Friday, 19 April 2019

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The Bank of Japan and the ECB are assisting me in teaching the world's savers, banking clients and corporations about the benefits of blockchain-based finance for the masses. How? Today, the Wall Street Journal published "Negative Rates: How One Swiss Bank Learned to Live in a Subzero World":

Wednesday, 13 April 2016 13:55

The Bearish Case Against Oil Gets... Bearier... Featured

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My 15 year old son and I went to the NY Hedge Fund Roundtable event on the energy sector at the Penn Club last week. It's good to have your children see you perform. The discussion surrounded the price of oil, LNG and the impact Elon Musk is having on the oil industry.

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It's official, I'm calling a banking crisis in Europe. Things didn't go well the last time I did this.

Banco Popular Research teaser

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The vendors and proprietors of blockchain solutions have almost all traveled the private blockchain route. We, at Veritaseum, have decided to go in the opposite direction.

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Update: Demand for the Tribeca Film Festival Imagination day is greater than expected. It's way past sold out. Even the hedge funds are blocked from getting in. We're postponing bank disrupt demo.

Veritaseum has partnered up with Hatchery and Tribeca Film Festival to bring education, experience and insight into what is easily one of the most disruptive, status quo busting and misunderstood paradigm shifts of the new millennium  - the birth of the P2P economy and the ValuNet (the new “Internet of value”).

We are doing this through an amazing day of innovation and imagination @TribecaFilm Festival. Think the second coming of the Internet meets TED meets the economic Singularity.

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carbanak2.0executableExecutable files founded in SHIM during Carbanak incident response

Following up on my detailed analysis of the faux pas of private blockchains and the possibility of 4 year settlement times endured by Lehman's counterparties from yesterday, I want to expound upon the extreme likelihood of a bank consortium blockchain being compromised through outright theft!

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blockchain panel

I attended a panel discussion on private blockchains in banking at UBS in NYC last night. There were two overarching misconceptions that appeared to permeate the discussions:

  1. Counterparties can be trusted, hence you can build reliable systems with trusted parties, and;

  2. Capital markets are, and always will be predicated upon the legacy, highly centralized hub and spoke model that we know today. Basically, the influential gatekeepers that control access to a centralized, authoritative exchange.

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I grew up in a small town in Long Island with some very funny people, Howard Stern and Eddie Murphy. Eddie had a skit in his stand-up comedy "Raw" which is a reminiscent of the macro scene of the modern day EU. Let me know if you get it...

Berlin Hyp Real Estate Exposure

Friday, 18 March 2016 11:49

The Next European Banking Crisis Looks to Be Upon Us Featured

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Veritaseum founder, Reggie Middleton, has accurately called the banking crisis, European sovereign debt crisis, the housing & CRE crash as well as several major tech paradigm shifts over the last 10 years. Click graphic above for a video synopsis of his track record.

Cyprus Bank NPLs

The 2008 financial crisis and ensuing recessions have resulted in crisis in the global banking sector. Borrowers’ inability to make pay back debt or even service debt due to an economic slowdown had hurt the banking system. Contrary to popular rhetoric, the European economy is still far away from recovery and so are the banks that are domiciled there.

 

The sector is grappling with barrage of concerns including negative interest rates, elevated levels of NPL, China’s synthetic growth engine facing the real reality of a slowdown, the softening of apparently elevated oil prices and impending regulatory and litigation costs. 

The big banks in Europe have witnessed major reshuffles in 2015 with new CEOs taking over at Barclays, Credit Suisse, Deutsche Bank, and Standard Chartered. In the same year, Deutsche Bank lost a record (as in the most, ever) €6.8 billion ($7.6 billion). Europe’s banking barometer, the Stoxx Europe 600 Banks Index recorded seven straight weeks of loss in 2016, its longest weekly losing stretch since 2008 -  speaking of which…              

The Impact of Rising NPLs

The economic slowdown left many European countries with high levels of NPLs. The corporate sector has a higher share of NPLs within which SMEs exhibit the greatest concentration of NPL. Notably SMEs contribute almost two-thirds of Europe’s output and employment, and are more reliant on bank financing than large firms who have access to the capital markets. While NPL level is very high in Europe, writeoff rates are too low, less than a quarter of that in the United States despite the fact that the US is actually increasing loan loss reserves—creating a buildup of impaired assets nestled and likely hidden in bank balance sheets.

High NPLs affect profitability as it requires banks to raise provisions, which lowers net income. This creates a perverse incentive for banks to hide non-performing assets through methods ranging from creative accounting mechanism to outright misrepresentation. Whether NPLs are reported accurately or not, they are still non-performing, hence they when carried on banks’ books they usually do not generate income streams comparable to performing assets. NPLs, net of provisions, may also tie up substantial amounts of capital due to higher risk weights on impaired assets. In addition, a deteriorating balance sheet raises a bank’s funding costs because of lower expected revenue streams and, hence, heightened risk perceptions on the part of investors. Together, these factors result in some combination of higher lending rates, reduced lending volumes, and increased risk aversion – all at a time when much of the EU faces recessionary and deflationary pressures from within and abroad.

The next installment of this report will delve into the nitty gritty of what's going on. Here's a hint: half of all of the loans that have been made in Cyprus are NPLs (non-performing loans). That means 50% (actually, it's 49%) of the business that the banks have wrote half failed or are failing.

Cyprus Bank NPLs

This is at a time when the ECB has pushed rates negative, and pushing it even more into the negative.

Negative rate snapshot

This is at a time when the EU area regions are entering recession. This is at a time shortly after the Cypriot banks have been bailed-in - taking the depositors money to recapitalize the banks in lieur of the bank investor's money. Reference actual bank statements showing capital being confiscated.

Laiki Bank has offers details...

DecreeEN Page 1

It's not just Cyprus, either! Purchase the introduction to the report here for $25, directly through the blockchain. The follow-up reports will delve into individual bank situations and offer our team's opinions of each.

This was all foretold 6 years ago...

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