Coming Soon: The Mother Of All Debt Ceiling Crises

 

[Urgent Note: The nation’s future and a massive debt ceiling hangs in the balance as Trump pushes beyond the Comey hearings. That’s why I’m on a mission to send my new book TRUMPED! A Nation on the Brink of Ruin… and How to Bring It Back to every American who responds, absolutely free. Click here for more details.]

While the Imperial City is frozen in the Second Coming of Comey, it doesn’t mean that the Washington spending machine is on pause. In fact, the Treasury’s cash balance yesterday stood at only $153 billion — down by $130 billion just since the tax season peak was reached on April 25th.

Uncle Sam has been burning cash at a rate of $3.2 billion per calendar day since then and has no more room to borrow. That’s because the public debt ceiling is frozen at its March 15th level ($19.808 trillion) and the mavens at the Treasury Building have run out of borrowing gimmicks.

The countdown to the mother of all debt ceiling crises is now well underway — with the nation’s net debt sitting at $19.69 trillion. That figure, in turn, is up nearly $500 billion since FY 2016 ended on September 30 with the net debt at $19.22 trillion.

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Germany & THE 800 POUND GORILLA

The derivative exposure mentioned by Martin Armstrong is what has been covered on Global Geopolitics numerous times over the years under the following posts:

Is Deutsche Bank Kaputt?

New financial MELTDOWN set to sink EU as German banks lose £14,292,610,000.00 in 90 DAYS

Deutsche Bank Exodus Continues As Real Estate Chief Leaves For Blackstone

Is Deutsche Bank the next Lehman?

Deutsche Bank Is Scared: “What Needs To Be Done” In Its Own Words

End of the eurozone? Germany’s biggest lender Deutsche Bank CRASHES with first annual loss

Deutsche Bank shocks with warning of €6bn losses

 

This week, a German cooperative savings bank in the Bavarian village of Gmund am Tegernsee with less than 10,000 in population, announced it will begin charging retail customers to hold their cash starting in September. This will apply to accounts greater than €100,000 euros. This means the bank will charge customers 0.4 percent, which amounts to a direct pass-through of the current level of the ECB’s negative deposit rate. After speaking directly with banking sources, what is happening is that cash is flooding into German banks from around Europe just to park avoiding the negative deposit rate. Now, the banks are starting to pass the negative rates back to the clients. However, much of this flow of capital has also been money fleeing other banks outside of Germany for fear that the euro will break and they will get Deutschemarks. Continue reading

Is Deutsche Bank Kaputt?

It looks like Deutsche Bank is heading toward failure. Why might we be concerned?

The problem is that Deutsche is too big to fail — more precisely, that the new Basel III bank resolution procedures now in place are unlikely to be adequate if it defaults.

Let’s review recent developments. In June 2013 FDIC Vice Chairman Thomas M. Hoenig lambasted Deutsche in a Reuters interview. “Its horrible, I mean they’re horribly undercapitalized,” he said. They have no margin of error.” A little over a year later, it was revealed that the New York Fed had issued a stiff letter to Deutsche’s U.S. arm warning that the bank was suffering from a litany of problems that amounted to a “systemic breakdown” in its risk controls and reporting. Deutsche’s operational problems led it to fail the next CCAR — the Comprehensive Capital Analysis and Review aka the Fed’s stress tests – in March 2015. Continue reading

Fed’s Kashkari Says “We Won’t See Next Crisis Coming”, Compares Banks To Risky Nuclear Reactors

Coming as a replacement to perhaps the biggest dove in Fed history, few were expecting former Goldman and Pimco staffer Neel Kashkari to be as vocally outspoken on a topic that is so near and dear to regulators everywhere: their own cluelessness, and more importantly, the topic of “too big to fail” banks, which according to the Fed are a pillar of stability in an unstable world, and which according to Kashkari are anything but.

It is doubly surprising because it was none other than Kashkari himself who served as one of the key architects of the bank bailout plan in the aftermath of the financial crisis. Shortly thereafter he lived for an extended period in the wild. Continue reading

German ‘bail-in’ plan for government bonds risks blowing up the euro

Quick reminder: “Bail-out” means the government bails the banks out, whereas “bail-in” means the citizens pick up the tab. Germany’s Fourth Reich is once again forcing its will upon the EU.

 

‘If I were a politician in Italy, I’d want my own currency as fast as possible: that is the only way to avoid going bankrupt,’ said German ‘Wise Man’

A new German plan to impose “haircuts” on holders of eurozone sovereign debt risks igniting an unstoppable European bond crisis and could force Italy and Spain to restore their own currencies, a top adviser to the German government has warned.

“It is the fastest way to break up the eurozone,” said Professor Peter Bofinger, one of the five “Wise Men” on the German Council of Economic Advisers.

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Greek PM Alexis Tsipras resigns and calls for snap election

Pass the baton to another candidate running in the same race to give sovereignty over to Germany. It’s clear now that Tsipras never wanted a Grexit and was banking on the public voting “yes” in the referendum, which is precisely why he went against 61% of the public’s will. It backfired and now he has to get out and let the next PM handle the next phase in Greece’s planned capitulation. You don’t make mistakes like these because you’re dumb, rather, they’re calculated. Now he’s ducking out before he can receive any more blame and the ensuing chaos on the streets when the pensions are wiped out.

The next candidate will play to the public, say it’s all Tsipras’ fault, yet still run the nation in the same direction — just as it is in America with the Bush, Clinton and Obama administrations. In Russia today, for example, it’s more apparent. The FSB (KGB) runs all opposition. No matter what candidate wins, the FSB still wins.

Come September, we’ll see if the Greek people want to fool themselves and throw themselves under the bus again.

