AuthorTopic: Big Slide v2.0 Begins  (Read 70292 times)

Offline Golden Oxen

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Re: Big Slide v2.0 Begins The Black Monday Market Crash
« Reply #360 on: October 19, 2017, 05:01:50 AM »

The “Black Monday” market crash 30 years ago today was so bad hospital admissions spiked



I lived through every second of it and was there on the floor and hour before and an hour after.

This is not a diminution of your posting, please don't take it as such, but let me assure it was a joke. It was a one day wonder of the little boys playing with their new toys of program trades and portfolio insurance derivatives. Many who knew what was happening were both jesting and pissed off at the same time. They were  the ones who opposed the children and their turning of the markets into a pin ball game for the Dim to gamble and day trade, but the corrupt exchanges and SEC allowed it to blossom. The brokers as well drooled as well as they dreamed of the commissions they would skim off of the casino operation.

The headlines pictured and hyperbole about that day are testament to the ignorance and need to sensationalize by the media which has become a circus rather than the Fourth Estate that was going to give us an enlightened citizenry. :laugh: :laugh: ::)

Allow me to move forward to the crash of 2007-8.

That was the worst horror in Financial history, few realize that we were minutes away from an entire systemic collapse and martial law with banks closing and the barter economy arriving the same day. Mayhem and violence would have engulfed the nation in a few days.

I still remember the moans of horror when Citicorp traded at a dollar and GE 5. The exchange banned short selling and was seriously considering shutting down completely to stop the avalanche. I could go on and on about the horrors that went on. Let me assure you as well that we still haven't recovered from it, only in the eyes of the dim are we in a healthy economy and financial system. I could also write and essay on how it was worse than 1929, Much Worse, and trust me that's a fact.

We are living in a world of Financial Fantasy where the central banks of the world have printed trillions in fiat money and are buying up all the stocks and bonds in the world to make it appear that they are in control and all is well to the dim as they spend their welfare money and food stamps, and the wealthy 5 to 1 % realized what the Banksters were going to do and are making and have made vast fortunes in the markets while the Dim and trusting are become more and more impoverished daily.

I break out in cold sweats and severe anxiety attacks when thinking about what happens when this corrupt edifice of propaganda and manipulations finally meets reality again.

                     


                             

                             

 
                                     
« Last Edit: October 19, 2017, 05:06:41 AM by Golden Oxen »

Offline RE

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Re: Big Slide v2.0 Begins
« Reply #361 on: October 19, 2017, 05:06:17 AM »

This is not a diminution of your posting, please don't take it as such

Simply by writing that sentence it was a diminusion of my posting, which you attempt to do every time you post up.  You are on an agenda to discredit me and you have little to say of value otherwise.  You paste the articles of others, write nothing original yourself.  I am quite tired of you.

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Offline Golden Oxen

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Re: Big Slide v2.0 Begins
« Reply #362 on: October 19, 2017, 05:20:59 AM »
I was trying to point out that the press write ups of the event were hyperbole and why the one day wonder came about.

Was also trying to explain what really happened.

The entire article was an original reply written solely by me, none of it was copied except the photos.

You have been tired of me since my arrival 7 years ago. It's a shame you have no tolerance for folks with views different than yours.

You have discredited 90 % of my gold postings as nonsense, that's what happens when someone doesn't agree with a posting. I accept it and continue on expressing my views.

Your obviously in a sour mood and I don't blame you with your medical problems.

Going walkabout again for a while until you are feeling better.       

Try that DaVita diet anyway, it's very healthy and may help.              Adios     

Offline RE

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Re: Big Slide v2.0 Begins
« Reply #363 on: October 19, 2017, 05:23:50 AM »

Going walkabout again for a while until you are feeling better.   

Good. Stay there this time.

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Offline Surly1

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Re: Big Slide v2.0 Begins
« Reply #364 on: October 19, 2017, 06:16:19 AM »

This is not a diminution of your posting, please don't take it as such

Simply by writing that sentence it was a diminusion of my posting, which you attempt to do every time you post up.  You are on an agenda to discredit me and you have little to say of value otherwise.  You paste the articles of others, write nothing original yourself.  I am quite tired of you.

RE

Most of the articles posted here, including by me and you, come from other sources.
WTF is wrong with you?

"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline RE

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Re: Big Slide v2.0 Begins
« Reply #365 on: October 19, 2017, 07:29:39 AM »
Most of the articles posted here, including by me and you, come from other sources.

