Italy’s PM Unloads On Deutsche Bank’s Unfixable Problem: “Hundreds And Hundreds Of Billions Of Derivatives”

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After a tumultuous week for Deutsche Bank which saw the DOJ demand a $14 billion settlement for the bank’s past RMBS transgressions, it was another bad day for the giant German lender, whose stock and contingent converts tumbled after the investing community realized that even a modest $5.5 billion final settlement would leave it perilously undercapitalized and likely scrambling to raise more cash.

As SocGen’s Andrew Lim calculated, Germany’s biggest bank would be “significantly undercapitalized” even if an eventual settlement with the DoJ can be covered by the bank’s reserves. Any settlement above €5.4 billion would imply a capital increase is needed just to pay the fine, he wrote. Continue reading

Bank of England adviser: ‘Everyone should have two bank accounts in case of cyber attack’

Banking expert warns cyber threat is so great we all need two accounts to guarantee access to cash

A leading banking academic and former adviser to the Bank of England has said everyone should have two bank accounts – so they can still access money if a major bank is crippled by a cyber attack.

Peter Hahn, senior fellow in banking at London’s Cass Business School, and between 2009 and 2014 a senior adviser to the Bank of England, said cyber crime was a new and growing risk which tended to be “not discussed”.

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OPEC is About to Crush the U.S. Oil Boom

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output.

The nation’s production is almost back down to the level pumped in November, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates. Continue reading

ALBERT EDWARDS: Chinese devaluation is leading to ‘a financial market rout every bit as large as 2008’

Many experts continue saying the second half of September 2015 and the first half of October 2015 is the beginning of a major and imminent turning point for the world economy — and much graver than what was seen in 2008 or the Great Depression. For example, former Reagan advisor Martin Armstrong and his forecasting model that has never gone wrong are predicting a hit in the first week of October 2015, or 2015.75.

See also: The Shift in Public Confidence: 2015.75

Batten down the hatches.

 

Societe Generale Economist Albert Edwards might have finally out-beared himself. He says the China devaluation is a step towards “a financial market rout every bit as large as 2008.”

In his latest note, Edwards says the Chinese currency devaluation is the beginning of a period of serious foreign exchange weaknesses in Asia. Continue reading

Albert Edwards Says Watch Japanese Yen and Be Very Afraid

The Japanese yen goes into freefall. China’s fragile economy tips over the edge. A wave of profit-crushing deflation comes washing over the U.S. and Europe. Investors panic.

That’s the view of perennial pessimist Albert Edwards. The London-based analyst and his team at investment bank Societe Generale SA have been ranked No. 1 for global strategy in surveys by Thomson Reuters Extel every year since 2007, even with a history of saying unpleasant things that few want to hear.

“My role is to step back from the excessive enthusiasm that builds up in the market, and to just say, ‘This is wrong. This is going to go horribly wrong,’” the 53-year-old said by phone last week. Continue reading

Russia Sanctions Accelerate Risk to Dollar Dominance

While no one’s suggesting the dollar will lose its status as the main currency of business any time soon, its dominance is ebbing. The greenback’s share of global reserves has already shrunk to under 61 percent from more than 72 percent in 2001. The drumbeat has only gotten louder since the financial crisis in 2008, an event that began in the U.S. when subprime-mortgage loans soured, and the largest emerging-market nations including Russia have vowed to conduct more business in their currencies.“The crisis created a rethink of the dollar-denominated world that we live in,” said Joseph Quinlan, chief market strategist at Bank of America Corp.’s U.S. Trust, which oversees about $380 billion. “This nasty turn between Russia and the West related to sanctions, that can be an accelerator toward a more multicurrency world.”

Such a transformation may take as long as 25 years, with the dollar remaining “top of the heap” even as other currencies play a greater role, Quinlan said, speaking by phone on Aug. 4 from New York. Continue reading