Deutsche Bank Profit Plunges 98 Percent As The Outlook For ‘The World’s Riskiest Bank’ Darkens - Michael Snyder THE ECONOMIC COLLAPSE BLOG

Deutsche Bank Profit Plunges 98 Percent As The Outlook For ‘The World’s Riskiest Bank’ Darkens Posted: 27 Jul 2016   Michael Snyder  THE ECONOMIC COLLAPSE BLOG The biggest and most important bank in the biggest and most important country in Europe continues to implode right in front of our eyes.  If you follow my work regularly, you probably already know that I issued a major alarm about Deutsche Bank last September.  Subsequently, Deutsche Bank stock hit an all-time low.   Then I sounded the alarm about Deutsche Bank again back in May, and once again that was followed by another all-time low for Deutsche Bank.  And then I warned about Deutsche Bank again in early June, and you can probably imagine what happened after that.  Over the past year, this German banking giant has literally been coming apart at the seams, and in so many ways it is paralleling exactly what happened to Lehman Brothers back in 2008. Today, we got some more bad news from Deutsche Bank.  Compared to the exact same period last year, profits were down 98 percent.  A nearly 100 percent drop in net income spooked a lot of investors, and Deutsche Bank shares got hit hard on Wednesday.  Of course Deutsche Bank shares are already down by more than half over the past 12 months, and the financial sharks can smell blood in the water. Just like Lehman Brothers in 2008, Deutsche Bank is essentially in panic mode at this point.  They recently announced that they will be closing 188 branches and that 3,000 workers will be losing their jobs.  But this could just be the beginning of the layoffs at the bank.  According to some reports, the bank could cut up to  35,000 jobs by the year 2020, and CEO John Cryan recently admitted that they “may have to accelerate cost-cutting measures“. What makes all of this even more alarming is that Deutsche Bank is widely considered to be “the most dangerous bank” on the entire planet.  The following comes from a CNN article posted just today entitled “The world’s riskiest bank is in trouble“… What is going on with Deutsche Bank? Germany’s biggest lender was dubbed the world’s riskiest bank by the International Monetary Fund last month, just as one of its U.S. businesses failed a Federal Reserve stress test. Its shares are down 45% this year, and on Wednesday it said second quarter profits were wiped out by a 98% slump in earnings. The stock fell 2.5% in Frankfurt. The primary reason why Deutsche Bank is “the world’s riskiest bank” is because of the mammoth derivatives portfolio that is possesses.  It currently has 42 trillion euros of exposure to derivatives, which is an amount of money about 13 times the size of the entire German economy. When Deutsche Bank finally goes down for good, it is going to be “the shot heard around the financial world”, and it will be a disaster many times greater than the collapse of Lehman Brothers in 2008.  Just consider what Jeff Gundlach had to say about the bank earlier this year… “Banks are dying and policymakers don’t know what to do,” Gundlach said. “Watch Deutsche Bank shares go to single digits and people will start to panic… you’ll see someone say, ‘Someone is going to have to do something.'” As I write this, shares of Deutsche Bank are sitting at just $13.63, and many experts are having a very difficult time finding any reason for optimism.  In fact, Edward Misrahi has stated that the bank is his number one short trade, and Jim Collins says that “it is just impossible” to recommend buying shares of Deutsche Bank even at this depressed level… As an equity analyst, it is just impossible to recommend shares of a bank that is not growing revenue. So really, Deutsche is an untouchable, and the stock market is trying — to the tune of a 58% decline in DB’s market value in 12 months — to recalibrate Deutsche’s market capitalization to the true value of its assets net of liabilities. That’s a painful journey. I don’t mean to just pick on Deutsche Bank.  Certainly there are a lot of other major banks around the globe that are also teetering on the brink right now.  Just take a look at Italy.  Basically their entire banking system is in the process of melting down. But the utter collapse of Italy’s banking system won’t have the same kind of worldwide impact that the collapse of Deutsche Bank will. Unlike some of his predecessors, CEO John Cryan is being honest about some of the struggles that Deutsche Bank is going through right now, and he admits that they may need to be “more ambitious in our restructuring”.  The following comes from Business Insider… Cryan said in a statement (emphasis ours): “We have continued to de-risk our balance sheet, to invest in our processes and to modernize our infrastructure. However, if the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring.” He said something similar in a note to employees (emphasis again ours): “Here I would like to speak plainly. If this weak economic environment persists, we will need to be still more ambitious in our restructuring. We will do everything in our power to accelerate the measures we have already planned.” Yes, I know that the stock market in the United States has been setting all sorts of all-time record highs lately. But that doesn’t change what is going on in the rest of the world one bit. The financial crisis that has been gripping Europe, Asia, South America and most of the rest of the planet since the second half of last year is accelerating. And it is inevitable that the U.S. is going to be experiencing some very real pain in the not too distant future as well. So even though things may seem a bit quiet this summer in the financial world, the truth is that there is a whole lot going on under the surface. Deutsche Bank is one glaringly obvious example of this, but there are many others all over the globe.  And not too long from now, the dominoes will begin to fall very rapidly.

