ISITC - next major crisis

Chris Skinner

@FSClub and @Chris_Skinner
www.thefinanser.com

© Chris Skinner. All rights reserved.

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 China
• Unemployment • Maintaining growth
• House prices • Reducing US
• Oil prices dependency
• Government deficits • House price bubble
• Currency wars • Civil disobedience
• Free floating the Yuan


Today

Eurozone Rest of World
• Portugal • Social inclusion
• Italy • Social unrest
• Ireland • Political instability
• Greece • Economic inbalances
• Spain • Resources


Today

CIVETS The Growth8
• Columbia • Brazil
• Indonesia • Russia
• Vietnam • India
• Egypt • China
• Turkey • Indonesia
• South Africa • Vietnam
• Mexico
• Turkey

Today

• Restoring Financial Stability • Deciphering “Russia, Inc.”
• Setting the Right Green • Engaging an Emerging India
Agenda • Revitalizing Ties to Latin
• Exercising Smart Power America
• Reimagining Global Trade • Supporting Africa’s Growth
• Navigating China’s Rise 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


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 • Dodd-Frank
• Credit risk • Volcker
• Liquidity • Durbin
• Capital availability • Vickers
• Political interference • De Laroisiere
• Regulation • Lagarde
• Profitability • Geithner
• Derivatives • Bernanke
• Corporate governance • King
• Quality of risk management • 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: Buy
• Mexico • Next generation tech
• Colombia stocks, including
• Indonesia twitter and facebook
• Vietnam • iPads and knowledge
• Turkey • Chris Skinner’s books
• South Africa


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