Tag: banks

Yes, the Deck is Stacked

It’s not an excuse to sit around and do nothing. But never waste any time whatsoever attempting to imitate or replicate what the apparently successful do, and definitely don’t listen to anything they say. It’s all extraordinarily manufactured, fake, and gay:

FTX FILLED ITS BANKRUPTCY FILLING TODAY

IT IS EVEN WORSE THAN ANYONE IMAGINED

AN OVERVIEW:

1) FTX LENT SAM BANKMAN OVER $1 BILLION DOLLARS FOR PERSONAL USE

2) FTX USED CUSTOMER FUNDS TO BUY HOUSES FOR EMPLOYEES

3) FTX DIDNT HAVE A LIST OF EMPLOYESS AND WHAT ALL THEY DID

4) FTX DID NOT KEEP ANY BOOKS OR RECORDS OF ITS DIGITAL ASSETS

5) ALAMEDA RESEARCH WAS EXEMPTED FROM AUTO LIQUIDATION ON FTX

6) FTX BUILT A SOFTWARE TO HIDE THE MISUSE OF CUSTOMER FUNDS

7) FTX HAD $400 MILLION IN UNAUTHORIZED TRANSFERS THE DAY THEY FILED FOR BANKRUPTCY

8) FTX HAD BILLIONS IN INVESTMENTS OTHER THAN CRYPTO BUT THERE ARE NO BOOKS OR RECORDS OF ANY OF IT.

9) SAM BANKMAN MADE ALL BUSINESS DECISIONS ON APPS THAT AUTO DELETED EVERYTHING AFTER SOME TIME

HE ENCOURAGED ALL EMPLOYEES TO DO THE SAME

The thing is, Bankman-Fried absolutely would have gotten away with it if it hadn’t all come crashing down. And he still hasn’t been arrested. He may never be arrested or held accountable for his copious crimes. It’s increasingly observable that the financial elite in the USA isn’t actually an elite of any sort whatsoever, it’s just a small group of highly connected people who are permitted to shamelessly break the laws and profit by doing so.

I would be willing to bet that the “young genius” has a lower IQ than at least 15 percent of the regular readership here. Because “success” of the sort that comes with fawning media attention is almost entirely manufactured.

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This is Fine

This is normal. Nothing to see here. Carry on.

Central Bank Liquidity Swap Operations
These swap facilities are designed to improve liquidity conditions in global money markets and to minimize the risk that strains abroad could spread to U.S. markets, by providing foreign central banks with the capacity to deliver U.S. dollar funding to institutions in their jurisdictions. The New York Fed undertakes certain small value transactions from time to time for the purpose of testing operational readiness. The results of the central bank liquidity swap operations and small value exercises of the central bank liquidity swap lines are published on a weekly basis when conducted.

Transfer to Swiss National Bank 10/05/2022 10/06/2022 10/13/2022 7 3.33 3,100,000,000

Now, why would the Federal Reserve be loaning $3.1 billion to the Swiss National Bank? Oh, yeah, I suppose that just might be why.

Credit Suisse Group AG may be facing a capital shortfall of up to 8 billion Swiss francs ($8 billion) in 2024, according to an analysis by Goldman Sachs Group Inc, underscoring the difficulties the troubled lender will face is it approaches what will likely be an extensive restructuring. Given the lender will need to restructure its investment banking operations during a period of “minimal” capital generation, it will face a shortfall of at least 4 billion francs, according to a team of analysts

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A Hitherto Unthinkable Restraint

But sooner or later, their amassed leverage – which is the corporate word for debt – was inevitably going to start bringing down the big banks.

Today The Fed is holding an emergency meeting under “expedited procedures.”

The actions to be considered are the discount and advance rate — in other words, interest rates.

The rumored reason is that Credit Suisse may be in trouble — specifically due to writing interest rate swaps, along with a number of other institutions which happens to include pension funds both in the UK and US, none of whom should ever be playing with levered instruments for the simple reason that leverage is everywhere and always speculative.

But of course they are because nobody has ever gone to prison for using leverage as a means to evade requiring the underlying organization to fund pensions adequately with actual money. Why that would cause both firms and governments to have to behave responsibly and we can’t have that.

This sort of act is a ridiculous violation of anything approaching fiduciary responsibility — which is a legal obligation for pension managers, not a suggestion. After all its not their money — its the pensioners’ money and they are charged with prudent management of same, which the use of leverage, especially leverage on a trend 40 years old that cannot reasonably go below zero, is the exact opposite of “prudent.”