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens - Michael Snyder THE ECONOMIC COLLAPSE BLOG

The Price Of Silver Explodes Past 20 Dollars An Ounce As The European Banking Crisis Deepens Posted: 04 Jul 2016 Michael Snyder  THE ECONOMIC COLLAPSE BLOG Have you seen what the price of silver has been doing?  On Monday, it exploded past 20 dollars an ounce, and as I write this article it is sitting at $20.48.  Earlier today it actually surged above 21 dollars an ounce for a short time before moving back just a bit.  In late March, I told my readers that silver was “ridiculously undervalued” when it was sitting at $15.81 an ounce, and that call has turned out to be quite prescient.  The Friday before last, silver started the day at $17.25 an ounce, and it is up more than 18 percent since that time.  Overall, silver is up more than 30 percent for the year, and that makes it one of the best performing investments of 2016.   So what is causing this sudden surge in the price of silver?  This is something that we will discuss below… This sudden spike in the price of silver has definitely caught a lot of analysts off guard.  Some are suggesting that the fact that the Fed is now less likely to raise rates after the Brexit and the fact that the dollar has been slipping a bit lately are the primary reasons for silver’s rise… This isn’t a gradual increase either. It’s an explosive growth spurt. Just three months ago silver had reached an 11 month high. Now silver prices have reached a 23 month high. Several factors appear to be influencing these gains, including a weakening dollar, and the fact that the Fed may cut interest ratesin light of the Brexit vote. Personally, I don’t buy those explanations. To me, the continuing implosion of major banks over in Europe is the main factor that is driving investors to safe haven assets such as silver. Rumors continue to spread that Deutsche Bank is essentially insolvent at this point, and many are watching for the imminent collapse of the largest and most important bank in Germany.  When this happens, it will be a much, much more cataclysmic event for the global financial system than the collapse of Lehman Brothers was back in 2008. But today I want to focus on the ongoing implosion of the major banks in Italy. Italy has the 8th largest economy on the entire planet, and their banks are drowning in approximately 400 billion dollars worth of non-performing debt. The Italian government would like to bail these banks out, but the rest of the EU appears ready to block that effort because it would violate EU rules.  As a result, the big Italian banks experienced a bloodbath on Monday… Italy’s Banca Monte dei Paschi di Siena SpA BMPS, -13.99% closed down 14%. The move came after a report that the European Central Bank is pushing the lender to draft a new plan aimed at reducing non-performing loans. Other Italian bank shares were lower, with Banca Popolare dell’Emilia Romagna BPE, -6.73% down 6.7%, Intesa Sanpaolo SpA ISP, -3.04% off 3% and Banca Popolare di Milano SpA PMI, -1.40% lower by 1.4%. And these stunning declines come on the heels of last week’s nightmare… As a reminder, the Euro Stoxx Banks index was down -0.88% last week and is nearly 19% down from its pre-referendum levels. Italian Banks are at the heart of that weakness with the likes of Unicredit, Intesa, Banco Monte dei Paschi and UBI down -9.78%, -3.44%, -15.79% and -6.11% respectively last week, in the process sending Italian stocks to levels not seen since Draghi’s famous “whatever it takes” speech. So what happens when all of the major banks of a country collapse at the exact same time? Basically, Italy is facing “financial Armageddon” if nothing is done, and so some Italian politicians are desperate to step in and do something about this crisis even if it means defying the EU… The Financial Times reported Sunday that Italy was prepared “to defy the EU and unilaterally pump billions of euros into its troubled banking system if it comes under severe systemic distress … despite warnings from Brussels and Berlin over the need to respect rules that make creditors rather than taxpayers fund bank rescues.” Citing “several officials and bankers familiar with the plans,” the FT said that the threat has raised alarm along Europe’s regulators “who fear such a brazen intervention would devastate the credibility of the union’s newly implemented banking rule book during its first real test.” But of course the rest of the EU is not about to let this happen because it would be a gross violation of European Union rules… Michael Hewson, chief market analyst at CMC Markets UK, said: “Under current EU state aid rules any attempts to help banks must involve a bail-in process that doesn’t involve using taxpayer’s money. “Italian Prime Minister Matteo Renzi has tried to argue that the Brexit uncertainty has destabilised Italy’s already fragile banks. “The reality is the problems of Italy’s banks predate last week’s Brexit vote, and he knows it.” So what is going to happen? Could Italy be forced to leave the EU? Will the rest of the European Union eventually cave in and save Italy? We all remember how difficult it was for the EU to save Greece, and they are just the 44th largest economy on the planet. So where in the world are they going to come up with the resources to rescue the 8th largest economy on the planet? Immediately following the Brexit vote on the Friday before last, we witnessed the biggest one day global stock market loss in world history.  But since that time many global markets have bounced back, and a lot of people seem convinced that the crisis has passed. Unfortunately, the truth is that the crisis is just getting started.  As I warned before the Brexit vote, European banks were going to continue to implode no matter what the result was, and that is definitely what we are seeing come to pass right now. Without bailouts, virtually all of the major banks in Italy are going to fail.  It is just a matter of time.  And each of those failures would send financial shockwaves all over the planet. Personally, I am convinced that the second half of 2016 is going to be even more eventful that the first half of 2016, and this new global economic crisis is going to continue to accelerate. Unfortunately, most Americans are preoccupied reading about Taylor Swift’s new boyfriend and things of that nature, and so they are totally oblivious to the global events that are about to turn their lives totally upside down.