We both write our own articles as well, and we do not persistently attempt to undermine the philosophy of this website.  Neither of us is a rude, ill-mannered poorly raised fake Christian who worships Gold as money and who lives a fantasy life as a fat German actor from a 1960's Bond film.  I have grown tired of all this nonsense.

Quote
WTF is wrong with you?

I wish I knew.  The doctors can't figure it out.

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Offline RE

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Warnings of Financial Crash as Stock Markets Continue to Surge
« Reply #366 on: December 07, 2017, 12:45:08 AM »
https://www.globalresearch.ca/warnings-of-financial-crash-as-stock-markets-continue-to-surge/5621696

Warnings of Financial Crash as Stock Markets Continue to Surge
By Nick Beams

Global Research, December 05, 2017
World Socialist Web Site
Region: USA
Theme: Global Economy, Intelligence

As stock markets continue to rise—Wall Street’s Dow Jones index hit a new record high yesterday following the US Senate’s passage of a massive tax cut bill—there are growing warnings that a new financial crisis is in the making.

In its quarterly review of financial conditions, issued on Sunday, the Bank for International Settlements (BIS), sometimes known as the central bankers’ bank, said the situation bore similarities to that which prevailed in the lead-up to the 2008 crash.

Increases in interest rates by the US Federal Reserve and the Bank of England had failed to choke off risky investments, and financial bubbles were growing, it warned. Financial investors were basking in the “light and warmth” of improving global economic growth, subdued inflation and soaring stock markets, while underlying risks were increasing.

Introducing the BIS review, Claudio Borio, the head of its monetary and economic department, said:

    “The vulnerabilities that have built around the world during the long period of unusually low interest rates have not gone away. High debt levels, in both domestic and foreign currency, are still there. And so are frothy valuations.

    “What’s more, the longer the risk-taking continues, the higher the underlying balance sheet exposure may become. Short-term calm comes at the expense of possible long-run turbulence.”

Last Friday, Neil Woodford, described as one of Britain’s most high-profile investment fund managers, issued a warning even sharper than that of the BIS. In an interview with the Financial Times, he said stock markets around the world were in a “bubble” that, when it burst, could be “bigger and more dangerous” than some of the worst market crashes in history.

This situation is the outcome of the policies adopted by the Federal Reserve and other major central banks of ultra-low interest rates and the pumping of trillions of dollars into the financial system, under the policy of quantitative easing introduced after 2008.

    “Ten years on from the global financial crisis, we are witnessing the product of the biggest monetary policy experiment in history,” Woodford said. “Investors have forgotten about risk and this is playing out in inflated asset prices and inflated valuations.

    “Whether it’s bitcoin through $10,000, European junk bonds now yielding less than US treasuries, historic low levels of volatility or triple-leveraged exchange traded funds attracting gigantic inflows—there are so many lights flashing red that I am losing count.”

Woodford commented that in a challenging global economic environment the few stocks capable of delivering dependable growth had become popular. However, that had manifested itself in “extreme and unsustainable valuations,” which meant the bubble had “grown even bigger and more dangerous.”

In his remarks on the quarterly review, BIS official Borio pointed to another reason for the soaring market valuations—the guarantee by the central banks that they stand ready to intervene to prop up the financial markets.

In the lead-up to the crash of 2008, he noted, the Federal Reserve had assured markets that any tightening of interest rates would be at a “measured pace.” Monetary policy in the present conditions had been, “if anything, even more telegraphed.”

    “If gradualism comforts market participants that tighter policy will not derail the economy or upset asset markets, predictability compresses risk premia,” Borio said. “This can foster higher leverage and risk-taking. By the same token, any sense that central banks will not remain on the sidelines should market tensions arise simply reinforces those incentives.”

In other words, whereas in past periods, the mantra was that the role of the central banks was to take the punchbowl away as the party was getting under way, now it is to pour in more alcohol to keep it going.

Besides the monetary policies of the US Fed, the other major factor in boosting markets this year has been the promise of the financial bonanza resulting from the massive tax cuts for corporations and financial elites under the Trump administration.

The S&P 500 index has enjoyed its longest sustained run of consecutive record-breaking closing highs. It has risen by 18.6 percent for the year. The Dow is up by almost 24 percent and the Nasdaq index has risen by 26.7 percent.

When the Reagan administration introduced tax cuts 30 years ago, they were accompanied by the claim they would be paid for by the growth in the economy, fuelled by increased investment—the “snake oil” of “supply-side economics.”

While the Trump administration continues to proclaim that its measures will produce jobs and investment, it is an open secret that the major corporate beneficiaries will not use the financial jackpot for investment in the real economy. Rather they will use the money for yet more speculation, including takeovers, mergers and share buybacks to further boost stock prices.

