Category Archives: Economy

Federal Reserve Initiates End Game As Trump Heads To White House

 

trump-fed-ratesBy Brandon Smith

For years, alternative economic analysts have been warning that the “miraculous” rise in U.S. stock markets has been the symptom of wider central bank intervention and that this will result in dire future consequences. We have heard endless lies and rationalizations as to why this could not be so, and why the U.S. “recovery” is real.  At the beginning of 2016, the former head of the Dallas branch of the Federal Reserve crushed all the skeptics and vindicated our position in an interview with CNBC where he stated:

What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.It’s sort of what I call the “reverse Wimpy factor” — give me two hamburgers today for one tomorrow. I’m not surprised that almost every index you can look at … was down significantly. [Referring to the results in the stock market after the Fed raised rates in December.]

Fisher continued his warning (though his predictions in my view are wildly conservative or deliberately muted):

…I was warning my colleagues, “Don’t go wobbly if we have a 10-20 percent correction at some point. … Everybody you talk to … has been warning that these markets are heavily priced.

Here is the issue stocks are a mostly meaningless factor when considering the economic health of a nation. Equities are a casino based on nothing but the luck of the draw when it comes to news headlines, central banker statements and algorithmic computers. Today, as Fischer openly admitted, stocks are a purely manipulated indicator representing nothing but the amount of stimulus central banks are willing to pour into them through various channels.

Even with the incredible monetary support pooled together by international financiers, returns on equities investments continue to remain mostly flat.  It would seem that the propping up of indexes like the Dow has been only for the sake of keeping up appearances. For many people, revenue is barely being generated.

Unfortunately, the majority of Americans do not care to educate themselves on the finer points of finance. Their only relation to the health of the economy is their daily glance at the Dow. If it is green, or at all-time highs, they assume that all is well, even if their gut is telling them something is not quite right.

The elites that stand at the helm of the Federal Reserve understand this dynamic very well. They are not stupid. They know that the whole of the global economy could be in a shambles but as long as stocks remain positive the masses will continue to ignore reality until the flames of destabilization are at their very doorsteps.

With this fact in mind one might think that the Fed would consider it in their best interest to keep stimulus measures operating indefinitely; but that is not what they are doing.

In fact, the Fed along with other central banks like the ECB has been slowly peeling back pillars of support from markets that have been in place since 2008-2009 and leaving the system open to a crisis event that should have been dealt with years ago. I examined this process of deliberate destabilization in my article “The Global Economic Reset Has Begun.”

In that piece I outlined the three major pillars holding up the U.S. market system and certain parts of our economy and how they were being systematically removed. The first pillar was the use of bailouts and quantitative easing measures. These were diminished through the implementation of the Fed “taper,” which I predicted would happen three months prior that year.

The second pillar was the use of near zero interest rates, which allowed numerous banks and corporations to access low-cost and no-cost overnight loans from the Fed. These companies then used these loans in large part to support a never-ending program of stock buybacks, which reduced the stock pool and artificially boosted the values of the remaining stocks.  I predicted in August of 2015 that the Fed would hike interest rates and that this would be the beginning of the end for the stock buyback bonanza. The Fed hiked rates in December of that year.

This process of removing backdoor manipulation through low interest rates should be our main concern right now. Early in 2016 I believed that the Fed would reach a position in which it would finally unleash a series of rate hikes. I did not think they would be so blatant as to wait until right after the U.S. presidential election to do so. I was wrong.

This is why I eventually predicted the launch of a series of rate hikes starting right after the election of Donald Trump in my article “World Suffers From Trump Shell Shock  Here’s What Will Happen Next.” The Fed has now once again hiked interest rates with assertions that they will be “accelerating” such hikes throughout 2017.

As I have been arguing for most of the past year, the election of Donald Trump was inevitable and would precede the triggering of the final stage of our ongoing economic crisis. I came to realize that the Fed’s timing of their latest rate hike is highly strategic. Not only does it set the stage for a series of hikes that will crush U.S. stock markets this coming year and finally shock the public out of their fiscal stupor, but it also maneuvers the crisis right into the lap of Donald Trump and the conservative movements that support him.

Beyond this, it perpetuates an increasing Left/Right division in America. Think about it  during a fiscal crisis under Trump, triggered by accumulating Fed rate hikes, liberals will immediately set upon Trump as the culprit, while conservatives will immediately defend Trump as a victim of Federal Reserve meddling.

