Global Financial Crisis Intesifies as European Banks Have Worst Two Days EVER
By Michael Snyder - End of The America Dream Blog June 28, 2016
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Over the last two trading days, European banks have lost 23 percent
of their value. Let that number sink it for a bit. In just a two day
stretch, nearly a quarter of the value of all European banks has been
wiped out.
I warned you that the Brexit vote "could
change everything", and that is precisely what has happened. Meanwhile,
the Dow was down another 260 points on Monday as U.S. markets continue
to be shaken as well.
Overall, approximately
three trillion dollars of global stock market wealth has been lost over
the last two trading days. That is an all-time record, and any doubt
that we have entered a new global financial crisis has now been
completely eliminated.
But of course the
biggest news on Monday was what happened to European banks. The Brexit
vote has caused financial carnage for those institutions unlike anything
that we have ever seen before. Just check out this chart from Zero
Hedge...
I knew that things would be bad if the UK voted to leave the European Union, but I didn't know that they would be this bad.
Prior
to all of this, a whole bunch of "too big to fail" banks all over
Europe were already in the process of imploding, and now this chaotic
financial environment may push several of them into full-blown collapse
mode simultaneously. Just consider the following commentary from Wolf
Richter...
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.
These
bank stocks got crushed on Friday. And they got crushed again today.
Italian banks have been reduced to penny stocks. Spanish banks are
getting closer. Commerzbank, Germany's second largest bank, and still
partially owned by the German government as a consequence of the last
bailout, is well on the way.
One institution
that I have been warning about for months is German banking giant
Deutsche Bank. On Monday, their stock fell another 5.77 percent to a
fresh all-time closing low of 13.87. I have been convinced that
Deutsche Bank is going to zero for a long time, but these days it seems
in quite a hurry to get there.
Of course
Deutsche Bank is far from alone. The following are other "too big to
fail" European banks that have lost at least one-fifth of their value
over the past two trading days...
-Barclays
-Royal Bank of Scotland
-Lloyds Banking Group
-Credit Suisse
-BNP Paribas
-Societe Generale
-UniCredit
-Intesa SanPaolo
-Banca Monte dei Paschi di Siena
-Banco Santander
-CaixaBank
This is what a full-blown financial crisis looks like, and U.S. banks have been getting hit very hard too...
The
Brexit contagion is spreading as USD liquidity and counterparty risk in
the interconnected global financial system has reached US banks with
Goldman at 3 year lows and BofA and Citi plunging over 12%. This happens
just two days after the Fed released its latest stress test results
finding that none of the 33 banks tested would need additional capital
in case of a "severe" financial crisis. That conclusion may be tested
soon.
Meanwhile, the British pound continues to
get absolutely pummeled. As I write this, the GBP/USD is down to 1.32,
and some are now warning that the British pound may hit parity with the
U.S. dollar by the end of the year.
One of the reasons why I expect the
British pound to continue to tumble is because the global elite have to
show the British people that they made the wrong decision, and they need
to scare off any other countries that would consider holding similar
votes.
So it was no surprise that the elite had two of their major credit rating agencies downgrade the UK on Monday...
Two major rating agencies downgraded the United Kingdom's credit rating on Monday.
S&P
Global Ratings lowered the UK to AA from AAA, with a "negative"
outlook. And, Fitch cut its rating to AA from AA+, with a negative
outlook as well.
And as I mentioned yesterday,
Bank of America and Goldman Sachs have already projected that the UK
economy is heading into recession.
As much
economic and financial pain as possible will be inflicted upon the
British people, and meanwhile they will be bombarded by mainstream news
stories telling them that they made a stupid decision.
Hopefully the British people will stand strong and will not give in to the pressure.
But
of course it isn't just the British people that will be feeling the
pain. The Brexit vote has sent shockwaves all over the planet, and
global investors are losing tremendous amounts of money. For instance,
here in the United States approximately 1.3 trillion dollars of stock
market wealth has been wiped out so far...
Brexit
isn't just a European problem after all. The United Kingdom's decision
to quit the European Union is costing U.S. investors a pretty penny.
U.S.-based
companies in the broad Russell 3000, including online advertising
company Alphabet (GOOGL), software maker Microsoft (MSFT) and global
bank JPMorgan Chase (JPM), have suffered a collective loss of $1.3
trillion since Friday's shocker from the United Kingdom, according to a
USA TODAY analysis of data from S&P Global Market Intelligence.
Hopefully
tomorrow will be better. It is very rare for global financial markets
to crash for three days in a row, but it could happen. More likely,
however, is that we will see some kind of temporary bounce as long as
some really negative event doesn't hit the news.
But
let there be no doubt about what has just happened. The collapse of
Lehman Brothers was the "trigger event" that really accelerated the
crisis of 2008, and now it appears as though the Brexit vote will be the
"trigger event" that greatly accelerates the crisis of 2016.
Global
investors had already lost trillions over the past 12 months, and a
full-blown financial implosion was going to happen no matter how the
vote turned out, but thanks to British voters the fun and games have
arrived early.
Unfortunately, only a very small
fraction of the population understands just how bad things are going to
get in the months ahead...
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