May 2016: Will Deutsche Bank Survive This Wave Of Trouble Or Will It Be The Next Lehman Brothers? - Michael Snyder THE ECONOMIC COLLAPSE BLOG

May 2016: Will Deutsche Bank Survive This Wave Of Trouble Or Will It Be The Next Lehman Brothers?

Posted: 23 May 2016   Michael Snyder  THE ECONOMIC COLLAPSE BLOG

If you have been waiting for “the next Lehman Brothers moment” which will cause the global financial system to descend into a state of mass panic, you might want to keep a close eye on German banking giant Deutsche Bank.  It is approximately three times larger than Lehman Brothers was, and if the most important bank in the strongest economy in Europe were to implode, it would instantly send shockwaves rippling across the entire planet. 

Those that follow my work regularly know that I started sounding the alarm about Deutsche Bank beginning last September.  Since that time, the bad news from Deutsche Bank has not stopped pouring in.  They announced a loss of 6.8 billion euros for 2015, Moody’s just downgraded their debt to two levels above junk status, and they have been plagued by scandal after scandal.  In recent months they have gotten into trouble for trying to rig precious metal prices, for committing “equity trading fraud” and for their dealings in mortgage-backed securities.  The following comes from Zero Hedge…

A month after admitting to rigging precious metals markets, Deutsche Bank has been hit with a double-whammy of more alleged fraudulent behavior today and the stock is sliding. First, Reuters reports that the bank took a charge of 450 million euros for “equity trading fraud,” and then Bloomberg reports that The SEC is looking into Deutsche’s post-crisis mortgage positions.

This is a bank that is steadily bleeding money, and so the last thing that it needs is for government agencies to be putting immense pressure on it.  Unfortunately for Deutsche Bank, the SEC seems determined to kick it while it is down…

Troubled Wall Street giant Deutsche Bank is under another investigation, this time by the Securities and Exchange Commission regarding the pricing and reporting of certain mortgage-backed securities.
The SEC wants to know whether the Frankfurt, Germany-based bank artificially raised the value of mortgage-backed securities in 2013 and later hid those losses for an extended period of time, Bloomberg first reported, citing people familiar with the matter.

But even if there were no scandals and no government investigations, the truth is that Deutsche Bank would be a deeply troubled bank anyway.

At one point, it was estimated that Deutsche Bank had 64 trillion dollars worth of exposure to derivatives contracts.  That is an amount of money that is approximately 16 times the size of the GDP of the entire nation of Germany.

So nobody wants to see Deutsche Bank fail.  It would be a financial disaster unlike anything the world has ever experienced before.

But right now things are not looking good.  As you can see from this chart, the steady decline of Deutsche Bank’s stock price is eerily similar to what happened to Lehman Brothers during the months leading up to the time when it finally completely collapsed…



Earlier this year, Deutsche Bank’s stock price set a new record low, and since that time it has been hovering just above that record low.

Clearly it is no secret that Deutsche Bank is having big problems, and the outlook for the immediate future is not good.  I included the following quote from Berenberg analyst James Chappell in a previous article, but I think that it bears repeating…

Too many problems still: The biggest problem is that DBK has too much leverage. On our measures, we believe DBK is still over 40x levered. DBK can either reduce assets or increase capital to rectify this. On the first path, the markets do not exist in the size nor pricing to enable it to follow this route. Going down the second path also seems impossible at the moment, as the profitability of the core business is under pressure. Seeking outside capital is also likely to be difficult as management would likely find it hard to offer any type of return on new capital invested.

In the end, I believe that Deutsche Bank will ultimately implode, but it won’t be the only one.

Meanwhile, we just got some more very disturbing news out of Asia.  According to Bloomberg, Japanese exports have now fallen for seven months in a row…

Japan’s exports fell for a seventh consecutive month in April as the yen strengthened, underscoring the growing challenges to Prime Minister Shinzo Abe’s efforts to revive economic growth.
Overseas shipments declined 10.1 percent in April from a year earlier, the Ministry of Finance said on Monday. The median estimate of economists surveyed by Bloomberg was for a 9.9 percent drop. Imports fell 23.3 percent, leaving a trade surplus of 823.5 billion yen ($7.5 billion), the highest since March 2010.

When your imports are 23 percent lower than they were a year earlier, that is a clear sign that consumer demand is way, way down and that your economy is in the process of imploding.

