If you have been following the news in Europe lately, you may have heard that Italian banks are in trouble. A few weeks ago, the Financial Times revealed that non performing (or bad) loans comprise 18% of all the bank loans in Italy today.

That number compares to the U.S. banks’ 5% non performing loan ratio from the peak of the Financial Crisis back in 2008-2009. It means the Italian banks have over three times as many bad loans as their American counterparts did in the worst financial crisis since the Great Depression.

This situation spiraled out of control in the five year period from 2010 to 2015 as the amounts of non performing loans Italian banks had rocketed up by 85% to an incredible 360 billion euros. The shocking part is that the Italian banks lost control of the situation after the financial crisis had already ended.

The Wall Street Journal has also weighed in at the end of July on how the Italian banking crisis became so severe. It turns out that the bad loans have risen by 50 billion euros per year after the financial crisis because the banks did not want to write off the bad assets.

The Italian banks and government officials hoped that a more powerful recovery would cause at least some of the borrowers’ financial situations to improve. This way they could repay their loans. At the same time, they figured that banks profits would then improve enough to lessen the blow from bad loan write offs.

The big problem is that the they never saw a significant recovery in Italy (or in much of the European Union for that matter). The 80 billion euros injected into the Italian banks by occasional market recapitalizing disappeared. Continuing financial problems and reduced bank profitability devoured them.

Negative interest rates from the European Central Bank have only aggravated the situation as banks in Italy and most of Europe have to pay 4 euros for every 1,000 euros they keep at the central bank. This adds up fast when you are talking about billions and even trillions of euros.

The banking problem is not confined to Italy either. Look at the first quarter profits for other major European banks.

The Spanish international bank BBVA saw its profits decline by 54%. Germany’s largest financial institution Deutsche Bank saw its profits plunge 58%. Even legendary international Swiss bank UBS suffered an eye watering 64% drop.

This matters to you for several crucial reasons. These major international banks are all connected by complicated financial risk and insurance policies called credit default swaps. When banks in Italy and the rest of Europe suffer catastrophic losses, it affects financial institutions around the world, including the U.S.

A banking crisis in Italy, one of the G7 largest economies of the world, can also be the spark that ignites a stock market pullback or crash not only in Europe but also in the United States.

Don’t forget about the stability of the European Union, the world’s largest economic block by several measures. The EU has taken a blow from Britain voting to leave the European project. It can not weather an Italian banking crisis that potentially spreads contagion to the rest of the block.

Gold is your answer to the financial problems that plague Italian and other European banks. By putting a portion of your assets into the safe haven metal that has withstood countless banking crises over the centuries, you can help hedge your portfolio and retirement assets against financial market turbulence.

This past Thursday, U.S. banking giant Wells Fargo announced that it had been quietly and secretly opening millions of credit card and bank account throughout the last five years. The problem is they had not been asking or telling any of their customers about these accounts.

The bank employees would simply open a savings account for a certain customer. They then transferred over some money from the customer checking account to fund the unauthorized savings account. Not once did they ask the customers for permission or alert them to this activity.

How widespread was this dishonest practice? The Consumer Financial Protection Bureau stated that the bank opened over 2 million different accounts about which consumers had no knowledge. Wells Fargo claims it is taking steps to address the issue, of course.

They have fired more than 5,300 employees who were involved in the inappropriate selling activities. This includes managers who were responsible. The bank is paying the CFPB a record high fine of $100 million, the Los Angeles city attorney $50 million, and the Office of the Comptroller of the Currency $35 million.

Besides this the bank has set aside $5 million to compensate their customers who have been charged service costs and fees. It may sound like a stiff penalty, but $190 million is chump change to an over trillion dollar bank with 100,000 employees and thousands of branches across the country.

Why, you might ask?

You might wonder why a bank would engage in such behavior. Richard Cordray the CFPB Director said it was to “hit sales targets” so that employees could receive bonuses. Former employees of the bank have stated they were under threat of losing their jobs if they did not hit daily sales quotas. These high pressure goals encouraged employees to sidestep the rules.

The CEO of Wells Fargo John Stumpf has been requested to testify before the Senate Banking Committee. The committee will hold a hearing on September 20 to grill bank officers over what happened. If you understand something about the inner workings of big banks, then you already know what occurred.

