A mounting crisis at one of Portugal’s biggest banks and signs of a deepening
economic slowdown in Europe have sent tremors through financial markets,
triggering a sharp fall on European bourses and a flight to safety across the
world. Portugal’s regulator suspended trading of Banco Espirito Santo after
its share price crashed 17pc in Lisbon, reviving worries about the underlying
health of Europe’s banks. The STOXX index of European lenders fell to its lowest
this year following a bank run in Bulgaria and a profits shock from Austria's
Erste Bank. The index is down 11pc since early June. Yields on Portugal’s
10-year debt surged 20 basis points on Thursday to 3.95pc, with contagion
spreading to Greek, Spanish and Italian debt. Before I board for Budapest! I
remarked yesterday about the closing FDI window through worries about €Z
stability - highlighted by the Holy Ghost in Portugal but already with knock-ons
in Greece, Spain, Slovenia and Bulgaria-Romania. I mentioned the Indian
budget/plan that would normally, because of its cautiousness, propelled some FDI
into a stable €Z. Money the €Z desperately needs to catalyse growth. Well
another small nail in the €Z FDI coffin today http://www.thetimes.co.uk/tto/... - as the BRICS set up their
own development bank as a counter to Laggard's arrogant stupidity in setting up
an €MF and an IMF. Now the BRIC money (reserves not borrowings) will be going to
their bank not into the last resort coffers of the €MF.No FDI, a totally impotent ECB, like water on stone... Zero Hedge is always an interesting read at times like these. Only if they crash, and get another central bank asset bailout, like in 2008. The amount of imaginary 'money' the central banks can create is infinite. At least, until it becomes worthless during hyperinflation. I think that day is closer than most people realize. It won't be caused by banks, though. It will be a government response to the effects of peak oil. As the cost to go after what oil remains gets too high, governments will start pumping out money to try and prop up the economy, as it begins to shrink from not enough affordable oil being available. They will create euros & dollars by the trillions, and shove them into the economy to try to boost economic activity. It will work for a while. Then the inflation will hit, and accelerate very quickly. Anything they do to try and rein in the inflation, will cause an instant global financial collapse. The numbers in Pritchard's last oil article show how close we are to peak oil. He is dreaming that all that energy can be replaced in transportation, with any other energy source, in time to prevent the apocalypse. It is 40 years too late to get that done in the time we have left. Transportation is the weak link in the global economic system that will prevent Pritchard's energy fantasy from being realized. Oil products move over 90% of everything that moves. Today there's a fascinating article about how state-controlled Chinese banks have been conniving with Chinese oligarchs to park their ill-gotten gains in foreign countries, notably America, in contravention of the tight capital controls in that country,
The market for colossally expensive US developments has been booming thanks to this tsunami of illegal money.
The purpose of this official winking-at illegality has been to minimize inflationary pressure in China.
Now that the cat's out of the bag, we can expect the Chinese Government to cover their involvement by actually enforcing the capital control regulations.
The result will be a steep rise in Chinese inflation and a collapse in the market for premium US properties.
The rise in Chinese inflation will require a raising of interest rates and a reining-in of economic activity, with wider consequences for the world. We are living through times of extreme financial froth and danger...It very much looks like another Euro crisis is in the offing.How much longer can they
keep this decrepit creaky edifice known as the EMU standing. Another cut in the slow death of a 1000 cuts.
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