Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby winston » Wed Jul 20, 2016 8:15 am

Forget Brexit! Europe Has a MUCH Bigger Problem

By Harry S. Dent Jr.

The Dow dropped nearly 1,000 points (5%) and the London FTSE dropped 10% after the Brexit vote surprised the markets on June 23. After two days though, markets were marching back up again.

That’s just like markets on “crack!” They react to political events, but totally miss the fundamentals.

Yes, Brexit is important. Years from now it will be recognized as the beginning of the end for the great Eurozone experiment.

It isn’t just about the renegotiations on trade agreements with Britain and initial slowing of GDP. It’s also about the threat that more countries will choose to exit the economic bloc.

The euro and Eurozone have 40%-plus unfavorable ratings in polls in France, the Netherlands and Italy. That many areas within countries will break free of their overlord. And then this rush for nationalism will spread across the globe like wildfire.

But here’s the 800-pound elephant in the room (I talked about this in detail in the February issue of The Leading Edge). The one Wall Street seems blind to at the moment…

Italy is the next Greece!

It’s bad – non-performing bank loans have risen to 18%.

At 10%, most banks are technically bankrupt. That’s the percentage of capital and pledged deposits they have against bad loans. Our pledged deposits, not theirs.

At 18%, they’re no longer “technically” bankrupt. They ARE bankrupt!

Greece still has bad or non-performing bank loans of 34%, Ireland 19% and Portugal 12%. And we haven’t seen the next serious financial crisis yet.

Yet nothing has been done to seriously restructure debt in southern Europe. The EU just bailed out Greece to stop the dominoes from hitting other countries. They’re pumping in heavy doses of QE to keep the banks and economy temporarily liquid and solvent.

But the problems are growing even worse. The blood is getting harder to hide…

Just look at Deutsche Bank. It had its largest loss in history in the fourth quarter of 2015: $7 trillion, without any help from the next financial crisis!

Its stock is now down 89% from its early 2008 high, and 62% from its 2015 high.

See larger image

It’s the largest bank in Germany.

Why is Wall Street ignoring this!?

UniCredit is the largest bank in Italy. Its stock is down 94% since the 2008 high, and 71% since its 2015 high.

Banca Carige, another major Italian bank, is down over 99% from its high in 2008.

HSBC in the UK lost 15% since Brexit, while the Royal Bank of Scotland dropped 40% and Barclays bled 41%.

Investors in these stocks are suffering tortures no investor should ever endure. And there’s more pain to come.

Depositors in these banks are willingly settling their heads into the guillotine!

But here is the worst part...

To raise capital after the 2008 global financial crisis, Deutsche Bank issued CoCo bonds. They didn’t want to dilute their shareholders or their senior bond holders, so they issued a new B.S. bond that ranked just below senior level.

But – and this is a pretty significant “but” – the 6% coupon only gets paid if the bank has sufficient cash flow… and any missed payments don’t have to be made up. If they continue to miss payments, the bonds get converted to stock. And there’s nothing the bond holder can do about it!

These should have been called Coo-Coo, not Co-Co, bonds!

The yields have now spiked above 12% and the bonds have been devalued substantially already…

And again, we haven’t even seen the next real financial crisis yet.

If Deutsche Bank is in this much trouble, you know many other major banks are.

Before the Brexit vote, most of these guys were trading at well below book value, while the broad markets trade at 2-times-plus book value. Italy’s Banca Carige is trading at just 3% of book value. Citibank is at 54%, Spain’s Banco Santander is at 58%, Deutsche Bank is at 59%, Credit Suisse is at 63%, and HSBC is trading at 69% of book value. Since then, they’ve gotten worse.

And the bank with the highest exposure to the most leveraged and toxic of all assets – credit default swaps (largely mortgage derivatives) – is Deutsche Bank! It holds 10% of this $550 trillion nuclear bomb. Not billion. Not million. Trillion!

At 10%, that means Deutsche Bank has $54.7 trillion credit default swamps on its books. JPMorgan isn’t far behind, with $51.9 trillion. Citibank has $51.2 trillion, Goldman Sachs has $43.6 trillion and the Bank of America has $27.8 trillion.

Markets should be much more worried about the coming default in Italy.

They should be much more worried about the largest banks in the world failing… and they will fail.

Yet they seem more concerned about political factors like Brexit, or when Janet Yellen will raise the fed funds rate 0.25%.

Investors are going to get their asses handed to them.

Mark my words: a major collapse is bearing down on us. Don’t be among the blind investors flattened when it arrives!