Either the highest levels of management were not aware of the practices in their massive organization, or worse still, they encouraged them. In any case, it is yet another example of big banks acting imperiously with your accounts and your money. You trust them to manage your funds safely and honestly, and they have no idea what their organization does with it.

This is par for the industry. The enormous banks provide little transparency. The Wells Fargo annual report details a category of commercial and industrial loans that represents $300 billion. They do not tell anyone how this breaks down or who receives the loans. That is what you call non transparent.

Wells Fargo is not alone in lacking transparency. All of the mega banks operate with the same secrecy. No one can say with any certainty what is happening inside such an organization until the bank encounters major problems as happened in the banking crisis and Great Recession of 2008/2009.

This is why you can not say with confidence that your money is safe in the bank. It could easily be poured into another type of toxic loans and investments. As this latest Wells Fargo example has shown so clearly, the biggest risk in the banking system is that the people managing your money are not trustworthy.

Once again… do NOT put all your eggs in the same basket

The best way to protect yourself is to take a portion of your money away from the bank and invest it into the world’s greatest safe haven: gold. It will only cost you the paltry .01% interest the bank is paying for using your savings. Gold has no counter party risk like accounts at the big banks do. Go to regalassets.com and download the free kit to learn more.

Until the 2008 financial crisis erupted and destroyed a number of solid banks, you may have believed along with the majority of other Americans that they were safe institutions. The crisis exposed it as a false hope. Thanks to the toxic assets banks had multiplied, they became insolvent when the losses mounted.

The list of bankrupted important and historical institutions were too many to remember. It included such too big to fail heavyweights as Lehman Brothers, Bear Stearns, Washington Mutual, Merrill Lynch, and Wachovia. In the end they all collapsed or were bought out by other banks in shotgun style weddings orchestrated by the Treasury and Federal Reserve.

The U.S. government has been on a mission ever since then to recreate the smoke and mirrors of financial system stability. The centerpiece of this effort came in the form of the enormous Dodd-Frank Act, officially known as the Wall Street Reform and Consumer Protection Act. Congress passed this in 2010 in an effort to make the banks appear to be safer.

Fast forward to six years later, and you may believe again that the banking system is stable, safe, and sound. New warnings from top financial regulatory officials have set the record straight.

Last month it was the Vice Chairman of the FDIC that insures bank accounts who claimed that the system today “too easily allows banks to conceal risk.” What’s more, he stated that the banking system reserve capital is too “inadequate for bank resiliency.”

At the end of last week, the previous United States Treasury Secretary Lawrence Summers added his voice to critics claiming that the banking reform regulations did not make the banking system in the United States safer.

In his paper, Summers claimed, “To our surprise, we find that financial market information provides little support for the view that major institutions are significantly safer than they were before the crisis and some support for the notion that risks have actually increased.”

There are three reasons that this is the case. The first is that banks have been given repeated deadline extensions on selling off risky assets. The Volker rule stated that they would not be allowed to engage in investment behavior which was risky and did not provide a benefit to their customers.

Banks had a deadline of July 21, 2012 to sell off their risky asset. They could not make that, so they requested deadline extension after extension. Finally they have succeeded in getting the deadline pushed out to 2022, a full ten years after the first one.

The explanation is there is no market at full value for the risky assets. If banks had to sell off these assets today, they would book incredible losses which would drastically reduce their capital levels. Neither the banks nor their concerned regulators want to see that happen.

The second problem you find in the banking system is that the banks’ reserve capital is fantastically insufficient to cover potential losses on their books. This capital is the emergency reserve fund of any bank. Regulators were supposed to ensure that the banks keep more capital. The problem is that the rules include numerous loopholes which allow them to mask their financial condition from you.

A final problem with the banks today is that the bank stress tests that are supposed to guarantee their solidity are only an illusion. The editorial board at Bloomberg has recounted that these stress tests allow for a tiny amount of equity capital of $4 for every $100 of assets. This is supposed to keep markets reassured that the banks will be solvent in a crisis. Their final evaluation was that “these flaws make a passing grade almost meaningless.”