The Federal Reserve and the mainstream media are already composing the narrative by stating that Trump’s potential economic policies and a widening budget deficit would REQUIRE higher rates at a faster pace in order to be accommodated.

I have heard arguments from some that this tactic would simply not work. That people would “never buy” a narrative in which Trump and conservatives are blamed for a market collapse that was at least eight years in the making. I have to say, this view is incredibly naive.

I understand why people would want to embrace the notion that the public is as savvy as the liberty movement when looking at economic events, but this simply isn’t reality. A large portion of the U.S. population identifies with the “Left” end of the political spectrum. We have already seen how they react in the face of a Trump election win. They are predisposed to believe that Trump is responsible for a market crash regardless of the facts. Not to mention, much of the rest of the world is economically ignorant and will likely jump on the anti-conservative bandwagon during a crisis as well.

But the real master stroke of this strategy on the part of the elites is that it creates the perfect platform for the destruction of the U.S. dollar’s world reserve status  the third and final pillar I mentioned months ago that is supporting our economic system.

Imagine that the Fed’s rate hike frenzy sparks an open feud between the central bank and Trump? Some people might say “Good! Shut the bastards down!” However, this is exactly what the elites want. With the Fed “at odds” with the president of the U.S., faith in the U.S. dollar will plummet. Its world reserve status will be destroyed. And instead of being blamed on central banks, the majority of people around the world will claim it was the fault of Trump.

With a historically sufficient excuse for the end of dollar dominance in hand, the elites can move forward with their great global reset, which includes the replacement of the dollar with the IMF’s special drawing rights as the go-to reserve currency mechanism. The SDR basket is an essential bridge in the formation of a single global monetary authority and a true single global currency.

I believe that the Fed will not only continue hiking interest rates throughout 2017, but that some of these rate hikes may be LARGER than many people expect (50 basis points or more). I believe this will be designed to foster extreme tensions between the executive branch and the central bank.

A few months ago I would have said that Trump may or “may not” be aware of this dynamic and the potential that he is a scapegoat. Now that I have seen Trump’s cabinet picks which include neo-con and Goldman Sachs alumni, I have little doubt that he is fully cognizant of the plan.  I will be writing more on the issue of Trump as a “Trojan horse” in my next article.  In the meantime I would point out that all of the elements of psychological support for stock markets will also disappear in the face of a Trump verses establishment narrative.

All those leftist media outlets cherry picking economic stats and telling half truths to support the recovery lie now have no reason to continue cheerleading for the economy. I expect that propaganda rags like Reuters and Bloomberg will quickly change their tune with Trump in the Oval Office and begin a consistent chorus of negative financial data. Not only will the Fed remove all support from the system, but the mainstream media will be pounding day traders with the kind of “doom and gloom” headlines that they have been criticizing us for over the years.

Make no mistake, the election of Trump may have some in the liberty movement ready to pack up their preps and forget about any national crisis in their lifetimes, but the truth is, vigilance is needed now more than ever. I said it before the election and I’ll say it today  do not get comfortable; the times are about to get even more interesting.

You can read more from Brandon Smith at his site Alt-Market.com. If you would like to support the publishing of articles like the one you have just read, visit our donations page here.  We greatly appreciate your patronage.

You can contact Brandon Smith at: brandon@alt-market.com

 

Federal Reserve Initiates End Game As Trump Heads To White House.

Trump Surrounded By Bankers, Wall St. Insiders Banging on the Door to Get In: “Draining the Swamp?”

trump-finance-chair

This article was written by Michael Krieger of Liberty Blitzkrieg.com.

Editor’s Comment: If Jamie Dimon (of JP Morgan Chase) or anyone else that heads a Wall Street mega-bank, etc. does become Treasury Secretary – and that’s a big if for now, as reports on Jamie Dimon remain unconfirmed – then it will be the clearest signal yet that this latest round of “change” will be more of the same once again. If this proves true, then Trump becomes Obama-in-2008 faster than a sportscar goes from 0-to-60.

Once again, we see the worst and most dangerous elite insiders looking for yet another bailout in the form of jobs, appointment and power over the levers of government policies – climbing back onto the government lifeboat (now in the Trump administration) while working to swamp the rest of the struggling passengers who were on-board the U.S.S. Titanicamerica. A new Captain still can’t stop this trainwreck, even if any change is welcome. A real #drainingtheswamp would be a great start, but early signs cast doubt on that happening.

