2008 - search results
Is the price of copper trying to tell us something? Traditionally, "Dr. Copper" has been a very accurate indicator of where the global economy is heading next. For example, back in 2008 the price of copper dropped from nearly $4.00 to under $1.50 in just a matter of months. And now it appears that another [...]
Poverty, Unemployment, Enriching the Few: The 2008 Economic Crisis and the Restructuring of Class...
In 2008, as the financial crisis picked up steam, one by one the big bank Wall Street CEOs came forward to assure everyone that “everything is fine” and that their banks were “well capitalized.”
Anyone who did a bit of actual research knew this was not the case. But a large component of corporate (and political) leadership is to maintain confidence and calm no matter how bad things get.
As a result of this, in May 2008 alone, executives at Citigroup, Goldman Sachs, JP Morgan, Lehman Brothers, and Merrill Lynch all stated that the worst was over for financials. That’s right, in just one month executives at ALL of these firms issued proclamations that everything was just dandy for the banks.
The market took about five months to realize the truth, at which point these firms imploded taking the market with them.
I bring this up because we’re seeing this same game played out on a much larger scale in Europe today. Starting in November, various political bigwigs from the EU, whether it be Germany’s Finance Minister Wolfgang Schauble, France’s Prime Minister Francois Hollande, of Spain’s Prime Minister Mariano Rajoy have all stated that the EU Crisis is either over… or that at least the worst of it is over.
It’s rather incredible when you consider the complete and utter failure of these folks to solve the debt problems for a country as small as Greece (which makes up only 2% of the EU’s GDP).
Greece entered a crisis in 2010. Three years later, its major banks are STILL insolvent, the Greece economy has contracted over 20% (the sort of collapse Argentina saw in 2001 when its entire financial system failed), and nothing has been fixed.
So… the EU, with the help of the ECB, IMF, and the US Fed (QE 2 and 4 were basically EU bank bailouts in disguise), COULDN’T SOLVE GREECE’S PROBLEMS. And we’re supposed to believe that these folks can solve Spain, Italy or even France’s!?!
Let’s cut through the crap here.
The European banking system is a complete and total disaster. Remember how bad Wall Street was in 2008? Europe’s banks are many multiples worse than that. The US at least recapitalized its banking system after the Crisis.
Europe hasn’t. At all. That’s right, the banks in Europe have not raised capital to bring down their leverage rations, which is why the ENTIRE EU BANKING SYSTEM IS LEVERAGED AT 26 TO 1.
Lehman, which was a total sewer of garbage debt, was leveraged at 30 to 1. Europe’s ENTIRE SYSTEM is leveraged at 26 to 1.
Let’s take Spain by way of example.
In the run up to the Spanish banking crisis, Spain sported a housing bubble that DWARFED the US’s. Spain is the DARK blue line in the chart below. The US housing bubble is the little green lump below it.
How does a housing bubble get that out of control? By banks lending to anyone with a pulse. Indeed, a little know fact is that the banks sitting on 56% of the Spanish mortgage market were TOTALLY unregulated up until about 2010. As bad as US lending standards leading up to our housing bust, Spain had us beat by many multiples as the above chart illustrates.
The Spanish Government’s solution to this mess was to merge one garbage bank with another. They’ve been doing this for three years… but the Spanish banking system remains screwed up beyond anyone’s comprehension.
Take Bankia for example.
Bankia was formed in December 2010 when the Spanish Government merged seven bankrupt smaller banks in
The bank was touted as a success story, posting a profit in 2011 and even considering paying a dividend. Then the following happened in 2012...
- May 9th: Bankia requests €4.5 billion loan, Spanish Government states that the bank is “solvent.”
- May 21st: Spain meets Bankia’s request for loan and takes a 45% stake in the bank thereby instigating a partial nationalization.
- May 23rd: Bankia’s bailout needs grows to €11 billion
- May 24th: Bankia’s bailout needs grow to €15 billion
- May 25th: Bankia’s bailout needs are now €19 billion (2011 profits revised to €4 billion loss)…
- December 27th: Spanish bailout fund announces that Bankia still has a “negative value of €4.2 billion” and will need another €13.5 billion in capital
- January 2nd (2013): Bankia shares halted on Spanish stock exchange.
As a summary… Bankia was considered profitable in 2011… it was actually talking about paying out a dividend in April 2012. And in the following eight months, it was discovered that the bank was not only un-profitable, but completely and totally insolvent.
Today, nine months later, the bank has swallowed up over €19 billion in bailouts and still has a NEGATIVE value. With the additional €13.5 billion Spain claims it needs (assuming that is the actual limit… which I doubt) the bank will have consumed over €32 billion in bailouts.
If you think Bankia is an isolated incident, you’re out of your mind.
The point of this? Europe’s banks are totally insolvent and have not been fixed. No EU leader is going to tell you this because their jobs depend on convincing people that everything is fine. Bankia was supposedly “fine” right up until the truth came out. Just like the Wall Street banks were “fine” going into 2008.
Just like Europe is “fine” today.
I know the markets have yet to fully realize this...the S&P 500 is approaching its all-time highs. But back in late 2007, the last time the markets were at this level... did stocks get what was coming then too? Nope. And by the time stocks "got it" things moved VERY quickly.
So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding, potentially taking down the financial system with them. Think I'm joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.
We have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.
This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.
It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.
