The Zombie Horde Emerges
I'd say "hoard" since we're talking banks that usually have a vaults (or computers) full of cash, but that is just the problem: they don't.
It’s a low-news day today, compared to the last couple of days, so I present just a short editorial. While stocks are still melting down over Trump’s latest and greatest China threats, the most interesting article is a topic I covered in my Deeper Dive a few days back. Today I want to share a related article by John Rubino that I saved for later when finishing my Deeper Dive, which describes the recent stealth repo crisis connected with the latest troubles in regional banks. Most people heard nothing about this little monster.
To create more of an editorial, given the lack of editorial-worthy news material today, I’ll share a sliver of that Deeper Dive here for everyone .
In essence, banks are getting back to not wanting to lend to each other as the lowering tide starts to reveal a few zombie banks that were swimming without their shorts on. Banks that are barely more decent than the failing ones are running from the water because nobody wants to see half-naked zombies. So, the Fed has had to bail these smaller failing banks out with repo loans on the QT as liquidity gets thinner among banks. (Except wait until you see the size of what they have put on offer with no talk about it!)
First, here’s an excerpt from the Deeper Dive:
Of course the liquidity crisis in shadow banking is what Jamie Dimon fears because shadow banks run to big banks for repo loans when liquidity runs thin, and his bank was THE trigger in the great repo crisis of 2019, which I’ve referred to as the Repocalypse, though I’m not sure I was the first, though I predicted its arrival.
That was when banking froze over because JPMorgan stopped being willing to expand its risks from engagement with the shadow banking sector. So, JPM stopped making repo loans, which are the lubricant that keeps banking smooth. The Fed had to rush to the rescue with massive QE; however, the current inflation-sensitive Fed is loathe to do that because the QE that it leaped into back, once it started getting thrown out of helicopters to the general public half a year later by the federal government is what created the massive inflation we’ve now been fighting back down for years, which all of us are paying for EVERY DAY.
For now, I’ll call this event the “Stealth Repocalypse” or the “Little Repocalypse” until it becomes more pervasive; but a bubble bust of zombie corporations has always been part of my overall scenario for the Everything Bubble Bust I predicted would be slowly forming. While it’s come on more slowly than I thought five years ago, when I placed its peak about 2-3 years out, everything has still consistently been moving in that direction. It’s just that the Fed created so much helicopter money for the masses and the masses expanded that through stocks more than I realized that it took longer to drain the new money down than I thought it would. Now things are getting thin as the economy ebbs, and the troubles are starting to show like the bones of a zombie through its thin flesh.
In my Deeper Dive, I went much more into how this factors into the death the dollar as it is losing its reserve status and into the shadow banking troubles. Today, I was to briefly focus on Rubino’s piece.
As Rubino describes,
Once again, the regional banks are in trouble. This time, the crisis began with several commercial/industrial loan defaults and is progressing into yet another multi-billion-dollar bailout via the repo market….
On October 16th, 2025, the Federal Reserve Bank of New York quietly injected $8.35 BILLION into the financial system through something called a Repo Operation, and that’s just what they admitted publicly. Nearly 80% of that was backed by mortgage-backed securities, not Treasuries….
When banks start pawning mortgage-backed securities instead of safe Treasuries, it means they’re desperate for cash. It’s like someone pawning their TV, their car, and then finally their wedding ring. And the Fed knows it. That’s why they quietly announced a $491.65 BILLION Standing Repo Facility for later that same day — nearly half a trillion dollars in emergency overnight liquidity. They don’t prep half a trillion unless something behind the curtain is breaking.
That last line is the gist of it. We may soon find out this is as big a deal as the Repocalypes was. In the very least it is the start of the Zombie Apocaplyse where we start finding out who the Zombie corporations are (described generally as any corporations that don’t make enough money to maintain the interest on their debts if cheap money dries up). I’ve predicted there will be a pretty good zombie horde that emerges during this recession, but the worst part is that the zombies seem to be crawling out in the waning twilight first from the banking sector
We’ve passed the point of no return. You can’t print your way out of a debt-based system forever. You can’t keep pretending it’s fine when the repo window is catching fire again.
Get ready for the fun to begin.
P.S. After I wrote about the total debacle Melania’s reportedly fraudulent crypto currency turned out to be, I thought I’d finally take a look at its husband currency $Trump. What an equal disaster. No wonder he’s talking about selling out. It’s almost down to pennies on the dollar:
