THOUGHTS ON “END GAME CONFIRMATIONS & MACROQE”
beachdude2 JC, broken link on “Ground Zero for Canada”
Jcollins Link should work now.
Don McIntyre I’m having trouble finding economic ground zero for Canada from the link. Where is it located?
Speedspirit JC we might not see eye to eye on God and Jesus but you the man when it comes to this economics stuff. Cheers!
Frédéric Perron Hi, i can’t find the page about the yesterday post “Economic ground zero for Canada” and the link goes nowhere.
Dane Hi JC, you mentioned that Canada could be affected by what happens in Greece and the EU. Do you see the possibility of temporary bank closures reaching as far as Canada?
Also when the Greek Policy Paper talks about,
“All depositors to be protected in full, whether guaranteed and not, during the period of insolvency and resolution, with a “deep insolvency” insurance fund funded by the ESM.”
Who are depositors? The original seed depositors who started the bank or the off the street depositors?
And if it’s off the street depositors does protected in full mean that whats in the bank is what they will have afterwards? Or does it simply mean lock down like what we are seeing?
Sorry for the pressure friend you’re surely burning the midnight oil these days.
deejj87 Aaannnndddd bail-ins!
( I could have sworn to read in a G20 communique last year that depositors are now considered common shareholders, just can’t find it at the moment)
“At the top of the list of those suffering losses are common shareholders, who can be wiped out by authorities when other debt including bail-in debt is converted to new equity in the recapitalized bank.”
Perhaps we will see a form of bail-ins in Greece within the next week…
Dane Hello Dee. Here is a pretty interesting comparison. Bail in vs. bankruptcy.
“bail-in, a term first popularised in the pages of The Economist, forces the borrower’s creditors to bear some of the burden by having part of the debt they are owed written off.”
“Purpose of bankruptcy. The two main purposes of bankruptcy are: to give the debtor a fresh start by wiping most of their debts; and. to fairly distribute the debtor’s assets amongst creditors.”
Something will have to give soon for sure. Seeing the macro having to continue moving I sure see a lot of confused people at the micro level. Its sad to see the fate of so many in the hands of “political representatives” who may not have the people’s best interest in mind.
“Let this be a wake up call.”
Dane Hey Dee here is a pretty interesting web article. You may find some interesting points in it. I did see something beginning to discuss “Exhibit II – “Report and Recommendations of the Cross-Border Bank Resolution Group” – Bank for International Settlements – 2010″ perhaps something to research a bit.
I don’t know why yet but this statement from JC keeps ringing loud and clear in my head. “The political representatives of the country package and sell the necessary policy adjustments through a script which serves the emotions and impulses of the disorganized masses.”
“Let this be a wake up call.”
Here is a piece of the article.
“And this is where the noose closes around the necks of depositors. Pay close attention. Unsecured debt is money that is OWED by the now insolvent bank to creditors. That debt is unsecured, meaning that the creditors can’t repossess buildings, etc. to make good on the unpaid debt.
So they’re going to take a bunch of people that are owed something and turn them into owners of the company by converting debt to equity. So what you have is the common and preferred stockholders wiped out and a bunch of creditors now owning the company.
But where does the capital come from that is mentioned in the above paragraph? All we’ve done to this point is shuffled some deck chairs on the SS BrokenBank.
We’ve wiped out the original capital/owner’s equity and replaced it with ‘unsecured debt’ holders. This resolution mechanism ONLY works if you assume that the deposits fall into the same category as ‘unsecured debt’ and as such are written-down along with unsecured debt (a la Cyprus).
Otherwise you’d be in a situation where public money would be needed to re-liquefy the new firm and both Dodd-Frank and the FDIC/BOE report specifically state that public money will not be put at risk. Instead, depositor money will be at risk. Yet the FDIC/BOE report does not explicitly say that, and in fact does quite a bit of outstanding grammatical grandstanding to avoid even alluding to it.
It must also be noted that the FDIC/BOE report was dated 10-December-2012; well in advance of the Cypriot bank holiday. The blueprints for America and Europe were laid well ahead of the beta test.”
Dane Crap this is where I got confused back in accounting class also. Debit/Credit.
When I open an account I would make an initial deposit but does that make me a depositor? Looking into the process I see that I place my money into the bank for safekeeping. But while the bank is keeping my money safe they are also using it to make loans. So at this point would I transition from being a depositor to being a creditor?
Has anything changed from the Cyprus bank closure to Greece’s current bank moves? Can we derive any form of movement when comparing the two which could give us direction for when it all expands to the rest of the regions?