Diversify your assets

There is no reason for you to be caught unprepared in the next banking crisis. By placing a portion of your bank account funds into physical gold, you can rest easy that your hard earned savings will be insured. Download your free kit from Regal Assets to start protecting yourself today.

Growth in U.S. Spending Outpacing Economic Growth Three to One!

This headline is not one you are likely to read on the front page of your local newspaper, the New York Times or the even The Wall Street Journal. Yet it is the telltale sign of the terminal financial decline for American public finances.

The fact that the increase in U.S. Federal government spending is growing at three times the pace of American economic growth is not a mere statistic. It is a tragedy from which the country will not likely ever recover.

Consider what the CBO Congressional Budget Office recently reported in its official declaration of the sobering state of American government public finances. The United States’ public debt has already reached $19 trillion and is rising.

On top of this, the CBO looks for minimally an additional $10 trillion in debt in the next few years. It also anticipates that the budget deficit (annual shortfall in the budget) for the United States will only get worse each and every year going forward.

Evidence that supports the Congressional Budget Office’s grim assertions is all around you. Military retirement spending increased 8.7% last year alone. The costs of Medicare continued to rise astronomically, up over 10% in just the prior year. Some government employees’ benefit programs took the cake though. Their price tags expanded by 17%.

Taken together the total mandatory government budget spending increased a serious 6.6% for the year. This amounts to fully three times more than the growth in American Gross Domestic Product!

Not only is the United States government flat broke by its own admission, but it is spending more and more each year. Worst of all, the growth in spending is massively outpacing the total economic growth.

Another annual update and report just came out on Social Security. The program is quickly running out of money and will be insolvent within ten years. The U.S. Treasury publishes annual financial statements that show it is broke not in twenty years, ten years, or five years from now, but today.

You don’t need an advanced degree to understand how serious this is for the country and all 300 million people plus who live in it. Despite the fact that the statistics office for the country has admitted to the country’s looming bankruptcy, the overall government continues to operate as if nothing is wrong and with a “business as usual” mantra.

They are ignoring this serious problem and it is only getting far worse every year. Congress and the Obama administration are completely oblivious to their own current and looming insolvency.

It is no laughing matter. The terminal financial decline of the greatest superpower in the history of the world will prove to be the greatest trend of our day and age. It will take down the world’s financial system with it.

The so called safe havens of the world will not shelter you and your financial assets from this impending implosion. Sub-zero yielding foreign debt will not save you. Government debt around the world will fall with American public finances. The best place to safeguard your money is in gold.

Now is the time to put a responsible portion of your family’s assets into the only true safe haven. No one can squander or bankrupt the yellow metal. It has endured economic collapses time and again for five thousand years now. It will ensure that your assets and purchasing power survive this greatest collapse so far.

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Expanding government payrolls have turned the suburbs of Washington, D.C. into some of the most affluent communities in the United States. Under the circumstances, it must have been difficult, these past dozen years or so, for residents to make their way through the city as they headed to a concert or a fine dining spot.

They could easily have run into eighty-year-old Wanda Witter at Thirteenth and G streets NW, with her makeshift sidewalk house of three suitcases, a handcart, and patio chairs. Not a welcome sight if they’ve been fortunate enough to inhabit a higher level on the food chain.

But until just the other day, Ms. Witter was no ordinary homeless person. In fact, she’s spoken of her homelessness as a decision, or more to the point, a “commitment.” And despite the fact she’d been wandering the D.C. streets for years with shopping bags full of papers she’s not afflicted with a mental disorder.  In those shopping bags she carried a series of letters she’d received from the Social Security Administration. To anyone who’d listen, she’d insist these letters represented proof the federal government owed her a hundred thousand dollars.

On Tuesday, August 23 Wanda Witter was finally vindicated, when a Social Security check for a hundred thousand dollars, less one dollar, showed up in her account at Sun Trust Bank. Her check was written for the highest lump sum Social Security, by law, is allowed to issue without an extended approval process. The rest that’s due her will be on its way soon. Meanwhile, she was able to use some of the initial payment to get an apartment and stock up on fresh food.

Most people wait till a crisis happens in order to start diversifying their assets. Don’t make that costly mistake. Click here to request Regal Assets’ free gold kit and learn how a portion of your savings in gold can help balance and protect your portfolio against economic uncertainty.