 

Greek prime minister Alexis Tsipras announces his resignation and calls for an early election, likely held in September

Alexis Tsipras, Greece’s prime minister, handed in his resignation and called a snap election on Thursday night, saying he had a “moral obligation” to lay his actions before the judgment of the nation.

Mr Tsipras made the drastic move amid an internal rebellion in which he lost the support of around a third of MPs within his Left-wing Syriza party, robbing him of a guaranteed parliamentary majority.

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Alexis Tsipras prepared to step down as parliament set to pass punishing austerity measures

And there you have it. As mentioned in an earlier post, don’t expect him to stay in power for much longer. The Greek ‘no’ vote couldn’t have been a more clear message to leadership, but they still intentionally went the opposite direction. Self-proclaimed Communists Tsipras and Varoufakis are beginning to look more like a hit team whose assignment was do to a quick hit and run.

 

Greek prime minister hinted his position will no longer remain tenable if he did not get the majority backing of his Leftist Syriza party over a bail-out deal

Greek prime minister Alexis Tsipras was ready to stand down from office on Wednesday night, as a Leftist rebellion erupted within his Syriza party over the punishing austerity measures the country needs to stay in the eurozone.

Greece’s lawmakers gathered for a midnight vote on reforms that would raise VAT, cut pensions spending and reform the country’s statistics body. The measures were passed with the support of Greece’s main opposition parties, with 229 voting “yes” and 64 voting “no”. There were six abstentions.

Outside the parliament, troubled flared briefly as groups of anarchists who were part of an anti-austerity protest threw petrol bombs at police, who barricaded the street leading to the entrance to parliament with several riot vans.

Defiant Greeks force Europe to negotiating table as time-bomb ticks

EMU creditors have Greece’s Alexis Tsipras by the scruff of the neck, but he has a knife to their throats

Europe’s creditor powers have started to wobble. Berlin, Paris and Brussels are coming to the grim conclusion that Greece may not capitulate as expected, and time is running out fast.

Athens is now warning openly that the “moment of truth” will come on June 5, when the country faces default on a €300m payment to the International Monetary Fund, unless the EU authorities hand over the next tranche of bail-out cash. Continue reading

Tsipras tells Merkel ‘Greece has made enough sacrifices for the euro’

Greece’s defiant Prime Minister has told Angela Merkel it is Europe’s job to do “their part” to keep his crisis-hit country in the eurozone.

Meeting on the sidelines of a European Council meeting in Brussels on Thursday, Alexis Tsipras is reported to have told the German Chancellor his debt-addled nation has made enough sacrifices to satisfy the demands of its creditor powers. Continue reading

Bank Deposits No Longer Guaranteed By Austrian Government

If you’re not already familiar with one of the more recent invented economic terms of the last few years, “bail-in”, it essentially means your respective government has given the banks the green light to legally take your deposits to cover their obligations should there be another crisis. Instead of the corrupt government bailing ‘out’ the banks, you, the depositor, are bailing them ‘in’. This is also an indication of an anticipated crisis.

In 2013, the United States reportedly missed one by a hair’s length.

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– Austria will remove state guarantee of bank deposits
– Austrian deposit plan given go ahead by the EU
– Banks to pay into a deposit insurance fund over 10 years
– Fund will then be valued at a grossly inadequate €1.5 billion
– New bail-in legislation agreed by EU two years ago
– Depositors need to realise increasing risks and act accordingly
– “Bail-ins are now the rule” and ‘Bail-in regime’ coming

Bank deposits in Austria will no longer enjoy state protection and a state guarantee in the event of bank runs and a bank collapse when legislation is enacted in July. The plan to ensure that the state is no longer responsible for insuring deposits has been readied by the Austrian government in conjunction with the EU two years ago according to Die Presse. Continue reading

US defends unruly Greece as Europe steps up ‘Grexit’ threats

Germany’s vice-chancellor said “zero chances” that his country will respond to Greek demand for Nazi war reparations

Europe’s creditor powers have reacted with fury as Greece presses ahead with plans to smash its EU-IMF Troika programme and demand war reparations for Nazi occupation, raising the risk of a traumatic rupture with Athens by the end of the month.

Wolfgang Schauble, Germany’s finance minister, said there could be no bridging agreement for the radical Syriza government, insisting that it must stick rigidly to the terms of Greece’s €245bn bail-out package and secure a negotiated extension, or face the consequences. “If they want to deal with us, they need a programme,” he said.

He issued a clear warning to the new Greek premier Alexis Tsipras that his country will be left penniless in a hostile world. “I don’t know how financial markets will handle it, but maybe he knows better,” he said.

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Detroit Isn’t Back, It’s Broken

The Tigers and Lions may be serious playoff contenders and Eminem may still be making hit records, but the city of Detroit is still on the brink of disaster. The Detroit Free Press reports:

On the same day Detroit officials delivered to the state a new proposal aimed at saving the city from fiscal collapse, Detroit’s financial review team declared that a severe financial emergency exists in the city.

The report may lead Republican governor Rick Snyder to appoint an emergency commission to once again bail out the desperate city. Detroit officials and residents are fuming at the prospect of the austerity measures needed to save the city from bankruptcy.

Residents cried racism and warned of mass unrest if the state intervenes. Of the 100 public comments, only one person delivered a reality check to the audience. His job title may have saved him from the hostile crowd.

“Detroit is nothing but pollution, crime, garbage and murder,” said Michael McMahon, a resident and cage fighter, eliciting boos and insults from the audience. “I believe in cuts, layoffs and firings. If they can’t get the job done downtown … I say fire them, send someone else from Lansing and clean up this mess.”

Full article: Detroit Isn’t Back, It’s Broken (Washington Free Beacon)