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The declines in large European banks in the past year are simply breathtaking …
Societe Generale SA (SCGLY) of France, one-year returns down 29.7% in the past year.
Banco Bilbao Vizcaya Argentaria SA (BBVA) of Spain, down 39%.
Standard Chartered PLC (SCBFF) of the U.K., down 50.4%.
Royal Bank of Scotland Group (RBS) of the U.K., down 62.9%.
Just look at the table below, a version of which I just published in my most recent Safe Money Report.
I could also bring up Deutsche Bank (DB) of Germany, down 57% to an all-time low for its U.S.-traded ADRs. Or Credit Suisse (CS) of Switzerland, down 60.4% to an all-time low for the U.S. shares. Then you have banks that are mostly traded in Europe, like the extremely troubled Banca Monte dei Paschi di Siena (BMDPY) in Italy — down 81.7%. Or another Italian bank UniCredit SpA (UNCFF), down 67.9%.
These aren’t small, micro-cap financial institutions. This isn’t like if some community bank with a handful of branches in Oklahoma or Texas was to go belly up because of souring energy loans. These are massive, multibillion-dollar institutions with operations and financial links all over Europe and the world — and they’re dropping like flies for a variety of reasons.
Take Italy. A whopping 17% of the country’s bank loans are estimated to be impaired. That compares with only 5% here in the U.S. at the absolute depths of the financial crisis in 2008-09.
[Read More – The Consequences of Reckless Lending- Mike Larson]
In Germany, Deutsche Bank was recently labeled one of the most potentially dangerous banks in the world by the International Monetary Fund. It lost around $7.5 billion last year alone, and had notional derivatives exposure of around $46.6 trillion euros at the end of 2015 (though net credit exposure is theoretically much more limited).
In the U.K., the biggest worry is Brexit and the ongoing fallout from the vote. One sign of major turmoil: Several high-flying British real estate funds just slammed the door shut in investors’ faces this week, freezing redemption requests. They did so because liquidation requests were flooding in, and they didn’t want to be forced to fire-sale properties in order to cover those demands for money.
If it all sounds familiar to you, it’s because we saw these same kinds of problems here in the U.S. during our major credit crisis. I don’t KNOW if any of these struggling Euro-banks face their own "Lehman Moments." But I can’t rule out a Lehman Brothers-style collapse, either … and neither can many other investors, judging from the action in the interest rate, currency, and credit markets.
My advice? Continue to stay away from these turkeys. Avoid U.S. financial stocks that are vulnerable to spillover selling. And by all means, take advantage of the profit opportunities that Euro-bank chaos is creating in the markets.
[Read More – Yet ANOTHER Billionaire Warns About Coming Chaos – Mike Larson]
That’s exactly what I’m doing in my All Weather Trader, by the way. I just told my subscribers to grab three rounds of solid double-digit profits — in as little as six days — and I’m confident many more similar opportunities lie ahead.
(Editor’s note: To get more information, click here or call Mike’s team at 1-800-393-0189.)
Until next time,
Mike Larson
{ 59 comments }
Mike,
Thanks for guiding us through this complex web and making us money in this volatile environment. I subscribe to both; All WeatherTrader and Safe Money Report.
Hi Mike
Many already believe that the sovereign debt levels of some countries are unrepayable. Institutions have already extended some maturities and cut interest in the hope of avoiding the inevitable crashes. Once again who do we trust and how does the average investor protect themselves against this collapsing Euro currency system?
When these banks start failing, and they will, there will be chaos. Bank runs are not a pretty sight. As with the last time of difficulty (and this will be more than difficulty), they will ask the U.S. for bailout. But now, through terrible management at the top of our nation…our debt has doubled in the past 7 years and we are looking at a National Debt of $20T. The day of reckoning is approaching as soon as this market tops out. Not long now….another 500 Dow points or so.
I believe you have been saying the same thing since Obama was elected…. Did you miss the rally since then that returned all of the Cheney/bush losses, plus some?
