Category Archives: banking

The Freak Chart, by the Northman Trader

Long-term stock market charts are perhaps sending a message that US equity markets may in for a lengthy period of consolidation at best, and perhaps a long bear market. From the Northman Trader at northmantrader.com:

I got a freak chart for you that’s stunning, but bear with me here because it requires some background and patience. Most of us are focused on the daily or weekly action and it’s easy to lose sight of big cyclical trends. We don’t think of them as they take a long time to unfold and the daily noise is so much more dominant.

With the advent of permanent central bank intervention sparked by the financial crisis all of us have come accustomed to markets always going up with the occasional correction in between and the timing of corrections have seemingly become shorter and shorter. Big fat bottoms that happen after just a few days of temporary terror. We haven’t seen a true bear market since the financial crisis and even that one lasted barely more than a year as central banks stepped in. The last longer term bear market came after the technology bust in 2000 when markets bottomed in 2002 and 2003 and then proceeded onto the next bull market.

It didn’t always used to be this way. Going back to 1900 there were multiple extended periods of stock markets going nowhere and trading in wide chop ranges:

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Fire the Fed? by Ron Paul

Central banks are an idea whose time never should have come. From Ron Paul at ronpaulinstitute.org:

President Trump’s frustration with the Federal Reserve’s (minuscule) interest rate increases that he blames for the downturn in the stock market has reportedly led him to inquire if he has the authority to remove Fed Chairman Jerome Powell. Chairman Powell has stated that he would not comply with a presidential request for his resignation, meaning President Trump would have to fire Powell if Trump was serious about removing him.

The law creating the Federal Reserve gives the president power to remove members of the Federal Reserve Board — including the chairman — “for cause.” The law is silent on what does, and does not, constitute a justifiable cause for removal. So, President Trump may be able to fire Powell for not tailoring monetary policy to the president’s liking.

By firing Powell, President Trump would once and for all dispel the myth that the Federal Reserve is free from political interference. All modern presidents have tried to influence the Federal Reserve’s policies. Is Trump’s threatening to fire Powell worse than President Lyndon Johnson shoving a Fed chairman against a wall after the Federal Reserve increased interest rates? Or worse than President Carter “promoting” an uncooperative Fed chairman to Treasury secretary?

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Will Globalists Sacrifice The Dollar To Get Their ‘New World Order’? by Brandon Smith

Globalists will sacrifice whatever needs to be sacrificed, including you and your family’s lives, to get their new world order. From Brandon Smith at alt-market.com:

Trade is a fundamental element of human survival. No one person can produce every single product or service necessary for a comfortable life, no matter how Spartan their attitude. Unless your goal is to desperately scratch an existence from your local terrain with no chance of progress in the future, you are going to need a network of other producers. For most of the history of human civilization, production was the basis for economy. All other elements were secondary.

At some point, as trade grows and thrives, a society is going to start looking for a store of value; something that represents the man-hours and effort and ingenuity a person put into their day. Something that is universally accepted within barter networks, something highly prized, that is tangible, that can be held in our hands and is impossible to replicate artificially. Enter precious metals.

Thus, the concept of “money” was born, and for the most part it functioned quite well for thousands of years. Unfortunately, there are people in our world that see economy as a tool for control rather than a vital process that should be left alone to develop naturally.

The idea of “fiat money”, money which has no tangibility and that can be created on a whim by a central source or authority, is rather new in the grand scheme of things. It is a bastardization of the original and much more stable money system that existed before that was anchored in hard commodities. While it claims to offer a more “liquid” store of value, the truth is that it is no store of value at all.

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The Yellow Vests Get it Right, by Robert Gore

Financial nuclear warheads.

The mainstream media has degenerated irreparably. Here’s a reliable rule of thumb: if it’s important it’s not covered; if it’s covered it’s not important. Stories in the American mainstream press about Yellow Vest protests have been few. One aspect of the protests, transcendently important, has received scant coverage.

The Yellow Vest protestors have called for a coordinated run on French banks. Whether they realize it or not, they’re playing with nuclear warheads that could annihilate not just the French, but Europe’s and the entire world’s financial system. Because inextricably linked to the ends of contemporary governments―how much they can screw up the lives of those who must live under them—is the question of means―how do they fund their misrule? The short answer is taxes and debt.

Since 1971, when President Nixon 
“temporarily” suspended international convertibility of dollars for gold (it’s never been reinstated), the monetary basis of the global economy has been fiat debt. Neither government or central bank debt nor currencies are tethered to any real constraint, like precious metals (see “Real Money,” SLL). Thus, politicians and monetary officials can create as much debt as they want: debt by fiat.

