes off again.
Financial derivatives are financial contracts in which the promised payoffs are derived from the performance of another underlying entity. The underlying entity can be an equity (such as an individual stock or a stock index), interest rate, credit or c …
With no fanfare and little to no media coverage, your government has just put in place a mechanism to use your deposit money to bail-in a failing bank, like what happened in Cyprus a short time ago.
The Fed surprised the world this week by calling off its widely anticipated ‘tapering’ plan which would have called for a gradual reduction of the amount of bond purchases from its current $85 billion per month level. The decision highlights the box the Fed is in and the increasing dominance of flow over the stock of the bond purchase program, a concept missed by the vast majority of economists and so called subject matter experts.
Another glance at the total derivatives the big 5 Canadian banks are exposed to since our last report shows the banks collectively continued to expand their derivatives books – by almost 1 trillion.
The immediate market celebration of a continued accommodative Fed at the last FOMC meeting might be premature. The pundits might have missed the cues buried in the Fed’s tea leaves.
Conventional economists and monetary practitioners take it as gospel that economic growth is both a necessity for our well being and something which can be projected indefinitely into the future. The end of growth as we are now witnessing, then, would fundamentally alter the constructs upon which our economy is based, with far reaching impacts.
Part 2 of the series describes the sequence of a typical bank failure and explores the list of options available to Deutsche Bank and the likely outcomes.
The commercial break at the close of the opening act of the global financial crisis in 2008 is finished. Here comes Act 2 with the globe’s most risky bank as featured guest.
With Brexit serving as the catalyst, Season 2 of the European banking crisis may be about to unfold.
In light of the recent bank bail-in legislation introduced by the Canadian government, here’s an update on how much the big 5 Canadian banks are exposed to derivatives, those toxic financial instruments of mass destruction which blew up the financial world in 2008 had it been not for the governments using massive public money to bail out the private banks.
A confluence of driving forces nudges the global monetary system toward a reset, with deflation leading the charge.
Faced with mounting losses in their bond portfolios and massive redemption requests, mutual and hedge funds begin suspension of any and all redemption requests. The next phase of the junk bond crisis has begun.
The flash crashes of some of the largest blue chip tracking ETFs on Aug 25 should serve as a warning of what’s to come for their smaller and illiquid high yield brethren.