Again…. In ALL of American history: There has NEVER been a Stock Market Collapse during a Progressive Liberal Presidential Administration. They have ALL happened during Conservative Administrations after periods of Conservative Domination….
Those that fail to study history are doomed to repeat the the errors of the past…… :(
I recently read an exhaustive study by a very conservative commentator. He concluded that the great lie of the century is that Republicans want smaller government and promote fiscal responsibility. They talk a good game but they have done nothing but grow government and rack up the deficit. Democrats have indeed been more responsible and the economy has fared better under their stewardship. They have both done a lousy job governing but less damage has been done by them. I disagree that the Republicans do this at the behest of the three per cent. Both parties are corporations that work for the three per cent. Neither one operates for the benefit of the regular folks. Jim
Yeah, the conservatives get to pick up the tab and clean the ashtrays after the liberals have partied it up. Been there, done that, nothing ever changes.
That is why we are at an inflection point now, and there is only one way out, a complete reset on a global scale. Maybe this is what the elite have been pushing for.
“In ALL of American history: There has NEVER been a Stock Market Collapse during a Progressive Liberal Presidential Administration.â€
I would find this comforting except that Obama has been and perhaps Clinton will be running the country. Despite conservative rantings to the contrary neither of these individuals are Progressive Liberals. Wall Street, Corporate America and the MIC have been and will be in control. What no one will admit, especially the media, is that on some issues both sides are wrong.
Sorry for change of subject,So sad to hear about the Dallas police killings,the old song,When will they ever learn.I was told by an American that nobody would dare invade the USA cos EVERYBODY has weapons,the way the USA is going it could that there will be nobody left. GOD BLESS AMERICA AND GUN LAWS AS WELL OF COURSE.
Well its finally playing out the banks with their fiat currencies are akin to the game of Monopoly and the dice are loaded against the banks. They are becoming more like the bank cards on the game board you know daddy War bucks puffing on a big cigar. The CEO’S all the while are racking in ever increasing salaries and bonuses stock options such massive salaries that border on being obscene while the poor smucks working the tills are laid off and replaced by a machine.
Gordon,
That incredible increase in Income Inequity all began with the Republican Revolution from 1981 forward….. Always works that way when we elect Presidents and Congresses that get the majority of their contributions from the wealthiest 3%……
Eagle, that would be the Clintons you are talking about here, I presume.
Reagan 1981, then H.W. Bush, then Clinton, then Cheney/bush who brought the 2nd Republican Stock Market Crash in the past 100 years….. then Obama in 2009 stopped the Cheney/bush Crash at a 60% loss and today has recovered ALL of that loss and taken the markets to new highs, just as FDR did anfter Hoovers Crash in 1929……
please enough of your complete fabrications did you realize Bill Clinton was impeached in the house and he would have been in the senate but Harry Reid a democrat senator who was in charge of the senate wouldnt allow anyone to vote on the final impeachment of Bill Clinton so in essence he vetoed the whole process so lets get down to the facts about the economy …. in june of 2009 the economy was turning around so barack obama his stimulas programs really didnt have much effect they wernt enacted until a later date anyway
To Gordon & Eagle 495,
You and others like you are constantly whining about corporate exec’s being overpaid. Nobody ever mentions the amount of money pro sport players receive plus all kinds of endorsements.eg: recent basket ball contract for 54,000,000. for a 2year deal just for bouncing a ball and throwing into a hoop!
Give me a break!