So I will repeat what I have said a number of times before…

Watch Germany and watch Japan.

I believe that they are going to be two of the biggest stories as this new global financial crisis begins to play out.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

Global Stocks Continue To Crash As Oil Plummets And Gold Skyrockets - Michael Snyder THE ECONOMIC COLLAPSE

Global Stocks Continue To Crash As Oil Plummets And Gold Skyrockets Posted: 11 Feb 2016 Michael Snyder  THE ECONOMIC COLLAPSE Stock markets around the world continue to collapse as this new global financial crisis picks up more steam.  In the U.S., the Dow lost 254 more points on Thursday, and it has now fallen for five days in a row.  European stocks continued to get obliterated, and financial institutions are leading the way.  But this week what is happening in Japan has been the most sobering.   After falling 918 points the other day, the Nikkei plunged another 760 points early on Friday.  The Nikkei has now fallen for seven of the past eight days, and investors in Japan are in full panic mode.  Overall, global stocks are well into bear market territory, and nearly 17 trillion dollars of global stock market wealth has already been wiped out. As panic rises, investors are seeking alternative investments.  On Thursday, the price of gold hit $1,260 an ounce at one point before settling back a bit.  But even with the fade at the end of the day, it was still the biggest daily gain in more than two years.  Overall, gold is having its best quarterly performance in 30 years. Whenever a financial crisis happens, investors seek out safe havens such as gold that can help them weather the storm.  In particular, demand for physical gold is going through the roof all over the planet.  Just check out the following excerpt from a Telegraph article entitled “Investors ‘go bananas’ for gold bars as global stock markets tumble“… BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis. Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014. BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning. Meanwhile, the price of oil continues to drop to stunning new depths.  On Thursday U.S. oil dropped as low as $26.21, which was the lowest price in 13 years.  Not even during the worst parts of the last financial crisis did oil ever go this low. And remember, the price of oil was sitting at about $108 a barrel back in June 2014.  Since that time it has fallen about 75 percent. Needless to say, this crash is having some very serious consequences for the energy industry.  Previously, I have reported that 42 North American energy companies have gone into bankruptcy since the beginning of last year. But I just found out that the true number is much worse than that. According to CNN, “67 U.S. oil and natural gas companies filed for bankruptcy in 2015″… Bankruptcy filings are flying in the American oil patch. At least 67 U.S. oil and natural gas companies filed for bankruptcy in 2015, according to consulting firm Gavin/Solmonese. That represents a 379% spike from the previous year when oil prices were substantially higher. With oil prices crashing further in recent weeks, five more energy gas producers succumbed to bankruptcy in the first five weeks of this year, according to Houston law firm Haynes and Boone. A lot of people tend to think that my writing is full of “doom and gloom”, but the truth is that I often understate how bad things really are.  I’ll often report one number and find out later that an updated number is even worse than the one that I originally reported. What we desperately need is for the price of oil to go back up. Unfortunately, the International Energy Agency says that isn’t likely to happen any time soon… The International Energy Agency said earlier this week that it expects the global oil glut to grow throughout the year. “With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term,” the IEA said in its monthly report. And of course all of this is incredibly bad news for financial institutions all over the world. During the boom times, the big banks showered energy companies with loans.  Now those loans are going bad, and the big banks are feeling the pain.  The following comes from CNN… It’s never a good sign when the country’s financial lifelines are under stress. Large U.S. banks JPMorgan Chase (JPM) and Wells Fargo (WFC) that helped bankroll the energy boom are already setting aside billions to cover potential loan losses in the oil industry. Investors are worried about imploding energy loans for European banks like Deutsche Bank (DB). High yield bonds in your investing portfolio wont be looking good either — Standard & Poor’s warned that half of all energy junk bonds are at risk of defaulting. Speaking of Deutsche Bank, their stock price continued to plummet on Thursday, as did the stock prices of most other European banks. Things were particularly bad for France’s Societe Generale.  Their stock price plunged 12 percent on Thursday alone. This is what a global financial crisis looks like.  It began during the second half of last year, and now it is making major headlines all over the planet. At this point, things are already so bad that the elite are starting to freak out about what this could potentially mean for them.  I want you to carefully consider the following two paragraphs from an editorial that I came across in the Telegraph earlier today… We are too fragile, fiscally as well as psychologically. Our economies, cultures and polities are still paying a heavy price for the Great Recession; another collapse, especially were it to be accompanied by a fresh banking bailout by the taxpayer, would trigger a cataclysmic, uncontrollable backlash. The public, whose faith in elites and the private sector was rattled after 2007-09, would simply not wear it. Its anger would be so explosive, so-all encompassing that it would threaten the very survival of free trade, of globalisation and of the market-based economy. There would be calls for wage and price controls, punitive, ultra-progressive taxes, a war on the City and arbitrary jail sentences. I think that the author of this editorial is correct. I do believe that another financial crisis on the scale of 2008 would trigger “a cataclysmic, uncontrollable backlash”. In fact, I believe that is what we are steamrolling toward right now. We can already see the anger of the American people toward the establishment being expressed in their support of Bernie Sanders and Donald Trump. But if the financial system completely collapses and it becomes exceedingly apparent that none of our problems from the last time around were ever fixed, the frustration is going to be off the charts. Many people believed that this day of reckoning would never come, but now it is here. The “coming nightmare” is now upon us, and this is just the start. The rest of 2016 promises to be even more chaotic, and ultimately this new crisis is going to turn out to be far worse than what we experienced back in 2008.

