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IPFS News Link • Economy - International

"The Dirty Work Of Going Through Old Positions On Bank Balance Sheets...

• https://www.zerohedge.com, By Larry McDonald

When was the last time a geopolitical risk event walked through the door behind a tech crash? George Soros always said "when past excesses are being corrected - it is always a period of maximum risk."

Going into the Ukraine-Russia tragedy, the ferocious "buy the dip" psychology was already impaired – now the matador just put forth his final sword. The wounded bull has been laid to rest. In the early 2000s, we called it "the other side of the mountain" – use vicious countertrend - short covering rallies to raise cash. We have clearly moved from a BTFD mentality to sell the rallies mode.

A bear has arrived for lunch and unfortunately, he's staying for dinner.

We have been up all night working the phones. It has been a Lehman weekend - as in a 24-hour scramble to find and calculate the risk - NOT the size of the risk.

The dirty work of going through old positions on bank balance sheets is being done around the clock as we speak. We do know the cost of default protection on French banks has diverged from UK-Asia-centric HSBC meaningfully.

After working at Soc Gen for three years we can tell you, the books on most EU banks are a cobweb of darkness. In 2016, when Glencore was going down, every week we found more and more risk tied to Glencore assets. The truth bled out very slowly.

Italian banks have been very close with Russia as well. The point is, it's very tough for politicians to "target" SWIFT sanctions into this darkness, very tough. In a loud voice the client said - "Larry - details matter BIGLY – we need to urgently to know exactly what is sanctioned here. They - Olaf - Macron - Biden - will try and dance around risk with a targeted SWIFT but they're probably not qualified to do so.


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