2016 has begun with a bang and much of the volatility is due to global derivative exposure.
With that in mind, what better time than now for an exclusive interview with bond trading and derivative expert, Rob Kirby:
Central Banks have LOST CONTROL.
The coming global financial crash will be greater than anything ever before seen in history.
The time for REAL INSURANCE has never before been this great!
The US probe investigating Deutsche Bank has reportedly now widened to include alleged money laundering “mirror trades” in Deutsche’s Moscow unit.
Translation: Things just ESCALATED MASSIVELY for Germany’s largest bank…
Even a small rise in interest rates could cause all kinds of problems with the trillions and trillions of interest rate derivatives…if all those derivatives start blowing up, the Fed would have to print trillions and trillions more dollars to save the banks.
And all those trillions and trillions of dollars would sink the dollar.
A real crisis is developing far faster than what I envisioned that is impacting the 75 Trillion Shadow Banking sector which is on the verge of implosion.
Credit markets are almost closed, I am being told! I REPEAT again the CREDIT markets are almost closed!
The following is chilling to say the least:
We are going to see a negative gradual financial crescendo into September and fear is going to strike the entire financial world far more then than it has now.
All of this crescendo leads to a blow off of the top of the mountain of the most magnificent volcano know to man obliterates the surrounding landscape and peoples.
I am speaking of the red hot magma of the paper bond and derivatives market and multitude of naked no substance bets that the entire financial world rests upon and how fragile it is. It is going to fail in about 60 minutes…
“There is no such thing as a derivative that does not have an implied or defined interest rate characteristics. This is the chain that connects them all. That makes this problem larger than one quadrillion dollars…
Here is the concept you must understand:
Notional value of a derivative becomes real value of the derivative in the event of derivative bankruptcy.
This unwelcome change in the interest rates market, the bond market, is truly the GOD OF DEAT for the world’s financial system.
When the smoke clears, gold will be the only true measure of value (a definition of money) with gold’s only mechanism for price discovery being the now growing and transparent physical market, the paper market will be in tatters as will be the paper exchanges and paper public companies that own these exchanges.”
Derivatives, demographics, and the lack of redundancy and concentration of deposits (liquidity) guarantee that the whole complex will burst with a POP heard around the world…
Well guess what? The CDO/credit default structure is re-born, only this time in the form of “Bespoke Tranche Opportunities:”
Goldman Sachs Group Inc. is joining other banks in peddling something they’re referring to as a “bespoke tranche opportunity.” That’s essentially a CDO backed by single-name credit-default swaps, customized based on investors’ wishes. The pools of derivatives are cut into varying slices of risk that are sold to investors such as hedge funds.
Rather than a securitized trust filled up with junk mortgages and junk corporate bonds, this ugly beast has greasy hair on it. It’s a securitized trust of derivatives in the form of credit default swaps, ostensibly with psuedo high grade and junk corporate debt issues used as the underlying reference securities. And of course this package will be wrapped up with a credit default swap on the entire cesspool of derivatives.
When this blows, the financial mushroom cloud will be a sight to behold.
It is probably very likely that Robert Oppenheimer and Richard Feynman, were they alive today- would be recruited into finance. Obviously, not to participate in a war effort – though certainly many of the products of modern finance with their extreme leverage and opacity are indeed what Warren Buffet characterized as “financial weapons of mass destruction”.
Of course there are currency wars, which in the end are simply private conflicts fought between (quasi-governmental, but ultimately private) central banking cartels that simply use the government or law as a leverage point – with massive, practically all-encompassing collarateral damage.
At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.
What it appears has been going on now since at least October is the United States government has been purchasing hundreds of millions of barrels of oil and storing them.
The maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, so it would take over 160 days to use the entire inventory. 160 days.
That might be just the amount to time required to operate efficiently during the world’s greatest economic collapse EVER and during its aftermath- while the rest of the world recovers from the depths of despair and chaos, death and destruction, when after 3 days all their food is gone from their store shelves and there is NO TRADE since all currencies have failed and it takes months for world leaders to convene and agree on a one world economic system going forward.
Silver is below $18 and anything below that is my announced buy target but as we go into February, I am changing my guidance. I now recommend buy with total abandon, not waiting, on all precious metal, particularly silver, even if price goes to $20 or higher as time is limited before the great, planned crash.
Get physical while you can.
The fear in the E.U. is spreading, and spreading fast.
From a widespread economic slow-down, brought on by ill-advised sanctions against Russia, to full-on banks in Greece, to saber thrusts of overnight currency revaluations….