For years, Wanda Witter dogged Social Security by phone and wandered the streets of the nation’s capital with her bags of government correspondence, trying to get someone to help her resolve her drawn-out bureaucratic mess, and trying to maintain her dignity in the process. But she simply was dismissed as a mental case – an old lady carting around junk.  In fact, she was for many years a machinist at Ingersoll-Rand and, when she lost her job she went back to school to become a certified paralegal. But no one was hiring.

It took a social worker, Julie Turner, to have enough compassion and patience to go through Witter’s paperwork to understand she was spot on about what Social Security owed her. With Turner’s help, she enlisted the help of Daniela de la Piedra, an attorney specializing in Social Security disputes.

I think we’re kidding ourselves if we simply write off Wanda Witter’s misfortune as a glitch in the system. Let’s use a more accurate name. I prefer “American nightmare.”

Americans looking to retire have come to rely on what U.S. Representative Sander Levin refers to as “a three-legged stool” – Social Security, employer-provided pension funds, and private savings.

You’ve frequently read criticism in this blog about all three of these sources of retirement funds. Social Security has become congress’s mandatory game of dodge-ball during a debate about the national debt. Some claim Social Security benefits are due to decrease, some say the age of eligibility for benefits should be raised, and still others say the whole shebang should be privatized.

Meanwhile private pension funds are fast going the way of the dodo. They’ve just about been replaced by defined contribution plans like the 401(k), which put the entire investment risk on the employee. As for private saving plans, the rates of interest range from anemic to outrageous.

Clearly, if you want a profitable and dignified retirement, you’re going to need something a heck of a lot less shaky than the no-longer-structurally-sound three-legged stool. Priced attractively in its support range, gold currently provides an impressive upside opportunity, which explains the meteoric rise in gold IRA rollovers. With central banks printing money like there’s no tomorrow, the dollars you’re saving are going to eventually disappoint you if you don’t diversify to more stable assets.

The recent news about negative interest rates in Europe may sound far away, but it affects you too. Banks throughout Europe have seen their bottom lines pinched by the -.4% rate on all deposits they keep at the European Central Bank. The idea behind the policy was to force banks to loan money out to boost the economy instead of holding it in reserve.

The unintended side effect is that businesses and some individuals are now having the negative rates passed along to their current accounts. This means that in leading economic countries, you have to pay to keep your savings in the bank while they use it to make money.

It started at the end of 2014 with major German bank Commerzbank. They passed along these negative rates to their business clients who kept balances over 10 million euros in on demand accounts. As with every creeping change, it never stops there.

A regional German bank Raiffeisen Gmund made headlines earlier this month when it announced its intentions to begin charging negative rates to individual depositors. This will apply to those who keep 100,000 euros or more in current accounts. Other regional German Sparkasse savings banks are also going to roll out the negative interest rates on major deposits from their business customers.

Private Banking Chief Christian Sewing at the largest German banking group Deutsche Bank has ruled out these negative rates. Instead they are going to simply raise the “administration fees” for holders of accounts. This will be their back door method of passing along the extra costs to the customers.

Don’t think this is just limited to Germany either. Royal Bank of Scotland has now become the first British bank to hit its business customers with negative interest rates starting this week. For the moment, they are limiting this to deposits held in Euros. If the Bank of England cuts its interest rates any further, they will reach 0% or go negative as well.

Charging negative rates on British pound accounts would impact huge numbers. RBS last month wrote a million business account holders to tell them it may have to start charging them for deposits should the Bank of England move to negative interest rates. This looks more likely with the hit the British economy has taken after their vote to leave the European Union upset the British economy.

The negative interest rates are not only limited to Europe. Six central banks around the globe have instituted negative rates, including both the European Central Bank and the Bank of Japan.

Negative interest rates are not only impacting European current bank accounts either. Five year government bonds in Japan now pay a loss of -.2% if you hold them till they mature.

This does not take into account inflation or even the possibility of Japan (with its 230% debt to GDP ratio) defaulting. Despite this, the size of the Japanese bond market tells you that it ranks among the more popular global investments.