A 918 Point Stock Market Crash In Japan And German Deutsche Bank Denies That It Is About To Collapse - Michael Snyder THE ECONOMIC COLLAPSE

A 918 Point Stock Market Crash In Japan And German Deutsche Bank Denies That It Is About To Collapse

Posted: 09 Feb 2016   Michael Snyder  THE ECONOMIC COLLAPSE

On Tuesday junk bonds continued to crash, the price of oil briefly dipped below 28 dollars a barrel, Deutsche Bank was forced to deny that it is on the verge of collapse, but the biggest news was what happened in Japan.  The Nikkei was down a staggering 918 points, but that stock crash made very few headlines in the western world.  If the Dow had crashed 918 points today, that would have been the largest single day point crash in all of U.S. history.

So what just happened in Japan is a really big deal.  The Nikkei is now down 23.1 percent from the peak of the market, and that places it solidly in bear market territory.  Overall, a total of 16.5 trillion dollars of global stock market wealth has been wiped out since the middle of 2015.

As I stated yesterday, this is what a global financial crisis looks like.

Just as we saw during the last financial crisis, the big banks are playing a starring role, and this is definitely true in Japan.  Right now, Japanese banking stocks are absolutely imploding, and this is what drove much of the panic last night.  The following numbers come from Wolf Richter…

• Mitsubishi UFJ Financial Group plunged 8.7%, down 47% from June 2015.
• Mizuho Financial Group plunged 6.2%, down 38% since June 2015.
• Sumitomo Mitsui plunged 6.2%, down 26% since May 2015
• Nomura plunged a juicy 9.1%, down 42% since June 2015

A lot of analysts have been very focused on the downturn in China in recent months, but I think that it is much more important to watch Japan right now.

I have become fully convinced that the Japanese financial system is going to play a central role in the initial stages of this new global financial meltdown, and so I encourage everyone to keep a close eye on the Nikkei every single night.

Meanwhile, the stock price of German banking giant Deutsche Bank crashed to a record low on Tuesday.  If you will recall, Deutsche Bank reported a loss of 7.6 billion dollars in 2015, and I wrote quite a bit about their ongoing problems yesterday.

Things have gotten so bad that now Deutsche Bank has been forced to come out and publicly deny that they are in trouble…

Deutsche Bank co-CEO John Cryan moved to quell fears about the bank’s stability Tuesday with a surprise memo saying its balance sheet “remains absolutely rock-solid.”
The comments come as investors grow increasingly nervous about the health of European banks, which have taken a hit on the fall in energy prices and which face rising concerns over their cash levels.

Of course Lehman Brothers issued the same kind of denials just before they collapsed in 2008.  Cryan’s comments did little to calm the markets, and even Jim Cramer saw right through them…

“You know, Deutsche Bank puts out a note saying, ‘listen, don’t worry, all good.’ Reminds me of JPMorgan saying if you have to say that you’re creditworthy then it’s already too late.”

Another thing that Lehman Brothers did just before they collapsed in 2008 was to lay off workers.  We have seen a number of major banks do this lately, including Deutsche Bank…

Cryan, 55, has been seeking to boost capital buffers and profitability by cutting costs and eliminating thousands of jobs as volatile markets undermine revenue and outstanding regulatory probes raise the specter of fresh capital measures to help cover continued legal charges. The cost of protecting Deutsche Bank’s debt against default has more than doubled this year, while the shares have dropped about 42 percent.

The following chart comes from Zero Hedge.  Nobody on the Internet does a better job with charts than Zero Hedge does.  I would recommend visiting them right after you visit The Economic Collapse Blog each day (wink wink).  This chart shows that Deutsche Bank stock has already fallen lower than it was during any point during the last financial crisis…

Deutsche Bank is the biggest and most important bank in the biggest and most important economy in the EU, and it has exposure to derivatives that is approximately 20 times Germany’s GDP.

If that doesn’t alarm you, I don’t know what will.

The biggest financial bubble in the history of the world has entered a terminal phase, and the parallels to the last financial crisis have become so apparent that just about anyone can see them at this point.  Just consider some of the ominous warnings that we have seen recently…

Billionaire Carl Icahn, for example, recently raised a red flag on a national broadcast when he declared, “The public is walking into a trap again as they did in 2007.”
And the prophetic economist Andrew Smithers warns, “U.S. stocks are now about 80% overvalued.”
Smithers backs up his prediction using a ratio which proves that the only time in history stocks were this risky was 1929 and 1999. And we all know what happened next. Stocks fell by 89% and 50%, respectively.
Even the Royal Bank of Scotland says the markets are flashing stress alerts akin to the 2008 crisis. They told their clients to “Sell Everything” because “in a crowded hall, the exit doors are small.”