The study of this measure may reveal where it is going.
Cadwaladr Dane, I believe the rules on all this changed when the G20 leaders adopted the Financial Stability Board’s adoption by the G20 leaders’ summit at Brisbane last November of the Financial Stability Board’s “Adequacy of loss-absorbing capacity of global systemically important banks in resolution” Consultative Document.
Please see my reply to deejj87’s post. Deposits are now just part of the commercial banks’ capital structure, but virtually nobody seems to be aware of this change.
Cadwaladr Dane, not sure whether it has been posted before, but here is the BoE/FDIC document to which you refer:
Dane Thank you so much cadwaladr. I’ll dig into it this weekend.
beachdude2 JC, I assume that restructuring the Greek debt is still in play even though that have defaulted?
Jcollins Yes. I would think they’ll spin this as only a missed payment. Lets see what transpires.
Dottie Derewicz I am amazed at how consistently well the Hegelian principle has worked throughout this process. Are these people such as Syriza selected and set in place to achieve the result/solution? I always wonder JC do they have a back up plan if the plan doesn’t quite go as designed?
Many times here we have discussed how Hegelian principles will be used to implement each transition point of the multilateral financial system. This latest Greek drama is a perfect example of that process.
The political representatives of the country package and sell the necessary policy adjustments through a script which serves the emotions and impulses of the disorganized masses.
So looking at the above statement..this is what we have to look forward to in the US as it transitions as well JC?
I guess it is sad to think that the people of Greece are just tools to set up this new system. They will wake up to a whole new world, just as all of us will in 2016.
Dottie Derewicz Another article on China,Greece and the European Union.
speedspirit From Armstrong:
Brussels has a hidden clause that shows from the very beginning this was a covert action to federalize Europe displacing democratic institutions from the top down. The sinister clause at issue explains why they expelled Yanis Varoufakis because they need unanimous consent to supersede the sovereignty of any member state.
Article 352 TFEU
(1) If there is any action by the Union under the conditions laid down in the Treaties policies needed to attain one of the objectives of the Treaties, and in the Treaties the necessary powers not provided , the Council shall, acting unanimously on a proposal from the Commission and after assent of the European Parliament take the appropriate measures.
If these provisions are adopted by the Council in accordance with a special legislative procedure, it shall also act unanimously on a proposal from the Commission and after approval by the Euro-pean Parliament.
(2) The Commission shall draw national parliaments in the procedure for monitoring the subsidiarity principle referred to in Article 5, paragraph 3 of the Treaty on European Union ‘attention to proposals which are based on this product.
(3) Measures based on this Article shall not entail harmonization of the laws of the Member States in cases where the Treaties exclude such harmonization.
(4) This item can not serve as a basis for attaining objectives pertaining to the common foreign and security policy and any acts adopted pursuant to this Article shall remain within the Article 40 paragraph 2 of the Treaty on European Union specified limits.
This Article 352 allows the EU to wage economic war on any member state to force its will upon the people regardless of what they vote. This is an amazing authoritarian view for this is not just about maintaining a single currency, it is now all about centralized power.
That being said it seems apparent there will be no collapse of Greece for “they” want control not riots.
Dottie Derewicz Whole lotta shaking going on.. China if this is correct is the king of shadow banking. I have been following this for a while and need to read again JC’s take on this.
Dottie Derewicz It is kind of humorous that someone would call their blog the economic collapse blog..I guess it tells you how they are thinking from the get go.
Cadwaladr Seems like quite a good choice of name for the blog of anyone with a grasp of basic arithmetic :)
Well, there goes the debt restructuring thesis.
Jcollins Not following your logic here. The link you provided suggests debt restructuring is more likely to be accepted by Europe in the coming weeks and months. We’re only at the beginning of this. Be patient.
Cramley The problem is the debt serves as reserves for banks, collateral for swaps and repos. Why do think the troika balks at ever bringing down the hammer? It’s not the Greeks who need a bailout so much as the creditors. Just like Long Term Capital.
A meager 10% haircut doesn’t mean 10% cut in reserves. The system is geared from one counterparty to another. Shadow banking and off-balance sheet vehicles. They took the Enron model and implemented worldwide.
Freebird here’s a big wake up call : https://www.youtube.com/watch?v=oJsKM-zGqys
Dottie Derewicz An awesome, awesome interview of Adam Lebor on the BIS..very interesting history of the BIS and its functions over the years.
A very factually based interview, which reminds me a great deal of JC, our knowledgeable macroeconomist whom I run to whenever I need an answer on what is happening in this big world economy.
