ISITC - next major crisis

© Chris Skinner. All rights reserved.

Chris Skinner

@FSClub and @Chris_Skinnerwww.thefinanser.com




Don’t

TELL Mum

I work for

a BANK




“I’d shut Apple down and give the money

back to the shareholders”

…An Apple PowerBook G3 250 cost $5,700in

The same in Apple stock is worth $330,563

FTSE100: 5073 Dow Jones Industrial Average: 6435

The Bad News

The next financial crisis is in 2045

The Good News

We will all make a shedload of money



Dodd-Frank has 400 rules

286 have deadlines

Regulators missed 1 in 4

Volcker rule delayed

FTSE100: 5845 Dow Jones Industrial Average: 13080 Hang Seng: 20900


Massive FDI heads into:

Turkey

Indonesia

Vietnam

Mexico

South Africa



European Market Infrastructure Regulation

(EMIR) deadline is missed

…

SWIFT, FIX and FpML agree to disagree



Yuan free floats

China sets up an Asian clearing system: the

Chinese Clearance Processing System

(CCPS)



Volcker Rule leads to radical restructuring

of bulge bracket



TARGET2 for Securities finally goes live



The Eurozone divides as Spain defaults



Vickers rule separates UK retail and

investment banks



China becomes #1 global economy




Today

America

• Unemployment

• House prices

• Oil prices

• Government deficits

• Currency wars

China

• Maintaining growth

• Reducing US

dependency

• House price bubble

• Civil disobedience

• Free floating the Yuan


Today

Eurozone

• Portugal

• Italy

• Ireland

• Greece

• Spain

Rest of World

• Social inclusion

• Social unrest

• Political instability

• Economic inbalances

• Resources


Today

CIVETS

• Columbia

• Indonesia

• Vietnam

• Egypt

• Turkey

• South Africa

The Growth8

• Brazil

• Russia

• India

• China

• Indonesia

• Vietnam

• Mexico

• Turkey


Today

• Restoring Financial Stability

• Setting the Right Green

Agenda

• Exercising Smart Power

• Reimagining Global Trade

• Navigating China’s Rise

• Deciphering “Russia, Inc.”

• Engaging an Emerging India

• Revitalizing Ties to Latin

America

• Supporting Africa’s Growth

Turnaround

• Pursuing a Positive Agenda

for the Middle East


Reserve Bank of India launch alternative

clearing system to CCPS, RBIXP



China makes all clearing of yuan mandatory

through CCPS



The euro ceases to trade as a national

currency in the ‘soft’eurozone countries, but

continues as a denominated trading currency



America’s new President Sheen (yes,

Charlie) takes the oath of office



America’s new President Sheen (yes,

Charlie) takes the oath of office



The USA requests that SWIFT remove

North Korean banks from the network

…

EU forces SWIFT to agree

…

China develops alternative to SWIFT



Great returns from investments in Latam,

new Asian and emerging Africa

…

Increased social unrest in developed

markets




Julian Assange (wikileaks)


Aaron Barr


Mark Zuckerberg (facebook)


Mohamed Bouzzazi


Molly Katchpole


Satoshi Nakamoto (bitcoin)


OWS picture


India and China impose trade sanctions

against each other over Nepal



Tensions in the Middle East become

extreme as alternative fuels undermine oil



The African Union Alliance is seen as the

world’s sixth largest economy



China’s RMB overtakes the dollar as the

world's major reserve currency[2012: 0.33% of world payments]



The Chinese CCPS and regional currency

systems take over from the DTCC and SWIFT,

in terms of global currency and trade volumes

…

India’s RBIX is a close fourth



The UK government complete the

rehabilitation of the Royal Bank of Scotland







Today

• Macro-economic risk

• Credit risk

• Liquidity

• Capital availability

• Political interference

• Regulation

• Profitability

• Derivatives

• Corporate governance

• Quality of risk management

• Dodd-Frank

• Volcker

• Durbin

• Vickers

• De Laroisiere

• Lagarde

• Geithner

• Bernanke

• King

• Dragi


European Economic & Monetary Union is

reworked into the European Regional Trade

Agreement (ERTA)

FTSE LATIBEX: 15121 Dow Jones Industrial Average: 24031 Hang Seng: 61992


Brazil, Colombia and Mexico agree a new

trade pact with India



America and China agree a new currency

union, giving birth to the Renminbuck



Iran attacks Israel with a nuclear strike

upon Jerusalem



China imposes economic sanctions against

India, as India’s economy reaches #2



Indian cyberterrorists destroy the CCPS




The Madness of Crowds

• Leverage

• Complexity

• Risk

• Herd Mentality

2045 High Low

Dow Jones Industrial Average 14758 24815, 2042 13080, 2012

Hang Seng 38132 63427, 2043 20900 2012

FTSE100 6007 11757, 2038 5845, 2012

FTSE LATIBEX: 8352 16857, 2044


‘My daughter asked me when she came home

from school, “What’s the financial crisis?” and

I said, it’s something that happens every five

to seven years.’

Jamie Dimon, JPMorgan Chase CEO


“A mega financial crisis is becoming far more

frequent and likely to occur, due to globally

connected risk and greed.”

Chris Skinner

200 BC – 300 AD BOOM (500) – the Roman Empire

300 – 1100 BUST (800)

1100 – 1345 BOOM (245) - Renaissance

1345 – 1637 BUST (292)

1637 – 1720 BOOM (83) – Armada and New Worlds

1720 – 1830 BUST (110)

1830 – 1929 BOOM (99) – Industrial Revolution

1929 – 1955 BUST (26)

1955 – 2008 BOOM (53) – Technology Revolution

2008 – 2020 BUST (12)

2020 – 2045 BOOM (25) – West moves East

2045 BUST


“You can never plan the future by the past.”

Edmund Burke, 1729 – 1797

“My role is find the chink in the regulator’s

armour.”

Salomon Smith Barney General Counsel, 1989

“Greed is good.”

Michael Douglas as Gordon Gecko in

Wall Street, 1987



Today

Invest in:

• Mexico

• Colombia

• Indonesia

• Vietnam

• Turkey

• South Africa

Buy

• Next generation tech

stocks, including

twitter and facebook

• iPads and knowledge

• Chris Skinner’s books


Chris Skinner

@FSClub and @Chris_Skinnerwww.thefinanser.com

ISITC - next major crisis

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