Of course the same is true for banks; they have fiduciary responsibilities too, including to the nation as a whole since they have a backstop through the government for depositors. Nobody went to prison last time in 2008 for this crap either, did they?

Never mind that exiting those positions (including at a loss) was clearly prudent in the two years after the US government along with everyone else threw trillions in printed credit into the economy as a result of the pandemic. Anyone with two IQ points to rub together had to expect that to reflect back into inflation and thus higher rates, never mind that its insane to expect that time has no value which is what a “zero rate” policy claims.

Now add to it that the economic report from Friday showed higher core inflation than The Fed and everyone else expected — not lower. In other words the bad news continued, and therefore the only logical “emergency” act is to withdraw even more credit from the system.

The Fed refused to take the bitter medicine that was necessary back in 2008. They bought a lot more time than I would have imagined by kicking the can down the road, and the Covid lockdowns and “emergency spending measures” appear to have given them an additional two years. But now it’s October, historically a month when the debt chickens come home to roost, and two of the world’s biggest banks, Credit Suisse and Deutsche Bank, have managed to get themselves in seriously deep trouble again, because no one ever stops doing what they’re doing when you prevent them from suffering the consequences of their actions.

While both giant banks are too big to be permitted to fail without significant ramifications through their host countries and the demi-global financial system – which now requires the prefix since the BRICSIA nations have their own system – and both are national flagships, the recent destruction of the energy pipelines suggests the hitherto unthinkable possibility that the Fed might not only be willing to let the banks fail, but perhaps even order the Swiss and German governments to refrain from bailing them out in the interest of furthering the Great Reset.

And both current governments are sufficiently corrupt, and sufficiently ignorant of economics, that they might well accept destructive direction from Washington DC on the subject. The fact that the only member of the Swiss Federal Council who has any grasp of economic matters just resigned last week might even be a sign that an unprecedented action – or rather, lack of action – may be in the offing.

This suggests that the next big economics battle will be the nationalization of banks and money vs centralized demi-global banking and a single digital currency for the former West.

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ESG Will Break Corporations

The use of Environmental, Social and Corporate Governance loans is almost certainly guaranteed to backfire on the corporations that are taking advantage of them.

The term “ESG” was originally coined by the United Nations Environment Program Initiative in 2005, but the methodology was not fully applied to the corporate world until the past six years when ESG investment skyrocketed.

ESG is about money; loans given out by top banks and foundations to companies that meet the guidelines of “stakeholder capitalism.” Companies must show that they are actively pursuing a business environment that prioritizes woke virtues and climate change restrictions. These loans are not an all prevailing income source, but ESG loans are highly targeted, they are growing in size (for now) and they are very easy to get as long as a company is willing to preach the social justice gospel as loudly as possible.

Deloitte’s Insights studies show that ESG assets compounded at 16% p.a. between 2014 and 2018, now account for 25% of total market assets, and they believe that ESG could account for 50% of market share globally by 2024.

These loans become a form of leverage over the business world – Once they get a taste of that easy money they keep coming back. Many of the loan targets attached to ESG are rarely enforced and penalties are few and far between. Primarily, an ESG funded company must propagandize, that is all. They must propagandize their employees and they must propagandize their customers. As long as they do this, that sweet loan capital keeps flowing.

It’s enough to keep corporations addicted, but not enough to keep them satiated. Diversity hiring quotas based on skin color and sexual orientation rather than merit help make the overlords happy. Pushing critical race theory smooths the way for more cash. Carbon controls and climate change narratives really makes them happy. And, promoting trans-trenders and gender fluidity makes them ecstatic. Each participating company gets it’s own ESG rating and the more woke they go, the higher their rating climbs and the more money they can get.

However, this sort of loan for something that is guaranteed to reduce a corporation’s actual business revenue is also guaranteed to harm the corporation over time. Look at Marvel, for example. Money flowing in from ESG loans might pay for blackwashing and transgendering its heroes, but it can only replace the sales revenues being lost for a limited time.

And unlike sales revenues, loans eventually have to be repaid. Even if the converged banks write off the initial loans, eventually they will want to collect their pound of flesh, the cost of which can only increase as interest rates rise from their historic lows.