This is a bit long, but definitely worth the watch. I learned a great deal from this video and like JC he doesn’t call out the BIS as some conspiratorial organization out to destroy the world. He just gives facts..enjoy and learn, just as you do here with JC.
Cadwaladr deejj87, I believe you are referring to the adoption by the G20 leaders’ summit at Brisbane last November of the Financial Stability Board’s “Adequacy of loss-absorbing capacity of global systemically important banks in resolution” Consultative Document. In my opinion, this is probably the biggest news story of the last hundred years, any yet it received virtually zero mainstream media coverage:
My limited understanding of these rule-changes is that one of them has moved banks’ depositors from first in the queue of creditors in the event of an insolvency or resolution to tenth (ie, the depositors will get nothing), to be replaced in first place by inter-bank derivative liabilities, which – to me – speaks volumes about where the problems are and who is going to pay for them.
Dane Hey JC perhaps Mr. Varoufakis is still looking for that answer.
The headline reads “Greek Finance Minister Says He’ll Resign if Referendum Endorses Bailout”
“ATHENS — Finance Minister Yanis Varoufakis of Greece said on Thursday that he would resign immediately if Greeks voting in a referendum on Sunday endorse efforts to secure an international bailout deal for the country. His comment is the starkest sign yet that the government of Prime Minister Alexis Tsipras is likely to be reshuffled or could even fall if a yes vote prevails.”
Dottie Derewicz Really good interview with Varoufakis July 2nd 2015..says he will quit if it is a yes vote.
Dottie Derewicz Fear and emotion will lead the people to a yes vote..Mayor of Athens says it will be a yes vote.
Dottie Derewicz A history of the Hegelian Dialectic.. I think it is of absolute importance that people know the history of the Hegelian Dialectic so they know how we got where we are today. I wanted to find out, because I had a question..was Hitler a follower of the Hegelian Dialectic..I had no idea, but I posed the question and searched and this is what I found out..
This is a PDF and is somewhat long, but is concise and gives the history of Hegel and how his ideas were used through history and changed to suit the means of the person using it.
cadwaladr Did she just open Pandora’s Box, or is she really pointing us towards a hat, out of which she is waiting to pull a SDR rabbit?! http://www.zerohedge.com/news/2015-07-02/did-imf-just-open-pandoras-box
cramley How will a SDR solve debt saturation? What has to happen first?
If the debt markets don’t want to buy bonds at all time high prices and record low yields, then why would they buy SDR bonds at the same low yields? SDR bonds that will still have the same problem of debt service sustainability?
What has to happen first?
“If China increases the number of yuan required to buy a troy ounce of gold, for example, the USA must allow the dollar gold price to rise with it. If not, the yuan will fall against the dollar.
In other words, China will determine the value of the US dollar on world markets, not the USA. That shifts the power and leverage away from Washington DC and toward Beijing, and will have a dramatic effect on the financial strength of the US government.”
Cadwaladr Agreed, cramley. A gold re-valuation seems like a no-brainer. It will plug so many holes in so many balance sheets. It seems that, with the announcement from the Shanghai Gold Exchange that they will introduce a yuan fix in gold before the end of this year, they have decided how and when to do it.
If the Chinese fix at a higher price than the COMEX, the arbitrageurs will pounce and what little metal the COMEX has left will be gone, the exchange will switch to cash settlement, making itself pointless.
I read somewhere recently that the COMEX had not settled a single transaction in metal for over two years, which to me is the same as game over already. The Chinese are already in charge.
In my opinion, the US lost its hegemony in March, when the Fed effectively admitted that it could not raise interest rates, and when their assassination of Boris Nemtsov failed to trigger a coup in Moscow
Cramley Makes you think under whose orders JPM ramped up all the commodity derivatives. No wonder gold was trapped in a range between 1180 and 1220 in spite of current events. I can’t help but laugh when the gold blogs now scream “gold smashed”. Dude, it dropped like 7 bucks, get a grip.
Back in 2008-2012 we would see thirty, sixty dollar daily candlesticks like nothing and only investment banks were at risk. Now we have monetary unions, central banks themselves peering into the abyss, and A-share stock markets crashing and gold doesn’t budge. Are we living the Truman Show in the financial markets?
Dripfood I guess, next to China, Turkey will also be playing a big role in the solution to the Greek crisis. Turkey has a lot to lose in case of a Grexit and I can’t see Turkey letting that happen without a big effort to help resolve the issue in its favor.
Dottie Derewicz Wikileaks and TISA