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The most difficult to value opaque assets on a bank’s books – called Level 3 assets – rose by more than 20% for lenders like Barclays Plc, Citigroup Inc., BNP Paribas SA and Societe Generale SA during the first half of 2020.

These sometimes illiquid and difficult to value trades are now worth a cumulative $250 billion, according to Bloomberg. Level 3 assets can include distressed debt, some mortgage backed bonds, high risk loans and derivatives linked to things like interest rates and corporate debt. 

Even better? Nobody can explain the jump in the value of assets, which are marked to market using discretionary estimates that have been, in the past, at the center of several fraud stories (like Allied Capital). Banks value these assets “based on historical trends and their own risk assumptions” which has, naturally, given the category the label of “mark to myth”. 

Some are explaining the rise as “a natural consequence of pandemic turmoil” while others state that the assets may have been added to by banks “after seeing the potential for a windfall in the chaos” that arised during the pandemic.

Jerome Legras, managing partner at Axiom Alternative Investments, said: “Banks need a little bit of complexity to actually make a lot of money. Clearly, there is a link with record profits.”

The increase is hard to ignore: it was the largest increase in the value of these assets in a half decade. 

As Bloomberg notes, these assets are greater than 30% of the common equity Tier 1 capital at banks like Deutsche Bank AG, Credit Suisse Group AG, Barclays, Societe Generale and Credit Agricole SA.

Michael Huenseler, who helps oversee 28 billion euros at Assenagon Asset Management in Munich, said: “Level 3 assets have a reputation as toxic, loss-prone assets which are hidden to the public.”

Level 3 assets played a major role in the Great Recession, where banks were have found to assigned unrealistic valuations to billions in investments. 

Kathryn Judge, a law professor focused on finance at Columbia University, commented: “This year’s increase means banks’ Level 3 assets are almost the same size as the gross domestic product of Finland — if their valuations are accurate. The gains are troubling.”

She continued: “There is far more wiggle room in the pricing process and more room for errors. Regulators should be paying close attention to the valuation techniques banks are using, particularly for those banks that have substantial pools of Level 3 assets relative to CET1.”

Legras concluded: “Bigger Level 3 means bigger investment-bank profits, and this means they can take bigger loan losses without hitting capital too hard. This always raises the risk that there has been a mispricing somewhere, that risk management has been deficient — and that those assets will translate into losses.”

Per Bloomberg’s analysis:

• Citigroup had the biggest Level 3 increase since December among 13 banks analyzed by Bloomberg — up about 80% to $14.5 billion.
• Goldman Sachs Group Inc.’s 28% increase to $29.4 billion makes it the second-biggest holder. The majority of its Level 3 holdings are merchant-banking investments, which also became harder to value.
• Deutsche Bank holds more than any other firm, even as it struggles to shrink; Level 3 assets are greater than half its CET1 capital — also the most of any bank.
• Barclays, whose investment bank has been repeatedly criticized by an activist investor, reported an increase of about 40%.
• SocGen, which has ousted executives amid trading losses, reported a 53% jump.
• Credit Suisse’s Level 3 assets have declined since the first quarter, spokesman James Quinn said in a statement. The bank’s turnover of the securities — meaning how quickly it buys and sells them — is the highest in the industry, he said.

Via SchiffGold.com,

The Nasdaq and S&P500 made new all-time highs last week. That leads many people to believe the economy must be doing OK. But as Peter Schiff explained in his podcast, the very thing that’s helping Wall Street boom is crushing the actual Main Street economy.

If you really stop and think about it, the continued stock market climb should be a bit perplexing. After all, the economy was effectively shut down for weeks and governments continue to impose many restrictions to this day. Unemployment has skyrocketed and we remain in the midst of a deep recession. And yet we have a booming stock market. Peter said surging stocks are actually misleading a lot of people into believing that the economy is stronger than it actually is.

Because somehow, this strong stock market must somehow reflect the fact that we have this v-shaped recovery. We don’t. We only have a v-shaped recovery in the stock market. We don’t have any recovery really in the real economy.”

In fact, there are plenty of signs that the economy is going to continue to struggle longterm. We just saw the worst quarter ever in mortgage delinquencies. Meanwhile, businesses are shutting down and bankruptcies are at a 10-year high. Americans owe billions in back rent. There is a rising number of over-leveraged zombie companies. And a tsunami of defaults and bankruptcies are on the horizon.