ESG is the sort of thing that requires free money to implement, and it is a particularly pernicious form of corporate cancer. It’s only a hypothesis at this point, but one might well build a successful investment strategy around the knowledge that the more ESG money a corporation takes, the more likely it is that the corporation’s sales are falling.

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The Sins of the Debtors

There are evils beyond your ken. And there isn’t any doubt for whom Boris Johnson works anymore.

Families could be offered “multi-generational” 50-year mortgages allowing parents to pass on outstanding debt to their children, under plans being considered by Downing Street.

Boris Johnson revealed that he wants lenders to offer extra-long mortgages as a way of getting more people onto the property ladder. The prime minister told reporters that he was keen to find “all sorts of creative ways to help people into ownership”.

No 10 is understood to be looking at ways to create a market for intergenerational mortgages, letting buyers borrow over terms of 50 years – or even longer – if offspring are signed up to inherit property and pay the rest of the loan. The proposal would allow more people to buy a house in their forties and fifties, knowing they would not have to finish paying it off during their lifetimes.

It could also let more buyers keep moving into bigger homes, if they are able take out larger loans over longer time-frames.

Having run out of native debtors, the bankers turned to mass immigration to create new ones. And having subquently discovered that populations with lower time preferences are considerably less inclined to service their debts, they’re now desperately casting about for ways to seduce more people into debt servitude, with or without their consent, or even knowledge.

This is obviously all coming to an end soon, even without the external pressure of the BRICSIA forces on the foundations of the neo-liberal world order and its proxy armies.

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Close Your Account

Before they do it for you, you thought criminal:

Halifax customers are closing their accounts today after its social media team told them to leave if they don’t like their new pronoun badges for branch staff in what is being branded one of the biggest PR disasters in British business history.

Britons have been pulling out millions of pounds in investments and savings as well as cutting up credit cards or transferring balances to rivals after they accused the bank of ‘alienating’ them with ‘pathetic virtue signalling’.

The row began this week when Halifax tweeted its 118,000 followers on Tuesday revealing that it would allow staff to display their pronouns on their name badges, in a post that read ‘pronouns matter’.

It showed a photo of a female staff member’s name badge, which featured ‘she/her/hers’ in brackets under the name Gemma, and said the policy was to help avoid ‘accidental misgendering’.

One customer replied: ‘There’s no ambiguity about the name “Gemma”. It’s a female person’s name. In other words, it’s pathetic virtue signalling and is seen as such by almost everyone who has responded to the initial tweet. Why are you trying to alienate people?’ Within 20 minutes a member of the Halifax social media team, calling himself Andy M, replied: ‘If you disagree with our values, you’re welcome to close your account’.

Andy M’s response has outraged customers, and seen hundreds claiming they will boycott the bank with many saying they have closed their accounts. Others have cut up their credit cards or getting rid of insurance policies.

It’s going to be fascinating to learn if corporations can survive without customers or if customers can survive without the services provided by corporations. Because it’s only a matter of time before corporations start exercising the rights they have granted themselves in their contracts of adhesion – the one-sided EULA statements to which one “agrees” by virtue of using the service or purchasing the product – to deny those deemed thought criminals their services.

On its website, Halifax say any customers they deem to be ‘transphobic’ could have their accounts closed.

Underneath a page titled ‘what we stand for’, they say: ‘We stand against discrimination and inappropriate behaviour in all forms, whether racist, sexist, homophobic, transphobic or ableist, regardless of whether this happens in our branches, offices, over the phone or online on our social media channels.

‘Such action may include account closure or contacting the police if necessary.’

And as we saw with Patreon, this self-granted corporate right to police customer behavior has been, in practice, expanded to include places and platforms that have nothing to do with the corporation itself. This is another reason why the BRICS economy is going to completely swamp the converged neoliberal economy.

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Switzerland’s Return to Poverty

The once-neutral country chooses a course that will inevitably lead it toward economic and geopolitical irrelevance if it is not abandoned:

The Swiss government has adopted the latest set of European Union sanctions against Russia and Belarus over the war in Ukraine, including an embargo on crude oil imports and certain refined petroleum products from Russia.

The Federal Council on Friday decided to adopt the sixth package of sanctions agreed by EU countries on June 3. It includes an embargo that will be introduced progressively on all Russian crude oil delivered by sea to Europe from early December; a ban on all Russian refined oil products will be introduced two months later.