This was the exact rationale for “The Obama Deception” exposé at the start of Obama’s first term – it’s a deception because it’s a brand new face frontin’ for the same ol’ gang – and people are slow to catch on, and even less willing to admit they got conned. Is Trump the new Obama for the alt right/populist uprising to keep them complacent and blow off enough steam to avert a destabilizing revolution? Does America have time to be wrong all over again? It is our duty to stay focused on these individuals and pressure Trump to dump or block the worst of these appointments.

The Obama Deception HQ Full length version


Draining the Swamp? Wall Street is Already Loving Donald Trump

by Michael Krieger

Before we move forward, let’s start with the following extraordinarily disturbing report out of CNBC:

In the wake of Donald Trump’s upset victory, advisors to the president-elect have floated the possibility of naming JPMorgan Chase chief Jamie Dimon Treasury secretary, according to two people familiar with the matter, but one of them added that Dimon said he would not be interested in the role.

A Trump spokesperson could not immediately be reached for comment, and a spokesman for Dimon declined to elaborate beyond his past remarks that he would not be interested in the job.

First off, I want to say that the above isn’t confirmed. If it’s totally false, the Trump campaign should come out with a quick and vehement denial. I sincerely hope that happens.

That said, the report is cause for serious concern. Why? Because Trump’s reluctance to go after Wall Street was apparent throughout his entire campaign (as opposed to Bernie Sanders), and it was one of the main reasons I could never get comfortable with him. I wrote several posts where I articulated my concerns, but here’s an excerpt from one of them, Donald Trump’s True Colors Emerge as He Snuggles up to Wall Street:

While I’m not a Dodd-Frank fan, it’s not because it was too harsh, but because it didn’t really do much of anything. It was the typical neoliberal bait and switch, designed to look tough for public consumption, while merely making tweaks around the edges of a financial system that requires systemic, paradigm level change.

Trump’s support of repealing Dodd-Frank tells you all you need to know. A Trump Presidency will see Wall Street felons who should be in prison, running as wild and free as ever.

He will be the same thing to distressed working class whites that Obama was to the black community. A fake messiah and a shyster.

Read that last line over and over again until you understand it. If it is true that Trump considered the CEO of the largest “Too Big To Fail” and “Too Big to Jail” U.S. bank for Treasury Secretary, we can be pretty much assured that Donald Trump is the Republican version of Barack Obama. A fraud who talked a good game in order to get elected, but who will be a willing pawn of crony corporations and Wall Street. You can’t drain the swamp by surrounding yourself with the swamp.

If I don’t hear a denial about this rumor, I will assume it’s true, which means Trump and I are off to a very bad start. Whether Dimon takes the role or not (I doubt it), is irrelevant. Merely considering Dimon tells you all you need to know about the types of status quo people who are likely to surround President Trump.

As I warned in yesterday’s post, Americans Roll the Dice With President Donald Trump

People = Policy

Trump will be a failure unless he brings the right people into his inner circle. This is of the utmost importance. Indeed, I knew for certain Obama was a total fraud the moment he appointed Larry Summers and Timothy Geithner to key positions within his administration. This is the area I think Trump is most vulnerable to making some very big mistakes. Indeed, I was very bothered by the effusive compliments he showered upon one of the nation’s worst political figures, Chris Christie, during this victory speech.

If Trump really wants to shake things up, he needs to think outside of the box and look far beyond the Chris Christies of the world, and consider some very sharp people he’s never heard of. If he surrounds himself with the old, tired political characters we already know, I fear very little will change for the better.

You can’t get more inside the box, status quo than Jamie Dimon. Period. Which brings me to a conspiracy theory about the whole thing. I think there’s a remote possibility that the Trump campaign leaked this themselves with the hope that he can then appoint his preferred candidate, former Goldman Sachs partner, Steve Mnuchin, with little outrage. That’s typical Donald Trump behavior. People will then say, “well at least it’s not Jamie Dimon.” Unfortunately, Steve Mnuchin would be a terrible choice too. As we learned in the post, A Nation of Sheep, Afraid of Words:

Mnuchin’s presence in the campaign reveals how the qualities Trump loyalists projected on their hero don’t measure up to the truth. They have venerated him throughout the Republican primary for rejecting the dirty business of pay-to-play politics, and for populist vows to protect the ordinary worker. But in selecting Mnuchin, not only has Trump submitted to the realities of presidential campaign finance; he’s chosen one of the most notorious bankers in America to carry it out.

