Don't let anyone fool you, the global crisis is here

Dateline Venezuela:  President Maduro declares a 60 state of economic emergency on Friday.

President of Venezuela Nicolas Maduro has signed a decree on a state of economic emergency to address the protection of social rights amid the grave economic crisis in the Latin American country, local media said Friday.

Maduro said earlier this month that the measures would be aimed at increasing the fundamental indicators of production, product distribution, commercialization and price controls.

The announcement came two days after Venezuela’s oil price had dropped to $24 a barrel, the lowest mark in 12 years. Up to 96 percent of Venezuela’s budget depends on oil revenues, which has a negative impact on the socio-economic situation in the country. –Sputnik News

It is ironic that the mainstream business media is doing little to talk about the absolute destruction that low oil prices are doing to multiple energy producing companies, but the fact of the matter is, a global financial crisis is now well under way, and will see both civil and geo-political unrest leading the way in 2016.

Dateline Mexico: Dollar against he peso hits more than 18:1

To give a little perspective on how much the Mexican Peso has devalued against the dollar, back during the 1994 Peso crisis the currency only went from 3.4 to the dollar, to 7.2.  Right now it is more than twice the highest level it achieved in 1994, and is only getting worse as oil prices fall below $30 per barrel.

Mexico's currency fell to a record low against the dollar due to uncertainty in global markets, although the peso was stronger relative to the greenback in interbank transactions.

In currency exchanges at the Mexico City International Airport, the peso slumped Thursday to as low as 18.06 against the dollar, while it traded at 18.05 at BBVA Bancomer and at 18.03 at Banamex and Santander's Mexican unit.

Concerns about the impact of an interest-rate hike by the U.S. Federal Reserve, which finally raised its benchmark rate last month for the first time in a decade, and low oil prices also have contributed to a sharp decline in the peso, which has fallen around 20 percent relative to the dollar over the past 12 months. - Fox News

Dateline Canada: Trudeau is Loonie to want to be Prime Minister at this point in history


Canada on the other hand, has just seen the price of every day goods rise precipitously over a very short period of time.

The crash in oil prices has crippled their economic growth, and led to the decline of the Canadian dollar, as well as a predictable increase in the cost of imports like food. For those of us living in the US, this provides a really good example of what life may be like should the dollar take a plunge in the near future. Here’s what our northern neighbors have been dealing with:

It is often said that a free-floating currency acts as a shock absorber.

But when Canadians go shopping for groceries these days, they’re getting nothing but the shock—sticker shock, that is.

On Tuesday, the Canadian dollar, commonly known as the loonie, broke below 70 U.S. cents for the first time since May 1, 2003.

For America’s northern neighbor, which imports about 80 percent of the fresh fruits and vegetables its citizens consume, this entails a sharp rise in prices for these goods. With lower-income households tending to spend a larger portion of income on food, this side effect of a soft currency brings them the most acute stress.

James Price, director of Capital Markets Products at Richardson GMP, recently joked during an interview on BloombergTV Canada that “we’re going to be paying a buck a banana pretty soon.”

Canadians took to twitter this week to share their collective horror over the rising cost of food. Cucumbers are $3 each. A head of cauliflower is $8. A large container of pepper cost $19 and some Canadians are paying $16 for a single bell pepper. A container of laundry detergent is $32. - Ready Nutrition

Canada has been hit harder than most nations from the decline in oil prices, primarily because their economy is also experiencing the bursting of a housing bubble created by former central bank head Mark Carney.  And with the dollar remaining so high in relation to every other currency, Canada's inability to afford imports is making me wonder if our friends to the north may soon be forced into North America's version of a Canadian Spring.


These are just three of a great many oil producing nations that are collapsing right before our very eyes, with Saudi Arabia and Russia experiencing their own energy based recessions on a smaller scale because they are much better prepared for it through their dollar reserves.  And one has to wonder what will come next if both our neighbors to the North and to the South find themselves in even worse deteriorating scenarios.

Dateline U.S.: Atlanta Fed announces .6% GDP, Dallas Fed ends mark to market for energy bond debt


Between Friday's colossal drop in stocks, and the Atlanta Fed's declaration of an estimated .6% GDP for the 4th quarter, all the U.S. economy needs now is for the banks who hold trillions in energy bond debt to capitulate... err I guess not.

Which brings us to the focus of this post: earlier this week, before the start of bank earnings season, before BOK's startling announcement, we reported we had heard of a rumor that Dallas Fed members had met with banks in Houston and explicitly "told them not to force energy bankruptcies" and to demand asset sales instead.

We can now make it official, because moments ago we got confirmation from a second source who reports that according to an energy analyst who had recently met Houston funds to give his 1H16e update, one of his clients indicated that his firm was invited to a lunch attended by the Dallas Fed, which had previously instructed lenders to open up their entire loan books for Fed oversight; the Fed was shocked by with it had found in the non-public facing records. The lunch was also confirmed by employees at a reputable Swiss investment bank operating in Houston.

This is what took place: the Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses which would exceed the current tier 1 capital tranches.

In other words, the Fed has advised banks to cover up major energy-related losses. - Zerohedge

Welcome to the 2016 version of The Big Short, where all relevant data is masked, and the Fed will do anything to protect the big banks from their corruption and speculation.

What can anyone say... we made it 17 days into 2016 before all hell is breaking loose.  And there is very little daylight at all ahead that signals it will end anytime soon.