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The Biggest lie in Stock Market History Revealed

Bankrupt Greece Blackmails Europe, Bailout or Euro Zone Dies, Global Financial System Collapse

Interest-Rates / Global Debt Crisis Jun 29, 2011 - 12:03 AM GMT

By: Nadeem_Walayat

Interest-Rates

Diamond Rated - Best Financial Markets Analysis ArticleThe Greek population is in constant revolt with another 48 hour national strike underway against ever expanding announcements of economic austerity though to date little of which has actually been implemented and therefore risks at the very a least a delay of the latest tranche of Euro 12 billion in what has now become a permanent flow of funds from core Euro-zone to Greece and other peripheral eurozone countries, therefore tax payers of core Europe and to a lesser degree Britain are being taxed to pay for the unwillingness of the PIIGS to pay their bills.


Core Euro-zone countries are effectively being black mailed by Greece to finance Greece's public budget deficit and the interest payments due on the ever expanding debt mountain, none of which that the Greece population are having to bare the consequences of, for were they then Greece would have gone bust Iceland style a year ago. The facts are that IF Greece were not being financed as a consequence of being within the Euro-zone then all of the middle class of Greece would have already been swiftly wiped out, as the value of earnings, savings and assets would have collapsed along with the Greek economy as a consequence of the markets immediate adjustment to the true level of debt and inability to ever repay.

Some argue that a short- sharp shock Iceland style would prove better in the longer run but there would be blood in the streets perhaps even revolution that would be infinitely worse for the Greek population than what is taking place today as international trade would literally seize up overnight due to the inability to make payments on goods and services and if a country can no longer import foods, then all that would be left would be food aid being shipped in Africa style to prevent starvation.

Therefore the Greeks life style is being subsidised by hard working tax payers elsewhere, and those demonstrating on the streets of Greece are mostly delusional or represent subversive interests such as the communist party that are banking on profiting from debt crisis chaos, for if Greeks actually got what they are asking for i.e. an exit from the Euro and debt default, then the Greek population would soon, perhaps within 24 hours come to regret the outcome as all roads would lead to instant bankruptcy with all of its consequences. So all this talk of the Greeks wanting to leave the Euro-zone is a load of nonsense, for what the Greeks really need to worry about is Greece being kicked out of the Euro as it continues to act as a funding black hole that is currently costing core euro-zone tax payers Euro 100 billion per year that they will never get back.

If Greece were ejected from the Euro-zone then there would soon be an exodus of Greece's best and brightest workers as they sought earnings in hard currency such as the Euro rather than be paid in worthless Zimabwe-esk Drachma's. Something that the Euro-zone politicians may be considering behind close doors in a desperate attempt to save the Euro currency from collapse.

The Greek Trojan Horse Full of Debt

Greece landed its debt filled Trojan horse economy onto the shores of the euro-zone in 1999, following which as if by magic a high interest rate high risk economy immediately became a low interest rate low risk economy. How did Greece achieve this apparent miracle ?

By perpetuating state sponsored fraud as the country proceeded to hide the true extent of public spending, debt and liabilities from the markets and European Central Bank as there was no longer a currency market that would reflect the real state of the economy which allowed Greece to secure funding for the state and its private sector at low interest rates that did not reflect the actual risk of default and debt burden.

The Greek government were not doing anything different than what most of the higher paid working population engages in, where fraud is endemic, be it government economic statistics or the 60% or so of of tax payers that evade the majority of taxes resulting in highly paid doctors paying taxes that can be less than typical public sector nurses.

Off course the Greek population can argue that most of the blame lies with their bankers, which is true, because the bailout is for holders of Greek debt which is mostly held by european bankster's. But the same holds true for every other country that has seen its politicians dump all of banking sectors losses and liabilities onto the backs of tax payers that has put every western country onto the path towards bankruptcy. But the Greeks by virtue of euro-zone membership have decided not to bare the responsibilities for their debt (public and bankster's) but for tax payers of other nations to take on both the liabilities of their banks and the Greek state, else the Euro dies. Therefore Greece is effectively black mailing core euro-zone nations into making funding available whether or not they actually implement any of the economic austerity plans as Greek politicians are likely to succumb to the greater weight of voters than follow through on demands from core euro-zone financing countries, after all what does most of the Greece population care, their money is safe against hyper-inflation, whilst they continue to evade taxes and the state runs a large budget deficit, instead letting the tax paying suckers of mainly Germany and France pick up the bill.

Which means the tax payers of Germany and France are effectively trapped into a lose, lose situation, where the only solution is for either collapse of the euro currency (savers wiped out) or for total political, economic and monetary union which means permanent financing of states such as Greece by means of internal transfer payments as occurs in nation states where wealthier areas are taxed to subsidise the poorer areas (UK example - London / South East subsidises most of the rest of the country).

Risks of PIIGS Sovereign Debt Default

Joining Greece are the other european bankrupting nations to varying degrees that are collectively referred to as the PIIGS (Portugal, Ireland, Italy, Greece and Spain), though a few others such as Belgium should also be included in the list as the risks of actual default vary between nations of the Eurozone as the below graphic illustrates the probability of actual default within the next 3 years, though this does not mean that we will have to wait for 3 years for countries such as Greece that are permanently tottering on the brink of default.

Britain and other european nations outside of the Euro-zone whilst having the ability to print money and inflate their debt away at a steady pace are still at a risk of bankruptcy and actual debt default if they could no longer service their external debts i.e. that which is denominated in a foreign currency courtesy of their bankster's, which therefore puts Britains risk of default at somewhere between Germany's 13% and France's 25%.

Sovereign Debt Default Contagion Risk

To illustrate how severe the current crisis is, Greece's debt is now rated at worse than that of Pakistan, though Pakistan's debt never threatened a collapse of the global financial system. Greek government 1 year debt is yielding 20% and 2 year at 30%, that is a sign of markets discounting default i.e. the bond markets are pricing in a Greek debt default which is hitting the Greek banks hard and risks wiping them out and acting as a contagion to other european banks.

All that the European Union has done is to throw good money after bad by wasting 100 billion euros and pushing Greek debt up from 260 billion euros to 330 billion euros, as if a greater debt burden would somehow prevent bankruptcy which I warned over a year ago was inevitable and the solution to the crisis remains the same for the Euro to effectively split into two.

11 May 2010 - E.U. $1 Trillion Bailout, Detonates Nuclear Option of Printing Money to Monetize PIGS Debt).

Financing albeit shrinking annual PIGS deficits over the next few years will still mean that ALL of these countries debt burdens will be HIGHER in 3 years time, i.e. Greece's debt burden is expected to rise from 120% of GDP to as high as 150% of GDP. How is that a solution for the debt crisis? How will that prevent eventual debt default ? Answer - It won't!

The ONLY solution is for the Eurozone economies to GET their economic houses in order which means cut the deficits and total debt as a % of GDP which can only be achieved through economic growth which means public sector spending cuts and reform of economies to generate economic growth that means LESS E.U. and national regulation as touched up on in the article Solving Britain's Economic Crisis Through Micro Business Capital Investments and Credit (31st Mar 2010). However when a country has a debt burden of 120%+ of GDP at interest rates of 5% or higher the inevitable result is still debt default.

EURO II ?

This, first of a series of money printing debt monetization bailouts puts the Euro firmly on a trend towards high inflation as are all fiat currencies, i.e. the fundamentals of the Euro block composed of many small weak economies that cannot devalue internally against highly competitive strong economies will still remain. The only possible solution is for a Euro II, i.e. split the Euro into two currency blocks one for the weak that suffer higher inflation and interest rates and the more competitive countries as part of the Euro II block (could just be Germany on its own?) which would act as a safety valve in times of economic crisis that demands internal currency devaluations.

The mainstream press predominantly focuses on the bottom line numbers of by how much are each countries banks exposed to Greek government debt, without fully understanding the total exposure is about 100 times greater as a function of the $600trillion+ derivatives market that gambling prone British banks are more exposed to in terms of per capita then virtually any other nation on the planet.

