Tag Archives: great financial collapse

A Liquidity Crisis Hit The Banking System In September

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, as you can see from the graph below, 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:

REPO1

You can also see from this graph that the size of the “spike” occurrences in reverse repo operations has significantly increased since 2014 relative to the spike up in 2008. In fact, the latest two-week spike is by far the largest reverse repo operation on record.

Besides using repos to manage term banking reserves in order to target the Fed funds rate, reverse repos put Treasury collateral on to bank balance sheets.  We know that in 2008 there was a derivatives counter-party default melt-down.  This required the Fed to “inject” Treasury collateral into the banking system which could be used as margin collateral by banks or hedge funds/financial firms holding losing derivatives positions OR to “patch up” counter-party defaults (see AIG/Goldman).

What’s eerie about the pattern in the graph above is that since 2014, the “spike” occurrences have occurred more frequently and are much larger in size than the one in 2008.   This would suggest that whatever is imploding behind the scenes is far worse than what occurred in 2008.

What’s even more interesting is that the spike-up in reverse repos occurred at the same time – September 16 – that the stock market embarked on an 8-day cliff dive, with the S&P 500 falling 6% 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.

Without a doubt, the graphs above are telling us that something “broke” in the banking system which necessitated the biggest injection of Treasury collateral in history into the global banking system by the Fed.

Bernanke’s Sovereign Deception: Bernanke Lied And Should Be In Jail Too

I love how these ex-Fed Chairmen admit the truth several years after the fact.  Recall that Greenspan gave a famous speech about the not being able to see financial bubbles until after they occur just before the internet/tech stock bubble popped.

And Bernanke stated in the 2005-2006 timeframe that there was not a housing bubble and that the economy was fine.  Of course, that was just before the housing market crashed hard and the economy dropped into the worst economic contraction since the Great Depression.

Now all of a sudden Benanke seems to have found “religion” about the criminality of bankers.  I wonder if this is part of his Yom Kippur “soul cleansing.”  In an interview this past weekend Bernanke stated that financial executives should have been investigated and prosecuted for perpetrating the great financial collapse:  More Wall Streeters Should Be In Jail.

The obvious injustice here is that Bernanke was in a position to enforce the laws and go after the Wall Street crooks in cooperation with the Justice Department.  But we know that the Justice Department is controlled by Goldman Sachs and the law firm, Covington Burling.  Goldman was one of Attorney General, Eric Holder’s biggest clients and Covington Burling is Holder’s employer.

Even more stunning, Bernanke stated that:

I certainly was not eager to bail out Wall Street and I had no reason to want to bailout Wall Street itself,” he told USA Today. “But we did it because we knew that if the financial system collapsed, the economy would immediately follow.”

This is an outright blatant lie.  And my good friend and colleague, John Titus of “Best Evidence,”  has compiled direct proof that Bernanke spear-headed the Fed’s bail-out of Wall Street AND he lied about the dollar amount involved in front of Congress.  Ben, the evidence is in the Fed transcripts from the 2009 FOMC meetings:  Bernanke’s Sovereign Deception

How come when Bernanke was in a position to enforce the law he was silent?  It’s because he was part of the crime syndicate.

color-bernanke-webIt’s amazing how these insiders are jumping ship and trying to come clean about their tenure in power in an attempt to save their legacy.  Fortunately, like all criminals, they have been careless about covering their tracks.  As Titus has demonstrated, anyone who with enough motivation can pour through public documents and find the truth.

Nice try Ben, but you are tolling a bell that should be tolled for you as well.

SoT #53 – Doc @ Silver Doctors: Retail Silver Supplies Are Disappearing

People also need to recognize that the gold and silver shortage is real. We’ve got the Royal Canadian Mint, for example, not being able to supply silver coins without a lengthy time delay…Eric, you and I believe the metals are headed for a complete turnaround that’s going to astonish everybody. If we look at the 90 percent junk silver bags. I deal with one of the largest companies in the world and what we are seeing is what I call ‘The 90 percent factor.’ Historically, when gold and silver are set for an explosive move, 90 percent bags become virtually unavailable.

When the biggest suppliers in the industry, and I’m talking directly with two of them, are saying ‘We can’t even get 90 percent bags and we probably won’t be able to fulfill any order for at least 8 – 12 weeks on those,’ you know we have serious supply problems. So 90 percent bags are virtually unavailable at these prices and those who are primary dealers in them can’t even acquire them.   – Steve Quayle on King World News

The Federal Reserve and the bullion banks are now blatantly manipulating the price of gold and silver using paper gold and silver, which can be printed in unlimited supply.  They no longer try to hide or disguise their operation and certainly never deny that they are constantly intervening in every market – not just the precious metals – in order to disrupt and prevent the valid price discovery mechanism of free markets.

I’ve always said that 90% bags are the leading indicator of impending market shortages…we saw that the week before the big smash-down in the silver price the first week of July, when premiums on 90% bags spiked.  Then around July 6th or 7th,  90% bags went “no offer” at the largest market maker of 90% bags in the U.S. at the wholesale level.  And it’s been “no offer” ever since. – Doc from Silver Doctors on Shadow of Truth

I used the quote at the top because it independently confirms everything we heard from Doc at Silver Doctors today, who told us that across the product spectrum silver coins are selling out at the wholesale level.  The only reason this can be occurring is because there’s a shortage of unrefined silver that has developed globally.

The U.S. mint production has been going down about 20% per week. The first week they resumed sales the total allocated to authorized dealers was 1.4 million coins, the next week it went down to 1 million, last week it was down another 20% and I haven’t heard the number yet for this week. The Royal Canadian Mint didn’t take any orders last week and they’re not advising when they’ll resume taking orders for maples.  – Doc

China and India are primarily attributed with importing most if not all of the annual mined supply of gold for the past couple of years and both are on track to import a record amount this year. But very little is mentioned about their silver consumption. India is on track to import a record amount of silver and China is using all of its internally mined silver to supply its massive solar program (see this SoT podcast:  Solar Energy Drives Silver Demand).

The reason it’s important to understand the retail demand function for silver is because, at the margin, it will be the retail investors who will “tip the scale” on the Government’s silver manipulation operation and force shortages that will overwhelm the naked paper short interest, both on the Comex/LBMA and in the OTC derivatives market.

Rory and I visited with Doc today because we wanted to hear first-hand about what he’s seeing in the markets which feed into the retail supply for silver investment products.   The only time premiums across the board for retail silver products were higher than they are right now was during the 2008 take-down of gold and silver. There were a lot less retail participants back then, which means that the current market has been set-up to become even more extreme than it was in 2008.

Of course, do not overlook the fact that the price take-down and shortage of metals back then preceded the Great Financial Collapse, because we know that current fundamental conditions are worse than they were in the period leading up the de facto collapse of the financial system.

How Bad Will The Financial Collapse Be This Time?

The comparisons between the economic indicators in 2008/2009 and now have been coming ad nauseum.  The only way you can avoid seeing them is if you are a Fed official, a CNBC/Bloomberg/Fox Business talking head or a complete moron.

I wanted to keep this simple and just look at what is considered perhaps the best barometer of global economic activity:

Untitled

You’ll note that the price of copper is headed lower and is back to the price level where it was in the middle of 2008, right before the great financial collapse.  You’ll note that $3.6 trillion in Federal Reserve money printing – on top of trillions in Bank of Japan, ECB and People’s Bank of China money printing – has not been able to keep the price of copper from crashing again.

Is there anything that can keep the global financial system from collapsing?  Hint…

NYSE circuit breaker