This is really unbelievable from a historical perspective. The Federal Council appears to have forgotten that for centuries, Switzerland was a very poor country that had virtually nothing to offer anyone except Alpine transit routes and its young men’s service as mercenaries. To this day, its national cuisine involves little more than bread and cheese.

Switzerland became wealthy as a result of two things: banking secrecy, and neutrality. It gave up the former under US pressure in 2010, and formally abandoned the latter in 2022. (One could reasonably make a case for it technically having done so when it joined the UN in 2002, but the more recent action is the more conclusive one.) Compounding the self-destructive effects of nuking its political neutrality, it actually did so on behalf of the losing party, which now almost guarantees that instead of serving as a central business connection between whatever replaces the declining neoliberal order in the former West and the rising Silk Road order in the North, South, and East, Switzerland’s current leaders have foolishly chosen to follow the lead of the increasingly irrelevant West European Co-Prosperity Sphere and taken the risk of rendering their country a very small and uncompetitive node on the wrong side of the Great Bifurcation.

This isn’t a prediction. This is an observation of a process that is already taking place.

For the past 200 years, Switzerland has been the number one financial center to attract wealth from other countries. Yet, it will unlikely be able to hang on to its pole position, as wealth increasingly flows to other places. And this isn’t the only area where Switzerland is falling behind.

Although Switzerland reaped the gains from 2021’s buoyant financial markets, growing 5.5 percent, the report points to more challenging years ahead for the financial center.

A big blow will come in the next four years when Switzerland falls out of the world’s top three financial centers, into fourth position behind the U.S., Hong Kong, and the U.K. in terms of onshore, cross-border and financial assets held. While Swiss financial assets are expected to grow 2.8 percent by 2026, the report says assets in the U.K. will rise by 3.3 percent (see below).

Switzerland will take another hit next year when Hong Kong overtakes it as the top financial center for cross-border wealth, ending Switzerland’s 200-dominance as the world’s strongest magnet for foreign wealth.

Switzerland Losing Ground Among Top Financial Centers, FINews

Going from neutral to reverse is no way forward.

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The Great Bifurcation Continues

ITEM: Russia is now SWIFT-free.

Russian banking giant Sberbank has been disconnected from the SWIFT global financial messaging system under a new set of sanctions approved by European Union leaders on Monday. “This sanctions package includes other hard-hitting measures: de-Swifting the largest Russian bank Sberbank,” European Council chief Charles Michel announced following the EU summit.

ITEM: The European Union has largely stopped importing Russian oil.

After weeks of deliberation, EU member states have agreed in principle on a sixth round of anti-Russia sanctions, the bloc’s leadership announced after a meeting on Monday. Hungary and Bulgaria will keep buying Russian oil, but most other import routes will be blocked. EU Council President Charles Michel said the watered-down embargo will affect about 75% of Russian oil imports, with the percentage growing to 90% by the end of the year.

ITEM: India has replaced the USA as a primary customer for Russian oil. In 2021, the USA imported 6 million barrels of Russian crude per month.

More than 24 million barrels of Russian crude were supplied this month, up from 7.2 million barrels in April, and from about three million barrels in March. The South Asian nation is set to receive about 28 million barrels in June, data shows. Last year, Russian crude exports to India averaged just 960,000 barrels per month, roughly 25 times less than this month’s total.

ITEM: China has publicly denounced the “rules-based international order” as a “US rules-based international order”.

The “rules-based international order” it touts is actually the “US rules-based international order”, a hegemonic order to dominate the world with the house rules of its clique… The US places its domestic law above international law and international rules and willfully resorts to illegal unilateral sanctions and long-arm jurisdiction. Since the outbreak of COVID-19, Venezuela, Syria and Iran have been grappling with severe difficulties with a struggling economy and strained medical resources due to prolonged US sanctions. Under such circumstances, the US, rather than halting those sanctions, redoubled them, making things even worse for these countries. The international community sees with increasing clarity that the US only complies with the market competition principle and international trade rules it claims to champion when it suits US interests.

On the basis of these developments, I suspect that we are going to see China voluntarily and preemptively disconnect from the SWIFT and global trade systems later this year. China will likely be followed in this by India and a number of other anti-Clown World nations. This will not only trigger a serious financial crisis, if not a comprehensive banking collapse, but will likely lead to regime changes across Clown World.