And let’s not forget that famous billionaire retail magnate Hugo Salinas Price has warned that the global economy “is going into a depression“.

The chaos that we have seen this week is simply a logical progression of the crisis that began during the second half of last year.  If you were to create a checklist of all the things that you would expect to see during the initial stages of a new financial crisis, all of the boxes would be checked.

In the days ahead, keep your eyes on Germany and Japan.

Yes, the Italian banking system is completely collapsing right now, but I believe that what is happening in Germany is going to be the key to the meltdown of Europe, and I am convinced that Deutsche Bank is going to be the star of the show.

Meanwhile, don’t underestimate what is taking place in Japan.

The Japanese still have the third largest economy on the entire planet, and their financial system is essentially a Ponzi scheme built on top of a house of cards that has a rapidly aging population as the foundation.

As Japan falls, that will be a signal that financial Armageddon is now upon us.
And after last night, it appears that moment is a lot closer than a lot of us may have thought.

22 Signs That The Global Economic Turmoil We Have Seen So Far In 2016 Is Just The Beginning - Michael Snyder THE ECONOMIC COLLAPSE BLOG

22 Signs That The Global Economic Turmoil We Have Seen So Far In 2016 Is Just The Beginning

Posted: 04 Feb 2016   Michael Snyder  THE ECONOMIC COLLAPSE BLOG

As bad as the month of January was for the global economy, the truth is that the rest of 2016 promises to be much worse.  Layoffs are increasing at a pace that we haven’t seen since the last recession, major retailers are shutting down hundreds of locations, corporate profit margins are plunging, global trade is slowing down dramatically, and several major European banks are in the process of completely imploding. 

I am about to share some numbers with you that are truly eye-popping.  Each one by itself would be reason for concern, but when you put all of the pieces together it creates a picture that is hard to deny.  The global economy is in crisis, and this is going to have very serious implications for the financial markets moving forward.  U.S. stocks just had their worst January in seven years, and if I am right much worse is still yet to come this year. 

The following are 22 signs that the global economic turmoil that we have seen so far in 2016 is just the beginning…

1. The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.

2. The Baltic Dry Index just hit yet another brand new all-time record low.  As I write this article, it is sitting at 303.

3. U.S. factory orders have now dropped for 14 months in a row.

4. In the U.S., the Restaurant Performance Index just fell to the lowest level that we have seen since 2008.

5. In January, orders for class 8 trucks (the big trucks that you see shipping stuff around the country on our highways) declined a whopping 48 percent from a year ago.

6. Rail traffic is also slowing down substantially.  In Colorado, there are hundreds of train engines that are just sitting on the tracks with nothing to do.

7. Corporate profit margins peaked during the third quarter of 2014 and have been declining steadily since then.  This usually happens when we are heading into a recession.

8. A series of extremely disappointing corporate quarterly reports is sending stock after stock plummeting.  Here is a summary from Zero Hedge of a few examples that we have just witnessed…

• SHARES OF LIONS GATE ENTERTAINMENT FALL 5 PCT IN EXTENDED TRADE AFTER QUARTERLY RESULTS – RTRS
• TABLEAU SOFTWARE SHARES TUMBLE 40 PCT IN AFTER HOURS TRADING – RTRS
• YRC WORLDWIDE SHARES DOWN 16.4 PCT AFTER THE BALL FOLLOWING RESULTS – RTRS
• SPLUNK INC SHARES DOWN 7.6 PCT IN AFTER HOURS TRADING – RTRS
• LINKEDIN SHARES EXTEND DECLINE, DOWN 24 PCT AFTER RESULTS, GUIDANCE – RTRS
• HANESBRANDS SHARES FURTHER ADD TO LOSSES IN EXTENDED TRADE, LAST DOWN 14.9 PCT – RTRS
• OUTERWALL SHARES FALL 11 PCT IN EXTENDED TRADING AFTER QUARTERLY RESULTS – RTRS
• GENWORTH SHARES DOWN 16.5 PCT AFTER THE BELL FOLLOWING RESULTS, RESTRUCTURING PLAN

9. Junk bonds continue to crash on Wall Street.  On Monday, JNK was down to 32.60 and HYG was down to 77.99.

10. On Thursday, a major British news source publicly named five large European banks that are considered to be in very serious danger…

Deutsche Bank, Credit Suisse, Santander, Barclays and RBS are among the stocks that are falling sharply sending shockwaves through the financial world, according to former hedge fund manager and ex Goldman Sachs employee Raoul Pal.

11. Deutsche Bank is the biggest bank in Germany and it has more exposure to derivatives than any other bank in the world.  Unfortunately, Deutsche Bank credit default swaps are now telling us that there is deep turmoil at the bank and that a complete implosion may be imminent.