Sports players contracts are literally a pimple on a nat’s behind relative to the economy….. The problem is that since the Republicans came to power in 1981, millions of jobs have gotten exported and the salaries of working people have gone down as executive pay has gone up
I responded to one of your big government loving posts previously and gave you the statistics regarding Reagan along with the government websites as references that support the numbers. Here we go again: During Reagan’s term 16+ million new jobs were created, revenue to government nearly doubled in the eight year term despite the two things you despise most (tax cuts and reduced regulation). Reagan triggered a 20 year period where revenue to government tripled. Big government managed to spend it all and then some (guess who controlled Congress during this period). These are simple statistics and facts. You can look them up on usgovernmentrevenue.com or you can continue with the same garbage propaganda that I see from you on this site everyday.
well please explain to me eagle495 why the majority of those jobs that were exported happened during Barack Obamas and Bill Clintons tenure and please tell me why Bill Clinton signed NAFTA AND GATT …. Barack Obama hasnt raised a finger to stop job exportation from this country or to bring them back but i did find some old footage of Clintons praising GATT and NAFTA saying it would create 100s of thousands of jobs here I CANT BELIEVE HOW WELL THE CLINTONS LIED TO THE AMERICAN CITIZENS ( dump hillery in 2016 )
“the amount of money pro sport players receive”
If there ever was a reason for a steeply graduated income tax you just made it.
Yes you are right , this shows what a sick world we now live in .
The people who grow food, make and build and repair things get paid a pittance and people who play with a ball or go acting get paid a fortune .
We need to reset our values .
The only thing Bernie said that I agreed with is that the Banks should be broken up and I will add to that that Glass Steagal act should be restored also .
Glass Steagal should never have been repealed. It was done because of lobbying efforts – and it’s being gone contributed to the financial crash of 2008-09. Fortunately there is some noise about reinstating it.
John
I agree Glass Steagal should have never been repealed and should have been restored after the financial 2008-09 . Instead they came up with Grahm-Rudman which I believe is going to prove to be a failure . I hope Glass Steagal gets reinstated but I fear it may be too late ????
I dont belive the banks will fail twice! At this stage they should be well able to weather the storm,unless we have a total collapse in the financial system..
My guess is that the banks will reinvent themselves and will see significant increase in share price in the next 12 months>> My bet is that the banks will have regained all the losses by Jan 2017..
Wow!. what are you smoking? I want some!..obviously you are not very good at math..look at the debt, look at the derivatives exposure. look at everything! The system is about to collapse, all it needs is a little Lehman bros moment and the way things are WAY more in debt this time, it will make 2008 look like a joke!..Proof? they are ammasing troups on the Russian border supposedely as a “defense” strategy. Bull$h1t ! they are getting ready to start a major war to distract us when the economy goes boom! like they always have! read your history, then they get to reset the board and make money rebuilding the world. only this time they will own everything because everyone owes them loans at 0% interest, that will go much higher= unrepayable and they foreclose on the world. Only problem is that this time it will go nuclear and the world will be finished..Good! as humanity we deserve to be extinct for letting these psychopaths lead us into this… The planet was better off without us…But other than that: Have a good weekend everyone! ;-)
Wasteland warrior
I agree the Banks are in bad shape . They have derivative exposure and I here there is new subprime lending this time in the Auto Industry although there are reports that it is happening in the real estate markets also
. I think the commercial real estate is in bad shape who knows how many defaults are coming in that end of the banking business ???
I still believe the next Domino to fall will be the Italian Banks as Money and markets stated they have non performing loan in the 17% range and there banking stocks have been hammered . If that Domino goes how long before Duestchebank and its 50-70 Trillion dollar derivatives collapse and than our banks may not be too far behind ????
Mike
could you please comment on the Canadian banks?
Thanks
The banks are in the business of making money by making loans. But, interest rates are so low, there is no interest to be charged/earned. And this is supposed to stimulate the economy? What f-idiot thought this up? Very low interest rates are the culprit that is suppressing economic activity, by depressing the multiplier effect, by making money unable to work (earn interest). When are the f-idiots going to realize this?
