- Why Preppers Should Be THRILLED That The Stock Market Has Hit An All-Time High (The American Dream, Nov 6, 2013):
I am a prepper and I LOVE the fact that the stock market is at an all-time high. In fact, I hope that it keeps going up for as long as possible. Why? Because it gives me more time to prepare for the inevitable collapse that is coming. As I will discuss extensively below, anyone with half a brain should be able to see that a great financial disaster is coming to this nation. If you still doubt this after reading this article, please go check out The Economic Collapse Blog where I have posted nearly 1000 articles that break this down in excruciating detail. Unfortunately, a lot of preppers out there are being really, really stupid right now. Over the past six months, I have noticed a tremendous amount of apathy among the prepper community. A lot of preppers were doing really well for a while, but now a lot of them have apparently decided that we are no longer in imminent danger of an economic collapse and that instead of preparing it is time to party. This is a critical mistake. We should be thankful that this stock market bubble has given us a few more months to prepare. Sadly, so many people out there are wasting this precious opportunity.
It is almost as if most people have forgotten what happened during the last financial crisis. 2008 may as well be ancient history for most Americans.
None of the underlying problems that plagued the U.S. economy back then have been fixed. Continue reading »
- 25 Fast Facts About The Federal Reserve – Please Share With Everyone You Know (Economic Collapse, Sep 15, 2013):
As we approach the 100 year anniversary of the creation of the Federal Reserve, it is absolutely imperative that we get the American people to understand that the Fed is at the very heart of our economic problems. It is a system of money that was created by the bankers and that operates for the benefit of the bankers. The American people like to think that we have a “democratic system”, but there is nothing “democratic” about the Federal Reserve. Unelected, unaccountable central planners from a private central bank run our financial system and manage our economy. There is a reason why financial markets respond with a yawn when Barack Obama says something about the economy, but they swing wildly whenever Federal Reserve Chairman Ben Bernanke opens his mouth. The Federal Reserve has far more power over the U.S. economy than anyone else does by a huge margin. The Fed is the biggest Ponzi scheme in the history of the world, and if the American people truly understood how it really works, they would be screaming for it to be abolished immediately.
The following are 25 fast facts about the Federal Reserve that everyone should know… Continue reading »
- JPM May Be Parting Ways With Blythe Masters (ZeroHedge, Sep 10, 2013):
It is somewhat ironic that none other than CNBC is reporting the news (which was suggested here months ago in “Will JPMorgan’s “Enron” Be The End Of Blythe Masters?”) that as part of its divestment of its physical commodities unit announced previously, JPMorgan may also seek to cover up any trace of market manipulation in the division recently embroiled in the aluminum cartel scandal (which we reported on in June 2011 and which story recently rose to prominence as a result of follow up reporting by the NYT) by getting rid of none other than Blythe Masters.
To wit: “JPMorgan’s initial round of conversations over the sale of its physical commodities unit has involved at least 50 potential suitors, according to someone familiar with the matter, as the bank attempts to ink a deal by the end of the year. In addition to energy supply contracts and metal-storage facilities, people close to the deal say the transaction could include a significant human asset: JPMorgan’s longtime commodities head, Blythe Masters. In addition to the physical assets it is selling—including the Liverpool, England-based metal-storage business Henry Bath & Son, U.S. power plants, and crude-oil and power supply agreements—any deal to sell JPMorgan’s commodities business could involve Masters, the division’s current leader, as well. Masters, 44, has found her future at JPMorgan in question as regulators crack down on both its power-supply business over alleged manipulations and the whole notion of banks owning commodities assets more generally.”
Ironic, because it was an extended CNBC interview-cum-PR campaign with Blythe Masters in April of 2012, just before the London Whale scandal broke, and one of her very rare media appearances, in which she made the following quite amusing, and factually wrong, in retrospect, statements: Continue reading »
- Billionaire Issues Chilling Warning About Interest Rate Derivatives (Economic Collapse, Aug 5, 2013):
Will rapidly rising interest rates rip through the U.S. financial system like a giant lawnmower blade? Yes, the U.S. economy survived much higher interest rates in the past, but at that time there were not hundreds of trillions of dollars worth of interest rate derivatives hanging over our financial system like a Sword of Damocles. This is something that I have been talking about for quite some time, and now a Mexican billionaire has come forward with a similar warning. Hugo Salinas Price was the founder of the Elektra retail chain down in Mexico, and he is extremely concerned that rising interest rates could burst the derivatives bubble and cause “massive bankruptcies around the globe”. Of course there are a whole lot of people out there that would be quite glad to see the “too big to fail” banks go bankrupt, but the truth is that if they go down our entire economy will go down with them. Our situation is similar to a patient with a very advanced stage of cancer. You can try to kill the cancer with drugs, but you will almost certainly kill the patient at the same time. Well, that is essentially what our relationship with the big banks is like. Our entire economic system is based on credit, and just like we saw back in 2008, if the big banks start failing credit freezes up and suddenly nobody can get any money for anything. When the next great credit crunch comes, every important number in our economy will rapidly start getting much worse.
