March 10, 2012 in Finance
After spending several days looking in vain for the motivation for the massive number of bank, financial, and business resignations, I was overwhelmed with possible explanations yesterday. This article provides some of those reasons.
The first is the accelerating of a situation I wrote about previously. Greece’s bond swap is looming on the horizon. Their bailout, which will arbitrarily reduce their debt by at least fifty percent, has the potential to cause issues throughout the world’s financial markets as Greece’s investors lose value.
The article linked here says this event meets the requirements necessary for derivatives to pay out billions of dollars. It remains to be seen how many billions. This will be decided in a week and a half.
In fact, all of Europe is uneasy about the financial situation. Switzerland and Germany have both inquired about bringing their gold back within their borders just as Venezuela did a few months ago. The article linked here and the links within it describe a vault on a Manhattan property recently purchased by the New York branch of The Federal Reserve that may or may not host the gold.
Truthfully, Switzerland and Germany have no idea where their gold is being held. As the financial crisis intensifies, they are losing their confidence in The Fed because assets tend to disappear in times like these.
The European unease over these financial situation certainly provides motivation for those in the banking and financial businesses to exit.
However, the motivation doesn’t stop there.
Iran and China, in cooperation with the BRICS countries of Brazil, Russia, India, China, and South Africa, continue to move away from the dollar as an instrument of trade. This includes violating the agreement made in the 1970s to sell oil only to those buying with dollars.
Iraq was successfully bullied away from trading oil for non-dollar instruments. It is unlikely that Iran and China will be bullied easily, if at all. The situation remains tenuous.
Then, there is the revaluation of the Iraqi Dinar. The rumors of the past couple of days say the RV has happened in some markets and it will progress through the remaining markets over the next few days.
The most compelling argument for this occurrence is that several experts are explaining how to protect this asset if someone intends to store it at the local bank. One article explains how to use accounts that are insured for more than the $250,000 FDIC limit. Another provides suggestions on how to work with the local bank vice-president to make sure dinars are not lumped in with dollars.
The logic is that when the dinars are revalued, the dollar will lose value. If this is the case, a depositor would lose substantial value if deposited dinars were listed in the account as fiat dollars.
Any one of these stories, all which came to me over the past twenty-four hours, could be motivation for someone in the banking, financial, or corporate environment, to consider a career change. The fact that all of them are happening at once may be all that is needed to explain the more than three hundred resignations and investigations since the beginning of the year.
By the way, if you think this doesn’t affect you, I suggest you think again.
I will explain why in tomorrow’s revealing article.