BACKDOC: THE BIG SQUEEZE
GOOD EVENING FAMILY. TOMORROW, OCT. 14TH ALL BANKS GLOBALLY WILL COME INTO COMPLIANCE WITH LIBOR AND HIBOR RATES, AS I MENTIONED A FEW WEEKS AGO.
THE PRESSURE TO COMPLY WITH THIS BASEL 3 RULE IS PUTTING A LIQUIDITY SQUEEZE ON LENDING.
AS A RESULT, WE HAVE BEEN SEEING BANKS CUTTING BACK ON HOUSING LOANS IN ORDER TO COME INTO COMPLIANCE. THE BANKS NEED HIGHER CAPITAL RESERVES.
THE COST OF SHORT TERM BORROWING IS ALREADY ON THE INCREASE REGARDLESS OF WHEN THE FED BEGINS TO RAISE RATES. THIS WILL NEGATIVELY IMPACT BANKS EARNINGS IF THE FED DOESN’T RAISE RATES.
CHINA, ON THE OTHER SIDE OF THE POND, IS DOING THE SAME WITH THEIR HIBOR RATES. CHINA HAS AN OVER-HEATED BUSINESS REAL-ESTATE MARKET SIMILAR TO OUR HOUSING BUBBLE IN 07/08.
CHINA IS ALSO BURNING THROUGH THEIR RESERVES TO DEFEND THEIR CURRENCY WHILE ALSO RESTRUCTURING THEIR BAD BUSINESS DEBT.
EVEN WITH THESE DEFENSIVE MOVES, CHINA’S CURRENCY HAS BEEN SLIPPING IN VALUE TO THE DOLLAR. CURRENTLY THEY ARE AT 2010 LEVELS (6.7 YUAN TO THE DOLLAR).
DOLLAR CURRENCY VELOCITY IS DROPPING LIKE A ROCK, WHICH IS LEADING TO A VERY TENUOUS SITUATION IN MARKETS.
DOLLARS ARE COMING OUT OF CIRCULATION. THIS IS DEFLATIONARY, NOT INFLATIONARY, AS THE FED KEEPS WANTING PEOPLE TO BELIEVE.
QE HAS NOT CREATED INFLATION BY PUTTING MORE MONEY IN THE HANDS OF THE PEOPLE. INSTEAD, QE HAS ONLY BEEN A PAPER TRANSACTION ON GOVT. BALANCE SHEETS, WHICH HAS ACTUALLY CREATED DEFLATION IN THE PRIVATE SECTOR.
REAL DOLLARS IN THE ECONOMY ARE SHRINKING RAPIDLY.
SIMPLY LOOK AT JAPAN FOR A GOOD EXAMPLE OF WHAT I’M TELLING YOU. BY DOING QE, JAPAN NOW HOLDS CLOSE TO 40% OF THEIR TOTAL BONDS.
YOU SEE THIS IS NOT MONEY IN THE HANDS OF THE PEOPLE BUT RATHER THE GOVT. WHAT REALLY MATTERS IS HOW MUCH DEBT A COUNTRY OWES OUTSIDE OF ITSELF.
IN JAPAN’S CASE, THEY HAVE VERY LITTLE DEBT OUTSIDE OF THEIR COUNTRY. THEREFORE, JAPAN’S CURRENCY PROBLEMS CAN BE MORE EASILY SOLVED.
WHAT DID IRAQ DO WITH THE TRILLIONS OF THE DINAR NOTES THEY PULLED IN WHEN THEY SOLD DOLLARS IN EXCHANGE? THAT’S RIGHT, THEY REDUCED THE NOTE COUNT PREPARING FOR THE IMMINENT RISE OF THE DINARS' VALUE.
OVER A YEAR AGO, I PREDICTED THE POUNDS DEMISE AS I EXPECTED IT TO HEAD TO PARITY, WHICH WE ARE NOW SEEING PLAY OUT!
THE POUNDS PERCENTAGE OF THE SDR BASKET HAS SHRUNK CAUSING LESS NEED FOR POUNDS GLOBALLY. THIS OF COURSE WAS TO MAKE ROOM FOR CHINA TO ENTER THE SDR BASKET!
WE KNEW THE BREXIT WOULD PLAY OUT AS IT DID. THE EVIDENCE WAS ALL AROUND US, WASN’T IT?
WE SAW THE U.K. FOLKS HAVING SOVEREIGNTY ISSUES WITH LACK OF DEMOCRACY IN THE EU SYSTEM. WE ALSO SAW THE OBVIOUS MIGRANT CRISIS THAT WAS AN ATTACK ON THE SCHENGEN AGREEMENT.
SINCE WE ARE LOOKING AT THE UK, LET’S CONSIDER DEUTSCHE BANK FOR A MOMENT. THE U.S.T. HAS LEVIED A FINE OF 14.5 BILLION DOLLARS FOR THEIR PART OF THE 07/08 HOUSING CRISIS DUE TO IMPROPER BUNDLING OF CDS (CREDIT DEFAULT SWAPS)!
THIS IS A SERIOUS PROBLEM FOR DEUTSCHE BANK AND GERMANY SINCE THE BANK IS ONLY VALUED AT 15.5 BILLION DOLLARS!
SINCE THE BANK HAS NO PROFITABLE DIVISIONS, IT LACKS THE CAPABILITY TO RAISE MONEY BY SELLING OFF PROFITABLE PARTS OF THEIR BANKING BUSINESS. AS A RESULT, THEY HAVE TURNED TO SELLING JUNK BONDS TO RAISE MONEY.
