A "Plague" Is Eroding The Core Of The Financial System.

The headlines of the world are occupied by shocking news every day.

Almost every day, there are terrorist attacks in different areas, attacking police and other political events that incite public sentiment.

The panic of the people has made people lose judgement. The banks that control the European financial system are entering the spiral of death.

Nevertheless, the greatest threat to people's lives is not religious differences or political collapse.

The real risk is that a "plague" is eroding the core of the financial system, and the close ties of various fields and regions in the globalized economy make global economic problems continue to erupt.

Greece may be worried about the collapse of its debt before it is affecting other "five pig countries" (Portugal, Italy, Ireland, Greece, Spain).

If these European countries continue to collapse like Domino, this could lead to a global collapse.

Italy's banking industry has become the biggest worry after the result of Britain's withdrawal from the EU.

Over the years, the banking industry in Italy has proved to be a fragile link in the Italy economic chain. Under the stress test, the internal problems of Italy's banking industry have been made public.

The Bank of Siena, the oldest bank in the world, is at the heart of the controversy.

Siena bank's losses are expected to exceed 3 billion euros.

There are also other big banks, such as Yu Xin bank, which are also very bad.

The latest discovery by Wells Fargo Bank is that the Bank of Italy holds 15% of its debt risk of default, which is a very alarming figure.

In addition, the results of the British referendum exit from the European Union sparked doubts about the future of the euro, and Italy could become a trigger for the collapse of confidence in the euro.

If panic spreads among the people of Italy, things will escalate very quickly and trigger a run on Italy banks.

"Slow growth or zero growth, low interest rates and politically related corruption have led to the current situation in Italy's banking sector. Italy's financial system needs massive assistance," Mihir Kapadia, an analyst at Sun global investment, pointed out in its recent research report.

European Bank President Mario Draghi is still wasting time to protect Italy's banking industry from the market.

Delagi, the former governor of the Italy central bank, recently proposed a plan for public support for non-performing loans.

This means that the bad loan responsibility that should have been borne by the government is pferred to the taxpayer.

The government and banks did not feel a bit dissatisfied with the obligation to bring toxic debt to democracy.

They even slander people's greed, which is the root cause of these bad debts.

For these elites, tightening policies, inflation or shifting responsibilities to the public is easier than recognizing the fact that their corrupt practices have created the current problem.

The EU has just passed a new ban on aid measures similar to that of the United States in the 2008 financial crisis, which means that the other option currently available is to use customer account funds, namely, internal relief.

This happened in Cyprus many years ago.

At that time, the personal accounts of the national depositors in Cyprus were requisitioned for 100 thousand euros.

In Cyprus's experiment, only a very wealthy class was affected, so there was no large-scale outrage.

Most of the accounts used in Cyprus were foreigners, especially Russians.

Against this background, everyone's future private savings account, retirement fund account and personal retirement account may be stolen by banks to make up for bad debts, and people can not get any compensation.

Although such a policy will have devastating consequences in Italy's banking sector, the more far-reaching impact will be on the impact of this move on other countries and major domestic banks.

Deutsche Bank is currently the most critical issue for the European Union, because Deutsche Bank is the backbone of the EU's economic engine, Germany.

In the past year, Deutsche Bank's share price plunged more than 60%, down nearly 90% compared with the peak of the company's stock price in 2007.

Deutsche Bank has announced that it will close 188 branches and lay off 3000 people in the coming months.

The recovery of the US financial industry has not appeared in Europe.

On the contrary, the value of European banking has continued to shrink due to policy incompetence and central bank control.

Germany is the only remaining economic power in Europe.

Germany is now

The key is that if there is another problem in Germany, then the EU's split will be inevitable.

If you think the situation is not bad enough, please look down.

Deutsche Bank is a representative figure in the global derivatives bubble.

Only the Deutsche Bank's derivatives trade exceeded $75 trillion, almost equal to the sum of the global GDP.

It is clear that the European market can not be independent.

Bank of America has also done a lot of derivatives trading, and it is also one of the big trouble makers.

Bankers' promises are entirely based on the public's regard for them.

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Before the subprime crisis, everything was not a problem.

Until everyone starts to panic and starts looking for a way out.

If this happens again today, the impact will only be worse.

The current scale of derivatives contracts has exceeded the sum of all current global funds.

According to the Central Intelligence Agency, the sum of all the broad money in the world, including cash, coins, checks, bank savings and money market accounts, has just exceeded 80 trillion dollars.

A small part of 80 trillion can be used to save banks' exposure to derivatives.

Buffett, a stock god, once described financial derivatives as "

Weapons of mass destruction ".

In a recent interview, Buffett once again expressed his view: "maintaining a heavier position on derivatives is very dangerous.

We had a moderate amount of general reinsurance stock before, but then we paid a loss of 400 million US dollars to get rid of it.

I have always believed that financial derivatives are dangerous for the financial system.

The derivatives market is the most obscure market in the financial market.

Unlike buying a company's stock or buying a large commodity, such as oil or grain, derivatives have no value in themselves, and the value of derivatives depends entirely on the performance of other markets.

The derivatives market is essentially an additional bet on the change in the price of real assets.

If large banks, such as Deutsche Bank, fail, all the derivatives they hold will collapse and trigger a time bomb in the financial market.