12. Last week, we learned that Deutsche Bank had lost a staggering 6.8 billion euros in 2015.  If you will recall, I warned about massive problems at Deutsche Bank all the way back in September.  The most important bank in Germany is exceedingly troubled, and it could end up being for the EU what Lehman Brothers was for the United States.

13. Credit Suisse just announced that it will be eliminating 4,000 jobs.

14. Royal Dutch Shell has announced that it is going to be eliminating 10,000 jobs.

15. Caterpillar has announced that it will be closing 5 plants and getting rid of 670 workers.

16. Yahoo has announced that it is going to be getting rid of 15 percent of its total workforce.

17. Johnson & Johnson has announced that it is slashing its workforce by 3,000 jobs.

18. Sprint just laid off 8 percent of its workforce and GoPro is letting go 7 percent of its workers.

19. All over America, retail stores are shutting down at a staggering pace.  The following list comes from one of my previous articles…

-Wal-Mart is closing 269 stores, including 154 inside the United States.

-K-Mart is closing down more than two dozen stores over the next several months.

-J.C. Penney will be permanently shutting down 47 more stores after closing a total of 40 stores in 2015.

-Macy’s has decided that it needs to shutter 36 stores and lay off approximately 2,500 employees.

-The Gap is in the process of closing 175 stores in North America.

-Aeropostale is in the process of closing 84 stores all across America.

-Finish Line has announced that 150 stores will be shutting down over the next few years.

-Sears has shut down about 600 stores over the past year or so, but sales at the stores that remain open continue to fall precipitously.

20. According to the New York Times, the Chinese economy is facing a mountain of bad loans that “could exceed $5 trillion“.

21. Japan has implemented a negative interest rate program in a desperate attempt to try to get banks to make more loans.

22. The global economy desperately needs the price of oil to go back up, but Morgan Stanley says that we will not see $80 oil again until 2018.

It is not difficult to see where the numbers are trending.

Last week, I told my wife that I thought that Marco Rubio was going to do better than expected in Iowa.

How did I come to that conclusion?

It was simply based on how his poll numbers were trending.

And when you look at where global economic numbers are trending, they tell us that 2016 is going to be a year that is going to get progressively worse as it goes along.

So many of the exact same things that we saw happen in 2008 are happening again right now, and you would have to be blind not to see it.

Hopefully I am wrong about what is coming in our immediate future, because millions upon millions of Americans are not prepared for what is ahead, and most of them are going to get absolutely blindsided by the coming crisis.

Global Financial Meltdown Coming? Clear Signs That the Great Derivatives Crisis Has Now Begun

A trader works underneath a television screen showing Federal Reserve Chair Janet Yellen announcing that the Federal Reserve will leave interest rates unchanged on the floor of the New York Stock Exchange in New York. (Reuters)

Global Financial Meltdown Coming? Clear Signs That the Great Derivatives Crisis Has Now Begun

10/9/2015 MICHAEL SNYDER  charisma news

Warren Buffett once referred to derivatives as "financial weapons of mass destruction," and it was inevitable that they would begin to wreak havoc on our financial system at some point. While things may seem somewhat calm on Wall Street at the moment, the truth is that a great deal of trouble is bubbling just under the surface.

Something happened in mid-September that required an unprecedented $405 billion surge of Treasury collateral into the repo market. I know—that sounds very complicated, so I will try to break it down more simply for you. It appears that some very large institutions have started to get into a significant amount of trouble because of all the reckless betting they have been doing.

This is something I have warned would happen over and over again. In fact, I have written about it so much that my regular readers are probably sick of hearing about it. But this is what is going to cause the meltdown of our financial system.

Many out there get upset when I compare derivatives trading to gambling, and perhaps it would be more accurate to describe most derivatives as a form of insurance. The big financial institutions assure us that they have passed off most of the risk on these contracts to others and so there is no reason to worry according to them.

Well, personally I don't buy their explanations, and a lot of others don't either. On a very basic, primitive level, derivatives trading is gambling. This is a point that Jeff Nielson made very eloquently in a piece he recently published:

No one "understands" derivatives. How many times have readers heard that thought expressed (please round-off to the nearest thousand)? Why does no one understand derivatives? For many, the answer to that question is that they have simply been thinking too hard. For others; the answer is that they don't "think" at all.

Derivatives are bets. This is not a metaphor, or analogy, or generalization. Derivatives are bets. Period. That's all they ever were. That's all they ever can be.

One very large financial institution that appears to be in serious trouble with these financial weapons of mass destruction is Glencore. At one time, Glencore was considered to be the 10th-largest company on the entire planet, but now it appears to be coming apart at the seams, and a great deal of their trouble seems to be tied to derivatives. The following comes from Zero Hedge:

Of particular concern, they said, was Glencore's use of financial instruments such as derivatives to hedge its trading of physical goods against price swings. The company had $9.8 billion in gross derivatives in June 2015, down from $19 billion in such positions at the end of 2014, causing investors to query the company about the swing.