And yet, analysts say we just experienced the shortest bear market in history. In other words, it was the shortest timespan from a bear market to record highs.

So, this was the shortest bear market ever, yet it’s taking place in arguably maybe the weakest economy ever. So, you really have a divergence between Wall Street and Main Street.”

Some have speculated that the booming stock market has tempered the need for fiscal stimulus. But why do we need a falling stock market to create political pressure for government stimulus? As Peter put it, the only thing the government can actually stimulate is the stock market.

That’s the only place it works. This stimulus doesn’t help Main Street. In fact, it actually hurts Main Street. The only thing they can stimulate is the level of the stock market. Because what happens is the stimulus is just printing money. It’s just artificially low interest rates. That doesn’t do anything for the real economy, but it works magic on Wall Street. That’s what pushes up stock prices. So, the only thing they can stimulate is the stock market. That’s why the stimulus comes into action when the stock market is going down.”

Politicians like boosting the stock market because they can point at it as if it is some kind of scorecard. They can create the illusion that the economy is good by propping up stock prices with cheap money — inflation.

Stimulus also creates a wealth effect. It creates asset bubbles. By artificially raising the prices of stocks and real estate, it makes Americans wealthier – at least on paper.

But it’s not just that paper wealth translating into a better feeling or more spending. It’s that paper wealth collateralizes all sorts of loans. So when you have more assets, you can borrow more money against those assets, using those assets as collateral, and that additional debt generates spending that artificially gooses GDP.”

But as Peter points out, the effect is temporary.

But of course, there’s a tradeoff there. We’re simply sacrificing the future to indulge the present. So, there’s no real gain. We’re just pulling consumption forward so we can count it now, but at the expense of having much less consumption in the future when the bills come due.”

In reality, what’s strengthening the stock market is actually weakening the economy. But how can this be? Doesn’t the stock market reflect the earnings of the economy?

Well, no. It reflects the earnings of the companies that are part of the stock market. The vast majority of businesses in America are not publicly traded. They’re not in the Dow 30. They’re not even in the S&P500 or the Wilshire 5,000. They’re privately held companies.”

Consider the companies that are doing really well right now. Many of them are actually benefitting from the overall weakness in the economy. People are shopping on Amazon because they don’t want to go out. People are watching Netflix because they are staying at home and movie theaters are closed. Meanwhile, small businesses, and mom and pop operations are getting decimated.

Since these big companies have less competition from smaller companies, that benefits the stock market. Also, the artificially low interest rates benefit these big publicly traded companies that can tap into the bond market. These small businesses — they have no ability to tap into the bond market. It doesn’t matter how low interest rates are because they can’t borrow. They don’t have the creditworthiness. They don’t have the connections. They’re not able to borrow money the way these big Fortune 500 companies are. So, the artificially low interest rates that are propping up the markets heavily favor these big companies that have all this debt. In fact, they are able to stay in business by selling debt and by selling stocks.”

In reality, the stock market is completely divorced from the real economy. And as Peter put it, if anything, it’s the mirror image of the real economy. The more pain there is on Main Street, the more gain there is on Wall Street.”

All of this is benefitting Wall Street, these big companies, over Main Street. So to say, ‘Oh look, the stock market is booming. That means we have a strong economy.’ We don’t. It is the weakness in the economy that is benefitting the stock market. And the weaker the economy gets, the better it’s going to be for the stock market. Because what happens when the economy is weak? The Fed prints even more money. We get bigger simulus. It does nothing for Main Street. It sedates Main Street. But it continues to pump air into the stock market bubble.”

Remember when the ‘experts’ warned that there was no credible evidence of coronavirus reinfection, claiming the notion that patients can be reinfected with the virus is categorically absurd? Well, since then, it looks like the New York Times has published stories arguing everything from ‘reinfection is so rare as to make it a non-issue’, to signs that ‘lasting protection might be elusive for some’.

It’s just one more sign of how little scientists know about the virus, and the latest reminder that projections for workable mass-produced vaccines that are also “safe” is an incredibly high bar to set before the end of the year.

Still, the WHO’s official position is that reinfection is possible, and that has been the case since early days of the pandemic. There’s still a lot we don’t know, including the virus’s ability to infect pets/zoo animals. And now, researchers in Hong Kong have reportedly confirmed the first documented case of reinfection that meets certain scientifically rigorous standards.

