Tag Archives: What Could Possibly Go Wrong

Bancopalypse 2.0 Is Bigger

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“Meanwhile in Italy, nearly the entire Italian banking system is rapidly sliding into insolvency.  Italian banks are sitting on over 360 billion euros in bad loans right now and are in desperate need of a massive bailout.  IMF calculations show that Italian banks’ capital levels are among the lowest in the world, just ahead of Bangladesh.  Spanish banks have been scrambling to raise billions in capital to cover persistent losses that still haven’t healed from the last crisis.  In Greece, over 35% of all loans in the banking system are classified as ‘non-performing.  The ratio of non-performing loans has actually been increasing for several years since the country’s supposed bailout.”

http://www.valuewalk.com/2016/07/deutsche-bank-scare/

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Deutsche Bank’s Chief Economist Calls For €150 Billion Bank Bailout

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“David Folkerts-Landau, the chief economist of Deutsche Bank, has called for a multi-billion dollar bailout for European banks.  Speaking to Germany’s Welt am Sonntag, the economist said European institutions should get fresh capital for a recapitalization following a similar bailout in the US. What he didn’t say is that the US bailout took place nearly a decade ago, in the meantime Europe’s financial sector was supposed to be fixed courtesy of ‘prudent’ fiscal and monetary policy. It wasn’t.  As Landau says the US helped its banks with $475 billion dollars, and such a program is now needed in Europe, especially for Italian banks.”

http://www.zerohedge.com/news/2016-07-10/deutsche-banks-chief-economist-calls-%E2%82%AC150-billion-bailout-european-banks

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Negative rates leading to ‘day of reckoning’ fear on Wall Street

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“The reason anyone would buy negative-yielding debt is actually pretty simple: Because they have to.  They are central bankers looking to help promote economic growth. They are insurance companies, pension funds and money managers who have to match liabilities with assets. They are not, by and large, retail investors who are so afraid of risk that they’re willing to pay for the privilege of lending money to a government.  Together, those buyers have helped build a nearly $12 trillion funnel of negative-yielding sovereign debt — unprecedented in world history. But what awaits on the other side is adding to the worries of investing professionals.”

http://www.cnbc.com/2016/07/11/negative-rates-leading-to-day-of-reckoning-fear-on-wall-street.html

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Race to the Bottom: Injuring the Real Economy with Paper “Wealth”

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“The ECB and the Bank of England have purchased so much government debt that they have recently reached even further down the credit ladder, with the ECB buying corporate bonds, and the Bank of England announcing purchases of ‘Tier C’ assets, which include assets ‘backed by credit cards; student loans; and consumer debt.’ Unfortunately, this isn’t backing at all. When will it end?  It will end as credit defaults rise, bank bailouts become necessary, covenant lite debt proves to be, indeed, lite on covenants, and financial assets pushed to zero long-term yields prove, indeed, to yield zero returns over the long-term.”

http://www.hussmanfunds.com/wmc/wmc160711.htm

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Taiwanese gov. blows up fishermen with supersonic missile

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“Taiwan’s navy mistakenly launched a supersonic anti-ship missile from a naval base, killing one person and injuring three, officials say.  A patrol boat was undergoing a drill inspection in Kaohsiung when the Hsiung Feng III missile was fired, Taiwan’s Central News Agency (CNA) reported.   It launched in the direction of mainland China, and hit a fishing boat off the Penghu islands, CNA added.  A Taiwanese official said the launch was not ‘politically motivated’.  It came as China celebrates the 95th anniversary of the formation of the Chinese Communist Party.  China considers Taiwan a breakaway province, to be reunited with the mainland, by force if necessary.”

http://www.bbc.com/news/world-asia-36680899

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Thieves using laptops to hack into and steal cars

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“Houston police told the WSJ that this method may have been used in the theft of four other late-model Wranglers and Cherokees in the city.  Security researchers have been able to take over cars remotely because automakers don’t always do a good job at limiting how car systems interact with wireless communications.  What’s more, even cars that aren’t internet-enabled can be taken over via third-party devices that introduce connectivity, such as through the diagnostics port.  Remote exploits have included taking over a 2014 Jeep Cherokee, controlling the car’s brakes, accelerator, steering and more by wireless connection”

https://nakedsecurity.sophos.com/2016/07/08/thieves-using-laptops-to-hack-into-and-steal-cars/

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ECB corporate debt buys unexpectedly high in first full week

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“The European Central Bank bought 1.9 billion euros worth of corporate bonds in its first full week of purchases, at the upper end of market expectations, signalling a strong start to its latest measure designed to revive inflation.  Unveiled in March as part of a 1.74 trillion euro asset-buying plan, the ECB started buying investment grade, non-bank corporate bonds on June 8. It hopes that lowering corporate borrowing costs will induce companies to invest, boosting inflation and economic growth.  Sources with direct knowledge had earlier said the ECB was hoping to lure new issuers to the market and would buy 5 billion to 10 billion euros worth of corporate debt per month if new debt sales ramped up.”

http://www.reuters.com/article/ecb-qe-idUSF9N18B01A

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German court rules that ECB’s 2012 bond-buying plan is legal

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“The country’s highest court ruled that the ECB’s 2012 bond-buying plan called Outright Monetary Transactions (OMT) is legal under the German constitution.  OMT – though never actually used – was part of ECB’s President Mario Draghi’s landmark promise to do ‘whatever it takes’ to save the battered euro at the height of the crisis in 2012.  The promise of OMT was that the ECB could, if necessary, buy up unlimited amounts of government bonds from debt-stricken countries that had pledged reforms such as Italy, Spain and Portugal.  Critics charged that the ECB is essentially printing money and lavishing it on states, leaving taxpayers with the risk of one day having to foot the bill.”

https://www.enca.com/money/german-court-rules-in-favour-of-ecb-crisis-fighting-tool

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John Hussman: Brexit and the Bubble in Search of A Pin

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“Think of the EU, in its current ill-structured form, as a kind of Ponzi scheme, and Britain as the guy who just asked for his money back. There are undoubtedly greater prospects for near-term disruption after last week’s vote, but the hallmark of a Ponzi scheme is the attempt to use progressively greater distortions in order to preserve a structure that is fundamentally unsound and increasingly bankrupt. Of any large country that could leave the EU, Britain was the best first mover. I have no immediate concerns about a domino effect, but if one was to emerge, my view is that the exit of Germany, France, and the Nordic countries would be preferable to the exit of Greece, Italy, Spain, or Portugal.”

http://www.hussmanfunds.com/wmc/wmc160627.htm

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Bitcoin rival Ethereum fights for its survival after $50 million heist

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“On Friday, thieves exploited a software bug that allowed them to transfer more than 3.6 million ‘ether’—the base unit of the Ethereum currency—out of The DAO’s coffers. The digital loot made up more than a third of The DAO’s 11.5 million ether endowment. The seized booty is valued at anywhere from $45 million (based on the plummeting value of ether following the attack) to as high as $77 million (based on pre-attack exchange rates). In the days following the theft, there have been at least a half-dozen copycat attacks (for instance, as documented here and here) that combined have purloined more than 785 ether.”

http://arstechnica.com/security/2016/06/bitcoin-rival-ethereum-fights-for-its-survival-after-50-million-heist/

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