Best of all, this report is 100% FREE. You can pick up a copy today at:
Phoenix Capital Research
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As is the case every Thursday, the BLS reported its weekly initial claims which unlike two weeks ago did not estimate the initial unemployment claims for America's most populous state when the number plunged, and has now missed expectations for two weeks in a row, printing at 366K, on expectations of a 360K number, while last week's 368K was as usual revised upward to 371K. As a result, the Mainspin Media already has its headline: Initial Claims decline by 5,000. Such is life under the US Department of Truth, even as unadjusted initial claims spiked by 16.7K to 386K in the week ended February 2. In other news, people on Extended Unemployment Comp plunged by 288K after soaring in the week prior, and making some wonder just what is going on with the EUC 2008 data series for it to get such massive weekly shifts each week.
But perhaps, more importantly, the BLS also reported Q4 unit labor costs and nonfarm productivity and as a result of the previously reported adjustments to worker data and negative GDP print, it was widely expected that productivity would drop. It did, but it did so far more than most expected, plunging by a whopping 2%, which "reflects increases of 0.1 percent in output and 2.2 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates." The offset: unit labor cost which soared by 4.5% in the fourth quarter of 2012, the combined effect of the 2.0 percent decrease in productivity and a 2.4 percent increase in hourly compensation. Unit labor costs rose 1.9 percent over the last four quarters.
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A new UN report says the US forces in Afghanistan have killed hundreds of children during their military operations in the war-torn country since 2008.
The United Nations Committee on the Rights of the Child on Wednesday also expressed deep concern at the arrest and detention of Afghan children by US-led forces.
According to the UN report, some of the children were abused in US detention facilities.
The report also said “those responsible for the killings have not been held to account even as the number of children killed doubled from 2010 to 2011.”
The committee has issued recommendations to Washington regarding US practices during armed conflicts, which are harmful to children.
The committee called on the US to take measures to prevent the killing and maiming of civilians and children.
Human Rights Watch has called on the US to promptly carry out the UN recommendations to improve the protection of children in the war-stricken country.
In December 2012, a report, sent every four years to the United Nations regarding the UN Convention on the Rights of the Child, revealed that the US military had detained over 200 Afghan teenagers since 2008.
The United States and its allies invaded Afghanistan in 2001 on the pretext of combating terrorism. The offensive removed the Taliban from power, but years into the invasion, insecurity remains in the country.
Russian tennis player Maria Kirilenko (RIA Novosti / Anton Denisov)
Second-seed Maria Kirilenko has edged out Sabine Liciski of Germany in the final match of the Pattaya Open, ending her WTA drought that lasted for more than four years.
The Russian, who lost last year’s final in Thailand to Daniela Hantuchova, took out all the stops this year against Sabine Liciski.
The fifth-seed German broke the Russian late in the first set, 7-5, only to let Kirilenko blitz in the second, 6-1. The final set was decided by a tiebreaker in which Kirilenko didn’t leave her opponent a single chance, 7-1.
The Russian has consequently increased her perfect record against Liciski to three wins, and claimed her first singles WTA title since 2008.
The Pattaya tournament is played on hard courts and has a $235,000 prize fund.
Iceland’s President Olafur Ragnar GRIMMSON was interviewed over the weekend (26./27.01.2013) at the World Economic Forum in Davos on why Iceland has enjoyed such a strong recovery after it’s complete financial collapse in 2008, while the rest of the Western world struggles with a recovery that has no clothes.
Grimsson gave a famous reply to the financial MSM reporter, stating that Iceland’s recovery was due to the following primary reason:
„… We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing here in Europe. …“
When asked whether Iceland’s policy of letting the banks fail would have worked in the rest of Europe, Grimsson replied:
„… Why are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and tele-communication companies and allowed to go bankrupt if they have been run in an irresponsible way? The theory that you have to bail-out banks is a theory that you allow bankers enjoy for their own profit their success, and then let ordinary people bear their failure through taxes and austerity. People in enlightened democracies are not going to accept that in the long run. …“
The whole interview with Grimmson (02:56 min) is available – see:
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Submitted by John Aziz of Azizonomics blog,
The so-called recovery is built on sand, and as stock markets climb and climb, and more traders and investors turn bullish, we come ever-closer to a new 2008-style collapse.
Markets have already gone far, far higher than many expected on a drift of reinflationary central bank liquidity. Yesterday the DJIA hit a new post-2007 high:
The same day, it was revealed that the big Wall Street banks are gambling again with billions and billions of dollars of clients’ funds. Goldman Sachs are back to pre-crisis-style profits. Again and again — from the LIBOR scandal, to MF Global, to the London Whale, to Kweku Adoboli — the financial sector has illustrated that it has learned very little from 2008, and is still practising many of the same hyper-fragile ponzi finance practices that led to the subprime bubble and the 2008 collapse.
Soaring markets, and soaring speculation. Big finance using loopholes to speculate bigger and harder. Mainstream financial journalists becoming more and more complacent about the “recovery”.
We’ve been here before. Isn’t repeating the same behaviour and hoping for different results the very definition of insanity?
I don’t know exactly how the next crash will occur — although there are many potential ignition spots including a severe trade or energy shock, or a Chinese real estate and subprime meltdown, or a natural disaster, or a new Western financial crisis. I don’t know when the next crash will occur, or how high the markets will climb before it does (DJIA 36,000 maybe? That would be hilarious).
But I know that if markets and regulators continue to repeat the mistakes that led to 2008, we will be back in a similar or worse hole soon.
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