HUMANITY AT A CROSSROADS: THE BANKS ARE COLLAPSING THE MARKET TO GET NEGATIVE INTEREST RATES TO STEAL YOUR MONEY!

Humanity At A Crossroads: Deliberately Created Systemic Risk Coming Apart. By Gregory Mannarino

 In recent months a number of the world’s central banks have veered into territory once unimaginable to most economists: negative interest rates.
Standard textbook theories hold that negative interest rates are infeasible because depositors always have the outside option of holding onto cash, which is storable and therefore pays an effective interest rate of zero. Recent experience and some expanding research suggest that zero is in fact not a binding floor on interest rates.
In our increasingly complex financial and monetary systems, currency is relatively unimportant and transactions costs mean that depositors may be willing to accept small negative rates of interest. In recent days, Fed Chair Janet Yellen has at least opened the possibility of the Fed following in the steps of some of the world’s other central banks in moving policy rates into negative territory.
The danger of negative interest rates
http://www.cnbc.com/2016/02/10/the-danger-of-negative-interest-rates-commentary.html

Bank of Japan adopts negative interest rate policy
http://www.cnbc.com/2016/01/28/bank-of-japan-adopts-negative-interest-rate-policy-reuters.html
Negative Interest Rates
http://www.bloombergview.com/quicktake/negative-interest-rates
BoJ Adopts Negative Interest Rates, Fails To Increase QE
http://www.zerohedge.com/news/2016-01-28/markets-turmoil-after-nikkei-reports-bank-japan-discussed-negative-interest-rate-pol
Small Swiss bank become first to hit savers with negative interest rates – CHARGING them to take their money
http://www.thisismoney.co.uk/money/news/article-3329324/Swiss-bank-ABS-hit-savers-negative-rates.html
Jamie Dimon Thoughts On Negative Interest Rates
http://seekingalpha.com/article/3665056-thoughts-negative-interest-rates

TT

The Crash In US Bank Stocks Is Only Half-Way Through

It appears by the total lack of coverage that the utter collapse of Europe's banking system is entirely irrelevant to the "fortress-like" balance sheets of US banks... but it is not. Once again today, US financials saw bonds dumped across the senior and subordinated segments...


...and while US financial stocks have fallen hard year-to-date, if credit is right - and it usually is on a cyclical basis - US bank stocks have a long way to go (as believe in book values is battered).


Of course, the CEOs will all tell investors there is nothing to worry about - just as David Stockman warned...

"in my experience is that when the crunch comes, bank CEOs lie"

The Most Ominous Warning That Oil Storage Is About To Overflow Has Arrived

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

And now with major US refiners dumping crude, as we detailed overnight, those fears are surging.

U.S. Energy Information Administration data on Wednesday showed inventories at the Cushing, Oklahoma delivery hub hit a record 64.7 million barrels last week - just 8 million barrels shy of its theoretical limit - stoking concerns that tanks may overflow in coming weeks.

And now, given the "super-contango" in 3-month it is extremely clear that storage concerns are at their highest in 5 years...

Simply put, as one trader noted, speculators are now "making the leap to Cushing storage never being more full... will actually overfill, or even stop taking crude oil deliveries outright."

Central Bankers Losing Control, Now Bad News Is Actually Bad News.

Among the many themes we might pick for the market turmoil – energy, margin debt retreating, currency gyrations, emerging market disarray – the one that will be the most punishing is when people lose faith in central bankers to control the markets and steer certain outcomes. As I noted in a recent piece: However, there’s a new fault line that’s opened up and it’s quite serious. As we’ve noted previously, the immediate reaction to Japan’s negative interest rates was for the share prices of Japanese banks to get crushed (even as the rest of the Nikkei spiked upwards, briefly). The big banks are increasingly unhappy and the already-wounded Deutsche bank is even angrier: [article on DB] Ah. Now we’re getting somewhere. A schism has finally appeared. A fault line that could lead to real change; quite possibly, disruptive change. This emerging friction is between the big client banks and the central banks. They are no longer on the same page. Self-interest and self-preservation have reared their ugly heads, as they always do when the financial system is placed under stress. Central bank policies are now crushing the big banks and the little people alike, so now they finally care. The gravy train for big banks is over. (Source) This idea of s schism between the big banks and the central banks is really a very big deal. I’m not sure where the Bloomberg journalist got this idea, but it’s focusing on a really important theme: Stock Rout Deepens, Bonds Jump as Faith in Central Banks Falters Feb 10, 2016 Financial markets are signaling that investors have lost faith in central banks’ ability to support the global economy. U.S. stocks joined a rout that has global equities poised to enter a bear market, as investors ignored Janet Yellen’s signal that the Federal Reserve won’t rush to raise rates in the face of market turmoil. A selloff renewed in risk assets from bank shares to crude oil and emerging-market currencies. Lenders led European stocks toward their lowest since October 2013. It’s even worse than “investors” (speculators is the correct term) losing faith in the ability of central bankers to support the global economy, they are beginning to lose faith that the central bankers can support the asset markets. That’s the major sin at the moment. So – poof! – just like that several years of ‘gains’ in the stock market have been wiped out. And there’s more to come until and unless the central banks intervene and give the junkie another big fix of monetary heroin. Which will, by the way, only makes things worse over the long haul even as it shores things up for a while. This next quote from the above article captures the sentiment well I think: “Over the last few years when we got bad news, equity markets would rally because they would interpret this as potential for central banks to go more dovish,” said Mohit Kumar, head of rates strategy at Credit Agricole SA’s corporate and investment bank unit in London. “Now that correlation is shifting to bad news is actually bad news. Investors are concerned over central banks’ policy options given the market is driven by factors over which they have little or no control.” Yes, now bad news is actually bad news. Just like it used to be and arguably should be. This whole fixation on the Fed, et al., cajoling and pumping markets ever higher and “doing whatever it takes” will be more widely recognized as being utter intellectual rubbish that has caused and will continue to cause major economic, monetary and social damage. Chris

