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Worse Than 2007: Top Banker Warns of Looming Wave of Worldwide Bankruptcies
Jan 20th, 2016
Daily News
Business Insider
Categories: Warning

The world's financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, according to a leading global banker.

William White, chairman of the OECD's review committee and former chief economist of the Bank for International Settlements, suggests the stresses in the financial system are "worse than it was in 2007."

Speaking with the UK Telegraph's Ambrose Evans-Pritchard before the start of the World Economic Forum in Davos, Switzerland, White warned that macroeconomic ammunition to fight further economic downturns was essentially "all used up."

"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he told The Telegraph.

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something."

The world's financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, according to a leading global banker.

William White, chairman of the OECD's review committee and former chief economist of the Bank for International Settlements, suggests the stresses in the financial system are "worse than it was in 2007."

Speaking with the UK Telegraph's Ambrose Evans-Pritchard before the start of the World Economic Forum in Davos, Switzerland, White warned that macroeconomic ammunition to fight further economic downturns was essentially "all used up."

"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he told The Telegraph.

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something."

The Oil Crash of 2016 Has the Big Banks Running Scared
Jan 20th, 2016
Commentary
Michael Snyder
Categories: Warning

Last time around it was subprime mortgages, but this time it is oil that is playing a starring role in a global financial crisis.  Since the start of 2015, 42 North American oil companies have filed for bankruptcy, 130,000 good paying energy jobs have been lost in the United States, and at this point 50 percent of all energy junk bonds are “distressed” according to Standard & Poor’s.  As you will see below, some of the big banks have a tremendous amount of loan exposure to the energy industry, and now they are bracing for big losses.  And the longer the price of oil stays this low, the worse the carnage is going to get.

Today, the price of oil has been hovering around 29 dollars a barrel, and over the past 18 months the price of oil has fallen by more than 70 percent.  This is something that has many U.S. consumers very excited.  The average price of a gallon of gasoline nationally is just $1.89 at the moment, and on Monday it was selling for as low as 46 cents a gallon at one station in Michigan.

But this oil crash is nothing to cheer about as far as the big banks are concerned.  During the boom years, those banks gave out billions upon billions of dollars in loans to fund exceedingly expensive drilling projects all over the world.

Now those firms are dropping like flies, and the big banks could potentially be facing absolutely catastrophic losses.  The following examples come from CNN…

For instance, Wells Fargo (WFC) is sitting on more than $17 billion in loans to the oil and gas sector. The bank is setting aside $1.2 billion in reserves to cover losses because of the “continued deterioration within the energy sector.”

JPMorgan Chase (JPM) is setting aside an extra $124 million to cover potential losses in its oil and gas loans. It warned that figure could rise to $750 million if oil prices unexpectedly stay at their current $30 level for the next 18 months.

Citigroup is another bank that also has a tremendous amount of exposure…

Citigroup (C) built up loan loss reserves in the energy space by $300 million. The bank said the move reflects its view that “oil prices are likely to remain low for a longer period of time.”

If oil stays around $30 a barrel, Citi is bracing for about $600 million of energy credit losses in the first half of 2016. Citi said that figure could double to $1.2 billion if oil dropped to $25 a barrel and stayed there.

For the moment, these big banks are telling the public that the damage can be contained.

But didn’t they tell us the same thing about subprime mortgages in 2008?

We are already seeing bank stocks start to slide precipitously.  People are beginning to realize that these banks are dangerously exposed to a lot of really bad deals.

If the price of oil were to shoot back up above 50 dollars in very short order, the damage would probably be manageable.  Unfortunately, that does not appear likely to happen.  In fact, now that sanctions have been lifted on Iran, the Iranians are planning to flood the world with massive amounts of oil that they have been storing in tankers at sea…

Iran has been carefully planning for its return from the economic penalty box by hoarding tons of oil in tankers at sea.

Now that the U.S. and European Union have lifted some sanctions on Iran, the OPEC country can begin selling its massive stockpile of oil.

The sale of this seaborne oil will allow Iran to get an immediate financial boost before it ramps up production. The onslaught of Iranian oil is coming at a terrible time for the global oil markets, which are already drowning in an epic supply glut.

Just the other day, I explained that some of the biggest banks in the world are now projecting that the price of oil could soon fall much, much lower.

Morgan Stanley says that it could go as low as 20 dollars a barrel, the Royal Bank of Scotland says that it could go as low as 16 dollars a barrel, and Standard Chartered says that it could go as low as 10 dollars a barrel.

But the truth is that the price of oil does not need to go down one penny more to have a catastrophic impact on global financial markets.  If it just stays right here, we will see an endless parade of layoffs, energy company bankruptcies  and debt defaults.  Without any change, junk bonds will continue to crash and financial institutions will continue to go down like dominoes.

