Is “Crexit” The Next Crisis? Will Italy’s Banking Crisis Trigger Financial Crisis? Deutsche Bank Admits It Is Preparing For Market Crash, Discloses $2 Billion Gold And Silver Mining Share Portfolio
In this episode of the Keiser Report from Washington DC Max and Stacy discuss ‘crexit’ and the dark heart of Italy’s banking crisis as central bank intervention increases financial risk. In the second half Max continues his interview with Francine McKenna of Marketwatch.com about the current trials against the auditors taking place in courts across the United States.
Is “Crexit” the Next Crisis?
Forget Brexit. Fear “Crexit”!
That’s the stark warning from a S&P Global Ratings report that caught my eye this week. S&P’s debt analysis team just said that …
• Corporate debt is exploding, on track to hit $75 trillion in the next four years from $51 trillion now.
• The surge … stemming from $38 trillion in refinance volume and $24 trillion in fresh debt … is $5 trillion more than S&P’s last projection.
• It’s coming even as the percentage of companies considered “highly leveraged” soars, and as previous borrowers are defaulting on their bonds at a rate we haven’t seen since the Great Recession. More than 100 companies reneged on their debts in 2016 so far, up 50% from a year ago and the most since 2009.
What’s behind the explosive growth in corporate debt?
What else? An explosion of easy-money policies around the world. In S&P’s words:
“Central banks remain in thrall to the idea that credit-fueled growth is healthy for the global economy. In fact, our research highlights that monetary policy easing has thus far contributed to increased financial risk, with the growth of corporate borrowing far outpacing that of the global economy. This cannot continue indefinitely. An increasing proportion of companies are becoming highly leveraged, raising questions over their long-term debt sustainability, despite low interest rates supporting their ability to meet interest payments.”
Why Italy’s banking crisis will shake the eurozone to its core
They call them le sofferenze – the suffering. The imagery is striking, the thousands of sofferenze across Italy, unwanted and ignored, a problem unsolved.
But despite the emotional name, these are not people. They are loans. Bad debts, draining banks of profits and undermining economic growth.
The name is less clinical than the English term “non-performing loans”, a reflection of the Italian authorities’ emotional rather than business-like approach to the problem.
None the less, the loans are indeed causing real suffering. The €360bn (£300bn) of sofferenze from Italian banks show borrowers are weighed down with debts they cannot afford, while the banks are struggling to offer new credit to the households and firms that need them.
Deutsche Bank ADMITS it is preparing for market crash as fears over bail out grow
GERMANY’S largest bank has ADMITTED it is in “financial repression mode” as it desperately scrambles to implement financial buffers to prevent collapse.
Central banks are using interest-rate cuts, asset purchases, and other monetary-policy measures to prop up the economy to keep it at a “status quo”, the bank said.
But a market correction could be on the cards if an “external economic shock” hits, they said.
The news comes as it was revealed the bank’s profits dropped by 98 per cent last month and its share price reached lows not seen since before 2002.
Now Dominic Konstam, Deutsche Bank’s global head of interest rates research, has issued a report that warned a “collapse in risk assets” could cause “panic”.
And he said the bank is awaiting on decisions from the ECB to bail out Italy and Japan’s proposed “helicopter money” investment similar to that of quantitative easing in order to fully understand what happens next.
DEUTSCHE BANK DISCLOSES $2 BILLION GOLD AND SILVER MINING SHARE PORTFOLIO