Two very interesting stories were emerging today, the first involving some strange meetings that have been held recently which is leading to a lot of speculation:
President Barack Obama and Federal Reserve Chair Janet Yellen discussed risks to the economy and progress from Wall Street reform during a rare meeting in the Oval Office on Monday, the White House said. -Reuters
“The President and Chair Yellen met this afternoon in the Oval Office as part of an ongoing dialogue on the state of the economy. They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally. They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers.”
ZeroHedge wrote, “Here is our modest attempt at translating what was and what was not said:
This may well be true – given the upcoming presidential election – but it brings up a much larger point.
The banking system around the world is extremely fragile and securing credible and calm markets make take considerable doing. The government of Italy for instance, just concluded an emergency meeting with its deeply indebted banks that saw the government agree to a bail out of over euro five billion.
Throughout Europe, the banking sector is in critical shape – and Japan too. The ratio of performing to non-performing loans is critically low. But perhaps the most concerning area is Germany where the Deutsche Bank – of all banks – is said to be in critical condition.
Here, from Bloomberg in early March:
Deutsche Bank AG, the lender exiting some trading operations, is in talks with JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. to sell the last batches of about 1 trillion euros ($1.1 trillion) in complex financial instruments, people with knowledge of the matter said.
The Fed is supposed to tend to US solvency. But during the 2008 crisis, Ben Bernanke reportedly extended trillions in overnight loans to banks around the world, and many of those loans still may not have been paid back. It is said to be one reason among many to be sure, why Fed officials don’t want an audit.
But what if the Fed has now agreed to “backstop” Deutsche Bank loans? Deutsche Bank is a critical bank, perhaps the most critical in all of Europe. Bank insolvency in Italy would already be a disaster, but a declaration of insolvency by Deutsche Bank would be unimaginably worse.
And so, perhaps, it is possible that the Fed will ensure, or help ensure, the solvency of Deutsche Bank. And this of course brings up a larger question – which is whether the Fed is now to do the same sort of thing in Italy, Greece, Ireland and elsewhere where banks are facing critical shortfalls.
The difficulties faced by Europe in the current environment have been seen as intractable. But what if a decision has been taken that the Fed will step in for the ECB? The ECB cannot print the necessary money but the Fed is both less scrutinized and more powerful than the ECB.
But now perhaps the time has come for further action. If the Fed is being used this way, then it is the US taxpayer ultimately, who will pay for the Fed’s generosity. The cost, extracted via price inflation, would certainly run into the hundreds or billions and even trillions.
It will take a lot of money printing to sustain Europe’s banks, and it’s probably not possible anyway. But surely at this point in time anything and everything will be tried to support European banking and sovereign solvency – at least until US elections are done. This would seem to call for additional monetary aggressiveness by the Fed.
What does this all mean? If we are lucky, there will be a new round of austerity (i.e. bail outs). This is not likely as bail-outs will not have much of an effect on the banks given the gravity of the economic condition of the banks.
Treasury Secretary Jack Lew and the UK’s Chancellor of the Exchequer, George Osborne, on Monday (11/10/)4), ran a joint exercise simulating how they would prop up a large bank (e.g. Bank of America) with operations in both countries that has landed itself in trouble. Also taking part in the “bank failure drill” was Federal Reserve Chair Janet Yellen and Bank of England Governor Mark Carney, and the heads of a large number of other regulators, in a meeting hosted by the U.S. Federal Deposit Insurance Corporation.
If a banking collapse were to be on the near horizon, the banksters are not going to notify you because they would not want to incite a bank run. With only 1.15% of all deposits being insured by the FDIC, your money would be left vulnerable and only the elite would be warned as they quietly transfer their money to a safer haven, such as gold. How do I know this? Please read on.
In a rerun of what happened two years ago when in April 2014 a Russian Su-24 fighter jet flew repeatedly within 1000 yards of a US warship, CNN reports that the Pentagon is furious that while sailing in the Baltic Sea, US warship the USS Donald Cook had two "extremely close overflights" by unarmed Russian fighter jets.
According to the initial reports, two concerning encounters occurred Tuesday night in international waters. A third overflight, at a more acceptable distance, happened Sunday, according to the source.
CNN adds that the ship, an Arleigh Burke-class guided-missile destroyer, also had a Polish helicopter on board as part of routine training, according to the official, leading to some speculation in military circles that the Russians were also "sending a message to Poland," the official said.
Navy officials are not commenting publicly, but inside the Pentagon there is an intense discussion about releasing video and still photos of the Russian encounter to demonstrate the danger the jets posed to the ship, a U.S. official told CNN.
A U.S. official described the Russian maneuver as "strafing runs" without firing any weapons. The unarmed Russian aircraft swooped in over the deck in the same flight profile that would have been used if an attack was underway.
A second U.S. defense official told CNN that the overflights were conducted by a Russian SU-24 and helicopter. Flight operations by the Polish helicopter were interrupted because one of the overflight was so close.
EUCOM added some additional details moments ago:
On April 12, while Donald Cook was operating in international waters in the Baltic Sea, a Russian KA-27 Helix helicopter conducted circles at low altitude around the ship, seven in total, at approximately 5 p.m. local. The helicopter passes were also deemed unsafe and unprofessional by the ship's commanding officer. About 40 minutes following the interaction with the Russian helicopter, two Russian SU-24 jets made numerous close-range and low altitude passes, 11 in total.
CNN reports that the Cook had been shadowed by a Russian intelligence-gathering ship for some time before the aircraft encounter. The U.S. crew had radioed the Russian ship that it was conducting routine operations, according to the official.
The Pentagon is livid because while there have been encounters between US ships and aircraft and Russian counterparts, this time Russia appears to have gone too far according to CNN sources.
Moments ago the US Navey released the following photos of the overflights.