We are already experiencing a major disaster.  Things are already so bad that some forms of low quality crude oil are literally selling for next to nothing.  The following comes from Bloomberg…

Oil is so plentiful and cheap in the U.S. that at least one buyer says it would pay almost nothing to take a certain type of low-quality crude.

Flint Hills Resources LLC, the refining arm of billionaire brothers Charles and David Koch’s industrial empire, said it offered to pay $1.50 a barrel Friday for North Dakota Sour, a high-sulfur grade of crude, according to a corrected list of prices posted on its website Monday. It had previously posted a price of -$0.50. The crude is down from $13.50 a barrel a year ago and $47.60 in January 2014.

While the near-zero price is due to the lack of pipeline capacity for a particular variety of ultra low quality crude, it underscores how dire things are in the U.S. oil patch.

A chart that I saw posted on Zero Hedge earlier today can help put all of this into perspective.  Whenever the price of oil falls really low relative to the price of gold, there is a major global crisis.  Right now an ounce of gold will purchase more oil than ever before, and many believe that this indicates that a new great crisis is upon us…

The number of barrels of oil that a single ounce of gold can buy has never, ever been higher.

All over the planet, big banks are absolutely teeming with bad loans.  And to be honest, the big banks in the U.S. are probably in better shape than some of the major banks in Europe and Asia.  But once the dominoes start to fall, very few financial institutions are going to escape unscathed.

In the coming days I would expect to see more headlines like we just got out of Italy.  Apparently, Italian banks are nearing full meltdown mode, and short selling has been temporarily banned.  To me, it appears that we are just inches away from full-blown financial panic in Europe.

However, just like with the last financial crisis, you never quite know where the next “explosion” is going to happen next.

But one thing is for sure – the financial crisis that began during the second half of 2015 is raging out of control, and the pain that we have seen so far is just the beginning.

Let the Headlines Speak
Jan 20th, 2016
Daily News
From the Internet
Categories: Today's Headlines

Oldest Christian monastery in Iraq razed
Satellite photos obtained by The Associated Press confirm what church leaders and Middle East preservationists had feared: The oldest Christian monastery in Iraq has been reduced to a field of rubble, yet another victim of the Islamic State group's relentless destruction of heritage sites it considers heretical.  

These Four Contenders for Biblical Villain Gog Might Surprise You
Today, in Jewish sources, there are four contenders for the title: former US President George H.W. Bush, Russian President Vladimir Putin, current US President Barack Obama, and, in a surprising new twist, the United Nations itself. In chapters 38 and 39 of the Book of Ezekiel, Gog is mentioned a number of times. Gog is generally understood to be a political and/or military leader and Magog is his nation.  

.Delusional EU Releases Peace Process Guidelines   “The EU is convinced that only the reestablishment of a political horizon and the resumption of dialogue can stop the violence,” the statement read. “Security measures alone cannot stop the cycle of violence. The underlying causes of the conflict need to be addressed.” In hoping to achieve its vision of a two-state solution, the EU stated that it will continue to ensure the viability of its two-state vision for both Israel and the PA.  

Emergency planners work on playbooks for the deadly Big One
Seismologists say a full rupture of a 650-mile-long offshore fault running from Northern California to British Columbia and an ensuing tsunami could come in our lifetimes, and emergency management officials are busy preparing for the worst. Federal, state and military officials have been working together to draft plans to be followed when the "Big One" happens.  

Israel to announce major land appropriation in Jordan Valley
The Israeli government will announce the allocation of 370 acres of West Bank agricultural land near the Palestinian city of Jericho as state lands, the largest such land appropriation since August 2014.  

Swedish MPs challenge Wallström to debate over Israel comments
As relations between Sweden and Israel grow increasingly tense, a small group of Swedish MPs vowed Tuesday to publicly challenge their foreign minister’s controversial call last week for an investigation into what she termed Israel’s “extrajudicial executions” of Palestinians.  

Lawmaker: Journalists should register with government
State Rep. Mike Pitts, R-Laurens, filed a bill in the S.C. State House Tuesday to establish a “responsible journalism registry.” The registry would be run by the S.C. Secretary of State’s office.  

Burqa-clad special ops raid ISIS bunker, kill chief
Burqa-clad special operations forces from Britain’s Special Air Service raided a bunker on the Islamic State group’s home turf and killed a terror chief. An eight-man squad went behind enemy lines in Raqqa, Syria, earlier this month and posed as ISIS wives before taking out a high-value target.  

SOUTHERN CORONAL HOLE
High above the sun's south pole, a vast hole has opened in the sun's atmosphere. This is called a "coronal hole", Coronal holes are places in the sun's atmosphere where the magnetic field opens up and allows solar wind to escape.  

‘Time to help them’: Israeli justice minister calls for independent Kurdish state
Israeli Justice Minister Ayelet Shaked has spoken out in favor of an independent Kurdish state. She also urged increased cooperation between Israel and the Kurdish people. Shaked sees this as an opportunity to weaken Israel’s rivals in the region.  

