A very significant, very loud, very nasty warning signal has been given. It is extremely important for those who choose to live in the world of reality, and not the fantasy world from the US financial markets. The Reich theme of sluggish economic recovery is a total lie, since the recession which began in 2006 has repeated each and every year since then. The deception is derived from the wrong (under-stated) price inflation used in supposedly real adjustments to the Gross Domestic Product. The significant negative signal is of the sharp decline in the BKX bank sector stock index. But first, consider that in 2007 and early 2008 the significant negative signals were

•the sharp decline in the Fannie Mae stock price
•the sharp rise in the Lehman Brothers credit default swap contract rate.

The Fannie Mae (FNMA) stock had declined by over 90%, which almost always means imminent failure. It did fail. The Lehman CDSwap rate jumped 5-fold to 7-fold in a matter of months. Insiders always bail out first as they have access to better information. Lehman did not enter failure as much as it was killed. Both Goldman Sachs and JPMorgan bought huge swaths of Lehman bonds and never paid for them, forcing a liquidity shortage crisis which ended up killing the firm. Think of a plastic bag put over a bound victim’s head, as in murder. The Goldman Sachs second crime was receiving 100% payouts from their CDSwaps held by AIG, which was illegally killed off in order for GSachs to control its function. Other financial firms were given 65% payouts, and less. Such are events of the 2008 crime scene, which had a climax of the stolen $700 billion TARP Fund.

The US Bank sector stock index, called BKX, has fallen in a dangerous manner. It had fallen by 18% from its March go-go highs, with a slight bounce in progress, surely short covering. It signals a dire event on the near-term horizon, even the trigger of a major financial crisis. For the past year, the Jackass has warned of a Systemic Lehman Event that will engulf the entire Western financial system, bonds and banks, since nothing was fixed in the last ten years. In fact, all the errors from the 2007 subprime mortgage bond crisis have been repeated. To put it best, the system has tripled down (like in blackjack at the casino) on all the subprime era mistakes. Next comes the bigger broader and much more powerful financial crisis. Thus my name has been given to the Systemic Lehman Event, since all these errors in credit abuse and monetary abuse have been applied across the entire spectrum of sovereign bonds, corporate bonds, and major stock indexes. The USTreasury Bond has become the poster boy in subprime bonds, with USFed monetization, $trillion deficits, and absent buyers. The abuse has extended to secondary nation banking systems and the entire gaggle of Emerging Market nations. The Western banks have been lending funds to the EM nations for debt service payments, in order to avert their US$9 trillion debt default. They will die like flies trapped in windows during the midsummer heat.


This extremely negative signal has not received much attention. The big DJIA and S&P500 stock index declines, recoveries, and irregular behavior have received the majority of attention. The FANG stocks have also received much attention. Refer to FaceBook, Apple, NetFlix, and Google. Add Tesla to the FANG group as darlings whose wretched fundamentals do not match their lofty valuations. Of course, Apple has very big cash flow, big profits, and big cash reserves, but their future is indeed precarious for their fabrication sites. While much attention is given also to the USTreasury Bond yield (TNX), and its fanciful move above the perceived 3.0% line in the sand, the US Stock market internals are lousy, and volatility is rising. In the Jackass view, the big fat key signal is the bank sector index. The decline in the crude oil price from 74 to 66, with a strong potential for revisiting the 50s again, should cause alarm to the banks. They are deeply invested and vulnerable toward the energy sector, in particular with the shale sector. The shale sector is doomed, with poor EROI returns and dire volume with growing depletion. The Wall Street banks have had the shale sector on life support for a couple years.