China's Central Bank Eliminates Margin T…

19-01-2017 Hits:228 BoomBustBlog Reggie Middleton

China's Central Bank Eliminates Margin Trading of Bitcoin

There have been rumors that the Chinese Central Bank (PBoC - People's Bank of China) would limit or eliminate margin trading in Bitcoin. It is now official, sort of...

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Is Donald Trump Truly Successful or Born…

18-01-2017 Hits:400 BoomBustBlog Reggie Middleton

Is Donald Trump Truly Successful or Born With A Silver Spoon? An Analysis

In social media and mainstream media, I often hear Donald Trump quoted (by himself, and others) as an extremely successful, self-made man. As an entrepreneur for nearly all of my...

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As I Promised, EU Is Colliding Into Prac…

17-01-2017 Hits:809 BoomBustBlog Reggie Middleton

As I Promised, EU Is Colliding Into Practical Confines of NIRP, Bank Hemorrhaging Up Next

Nearly a year ago, I warned subscribers of consequences stemming from the ECB's negative interest rate program. Here's an exceprt from our resarch report titled European Banking Macro Issues for March...

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Is Bitcoin Too Risky? Whenever the Bitco…

12-01-2017 Hits:1438 BoomBustBlog Reggie Middleton

Is Bitcoin Too Risky? Whenever the Bitcoin is Mentioned in Financial Pop Media, Ignorance Ensues

I hate to be the one to break bad news to you, but most of the pop media/mainstream media financial pundits that I hear and see opine on bitcoin have...

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What Happens When Rates Rise While the S…

10-01-2017 Hits:1069 BoomBustBlog Reggie Middleton

What Happens When Rates Rise While the S&P 500 Relies on Cheap Credit To Boost EPS?

So, the stock market, bond market and real estate markets are all at all-time highs. Everything is Awesome! You know better than that. You see, when the bond market wakes...

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Debt Encumbered Oil, Sovereign Soil, Toi…

10-01-2017 Hits:627 BoomBustBlog Reggie Middleton

Debt Encumbered Oil, Sovereign Soil, Toil & Trouble: Can't You Hear Seems Cracking in the OPEC Empire?

@WSJ reports Libya Ramping Up Oil Production, Threatening OPEC (supposed) Plans to lift global oil place by artificially limiting supply. This would be in violation of federal antii-trust laws in the...

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Ten Years Since BoomBustBlog Was 1st Pub…

09-01-2017 Hits:949 BoomBustBlog Reggie Middleton

Ten Years Since BoomBustBlog Was 1st Published & That Initial Research Still Relevant Today

We have looked into insurance companies' performance last month in regards to our bearish real estate thesis. A small comederie of companies are suffering losses and/or declining profits as we've exected....

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The Macro Truth About The Big Bitcoin Po…

07-01-2017 Hits:1117 BoomBustBlog Reggie Middleton

Bitcoin has dropped precipitously, and as is usual, we have the cacophony of instant digital currency pundits cackling about as if they had a clue. This is the inaugural post...

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To Bust or Not To Bust: Are We In A Real…

04-01-2017 Hits:796 BoomBustBlog Reggie Middleton

To Bust or Not To Bust: Are We In A Real Estate Bubble?

Banks are showing thin NIM, yet many of the big banks are able to boast stable if not slightly improving credit metrics. This doesn’t make sense considering the explosive growth...

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What Happens To Real Asset Lending Banks…

03-01-2017 Hits:643 BoomBustBlog Reggie Middleton

What Happens To Real Asset Lending Banks When the Real Funding Rate Appears? We're About to Find Out

During the financial crisis of 2008, money market funds who subjectively agreed to hold their NAV (net asset value) unit prices at $1 “broke the buck”. That is, the unit...

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Stress Test on Banks’ Earnings Facing th…

30-06-2014 Hits:44770 BoomBustBlog Reggie Middleton

Stress Test on Banks’ Earnings Facing the Veritaseum UltraCoin Value Transaction Platform

My last post on the topic of disintermediation during a paradigm shift was Wall Street Should Be First To Invest In Reggie Middleton's UltraCoin, Much Of It Won't Be Here In...

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Introducing the "Unbreakable Promis…

09-06-2014 Hits:39558 BoomBustBlog Reggie Middleton

Introducing the "Unbreakable Promise" As a Method Increasing Efficiencies and Decreasing Risk

Continuing on the margin compression theme originally laid out in Margin Compression Is Coming in the Payment Processing Space As $100 Million Pours Into Startups, I illustrate mathematically how the bit...

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This was contributed by ChrisM regarding the recent banking meeting in Europe and my comments:

The meeting here in Basel has been very interesting, the main points are:

1) they don't expect the economy to slow much further in the second half.

In regards to the US and UK, I don't see much evidence to support this.


2) they are concentrating on fighting inflation first, before growth.

 This should have been number one priority from the beginning. Inflation is still woefully understated by government numbers. On the boat ride, I shared with the fellow boombustbloggers my observation that effective housing price inflation is still rampant. Nominal prices have dropped sharply across the country, but affordability is actually way down in many areas, due primarily to the tightening of credit. The largest barrier for home purchasers for the middle and working class is the down payment. This barrier has increased significantly after the mortgage markets came back to reality, thus even though prices may have drop by 20% or so, required down payments on those houses have increased as much as 100% to 400% (think from 5% down piggyback 2nd mortgages to 10% to 20% conventional mortgages with PMI).

In addition, interest rates have moved up sharply and maintenance costs have skyrocketed with the cost of commodity inflation. This does not take into account the cost of heating homes, which may have effectively doubled in the past year.

Fuel, housing and food are still stripped from the core rate reading, yet they are the most ubiquitous of consumer purchases and all have advanced nearly or more than 100% in the past year or so (sans food, which still went up a lot).

 

3) they have suggested that "parking" bad debts, by the central banks, to assist commercial/investment banks is a bad idea.

I agree wholeheartedly.

 

4) they have further suggested that the institutions should sell these instruments at market rates, to establish a true value, to hopefully achieve a bottom to valuations.

Without doing so, no serious investors will ever trust them. They must swallow the short term pain in order to gain long term clarity. Then again, foreign investors have agreed to pour good money after bad. I theorize that petrodollars and SE Asian manufacturing money are attempting to get monetized through the major financial systems of the US and the UK, but they are only willing to take but so big a loss in the "legitimate laundering" of their monies into these developed nations financial systems. After a while, they should grow weary. Remember, I stated that the introduction of foreign monies purchasing assets en masse tends to denote a sharp drop in asset value. Think back to US acquisition of foreign automobile companies, the Asian acquisition of overheated US real estate in 80's (Japan was supposed to take over the world back then), and the Japanese investment in consulting companies (ex. Deloitte and Touche). 


Obviously the FED does not have to heed these suggestions, but the warning by the Chinese today to stabilise the dollar, is a veiled threat that they may stop buying US debt.

Points 3 and 4 will see the banks tank (again), the next 3 months should be interesting.