Folks are starting to wonder if they will be the next victim!
The fall-out from the Swiss move will continue to reverberate.
The ripples will grow louder, larger, and more complex.
The question is, what derivative markets were roiled, and what payouts will be triggered, either directly or indirectly, from it?
The dominoes have been set in motion. They are falling!
Judging from the volatility in the USA index today, I strongly believe that we had a derivative meltdown of some sort.
The total US dollar short position by major players is $9 TRILLION according to the IMF.
The US dollar has gone from 80 up to 91.5 for a 14.3% loss. Coupled with this, the players then bought oil plus other commodities and that as well as seen a huge fall.
There is also a huge problem with a potential Greece exit.
All of these combined could add up to a trillion dollar loss to the major USA banking system!
Derivatives expert Rob Kirby joins the SGTReport’s Rory Hall for the last installment of a 3 part interview that does not disappoint.
Kirby discusses how we arrived at this point and digs into what the banksters have up their sleeves for 2015 and beyond.
Will the treasuries blow up, will China, Russia and the other BRICS take break away completely from the Anglo American banking cartel?
What role will gold and silver play in the upcoming system?
Rob Kirby breaks down the next step in the global financial collapse in the MUST LISTEN interview below:
The US Government has suddenly become aware of the derivatives mass financial destruction risk.
In the recent omnibus finance bill a clause was hurriedly inserted transferring derivative liabilities to the Government in the event of a bank failure. What is alarming is not that this reality has been accepted by the politicians, but the hurry with which it was enacted.
Instead of a normal consultative procedure allowing the legislators to draft the appropriate clause, the wording was lifted at short notice from a submission by Citibank, which has some $61 trillion-worth of derivatives on its own books, with virtually no alterations. Either the insertion was correcting an oversight at the very last minute or, alternatively, it has suddenly become an urgent matter for the too-big-to-fail banks.
The coincidence of current market volatility and this hurried legislation cannot be lightly dismissed and suggests it is the latter.
We can’t speak about the manipulation of the gold price today without understanding the derivatives market.
These products have never been tested in the real world and especially in adverse conditions as a major crash.
I have concluded that the next financial crisis will have derivatives at its core.
The 2008 crisis confirmed it to some extent. The next crisis will be much worse and it will also have derivatives at its core.
In the gold market derivatives are presently dictating to the physical market what the price should be whereas by definition, as derivatives, they should be derived from prices set in the physical market.
When is the U.S. banking system going to crash?
I can sum it up in three words:
Watch the derivatives.
Fixed Income Global Structured Covered Obligation. Say that three times fast.
According to yesterday’s Wall Street Journal, the bailed out financial criminals at Goldman Sachs are set to launch the latest and greatest toxic derivative product directly into the portfolios of willing muppets the world over.
It all starts this September, so public pension funds may as well just start taking out stacks of hundreds and torching them at Burning Man while they still have a chance.
Yes, it’s called the “Fixed Income Global Structured Covered Obligation,” and no, you will not have a clue what’s in it.
No seriously, you won’t have a clue.
In this hour long in-depth interview, the Hat Trick Letter’s Jim Willie discusses the origins of over the counter (OTC) derivatives and how these OTC derivatives are used as a phony foundation (bad collateral) for banks to invest/speculate/loan with the rest of their businesses. Jim traces many of these large, opaque zero sum game derivatives casino type bets/games back to the early 1990s, and explains how they are at the heart of the fraud at many large banks in the US and in Europe.
Willie breaks down credit default swaps and interest rate swaps, and explains why based on his and Rob Kirby’s research that the US can never fully leave ZIRP without a systemic collapse WORSE than 2008.
Shockingly, Willie also explains how the bank balance sheets problems and derivatives crisis are connected to the string of recent murders of middle managers at banks!
Jim Willie’s full MUST LISTEN interview on the impending collapse of the derivatives casino is below:
The International Swaps and Derivative Association (ISDA) published their position on the changing of the “SILVER-FIX” with the new “LONDON SILVER PRICE” and the ramifications are earth shattering for silver derivative holders:
WHAT WAS ANNOUNCED WAS A SHOCKING “GET OUT OF JAIL FREE” CARD FOR THE SILVER DERIVATIVE SHORTS AND GUARANTEED TO THROW THE SILVER DERIVATIVE MARKET INTO CHAOS as none of the silver derivative contracts are legally binding after the London Fix ends August 14th!!
GET OUT OF YOUR BOND FUNDS NOW!
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.