Deutsche Bank Chief Economist Joins SocGen Chairman in Trying to Foment Banking Crisis to Get Germany, Brussels to Blink | naked capitalism

Another race to the crash: who goes first Deutsche Bank or Italian Banks? Can bankers get politicians to pull the emergency cord? Who gets screwed? Stay tune for Crash 2.0.

Why bank executives are stoking a banking crisis, with Deutsche Bank in their crosshairs.

Source: Deutsche Bank Chief Economist Joins SocGen Chairman in Trying to Foment Banking Crisis to Get Germany, Brussels to Blink | naked capitalism

Bear Stearns 2.0? UK’s Largest Property Fund Halts Redemptions, Fears “Vicious Circle” | Zero Hedge

Beginning of the end?

In the summer of 2007, two inconsequential Bear Stearns property-related funds were gated and then liquidated, exposing the reality of the US housing bubble and catalyzing the collapse of the financial system. While equity markets have rebounded exuberantly post-Brexit, suggesting all is well, British property-related assets have tumbled and, as The FT reports, Standard Life has been forced to stop retail investors selling out of one of the UK’s largest property funds for at least 28 days after rapid cash outflows were sparked by fears over falling real estate values. As one analyst warned,

Source: Bear Stearns 2.0? UK’s Largest Property Fund Halts Redemptions, Fears “Vicious Circle” | Zero Hedge

Why Commercial Real Estate Is Next: ‘Challenging Technicals’ Are About To Become ‘Weak Fundamentals’ | Zero Hedge

There is a growing sense of tighter financial conditions, particularly to the commercial real estate sector. Late last year the regulators issued a joint statement on Prudent Risk Management for Commercial Real Estate Lending and the latest Senior Loan Officer Opinion Survey (SLOOS) shows that banks tightened their lending standards to commercial real estate meaningfully in 4Q15…. The growing sense of gathering clouds in terms of tightening financial conditions to commercial real estate translates into a more challenging road ahead for US commercial real estate.

Source: Why Commercial Real Estate Is Next: ‘Challenging Technicals’ Are About To Become ‘Weak Fundamentals’ | Zero Hedge

Bernie Sander’s Plan to Tame Wall Street Riles Team Clinton

Sanders points out: “Three out of the 4 largest financial institutions (JP Morgan Chase, Bank of America and Wells Fargo) are nearly 80 percent bigger than before we bailed them out. Incredibly, the six largest banks in this country issue more than two-thirds of all credit cards and more than 35 percent of all mortgages. They control more than 95 percent of all financial derivatives and hold more than 40 percent of all bank deposits. Their assets are equivalent to nearly 60 percent of our GDP. Enough is enough.”

Source: Bernie Sander’s Plan to Tame Wall Street Riles Team Clinton | Common Dreams | Breaking News & Views for the Progressive Community

Anne Stevenson-Yang: Why Xi Jinping’s Troubles, and China’s, Could Get Worse – Barron’s

Prominent expert on Chinese economy warns of depression and possible crash:

China, for all its talk about economic reform, is in big trouble. The old model of relying on export growth and heavy investment to power the economy isn’t working anymore…

… starting in 2008, China sought to counter global recession with huge amounts of ill-advised investment in redundant industrial capacity and vanity infrastructure projects—you know, airports with no commercial flights, highways to nowhere, and stadiums with no teams…

People are crazy if they believe any government statistics, which, of course, are largely fabricated…actual Chinese GDP is probably a third lower than is officially reported…

Property sales are in decline, steel production is falling, commercial long-and short-haul vehicle sales are continuing to implode, and much of the growth in GDP is coming from huge rises in inventories across the economy. We track the 400 Chinese consumer companies listed on the Shanghai and Shenzhen stock markets, and in the third quarter, their gross revenues fell 4% from a year ago. This is hardly a vibrant economy…

Rampant capital flight could turn into a rout given the ridiculous concentration of wealth in China, cutting the seemingly impregnable foreign reserves dramatically…

China is riding an involuntary credit treadmill where much new money has to be hosed into the economy just to sustain ever-mounting bad-debt totals. Capital efficiency, or the amount of capital it takes to generate a unit of GDP growth, has soared as a result…

The Chinese home real estate market, mostly units in high-rise buildings, is truly bizarre. Many Chinese regard apartments as capital-gains machines rather than sources of shelter. In fact, there are 50 million units in China that are owned but vacant. The owners won’t rent them because used apartments suffer an immediate haircut in value.