Forget the official UK statistics of £1 trillion of public sector debt, total actual debt and liabilities are in excess of £11 trillion and the fools in Coalition Government are now contemplating Britain borrowing money in the name of UK tax payers to throw into the Greek black hole!

For instance the mainstream broadcast press smugly declares that British banks exposure the Greek government debt is just £2.5 billion. However throw in the derivatives exposure that also includes Portugal and Ireland and then the figure jumps to at least £350 billion with a figure approaching £800 billion or about 60% of GDP as the default contagion would not stop with Portugal as soon Spain and Italy would also follow their PIIGS brethren over the cliff, which would be enough to trigger a collapse of the global banking system as the earlier article ( Nov 2010 - Global Sovereign Debt Default Bankruptcy Bailout and Contagion Risk Analysis) illustrated the risk each country on its own posed to the global financial system if one were to default on their debts.

The November 2010 analysis treated Greece and Ireland as being on life support pending inevitable bankruptcy with Portugal not far behind that combined present a contagion risk factor to the global financial system of about 22%, an eventuality that the worlds financial system could survive, if only it could be halted to the peripheral euro-zone which it would not as soon Spain and Italy would join the collapse as their bonds are dumped sending interest rates soaring towards where Greece debt currently trades, which would be more than enough to bring about a collapse of the Euro-zone and within hours of which a collapse of the whole global financial system including that of the United States as all fiat currency is dumped for hard assets i.e. an hyperinflationary collapse event and NOT Deflation as the ivory tower academics that populate the mainstream press would lead you to believe (see Inflation Mega-trend Ebook FREE DOWNLOAD).

Inflation is the ONLY Solution to the Debt Crisis and Next Phase of the Mega-Trend

The Inflation Mega-Trend ebook of January 2010, concluded that the ONLY solution to the unfolding global debt crisis was for governments to print money and inflate their way out of debt . What we have seen over the past 2 years is just the first phase of the Inflation Mega-trend in the inflating of asset and commodity prices.

Phase 3 of the Inflation Mega-trend (Phase 2 consumer prices) will be governments INFLATING WAGES, which is completely contrary to everything you hear in the central bank propaganda pumping mainstream press, the next phase of the Inflation Mega-Trend will be for central banks to inflate the wage price spiral, which will result in an acceleration of inflation.

Whilst many may argue that many aspects of UK public debt are linked to inflation such as benefits and state wages and pensions, and not forgetting that some 25% of gilts are indexed. Lets leave aside for the moment that real inflation is a good 2 to 3% above the official inflation indices for Britain and most western economies, if not higher. What people tend to forget that PRIVATE debt is at many multiples of public debt, therefore governments in acting to boost the economy in nominal terms by reducing the debt burden on the private sector that is in a far indebted state i.e. bringing total debt and liabilities to about £11 trillion (more than X10 official public debt statistics), then the indexation argument goes out of the window.

This has major ramifications for depositors who are already subsidising the debtors (both public and private) each year to the tune of at least 3% on CPI (after tax).

Why can't those who STILL pump out deflation nonsense realise this inflation wage price spiral reality?

Again. I need to reiterate that the rise in asset and commodity prices over the past 2 years is to all intents and purposes just Phase 1, Phase 2 is consumer prices (well underway in the UK), Phase 3 is wages and then off go down the road of the feed back loop the end result will that bond holders and savers will be wiped out, along with the debt.

What this means for Greece ?

Greece cannot inflate so they have no choice but to leave the Euro to enable them to inflate EVERYTHING , i.e. prices, and wages, that is the only way they will be able to STEAL from all of the bond holders and savers as they STEALTH default on their debt by means of high inflation which is the path that the UK and US are upon for a decade long inflation mega-trend.

The ONLY reason why they are being prevented from defaulting and leaving the euro-zone is because banks of other european countries are not strong enough to withstand such an event.

What a Greek Debt Default Will Mean for the UK Economy?

There is no firewall between Britain and Europe if Eurozone banks start to go bankrupt then so will most of Britain's banks, the only protection savers will have is to protect their deposits by abiding by the compensation limits. Where the economy is concerned the government via its central bank (BoE) will print money to inflate the economy to prevent recession, hence the most probable outcome is continuing stagflation of high inflation and very low economic growth, as governments such as the UK aim to buy time.

Credit Crisis Phase 3 Conclusion

The credit crisis that began in August 2007 when the credit markets froze is not over, far from it, the Lehman's bankruptcy was just phase 2 of the credit crisis where increasingly over the past 18 months we have seen Phase 3 manifest itself in the bankruptcy of whole countries with Greece, Portugal and Ireland to all intents and purposes bankrupt, only being kept afloat to prevent bankruptcy of the banking system and the larger Eurozone countries namely, Spain, Italy, then France and Germany itself.

The time horizon for the manifestation of the inevitable debt defaults can only be guessed as it depends on how much tax payers money will be thrown at the bankrupt states before the sovereign debt default contagion spreads from country to country. Readers should be under no illusion that bankruptcy of whole countries is inevitable, where even if countries such as Britain, Germany, France and the United States do not default on their debts, there will be a very heavy price paid in loss of purchasing power of earnings and savings as covered at length in the January 2010 Inflation Mega-Trend Ebook.

However depositors need to immediately focus themselves on protecting themselves against nominal loss of deposits as would occur when states go bankrupt and bank deposits are only honoured upto the compensation limits.

Once you have achieved this first emergency step of protecting your wealth in nominal terms then you can purse the second strategy of protecting your wealth in real terms which I have covered at length in 3 ebook's and ongoing newsletters (ALWAYS FREE), and continue to do so on an ongoing basis in articles that can be quickly viewed at walayatstreet.com

Off course there are also major implications in the costs of compensating depositors, which as we have seen will ultimately fall onto the back of tax payers at the rate of approx £85 billion for every 1 million customers across each banking group, a potentially huge bailout cost that could literally doubles Britians public debt virtually over night. So the governments response would be similar to 2008, which would be to inject capital into the bankrupting UK banks the cost of which would be 1/10th that of making good on depositor guarantees but this would be likely restricted to fully UK banks rather than the likes of Santander.

The risk that European Union is trying to balance is that of systemic risks of a disorderly Default of Greece and resulting collapse of the global financial system, with first in line being the PIIG's then the larger euro-zone countries such as France and Italy and then countries such as the UK and ultimately the United States will be hit all with-in accelerating trend with little time for professionals let alone ordinary people to react.

Therefore readers should not be under any illusion that the debt default would be halted with Greece, because once it starts it would soon spread to the other PIIGS within a matter of weeks if not days, Portugal would go next, then Ireland and then Spain, with other debt dominos soon falling such as Belgium.

This would bankrupt virtually every European bank whether or not they are exposed to PIIGS debt due to counter party risks, though unfortunately at this point in time the coffers of countries such as Britain, France and Germany are empty after a series of bailouts and huge public sector deficit spending programme's will mean they will not be in any shape to 100% guarantee bank issued debt or even retail deposits, instead savers are running a serious risk of actual loss of nominal value of their savings on funds deposited in excess of the £85k limit across banking groups.

European Bank Run Contagion Risk

The Greeks have already set the ball rolling by withdrawing their funds out of their banks during May and June as a consequence of their exposure to Greek Government debt, soon to be followed by Banks across Europe if not already in the process of desperately attempting to pull their funds out of Greek banks ahead of an inevitable debt default, and then from other PIIGS banks and financials, that's banks of Portugal, Ireland, Italy, and Spain as well as Greece on rising default contagion risks.

The problem with the banking sector lies in the hidden exposure to the over the counter derivatives market that won't become apparent until there is an actual credit event such as Greece defaulting its debts, triggering claims on credit default swaps issued by banks and insurance companies as occurred following Lehman's bankruptcy in 2008 which brought down the worlds largest insurer AIG. Therefore Greece defaulting could quite easily collapse the whole banking system given that derivatives exposure could result in a crisis that is a100 times larger than the nominal value of the amount of debt defaulted upon.

