Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The news they're burying in "Trump Week"

Stock-Markets / Financial Markets 2016 Nov 15, 2016 - 12:02 PM GMT

By: Submissions

Stock-Markets Trump.

Trumpety-trump.

Trump Trump Trump.


Tell me I’m not the only one who had this in my head when I turned on the news this morning.

Or logged onto a website.

Or opened a newspaper.

I think something like the first seven or eight headlines on the FT’s app this morning were about Trump.

I know it’s big news. But it’s not the only news.

Makes me wonder... what bad news is getting buried this week?

Shovels out!

Oh look. The Bank of England decided Tuesday was a great day to put out a press release about something called MREL.

MREL stands for minimum requirement for own funds and eligible liabilities.

It’s part of the ongoing effort to end Too Big To Fail and bank bailouts.

Instead of bailouts, the idea is that in future failing banks will be rescued via a bail in.

MREL is to set out how much loss absorbing capacity each bank needs to have, depending on how big it is and how likely it is its failure would collapse the system.

Banks can hold this loss absorbing capacity as a mixture of equity – meaning a bank’s shareholders take the hit if it needs to be rescued – and debt that can be converted into equity if needed.

Think of the so-called CoCo (contingent convertible) bonds I wrote about in February, when these bonds were giving Deutsche Bank a big headache (which hasn’t gone away, incidentally):

”These are bonds that can be written down or converted into equity (i.e. shares in the bank) if a bank’s capital buffer – the amount it has available to absorb losses – falls below a predefined threshold.

“So in the good times, investors get paid a coupon the same as any bondholder. But if the bank gets into difficulties, it can ‘bail-in’ CoCo investors, giving them shares in a now struggling institution.”

So what’s significant about the news published on Tuesday?

I find two things interesting. First, the large banks will now have until 2022 to issue the required amount of debt that can be bailed in.

The original deadline was 2020.

It’s interesting because on the one hand Mark Carney likes to talk about how robust the system now is.

But on the other hand the Bank of England says banks need to boost their loss absorbing capacity. And it’s now acknowledged they’re going to need more time to do it.

The other reason this is interesting is that it’s another step on an important journey.

“The Bank of England now has the legal powers necessary to manage the failure of a bank,” Tuesday’s press release says, “and significant progress has been made to ensure there is coordination between national authorities should a large international bank fail.”

If you’ve got your free copy of Jim’s new Road To Ruin book and had a chance to read it, you’ll already know exactly where this is leading.

And if you haven’t, secure your copy here before you read the rest of today’s DR.

The term “eligible liabilities” is interesting, because it’s rather broad.

A bank deposit is a liability. It’s the bank’s liability to you as its customer.

MREL isn’t laying out plans to bail in depositors. Not explicitly.

Yet don’t be lulled by the talk of “special debt”, “stress tests” and the like.

The approach is entirely reliant on regulators getting a number of difficult (perhaps impossible) things right.

They need to make sure these minimum levels are enough. And they need to make sure their stress tests take account of the worst things that might happen, and accurately model their impacts.

But how can they know?

And all this is assuming there are enough saps willing to invest in all this new “special debt” (no doubt institutional investors like pension funds will be given plenty of “encouragement”).

If MREL turns out to be as strong as the pre-2007 safeguards, then to whom will they turn to make up any shortfall?

Don’t rule out it being you and your savings.

The principle of bail in is now set. The various mechanisms are being put in place.

You can see where this is heading...

I’ll let Jim take it from here. Follow this link to find out more about what he calls the “Ice 9” plan to use your money to fix their crisis.

Tomorrow we’ll have a look at another big development in this story that also just happened to take place as Americans were going to the polls!

Until next time,



Ben Traynor

Editor

The Daily Reckoning www.thedailyreckoning.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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 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