The additional $1.5 trillion in the US federal deficit will be paid for by massive cuts in Medicare, the health program for the elderly, and the slashing of other social services, including what Republican Senator Marco Rubio of Florida described as “structural changes to Social Security and Medicare for the future.”

As the WSWS Perspective yesterday noted:

    “Talk of ‘structural changes’ is political jargon for the privatization of these bedrock programs upon which hundreds of millions of people depend and their destruction as guaranteed entitlements.”

There is an underlying causal connection rooted in the very structure and functioning of the capitalist economy, and this is given voice by the political establishment.

The fabulous monetary gains in financial markets are the result of the operations of fictitious capital. That is, they are not the result of production of real wealth, achieved through expanded investment and production, but in the final analysis represent claims upon the surplus value extracted from the working population.

To the extent that the demands of fictitious capital increase, through the escalation of asset and financial valuations, they have to be met by increasing the mass of surplus value on which ultimately they are a claim.

Thus the rise of rise of financial markets is being accompanied by an escalating drive to force down wages and scrap social provisions, while at the same time creating the conditions for a collapse in the financial house of cards, with immense economic and social consequences.
The original source of this article is World Socialist Web Site

Copyright © Nick Beams, World Socialist Web Site, 2017
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Offline RE

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https://wolfstreet.com/2017/12/08/citi-bofa-hsbc-goldman-bnp-on-hook-steinhoff-spirals-down/

Enron Déjà Vu? Citi, BofA, HSBC, Goldman, BNP on the Hook as Steinhoff Spirals Down


by Wolf Richter • Dec 8, 2017 • 37 Comments   
$21 billion of debt. Off-balance-sheet entities. Moody’s wakes up, downgrades it four notches, with more to come.

Steinhoff International Holdings – which acquired nine companies in the past two years, including Mattress Firm Holding in the US, and which presides over a cobbled-together empire of retailers and assorted other companies in the US, Europe, Africa, and Australasia – issued another devastating announcement today: It cancelled its “private” annual meeting with bankers in London on Monday and rescheduled it for December 19.

This is the meeting when the company normally discusses its annual report with its global bankers. The annual report should have been released on Wednesday, December 6. But on precisely that day, the company announced cryptically that “accounting irregularities” had “come to light” that required “further investigation,” and that CEO Markus Jooste had been axed “with immediate effect,” and that it would postpone its annual report indefinitely.

This is raising serious questions about the company’s viability as a going concern. The lack of transparency doesn’t help.

To soothe investors, the company announced on Thursday that it was trying to prop up its liquidity by selling some units ASAP. And it made more cryptic statements: It “has given further consideration to the issues subject to the investigation and to the validity and recoverability” of some assets of “circa €6 billion” ($7 billion).

“The validity and recoverability” of assets worth $7 billion? The company is infamous for its opaque communications which equal its opaque corporate structure.

It’s considering selling “certain non-core assets that will release a minimum of €1 billion of liquidity.” It also “committed” to wringing out €2 billion from its subsidiary Steinhoff Africa Retail Limited (STAR) by refinancing “on better terms” some debt that the subsidiary owes the parent company, which the subsidiary should be able to handle, “given the strong cash flow.”

With these measures, it hopes “to be able to fund its existing operations and reduce debt.” Shareholders and bondholders were aghast.

The shares, traded in Frankfurt and held widely by international investors, had still been in the €5-range in June. But in August, German prosecutors said they were probing if Steinhoff had booked inflated revenues at its subsidiaries. Shares began to drop. By Tuesday, there were down 41% at €2.95.

On Wednesday, after the “accounting irregularities” had “come to light,” shares crashed 64% to €1.07. By Friday, they’d dropped to €0.47. Market capitalization plunged by about €18 billion ($21 billion) since June to €2 billion.

On Thursday, given the fiasco, Moody’s downgraded the company four notches in one fell swoop, from Baa3 (one notch above junk) to B1, which is well into junk, and added “on review for further downgrade.” It said:

    Given that allegations of accounting irregularities were raised and rebutted in August 2017 and again in November 2017 it calls into question the quality of oversight and governance at Steinhoff.

The €800 million of bonds that Steinhoff Europe AG issued during the halcyon days of June 2017 had traded at over 100 cents on the euro in August. By Tuesday, they’d dropped below 85. On Wednesday they crashed to 56. On Friday, they closed at 46.56 cents on the euro:


Moody’s 4-notch downgrade with more downgrades likely shows once again how credit ratings are lagging indicators that merely give investors confirmation of what the plunge in price has already shown in gruesome detail.

