Must Read: The Regulators Are Terrified of a Bond Market Collapse

The day of reckoning is coming.
 I had a “eureka” moment last night when I read the comments by the chief economist of the Bank of England who, presumably unwittingly, warned that the aggregation of derivatives in the derivatives clearing system (primarily a subsidiary of The Depository Trust and Clearing Corporation – aka DTCC) could be “a problem from hell.”
The nexus of the problem is that fact that interest rate derivatives contracts make up the majority of the OTC derivatives.  
JP Morgan and Citibank alone have $97 trillion in notional amount of OTC interest rate derivatives exposure.
To put that in perspective, the total size of the U.S. stock market is around $22 trillion.  And $97 trillion doesn’t include the leverage that is embedded in these contracts.
Pimco, Black Rock and Fidelity have by far the largest concentration of exposure to this.   That’s why the Vice Chairman of Black Rock is going around promoting the idea of a mechanism to bail-out DTCC when the derivatives bombs start to fly. 
I was told this morning by someone in a position to know that the regulators are absolutely terrified of this problem and of a total bond market collapse.

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Bloomberg Admits: Rehypothecation & Derivatives- THE $5 TRILLION ANNUAL SILVER MARKET FRAUD

GLDDavid Quintieri author of The Money GPS joins the SGTReport to discuss the collapse of the international banking and monetary systems. We also cover the great Wall Street SILVER FRAUD in detail.
According to Bloomberg the “silver market” is a “$5 TRILLION DOLLAR market”.   However, given that we know that only 700-800 million ounces of PHYSICAL silver are mined from the ground every year, the ACTUAL gross silver market is at best worth $15-20 Billion a year!
Bloomberg is admitting that the great Wall Street silver paper PONZI market is at least 250 times larger that the actual PHYSICAL market… ANNUALLY.  [Read more...]

New Derivatives Rules Rescinded To Help Banks Make More Money


Source: Chip Somodevilla/Getty Images

Source: Chip Somodevilla/Getty Images

The rules originally established to help protect the system from bank greed and fraud connected to derivatives were just rescinded by the same Basel Committee that drafted the original blueprint – article link.  The original rules would have significantly curtailed the ability of banks to underwrite the derivatives they sell to pension funds and hedge funds. It would have required that the banks put up a lot more in reserve capital, which in turn would have forced the banks to charge a much higher premium – or cost to the buyers – for the derivatives it sells. Make no mistake about it, AIG and Goldman would not have blown up if both parties had been forced to properly reserve against their derivatives contracts.
Anyone who understands what is going on here and continues to keep their money inside the financial system is either extremely naive or tragically stupid.  Forewarned is forearmed.
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The Silent Scream Of The Plunging $/Yuan: Portrait of A Derivatives Bomb Detonated

Anyone who denies that the Fed is engaging in unprecedented intervention in all of the markets – especially the gold and silver markets – is guilty of either ignorance or willfully intentional denial.
But the Chinese can play the intervention game as well

We are seeing that giant footprint of intervention in the dollar/yuan relationship, as the Chinese yuan has just experienced it biggest weekly plunge ever:

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Derivatives: How the Tiny Silver Market Could Take Down the System

China credit crisisPrecious metals naked shorting is just another streamlined way to pick up nickels in front of a steamroller. Do it on a large enough scale and with some form of subsidy, margin, or grantee, and it can be a massive business unto itself.   That is, until it explodes and spills over into the densely connected network of other paper derivative structures.
This is part of why it is never absurd to consider that the tiny silver market can be the Achilles heel that might take down the system.

Everything is tied and the trigger could come from any place along the tangled web. [Read more...]

Former Goldman Banker Nomi Prins: Syria War Could Implode Derivatives!

Former Goldman Sachs banker Nomi Prins says the financial system is more risky than before the 2008 meltdown. Prins, who wrote the best-seller, “It Takes a Pillage,” says, “We have greater concentration of . . . financial risk within fewer institutions. So, we’re in a situation where there is moral hazard, but there is more recklessness beneath the surface because they know they can get away with it.” Prins sees the recent op-ed piece by Russian President Vladimir Putin in the New York Times as a warning. She says, “To use Obama’s term, ‘American exceptionalism,’ as an excuse for that kind of combat, doesn’t negate the risk associated with it.” So, what could a U.S. war in Syria do to the fragile global economy? Prins contends, “It could implode and have serious ramifications on the financial systems starting with derivatives and working on outward.” Prins goes on to say, “It’s a tremendously dangerous time to be moving forward with aggression rather than moving backwards with diplomacy.” As far as the stock market goes, Prins says, “I would not put my money in the stock market right now. . . I would stay away from it because that is flimsy ground.” Join Greg Hunter as he goes One-on-One with best-selling author & former Goldman Sachs banker Nomi Prins. [Read more...]

Rob Kirby: Interest Rates Are Headed LOWER Via Central Bank IR Swap Interventions!

Jamie DimonIn the latest Keiser Report, Max talks to Rob Kirby of about Mark Carney and his merry band of bankers as the Lone Ranger box office disaster, they’ve all made their fees while the shareholders and stakeholders eat the losses.
Kirby also predicts lower rates due to central bank intervention via Interest Rate Swaps and Forward Rate Agreements. [Read more...]