Pivot to Nowhere as the World Awaits the Next Big Crisis

But at least there's still occasionally good TV

Originally appeared at Strategic Culture Foundation

Let’s start with the IMF «reform» which will be in full effect in a few weeks. Even this mini «reform» had been repeatedly vetoed by the Empire of Chaos. Washington still holds the largest quota and voting shares in the IMF, ahead of Japan. But now China is in the 3rd place and BRICS members Brazil, Russia and India are in the top ten.
This does not spell out radical change though. The US government still refuses to implement a full reform that will end up reducing the IMF's global power. China, meanwhile, advances with facts on the ground such as the Asian Infrastructure Investment Bank (AIIB), and the BRICS with their New Development Bank (NDB), a serious attempt at breaking the stranglehold of a fraudulent – and hyper exploitative – monetary and financial system.
Bretton Woods may be dead but the world is still encumbered with its corpse. The same applies to the larger Washington Consensus – as much as deadly chickens are increasingly coming home to roost.
An avalanche has been building up since the Reagan years – that late Cold War show neatly immortalized in the new TV series Deutschland 83.
In the go-go 1980s, the US government cut taxes for the wealthy and attacked organized labor. Then, in the 1990s, it outsourced good paying manufacturing jobs to Mexico, China and other low wage platforms and deregulated finance – via the repeal of Glass Steagall and the passage of the Commodity Futures Modernization Act of 2000 under Bill Clinton.
The Afghanistan and Iraq wars, in the early 2000s, cost US taxpayers at least $3 trillion – and paved the way for the massive 2008 financial crisis, which is still ongoing and about to metastasize into an even bigger crash.
After all, in «response» to the crisis, the Fed, followed by the European Central Bank (ECB) and the Bank of Japan, went all out quantitative easing (QE) – essentially transferring trillions of US dollars from taxpayers to prop up (still) insolvent banks.
This tsunami of cash obviously did not sit idle, but was channeled into dizzying scams maximizing returns, inflating stocks (via corporate stock buybacks) and providing ultra-cheap money to invest in real estate.

The state of play in the US – which Il Generalissimo Trump scholarly describes as «nothing works in this country» – spells out high unemployment; anemic job growth (90% of «new jobs» are temp with low pay, few benefits and zero job security); and exploding deficits.
US foreign policy under the lame duck Obama administration – in commercial terms – is now resumed to pushing «NATO on trade» pacts; the TPP and TTIP, which include the EU and Japan, both stagnating and/or declining, while excluding China. This means both pacts are virtually, eventually DOA; no one can increase economic growth anywhere by excluding China.
In Cold War 2.0 terms, US foreign policy now entails a US/NATO latent war theater engulfing the Maghreb, the Horn of Africa, the Levant, the Caspian Basin, the Persian Gulf, the Indian Ocean, the South China Sea, and the whole of Eastern Europe as far as the Russian borderlands.
Predictably, US taxpayers are financing the Cold War 2.0 mindset with the Pentagon keeping very much alive the possibility of direct military confrontation against the three key hubs of Eurasia integration; Russia, China and Iran.
Pivot to nowhere
The myriad of economic problems confronting US turbo-capitalism are structural and absolutely insolvable under the economic/political system in place, which is in fact a Washington/Wall Street crypto-consensus. Fissures among the Masters of the Universe themselves are about to explode in the open as the planet embarks on a tectonic shift towards a more multipolar economic and political order centered on Eurasia.
Geopolitically, the best the Obama administration could come up with was the 2011 «pivot to Asia» which has translated so far into sporadic US Navy bullying in the South China Sea, converted into a new prime tension region even before the US had managed to extricate itself from the Middle East quagmire.
Beijing, meanwhile, puts the pedal to the metal on the restraint front, while accumulating political – and economic – capital as it enhances pan-Eurasian economic interdependence. Not only the AIIB but also the Silk Road Fund, and even the NDB bank in the future, will all be geared towards bringing about the One Belt, One Road vision; the New Silk Roads which will be the lifeblood of an integrated Eurasia.
China and the BRICS’s strategy of establishing a rival international monetary, financial, diplomatic, trade and geopolitical system is the ultimate nightmare of the Masters of the Universe – as divided as they may be. So no wonder the only visible reaction – via Pentagon / NATO – has been to ratchet up fear and/or warn about impeding chaos if the hegemon is not trusted to impose its version of order.
It’s as if the whole planet would be fatalistically waiting, in suspension, for the next big, inevitable crisis. The real suspense is whether this new metastasized crisis will doom for good the hegemon’s financial and military domination. Meanwhile, we watch Deutschland 83.

Gold To Be Revalued Big Time When World Economies Fail

New study finds that Dodd-Frank has promoted industry consolidation and killed community banks

By Todd Zywicki February 9, 2015

A new study by Marshall Lux and Robert Greene reports that since the enactment of Dodd-Frank community banks have lost market share at twice the rate that they did prior to Dodd-Frank.
The authors note that many of the regulations implemented pursuant to Dodd-Frank are not linked to the size of the institution, thus there are economies of scale in regulatory compliance. Thus, regulatory costs tend to fall proportionally heavier on smaller banks, which, in turn, tends to promote consolidation of the industry (as I noted several years ago when I predicted that Dodd-Frank would promote industry consolidation).
The study has lots of interesting data on the industry patterns of lending by various types of banks as well, most notably that large banks tend to make fewer agricultural loans than community banks.