Over the past 3 years, Santander and other foreign banks have been allowed to run amok amidst Britain's retail banking sector as a consequence of an incompetent regulator and a desperate Labour government eager for anyone to take on the responsibility of restructuring a string of bankrupt UK banks which allowed Santander to gobble up a string of small to medium sized UK banks such as Bradford and Bingley, Abbey and Alliance and Leicester, which now pose a real risk to UK depositors as compensation licences have been consolidated therefore now instead of protection of 4X £85k, there is just 1X £85k across the banking group.

One can measure the rising contagion risks in the credit default swaps market, where the price of insuring against Santander bonds against default has been steadily on a rise since March 2011. This increasing risk is also manifesting itself in the yield of Spanish government debt that has hit an 11 year high of 5.75% on 10 year bonds, which stands nearly 3% above German Bund's, a financing level that is not sustainable for Spain, let alone a further surge in yields that would follow a Greek debt default.

The rise of euro-zone default risks, risks another credit markets freeze as the banks of countries such as Britain that do not face default by virtue of its ability to print money and inflate, increasingly pull the plug on financing of euro-zone banks much as occurred following the freezing of the credit markets in August 2007. Similarly UK retail customers would also be wise to limit exposure to euro-zone banks, especially of peripheral nations (PIIGS).

Breaking Up the PIIGS Banks

It is my opinion that at some point in time (if the banking system survives the current crisis) the British Government will force PIIGS banks such as Santander to sell off their British banking arms so as to ensure contagion risks to Britain's banking system are reduced, that is really the only solution to prevent a run on the UK banking system as occurred in September 2007 with Northern Rock and threatened to occur in Sept 2008. A break-up of the banks in itself would trigger a major credit market event, therefore it is probably going to take place in secret behind closed doors to prevent financial panic, i.e. British banking arms will be floated under the pretense of raising capital, which on balance would be seen as a market calming measure.

UK Safe Retail Banks List

The following table lists Britain's major retail banking groups (separate licences) in terms of the percentage probability that your deposits above the UK compensation limit of £85k and Euro-zone banks 100,000 (current £/E £86k) would be secure in the event of a series of euro-zone debt defaults starting with Greece and that the crisis is contained to these smaller peripheral euro-zone countries i.e. Greece, Portugal and Ireland, if Spain comes under real risk of default then that would require a revaluation of this list as banks such as Santander would come under far greater pressure given exposure to Spanish government debt.

Banking Groups (separate Licences) Probability Deposits over £85k are Safe
National Savings & Investments
99%
Tesco Bank
80%
HSBC
75%
Co-op
75%
Standard Chartered
65%
Santander Group
50%
Barclays
35%
ING Direct
25%
Nationwide BS
20%
CitiGroup
20%
Lloyds TSB
10%
HBOS
10%
Nat West
5%
RBS
5%
Allied Irish
1%

 

The government backed National Savings tops the list at virtually 100% depositor safety ranking, as if NS&I goes bust so will have the the whole British financial system. Readers may be surprised to find out that Britain's safest commercial retail bank is owned and operated by the supermarket Tesco, next to follow are HSBC and Co-op, with Spain's Santander offering a 50/50 bet on the safety of deposits over £85k. The rest offer an increasing probability of loss of deposits that would take place amidst a sovereign debt crisis induced banking crisis. The government owned Northern Rock is probably 99% safe at this point in time but it is being primed to be sold off as are the share holdings of other high risk major retail banks such as RBS and the Lloyds group.

There are other smaller safe banks such a Yorkshire Bank which is owned by the National Australia Bank Group.

Depositors Protect Yourselves From Potential Banking Crisis

UK bank depositors need to prepare for what will probably follow the Greece debt default contagion snowballing across Europe's financial system, especially as you are receiving a pittance in interest on even the best deposit accounts of less than 2.5% after tax which does not match the risks of loss of funds in excess of £85k. UK bank account holders have been receiving mail shots from their banks over the past 6 months informing them of the protection of their deposits upto a value of £85,000 per individual customers across the banking group. This should not be treated as junk mail but rather banks laying the ground work for the real risk of defaulting on deposits over compensation limits as a consequence of the bankruptcy of peripheral Euro-zone countries starting with Greece. Remember Greece going bankrupt is not a question of IF but rather when.

Therefore savers with amounts deposited above the guaranteed limit need to ensure that they have measures in place well ahead of a banking crisis to ensure that they survive one both in terms of the ability to transact business as well as ensuring total funds exposed are LESS than the £85k banking limits at the time of a bank run.

Scare Mongering ?

Am I scare mongering? Try asking those that were locked out of their savings accounts when the Icelandic banks went bust during October 2008. The banks froze UK customers out of their accounts on the 7th of October 2008. My analysis of 2nd October 2008 had warned that small countries such as Iceland were at risk of going bankrupt, with Iceland's bankruptcy preceded by some 24 hours earlier by Iceland Going Bankrupt?, - "savers should at the first opportunity seek to repatriate their savings to a 100% UK bank as the consequences of a country going bankrupt could render guarantees meaningless".

Steps You Need to Take Now !

The situation is literally critical with a possible default imminent and bank runs probable even if Greece is bailed out again as a consequence of future inevitable default due to the ramping up of Debt burden (Debt/GDP).

1. Ensure that you have at least 2 current accounts across banking groups and at least one with a safe bank such as HSBC.

2. Next make a list of all of your deposit / bank accounts, with the amounts on deposit.

3. Now group your accounts by banking sector group (see list at end of this article as a guide).

4. If you are anywhere near the £85k limit with any banking group then move those excess funds immediately!

5. Consider transferring funds to your spouse so as utilise their compensation limit across a banking group.

6. Ensure you have procedures in place so that you can at short notice transfer funds from high risk banks to lower risk banks so as to limit the fallout from any banking system crisis. For instance open an NS&I Direct Saver account NOW (pays 1.75% gross), then use this during an unfolding sovereign debt crisis event to transfer your cash to as this is the safest deposit account available for UK depositors (Max £2mill, Min £1). Again do this now as you may not be able to do so during a debt crisis event due to high demand for the account.

Instant Access Savings Accounts with Lower Risk banks

  • NS&I - 1.75%
  • Tesco - 2.90% (includes 1.65% bonus for 12 months)
  • HSBC - 0.75% (includes 0.5% bonus if you do not withdraw in a calendar month)
  • SMILE (Co-op) 0.25%

Higher Risk banks

  • Santander - 3% (includes 2.5% bonus for 12 months)
  • Barclays - 1.25% (includes 0.35% bonus when you do not withdraw in a month).
  • ING Direct - 2% (includes a 1.6% bonus if you do not withdraw in a month)

All accounts pay significantly less than current CPI Inflation of 4.5%.

7. Do not have ANY savings are fixed deposit exposure to banks that do not fall under the UK Financials Services Compensation Scheme.

8. Limit exposure to PIIGS banks, that is Greece, Ireland, Spain, Portugal and Italy as these are at the most risk of going bust thus triggering a lengthy process for savers having to wait for compensation. Remember that if Spain comes under pressure following perhaps Ireland and Portugal joining Greece, then the risks posed to Santander depositors will also significantly rise.

9. Keep enough in cash to cover at least 1 months expenditure, (I keep 2 months worth of cash).

Savers Paying For Low Risk

Savers preparing to cut their risk by switching banks will be disappointed to learn that the safest banks also pay the worst interest rates on deposits, typically less than 2% gross and often below 0.5% on instant access accounts, similarly the highest risk banks pay the best rates (typically 3%), which is further evidence of a market that is geared towards the risk of default and therefore higher risk banks are more desperate to attract retail deposits.

Britain's Slow Stealth Debt Default

Off course the system is designed so that you can never win, to keep up with inflation and tax you will need to be in receipt of interest of at least 5.4%. Instead the banks are offering you a pittance WITH the risk of default, so frankly your being treated like fools, suckers by the banks and government as you finance bank losses, liabilities and government deficit spending.

