Like many of you, I’ve been watching the election with keen interest. No matter your party affiliation or who you’re voting for, you understand that 2016 is one of the most important elections we’ve ever faced.
In truth, who becomes the next President of the United States isn’t important to me.
I’m watching the election for one reason.
The next president will nominate the next Chairman of the Board of Governors of the Federal Reserve System – in reality the most powerful person in America and the world.
If you read the 58-page draft of the Republican Party’s official party platform you’ll come across a surprising one-liner: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”
But before Republican big-bank haters get excited, everyone should know that’s not presidential candidate Donald Trump’s one-liner.
In fact, it just might turn out to be a joke.
Based on who Mr. Trump is reportedly considering for Treasury Secretary in his would-be cabinet, it’s highly unlikely, Republican platform rhetoric aside, a Trump Administration would be even remotely interested in resurrecting Glass-Steagall.
Frighteningly, but not surprisingly, there’s a huge Goldman Sachs nexus connecting the end of Glass-Steagall to the future prospect of reviving it, with Donald Trump squarely in the middle.
Here’s how a former Goldman Sachs operative murdered Glass-Steagall for $125 million, why another former Goldman Sachs Treasury Secretary would keep it buried, and what Donald Trump, if elected, should do about it.
When America’s “Too Big to Fail” banks released Q1/2016 earnings, I told you that all was not what it seemed, and that rosy-seeming earnings were actually a huge red flag.
Judging by the headline financial news these days, however, the big banks are back. They’ve almost all reported earnings beats this quarter, some by a good amount, and analysts are saying the hard row’s been hoed and they’ve planted fresh seeds. And when you look at their stock prices, some of the TBTF banks look like downright bargains.
But price doesn’t tell you anything. There’s a lot more to look at with the big banks.
On Wednesday, I told you about the hack that drained $55 million in cryptocurrency from the crowdfunded Decentralized Autonomous Organization (DAO), and that a vote by members about how the handle the hack was forthcoming.
Voting by token holders on the future of the DAO wasn’t as exciting as the Brexit vote, but it may have mattered just as much.
Token holders in The DAO (who in a parallel universe known as reality would be called investors, since they converted dollars into a cryptocurrency known as ether and bought tokens, which in this parallel universe would be called capital voting shares) overwhelmingly voted to exit the would-be investment fund by reversing time in their digital Ethereum world, so it’s like the hack – and the $55 million theft – never happened.
Of course it was a no-brainer vote, right?
Who wouldn’t vote to get all their dough back from a hacker who stole $55 million worth of ether from the $155 million crowdfunded pool?
Not everyone. Some folks voted to let the hacker keep what he stole… for the sake of the future.
The DAO vote, like the Brexit, will have far-reaching consequences for your financial future.
The concept of a leaderless non-entity entity – in effect a software program running what amounted to an investment fund based on a cryptocurrency called ether, hived off a blockchain platform known as the Ethereum – was a long-shot from the beginning.
While the idea that a decentralized autonomous organization could raise money, cryptocurrency actually, which investors in turn received “tokens” against, representing their investment capital, attracted over $150 million via “crowd-funding is fantastic.
Too bad The DAO, which was supposed to allow token holders to vote on funding other Ethereum-based programs and businesses and hopefully earn a return on those investments, got hacked – literally – to death.
Here’s what happened, and what investors need to know now…
There is a “Lehman” moment out there somewhere – just as sure as there are black swans in the world.
Brexit was scary for markets around the world… but it was not a Lehman moment.
It was, as I’ve said, a “Bear Stearns” moment, a terrible harbinger of impending financial disaster.
Once again, it’s about the banks…
Except this time, it’s not the big American banks – we’re not talking about the likes of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corp. (NYSE:BAC), or Citigroup Inc. (NYSE:C), though they won’t be immune from contagion effects.
On Wednesday, I told you that the next Lehman moment could be brought about by the irreparable insolvency of one or two big Italian banks, or even a few of the big British banks. Both the European Central Bank and the Bank of England have been scrambling to obfuscate just how dire things are in Western Europe. Of course, a look at their balance sheet tells a different story – the numbers just don’t add up.
But the more likely – and far more frightening scenario – is that the entire global financial system will be brought to its knees by a single bank.
Here’s what’s really going on, what to watch for, and what to do if world’s most dangerous bank continues to falter.
On the latest episode of Varney & Co., Shah takes on sobering reality: the markets are starting to look a lot like 2007-2008 again. After Brexit, European banks are in especially dire circumstances – but one country stands out. (Surprise: It’s not Germany.) Shah tells you which banks he’s watching right now – and why their situation frightens him so much.
Plus, find out how he’s playing Tesla, Comcast and Netflix… what Brexit means for Apple… and why Chipotle’s cutesy new ad won’t fix any of its problems.