Here’s more from the NYT:

Researchers in Hong Kong are reporting the first confirmed case of reinfection with the coronavirus.

“An apparently young and healthy patient had a second case of COVID-19 infection which was diagnosed 4.5 months after the first episode,” University of Hong Kong researchers said Monday in a statement.

The report is of concern because it suggests that immunity to the coronavirus may last only a few months in some people. And it has implications for vaccines being developed for the virus.

The 33-year-old man had only mild symptoms the first time, and no symptoms this time around. The reinfection was discovered when he returned from a trip to Spain, the researchers said, and the virus they sequenced closely matched the strain circulating in Europe in July and August.

“Our results prove that his second infection is caused by a new virus that he acquired recently rather than prolonged viral shedding,” said Dr. Kelvin Kai-Wang To, a clinical microbiologist at the University of Hong Kong.

Given that there are millions of cases worldwide, it is not unexpected that a few, or even a few dozen, people might be reinfected with the virus after only a few months, experts have said.

Several cases of reinfection have been discovered in the US and elsewhere, however, scientists weren’t able to use contact tracing tools and other efforts to confirm beyond a reasonable doubt that the case is a genuine reinfection.

Doctors have reported several cases of presumed reinfection in the United States and elsewhere, but none of those cases have been confirmed with rigorous testing. Recovered people are known to shed viral fragments for weeks, which can cause tests to show a positive result in the absence of live virus.

But the Hong Kong researchers sequenced the virus from both rounds of infection and found significant differences in the two sets of virus, suggesting that the patient was infected a second time.

Common cold coronaviruses are known to cause reinfections in less than a year, but experts had hoped that the new coronavirus might behave more like its cousins SARS and MERS, which seemed to produce longer-lasting immunity of a few years.

A study published back in June in the journal Nature Medicine found that antibodies, protective proteins made in response to an infection, may last only two to three months, especially in people who never showed symptoms while infected.

Hong Kong’s outbreak has been waning over the past week as the strenuous social distancing measures imposed by Carrie Lam, along with a plan to test every Hong Kong resident, has slowed the infection’s spread.

Authored by Michael Snyder via The Economic Collapse blog,

The state of California sure has been through a lot this year.  The COVID-19 pandemic hit the state particularly hard, fear of the virus sent the unemployment rate soaring, civil unrest has ripped permanent scars in most of the major cities, and earlier this month a historic heatwave caused rolling blackouts all over the state for the very first time since 2001.  So California certainly didn’t need anything else to deal with in 2020, because it has just been one thing after another all year long.  Unfortunately, it looks like the massive wildfires that have been roaring across the state over the last week are about to get even worse.  A “red flag” warning has been issued for Monday, and just about everyone is expecting this week to be a really, really bad week.

But even if all of the fires ended right now, the devastation that we have already witnessed has been off the charts.  Hundreds of individual wildfires erupted after “12,000 lightning strikes” hit the state, and so far more than a million acres have been burned…

Firefighters have been battling more than 600 blazes – sparked by a staggering 12,000 lightning strikes – for a week. About 1.1 million acres of land has been torched. Most of the damage was caused by three clusters of fire “complexes” ripping through 1,175 square miles of forest and rural areas in the San Francisco Bay Area.

Those numbers are difficult for me to comprehend.

I would think that 12,000 lightning strikes must be some sort of a record for a single week, but I haven’t been able to confirm that.  In any event, that seems like an exceptionally high number.

Similarly, it is hard for me to imagine a million acres that have been completely destroyed by fire.  It is a monumental tragedy that will take a really long time to fully digest.

Of course the fires are still violently raging as I write this article.  In fact, two of the five largest fires in the history of the state are roaring through parts of northern California right now…

In nearly a week, firefighters have gotten no more than the 17% containment for the LNU Lightning Complex fire in wine country north of San Francisco. It’s been the most destructive blaze, accounting for five deaths and 845 destroyed homes and other buildings. It and a fire burning southeast of the Bay Area are among the five largest fires in state history, with both burning more than 500 square miles (1,295 square kilometers).

Overall, wildfires in the state have already caused more death and destruction in 2020 than they did in all of 2019.