Government and central bank debt is at the apex of the global debt pyramid. The next tier is commercial banks that have accounts at central banks. Those accounts are bank assets and central bank liabilities, or debts. Central banks expand their fiat liabilities to banks in exchange for banks’ fiat government debt, an exchange called debt monetization, which is a bit of a misnomer since no “Real Money” is involved. The “monetization” is the central bank’s fiat expansion of banks’ accounts with the central bank in exchange for fiat government debt, which expands banks’ assets available for loans to governments, businesses, and individuals.

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Political Nightmares Multiply for Europe Ahead of Davos, by Tom Luongo

The globalist-inspired European integration dream is crumbling. From Tom Luongo at tomluongo.me:

Europe’s dreams of integration are slipping away as the people wake up from the nightmare erected for them.

As we approach Act IX of the Yellow Vest protests in France and the threats of creating bank runs we get the news that both Presidents Trump and Macron will not be attending the convocation of globalists known as the World Economic Forum at Davos.

Trump’s not attending because it’s clear he’s no longer a member of The Davos Crowd and Macron isn’t because any public appearance by him will double the number of people donning high visibility safety gear and taking to the streets.

It almost feels like we’ve reached Peak Davos, with these announcements. But, clearly neither of these men are invited because in the minds of The Davos Crowd they no longer figure in their long-term plans.

Macron not attending is also a sign his government will be sacrificed on the altar of the Yellow Vests in the near future.

The Yellow Vest protests will have to be dealt with in a substantive manner that goes far beyond a few temporary injunctions against higher taxes. They are now vandalizing another symbol of middle class oppression in France, speed cameras.

All of the governments of Europe are broke. And the speed camera is simply another in a long line of instances of them trying to squeeze blood from the now impoverished and shrinking middle class.

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Here’s Where the Next Crisis Starts, by James Rickards

Junk bonds are certainly a plausible candidate for where the next financial crisis begins. From James Rickards at dailyreckoning.com:

The case for a pending financial collapse is well grounded. Financial crises occur on a regular basis including 1987, 1994, 1998, 2000, 2007-08. That averages out to about once every five years for the past thirty years. There has not been a financial crisis for ten years so the world is overdue. It’s also the case that each crisis is bigger than the one before and requires more intervention by the central banks.

The reason has to do with the system scale. In complex dynamic systems such as capital markets, risk is an exponential function of system scale. Increasing market scale correlates with exponentially larger market collapses.

This means a market panic far larger than the Panic of 2008.

Today, systemic risk is more dangerous than ever because the entire system is larger than before. Due to central bank intervention, total global debt has increased by about $150 trillion over the past 15 years. Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system and have much larger derivatives books.

Each credit and liquidity crisis starts out differently and ends up the same. Each crisis begins with distress in a particular overborrowed sector and then spreads from sector to sector until the whole world is screaming, “I want my money back!”

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French Yellow Vest Protesters Urge Supporters To Spark Bank Run With Mass Withdrawals, by Tyler Durden

You won’t see much in the mainstream media about the Yellow Vests’ planned bank runs, but it may be the most important aspect of their protests. From Tyler Durden at zerohedge.com:

Activists from the Gilets Jaunes (Yellow Vest) movement have vandalized nearly 60% of France’s country-wide speed camera network, according to Interior Minister Christophe Castaner, who said that the wilful damage was a threat to road safety and endangered lives, according to the BBC.

The BBC’s Hugh Schofield, in Paris, said evidence of the vandalism is visible to anyone driving around France, with radar cameras covered in paint or black tape to stop them working. But the extent of the damage – now believed to affect more than half of all 3,200 speed cameras in the country’s network – was unknown until Mr. Castaner’statement on Thursday.
He said the devices had been “neutralised, attacked, or destroyed” by members of the protest movement. –BBC

Speed limits in France have become a hot-button topic, after the Macron government lowered the limit on many roads from 90 km/h (55 mph) to 80 km/h (50 mph) early last year.

Yellow Vest protesters upset over an increase in fuel taxes have also complained about the rising costs of commuting for those who can’t afford to live near urban centers where they work – citing speed cameras and toll roads in their complaints.

Bank run?

While the Yellow Vest movement has been taking to the streets for violent clashes with French police, activists from the movement are now recommending that French protesters empty their bank accounts to spark a bank run – in a move which one protester, Maxime Nicolle, called a “tax collector’s referendum.”

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