The fact is that Britain is BANKRUPT, it can never repay its current debt in real terms or cover future liabilities with future economic output, its just that we don't know it, this bankruptcy is manifesting itself in HIGH inflation that is the process for transfer of wealth from workers and savers as the price for stealth bankruptcy . It's the reason why your savings buy less than a year ago and the reason why your pay buys less than a year ago despite going up a few percent.

There is only one way to escape from this decade long losing streak and that is to realise that approx 50% of the value of your savings will be wiped out over the next 10 years, so it is not the case that your savings are protected but rather they are guaranteed to lose approx 50% of their current value, so you have to learn to take risks with your capital, in which respect the Inflation Mega-trend Ebook (FREE DOWNLOAD) as well as the more recent ebook's, contain strategies for protecting and growing your wealth in REAL TERMS.

Capital Safety in Index Linked Savings Certificates

One low maintenance high safety cash investment product that comes to mind is the NS&I index linked certificate, which has recently been re-introduced after being suspended due to high demand in June 2010. The returning product now pays 0.5% interest + annual change in the RPI index (currently 5.2%) TAX FREE for upto a total of £15k per issue per individual. In my opinion there is NOTHING on the market that can beat the NS&I in terms of return AND safety of capital, and even more so for higher rate tax payers.

Again no matter what happens to the inflation rate, your capital is 100% secure in real terms, and at the minimum guaranteed a return of 0.5% per annum, so even if deflation took place you would still receive a positive return of 0.5%. The certificates can also be cashed in early (after 1 full year), with little loss of indexation+interest. However these certificates are not suitable if you may require your funds within a year as you will not receive any indexation for inflation.

Banking Groups

Note whilst banking groups may have multiple licences as a consequence of mergers and takeovers, however they also may be in the process of merging licences so for ultimate safety one should remain focused on banking groups.

LLOYDS BANKING GROUP (2 licences)

  • Lloyds TSB Bank
  • AA Savings
  • Bank of Scotland / HBOS
  • Birmingham Midshires
  • Capital Bank
  • Cheltenham & Gloucester Savings
  • Halifax
  • Intelligent Finance
  • Saga

SANTANDER GROUP

  • Santander bank
  • Abbey National
  • Asda Savings
  • Alliance and Leicester
  • Bradford and Bingley
  • Cahoot
  • Moneyback
  • Honycomb

Nationwide Building Society

  • Nationwide Building Society
  • Cheshire Building Society
  • Derbyshire Building Society
  • Dunfermline Building Society

BARCLAYS GROUP

  • Barclays Bank
  • Standardlife Bank

HSBC GROUP

  • HSBC Bank
  • First Direct
  • Marks and Spencer Financial

ALLIED IRISH GROUP

  • Allied Irish Bank
  • First Trust

CITI GROUP

  • Citibank
  • Egg

CO-OPERATIVE GROUP

  • Co-operative Bank
  • Britannia
  • Smile
  • Unity Trust Bank

RBS Group

  • Royal Bank of Scotland
  • Nat West Bank
  • Direct Line Savings
  • Lombard
  • The One Account
  • Drummonds
  • Ulster Bank

Additional comments

  • Foreign Banks under UK FSCS Scheme - ICICI (India), First Save (Nigeria)
  • Small business are covered by the FSCS on the basis of 2 of following 3 conditions - upto a turnover of 6.5 million, less than 50 employees, balance sheet total not more than £3.26 million

Banks not under the UK FSCS.

  • ING Direct, Tridos - Dutch

  • Anglo Irish, Bank of Ireland - Ireland

Don't delay! Act today to form and implement a quick personal savings protection contingency plan, otherwise you may wake up one day to find yourselves locked out of your funds Iceland style, or worse lose deposits over £85k across banking groups.

Stock Market Trend

The stock market continues to track the conclusion of my last analysis (13 Jun 2011 - Stocks Bear Market Rally is Over Mantra About to Get Busted Again?) for an imminent bottom to be followed by the stock market carving out a base into late June / Early July, so no new analysis is warranted at this point in time.

Yes there is a disconnect between the stock market and economic perceptions, but that is nearly ALWAYS the case, well at least 70% of the time, which is why price trumps economics and the mainstream noise. Though don't forget that investing in the stock market is at the best of times high risk, so it is never a case of treating stocks as an alternative to bank deposits even if the banks look set to default, as banks going bankrupt would also wipe out their respective stock prices.

Source and Comments: http://www.marketoracle.co.uk/Article28957.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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 trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

dincer
29 Jun 11, 09:13
What will be the next story?

Mr. Walayat, I think stock markets need newer stories to make new highs. And I don't see much prospect for markets to go higher. Does your analysis depend upon pure technicals or do you have any special insider information regarding the overall markets, for example launching QE3, or US debt ceiling problem solved, or Greek people's acceptance of enormous privatization schemes? Or do you expect NYSE will rhyme the Feb-Apr 2010 period where both US dollar and stock exchanges did go higher? You say consumer prices are to follow commodity price inflation, I think this is not an easy thing for many firms. In addition sovereign debt problems will remain on the table (other PIIGS are on the queue) even if Greek situation manages to calm the markets.

Thank you.


Nadeem_Walayat
29 Jun 11, 09:23
The Inflation Story

Hi

The next big story that no one is seriously contemplating at this point in time is the WAGE PRICE SPIRAL that central banks will manifest, which if you think about is very logical.

i.e. first inflate asset and commodity prices, which impacts on consumer prices, causing loss of wage purchasing power, the natural solution to which is to Inflate wages !

So, yes wages will inflate and act as a feedback loop for asset prices such as stocks and consumer prices hence the inflation mega-trend.

Best

NW


LM
29 Jun 11, 10:48
UK housing

What about buying a home in the UK at the moment? Better than renting and risking your deposit in a bank? Having a mortgage and no significant savings sounds like the best place to be at the moment? Surely interest rates will not rise for years until wages have moved up notably?


Nadeem_Walayat
29 Jun 11, 11:30
UK housing

Yep, UK housing looks increasingly appealing.


Mr Spok
29 Jun 11, 14:04
Greek Bailout

I believe that the euro zone tax payers are bailing out only their euro zone banks. Their banks took the risks, ripped the profits and now transfer their losses to their taxpayers. As the Greek debt will be larger next year, the Greek economy much slower and the Greek problems greater.

I find nothing wrong with your article, everything you write is the truth. I just wanted to clarify this. Somebody who does not understand your article may think that the eurozone is paying the Greek debts which at this point is not true.

I would also like to add that your advice during the last years has helped me a lot and I am grateful.



30 Jun 11, 04:34
Greece "blackmails" Europe?

You have not idea what is really going on, and just recycling the spiteful elite propaganda that the entire Greek population lives in palaces made out of gold at the expense of the rest of Europe.

It is Greece that is being blackmailed by the Eurocrats to accept the bailout or default. Needless to say that this is just a bluff on the part of the elite plutocrats to intimidate the Greeks into accepting the bailout and thus burden the population with paying the fake debt of the banks, while those responsible for this debt will seize the country's assets through privatization procedures, bying them for much less than their real value. The Greek people don't want to be "bailouted" by anyone. It is being FORCED on them

Nadeem Walayat, you're just another kleptocrat apologist.


David Sinclair
30 Jun 11, 04:38
Currency Exchange

HiNadeem

Please help, would you convert 100k UKP to OZ dollars,even at 1-48 ? ....painful to accept, but the chart is forever down without any prospect of upward change.

Ex-Pat in Oz


Nadeem_Walayat
30 Jun 11, 13:07
Bankrupt Greece Financed by Core-Europe

The facts are that core Europe is financing Greece to the tune of 100 billlion a year. The whole Greek economy is only about Euro 200billion !

Greece will NEVER repay any of this money, it really is incredible how the truth is so skewed.

E100 billion a YEAR that will NEVER be repaid.

