Banks are in turmoil but a bigger financial crisis may be brewing elsewhere
Thu April 6, 2023
(Why is it the first thing about "shadow banks" came from the IMF report in the earlier piece I did? Nobody in this country knew what was going on with shadow banks till now??? Or that we didn't have enough financial "regulators'. Thats why this industry "blew up" so to speak. The gangsters went where they knew the regulator wouldn't be.
And so here we are again, this time with no good options.
"The country is going down.
But first all the $ gotta disappear first.")
"The term encompasses financial firms, other than banks, that provide all manner of financial services, including lending to households and businesses. It’s a diverse cast list: non-banks range from pension funds and insurers, to mutual funds and high-risk hedge funds.'
"And the sector is big. According to the Financial Stability Board (FSB), a body of global regulators and government officials, non-banks had about $239 trillion on their books in 2021, accounting for just under half of the world’s total financial assets."
"The sector has grown strongly since the global financial crisis in 2008, with its asset base expanding by 7% a year on average, according to FSB data.'
(Thats an accident you think?
Or did the real gangsters have a plan and went where they knew the regulators weren't going to be? What really makes more sense to you?)
"As interest rates hit rock-bottom in the years that followed the crisis, many savers and investors turned to non-banks in search of higher returns."
(Because they could borrow it for nothing and invest it and get back tons on their investment. Capitalism wasn't ever meant to be without risk. It's the moral delima of loose $ policy that we have had in effect since the financial crisis but that Covid and inflation have wiped out. Who bends the arch of history to his will again? The almighty people, come on now, get w/the program!)
"What are the risks?
Some of the risks that non-banks run increase when interest rates are rising, as they are now. The sector’s larger size means its troubles could, on their own, destabilize the entire financial system but they could also spread to traditional banks through real and perceived interconnections."
"One of the risks is the likelihood of credit losses. In a report in November, the European Central Bank called out the “persistent vulnerabilities” in the non-bank sector, including “the risk of substantial credit losses” if its corporate borrowers started to default amid a weakening economy."
"While the economic outlook in Europe has brightened since the start of the year, fears of a US recession have grown following the collapse of SVB and Signature Bank and the rescue of First Republic Bank last month. Economies on both sides of the Atlantic remain fragile, as interest rates are expected to rise further and energy prices are still high despite recent falls."
("Economies on both sides of the Atlantic remain fragile" Why exactly do you think Opec +,(led by Saudi Arabia) just instituted production cuts again?, and ahead of the timetable for which they normally make such adjustments? We are being pushed over the edge my friends...)
"Since non-banks do not take deposits from customers, they are mostly exempt from the strict requirements for loss-absorbing capital and liquidity imposed on banks. And most are not subject to regular tests by regulators to ensure they can cope in a range of adverse scenarios."
"In a report in February, S&P Global Ratings pointed out another alarming feature of many non-banks."
“Shadow banks cannot access emergency central bank funding in times of stress and we don’t expect governments to use taxpayers’ funds to recapitalize a failed shadow bank,” the firm said."
(Nobody knew of any of this until February?
)“This means that public authorities have limited tools to mitigate contagion risks.”
(The Fed/regulators that is.)
"Ill health at a big non-bank or in a large part of the sector could infect traditional lenders because non-banks both lend to and borrow from banks, and many invest in the same assets as their conventional peers."
"A notorious example is the collapse of US fund Archegos Capital Management two years ago, which caused about $10 billion worth of losses across the banking sector. More than half of that was sustained by Credit Suisse (CS), which counted Archegos among its clients. The hit contributed to a string of scandals and compliance failures that have plagued the Swiss lender in recent years, eventually leading to an emergency takeover by rival UBS (UBS).'
(There's another domino we should know about:
The dominos have been falling for a while y'all...)
"Open-ended funds are especially risky, analysts told CNN. If scores of panicked investors redeem their holdings all at the same time, these funds may need to rapidly sell some of their assets to make the payments."
"A firesale of, say, government bonds, by multiple funds would depress the value of those bonds, leading to losses for the bonds’ other holders, which may well include banks."
"This is what happened last fall when UK pension funds using the so-called liability-driven investment approach had to sell UK government bonds, which were crashing on the back of then-Prime Minister Liz Truss’s disastrous budget plans. That created “a vicious spiral” in the country’s bond market, in the words of the Bank of England, nearly toppling the UK financial system."
(I dont care how much $ you got.
You dont have enough to get through this.
And?
"You can blow out a candle
But you can’t blow out a fire
Once the flame begins to catch
The wind will blow it higher"
)
"In a report on non-banks released this week, the International Monetary Fund said it welcomed “stricter supervision” of the sector, which must include rules on their capital buffers and access to liquidity."
(Nobody knew of it beforehand?
Only one way out folks:
I'd grab ahold and hang on if I was you.
BTW?
Where exactly is the other holy text that explains all this in perfect detail?
And people are still trying to say it doesn't belong in the cannon at this point in time?
Matthew 24:4
And Jesus answered and said unto them, Take heed that no man deceive you.
Matthew 24:11
And many false prophets shall rise, and shall deceive many.
Choose wisely, eternity is at stake.)
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