Gold and Global Financial Crisis Redux…”The global battle to locate, to source, and to provide secure vaults for Gold has begun.”
By: Jim Willie CB
GoldSeek.com
Tuesday, 11 December 2018
The Global Financial Crisis, a broader deeper more powerful systemic crisis than the Lehman Event was, has finally arrived in a great redux. It is seen in numerous areas. We have finally arrived at the ten-year anniversary of the Lehman event, a killjob whereby JPMorgan and Goldman Sachs bought a few $billion in mortgage bonds and never paid Lehman Brothers. The firm died, called a financial failure, but was actually a strangulation. Goldman went on to capture AIG, in order to claim 100 cents per dollar on insured mortgage bonds, a second crime. The Wall Street banks, under the leader Henry Paulsen as the managing USTreasury Secretary, completed the third crime, by pitching the $700 billion TARP Fund. They stole it, using the fund for enriching themselves with redeemed preferred stock, instead of making the funds available for lending purposes. Here ten years later, nothing has been fixed. In fact, all the abuses heaped upon the mortgage finance sector have been repeated in sovereign bonds. The USTreasury Bond has become a subprime bond, financed by pure monetization, almost no actual bonds buyers, $trillion annual deficits, auctions rigged, with hidden demand from the derivative machinery. It qualifies as a Third World debt security. The corporate bonds were routinely abused in stock buybacks, hardly ever ploughed back into the business. High yield bonds are the norm now, along with the wrecked Emerging Market bonds. There are many analysts who call the current situation the Everything Bond Bubble.
The Jackass prefers the name of Systemic Lehman Event, since it is part 2 with the exact same monetary abuse, bond fraud in underwriting, with a QE chaser. The Quantitative Easing is old fashioned hyper monetary inflation of the worst kind, unsterilized, meaning huge volume of funds added to the financial system with no extractions. The global financial crisis is upon us, having entered an intermediate level of debt saturation, of bond issuance deep abuse, of market rigging corruption, of banking system insolvency at acute levels, and of economic rot setting in. The outcome of the unfolding crisis will be three to five times more magnificent that what was witnessed in 2008 and 2009. Expect the current crisis to wreck a few big Western SIFI banks, collapse at least one national banking system, destroy at least five major Western corporations, and result in open discussion of the USGovt debt restructure, technically a default. The systemically important financial institutions (SIFI) cannot not be saved, since too many are insolvent, gigantic hollow reeds, dependent upon bond carry trade easy profits and narco money laundering fees. They rely upon hidden central bank welfare, to cover their $trillion exposure to derivatives. As the Petro-Dollar dissolves, these derivatives become unmanageable.
The signals are numerous for the unfolding erupting cascading financial crisis. Witness the early tipoff in the FANG tech darling stocks. Then the Italian banking system recurring disaster. Then the Deutsche Bank saga, better known as the Bush Narco Bank. Then the entire US big bank takedowns, evident in the BKX bank stock decline. Then the crude oil decline, down 30% in two months, a sign of the vacated Petro-Dollar. Now finally, see the declines in the major stock indexes, like the SPX (S&P500 index), the QQQ (Nasdaq index). The pain meter will be the high yield bonds and the Emerging Market bonds. In fact, the Western banks have kept the EM nations afloat by lending them funds in the last two years, just to maintain and to float the loans owed to the same Western banks. This is lending good money after bad. The Wall Street banks are soon to decline sharply from the crude oil price, as the energy sector deals out tremendous pain. The ballyhooed shale sector will collapse in a massive thud.
GOLD AS SAFE HAVEN
The USTreasury Bond is the gigantic subprime global bond. It will face a major global challenge by the Eastern superpowers, as they work steadily toward implementing the Gold Standard. The weaponized USDollar and the nuclear threats do not deter global players in the East. The rogue nation has become the United States, both financially and in global behavior. The USGovt tax revenue in total does not cover the USGovt borrowing costs any longer. The entire USGovt function is currently in deficit, the entire shebang. The insolvency of the situation is utterly obvious, except to Americans.
The subprime bond is the USGovt debt security. It bears Third World fundamentals, and will be treated as such. The lit fuse will be Western bank declines and Emerging Market debt default. The winner will be Gold during the next global financial crisis. Many are its signals, and the BKX bank stock index is only one of several such signals. In 2008 and 2009, the safe haven during the crisis was clearly the USTreasury Bond. Not this time, as Gold will take the safe haven mantle, or share the mantle. The entire global bond market will be shaken to its core. Gold will hit the scene with trade payment, then with bank reserves management. The fact that Gold has such lousy sentiment is the final confirmation, a contrary indicator. The Jackass has two key clients who just threw in the towel, each involved in a gold trade line of business. They might be the last sellers, since so dedicated and devoted in the past.
The Rest…HERE