EURO 100 BILLION !

100 BILLION !!!!!!!!!!!!

THAT IS THE FACT, You may choose to deny it, but that is the fact of the matter.


Robert Baird
30 Jun 11, 17:34
UK Interest Rates

Hi Nadeem,

I agree that the BOE will not want interest rates to rise at all, but what if we have a bond market event or a currency crisis as in the early 90s that will force interest rates to rise? The ERM crisis pushed rates up to over 15% and a rerun of such a crisis would have a massive effect.

Regards, Robert Baird.


Nadeem_Walayat
30 Jun 11, 22:02
UK interest rates

The BoE has made the base rate irrelevant, market retail rates are far higher and infact many mortgage rates are not too dissimilar to when the base rate was at 5%.

The only answer / solution is to inflate, they have tried assets, which has fed into commodites the next step is to inflate wages.

It is only a matter of time when the clowns sat around the BoE MPC table come to realise this fact that the only thing they have left to manage the debt crisis in the UK is to inflate wages.

Which will mean a hell of a lot more government spending and money printing that will turn the current mainstream press perceptions of the economic world upside down.

Best

NW


lance
01 Jul 11, 09:57
Blackmail?

@Nadeem_Walayat

Everybody knows that Greece will never repay its debt. Greece has paid in the last 15 years more than 300 billion of its debt yet the debt has increased. It can never repay the its debt because the "bailout" is designed in such a way that does not provide a viable solution by enabling growth for the Greek economy. Instead its aim is to ensnare the country into debt slavery for decades, put the burden of banker debt into the population - through austerity - and seize the public assets that were build wih taxpayers'

money. The purpose is just to buy time and assets before letting the country go eventually bankrupt. So it is the banks that are blackmailing Greece through the EU to accept bailout. Do you get it this time, or am I still expecting too much from you?


chrisitan
01 Jul 11, 10:37
greek parliment will have difficulty implementing austerity but there is bigger agenda

regardless of the greed of the greek politicans the corruption of goldman sachs that helped them engage (in enron style accounting) did u mention that part nadeem and the greater financial community not banning the use of CDS in ways (since they only operate as a hedge in a moral economic vaccum) which we don't live in

the greek gov't wont be able to implement (IMO) the extent of the cuts with almost the entire population against them.

Also this is part of a bigger agenda about increasing the role of the financial sector's dominance and influence especially effecting soverign gov't decsions (making sure CDS's aren't banned is key to giving the global finance leverage over soverign's). The global financial apparatus power and quasi governance influence becomes apparent during these "debt crisis" which CDS help spawn...(and rating's agency's are complicit with) Then stripping soverigns of their wealth and influence using crisis management and the role of the financial sector's global quasi governance (decision making) grows stronger. All the while the policys themselves that 'bailout' black mailing greeks just indebt them further making them less solvent showing the intent of the "bailouts"


Nadeem_Walayat
01 Jul 11, 11:54
Greece Debt (Lance)

Greece has never repaid any debt, instead it borrows from one to pay back to the other.

Greece WILL default on its debt, which means all of the tax payers money being @ the rate Euro 100 billion a year sent by mainly Germany is being flushed down the Greek debt black hole.

Again, you miss the point completely! Greece is NOT REPAYING ANY DEBT OR SERVICING ITS DEBT, It is borrowing more money that it will never repay to finance its government budget spending.

Greece are by far the biggest winners of this bailout, followed by the bond holding banksters, with the losers core-euro-zone tax payers that due to no fault of their own are being forced to pay for Greece and the bankster bond holders.

Though these bond holders will lose when Greece defaults as their bonds have already been marked down by the market.


Nadeem_Walayat
01 Jul 11, 12:00
Austerity (Christian)

Yes, I agree that much if not most of the austerity will never be implemented which will put a greater burden on core-eurozone tax payers to fund the difference.

Yes the financial system is fruadulent, but for this governments are just as much to blame as the politicans have always been in the back pockets of the banksters.

Again Greece is not making ANY debt or interest repayments - NONE, it is a total scam on core-euro-zone as they give Greece about Euro 100 billion of which they get back about 5 billion as interest so net 95billion financing cost that they will never get back !

If someone is bankrupt which is where Greece is today, then how can someone be made more bankrupt by giving them 100 billion a year. Bankruptcy is Bankruptcy.

I am sure the Zimababweians would be jumping for Joy if Eurozone had given them 100 billion a year of free money that they would never repay during their bankruptcy.

Why work, implement austerity when the fools in core-eurozone will give you free money that you will never repay !


lance
01 Jul 11, 12:59
Greece Bailout

@ Nadeem_Walayat

You said that Greece is by far the biggest winner of this bailout. That's the stupidest thing I've ever heard.

From all the bailout money, the amount that goes to Greece is 0. None. All the money goes to the banks who are the main bond holders.

You also said that Greece has never repaid or serviced any debt. Uh-huh.

That's what I'm trying to explain to you but you don't seem to get it. The debt of Greece was 114 bn in 2001. Ever since Greece has paid more than 200 bn. Yet the debt is now around 400 million. Why? Cause the terms of borrowing are designed in such a manner so that it will have to borrow more and more to service its previous debts. It's called a ponzi scheme. Do you have any idea what it means? Plus around 70 billion of the current debt was caused by the currency swaps with Goldman Sachs.

One reason the default is delayed is so that the bond holders will have the time to get rid their toxic derivatives through the ECB. Another is because the bailout package - which according to your ignoramus view benefits Greece - enables the privatization of all public assets by foreign "investors" at much less of their value because everything that was built with taxpayer money is being labeled as "debt". This is outright theft and kills any chance of a recovery. This bailout is destined to fail by design and not to benefit anyone except banks and foreign corporations. After they buy everything and secure their losses either by dumping their useless bonds or by using real assets as collateral, Greece will be left to default and kicked out of the Eurozone and the EU.


Nadeem_Walayat
01 Jul 11, 15:56
Greece Bailout (Lance)

Offcourse the bailout money goes mostly to the Greece government, without which wages would no longer be being paid!

Your not looking at the whole picture of what happens when a country goes bankrupt, go see what happened to Argentina, Zimbwe, 1920's Germany and others..,

Greece is being helped to the tune of 100 billion a year so that it does not go through a similar wipe out of all workers and pensioners.

If Greece goes bust, i.e. kicked out of the Euro, then today;s crisis in Greece will look like a picnic in comparison to what would follow.

P.S.

I am getting tired of cutting out your abusive lines, if I see them in your next comment it won't get posted!


Will
02 Jul 11, 02:40
UK housing looks increasingly appealing

Nadeem, can you expand on this please? You have generally been bearish on UK housing so I am interested to know what is changing your mind.

In my view, it may drop 5-10% in nominal terms before bottoming, but I think it more likely that prices will remain static and allow wage inflation to bring them back to historical measures of affordability.

The only thing I can see changing this is in an EZ event where sterling becomes seen as a safe haven, and hot money pours in. But the BoE must know how damaging this would be - capital controls?


christian
02 Jul 11, 07:49
thank you nadeem ....and the trillion $ question

thanks for response......and yes the core euro taxpayers are really get screwed badly......and guess what in a year or two when portugual italy spain et all come to the trough the soverign debt levels of core europe will be much higher and potentially an issue. all throwing good money after bad but part of a agenda.

the question i have is that i believe bond yields the world over may follow suit and international finance will checkmate soverign states (via liquidatio of national assets) and forced austerity measures from nation state to nation state) as other tax payers foot the bill....until the global banking cartel has a much firmer grip of quasi governance "shadow governance" over many more nation states. Perhaps the 300 trillion or so of INTEREST RATE DERIVITIVES on the books of wall street will actually come in handy and keep the USA as one of the last country's the international crediors can checkmate do to the meltdown via bank contagion if JP morgan sees as much as 1-2% writedown on it's interst rate derivative position. (are these positions held on US bond yields primarily?) better to go for easier prey first I.E bond yields won't go to 5% on US 10 year as that would blow up financial system due to interest derviative losses in trillions? i know this is abit out of left field but do you think the idea has any merit nadeem. Please


Iain
02 Jul 11, 08:59
Debt Ceiling

I would like to say Nadeem your work is great and has a honest perspective on the financial world today.

