Panic in Washington, New York and San Francisco

Week ended March 25, 2023, interesting news items to look at this week were:

1. Panic in Washington, New York and San Francisco: My January 28 2023 Blog was titled “Huge Margin Call on the Anglo American Empire and NATO”. That margin call was not met and now creditors are demanding satisfaction. First Yellen called for an unscheduled meeting of the Financial Stability Oversight Council (FSOC) on Friday, whilst putting on a happy face parroting the US Banking System is sound. Please note the council members are the key administrators and regulators of finances in the US and no member can afford to waist their time with idle talks (Fig. 1).

Then a “Nothingburger” statement was issued. (Fig. 2).

The market conclusion is "Capital markets stop panicking when officials start panicking"  Remember on June 27, 2017 when Janet Yellen was chairman of the Federal Reserve she said “she does not believe there will be another financial crisis for as least as long as she lives” (Fig. 3).

Allow me to adapt from a Persian Proverb, there are 4 kinds of fools , one who is insincere but ignorant, one who is knowledgeable but insincere, then there are ignorant and insincere but the most sickening are those who are insincere and do not know they are ignorant but think everyone else are ignorant. It seems Washington is full of the fourth kind. (Fig. 4)

(i) FDIC out of funds: As at the end of 2022, the FDIC “Deposit Insurance Funds” has $128 billion against banking deposit of 17 trillion ($10 trillion within insured amount and $7 trillion large uninsured deposits). To bail out SVB, FDIC had to borrow $143 billion in newly printed money from the Federal Reserve. (Fig. 5).

Since the creation of the Federal Reserve in 1913 US had maintained a facade to the world that the Federal Reserve is independent to the White House because the Fed do not lend directly to the US Government and do not participate directly in Treasury Auctions. This thin veil is now torn because Treasury could not borrow anymore on account of the Debt Ceiling Limit and cash balances of the Treasury is down to below $200 billion. (Fig. 6).

This is chump change when one’s liability amounts to $31 trillion. Remember Yellen forecast Treasury could last until June before Congress passes a new debt ceiling. (Fig. 7).

It looks if the Administration can survive April it would be considered as a real accomplishment. A CFO who is incapable to make predictions that last 60 days is only useful as a contrarian indicator .

 (ii) The Federal Reserve Machine is running on petrol fume: The Federal Reserve is insolvent with a negative networth of $1 trillion and weekly losses of $42 billion and losses are rising in increasing speed. (Fig. 8).

On strict financial terms, SVB has a liquidity problem but the Federal Reserve has both a solvency and liquidity issues. The auction off of SVB has been delayed by the FDIC without further explanation. (Fig. 9).

A former Fed Advisor Danielle Martino Booth said the GSIB are still soaring from the 2008 bail out of troubled financial institutions, none is therefore stepping forward to take over yet another round of lemons. (Fig. 10).

Unconfirmed Intel Briefing said about 40 African countries are in closed session discussion on a repudiation of USD as a reserve currency.

(iii) The Entire US Banking System is approaching Insolvency: Fortune Magazine reported a research showed the current status of US Banks have in aggregate unrealized losses similar to SVB of $1.7 trillion. In the context of the entire Depository Institutions in US only have equity of $2 trillion and that JP Morgan, the consummate insider, already sold its entire US Treasury Portfolio and shorted some more since August 2022. We can deduce all other banks combined with the exception of JP Morgan would have their entire equity wiped out in the current crisis. JP Morgan alone alone has equity of $292 billion (Fig. 11).

There are 4,236 commercial banking institutions in the US under FDIC, when the media reported 186 would be in trouble, in my opinion, that is already a gross understatement.   

 (iv) Hong Kong & Singapore major financial beneficiary: Unofficial news purportedly from Christopher Hui, Secretary for Financial Services and Treasury of Hong Kong SAR, overseas Chinese flight capital from US and Europe have been redirected to Hong Kong to the tune of US$236 billion. Singapore also is having a similar experience. Having read the summary of US Treasury cash holdings above, Hong Kong has now a lethal weapon against the dollar hegemony or a time bomb for Hong Kong’s destruction. All depends upon how Hong Kong would deploy these resources. I call upon my fellow Christians to pray for wisdom for our Hong Kong SAR administrators to walk cautiously and humbly before God.

 (v) Margin Call on Weapons Unfulfilled: Just one month ago, the Czechs showed unwavering support to arm Ukraine. (Fig. 12)

This week “How could - already helped” Fig. 13

 (Vi) What would the Anglo American Empire Do: The Anglo American Empire has run out of options and if history is a good guide, kinetic wars would escalate in Europe, Syria and the Taiwan Strait to generate instability in the Atlantic, Pacific and Indian Oceans. The intention is to herd capital back to US. From UK sending depleted Uranium shells to Ukraine, to renewed bombing of Syria, to legislating a confiscation of ethnic Chinese personal assets in America via Taiwan Conflict Deterrence Act of 2023, the writings are all on the wall.

We have talked ad nauseam since 2018 on events that have progressively developed to the critical juncture this week. The $64 question is have you taken evasive actions.

 Hosea 4:6 My people are destroyed for lack of knowledge: because thou hast rejected knowledge, I will also reject thee, that thou shalt be no priest to me