Justin,
We are in the recovery from the Republican Stock Market Crash of 2007-2009 (60% loss)….. Depressing interest rates is an attempt to get the economy going again….. It worked after the Republican Stock Market Crash of 1929-1932 (90% loss) and it is working now, as the Stock Market, a precursor of the Economy is now at new heights…..
are you insane we are in a literal ZERO INTEREST RATE ENVIRONMENT THE REAL REASON WHY interest rates are so low because the economy cannot grow enough jobs for all the young turning age 18 (working age) every month 300,000 + turn 18 we are lucky if the numbers are smoothed we are creating 150,000 jobs but that does not take into account the 265,000 that are losing their jobs or the 300,000 baby boomers that are retiring this economy is in sore shape considering the national debt has doubled trying to restart it
Correct! The Fed started to do the right thing in December, but seems to have gotten scared off by the January reaction – but you’ll notice that corrected, and things have held up pretty well since then, despite troubles in other parts of the world. The reason is that American bonds have become possibly the most desirable in the world because they actually pay a bit of interest, and the Fed can always print a bit more money to pay off, if needed. Euro countries banks are at the mercy of the ECB bureaucrats.
This is not correct. Banks make money on the SPREAD, or the difference between what they pay to get money to lend and what they lend if for. It really doesn’t matter as much as you think whether that’s a higher or lower rates. It’s the difference that matters to them, not the level. And no matter the circumstances banks have access to wholesale money rates that borrowers can’t get – and they get it even cheaper from depositors who “lend” their money to banks for next to nothing. You can always make money selling things for something when you get it for nothing.
Another problem here is that interest rates are a function of the markets to a much greater extent than the Fed. (The Fed is a factor because they set the wholesale discount rate, but they are not the most important considerations including many other sources of money) There is no “master mind” behind interest rates; that’s a mistaken concept. They are what they are because of economic circumstances.
Last- a lot of people seem to think that attractive interest rates along will stimulate the economy. Okay, it helps but the attractiveness of projects for which businesses and individuals will want to borrow money for to finance is quite a bit more important. And in this slow economy a lot of would-be borrowers don’t want to. A lot of would-be lenders don’t want to lend out money either (hey – they really do want to get it back). There’s a lot more to the robustness of economic activity than what you can easily put your finger on like interest rates.
Well, at least you’re not blaming BREXIT for all of this.
All BREXIT has done is move the date of final collapse forward a few months.
I was just checking the banks yesterday.
Strange, you must have been reading my mind!
Great work. My compliment.
If Euro banks start going under, the splash will be felt worldwide, including the U.S., since banks are interconnected worldwide. It happened before, during the U.S. banking crisis, but now there is less that central banks can do to mitigate the effects, so this one is likely to be worse.
Mike Will you please provide your current views on 10 year treasury yields. Another well known financial commentator just released his views that these yields would double in the next few months and gold prices are also due to a big drop before resuming their upward climb. I am concerned because his views on the economy are much like yours
Eagle 495,
You might take a look back at the USA history for the real answers that you are quoting.
Every time the Democratic party has claimed to be the salvation of the country, it was preceded by a boom that the Republican party created. Check your facts!
100 years of American History: BOTH Stock Market Crashes occurred under REPUBLICAN Presidents 1929- Hoover and 2007- Cheney/bush. both also occurred with REPUBLICAN MAJORITY CONGRESSES and BOTH occurred after years of REPUBLICAN DOMINATION…..
From 1929-2012, $10,000 invested in ONLY Democratic Administrations would have grown to $300,000. Same amount in ONLY Republican Administrations would have grown to ONLY $11,000….. Had the study gone to the current day, the difference for the Democrats could have been even greater…..
What history were you talking about?
Eagle. You have no idea what you are talking about. Let’s see. Obama has doubled the debt. Spending 30,000.00 per second of fake money. Non existent. Not backed up. When the banking elite were allowed to create fractional banking loans .. The greed set in long ago. It’s not republicans or democrats !! It’s the people who really control the money. Both parties. Rich families and banking cartels. There will be a total reset of all world currencies. The rich who own all of the land and the commodities will survive. The world will have very few middle class. The collapse continued as we lost all morality and threw God out . Greed. Greed. And excessive credit. The collapse coming will be like nothing we have had. We have over 100 trillion in new debt and derivatives since 2007. I could go on … But I wont. Get out of debt. Return to the only truth. God !!
