The Contrarian

“In the investment markets, what everyone knows is usually not worth knowing.”

U.S Banks’ Exposure To Europe: A Huge $2 Trillion

The Office of Financial Research (OFR) is a unit of the U.S. Treasury. It’s role is to “shine a light in the dark corners of the financial system to see where risks are going, assess how much of a threat they might pose, and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate them.” writes:

“Its 2016 Financial Stability Report, indicates that Wall Street banks have been allowed by their “regulators” to take on unfathomable risks and that dark corners remain in the U.S. financial system that are impenetrable to even this Federal agency that has been tasked with peering into them.

At a time when international business headlines are filled with reports of a massive banking bailout in Italy and the potential for systemic risks from Germany’s struggling giant, Deutsche Bank, the OFR report delivers this chilling statement:

“U.S. global systemically important banks (G-SIBs) have more than $2 trillion in total exposures to Europe. Roughly half of those exposures are off-balance-sheet…U.S. G-SIBs have sold more than $800 billion notional in credit derivatives referencing entities domiciled in the EU.”

It is clear that all of this is unreported in the media. The only thing we ever hear is that “banks have never been stronger.” This is just like 2007 before the crisis when we warned about all the undisclosed bank exposure, such SIV’s (special investment vehicles) which were not on the balance sheets of banks.

The same financial games are being played again. And when everything collapses, the taxpayers will pay for the damages.

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