But Steinhoff owes its banks a lot more than its bondholders – the same banks with which it was supposed to meet on Monday. According to Bloomberg, the company’s “total exposure to lenders and other creditors was almost €18 billion ($21 billion) as of the end of March.”

“The great unknown is the funding of the off-balance-sheet structures, which could spill over into fresh bank liability,” Adrian Saville, CEO of Cannon Asset Managers in Johannesburg, told Bloomberg. He said the short-term debt could “fall over if the business fails.”

These are the banks, according to Bloomberg, that are exposed to the company, its off-balance sheet vehicles, and the investment vehicles of its Chairman Christo Wiese, globally:

    Citigroup
    Bank of America
    HSBC
    BNP Paribas
    Goldman Sachs
    Nomura Holdings

And in South Africa:

    Standard Bank Group
    Investec
    Rand Merchant Bank, a unit of FirstRand

Bloomberg explains:

    Last year, [Wiese] the billionaire and largest shareholder of the company pledged 628 million of Steinhoff’s shares in collateral to borrow money from Citigroup, HSBC, Goldman Sachs Group Inc. and Nomura Holdings Inc. That was to participate in a share sale in conjunction with the acquisition of Mattress Firm and Poundland, according to a company statement.

The value of those pledge shares has plunged to €301 million, from about €3 billion a year ago.

“The disclosures have also turned a fresh spotlight on a set of transactions involving related entities that critics say may have hid operational losses and artificially pumped up the company’s valuation,” according to The Wall Street Journal.

The German prosecutors said in August that, according to the Journal, “they suspect the revenue came from a set of contracts, each valued in the hundreds of millions of dollars, that Steinhoff subsidiaries sold to undisclosed related parties.”

    This week, analysts scrambled to make sense of some of the transactions, parts of which are publicly disclosed. In the past, some transactions had triggered specific concern by analysts. Despite those questions and the German probe, investors had largely been satisfied with Steinhoff’s public explanations – until now.

“It’s the unknown unknowns that are the big worry here. You’ve got to ask, ‘Who knows the whole story?’” Brian Pyle, an analyst at Old Mutual Investment Group, told the Journal. The firm is one of Steinhoff’s top-20 shareholders. “We just don’t know what else is out there.”

    In one widely circulated research report published anonymously Tuesday, a group calling itself Viceroy Research accused Steinhoff of using companies owned by some of its former executives and other close associates to hive off unprofitable assets. Those disposals, Viceroy alleges, were often financed by loans from Steinhoff, the interest from which Steinhoff booked as revenue.

    Viceroy said some of these transactions involved Campion Capital SA, a Swiss private-equity firm. Campion directors include Siegmar Schmidt, a former finance chief at one of Steinhoff’s subsidiaries, according to public records and other documents reviewed by The Wall Street Journal.

    In 2015, Steinhoff Möbel, a Steinhoff subsidiary, entered into a joint venture with a company owned by Campion, according to these records. The joint venture then bought a company called GT Global Trademarks from Steinhoff.

    The following year, Campion bought two consumer-loan units from South Africa-based Steinhoff Africa Holdings, a Steinhoff International subsidiary. It then sold parts of those firms seven months later to Pepkor, a South African retailer owned by Steinhoff’s Johannesburg-listed subsidiary, according to a determination by the South African Competition Commission in October of that year.

    The terms of both transactions are unclear.

And there were more indications. The Journal:

    In Steinhoff’s third-quarter earnings call in August, a credit analyst from HSBC asked then-Chief Executive Markus Jooste why the company was taking on debt and entering into complex partnerships even though its balance sheet showed it had plenty of cash.

    Mr. Jooste answered that the joint ventures “had nothing to do with liquidity or monetary terms” and that it just wanted to have local partners who understood how to grow its business.

Reuters reported in November that Steinhoff “did not tell investors about almost $1 billion in transactions with a related company despite laws that some experts believe require it to do so.” Short-seller Viceroy Capital, mentioned above, has alleged that Steinhoff used such related-party transactions to channel losses off its financial statements.

Steinhoff’s roll-up strategy made it practically impossible for investors – even those tempted to try – to establish underlying cash flows, revenue growth, and earnings. But these schemes cannot be carried on forever.

And the ECB bought into this company. Read… Bonds Issued by Acquirer of Mattress Firm & Sherwood Bedding Collapse after ECB Buys Them as Part of QE
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