Joseph,
It cost a LOT of money to recover the country from those Republican Stock Market Crashes…… FDR, did basically the same thing to recover the economy….. It really is simple what caused the Crashes of both 1929 and 2007. It was unregulated trading…. The Democratic regulation called Glass-Steagall stopped that until 1999 when the Republican Majority Congress repealed it through their enabling legislation called Gramm/Leach/Blyley, all powerful Republicans….. then the die was cast for 2007-2009… G.S. is still off the books…. the Democrats are trying to get it reinstated and the Republicans are stopping the reinstatement…. Until GS returns to law our financial system is at risk….. Hopefully in November the Republicans along with Drumpf will be thrown out and GS will get reinstated and then the markets will really take off as financial saneness returns to America as we enjoyed from 1933 until the Republican Revolution of 1981 they, at thee behest of the big banks began removing those safeguards
im glad other people here can see through your lying ways eagle 495 you forgot to mention the depression that occured in 1937 FDR a democrat was elected P.O.T.U.S. in 1933 through 1945 o h and if your listening eagle495 please explain this to everyone how its a republicans fault when it was FRANKLIN ROOSEVELTS a liberal democrat fault for the worst depression in the last 100 yrs
The US markets keep melting up in spite of the obstacles.
AND SO ARE PRECIOUS METALS
Hi Mike
I undestand the vulnerability of European banks and the economies of many European countries. We are told constantly that with trade deficit, national debt and unfunded liabilities the USA is up to $ 200 trillion in debt. Does that not make us more vulnerable than even Greece ? Or, are these figures not true.
RB
It should but our Reserve Currency Status has allowed it to go on longer than it otherwise would have .
All the Fed’s are now stuck in a zero rate loop and can’t get out. Any rate increase causes serious problems and negative rates below zero, causes significant problems. Zero rates, suppresses growth in GDP. We are caught in a no growth environment, in a Depression/deflationary environment. Fed’s are always talking about 2% inflation, but it’s unlikely they will get it…they’ve been trying for 5 years. All the Fed’s can do is TALK the markets with dovish or hawkish talk; that is exactly what Yellen and Draghi does. They are out of ammo! We are repeating, exactly what Japan did 22 years ago…a recession. They cannot recover. The US and EU have not recovered.
The US still hasn’t figured in the low 60% employment rate. The unemployment rate of 4.8% isn’t correct. They need to include people who are still looking for full-time employment! The 19+ TRILLION DEBT cannot be repaid. Our Fed is insolvent and bankrupt with 4 Trillion Debt!
The US DOW is now over 18K. Every time they reach this point, equities are way over priced and the market will start down. This time, the markets may hit over 18.5K. A little “hawkish” talk may be in order. Almost time to short. When the market tanks some, Yellen will start her dovish “talk” and the market will go up.
We still don’t know, how Britex will affect markets. I believe, it will be a bumpy road ahead, with tons of uncertainty! Cheers! Jim
Justin ,
They are not f-idiots ….
The are filling their boots with your / our money and laughing at you and the rest of the world .
Greedy selfish crooked b-astards would fit better .
The “jobs number” came in favorably this morning (as if that is really to be trusted!!) and now the market is jumping today! ALL of it, the government “numbers,” interest rates, stock market levels….ALL of it is contrived and riding on a bubble! When will it pop? Who knows? But it will, sooner or later!! And I think that the least suspected thing will be the “straw that breaks the camel’s back!”
Hillary’s running on the platform of promising more “gubmint gimmies” and Trump’s running on the platform of bringing companies back to the U.S. and creating more jobs. Truth is, there is a HUGE percentage of Americans who DON’T want to go to work!! And why should they? 1)What are they qualified to do? and 2)Why should they work at a job when they get more money working “the system”…??
