The Evergrande Crisis Intensifies

Evergrande Group is everywhere. Here's what you actually need to know  

 

Data Agency Warns of Next Potential Systemic Shock

From American Banker –

“The U.S. financial system may be on the verge of another systemic crash, according to a provocative new report issued this week by the Office of Financial Research.

The report posited that certain stock market conditions resemble the climate just before crises hit in 1929, 2000 and 2007. While some metrics like price-to-earnings ratio are within normal bounds, other indicators suggest that markets are overvalued and headed for a correction for which the financial system may not be adequately prepared.”

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Déjà vu – Bitcoins, Blockchains and the future

Not so long ago, just before the 2008 crash in fact, the Quants disdainfully told the world that their algorithms and their application were just too difficult for the uninitiated to understand. We all know where that led. Now the same is happening with Bitcoin and other crypto currencies. It’s the same old story that “this time it’s different”.

We leave it to your judgment. The following from Institutional Investor.

“The future of Bitcoin is not Bitcoin”

“In October several prominent figures in the Bitcoin development community launched a start-up to considerable fanfare in the technology and finance worlds. San Francisco - based Blockstream aims to take the encryption technology that Bitcoin is built upon - the blockchain - and improve it in ways that will, its founders say, ”transform global systems of value exchange”. The company calls these improvements sidechains.

But ask Austin Hill, chief executive and co-founder of Blockstream, to explain - in less than one minute and using terms intelligible to a lay audience – what sidechains are and how they might help institutional finance, and he launches into a meandering answer that begins, “I think the analogy that’s been used is the TCP/IP and routing infrastructure that existed before the consumer Internet”. By the time he has finished, six minutes later,he has dropped in unexplained references to “hash power,” the blockchain’s “hash rate,” “industrial mining centers” and “the SHA-256 algorithm” before concluding with a brief digression on how 98 percent of developers of alt.coins, or alternative, Bitcoin-like cryptocurrencies, are “attempting to pump and dump an asset class.” This, Hill says, confirms that there is a “Wolf of Wall Street - style dynamic at work in much of the Bitcoin world - referencing Martin Scorsese’s 2013 film about a corrupt stockbroker.”


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Memories of Financial Crisis Fading as Risks Rise

From ABC News

“Six years after the collapse of Lehman Brothers, the lessons of the financial crisis may already be fading from collective memory.

Just last week:

• Congress acted to loosen the regulation of the high-risk investments that ignited the 2008 crisis. 
• Housing regulators cut minimum down payments on home loans.
• The Institute of International Finance declared it "worrisome" that global indebtedness, as a share of world economic output, has reached record levels.

All this comes as subprime auto loans for financially stretched buyers are surging. And the so-called too-big-to-fail banks that needed a taxpayer bailout in 2008 now loom even larger than before the crisis: America's five biggest banks account for 44 percent of bank assets, up from 38 percent in 2007, according to SNL Financial.

The trend toward pre-crisis lending practices worries analysts who favored far-reaching reforms to safeguard the system.

"We're on a very dangerous trajectory," said Simon Johnson, professor of global economics at the Massachusetts Institute of Technology.”

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