It's Time To Beat Up On Credit Suisse an…

22-02-2017 Hits:164 BoomBustBlog Reggie Middleton

It's Time To Beat Up On Credit Suisse and Their Woefully Misinformed Bitcoin Advice

Credit Suisse has been posting cryptocurrency advisories over the last few weeks. They are quite one-sided, although couched in the appearance of objectivity. To explain why it's couched in the appearance...

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HSBC Reports One of the Biggest Misses o…

21-02-2017 Hits:270 BoomBustBlog Reggie Middleton

HSBC Reports One of the Biggest Misses of the Year, We Warned Quite Thoroughly in September

Our HSBC research report released September of 2016 has proven to be 110% correct. This is the first sentence of our report: HSBC Common Equity Returns: Notwithstanding a possible boost from...

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Censorship, Autonomy and Risk Management…

19-02-2017 Hits:609 BoomBustBlog Reggie Middleton

Censorship, Autonomy and Risk Management When Dealing With Digital Assets: How to Minimize Risk of Loss

This is a video on the topic of the qualities of Bitcoin blockchain's censorship-proof attributes and how they apply in the world we live in today. It is imperative that you...

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How to Use, Trade, Store and Invest in B…

16-02-2017 Hits:1127 BoomBustBlog Reggie Middleton

How to Use, Trade, Store and Invest in Bitcoin Digital Assets - Step by Step, Part 1

I will teach novices and experts alike how to fit Bitcoin into an investment portfolio safely and with the optimum risk-adjusted potential - along with step-by-step guides, instructions and tutorials. This...

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Italy Approves 1.2% of GDP to Save It's …

16-02-2017 Hits:514 BoomBustBlog Reggie Middleton

Italy Approves 1.2% of GDP to Save It's Troubled Banks... Again! Exactly As We Warned Last Year

I've been warning about Italy's troubled banks since 2010, and last year I pushed two very detailed reports about what was essentially Italy's Bear Stearns and Lehman Brothers. Italy is a...

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T-Mobile Has Eliminated Most of Verizon'…

15-02-2017 Hits:566 BoomBustBlog Reggie Middleton

T-Mobile Has Eliminated Most of Verizon's Network Advantages At A Lower Price Point - Uh Oh!

T-Mobile reported their Q4 2016 results yesterday, and guess what?

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Association with Donald Trump Cost Uber …

13-02-2017 Hits:594 BoomBustBlog Reggie Middleton

Association with Donald Trump Cost Uber $200 Million in 45 Days, Other Companies Feel It Too

Uber's CEO perceived association with Donald Trump (sitting on his tech advisory panel) has caused a viral #DelteUber campaign, resulting in over 200,000 Uber accounts deleted in 45 days. Videos of the...

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Verizon Unlimited, T-Mobile Upgrades, Sp…

13-02-2017 Hits:1337 BoomBustBlog Reggie Middleton

Verizon Unlimited, T-Mobile Upgrades, Sprint Drops Prices Through Floor: The Deadbeat Carriers are Beating Themselves To Death

Update: T-Mobile responds to Sprint & Verizon price cuts but adding additional features to its fixed rate plan. Competition continues to benefit the consumer, but net margins will be/are hovering...

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Fitch Has Effectively Downgraded The Tru…

10-02-2017 Hits:688 BoomBustBlog Reggie Middleton

Fitch Has Effectively Downgraded The Trump Administration, Albeit Too Late As Usual

After my many, many warnings about Donald Trump and his administration (I'll list those a little later)... It's official, Fitch has actually warned that the Trump administration is detrimental to...

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Chinese Bitcoin Exchanges Suspend Client…

09-02-2017 Hits:846 BoomBustBlog Reggie Middleton

Chinese Bitcoin Exchanges Suspend Client Withdrawals. I Warned You About Heteronomous Wallets!

Bitcoin.com reports "Chinese Exchanges Suspend Withdrawals for One Month": The two largest Chinese Bitcoin exchanges have suspended Bitcoin and Litecoin withdrawals for one month. The news follows China’s central bank...