Something that has been particularly sad to hear is that many redwood trees are being burned.  Some of those trees are over 1,000 years old, and we are being told that Big Basin State Park experienced “significant fire damage”…

Biologists are watching closely as the blazes encroach on old-growth redwood trees in Northern and Central California, where some giants are more than 1,000 years old and are known by individual names. While some seem to have been spared, Big Basin State Park — the oldest state park in California — saw significant fire damage.

That is not just a loss for the state of California.

That is a loss for all of us.

Unfortunately, California’s rapidly growing social decay has also been on full display during this crisis.  Looters have been hitting the evacuation zones pretty hard, and at last eight people have already been arrested…

At the CZU Lightning Complex fire in the Santa Cruz Mountains. south of San Francisco, authorities said their effort was hindered by people who refused to heed evacuation orders and those who were using the chaos to steal. Santa Cruz County Sheriff Jim Hart said 100 officers were patrolling and anyone not authorized to be in an evacuation zone would be arrested.

“What we’re hearing from the community is that there’s a lot of looting going on,” Hart said. He said eight people have been arrested or cited and “there’s going to be more.”

And one guy that is apparently vying for the title of “biggest scumbag in America” decided that he would steal a firefighter’s wallet out of his work vehicle and completely drain his bank account…

A California firefighter’s wallet was stolen out of his work vehicle and his bank account was drained while he was battling a blaze, officials said. It was the latest robbery to occur amid fear and panic over wildfires in Santa Cruz.

“It’s absolutely disgusting behavior, I can’t, frankly, I can’t believe that somebody would actually have the nerve to break into a firefighter’s vehicle or enter their vehicle to steal something from them when they’re there to protect the community. Honestly it blows me away,” Chief Deputy Chris Clark with the Santa Cruz County Sheriff’s Office said during a press conference on Sunday.

You have to be really, really low to do something like that.

But this is what America has become.  We have become a completely lawless nation where chaos reigns, and things are only going to get worse in the years ahead.

And we are also being told that the battle against the wildfires could go to an entirely new level during the early part of this week.  A “red flag” warning has been issued, and the state is bracing for very high winds and more lightning strikes…

The National Weather Service issued a “red flag” warning through Monday afternoon for the Bay Area and the central coast, meaning extreme fire conditions, including high temperatures, low humidity and wind gusts up to 65 mph, “may result in dangerous and unpredictable fire behavior.”

There was the potential for scattered “dry” thunderstorms over much of Northern California, the weather service said, and lightning could spark new blazes.

For a long time, I have been encouraging people to consider moving out of the state.

The “California Dream” has become an endless California nightmare, and in 2020 we have seen an endless parade of so many of the reasons why millions have already fled for greener pastures.

In the end, it is such a great shame what has happened to the state.  It is blessed with outstanding weather and tremendous natural beauty, but at this point I don’t know why anyone would want to live there.

In what can be described as Bank of America at its most apocalyptic, the bank’s currency strategist Athansios Vamvakidis takes us on a tour de force of where we’ve been, going through what comes next, and which culminates in what may well be the 9th circle of financial hell.

Starting with the “three red flags” that have recently emerged across global economies, he then explains why nobody cares and why “markets remain optimistic” – the reason is MMT, in case anyone is confused – as “deflation and not inflation is the risk today.” As a result, nothing “prevents more fiscal policy stimulus, funded by more money printing” while “central banks keep policy rates low for as long as necessary, to help governments deal with the massive debts they are accumulating? Effectively, this is what markets are pricing in” as without inflation there is no “budget constraint.”

Yet stocks at all time high does not mean the situation is sustainable: as Vamvakidis writes next “things could have been different if the pandemic had found the global economy with lower debt and higher interest rates” however, that is a pipe dream as “most countries did not take advantage of the good times in the years before to create enough policy space, just because they thought that these years were not “good enough.” In fact, in a complete failure of following Keynesian principles, “macro policies since the late 1990s have been loose in good times and even looser in bad times” as “countries have been converging towards MMT, without even realizing that they do” and the result “is that policies were loose and debt high even before the pandemic.” Covid only accelerated this trend.

So for now the world is cruising on a debt-fueled autopilot, and “as long as there is no inflation, there is no budget constraint, in MMT and in the current state of the world. For as long as the pandemic lasts, fiscal and monetary policies can provide as much support as necessary and even more.” Furthermore, looking ahead in a post-covid world, there will be “no rush to tighten policies, to avoid jeopardizing the recovery, as was also the case in the years following the global financial crisis. After all, Japan has been in this reality for the last 30 years.”

