It's not looking good for the stock market or big banks

There is a group you have probably never heard of other than here and I don't talk about them often. It is called the Bank of International Settlements and it sort of coordinates between all the worlds central banks. Well, they just issued a paper on how they might recapitalize to big to fail banks with bail-ins and some other things.

Yahoo - Reuters - BIS lays out "simple" plan for how to handle bank failures

The actual proposal from BIS's own website is here. BIS - A template for recapitalising too-big-to-fail banks.

What is going on is that the IMF and governments want to take a "bail-in" approach favoring depositors and BIS wants to put some others in a better situation. What I find really interesting is that with all of these governments and banks suddenly publishing their plans for what to do with the investment banks fail again, why is it barely mentioned in any of the financial papers?

Here is what is going on with the banks at the moment. New York Times - Quantity Over Quality in Bank Profits. The large banks are showing higher profits; but, not from lending out money. One of the things these banks did was decrease how much they set aside in the event of losses on loans.

Traditionally banks were different. You would deposit your funds for safe keeping and they would loan money out to people to buy houses, start businesses and buy cars or other large purchases. The bank put money in real assets that effected their community. During the period of deregulation things changed. They allowed all banks to become investment banks. Banks began finding they could make more money off the stock market and keep the profit. They take your deposit and then gamble on the stock market. Risky investments don't matter because they are gambling with your money.

While I will link to the financial mainstream media, the fact is that you cannot trust them. How many of them predicted the housing crash or the stock crash? Yeah. The media acts as a cheerleader for Wall Street or they won't get the interviews or the insider information that allows them to make money too.

I expect volatility; but, the real challenge comes on the 21st. Be well.