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Will Japan's Declaration of Bitcoin as L…

09-02-2017 Hits:892 BoomBustBlog Reggie Middleton

Will Japan's Declaration of Bitcoin as Legal Tender Accelerate Cryptocurrency Mainstream Adoption?

It’s being reported by Sputnik News and other sources that Japan has declared Bitcoin to be legal tender. Unfortunately, I have not been able to quickly confirm this through Japanese...

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Deutsche Bank's Year End Analysis and Re…

08-02-2017 Hits:1082 BoomBustBlog Reggie Middleton

Deutsche Bank's Year End Analysis and Review - BoomBustBlog Style

This is our Q4 analysis of Deutsche Bank. When analyzing and valuing entities such as banks and platform-driven tech companies, perception is always key. You see, what one maverick or...

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I am predicting and betting heavily on another large bank failure in the US and the Eurozone. Many on the site have probably already guessed what it is that I do. Well, I may be significantly epanding my job description if the financial system takes the hits that I expect it to.

A Black Swan Swims Across the Pond

European Central Bank’s (ECB) measures to inject necessary liquidity in the financial system had negligible on the interbank liquidity hoarding which led to sharp rise in inter-bank lending rates. Although the liquidity injections by ECB helped restore the expected overnight lending rates (EONIA) to near target level of 4%, there was little impact on the inter-bank borrowing rates for deposits over 3 months (EURIBOR), which stood at 70 basis points against the usual rate of 5-10 basis points over the target rate since banks were unwilling to lend each other. Similar phenomena were observed in US where steps taken by Fed like the Term Auction Facility were proven ineffective in reducing LIBOR-OAS spreads which were more dependent on counterparty risk factors such as asset-backed commercial paper spreads, and credit default swaps. Since term lending does not affect counter party risk Fed should consider other measures that affect LIBOR-OAS spreads. For example, some feel that the ECB’s policy framework for direct open market purchases of marketable assets including high-grade mortgage-backed securities could address the ongoing stress in the market. I personally believe that these securities must be allowed to bottom out. If there is any value in them, speculators such as I will swoop in to purchase them at the right price. The point of consternation is that the right price results in explicit insolvency. The banks are implicitly insolvent now, though, and everyone knows it. I am referring to both commercial banks and the non-bank entitiies that include the investment banks and brokerages - whose fates are heavily intertwined.

Fed rate cutting has also failed to improve margins in many of this nation’s regional banks, as was clearly illustrated in “The Anatomy of a Sick Bank!”. This shows that the problem is getting worse despite rampant rate cuts and the wholesale swallowing of infected assets as collateral. I believe that the banks must be allowed to fail, and it appears as if the Fed and Treasury are coming to that conclusion as well.  Today’s headline on CNBC.com:

Paulson Wants Bank Failure without Fallout – “"In my view, looking beyond the immediate market challenges of today, we need to create a resolution process that ensures the financial system can withstand the failure of a large, complex financial firm," Paulson said in remarks prepared for delivery to the Chatham House think tank in London. "To do this, we will need to give our regulators emergency authority to limit temporary disruptions. These authorities should be flexible and -- to reinforce market discipline -- the trigger for invoking such authority should be very high, such as a bankruptcy filing," he added.

He said the perception should be avoided that an institution is "too interconnected to fail or too big to fail" and added that "we must improve the tools at our disposal for facilitating the orderly failure of a large, complex, financial institution." The United States has procedures for the orderly unwinding of insolvent commercial banks with insured deposits, in which their regulators, including the Fed for smaller state-chartered banks, administer claims and control insolvency proceedings. Paulson on Tuesday said using these procedures for larger, complex institutions such as investment banks could mitigate market disruption but would not impose enough market discipline on the private sector.

And simply subjecting investment banks to normal bankruptcy proceedings "imposes market discipline on creditors, but in a time of crisis could involve undue market disruption," he said.

Knowing that Fed support is readily available could cause institutions to willingly take on too much risk, as they did in the run-up to the subprime mortgage crisis, he said. "For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system."