When I heard Mnuchin’s name last week, I immediately remembered the front lawn of his mansion. Back in 2011, local housing activists and the Occupy movement in Los Angeles camped out on that lawn to save the home of Rose Mary Gudiel, a La Puente, California, resident who faced eviction after being just two weeks late on one mortgage payment. The activists threatened to move all of Gudiel’s furniture into Mnuchin’s $26 million Bel Air estate if the eviction wasn’t stopped. Twenty police officers and a helicopter met the protesters.

The OneWest subsidiary Financial Freedom executed 39 percent of all foreclosures on reverse mortgages between 2009 and 2015, despite servicing only 17 percent of the market, according to data from the Department of Housing and Urban Development (HUD) obtained by the California Reinvestment Coalition. OneWest disclosed in its most recent annual report that it’s under investigation for this disproportionate share of “widow foreclosures” by HUD’s Inspector General. The victims include 103 year-old Myrtle Lewis of North Texas, who OneWest put into foreclosure after her insurance coverage lapsed; Karen Hunziker, who got a foreclosure notice from OneWest ten days after her husband passed away in 2014; and a host of others.

Trump’s loyal fans aren’t likely to scrutinize Mnuchin’s record, but they should. You can measure political candidates in part by who they associate with. The foreclosure history in Mnuchin’s past reflects an extreme mentality of profit at all costs, and hardly a viewpoint of standing up for the little guy. Trump as populist was always something of a pose, covering for a deep nationalism and antipathy to immigrants. The Mnuchin pick just brings that into sharper relief.

Meanwhile, what was Mnuchin doing right before the election? Why he was the personal guest of Blackstone head Steve Schwarzman at the New York Public Library’s Lions gala. 

Bloomberg reported:

Steve Schwarzman, who’s declined to say which presidential candidate he’s voting for, spent Monday night two seats away from Trump finance chair Steven Mnuchin, a possibility for treasury secretary if Trump wins.

The setting was the New York Public Library’s Library Lions gala, where the Rose Main Reading Room’s tables were covered in gold cloth, the place mats were made of gold paper laser-cut to resemble the rosettes on the room’s ceiling, and the books were lit with spotlights.

Mnuchin was Schwarzman’s guest — an experience sort of like hanging with Donald Trump in Trump Tower: The gala took place in the library’s Stephen A. Schwarzman Building. The New York Public Library includes this flagship center for collections and exhibitions, as well as more than 80 branch libraries where children learn to read, teens do homework and job-seekers work on their resumes.

Here’s a photo of Trump’s “drain the swamp” finance chair hanging with billionaire private equity mogul Schwarzman.

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Steve Schwarzman…you know that name don’t you? Of course you do. He’s the guy that said the following about the threat to repeal the carried interest loophole:

Word of mouth says that Blackstone founder Steve Schwarzman got suddenly very passionate when talking about tax hikes in July.

“It’s a war.”

“It’s like when Hitler invaded Poland in 1939.”

With that in mind, it’s no surprise that Schwarzman had the following to say in Davos earlier this year. From the post, Billionaire CEO of Blackstone Trolls the American Public – He Doesn’t Get Why People Are Angry:

“I find the whole thing astonishing and what’s remarkable is the amount of anger whether it’s on the Republican side or the Democratic side,” the Wall Street mogul said at the World Economic Forum in Davos. “Bernie Sanders, to me, is almost more stunning than some of what’s going on in the Republican side. How is that happening, why is that happening?”

This is the guy Trump’s finance chair was hanging with a day before the election. You don’t get more status quo than Steve Schwarzman. While we’re at it, here are just a few examples of what Blackstone’s been up to since the financial crisis:

America Meet Your New Slumlord: Wall Street

A Closer Look at the Decrepit World of Wall Street Rental Homes

Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds

Meanwhile, I think the performance of Wall Street shares since the election tells you all you need to know.

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To conclude, this article is primarily written for all my readers who are either Trump supporters, or who reluctantly voted for him. My message to you is that we need to hold this man’s feet to the fire. The election is over, and you got your desired outcome. Now is not the time to be a cheerleader. Now is not the time to behave exactly like Obama zombies did after he became an obvious betrayal. What allowed Obama to do all the bad things he did, was the fact that his supporters made endless excuses for him. Don’t make excuses for Trump. If you do, your life will get a lot worse and this country will decay far more into an authoritarian oligarchy than it already has. It is up to you to make sure he doesn’t become the Wall Street puppet I always feared he would be.