Can I have your thoughts on the US debt ceiling?

It looks like Democrats and Repiblicans might not agree in time so causing America to default on their debts.

If this is the case will the stock Market crash/fall for a period of time and where will the Market hide. Will it be the dollar or because of the default,put their money in precious metals and shy away from the dollar.

Will the Market have to liquidate everything due to margin calls?

Does this mean that the world bankers will crank up the printing presses even more to keep the markets afloat?


Nadeem_Walayat
02 Jul 11, 14:06
Uk Housing

Hi Will

Remember UK inflation is running at about 5% a year, thats real terms falling house prices.

My next analysis / newsletter will elobrate on this.

Best

NW


Nadeem_Walayat
02 Jul 11, 14:12
US Debt

Hi Christian

All roads lead to inflation, be it assets, consuemr prices or credit. As you say Interest rate Derivatives of $300 trillion are evidence of this inflation.

I guess, to prevent a blowup of $300 trillion of interest rate short bets, wall street aided by the fed will double up to $600 or $900 trillion on rising interest rates, as the credit bubble continues to inflate.


Nadeem_Walayat
02 Jul 11, 14:17
US Debt Cieling smoke and mirrors

The debt ceiling debate is bogus, all smoke and mirrors for mainstream press consumption.

In reality the US does NOT have a debt ceiling, as evidence by the fact that it has been raised by about 100 times over the past 70 years and so it will be raised again for it is infinetly better for politicans to borrow or print money than raise taxes and cut spending i.e. this is how all politians buy votes.


Simon Green
02 Jul 11, 19:13
Inside Information?

Hello Nadeem

I too would like to thank you for your work over the past few years, it has helped me a lot.

Your stock market analysis has been uncannily accurate, whats the real secret, do you have access to inside information ?

Thanks

Simon


Dave
02 Jul 11, 21:57
reply ?

Nadeem

Grateful if you could reply to 30/06 posting

Dave


Will
03 Jul 11, 03:40
thats real terms falling house prices

Thanks Nadeem - this is what I was getting at, but for me we would need 3 years of 5% inflation and no nominal rise in house prices before they would begin to look somewhere around value.

Of course, if inflation hit 10%+ all bets would be off.

I'll look forward to your next newsletter :)


Wild
03 Jul 11, 10:13
Greece Bailouts

No one outside of Greece is really interested in what is happening to the Greeks. They just want their money.

The biggest creditors would most likely be the big European banks, amongst which the German banks are heavily exposed.

That is the story behind the bailouts. It is an indirect support of the creditor banks by their governments. It is yet another transfer of wealth to the banks, from future tax earnings and charges, not only in Greece, but in Germany and France as well. Even in Denmark, which, wisely, rejected the Euro. The politicians have sold the taxpayers down the river.

The man in the street is being enslaved, his family is being enslaved and his unborn children too, to pay for fat cats all over Europe.

The Greeks have once shown what can be done against overwhelming odds at Salamis and Thermopylae. I have a feeling they are about to show us again.

That would be an eye opener to the banksters and the kleptomaniac politicians!


brianthiesen
03 Jul 11, 12:00
Greece Protetsts

Keep in mind more violence disruptions problems etc. are exactly what the banks want, so these useless 2 day strikes and sit ins will do nothing they sit in the ivory tower and watch and as well as yields get bigger and banks or whoever double or triple or whatever down they win as the debt will be paid by someone

When we refer to greece lets not lump the citizens in with the bankers and politicians. This is part of the problem when we say "the greeks" or "greece" keep in mind a very small few will benefit in greece from this (like .000001%)

And during the time the Greecy swine were high on the hog it was this same .000001% who got all the benefits.

We should grow tired of everyone blaming the public sector or unions or tax avoiders.... this is human nature that many in a society are lazy or or that people dont want to pay taxes and do what they can to avoid it in every way MOSTLY THE RICH AT ALL TIMES PAY ABSOLUTELY ZERO TAXES hold these bonds and whine and complain about all but themselves in the media and we blame our own people (ones who have actually paid taxes, lifted a finger, didnt grow up in rich banking or political families and make under 50k/year)

Guys like shedlock and the rest who blame unions and public workers are fools. Anyone else is as well. Do your research! do you know what a CAFR is?

Do you really think if what we call "criminals' like drug cartels etc. keep multiple sets of books that the "smart and dignified right honourable noble politicians" don't?

We have all been distracted from what is really happening, these guys play a whole different game they sit on trillions and quadrillions not telling us and this whole time when the dow goes down 6000 points we say take everything when we look at a even 500 trillion in derivatives we think it is a big deal, to them they laugh and see it as a joke and if anything bad happens they just take more money from us, or even worse they make the bad happen then take it..... like all wars and problems, then they will blame "the global economy" "mother nature" climate change, the liberals, the democrats, the tories, big unions, labour parties, teachers unions, and even blame millionaires and billionaires.... because they know we will just go back to Jersey Shore like the monkeys we are.

So throw your molatovs at some buildings, yap about how much gold will go up in the next 3 years and realize who will pay higher insurance to the buildings you threw them at? You! to the insurer the banks own. then if you hit a corporation AKA person like a cop, you will pay via taxes to an compensation insurer.

Then if your metals go up the bankers will profit a thousand times more than you. And if you get the chance to beat up some cop drone, realize he has a family and is doing his job so they can eat as well and until you get your shit together and take out the ones in charge, nothing will matter in the least.

Except of course for how much they will profit from your idiocy and lack of life responsibility and need to have leaders to follow regardless of the path they take you down, and take you down they will for if you dont go down how are they to go up?

Until a band of these monkey walk right into a parliament or whatever it is called in a particular country and do what needs to be done (leaving that up to your imagination) more "partial violence" serves only bankers and serves against your fellow man. Regardless of "yeilds" or "debt" or who to blame for the problems or who will pay, the fact is you do pay and as long as you pay the illegal taxes to these powers someone will always be paying being blamed making fat profits, causing violence killing and maming until no end while we or you or whoever blames all but themselves.

Look in your wallet and at your mortgage and your "gift cards" (which become leverage in case you didnt know) if you want to see who is to blame this is your blood contribution to the vampire.

Look no further than your mirror before you speak of "debt ceilings" and all the rest. This is the cause of all your inflation, deflation, food shortages, war whatever you want. it is no one but your self PERIOD.


Nadeem_Walayat
05 Jul 11, 23:29
Inside Information (Simon)

There is only one mechanism that works i.e. generates accurate analysis, and that is I make money when I am right, and lose money when I am wrong.


Nadeem_Walayat
05 Jul 11, 23:33
Bankrupt Banks and Greece Bailout

Greece (as a whole) has benefited hugely from the bailout, hugely, where would Greece be without the bailout ? Where ?

Outside of the eurozone, bankrupt and with a worthless currency.

The reason why its being bailed out is because Greece defaulting would set in motion a sequence of events that would collapse the whole global financial system, which is WHY Greece is being bailed out.

This article is NOT primarily about Greece but why people in Britain should protect your savings from the real risks of loss of savings in nominal terms and then value of savings in real terms.

That is the primary focus of this article, not Greece.

Seriously, if you have more than £83k sat with any single banking group other than NS&I then MOVE IMMEDIATLY OR FACE THE CONSEQUENCES!


Paul_B
06 Jul 11, 11:57
UK inflation outlook

Nadeem, you speak about coming inflationary pressure from a wages/price spiral, but although I grant you we're at the beginning of a stagflationary decade, it's hard to see where wage demands will feed into it. The broad mass of the people are getting squeezed like never before. Prices iro utilities and fuel and whatnot have increased massively, but the people can't really do much about it due to the grave weakness of the economy. This isn't like the inflationary spirals we're used to in the UK which used to result from labour shortages and other bottlenecks. There is too much unemployment around for workers to risk pushing their luck with wage demands which, if we're truthful, would only at best restore most of the purchasing power they had a few years ago.

