Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
Best Time / Month to Buy a Used Car From a UK Dealer - 16th Dec 17
Relief Rally in Gold Mining Stocks - 16th Dec 17
Amid Bad Fundamentals, Gold Sector Rally May Have Begun - 16th Dec 17
Gold Bullish on US Fed Interest Rate Hike - 16th Dec 17
The LORAX Explains What Happened to Sheffield's Street Trees 2017 - 16th Dec 17
Bitcoin Trading Alert: Bitcoin Pauses – Will Appreciation Follow? - 16th Dec 17
SanDisk Ultra 128gb 100mbs Micro SD Card for Smartphone's Speed Test - 15th Dec 17
Inflation is Spiking Globally… Bond Bubble Bursts in 3… 2… - 15th Dec 17
Sheffield's 'Real' LORAX Defending the Trees From the Labour City Council Patrol Units - 15th Dec 17
Stock Market Decline Signals are Near - 15th Dec 17
Santa Is Putting Christmas On The Blockchain And Saving Billions - 14th Dec 17
The Unprotected, the Protected, the Vulnerably Protected Classes—Which Are You? - 14th Dec 17
Gold’s Upside Target - 14th Dec 17
Year-end US Interest Rate Hike Again Proves To Be Launchpad For Gold Price - 14th Dec 17
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

Global Financial Crisis, No Bailout Will Stop It

Stock-Markets / Credit Crisis 2009 Dec 15, 2009 - 04:21 AM GMT

By: Mac_Slavo

Stock-Markets

Best Financial Markets Analysis ArticleSometimes, a bailout is not enough.

When Dubai World black swanned global investors last month with what amounts to be a reported $80 Billion in debt liabilities, it sent shivers down the spine of many a financial manager and stock trader. For those who were paying attention, Dubai’s troubled assets were no surprise, it was simply a matter of time. Oft repeated by contrarian analysts and investors like Dr. Doom Marc Faber, Gerald Celente, Jim Rogers, and Karl Denninger, the mathematical certainty of the economic crisis would play out - eventually.


It was a year ago that the entire global financial system, spear headed by the USA, faced the real possibility of total meltdown, that is if you trust the motivational fear tactics employed former Treasury Secretary Henry Paulson.

This week, the American public received word that the banks once deemed too-big-to-fail will be paying back their TARP funds, ostensibly because they are now cured of the financial contagion that threatened sudden death, economic collapse and the implemntation of martial law.

In addition to Bank of America and JP Morgan Chase, we have commercial real estate powerhouse and partially owned subsidiary of Warren Buffet Enterprises, Wells Fargo, which announced it will sell $10.4 billion in stock and exit the TARP bailout. According to a company statement, the bank plans to pay back $25 billion in taxpayer funds. CEO John Stumpf, presumably also doing gods work, says “we’re ready to fully repay TARP in a way that serves the interests of the U.S. taxpayer, as well as our customers, team members and investors.” Management did not comment on whether the share sales totaling around $14.8 billion, when you count additional plans to  raise capital, will devalue, by way of dilution, the amount of market capitalization held by shareholders.

Citibank, who also committed to repaying $20 billion in TARP funds yesterday saw a stream of positive news throughout the media when they announced their intentions. Just 24 hours later, Bloomberg reports that Citigroup’s Exit From the Bailout is Clouded by Citi Holdings Assets. It seems that CEO Vikram Pandit failed to mention that his company is “emerging from a U.S. bailout with higher capital levels and loan-loss reserves than any peer.” That amount to somehwere in the area of $617 billion.

Dubai showed how investors and traders are ready to run at the first sign of trouble. As has been the case for the last nine months, however, the Dubai crisis was quickly subdued by stories of bailouts from their sister city, Abu Dhabi. And indeed, Dubai has been rescued with what amounts to be a $10 billion bailout that should help the former real estate Mecca of the Middle East make at least a few payments to keep it a float for a little bit longer. Regional investment firms will receive some of their funds, but as for non-Middle Eastern investors, the verdict is still out, though, as Abu Dhabi’s rulers said, “they will not necessarily just bail out everyone across the board. They will be selective.”

This seems to be the norm these days, so it’s no surprise. Certain entities, for whatever reasons, are bailed out, while others suffer the collapse of their wealth for trusting in the belief that asset prices always go up forever.

As Real Estate Collapse (Wave One)  in the US proved, no asset will appreciate all the time. Like Dubai, the underlying assets in America, Europe, and even China have been slowly simmering for the last year or so. And once the public gets a taste of the toxicity, there will be no stopping the panic as everyone in just about every asset class decides to run for the exit.

When the panic does start, it may be an event perceived to be too-small-to-matter, like a Dubai that exposes several larger global players, which leads to a domino effect that will echo through the entire financial markets. It may start with debt defaults in an  Euro Zone country like Greece or Hungary, or maybe with commercial real estate or Wave Two of the Mortgage Meltdown in the US. It could be a geo-political event  with Iran and Israel, or a terrorist attack on a Saudi Arabian pipeline.

Right now, the world is on edge. The citizens of the US, as well as the global public don’t really know who to trust to tell them the truth. They are on alert, consciously or subconsciously, and if they perceive even a small threat, the fight-or-flight system will be activated.

Some say that a year ago we faced economic disaster on a massive scale. In one year, governments around the world have printed money, and done little else, except to provide daily lip service and commentary. The contagion has been lying dormant and will become an epidemic.

No bailout will stop it.

By Mac Slavo

http://www.shtfplan.com/

Mac Slavo is a small business owner and independent investor focusing on global strategies to protect, preserve and increase wealth during times of economic distress and uncertainty. To read our commentary, news reports and strategies, please visit www.SHTFplan.com .

© 2009 Copyright Mac Slavo - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife