Posted on 03/27/2023 5:19:33 AM PDT by Kaiser8408a
Are central banks like The Federal Reserve and European Central Bank ({ECB) sinking the banks?
Deutsche Bank, Germany’s largest bank (eerily like Germany’s World War II battleship The Bismarck) is seeing a blow out in its 1-year credit default swaps (CDS) as the ECB cranks up it main refinancing rate to fight inflation.
And then we have Deutsche’s Banks gross notional derivatives exposure (Euro 55.6 TRILLLION) dwarfing German GDP (Euro 2.7 Trillion). By a factor of greater than 20! Now, THAT’S a lot of derivatives exposure.
On the bond front (the NEW eastern front), we see the US Treasury 2-year yield rising 17.1 basis points. But European sovereign yields are up double digits as well (except for Italy).
Sink the banks?
(Excerpt) Read more at confoundedinterest.net ...
Very few banks are stupid enough to buy heavily into 1.56% interest rate products (except when funded by .1% CDs).
Banks need to explain their finances in their 10-Ks and by in branch charts.
This is all by design by the elites to usher in the NWO.
Imagine:
2% inflation - 3% mortgages [net cost 1% in real terms]
8% inflation - 3% payment rate, 6% interest compounded to principal [net cost 1% in real terms]
The second scenario is equally affordable as the first.
With gold money, interest rates are always real.
Only government fiat money permits mortgages with real interest rates that are negative.
If so, we can do the same thing with a gold -backed currency.
Most banks are sound, are they not?
Helicopter Ben did nothing to fix the derivatives problem after 2008. So here we are.
Depends on who you ask and on the current contents of their Depends.
They are ‘only’ up 20% today. Everything is fine. Lol..
Consider the consistency in all this.
These "banks" have been gambling, and the outstanding wagers -- for that is what CoCos and derivatives of all sorts are -- are such enormous moral hazards that whole countries are shaking.
When IceBank collapsed, Icleand REFUSED to put public money in to pay mostly British and Dutch investors, and then prosecuted the bankers. Seen any banker prosecutions lately? And note in addition that the Bankman-Freid scandal in not appearing in the headlines. The politically well-connected bankers are expecting the politicians in the US and Europe to simply ignore their "gambling," pay off their debts and errors, and walk free.
Sanctions on Russia over a war with another non-NATO country? Big deal for the same jackasses, but billions, if not trillions, thrown away is just a political problem? Jackasses. All of them. They should be prosecuted to the maximum.
As with Covid just past and as with climate change's worthless paper credits, this all has been a three card monte, and the press has played along.
And it was ALL a lie.
It’s almost as if this Biden contrived economic catastrophe is affecting the entire western world. Seems like when the U.S. sneezes the world gets pneumonia. Nah that can’t be it.
“And then we have Deutsche’s Banks gross notional derivatives exposure (Euro 55.6 TRILLLION) dwarfing German GDP (Euro 2.7 Trillion). By a factor of greater than 20! Now, THAT’S a lot of derivatives exposure.”
So, in simple terms, what does that exactly mean? What does the 55 trillions refer to? Who owns (or owes) that money?
And what is the worst consequence of that?
Banks by definition are never “sound”—they never have enough liquid assets to redeem all deposits.
“Sound” in modern usage has a very slippery meaning—bankers would define it as their ability to liquidate assets to meet federal guidelines for equity.
By that definition very few banks are “sound” today—since today’s higher interest rates means the liquidation value of any low interest rate loans is below what they are telling the feds they have.
At the end of the day the “soundness” of banks is dependent on depositor confidence—if the depositors are assured the FDIC or the fed will come to the rescue all banks become “sound”. With no bailouts almost all banks are “unsound”.
That is why when I hear the administration say “our banking system is sound” I take that to mean that the Fed will bail out any and all banks—no matter what the consequences.
“Derivatives” are just bets.
If you place a trillion dollars worth of bets on sporting events—and you are allowed to do so on credit—there are a few bad things that could happen.
Your teams lose—then you lose your money.
Your teams win—but the bookie you placed the bet with skipped town with your money—so you still lose.
Your teams win—but the regulators throw the bookie in jail (for whatever reason) and you still cannot collect—you still lose.
The bottom line is even though “bets”/derivatives appear to be a “wash”—winnings = losses—that is not correct in the real world.
Some counterparties may not be able to come up with the cash they owe...for whatever reason.
“Some counterparties may not be able to come up with the cash they owe...for whatever reason.”
I thought that’s what all the rules and regulators were for, to make sure that everyone could and would cover their bets.
If I sell a naked put, the broker requires that I have money set aside to be able to buy the stock at the strike price.
years ago, an article described derivatives as insurance policies (up to billions) with no (zero) insurer monetary backing.
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