Danielle on The Financial Survival Network

Danielle was a guest today with Kerry Lutz on The Financial Survival Network talking about recent developments in the world economy and markets. You can listen to an audio clip of the segment here.

Further to the discussion, political distancing efforts re Deutsche Bank are in progress, see Political support for ‘dinosaur’ banks must end – Bundesbank’s Dombret:

Andreas Dombret, the Bundesbank board member in charge of supervision, said banks’ deficiencies should be tackled and the sector should be allowed to shrink further.

“Political support for the banking sector must finally come to an end – something that unfortunately I’ve only seen to a limited extent,” he told an audience in Vienna.

“Crucially, we cannot discuss away the structural deficiencies of the banking sector.”

Comparing banks to dinosaurs, Dombret said they should not hope size would save them from extinction due to threats such as a reduction in the overall amount of debt in the economy, competition from financial technology companies, an ageing population and low interest rates.

“A lesson from the era of the dinosaurs is still true today: size is not a goal in itself,” Dombret said. “Neither is the size of a single bank a guarantee for their survival, nor can the size of the sector as a whole protect it from crises.”

Also see more on the pension deficits story here:  Dallas Police see exodus as doubts rise on pension promises.

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Wells Board swinging at each other ahead of House hearing

Ever since Senator Elizabeth Warren skillfully revealed how Wells executives used predatory cross-selling mandates to whip staff, prey on customers and pump up their personal stock holdings, the Wells Board of Directors (of which CEO Stumpf is also Chariman, let’s not forget) are infighting in the usual game of circle blame.

Since the Senate hearing, we have heard from Wells staff who were fired for bringing the account fraud to management’s attention before the LA Times broke the story in 2013. Stompf is next up in front of the House tomorrow. Word is he’s not contrite and the announcement yesterday of bonus clawbacks proposed for he and other top executives were not his idea.

Not that surprising, as John Kenneth Galbraith famously said: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” Now there is also a class action lawsuit against the company from shareholders who say they were misled by management on the success of the company’s sales practices.   More to come for this company and others like it.  Is personal and financial accountability of corporate directors finally coming into vogue?

CNBC’s Andrew Ross Sorkin discusses the ongoing boardroom struggle resulting from the revelations that Wells Fargo employees had been opening free-generating accounts without authorization for years. Here is a direct video link.

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Decarbonization is the next big (good) growth boom for the world

Great article from Jeffrey Sachs this week reminds us of the generational, efficient, productive, investment opportunities in things that matter, which are now unfolding all around us in the real world. Deep-decarbonization is the next great boom to spread sustainable prosperity through humanity. See Sustainable infrastructure after the Automobile Age:

The first infrastructure task, therefore, is one of imagination. What kind of cities and rural areas do we seek in the future? What kind of infrastructure should underpin that vision? And who should plan, develop, build, finance, and operate the systems? These are the real choices facing us, though they’ve hardly been considered in our political debates to date.

Fortunately the technology for this smart evolution is already here. Solutions to our challenges are everywhere today: vertical farming, sustainable power, intercontinental transmission lines that bring low cost, clean energy to population centers, smart grids, home storage, electric, autonomous vehicles. Very exciting time to be alive.

The world requires an area of farmland the size of South America to feed itself. Vertical farming could be the future of agriculture. Here is a direct video link.

At the same time, last week Elon Musk tweeted about the new integrated Powerwall 2.0 roll out that will allow individual homes to capture our own free solar energy, store it in our own on site Powerwall and electric car.  Hyper-efficient, clean, sustainable living. Yes we can.

See:  Tesla’s integration of home charging station + energy storage + solar will change everything:

All of these products and applications are individually available today or have been announced by solar or energy storage companies, but the integration of all of them into a single package, combined with seamless integration with an electric vehicle, would be a real game changer.

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Global liquidity crunch spreading amid mean reverting demand and trade

Excessive leverage 2005-2015 brought forward years of what would have been future demand and booked it as sales in the present, now the future has arrived and the world economy is slumping into the demand pothole this behavior left for us. While many so called experts are surprised, no one should be.  We have earned an equal and opposite mean reversion period.

Gary Shilling, president at A. Gary Shilling, and Alberto Gallo, portfolio manager and head of micro strategies at Algebris Investments, discuss areas of rising inflation, the prospect of a Federal Reserve rate cut and the lack of ammunition for the Fed to combat a slowing economy. Here is a direct video link.

Alberto Gallo, portfolio manager and head of micro strategies at Algebris Investments, and Gary Shilling, president at A. Gary Shilling, join Bloomberg’s Michael McKee to examine liquidity warning signs in global markets and the economic impact of globalization. Here is a direct video link.

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Deutsche banking on another rescue

As we have written earlier, Deutsche Bank is a canary in the ongoing global financial crisis. Its culture and management have blown up a $2 trillion balance sheet with reckless risk taking, illegal activities and suicidal-leverage. Now they are blaming a $14 billion fine being demanded to settle their role in mortgage fraud as unreasonable and want Germany to bail them out. So far Merkel’s government has said ‘nein’ as they face low popular support and a desire to distance themselves from bankers heading into next year’s election. But then there is the inter-connectivity between Deutsche and the other too-big-too-exist global banks as captured in this chart.
DB IMF 1

Will personal prosecution, compensation clawbacks and job losses follow for the directing executives this time?  It certainly needs to, might as well start now.
Deutsche Sept 24 2016

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Danielle’s weekly market update

Danielle was a guest with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets. You can listen to an audio clip of the segment here.

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