It’s as if the government created a new asset class that no one lives in. This fact gives lie to the commonly held myth that the buildout of all these empty towers and ghost cities is a Chinese urbanization play. The only city folk who don’t own housing are the millions of migrant laborers continuously flocking to Chinese cities. Yet, they can’t afford the new housing…

Families have more than half of their wealth in housing, including the less affluent in recent years who have taken to buying fractional shares in luxury apartments and town houses. Local governments, which rely on land sales to developers and real estate transfer taxes for something like 35% of their revenue, would be in a bad way in a housing-price bust…

Interestingly, liquidity seems to be a growing problem in China. Chinese corporations have taken on $1.5 trillion in foreign debt in the past year or so, where previously they had none. A lot of it is short term. If defaults start to cascade through the economy, it will be more difficult for China to hide its debt problems now that foreign investors are involved. It’s here that a credit crisis could start…

December 5, 2014

Anne Stevenson-Yang: Why Xi Jinping’s Troubles, and China’s, Could Get Worse – Barron’s.

AG Holder – “ U.S. Announces the Indictment of Citigroup’s Senior Officers”

by (www.nakedcapitalism.com)

….Why then did “endanger[ing] the company” become Citi’s controlling officers’ paramount mortgage strategy despite Bowen’s copious, dead-on accurate warnings?  Citi’s most senior managers, including former Treasury Secretary Robert Rubin, were personally put on written notice by Bowen that an extraordinary and growing percentage – eventually 80% – of Citi’s purchased mortgages were “toxic” and that it was reselling them through fraudulent “reps and warranties.”  Unlike Holder, there is no conceivable dispute that every Citi officer warned by Bowen instantly understood the implications.  There is only one logical answer – they knew that the accounting controlling fraud scheme Bowen described was a “sure thing” guaranteed to make them personally wealthy at the expense of Citi’s shareholders (and, absent a federal bailout, Citi’s creditors).

In response to these frauds Holder’s response is to fine the bank (Citi) – and to do nothing to the officers who grew wealthy by looting Citi’s shareholders.  The fine, of course, will be paid by Citi’s shareholders – who were one of the primary victims of the controlling officers’ “toxic mortgages” fraud schemes…..

AG Holder – “ U.S. Announces the Indictment of Citigroup’s Senior Officers”.

The Implosion Is Near: Signs Of The Bubble’s Last Days | Seeking Alpha

Yes I confess, I agree with David Stockman.

The central banks of the world are massively and insouciantly pursuing financial instability. That’s the inherent result of the 68 straight months of zero money market rates that have been forced into the global financial system by the Fed and its confederates at the BOJ, ECB and BOE. ZIRP fuels endless carry trades and the harvesting of every manner of profit spread between negligible “funding” costs and positive yields and returns on a wide spectrum of risk assets.

Moreover, this central bank sponsored regime of ZIRP and money market pegging contains a built-in accelerator. As carry trade speculators drive asset prices steadily higher and fixed income spreads steadily thinner—- fear and short interest is driven out of the casino, making buying on the dips ever more profitable and less risky. Indeed, the explicit promise by central banks that the money market rate will remain frozen for the duration and that ample warning of any change in rate policy will be “transparently” announced is the single worst policy imaginable from the point of view of financial stability. It means that the speculator’s worst nightmare—–suddenly going “upside down” due to a sharp spike in funding costs—-is eliminated by central bank writ….

At the present time, for example, 40% of all syndicated loans are being taken down by sub-investment grade issuers. This is materially higher than the 2007 peak, and is accompanied by an even more virulent outbreak of “cov-lite” credit terms. Indeed, upwards of 60% of these junk loans have no protection against debt layering and cash stripping by equity holders—-notwithstanding their nominal “senior” status in the credit structure. The obvious implication, of course, is that the Fed “easy money” is being massively diverted into leveraged gambling and rent stripping by the LBO houses. Three times since 1988 this kind of financial deformation has led to a thundering bust in the junk credit market. Why would monetary central planners, who allegedly watch their so-called “dashboards” like a flock of hawks, think the outcome would be any different this time?…”

The Implosion Is Near: Signs Of The Bubble’s Last Days | Seeking Alpha.