You may say that negative interest rates for bank accounts and bonds could never happen in the United States. Thanks to U.S. inflation at near 2 percent, real interest rates of half a percent are already significantly negative here. The paltry amount you are receiving from your bank or government bonds is costing you money as inflation eats it away.

Now is the time to protect your portfolio against negative returns and uncertain economic times

There is no reason to lose sleep at night over negative interest rates and returns. Putting a portion of your money into gold will help to protect you against these financial interest rate tricks and manipulation of the world monetary system. Gold is the ultimate safe haven and hedge in times of financial instability like these. Click here to request your free gold IRA investment kit from Regal Assets today to learn how you can diversify and protect your retirement savings.

Gold vs Bonds, Which Direction Should You Take for Safety?

Has your financial planner been trying to get you to invest in sovereign bonds from various countries?

The problem with many sovereign bonds today is that an enormous percentage of them come with negative yields, meaning that you pay the often troubled sovereign country for the privilege to use your money.

This is supposed to be a favorite safe place to park your hard earned cash. But is it really so safe to lend your money to troubled sovereign countries like Japan and the various countries of the European Union?

Consider why these bonds deliver negative yields in the first place. How did it come to pass that sovereign countries can require you to pay them to utilize your money?

Former Federal Reserve Chairman Alan Greenspan would have you to believe it is because of competition.

His thoughts on the matter: “Whenever you see strong currencies in a normal market, they’re spread against say Spain and Italy’s 10-year notes, it’s relatively stable through time. But as the rates overall go down, clearly at some point as the rates go down you’re going to pick up negative rates for the highest-quality currencies – like of course the Swiss franc – and I think that this is just a passing fancy.”

Greenspan can call it like he sees it, but does this justify you putting your hard earned investment dollars into vehicles in which you pay to participate?

The Real Reason So Much Sovereign Debt Pays Negative Yields

The numbers of negative debt yielding sovereign bonds that you see offered today are truly eye watering.

Two years ago almost none existed. In February of 2015, the entire amount of global debt with negative yields amounted to a “mere” $3.6 trillion. One year later by February of 2016 this amount had practically doubled to reach $7 trillion. Less than a month ago, it reached $11.7 trillion. Now it has achieved a staggering total of over $13 trillion per last week’s published calculations of Bank of America Merrill Lynch.

That now exceeds 50% of all government debt issued on the planet! If this is just a temporary new normal that Greenspan believes, then why is the trend of negative sovereign debt continuing to double in ever shorter time frames?

The answer is not one which will inspire confidence in you. The Bank of Japan and European Central Bank have been increasingly engaged in massive quantitative easing. In an effort to jump start failed Japanese and continental European economies back to growth, these central banks have been throwing everything including the kitchen sink at their economies.

These central banks are busily printing money (debasing their currencies) and using this money to buy up sovereign and even corporate debts now in an effort to prop up the markets. The governments then take these extra proceeds to use as spending money to try to boost production and GDP within their own sinking economies.

The byproduct of this activity to bolster sagging and even stagnant economies results in falling government sovereign bond yields. More printed up money demand for these securities leads to ever lower and lower yields.

So in the vast majority of cases, sub-zero sovereign bond yields do not represent higher quality, no-risk government bonds at all as Greenspan would have you to believe. Instead, they reveal the nations
that are struggling the most.

Think about it, and it makes perfect sense. Japan has been caught in a downward deflationary stagnation spiral for more than two decades now. They continue to throw money at their bond markets and banks in an effort to increase economic activity.

Yet after years of doing this, the economy has not at all improved. Do you really consider Japanese sovereign debt tied to an economy that has not materially grown in nearly twenty-five years to be safe haven debt?

Look at the EU and its national countries’ sovereign debt. This largest economic block in the world has not yet reached its former GDP and growth levels seen just before the financial crisis erupted in 2007/2008. This is more than five years after the crisis officially ended!

You might be able to make a case that sovereign bonds from countries such as Norway, Switzerland, and Sweden are more likely to be safe haven places to park your investment dollars. Yet if things are so rosy in these countries, why do they need to issue government debt at all?

The answer is that there is no such a thing as safe haven positive yielding sovereign government debt. Gold is your safe haven destination of choice.

No government can print or effectively manipulate gold. While it may not pay a yield, at least you do not have to pay anyone to keep your money invested in it.

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