Of course, eventually these loose macro policies, in both a good and a bad state of the global economy, “will likely lead to inflation. The longer it takes the more addicted markets become to macro policy support making the eventual adjustment harder.”  And yet, even once central banks announce their intent to overshoot their inflation target – something which will be unveiled in September, “non-linearities may make their task challenging, while in any case markets may start pricing rate hikes and the so-called central bank policy put could weaken.”

Indeed, it is “only low inflation has allowed the I-am-so-bearish-I-am-bullish market in recent years” and is why the Fed will do anything in its power to keep inflation from becoming a budget constraint. However, “if and when at some point we do get inflation, this equilibrium will likely break.”

So is there a way out? Well, with debt set to keep rising, the only option to reduce debt to either pre-Covid levels, or even more to pre-global financial crisis levels “would require massive fiscal austerity and private sector deleveraging”, something which no self-respecting politician will ever campaign on ever again. And why take the plunge: “as long as inflation remains low and central banks keep policy rates at zero, there is no reason for such pain.”

Unfortunately, as even Bank of America admits, “this is a scenario of recurring bubbles.” The real economy is weak, but asset prices are strong because of loose macro policy support-more decoupling between Wall Street and main street. As Vamvakidis writes, “this will continue until unexpected shocks take place, asset price bubbles burst, which then needs even looser macro policies to avoid an even weaker real economy, leading to new asset price bubbles. The result is a vicious cycle spiralling to even higher debt levels, lower interest rates and larger central bank balance sheets, without inflation, but with an even weaker real economy and even worse asset price bubbles.”

And we all have the Fed to thank for this endless loop that eventually ends in absolute disaster.

Of course, these same central banks are all too aware of these “risks” as BofA calls them (or, as the 1% would call them, opportunities), “but they are stuck.” For the reason why just look at recent attempts to tighten, even in small steps, which led to sharp market adjustments: “We can mention many examples, from the Fed’s QE taper tantrum and its sharp U-turn last year cutting rates and expanding its balance sheet despite unemployment being well below the natural rate, to the ECB being stuck with negative rates well after the crisis and despite serious side effects and reintroducing QE last year at effectively full employment. Government debt is already too high in most cases, particularly after the pandemic, to reduce it with fiscal consolidation in the years ahead, without hurting the already weak economy.”

Which brings us to Vamvakidis’ damning conclusion, one which can be summarized simply as enjoy it all while you can because the end-game is coming as “this is not a sustainable situation in the long term:”

We see no easy way out. Again, we wouldn’t start from here. This is not a good place to be in for the global economy and it is getting worse with every shock, despite the market euphoria in the meantime. An already bad situation before the pandemic has now become worse. We are not sure how and when we will see the end-game, but in our view this is not a sustainable situation in the long term.

And that’s all one needs to know about the current trajectory of, well, everything.

* * *

His full must-read note below:

In search of a budget constraint

First, Covid-19 infections continue to increase in Europe in recent weeks, reaching a new re-opening peak last week. We have been concerned that reopening will lead to higher infections, in Europe and everywhere else. The trade-offs between going back to normal and containing Covid-19 are clear to us.

Second, the Eurozone August PMIs dropped, confirming our view that the initial rebound was simply from base effects after the lockdown and that the cleaner data from now on will reflect a weaker recovery and output well below pre-crisis levels. US data has also started weakening, with our economists expecting further slowing this fall.

Third, markets were disappointed by the FOMC minutes last week, just because they were not dovish enough. The minutes told us that Fed policies would be outlook-dependent. However, the consensus was looking for a strong, unconditional dovish message. Effectively, markets are pricing both loose monetary policies and a strong recovery, which we have been arguing is not realistic.

US equities were back to an all-time high last week, with equities in the rest of the world also recovering strongly, before these red flags caused a pause in risk assets. In the meantime, there is no fiscal deal yet in the US, with some benefits already expiring. The bottom line we see is that the real economy remains weak and fragile, while macro policy support has its limits, but markets are optimistic on both fronts.