This crisis which hit in 2008 is now entering its third phase. QE has been a dismal failure and we are now seeing a new flurry of companies going bust and laying off workers. We have inflation and unemployment. Unions know they have little ammunition to deal with the situation when so many people now consider themselves lucky to have a job at all. The upshot is that the squeeze is unavoidable and the bulk of the British people are going to get poorer and poorer and poorer and more and more businesses close. It's hard to see then, why you remain so sanguine about the outlook for house prices in the UK.


Nadeem_Walayat
06 Jul 11, 17:18
Wage Price Spiral - UK Inflation Mega-trend

Hi

18 months ago, no one could see how UK could experience inflation as a long list of reasons where given why inflation would be 1% or less a year forward.

Instead here we stand with CPI at 4.5%, think about that for a moment 4.5% not 2.5%, or 3% but 4.5%. You would be laughed at if you said inflation would be 4.5% in 18 months time, just as academic economists would laugh at anyone today who states a wage price spiral is imminent.

The governments know only one thing - That is to PRINT MONEY.

The bigger the crisis the more money they print.

QE is just one name for printing money, for it takes many forms.

As ever, after the event the reasons will become crystal clear, just as now everyone points to inflation being imported and that the UK did not have the spare capacity that it thought it had.

In a future article / newsletter, perhaps next one, I will eloborate on the wage price spiral, as it feeds into the housing market analysis.

Best

NW


brianthiesen
07 Jul 11, 01:08
Greece Bailouts

Nadeem,

The previous post was not to be intended as a jab or knock on how or if you make money. What is quite obvious is barring that you bet against everything you are saying or simply not trading at all and observing, you are making money. When you is used it means to whomever reads, not to you directly, as in also that sense to say "greece" or the "greeks" did this or the bankers or anyone, it is %100 collective. And the collective starts at the individual.... you (or anyone)

Having said that it is intended to move people to a position (potentially) without blame. Fools are those who would have blindly invested any amount in Iceland without due diligence, Fools further should expect its people to bare the burden of this debt for what amounts to a century or more of slavery. It must be asked what sane man (although man itself has bondaged himself for centuries of continuously heavier yokes) should agree to such a thing to bail out a bunch of people foolish enough under any circumstances to invest at X or Y?

Why should iceland bail out Britain and be shamed if they dont.... screw them, lose you lose. Now this is no different for greece, they messed, so why britain and germans to pay? Only because the people in charge of the worthless paper (Which is not "Britons" or "Germans" and we must realize what we create when we lump all things together) but those who speak on their behalf as far as finance is concerned, bought that junk knowing full well it is %100 garbage. Now then might it be we could ask that they PURPOSELY put all of europe in a bind and that by fear of "losing it all" and the fact these people will not be lynched because they have scared the population to death, europe now faces (along with the world) this "Situation" that "magically happened" because one group of people be it unions or this or that faction (all but the rich and the politicians. In order to be in that position... they must really be in that postion. At least that is the books and what we are shown, when mean while there is plenty of money, plenty of gold, plenty of silver and plenty of food, plenty of land....

For without "Scarcity" or scarecity, why would we feel the need for more (desire vs fear) flip flopping the split personality insides hence society is split and in constant blame, what perfection for the puppet master, they really dont have to do anything except sit back and watch us react the way we always do, like puppets

The funniest bit is that if everyone is blaming everyone it technically means no one is doing anything, it is like a company... The president according to the labourers do nothing, according to the president management does nothing, according to the labourers the management does nothing.... So how is it anything gets done? And when something goes wrong everyone but them is to "blame" Quite comical wouldnt you say?

Anyway...

They are the grand masters of human behaviour and we fall for it every time.

This situation no doubt can and will be (as planned) used to exercise an even tighter grip on what we call "society" and they call pigs or cattle (us)

While they sip brandy, do rails, have 3 call girls a night, we languish "beyond our means" by getting a credit card to pay for food since wages have gone nowhere for decades while prices increase. These price increases in general force people to get "credit" Discounting the fools who use strictly for larger and larger TV's etc. Higher prices mean more tax revenue (to a point) and further spiralling "debt" (which if you research in no way exists but has been fictioned to control emotion) Anyone who has traded knows emotion can be the biggest asset (or non asset) or the biggest burden, Moreover not one man can say they cannot recall a situation where this was the case. So the game is to work emotion, of the "fools" while they sit on unreal profits, so unreal it is impossible to believe. Why? because all weve ever known is debt and shortages and not enough etc. etc. This only takes one generation and we are hooked (Like income taxes were "temporary".... now look at us!!!!

All we do is blame, "the unions" this "the politicians" that swipe swipe swipe in a mindless blind perpetuation of the game we so despise, in so saying is it not that by which has happened by our request we qet exactly what we want only to in the next breath say this is what we dont want and somehow we expect otherwise? That somehow our word means more than our action?

This is conspiracy at its finest as we conspire against ourselves, while it is polibankers simply sit back and politrick the monkeys in drunken submission noting that this fear of losing it all is unwarranted for it is truly that we for all intents and purposes have lost everything already. And in such to go to the "final solution" further and larger crises need to be devised (like a heroin addict) and is it is further and further crises we get (by demand) due to inaction from the previous one(s) to the newest.

Therefor it is that we "you" in the previous comment, must look at ourselves very deeply, but unfortunately it is a very ugly picture, this ugliness manifest globally into the cesspool we call earth.

Many will say they are doing this (crisis) to make a "new currency" When truthfully they are only playing in a probability matrix and will make it up as they go depending on what we do, when oil goes up and we pay, it will, just go up further, so is the yo-yo they play us with in nearly every aspect (look around you will see.. if you dare) Focus your energy on this, upon up to the picture of outside and let it serve as the gateway in for/to you. Our inaction or action truly does ripple outward and carry power despite what we choose to beleive that it does not.

The blaming the money making the war the gas the famine this will all continue forever until we stop. What is the solution to the greek and global "Crisis" STOP. Stop the support of the turmoil in any way you can even in the smallest ways to begin. Stop getting mad at everything, stop blaming, stop paying ever higher prices, stop listening to the media monkeys, stop with the TV dumbness, stop with watching the ratty women running around trying to look hip and cool, stop with the local sports team eating up 10 hours of your week, stop the hate against the other guy and his team, stop hating whoever it is you hate for whatever reason, stop wanting more for you will become less and less as the world has.

Please for even a moment see if this is possible understand all those who call conspiracies for what they are see the small picture the big conspiracy is you against yourself, and that it is impossible for us not to be conspired against when this is exactly what we do day in and day out. Year in and year out, upto this exact moment where it is we now have a chance to make even the smallest change, and maybe stand up to what is transpiring "by accident" from "Stupid bankers and politicians" for what could we possibly fear but the fact there may be by our action (or lack thereof) a chance to become without fear?

Your ability to live without it will require your action towards and not blame towards another.

Next time you do exactly what exascerbates the problem, think of your role and your contribution to your own slavery by fear, debt, desire or otherwise

Then maybe think of how you could lean the other, way, in advance i thank you for helping to make this a better place and know that others will follow for it is exactly this that we humans are best at!


Tilo
07 Jul 11, 03:37
Wage price spiral

I find it difficult to see a wage price spiral in the UK, both in the private and public sector.

Private sector: In agreement with a previous poster I would say that unemployment and economic shrinkage is IMHO too prevalent for any concerted action from relatively weak trade unions.

Public sector: IMHO bond and FX markets would punish the Pound immediately because it would render all the government talk of austerity completely meaningless!

Best regards, T.


Nadeem_Walayat
10 Jul 11, 06:11
Accurate Analysis and Greece

Hi Brian

I think you may have mis-understood me, the secret to making accurate analysis is to be conditioned by profit and losses, without which is why approx 90% of what you read will turn out to be wrong, because it is written by salesment or journalists that never have any real consquences for being wrong.