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The Fed Can’t Do What It Must

Karl Denninger sees the proximate problem, but not the structural impediment to solving it:

Either Hike 200bps Today and 100 Each Mtg Until PPI Cools. or watch the economy literally burn to the ground.

At the same time all inhibitions on energy production here in the US must be lifted immediately. All of them. All coal plants shut down but still operational and those intended to be retired must have those orders rescinded immediately. Further, all refined product exports must be banned.

If you didn’t get the hint from WalMart and Target’s earnings announcements you’re deaf, blind, stupid and might be starving and homeless within months. Fuel prices continue to ramp, in no small part not because of oil but because we’re exporting products to other nations, specifically Europe. This must end now.

There is no instant solution but if we do not put a stop to the transportation cost and fertilizer problems now by this fall and winter the lower 50% of the economic strata in this nation will be hard-pressed to both feed their families and heat their homes. That is the combination that leads to riots and worse. Witness Sri Lanka where its already happening and politician homes are being set on fire.

Stocks? Who cares. The entire ramp from roughly 2011 onward likely will and should come back off. If you believed that said price advances of roughly a triple over that period of time were reasonable you’re nuts. If you predicated your future or present on it there’s nothing we can do to help you at this point; you ridiculously overpromised to yourself and overspent behind that.

Ditto for real estate. There’s nothing to be done other than let prices go back to where they should be. They will, by the way.

The Fed absolutely should be raising interest rates and raising them very steeply. The last time the USA saw this sort of inflation, it was the 1970s and interest rates went as high as 20 percent. However, there was considerably less debt then, and both consumers and corporations were able to service the debt payments even at those higher rates because the prices were so much lower.

Now that debt-consumption has raised prices by artificially stimulating demand, consumers can’t even make their payments on very low, historically low, interest rates. The level of defaults would be astronomical, and would essentially amount to a debt jubilee that would utterly destroy every single federally-regulated financial institution in the country. So, the Fed cannot, and will not, do what the laws of economics require of it.

My expectation is that there will either be some sort of federalization of the entire US economy, possibly on a neo-global scale that includes the NATO countries, or a recurrent series of defaults in which rates are raised slightly, allowing the weakest institutions to fail first in the hopes that the stronger institutions can survive on the strength of the assets previously held by the failing ones.

Neither option will work, of course, but the Fed has successfully kicked the can down the road for more than a decade already, so perhaps they might be able to buy themselves another year or three.

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China Prepares for Decoupling

Recent Chinese actions on the financial front make it appear stage two of the Great Bifurcation is incoming, and it looks as if it’s going to be on a scale much larger than most observers of the Russo-Ukrainian conflict were prepared to believe.

The Chinese government reportedly held an internal conference with officials from foreign and local banks as the nation seeks to protect overseas assets from US sanctions over potential military tensions in Taiwan. The meeting between officials from China’s Central Bank and Finance Ministry, as well as executives from foreign and domestic lenders, was held on April 22, FT reported on Sunday, citing people familiar with the discussion.

“If China attacks Taiwan, decoupling of the Chinese and western economies will be far more severe than [decoupling with] Russia, because China’s economic footprint touches every part of the world,” one of the people briefed on the meeting told the media.

Chinese officials are reportedly worried that penalties similar to those imposed on Russia over the military operation in Ukraine could be introduced against China in the event of a regional military conflict or other crisis.

China summons banks over sanctions fears, 1 May 2022

I very much doubt that the Chinese officials are worried in the slightest. They have clearly intended the break with the neo-liberal financial system for at least a decade, it’s only the preferred timing that is unknown. For me, the only serious question here is whether the Chinese will wait for the neo-liberal financial order to make a partial break in reaction to something, as per the article, or whether they prefer to make a preemptive break themselves. The evidence of prior Chinese behavior, including the erection of the Great Firewall of China, tends to indicate the latter, especially since their ability to choose the timing of the decoupling would permit the Chinese to create maximum disruption in the West while minimizing the disruption to the East.

Furthermore, the delicacy of the Russians in pursuing the moral and rhetorical high ground has gone mostly unrewarded, so there isn’t much tangible benefit to the Chinese in being able to proclaim that they are being further victimized by the imperialist colonial forces. A preemptive move would not only be materially beneficial, but would also be a powerful psychological blow to a Western elite that perceives itself to be dictating reality by calling all the shots.

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