Remember the timeless words of Mark Twain and please take heed.

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This isn’t the time for playing around. This isn’t the time for looking the other way. You voted him in to take down the status quo system. Make sure he does it.

In Liberty,
Michael Krieger

This article was written by Michael Krieger of Liberty Blitzkrieg.com. His columns typify the kind of questions that must be asked during the next administration, no matter if you support or oppose it.

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Trump Surrounded By Bankers, Wall St. Insiders Banging on the Door to Get In: “Draining the Swamp?”.

Vote as if your life depended upon it, because it does.

Here’s why:

Hillary has repeatedly said: “We should also work with the coalition and the neighbors to impose no-fly zones that will stop Assad from slaughtering civilians and the opposition from the air. Opposition forces  on the ground, with material support from the coalition, could then help create safe areas where Syrians could remain in the country, rather than fleeing toward Europe.”

This would mean that U.S. fighter-jets and missiles would be shooting down the fighter-jets and missiles of the Syrian government over Syria, and would also be shooting down those of Russia. The Syrian government invited Russia in, as its protector; the U.S. is no protector but an invader against Syria’s legitimate government, the Ba’athist government, led by Bashar al-Assad. The CIA has been trying ever since 1949 to overthrow Syria’s Ba’athist government — the only remaining non-sectarian government in the Middle East other than the current Egyptian government. The U.S. supports Jihadists who demand Sharia law, and they are trying to overthrow and replace Syria’s institutionally secular government. For the U.S. to impose a no-fly zone anywhere in Syria would mean that the U.S. would be at war against Russia over Syria’s skies.

Whichever side loses that conventional air-war would then have to choose whether to surrender, or instead to use nuclear weapons against the other side’s homeland, in order for it to avoid surrendering. That’s nuclear war between Russia and the United States.

 

Would Putin surrender? Would Hillary? Would neither? If neither does, then nuclear war will be the result.

Here are the two most extensive occasions in which Hillary has stated her position on this:

To the Council on Foreign Relations, on 19 November 2015:

      We should also work with the coalition and the neighbors to impose no-fly zones that will stop Assad from slaughtering civilians and the opposition from the air. Opposition forces on the ground, with material support from the coalition, could then help create safe areas where Syrians could remain in the country, rather than fleeing toward Europe.

      This combined approach would help enable the opposition to retake the remaining stretch of the Turkish border from ISIS, choking off its supply lines. It would also give us new leverage in the diplomatic process that Secretary Kerry is pursuing. …

      QUESTION: When you were secretary of state, you tended to agree a great deal with the then-Secretary of Defense Bob Gates. Gates was opposed to a no-fly zone in Syria; thought it was an act of war that was risky and dangerous. This seems to me the major difference right now between what the president — what Obama’s administration is doing and what you’re proposing.

      Do you not — why do you disagree with Bob Gates on this?

      CLINTON: Well, I — I believe that the no-fly zone is merited and can be implemented, again, in a coalition, not an American-only no-fly zone. I fully respect Bob and his knowledge about the difficulties of implementing a no-fly zone. But if you look at where we are right now, we have to try to clear the air of the bombing attacks that are still being carried out to a limited extent by the Syrian military, now supplemented by the Russian air force.

      And I think we have a chance to do that now. We have a no-fly zone over northern Iraq for years to protect the Kurds. And it proved to be successful, not easy — it never is — but I think now is the time for us to revisit those plans.

      I also believe, as I said in the speech, that if we begin the conversation about a no-fly zone, something that, you know, Turkey discussed with me back when I was secretary of state in 2012, it will confront a lot of our partners in the region and beyond about what they’re going to do. And it can give us leverage in the discussions that Secretary Kerry is carrying on right now.

      So I see it as both a strategic opportunity on the ground, and an opportunity for leverage in the peace negotiations. …

      QUESTION: Jim Ziren (ph), Madam Secretary. Hi. Back to the no- fly zone. are you advocating a no-fly zone over the entire country or a partial no-fly zone over an enclave where refugees might find a safe haven? And in the event of either, do you foresee see you might be potentially provoking the Russians?