- The Most Important Number In The Entire U.S. Economy (Economic Collapse, Aug 1, 2013):
There is one vitally important number that everyone needs to be watching right now, and it doesn’t have anything to do with unemployment, inflation or housing. If this number gets too high, it will collapse the entire U.S. financial system. The number that I am talking about is the yield on 10 year U.S. Treasuries.
When that number goes up, long-term interest rates all across the financial system start increasing. When long-term interest rates rise, it becomes more expensive for the federal government to borrow money, it becomes more expensive for state and local governments to borrow money, existing bonds lose value and bond investors lose a lot of money, mortgage rates go up and monthly payments on new mortgages rise, and interest rates throughout the entire economy go up and this causes economic activity to slow down.
On top of everything else, there are more than 440 trillion dollars worth of interest rate derivatives sitting out there, and rapidly rising interest rates could cause that gigantic time bomb to go off and implode our entire financial system. We are living in the midst of the greatest debt bubble in the history of the world, and the only way that the game can continue is for interest rates to stay super low. Unfortunately, the yield on 10 year U.S. Treasuries has started to rise, and many experts are projecting that it is going to continue to rise.
- A Nightmare Scenario (Economic Collapse, July 17, 2013):
Most people have no idea that the U.S. financial system is on the brink of utter disaster. If interest rates continue to rise rapidly, the U.S. economy is going to be facing an economic crisis far greater than the one that erupted back in 2008. At this point, the economic paradigm that the Federal Reserve has constructed only works if interest rates remain super low. If they rise, everything falls apart. Much higher interest rates would mean crippling interest payments on the national debt, much higher borrowing costs for state and local governments, trillions of dollars of losses for bond investors, another devastating real estate crash and the possibility of a multi-trillion dollar derivatives meltdown. Everything depends on interest rates staying low. Unfortunately for the Fed, it only has a certain amount of control over long-term interest rates, and that control appears to be slipping. The yield on 10 year U.S. Treasuries has soared in recent weeks. So have mortgage rates. Fortunately, rates have leveled off for the moment, but if they resume their upward march we could be dealing with a nightmare scenario very, very quickly.
Tags: Bank of America, Barack Obama, Ben Bernanke, Bond Bubble, Bonds, Bubble, Collapse, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Global News, Goldman Sachs, Government, Great Depression, Greatest Depression, JPMorgan, Politics, Quantitative Easing, U.S.
- The 441 TRILLION Dollar Interest Rate Derivatives Time Bomb (Economic Collapse, June 24, 2013):
Do you want to know the primary reason why rapidly rising interest rates could take down the entire global financial system? Most people might think that it would be because the U.S. government would have to pay much more interest on the national debt. And yes, if the average rate of interest on U.S. government debt rose to just 6 percent (and it has actually been much higher in the past), the federal government would be paying out about a trillion dollars a year just in interest on the national debt. But that isn’t it. Nor does the primary reason have to do with the fact that rapidly rising interest rates would impose massive losses on bond investors. At this point, it is being projected that if U.S. bond yields rise by an average of 3 percentage points, it will cause investors to lose a trillion dollars. Yes, that is a 1 with 12 zeroes after it ($1,000,000,000,000). But that is not the number one danger posed by rapidly rising interest rates either. Rather, the number one reason why rapidly rising interest rates could cause the entire global financial system to crash is because there are more than 441 TRILLION dollars worth of interest rate derivatives sitting out there. This number comes directly from the Bank for International Settlements – the central bank of central banks. In other words, more than $441,000,000,000,000 has been bet on the movement of interest rates. Normally these bets do not cause a major problem because rates tend to move very slowly and the system stays balanced. But now rates are starting to skyrocket, and the sophisticated financial models used by derivatives traders do not account for this kind of movement.So what does all of this mean? Continue reading »
And yes, derivatives are designed to do exactly that …
“(Slow) Economic Destruction”
… and the greatest financial/economic collapse in world history is well on its way.
