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HOUSEKEEPING
I will be attending IMN’s Sixth Annual Winter Forum On Real Estate
Opportunity & Private Fund Investing on 21-23 January 2009 at
the Montage Resort & Spa in Laguna Beach, CA. Then I will be headed
to Kansas City to conduct a funeral because of a death in the family earlier
this week. Finally, I will end up in Vancouver to present at the Cambridge
House Investment Conference. Hopefully I will get to meet some of
you and like usual I will have a question and answer session so please bring
good questions.
PODCAST
Due to popular demand I have launched a podcast at http://podcast.runtogold.com or
you can subscribe via iTunes or search for ‘runtogold’
in the iTunes store. I respect your time and attention and hope you
find this new medium of content delivery helpful. I intend to average
around 3-8 minutes per episode but some may be longer depending on the
subject matter.
PULLING BACK THE CURTAIN
Often I have referred to the fact that the Internet
pulls back the curtain and reveals things as they are. Recently, The
Independent reported that British banks are
‘technically insolvent’. As Mish said, ‘The link above as well as what follows
is from Google cache. Not sure how long that cache will stay but here is the
article that someone, for some reason, wanted to suppress.’
I would hate to see such useful information
suppressed so I suppose I will do my part to pass it along. Therefore,
the post which is cached in Google, but who knows for how long, will appear
at the end of this post. Between Mish and I this article should
circulate to at
least around 50,000 people and because of the viral
nature of the Internet it may be picked up and forwarded to many others as
the curtain is pulled back. How fun!
As I wrote about in Bank of England and Quantitative Easing, the British
banking system and British Pound are in terrible shape. The bank wreck
will get worse so get out of the way. The increased secrecy and lack of
transparency does not inspire confidence. Nor should confidence be
placed in them because all bankers are liars and frauds because fractional
reserve banking is by definition fraud and theft.
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British banks are ‘technically
insolvent’
By Ben Russell and David Prosser
Saturday, 17 January 2009
Britains biggest banks are “technically insolvent”, Royal Bank of
Scotland said yesterday, as the global banking industry was rocked by another
day of turmoil, including the announcement of $23bn (£16bn) of new
losses from Merrill Lynch and Citigroup, the giant US institutions.
Analysts working for RBS, one of several British
banks to have received emergency funding from the UK Government last year,
told the City that “the domestic UK banks are technically insolvent on
a fully marked-to-market basis”.
The warning does not mean British banks are about to
go bust, because the assessment is purely theoretical, and RBS said the
position was “not unusual at this stage in the economic cycle”.
However, it will add to pressure on the Government
to provide more support for the country’s banks. Treasury officials are
now set to spend this weekend in talks about a fresh round of measures, which
could be unveiled as early as next week, to free up lending to households and
major corporations hit by the credit crunch.
The value of Barclays fell by a quarter in stock
market trading yesterday, amid a series of wild rumours
about its finances, although the bank said it saw no need to comment on the
drop. Its board said in a statement last night that it knew “no
justification for the fall”.
The statement said next month the bank expected to
report that profits before tax for 2008 were “well ahead” of the
£5.3 billion forecast by analysts.
City analysts said the bank had been targeted by
traders after regulators lifted a ban yesterday on the short selling of
financial stocks. Barclays’ share price, along with the value of other
British banks, was also hit by dismal news from the international markets,
including the announcement on Thursday night that the Irish government was nationalising Allied Irish Banks. In the US, Bank of
America announced yesterday that it was taking a $20bn injection of emergency
funding from the US government, subsequently revealing that Merrill Lynch,
the investment bank it rescued last year, had lost more than £15bn in
the final three months of last year.
Citigroup, once the world’s largest bank,
announced more than $8bn of losses for the final quarter of last year, and
revealed plans to split itself in two.
Treasury officials were still discussing plans to
help British banks last night but the proposals are likely to include up to
£100bn of new guarantees for the wholesale markets that underpin
mortgage and other loans.
Other possible measures being considered include
state support to help Britain’s largest companies raise their own
funds. Another option is to launch a “bad bank” to remove tainted
assets from the banks’ balance sheets, though while this policy is
under consideration, it is thought to remain some way off.
Other proposals include ring-fencing the toxic
assets within bank balance sheets. Lord Mandelson,
the Business Secretary, has also talked of easing the terms of the
Government’s £37bn bank bailout in order to kickstart
lending. Downing Street made it clear yesterday that the Government remained
committed to doing “whatever is necessary to help British businesses
and families get through this global financial recession”.
Trace Mayer
RuntoGold.com
Trace Mayer, J.D., holds a degree in Accounting from Brigham Young
University, a law degree from California Western School of Law and studies
the Austrian school of economics. He works as an entrepreneur, investor,
journalist and monetary scientist. He is a strong advocate of the freedom of
speech, a member of the Society of Professional Journalists and the San Diego
County Bar Association. He has appeared on ABC, NBC, BNN, many radio shows
and presented at many investment conferences throughout the world.
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