Joseph,
Gotta call Horse Crap on you for that one…… GATT got dreamed up under Reagan and NAFTA got dreamed up under H.W. Bush….. You can find that on Goggle and Wikipedia, but surprisingly, not FOX…… Also, look up “The One World Group”….. Both trade agreements and the original opening up of China (Nixon) where the dream of those guys, who all are members of the wealthiest 3% in America and solid Republican Donors….
And, somehow Trump, who gets his products Made in China, is going to really bring back those jobs?
but why do you constantly misinform everyone eagel495 here”s the REAL TRUTH ABOUT THE CLINTONS BILL AND HILLERY CLINTON signed NAFTA and GATT into law along with 100s and 100s of other democrats the Clintons told the citizens of the united states by signing these it would create 300,000 high paying jobs here just in the first month actually we lost over 300,000+ just the first month so although i voted for Bernie Sanders im not voting for lying Hillery or Bill Clinton
Joseph
Will Hillary Bring back her Husbands Workfare that Obama dismantled ???? Probably not that is why I would rather take my chances with the Job Creator who may actually get the wages to stop falling because of the cheap labor coming in from our Southern Border . Maybe that would give people incentives to get back to work ????
Europe is going to implode the level of debt is crazy, other country’s will be lining up to leave soon, It is now not possible to short a certain Italian bank, soon it will be like trying to put a fire out with petrol,
Just this week 40 ft containers full of ammunition and rifles have been found on route to a refugee camp in Greece, the paperwork said it was furniture, The big worry is that the ammunition was American manufactured, some one has got a lot of questions to answer for that mistake.
Richard,
What is the source of that information? Please provide a link…… If it exists?….
The only real British bank on the list is the Royal Bank of Scotland. Scotland wants to remain in the EU. How have the British banks fared in comparison? At first blush, the EU banks have suffered far more than the British. If so, the British may be able to set up a faster and better exit deal for themselves as it appears the EU needs the British far more than the British “need” the EU. As pointed out elsewhere, if the British That might accelerate the dismantling of the EU and the financial regulatory apparatus serving the Brussels elites. As as pointed out elsewhere, the EU and the Euro will collapse if the British banks withdraw their Euro deposits.
Here are actual facts and statistics regarding Reagan’s term. These numbers are easily verified despite posts to the contrary that show up on this site daily. During Reagan’s term 16+ million new jobs were created, revenue to government nearly doubled in the eight year term as a result of tax cuts and reduced regulation. Reagan triggered a 20 year period where revenue to government tripled. Big government managed to spend it all and then some (guess who controlled Congress during this period). These are simple statistics and facts. You can look them up on usgovernmentrevenue.com.
Dave,
Please provide the links for those “actual facts and statistics” from a credible source…… The truth is that it was Volcker’s (appointed by Carter) moves to stop the Nixon inflation that make the stock Market take off in 1982. Did Reagan reward Volcker? Nope, Reagan did the dumbest thing by hiring Greenspan (the mumbler) who saw “no problem” to rolling over to the Big Banks and removing Glass-Steagall, which brought the Crash of 2007-2009……. :(
From 1981 forward, with Reagan, the Deficit began to go parabolic up as Reagan cut taxes to his supporters, the wealthiest 3%, while actually increasing Federal Spending…….
and eagle 495 you mentioned you got your information from the huffington post and the national enquirer so we know how reliable your sources are
Mike, all the banks are bankrupted and all the countries so the only answer is gold and silver, myself I am leveraged in royalty mining gold and silver shares, all Canadian, myself I have just changed to one of the largest brokerage companies to cover my ass.
With 1.4 quadrillion derivatives the coming collapse will make the 08 look like a walk in the park, we are run by psychopaths and greedy idiots?
Sounds like a good short play. How about a list to short? Thanks Jimmy