European liberal left leaves Europe in decay, Wallstrom-style
Wallstrom has a talent for finding Israel guilty for all of Sweden’s woes. When, according to Swedish intelligence, over two hundred Swedes were reported to have joined ISIS, Wallstrom pointed at Israel when she said, “Clearly we have a reason to be worried not only here in Sweden but around the world because there are so many who are being radicalized.  

Putin offers European Jews refuge in Russia
As anti-Semitic attacks increase throughout Europe, Russian president Vladimir Putin has invited European Jews to immigrate to Russia. Putin made the offer on Tuesday in a meeting with members of the European Jewish Congress (EJC) that took place in the Kremlin.  

China tells Taiwan to abandon independence 'hallucination' after vote
Taiwan should abandon its “hallucinations” about pushing for independence, as any moves towards it would be a “poison”, Chinese state-run media said... Tsai Ing-wen and her Democratic Progressive Party (DPP) won a convincing victory in both presidential and parliamentary elections on Saturday, in what could usher in a new round of instability with China, which claims self-ruled Taiwan as its own.  

Kuwait Air Ends New York City Flights Rather Than Carry Israelis
After Kuwait Air was ordered by the US Department of Transportation to cease “unlawful discrimination,” regarding their refusal to carry Israeli passengers -- the carrier doubled down and ended the flight route entirely. ...Kuwait Air announced that they will cease passenger service from New York JFK airport to London Heathrow by January 18, and as of the 19th the route is no longer an option on their website.  

Federal deficit to soar in 2016 after Ryan-Obama tax deal
The tax-cut deal inked by President Obama and House Speaker Paul D. Ryan last month has put a major dent in the federal budget, helping send the deficit soaring by 24 percent... The $544 billion deficit projected for 2016 marks the first year since 2009 that the red ink has grown, and it powers the deficit back up over the half-trillion mark, where it had been for most of Mr. Obama’s tenure.  

Barack Obama's migrant plan taken up by US Supreme Court
The US Supreme Court has said it will consider a challenge to one of President Barack Obama's key immigration reform plans. The plan would lift the threat of deportation from five million migrants living illegally in the US. A coalition of 26 mostly conservative states, led by Texas, has been successful in lower court challenges.  

Pakistan Taliban kill at least 19 as they storm university
Islamist Taliban militants stormed a university in volatile northwestern Pakistan on Wednesday, killing at least 19 people and wounding dozens as the army hunted for any gunmen still holed up on the campus, officials said. A security official said the death toll could rise to as high as 40 as army commandos cleared out student hostels and classrooms.  

'WORSE THAN 2007': Top banker warns of looming wave of worldwide bankruptcies
The world’s financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, according to a leading global banker.  

50 percent pay cut: a tough break for ISIS fighters
Violent jihad, it turns out, is a rough business. According to documents leaked from inside the Islamic State (IS) group, all IS fighters have reportedly had their salaries cut by half.  

In besieged Syrian city, hungry residents sell gold for food
In Syria’s eastern city of Deir el-Zour, supplies are running so short that desperate residents are selling their gold, valuables and even their homes for food or an exit permit allowing them to escape a siege by both government troops and Islamic State militants.  

IS Acknowledges Death of 'Jihadi John' in Magazine
The Islamic State group has acknowledged the death of the masked militant known as "Jihadi John," who appeared in several videos depicting the beheadings of Western hostages, in an article in its online English-language magazine Dabiq.  

Here’s the Bomb the US Hopes It Never Has to Use Against Iran
The good news: Iran seems to be living up to its end of the treaty with six other nations that requires a halt to Iran’s uranium enrichment and processing activities. In short—they can’t make nuclear weapons. The bad news: Last December, Iran launched the second ballistic missile test in violation of its nuclear arms agreement. The missiles are housed in an underground storage bunker 1,640 feet underground.  

A 'gay lobby' at the Vatican? One cardinal says it's real, and Pope Francis is responding
The influential Cardinal Oscar Maradiaga has acknowledged the presence of a “gay lobby” in the Vatican. In a new interview, he says that Pope Francis has adopted a gradual approach to address it – and that Catholic teaching won’t change.  

France might not have any Jews in the future – and here's why
An increasingly violent wave of anti-Semitic words and acts in France threatens the very existence of Jewish communities there, one human rights advocacy group warned in a new report. The attacks are “a harbinger of societal breakdown,” said Susan Corke of Human Rights First. “Left unchecked, antisemitism leads to the persecution of other minorities, and to an overall increase in repression and intolerance.”  

Humans as we know them to be GONE by 2100 and replaced by ALIEN children
Seth Shostak, a senior astronomer, said this may be the last century humans as we know them dominate the earth. Desinger babies and artificial intelligence (AI) will lead to a new dominant species, he said.


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