Deepcaster: Meltdown Warning Signals: Run for the Hills!

Historians will certainly consider the 2008 crisis as a warning shot before that of 2013. – LEAP 2020

Indeed, we are already seeing some of those Signals sound such a Warning.
A prime signal of impending Financial Collapse would be the collapse of one of the world’s too-big-to-fail Mega Banks, all of which are interrelated as counterparties on trillions of dollars of Derivatives and other Instruments. The prime candidate for collapse – Deutsche Bank.

The Fed and Bank of England can protect the American and English Mega Banks to a degree because they can print unlimited money. The Deutsche Bank has no such national currency printer/protection, and DB is under increasing pressure from the LIBOR and other fraud allegations and investigation.
There are also reports DB has sold 60 thousand tons of allocated Gold certificates to clients. But who actually has the Physical Gold and how much do they have?

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Senate Report: JP Morgan Lied & Deceived Regulators, Investors And Public on London Whale Losses

JPMorganAfter today’s market close, and ahead of tomorrow morning’s 9:30am Senate hearing on JPM’s London While IG9 trades that cost the firm upwards of $10 billion, the Senate Permanent Committee on Investigations has released a 300 page document titled JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses in which the Senate Committee accuses JPMorgan and Jamie Dimon in particular of lying to and intentionally deceiving regulators, investors, and the public regarding the extent of the derivatives losses the firm sustained as Bruno Iksil nearly took down the ship in early 2012.

Full senate report is below: [Read more...]

Derivatives: Who is Going to Pay?

DerivativesSubmitted by Bill Holter:

Kyle Bass claims to have purchased $500 billion worth of Japanese debt protection for 1 basis point (which if my math is correct cost him $5 million).  Presumably he is not the only one that this bank sold the “protection” to.  Is there any bank anywhere on the planet that could come up with that type of cash today?

Let me put this in just a little perspective for you.  $500 billion, doesn’t sound like much the way “billions” are thrown around like confetti does it?  The “admitted” on books accumulated debt of the 237 year history of the U.S. Is $16 trillion…or only 32 times the size of Mr. Bass’s bet!  When (not if) Japan fails, who’s going to bail out this little puppy trade (and presumably many more like it)? [Read more...]


hari kari derivativesJapan is falling on their sword for the good of the NY & London criminal banksters by purchasing their worthless derivatives.

The Japanese have decided to perform Hari-kari on themselves and disembowel their economy on a global stage. In what can only be described as willful suicide, the BOJ has decided to begin buying derivatives. The most volatile financial weapon of mass destruction will be purchased by the Japanese, the question is why?
As the US economy continues its death spiral, Japan has been ordered to jump on the grenade and keep the dollar charade going for just a little bit longer.
Japan is finished, energy and food prices are through the roof and they are moving from the lost decades to being the lost civilization.
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How to Shoot Yourself in the Foot: Central Banks Begin Buying Derivatives

central bankersBy Bill Holter:

The Bank of Japan announced over the weekend that they are considering buying derivatives to jump start their economy.  Oh yes, that will do it!  Print money (currency) lots and lots of it, purchase derivatives that are worthless and have zero chance of performing and book them on your balance sheet.
Yes I know, taking dead derivatives off of bank balance sheets and replacing them with Yen, Dollars or what have you will “strengthen” the selling banks balance sheet by removing the Albatross but….what about the central bank’s balance sheet?
This cannot work because all they are doing is destroying themselves!

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Gonzalo Lira: Why Isn’t Gold Higher?

SLIDE_GOLD_DEFAULTHint: Because it’s the Credit Default Swap of the Next Financial Crisis

Submitted by Gonzalo Lira

Credit default swaps were the insurance—the hedge—against exactly what happened in 2008: Bonds threatened to default, during the Global Financial Crisis. So the CDS’s insuring those bonds rose in valueuntil suddenly, they didn’t: CDS’s stopped rising in value just when the markets collectively realized that the counter-parties to those CDS contracts might not be able to pay up.

What if the price of gold is drifting not because the markets don’t trust the world’s reserve currencies to continue to devalue, but because the market doesn’t trust gold?

Since everyone with any sense realizes that this is the endgame of the current race to the bottom, gold ought to be rising dramatically, but that is not happening. Gold rose steady and strong from 2000 through September 2011—but since then it’s been drifting jaggedly.
So why would gold—which is an actual, physical commodity—be acting like credit default swaps did right before the 2008 crisis?
For the same reason: Gold buyers don’t trust the counter-parties selling gold. [Read more...]

Nobody Wants to Buy America’s Opium- Credit Default Swaps

imagesIn the latest Keiser Report, Max & Stacy discuss the butch welfare Queens in Virginia, Maryland and DC who rely on the ‘untouchable’ Pentagon budget. They also discuss the US deploying both its FMDs — “financial extortion”, “monetisation” and “devaluation” — to finance its debt and deficit requirements and its troops to 35 African nations. In the second half of the show, Max Keiser talks to Dan Collins of about the petro-yuan, China’s gold and the problem with the fact that nobody in Africa wants to buy America’s opium – credit default swaps. [Read more...]