Greyerz – Banks Face Shockwaves Of Losses As The World Teeters Near The Edge Of Collapse
Today the man who has become legendary for his predictions on QE and historic moves in currencies and metals told King World News that banks face shockwaves of losses as the world teeters near the edge of collapse.
April 5 (King World News) – Egon von Greyerz at Matterhorn Asset Management (based in Switzerland):Bill Hwang, the founder of the hedge fund Archegos that just lost $30 billion, probably didn’t realise when he named his company that it was predestined for big things.
Archegos is a Greek word which means leader or one who leads so that others may follow.
ARCHEGOS THE FIRST OF MANY TO COMEThis, until a few days ago, unknown hedge fund is a trailblazer for what will happen to the $1.5+ quadrillion derivatives market. I have warned about the derivatives bubble for years. Archegos has just lit the fuse and soon this whole market will explode.I know that technically Archegos was a Family Office for favourable regulatory reasons. But for all intents and purposes I consider it a hedge fund.
Warren Buffett called derivatives financial weapons of mass destruction and he was absolutely right.But greedy bankers have now built derivatives to a self-destructive nuclear weapon. Archegos shows the world that an unknown smaller hedge fund can get credit lines of $30 billion or more that quickly leads to contagion and uncontrollable losses…
And when the hedge fund’s bets go wrong, not only do the investors lose all their money, but the banks that have recklessly financed Archegos’ massively leveraged speculation will also lose around $10 billion of their shareholders’ funds.
It obviously will not affect the bankers’ bonuses, which will only be reduced when the bankhas gone bust. Remember the Lehman crisis in 2008. Without a massive rescue package by central banks, Morgan Stanley, Goldman Sachs, JP Morgan, etc, would have gone under. And still the bonuses that year in these banks were the same as the previous year, which is absolutely scandalous and the very worst side of capitalism. But as Gordon Gekko said in the film Wall Street – Greed is Good! Well, when it all finishes, it might not be as good as they think.