WITHOUT A SERIOUS REDUCTION OF THIS FINE FROM THE UST, THE BANK WOULD BECOME INSOLVENT WITHOUT A BAILOUT FROM THE GERMAN GOVT.!
BARRING A BAILOUT, A TWO TO THREE TIMES MORE SEVERE BANKING ACCIDENT THAN THE LEHMAN BANK FAILURE WOULD OCURR. WOW!
WE HAVE THIS DEUTSCHE BANK PROBLEM LOOMING ON TOP OF A 512 TRILLION GLOBAL DEBT CHOKING OFF GLOBAL GROWTH.
I TRULY EXPECT A MARKET SELLOFF TO HIDE THE FINAL PUBLIC VIEWING OF THE RATE CHANGES THAT WILL COME WITH THE NEW REALITY;
SORT OF A LOOKIE! LOOKIE! OVER HERE!
IF THE ACCIDENT ON PURPOSE FOR A PURPOSE IS SEVERE ENOUGH, IT COULD BE DAYS OR WEEKS BEFORE FINANCIAL SAFETY FOR EXCHANGE WOULD BE ASSURED!
WITH PARLIAMENT MEETING MONDAY, RECENT HOLIDAYS THAT CAME OUT OF NOWHERE, MOSUL IN CONCLUSION, CBI DISRUPTIONS, THE IMPLEMENTATION OF THE TARIFFS AND TAXES, AND AUCTION CHANGES, I’M VERY OPTIMISTIC ABOUT THE PROGRESS OF THE MONETARY REFORM.
IRAQ HAS FOLLOWED THE LETTER OF INTENT TO THE TEE.
WE ARE ALREADY SEEING CURRENCY ADJUSTMENTS TAKING PLACE IN PREPARATION FOR THE BIGGER ONES. THE POUND IS JUST THE OBVIOUS ONE, SINCE IT IS SO POLITICAL.
VERY SOON IRAQ WILL BE ALL ABOUT DIVERSIFICATION OF THEIR ECONOMY AND THEY WILL BE ON THEIR WAY TO A HUGE SUCCESS.
I HAVE A QUESTION. WHY DID OZ PICK THE 14TH FOR HIBOR AND LIBOR RATES TO COME INTO COMPLIANCE?
WELL, WE MAY NEVER KNOW FOR SURE, BUT I LIKE THAT ITS A MULTIPLE OF 7, ESPECIALLY IN THE JEWISH YEAR OF 5777! LOL!
ALSO, WE HAVE TO REMEMBER THAT U.N. OPERATIONAL RATES ARE PUBLISHED ON EVERY 15TH OF THE MONTH! INTERESTINGLY, WE HAVE A WEEKEND FOLLOWING THE 14TH. MMMM
THESE ARE VERY EXCITING HOURS WHILE WE WAIT FOR THE COMPLETION OF MOSUL! HEE HEE ENJOY YOUR WEEKEND FOLKS AND JUST KEEP ALERT AS ALWAYS!
SPECIAL THANKS TO THUNDERHAWK FOR THE PICS AND CONVERSATIONS.
THANKS TO MRS. DOC FOR PROOFING.
THANKS TO PAPAJ FOR CONVERSATIONS
8@8, DOC IMO
From Bloomberg, Oct 11, 2016, 8:03:48 AM
Oct. 11 -- Axel Merk, Merk Investments co-founder and chief investment officer, discusses the impact of changing money market fund rules on the U.S. dollar. He speaks with Bloomberg's David Gura and Vonnie Quinn on "Bloomberg Markets."
If the London Interbank Borrowing Rate was a musical artist, or an actor, or a sports team, we'd be calling 2016 its comeback year.
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CNBC.com Article: It's a good time to bet against stocks, portfolio manager says
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Traders work on the floor of the New York Stock Exchange in New York, U.S., on Wednesday, May 19, 2010.
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To read the entire article, go to http://bloom.bg/2d1mTCz
From Reuters News: Deutsche Bank fails to score Justice Dept. deal, shares fall
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New Way to Use Your Crisp Five Pound Note
From Bloomberg, Oct 12, 2016, 7:45:50 AM
That sterling flash crash might be the least of Theresa May's problems. There's a potential gilt crisis brewing, and if her honeymoon was fizzling out now, that would make it well and truly over.
To read the entire article, go to https://www.bloomberg.com/gadfly/articles/2016-10-12/gilts-face-pressure-from-inflation-and-central-bank-selling
Pound touched its weakest Level in history by this measure http://on.mktw.net/2dJigfE
From Reuters News: Top bankers warn of risk of 2017 exodus from Britain
Top bankers warned on Tuesday they could start moving staff abroad as early as next year if there is no clarity on whether Britain will retain access to the European single market when it leaves the EU.
From Bloomberg, Oct 12, 2016, 7:32:55 AM
Greece won’t regain stable access to international bond markets unless creditors ease repayment terms on the country’s bailout loans, European Central Bank Executive Board member Benoit Coeure said.
To read the entire article, go to http://bloom.bg/2e5nBAe
From Bloomberg, Oct 12, 2016, 4:26:28 AM
Commercial and residential buildings stand in Beijing, China
For Beijing's policy makers, taming the country's ever-growing property sector presents a challenge.
To read the entire article, go to http://bloom.bg/2dQJGQ6
Cranes operate as residential buildings stand under construction in Chongqing, China, on Thursday, April 14, 2016.
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To read the entire article, go to http://bloom.bg/2dOxdfu