      CLINTON: I am advocating the second, a no-fly zone principally over northern Syria close to the Turkish (ph) border, cutting off the supply lines, trying to provide some safe refuges for refugees so they don’t have to leave Syria, creating a safe space away from the barrel bombs and the other bombardments by the Syrians. And I would certainly expect to and hope to work with the Russians to be able to do that. [She expects Putin to join America’s bombing of Syria’s government and troops and shooting-down of Russia’s planes in Syria, but no question was raised about this.] …

      To have a swath of territory that could be a safe zone … for Syrians so they wouldn’t have to leave but also for humanitarian relief, … would give us this extra leverage that I’m looking for in the diplomatic pursuits with Russia with respect to the political outcome in Syria.

During a debate against Bernie Sanders in the Democratic primaries:

      Hillary Clinton, in a debate with Bernie on 19 December 2015, argued for her proposal that the U.S. impose in Syria a “no-fly zone” where Russians were dropping bombs on the imported jihadists who have been trying to overthrow and replace Assad: “I am advocating the no-fly zone both because I think it would help us on the ground to protect Syrians; I’m also advocating it because I think it gives us some leverage in our conversations with Russia.” She said there that allowing the jihadists to overthrow Assad “would help us on the ground to protect Syrians,” somehow; and, also, that, somehow, shooting down Russia’s planes in Syria (the “no-fly zone”) “gives us some leverage in our conversations with Russia.”

      Bernie Sanders’s response to that was: “I worry too much that Secretary Clinton is too much into regime change and a little bit too aggressive without knowing what the unintended consequences might be.” He didn’t mention nuclear war as one of them.

The “no-fly zone” policy is one of three policies she supports that would likely produce nuclear war; she supports all of them, not merely the “no-fly zone.”

Hillary Clinton has never been asked “What would you do if Russia refuses to stop its flights in Syria?” Donald Trump has said nothing about the proposal for a no-fly zone (other than “I want to sit back and see what happens”), because most Americans support that idea, and he’s not bright enough to take her on about it and ask her that question. Probably, if he were supportive of it, he’d have said so — in which case it wouldn’t still be an issue in this election. Trump muffed his chance — which he has had on several occasions. But clearly he, unlike her, has not committed himself on this matter.

Hillary Clinton is obviously convinced that the U.S. would win a nuclear war against Russia. The question for voters is whether they’re willing to bet their lives that she is correct about that, and that even if the U.S. ‘wins’, only Russia and not also the U.S. (and the world) would be destroyed if the U.S. nuclear-attacks Russia.

Every other issue in this election pales by comparison to the no-fly-zone issue, which is virtually ignored, in favor of issues that are trivial by comparison. But a vote for Hillary Clinton is a vote for nuclear war against Russia, regardless of whether or not the voters know this. And a vote for Trump is a vote for the unknown. Could the unknown be even worse than Hillary Clinton? If so, would it be so only in relatively trivial ways?

This election should be about Hillary Clinton, not about Donald Trump.

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

 

Vote as if your life depended upon it, because it does..

Interview 1218 – The Freedom Cell Solution with Derrick Broze : The Corbett Report

Derrick Broze of TheConsciousResistance.com joins us once again to continue our conversation on agorism and counter-economic activity. Today we discuss Freedom Cells, an idea for self-organized peer to peer groups that assert sovereignty, create alternative institutions, and innovate counter-economic activity.

SHOW NOTES:
www.TheConsciousResistance.com
www.FreedomCells.org
Interview 1103 – Derrick Broze on Agorism and Counter-economics
Creating Freedom w/ Vertical and Horizontal Agorism
The New Libertarian Manifesto
What is a Freedom Cell?
Welcome to The Free Thinker House!
Free Thinker House – Patreon
Free Thinker House – Facebook

Interview 1218 – The Freedom Cell Solution with Derrick Broze : The Corbett Report.

Run on Banks Begins — Deutsche Bank Clients Begin Withdrawing Excess Cash

 

deutsche-bankBy Matt Agorist

As the Free Thought Project reported Thursday, the most prominent bank in Germany is at risk of failure, with potentially profound effects for the EU, the United States and likely the rest of the world. This risk of failure has now gotten so threatening that a number of funds that clear derivatives trades with Deutsche Bank AG have withdrawn excess cash and positions held at the lender, according to Bloomberg.