Glencore told investors the number went down so drastically because of changes in market volatility this year, according to people briefed by Glencore. When prices vary significantly, it can increase the value of hedging positions.

Last year, there were extreme price moves, particularly in the crude-oil market, which slid from about $114 a barrel in June to less than $60 a barrel by the end of December.

That response wasn't satisfying, said Michael Leithead, a bond fund portfolio manager at EFG Asset Management, which managed $12 billion as of the end of March and has invested in Glencore's debt.

According to Bank of America, the global financial system has about $100 billion of exposure overall to Glencore. So if Glencore goes bankrupt, it will be a major event. At this point, Glencore is probably the most likely candidate to be "the next Lehman Brothers."

And it isn't just Glencore that is in trouble. Other financial giants, such as Trafigura, are in deep distress as well. Collectively, the global financial system has approximately a half-trillion dollars of exposure to these firms:

Worse, since it is not just Glencore that the banks are exposed to but very likely the rest of the commodity trading space, their gross exposure blows up to a simply stunning number:

For the banks, of course, Glencore may not be their only exposure in the commodity trading space. We consider that other vehicles such as Trafigura, Vitol and Gunvor may feature on bank balance sheets as well ($100 bn x 4?)

Call it a half-trillion dollars in very highly levered exposure to commodities: an asset class that has been crushed in the past year.

The mainstream media are not talking much about any of this yet, and that is probably a good thing. But behind the scenes, unprecedented moves are already taking place.

When I came across the information I am about to share with you, I was absolutely stunned. It comes from Investment Research Dynamics, and it shows clearly that everything is not "OK" in the financial world:

Something occurred in the banking system in September that required a massive reverse repo operation in order to force the largest-ever Treasury collateral injection into the repo market. Ordinarily the Fed might engage in routine reverse repos as a means of managing the Fed funds rate.

However, there have been sudden spikes up in the amount of reverse repos that tend to correspond the some kind of crisis—the obvious one being the de facto collapse of the financial system in 2008:

What in the world could possibly cause a spike of that magnitude?

Well, that same article that I just quoted links the troubles at Glencore with this unprecedented intervention:

What's even more interesting is that the spike-up in reverse repos occurred at the same time—Sept. 16—that the stock market embarked on an 8-day cliff dive, with the S&P 500 falling 6 percent in that time period. You'll note that this is around the same time that a crash in Glencore stock and bonds began. It has been suggested by analysts that a default on Glencore credit derivatives either by Glencore or by financial entities using derivatives to bet against that event would be analogous to the "Lehman moment" that triggered the 2008 collapse.

The blame on the general stock market plunge was cast on the Fed's inability to raise interest rates. However that seems to be nothing more than a clever cover story for something much more catastrophic which began to develop out sight in the general liquidity functions of the global banking system.

---

Back in 2008, Lehman Brothers was not "perfectly fine" one day and then suddenly collapsed the next. There were problems brewing under the surface well in advance.

Well, the same thing is happening now at banking giants such as Deutsche Bank, and at commodity trading firms such as Glencore, Trafigura and The Noble Group.

And of course a lot of smaller fish are starting to implode as well. I found this example posted on Business Insider recently:

On Sept. 11, Spruce Alpha, a small hedge fund which is part of a bigger investment group, sent a short report to investors.

The letter said that the $80 million fund had lost 48 percent in a month, according the performance report seen by Business Insider.

There was no commentary included in the note. No explanation. Just cold hard numbers.

Wow—how do you possibly lose 48 percent in a single month?

It would be hard to do that, even if you were actually trying to lose money on purpose.

Sadly, this kind of scenario is going to be repeated over and over as we get even deeper into this crisis.

Meanwhile, our "leaders" continue to tell us that there is nothing to worry about. For example, just consider what former Fed Chairman Ben Bernanke said:

Former Federal Reserve chairman Ben Bernanke doesn't see any bubbles forming in global markets right now.

But he doesn't think you should take his word for it.

And even if you did, that isn't the right question to ask anyway.

Speaking at a Wall Street Journal event on Wednesday morning, Bernanke said, "I don't see any obvious major mispricings. Nothing that looks like the housing bubble before the crisis, for example. But you shouldn't trust me."

I certainly agree with that last sentence. Bernanke was the one telling us that there was not going to be a recession back in 2008, even after one had already started. He was clueless back then and he is clueless today.

Most of our "leaders" either don't understand what is happening or they are not willing to tell us.

So that means that we have to try to figure things out for ourselves the best that we can. And right now there are signs all around us that another 2008-style crisis has begun.

Personally, I am hoping there will be a lot more days like today, when the markets were relatively quiet and not much major news happened around the world.

Unfortunately for all of us, these days of relative peace and tranquility are about to come to a very abrupt end.

Michael T. Snyder is the publisher of The Economic Collapse Blog and author of The Beginning of the End.

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