You are here
Alasdair Macleod: A perfect storm in banking is brewing
By Alasdair Macleod
GoldMoney, Toronto
Thursday, June 16, 2022
Now that interest rates are rising with much further to go, the global banking system faces a crisis on a scale like no other in history. Central banks loaded with financial securities acquired through quantitative easing face growing losses, and their balance sheet liabilities are now significantly greater than their assets -- a condition that in the private sector is termed bankruptcy. They will need to be recapitalised urgently to retain credibility.
Further, banking regulators have made a prodigious error in their oversight of the commercial banking system by focusing almost solely on bank balance sheet liquidity as the principal determinant of risk exposure. And on the few occasions in the past when they have demanded that banks increase their own capital, it has always been through the creation of preference shares and pseudo-equities to avoid diluting the true shareholders.
... Dispatch continues below ...
... ADVERTISEMENT ...
Fisher Precious Metals offers great prices
with personal service from a family team
Family-owned and operated Fisher Precious Metals is a great low-cost source for precious metals -- coins, rounds, and bars. But we also get you the highest prices available when you sell your precious metals.
Expect a personal approach with Fisher Precious Metals. You can always speak directly with the owners within 24 hours if not immediately. We provide you a team you can get to know and call at any time to discuss your investments with no pressure to buy.
Check our Google reviews to see what our clients have to say:
https://g.page/FisherPreciousMetals?share
Contact us at 1-800-390-8576 or Info@FisherPM.com or visit us here:
https://fisherpreciousmetals.com/
The consequence is that the level of leverage for common equity shareholders in the global systemically important banks has risen to stratospheric levels.
The regulators may be comfortable with their liquidity approach, but they have ignored the periodic certainty of a contraction in bank credit and the consequences for banks' equity interests. Meanwhile, global systematically important banks have asset-to-common equity ratios often more than 50 times, with some in the eurozone over 70. It is hardly surprising that most G-SIBs are valued in the equity markets at substantial discounts to book value.
G-SIBs have accumulated excessive exposure to financial assets, both on-balance sheet and as loan collateral. With vicious bear markets now evident and further interest rate rises guaranteed by falling purchasing power for currencies, the one thing regulators have not allowed for is now happening. Like a deepening meteorological low, bank credit is contracting into a perfect storm.
Jamie Dimon's recent warning that his bank (JPMorgan Chase) faces hurricane conditions confirms the timing. Central banks, bankrupt in all but name, will be tasked with rescuing entire commercial banking networks, bankrupted by a collapse in bank credit. ...
... For the remainder of the analysis:
https://www.goldmoney.com/research/a-perfect-storm-in-banking-is-brewing
* * *
Join GATA here:
New Orleans Investment Conference
Wednesday-Saturday, October 12-15, 2022
Hilton New Orleans Riverside Hotel
New Orleans, Louisiana
https://neworleansconference.com/
* * *
Toast to a free gold market
with great GATA-label wine
Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA's recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.
Here's what the bottles look like:
http://www.gata.org/files/GATA-4-wine-bottles.jpg
Buyers can compose their case by choosing as many as four varietals from the list here:
http://www.gata.org/files/FayJWineryVarietals.jpg
GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?
To order a case of GATA-label wine, please e-mail Fay J Winery at bagman1236@aol.com.
* * *
Support GATA by purchasing
Stuart Englert's "Rigged"
"Rigged" is a concise explanation of government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon --
-- or for an additional $3 and a penny buy an autographed copy from Englert himself by contacting him at srenglert@comcast.net.
* * *
Help keep GATA going:
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
