It's Time to Connect the Dots

by Simon Black

This week may very well go down as ‘connect the dots’ week. Things have been moving so quickly, so let’s step back briefly and review the big picture from the week’s events:

1) After weeks… months… even years of posturing and denial, Spain and Cyprus became the fourth and fifth countries to formally request aid from Europe’s bailout funds on Monday.

In doing so, these governments have officially confessed to their own insolvency and the insolvency of their respective banking systems.

Meanwhile, Slovenia’s prime minister said that his country may soon ask for a bailout. (Humorously, Slovenia’s Finance Minister denied any such plans.)

Spain’s 10-year bond yield jumped to over 7% again in response, and many Spanish banks were downgraded to junk status by Moodys.

2) Over in the US, the city of Stockton, California filed for bankruptcy this week… the largest so far, but certainly a mere drop in the proverbial bucket.

3) JP Morgan, considered to be among the few ‘good’ banks remaining in the US, conceded that the $2 billion loss they announced several weeks ago might actually be more like $9 billion.

4) The Federal Reserve reported yesterday that foreigners are reducing their holdings of US Treasuries.

5) Countries from Ukraine to Kazakstan to Turkey announced that they have purchased gold in recent months to bolster their growing reserves.

6) Chile has joined a growing list of countries that has agreed to bypass the US dollar and settle all of its trade with China in renminbi.

7) China has further announced plans to create a special zone in Shenzhen, one of its wealthiest cities, to allow full exchange and convertibility of the renminbi.

8) World banking regulators from the Bank of International Settlements to the FDIC are proposing that gold bullion be treated as a risk-free cash equivalent by commercial banks.

Continue Reading: http://www.sovereignman.com/finance/its-time-to-connect-the-dots/

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Permalink Reply by Nathan on June 30, 2012 at 5:28pm

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Permalink Reply by Nathan on July 1, 2012 at 11:09am

77% of JP Morgan’s Net Income Comes from Government Subsidies

http://www.blacklistednews.com/77%25_of_JP_Morgan%E2%80%99s_Net_Inc...

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Permalink Reply by Nathan on July 2, 2012 at 9:50pm

Barclays Chairman Marcus Agius resigns over 'rate' scandal
Monday, July 02, 2012
London: Barclays on Monday said its Chairman Marcus Agius has resigned following the bank being slapped with 290 million pounds (USD 451 million) fine by the US and the UK authorities to settle the charges of manipulating global benchmark lending rates.

Agius, who served as the Barclays Chairman for the past six years, would stay in his position until a succession plan is in place.

Besides, Michael Rake has been appointed Deputy Chairman.

The bank said it would launch an audit of its business practices, led by Rake and a panel of non-executive Directors.

Read the full story: http://zeenews.india.com/business/news/international/barclays-chair...

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Permalink Reply by raymond _______ on July 3, 2012 at 9:48am

Its time all the dots put that little dot back in his cage...

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Permalink Reply by Nathan on July 6, 2012 at 12:38pm

Guess who’s bailing out bankrupt western governments now…

Fourteen years ago during the Asian financial crisis, Indonesia endured a currency collapse, a severe 2-year recession, and an embarrassing IMF bailout.

Western bureaucrats wagged their fingers incessantly at Indonesia, lecturing the country about the dangers of excess and fiscal irresponsibility.

How sweet the irony is. In a stunning rags-to-riches story, Indonesia contributed US$1 billion to the IMF last week in order to help bail out bankrupt Western nations.

As I’ve written before, unlike Japan, the US, and Europe — which all seem to think the answer to an economic bust brought on by a debt-binge is to borrow and spend even more money– Indonesia took its medicine when its economy collapsed back in 1998.

The government cut spending. The economy was de-regulated and thrown open to more foreign investment.

The banking system was restructured, and after a difficult and admittedly very painful two years, the foundation was laid for new economic expansion, which continues to this day.

To be sure, the 1998 collapse of the Indonesian economy cost the incumbent political elite here their cushy positions. President Suharto’s three-decade long iron-grip came to an ignominious end. There were riots in the streets, and he was literally turfed out of office.

But so what? That’s EXACTLY what was needed. Part of the renewal process should always be to ship out the dead wood.

Wandering the streets of Menteng this week, Jakarta’s most up-market residential suburb, it’s as though the Suharto era never existed. The street where he used to live is just another non-descript, quiet, residential street in this leafy inner-city suburb.

Ironically, US President Barack Obama spent some of his childhood in this same suburb of Jakarta.

http://www.sovereignman.com/expat/guess-whos-bailing-out-bankrupt-w...

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Permalink Reply by Nathan on July 10, 2012 at 3:10pm

PFG Is Now MFG(lobal) Part 2 As $220 Million In Segregated Client Money Has Just Vaporized

http://www.blacklistednews.com/PFG_Is_Now_MFG%28lobal%29_Part_2_As_...

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Permalink Reply by Nathan on July 27, 2012 at 3:57pm

Exclusive: Spain discussed $366 billion bailout with Germany

http://www.reuters.com/article/2012/07/27/us-eurozone-spain-idUSBRE...

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Permalink Reply by Nathan on August 24, 2012 at 12:58pm

The Next One will be the Big One

http://usawatchdog.com/prepare-for-us-and-euro-financial-collapse-t...

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Permalink Reply by Nathan on September 4, 2012 at 12:57pm

Moody's changes EU rating outlook to negative

http://www.reuters.com/article/2012/09/03/us-eu-ratings-idUSBRE8820...

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Permalink Reply by Nathan on September 5, 2012 at 1:42pm

Economic growth slows in the second quarter in Australia in 2012

http://moderntokyotimes.com/2012/09/05/economic-growth-slows-in-the...

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Permalink Reply by Nathan on September 8, 2012 at 12:10pm

Why is Putin stockpiling gold?

According to the World Gold Council, Russia has more than doubled its gold reserves in the past five years. Putin has taken advantage of the financial crisis to build the world’s fifth-biggest gold pile in a handful of years, and is buying about half a billion dollars’ worth every month.

http://www.marketwatch.com/story/why-is-putin-stockpiling-gold-2012...