At the end of the day all my analysis is focused on what impacts on my portfolio, inflation is a consquence of bailouts which left unchecked will wipe out mine and everyone elses portfolios.

The bottom line with regards the economy is free market competition, those that cannot compete need to go bust, be they banks or countries so they can restruture and compete, that is the ONLY solution, there is no other.

Allowing Greece to continue to suck in 100 billuon euros a year is not helping Greece for they cannot compete at the current rate of exchange i.e. their wages are too high! They need to either cut the exchange rate by 33% or their wages.

Best

NW


brianthiesen
10 Jul 11, 16:16
Correct again NW

Greece no doubt needs to go bust like the rest of.... pretty much the whole planet, Real people/leaders (actually i will say humans as saying you are a person or of people makes you a corporation owned by the bankers..... WE THE PEOPLE lol)

Real and actual leaders which is more so large groups of people need to oust these guys. P/L is the key Greece etc. are bad bets that are way more L than anything.... ever and it is there politicians that steer them that way... and of course those who vote for them... again the collective.

Greece needs to cut the oligarchy, default, become self sustained and let europe wallow in their debt (by their i mean greece' debt and their own)

in roughly 1-2 years they will be out of the hole and back on their feet with a shot at surpluses vs all which we all know and understand by now.

Good for you to pay attention to your portfolio now only if the people paid attention to the portfolios they are entrusting their respective govts to manage.

A full systemice tear down and rebuild needs to take place across the board, sadly the only way this may happen is if the virus that is the bankers kills itself for as we can see centuries have gone by of complete inaction which feeds tighter grips on control.

Starvation is a good motivator which is why we see more courage in third world countries than we do of "first world" and the very fact we have to distinguish between the 2 is a blight on humanity.

This fiction must end and often it is not without blood, it seems we are starting to see the rats have overpopulated their sewers and maybe if we are lucky they will eat themselves alive (like this murdoch situation)

If greece defaults (which we all know they have) maybe if enough pensions disappear into thin air etc. then maybe the germans etc. will get hungry enough, then in the end it may be that we think of profit for the benefit of mankind rather than vampires and wolves

But of course as always keep up what you are doing, i no way would i say since i have followed your analysis or articles would i say anything contrary to your analysis or most opinions however my only issue was with blaming wholesale population when as per greece or this planet we must break it down to our own individual natures and responsibilities to ourselves, children etc. If we can find this courage, all our problems will vanish quite quickly. I will say for as much bad as their is there are signs this is happening and this truly is promising.

As you spoke of trends or only seen 2 years down the road and truth before its time is heresy, if the greeks can pull it off and mob those rats out of the sewer we will all be better off if this collapses for only then may we build anew


jonnysingapore
10 Jul 11, 20:09
eu total debt requirement to fall

Hello Nadeem. hooked on your work, would love to learn your analysis methods.

I read on one of your guest posts that total eu debt requirements after this year is going to fall quite dramatically year by year, even though PIIGS countries require signficant debt relative to the size of their economies. Wondered if you had come across this in your analysis.

Can you see the euro getting very strong and this PIIGS debt talk dropping off the table once total debt needs are falling? wouldn't this also lower interest rates in the EU?

thanks.


mike
16 Sep 11, 09:39
Santander

Nadeem,

I agree with a lot of your analysis, but i think you are wide of the mark with santander risks. Santander UK is completely ringfenced from Santander it has its own credit rating and share price and would continue unaffected should santander group fail.

http://www.aboutsantander.co.uk/investors/credit-ratings.aspx

also you missed Cater Allen Private Bank from the list of assets owned by Santander UK.


Nadeem_Walayat
07 Oct 11, 07:56
SANTANDER Downgraded

Moody's downgraded a number of UK banks today including Satander,

I think its time for me to update the UK Safe bank List.

Next article - within the next few days,

Best

NW


Neil
25 Oct 11, 11:02
Housing Market analysis

Hi Nadeem,

Some interesting articles and ebooks, thank you.

When do you think the next newsletter / eBook regarding the housing market will be available ? I am interested to hear your views on the UK housing since I can only see the same outcome as others have mentioned above.....depreciation.

Regards.


Nadeem_Walayat
25 Oct 11, 11:41
UK Housing

I can't say when an ebook will be available because the final conclusions emerge from accumulative analysis.

My next analysis will be on UK housing and inflation the conclusion of which will point me towards the next question to answer that should culiminate in a multi-year trend forecast.

Best

NW


MDerkacz
30 Jun 13, 18:23
UK Banks - Probability Deposits over £85k are Safe

Hi NW,

Long time reader - first time comment poster.

It's been a long time since you updated your matrix of the estimated relative safety of UK Banks; "Probability Deposits over £85k are Safe".

I've been with HSBC for years and have my Business Banking there too. Read recently that they're almost 50% exposed to US Treasuries, so the two weeks of rising yields / falling prices won't be going down a storm. This week they've just stamped Service Charges on an account that never had them before - it's not the level so much as the notion itself that's jarred me a bit.

Having seen your own Santander UK Business Banking "server issues" of late, and the Laiki 'locked funds' screengrabs of others, confidence is a bit dented...

Today and to me, NAG's UK outfits - Clydesdale and Yorkshire - feel increasingly less risky places to park capital reserves.

*Any chance that you could provide an update on those relative safety estimates across the UK?

Thanks for sharing,

Mark

(p.s. A future article on UK Business Banking, assets and investing etc. would also be massively appreciated)


Nadeem_Walayat
30 Jun 13, 22:44
Escaping from the Bankrupt Banks

Hi Mark

My strategy is to seek out that which will allow me to sleep well at nights, which since start of 2012 has meant transferring my wealth from banks, bonds and stocks into bricks and motar.

YOU can't trust the banks.

You need to see what your exposure is and then diminish it.

Yes, I have several business, which means there is always a banksters risk to the reserves, my strategy there is to spread the cash between banks, for instance in the UK, in my escape from Santdander I was able to get 1 year fixed rate BUSINESS bonds with Aldermore at 2.15%, which is better than nothing, I see the current rate is at 2% which is actually up from 1.6% when I last checked a few weeks ago.

It is tough, we will be squeezed by the crime syndicate, the ultimate current escape is into bricks and motar.

At the end of the day I count myself very fortunate for when the banks give me pain, then I can ram my articles down their throats! and then I feel much better :)

Best

NW


MDerkacz
01 Jul 13, 03:15
An Englishman's home is his castle

Cheers NW,

With just about every asset class tanking, escape planning is definitely the order of the day.

Your editorials have long felt like textbooks.

- I keep business reserves inside FSCS limits of separate UK Banking Licences

- I park personal income in NSandI so it's as safe as possible until needed

- I've got a couple of separate current accounts on a just-in-case basis

- I'm dubious about fiat and paper assets too and wish everyone would stop sleepwalking backwards!

- etc.

... so thanks to good steering am ok as I can be in terms of general exposure to bankrupt banks.

- I've also gone heavily into bricks'n'mortar last year. Have got a mortgage for now (and I know that makes me a DEBT SLAVE who OWNS NOTHING) but it's fixed rate and the plan is to overpay fast and clear asap, so that I can get rid of those shackles pronto and start planning to build a moat around the castle!

Re: Business "savings" - they've long bordered on being a joke with rates typically offered at 0.05% p.a. but retaining capital reserves isn't really something I can think of as an optional extra today.

- Have had an eye on Aldermore for a few months; their business Easy Access 1yr has been stuck on 1.50% for a while but the Fixed/NoWithdrawals at 2.0% you mention sounds like a plan.

- Definitely "better than nothing" and their savings-book-to-fund-mortgages ethos rings ok from a risk perspective as does their only funding at up to 80% LTV...

- Will take the plunge there rather than sit on the fence - thanks.

Loving the generosity,

Cheers again,

Mark


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