Source: Economy & Markets
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby winston » Fri Jul 22, 2016 8:25 am

There's a ticking time bomb in Europe

What do you think Europe's worst problem is? Brexit revealed cracks in the euro currency. And it's bad, potentially a crisis, but not nearly as bad as the other problem.

The other problem is the refugee crisis - millions from the Middle East are moving into Europe. And there are many reasons why. But the bottom line is that Europe is not set up to handle the influx of people.

As a result, governments could fall. The eurozone may fragment. This scares the bejesus out of the market. Swap euros for dollars? Absolutely. Buy gold? You bet!

Now let's add in that the eurozone economy slowed to 0.3% growth in the second quarter - according to forecasts, at least.

So the European central banks are panicking. They are slashing interest rates in a bid to boost their flagging economies. This has sent benchmark rates - and bond rates - into the negative across Europe. Japan is in negative land too.

This makes U.S. Treasurys, which actually pay interest, look attractive. You need dollars to buy Treasurys, so the dollar goes higher.

Meanwhile, negative interest rates mean there is no carrying cost to owning gold. So there's no reason not to add that protection to your portfolio, at least if you're in Europe. (I've written about this trend a lot, the latest being here.)

These are some of the forces that have combined to send the U.S. dollar and gold higher.

Source: The Non-Dollar Report
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby winston » Mon Jul 25, 2016 8:42 am

Latest attacks fuel new EU influx fear

The attacks in Germany of the past week go some way toward vindicating, for some, the view that the future for Europe is worrying. And the immigration policy is the main reason Brits chose Brexit.

For what's worth deeper discussion is whether a relaxed immigration policy may become the main channel for terrorists to enter the European Union, where leaders lack wisdom for long-term development.

For, after the referendum, Germany did not consider at any length why the British chose to leave EU but continued with the process of admitting Turkey into the EU.

The Turkish coup attempt was a slapdown of Germany Chancellor Angela Merkel's belief that fast- tracking Turkey can offset the impact of a lost kingdom. Except it is hard to find replace the national strength and culture of the British.

The EU needs to revisit the decision over whether to receive millions of refugees, raising the terrorist threat.

With more attacks like the German ones, the question is how many countries will join British in leaving the EU?

Finally, what will be the value of EU's existence and the value of the euro?

Unless the EU has real reform, especially on immigration, the investment value of the euro will continue to decline and bring another financial crisis to the world.

Source: Andrew Wong Wai-hong, The Standard
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby behappyalways » Sat Jul 30, 2016 2:34 pm

Eurozone GDP growth halves as French economy stalls
http://www.bbc.com/news/business-36922367
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby behappyalways » Mon Aug 01, 2016 6:44 pm

Europe's Stress Tests Fail Again

Source: Bloomberg

http://www.bloomberg.com/view/articles/ ... fail-again
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby behappyalways » Tue Aug 02, 2016 6:24 pm

The state of Europe’s banks is far from steady

Source: CNBC

http://www.cnbc.com/2016/08/02/stress-t ... teady.html
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby winston » Wed Aug 03, 2016 8:32 am

This banking crisis should be on your radar…

by Chris Mayer

Italy is the 3rd largest economy in the Eurozone. It is, depending how you figure it, either the 8th or 12th largest economy in the world.


About 18% of Italian bank assets are non-performing


Italian banks are down by more than half this year. It’s also why they trade for fractions of their book value (or the value of the bank’s assets on its books less liabilities). The market is anticipating losses.


The turmoil has taken the market down 30% off its highs, and shaken loose some great values in global companies.


Source: Bonner Private Portfolio

http://thecrux.com/chris-mayer-this-cri ... our-radar/
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby behappyalways » Wed Aug 10, 2016 12:37 pm

Europe's Wave of Migration Brought Too Many Men
http://www.bloomberg.com/view/articles/ ... o-many-men
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby winston » Thu Aug 11, 2016 3:27 pm

by behappyalways:-

Italy has no room left to maneuver, partly due of its mountain of public debt. Government debt has reached 132.7 percent of GDP. A ratio above 125 percent is where the IMF says a country has fallen into a debt trap

Looming Banking Crisis in Italy Casts Another Shadow on The Eurozone

Source: Caixin

http://english.caixin.com/2016-08-10/100976351.html
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Re: Europe - Economic Data & News 12 (Jul 15 - Dec 16)

Postby behappyalways » Sun Aug 14, 2016 11:26 am

Italian economy stagnates as German growth slows
http://www.bbc.com/news/business-37056800
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