What zapped the fear gauge?
While the world continues to focus on the BREXIT, two other, much larger problems are emerging.
The first is that the US is back in recession. Labor Market Conditions, Industrial Production, the Dallas Fed Workweek, Commercial and Industrial Loan Delinquencies, Corporate Debt Levels, and Inventory Accumulation are ALL in recessionary territory.
Because it is an election year, there is an even greater need to maintain the narrative than usual. So don’t expect an official announcement of this recession until sometime in earl to mid 2017
Regardless of when the elites announce it, the fact remains, the US is in recession. , Seven years of ZIRP and $3.5 trillion in QE by the Fed generated the weakest recovery in seven years. And the Fed is now out of any effective ammo (the benefits of a rate cut would be transitory at best).
In short, the academically based theories of the Fed’s Presidents have been proven to be bunk. The Fed cannot stop the business cycles. All it has done is create a bubble in every asset class under the sun. And this time around, stocks will be crashing to new lows below the March 2008 levels of 666 on the S&P 500....
On Friday, the ECB pulled a huge magic trick, larger than TARP. Under one of its alphabet-soup programs – long-term refinancing operations (LTRO) – it handed teetering banks $399.3 billion, or $444 billion.
€399.3 billion – like a used car is advertised for €19,999.99 – because €400 billion might have been too much of a sticker shock. So let’s round it to €400 billion.
And as central banks do, it didn’t ask legislators for permission. It just did it. ...
The ECB, which regulates 129 Eurozone banks, has estimated that these banks are bogged down in €900 billion ($1 trillion) of bad loans, or 7.1% of all Eurozone bank loans. At some banks, NPLs have reached catastrophic levels: for example, 15% at Italy’s UniCredit.
So instead of forcing the banks to finally take the losses, raise a lot of new capital or topple, the ECB will merely give them “non-binding guidance” by the end of 2016 or early 2017, and some of this “guidance” won’t even be in writing, sources told Reuters with perfect timing the day before Brexit sank these banks.
The ECB doesn’t want to hurt fake earnings. And this leak to Reuters was supposed to have soothed the markets and helped prop up bank stocks.
The thing is, banks that need to raise equity capital must have inflated stock prices or else existing investors get crushed
European bank stocks just experienced their worst two-day plunge ever in the post-Brexit fallout that rained down on the already blooming European banking crisis.
Healthy big banks would get over Brexit and the political turmoil it is spawning, particularly non-UK banks. But there are no healthy big banks in Europe. And non-UK banks are crashing just as hard, and some harder. This is about a banking crisis morphing into a financial crisis....
The government is thinking about using some kind of taxpayer guarantee and taking a stake in these banks, funded by about €40 billion in new government debt, issued by the second-most indebted government in the Eurozone, after Greece....
But the government is invoking the exemption in these rules in case of “exceptional events,” which would be the crash of bank stocks as a consequence of investors figuring out that these Italian banks are toast.
Look at the map of those results, and that huge island of “in” voting in London and the south-east; or those jaw-dropping vote-shares for remain in the centre of the capital: 69% in Tory Kensington and Chelsea; 75% in Camden; 78% in Hackney, contrasted with comparable shares for leave in such places as Great Yarmouth (71%), Castle Point in Essex (73%), and Redcar and Cleveland (66%). Here is a country so imbalanced it has effectively fallen over.