While the vast majority of the bank’s more than 200 derivatives-clearing clients have made no changes, the hedge funds run on cash highlights serious concern. The paranoia of an imminent collapse spread to the US on Thursday as 10 hedge funds that are Deutsche Bank clients have decided to withdraw cash and listed derivatives positions from the bank, according to a Bloomberg News report.

Millennium Partners, Capula Investment Management and Rokos Capital Management are among about 10 hedge funds that have cut their exposure, said a person familiar with the situation who declined to be identified talking about confidential client matters.

The hedge funds use Deutsche Bank to clear their listed derivatives transactions because they are not members of clearinghouses. Millennium, Capula and Rokos declined to comment when contacted by phone or e-mail.

These funds use Deutsche Bank’s prime brokerage to clear their derivatives trades, reports Bloomberg. They post collateral as a sort of insurance in case they run into trouble — but now they appear to worry that Deutsche Bank is the one in trouble. So they are withdrawing some of their derivatives holdings and excess collateral above what Deutsche Bank requires them to hold.

As Zero Hedge points out, this massive withdrawal of cash has led to a sharp increase in short-term CDS.

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“Our trading clients are amongst the world’s most sophisticated investors,” Michael Golden, a spokesman for Deutsche Bank, said in an e-mailed statement.

“We are confident that the vast majority of them have a full understanding of our stable financial position, the current macroeconomic environment, the litigation process in the U.S. and the progress we are making with our strategy.”

But this is simply not true. Deutsche Bank is anything but stable as their shares have fallen sharply on the news that German Chancellor Angela Merkel won’t bail them out. Its shares fell by as much as six percent in early Monday trading, making it the worst performance since 1992. Since January, the bank’s shares have lost over 52 percent of their value.

As news of the bank run spread on Thursday, the ‘stable’ bank’s shares declined below 10 euros for the first time. The lender’s 1.75 billion euros ($2 billion) of 6 percent additional Tier 1 bonds, the first notes to take losses in a crisis, fell as much as five cents on the euro to 69 cents, a record low, according to data compiled by Bloomberg.

“The issue here is now one of confidence,” said Chris Wheeler, a financial analyst with Atlantic Equities LLP in London. “That’s what’s going on here. The thinking is ‘Deutsche Bank is fine, but there’s a slim chance it might not be, so why leave my money in there?’”

The possibility of depositors having their funds taken from them as the bank collapses is not at all isolated as it has happened before. As we pointed out, to keep the bank solvent, the Bank of Cyprus took almost 40% of depositors’ funds – leaving customers with essentially nothing they could do about having their money stolen. Assets were frozen and ATM machines were not refilled.

As Jay Syrmopoulos points out, the collapse of Deutsche Bank would most likely begin a cascade of Western banking institutions falling like dominoes (which could include Barclays in London and CitiGroup in the U.S.). According to same expert who valued Lehman’s worth at its collapse, Deutsche Bank’s current value of $1 trillion dollars is significantly more than Lehman Brothers’ valuation during their collapse in 2008.

The graphic below shows the severity of the impact and implications for contagion a Deutsche Bank implosion would have.

screen-shot-2016-09-29-at-10-36-42-amIn fact, the contagion has already begun. News that some hedge funds were pulling positions and excess collateral from Deutsche Bank caused shares of U.S. banks to quickly reverse early gains, according to Bloomberg.

capture91But don’t worry, just as Lehman Brothers maintained in the beginning of 2008 that everything was fine and dandy, Deutsche Bank is doing the same.

In a memo to staff published on Friday, as reported by Bloomberg, Deutsche Bank Chief Executive Officer John Cryan responded to what he called media speculation causing some “unjustified concerns,” saying that the bank’s balance sheet has never been more stable over the past two decades.

“Ongoing rumors are causing significant swings in our stock price,” he wrote. “It’s our task now to prevent distorted perception from further interrupting our daily business. Trust is the foundation of banking. Some forces in the markets are currently trying to damage this trust.”

However, even the IMF has called their bluff, noting that “Deutsche Bank appears to be the most important net contributor to systemic risks.”

Matt Agorist is the co-founder of TheFreeThoughtProject.com, where this article first appeared. He is an honorably discharged veteran of the USMC and former intelligence operator directly tasked by the NSA. This prior experience gives him unique insight into the world of government corruption and the American police state. Agorist has been an independent journalist for over a decade and has been featured on mainstream networks around the world. . and now on Steemit

 

Run on Banks Begins — Deutsche Bank Clients Begin Withdrawing Excess Cash.

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