MMT to the rescue

Even if the real economy is weak and the recovery from the pandemic looks nothing like a V or a U, what prevents fiscal and monetary policies to keep supporting risk assets? By any measure, real output is well below pre-crises levels today and forecasts suggest it will remain so well into next year, if not the year after. And yet, global equities have almost fully recovered. In the meantime, deflation and not inflation is the risk today. What prevents more fiscal policy stimulus, funded by more money printing? And wouldn’t central banks keep policy rates low for as long as necessary, to help governments deal with the massive debts they are accumulating? Effectively, this is what markets are pricing in our view.

And why stop there? Is supporting the economy after a shock from a global pandemic more urgent than addressing rising income inequality or climate change, just to mention two of many other possible examples? Aren’t we implementing Modern Monetary Theory already? What’s the budget constraint?

We wouldn’t start from here

Things could have been different if the pandemic had found the global economy with lower debt and higher interest rates. Most countries did not take advantage of the good times in the years before to create enough policy space, just because they thought that these years were not “good enough.” Macro policies since the late 1990s have been loose in good times and even looser in bad times. Countries have been converging towards MMT, without even realizing that they do. Of course, extraordinary macro policy support is absolutely necessary, in our view, in response to a global pandemic that takes place once in a century. However, the problem is that policies were loose and debt high even before the pandemic.

Inflation could eventually be the budget constraint

As long as there is no inflation, there is no budget constraint, in MMT and in the current state of the world. For as long as the pandemic lasts, fiscal and monetary policies can provide as much support as necessary and even more. Even after the pandemic, we would expect no rush to tighten policies, to avoid jeopardizing the recovery, as was also the case in the years following the global financial crisis. After all, Japan has been in this reality for the last 30 years.

In theory, at some point, loose macro policies, in both a good and a bad state of the global economy, will likely lead to inflation. The longer it takes the more addicted markets become to macro policy support making the eventual adjustment harder. Even if central banks are willing to overshoot their inflation target, non-linearities may make their task challenging, while in any case markets may start pricing rate hikes and the so-called central bank policy put could weaken. Only low inflation has allowed the I-am-so-bearish-I-am-bullish market in recent years. If and when at some point we do get inflation, this equilibrium will likely break.

Recurring bubbles in a lowflation scenario

The obvious pushback is that inflation has been the dog that has not barked in recent decades. It is certainly the least of our concerns today, with output well below potential and our forecasts for a very weak recovery. Markets are also pricing low inflation and low interest rates for the foreseeable future.

However, in a lowflation scenario, debt is likely to remain high in most countries. To reduce debt to pre-Covid levels, and even more to pre-global financial crisis levels, would require massive fiscal austerity and private sector deleveraging. As long as inflation remains low and central banks keep policy rates at zero, there is no reason for such pain.

However, this is a scenario of recurring bubbles. The real economy is weak, but asset prices are strong because of loose macro policy support-more decoupling between Wall Street and main street. This will continue until unexpected shocks take place, asset price bubbles burst, which then needs even looser macro policies to avoid an even weaker real economy, leading to new asset price bubbles. The result is a vicious cycle spiralling to even higher debt levels, lower interest rates and larger central bank balance sheets, without inflation, but with an even weaker real economy and even worse asset price bubbles.

Most likely, this spiral started with low inflation in the 1990s, because of structural forces such as globalization and IT, and the widespread adoption of inflation targeting in the years that followed. Macro policies took advantage of low inflation to loosen too much, and one thing led to another, with a crisis every few years also keeping inflation low.

The end game is not clear, but unlikely to be smooth

Most likely, major central banks and most governments are aware of these risks, but they are stuck. Efforts to tighten in the past, even in small steps, led to sharp market adjustments. We can mention many examples, from the Fed’s QE taper tantrum and its sharp U-turn last year cutting rates and expanding its balance sheet despite unemployment being well below the natural rate, to the ECB being stuck with negative rates well after the crisis and despite serious side effects and reintroducing QE last year at effectively full employment. Government debt is already too high in most cases, particularly after the pandemic, to reduce it with fiscal consolidation in the years ahead, without hurting the already weak economy.

We see no easy way out. Again, we wouldn’t start from here. This is not a good place to be in for the global economy and it is getting worse with every shock, despite the market euphoria in the meantime. An already bad situation before the pandemic has now become worse. We are not sure how and when we will see the end-game, but in our view this is not a sustainable situation in the long term.