-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
- Derivatives Are Weapons Of Slow Economic Destruction: Study (Huffington Post, June 14, 2013):
We have learned, painfully, of the damage derivatives can do to an economy in a financial crisis. But derivatives are hurting the economy even on its best days, according to a new study.
In the crisis, derivatives exposures brought down giant financial institutions and markets, leading to the worst recession since the Great Depression. But derivatives are also weapons of slower, more insidious destruction: They drain cash away from productive segments of the economy into the financial sector, according to a new study by the progressive think tank Demos.
And who said when Bilderberg Josef Ackerman left Deutsche that things will get very interesting soon enough?
Oh, that was me.
- Deutsche Bank “Is Horribly Undercapitalized… It’s Ridiculous” Says Former Fed President Hoenig (ZeroHedge, June 15, 2013):
Back in May 2012, when we were making fun at the latest iteration of the now fatally discredited European stress tests, we took the first of many jabs at the what may currently be the world’s most systematically important, and undercapitalized, bank in the world:
Finally, if anyone is still confused where the pain is headed next, here is a list from Morgan Stanley of all Euro banks with a Core Tier 1 ratio that is so low, that the banks will soon regret not raising more capital in the period of calm that the ECB’s LTRO bought them.
Also, one bank is missing from the list above: Deutsche Bank. CT1/TA: 1.68%. Oops.
That’s right – Deutsche Bank was so bad that it wasn’t even allowed to appear on a screen of Europe’s most undercapitalized banks – and we helpfully pointed out its true capital ratio of just under 2%, and an implied leverage of 60x!
Fast forward 13 months to a Reuters interview with former Kansas City Fed president and FOMC dissenter and sole voice of reason at the Federal Reserve, and current FDIC Vice Chairman Tom Hoenig, who confirmed that once again Zero Hedge was just a year ahead of the curve.
A top U.S. banking regulator called Deutsche Bank’s capital levels “horrible” and said it is the worst on a list of global banks based on one measurement of leverage ratios. “It’s horrible, I mean they’re horribly undercapitalized,” said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. “They have no margin of error.” Deutsche’s leverage ratio stood at 1.63 percent, according to Hoenig’s numbers, which are based on European IFRS accounting rules as of the end of 2012.
In other words, the slighest systemic shock in Europe and Deustche Bank gets it. And as Deutsche Bank goes, so does Germany, so does Europe, so does the world.
Immediately confirming Hoenig’s (and Zero Hedge’s) observations, was Deutsche’s prompt repeat that “all is well” and that “these numbers” are not like “those numbers.”
“To say that we are undercapitalized is inaccurate because if you look at the Basel framework, we’re now one of the best capitalized banks in the world after our capital raise,” Deutsche Bank’s Chief Financial Officer Stefan Krause told Reuters in an interview, when asked about Hoenig’s comments. “To suggest that leverage puts us in a position to be a risk to the system is incorrect,” Krause said, calling the gauge a “misleading measure” when used on its own.
Of course, DB’s lies are perfectly expected – after all it is a question of fiath. So let’s go back to Hoenig who continues to be one of the few voices of reason among the “very serious people”: Continue reading »
- America’s Bubble Economy Is Going To Become An Economic Black Hole (Economic Collapse, May 22, 2013):
What is going to happen when the greatest economic bubble in the history of the world pops? The mainstream media never talks about that. They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to. And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay. Sadly, that is not the case at all. Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy. You can see this when you step back and take a longer-term view of things. Over the past decade, we have added more than 10 trillion dollars to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows. But this time when a crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.
But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term. Things are good this week and things were good last week, so there is nothing to worry about, right?
- The Big Banks Are Recklessly Gambling With Our Money, And It Will Cause The Global Financial System To Collapse (Economic Collapse, April 2, 2013):
Have you ever wondered how the big banks make such enormous mountains of money? Well, the truth is that much of it is made by gambling recklessly. If they win on their bets, they become fabulously wealthy. If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”. Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts. So if they win, they win big. If they lose, someone else will come in and clean up the mess. This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks. If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street. But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened. In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.
Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?
Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them. In a recent article, Ron Paul explained how the situation played out once the bets started to go bad… Continue reading »
- Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers (Economic Collapse, March 20, 2013):
Why is the global economy in so much trouble? How can so many people be so absolutely certain that the world financial system is going to crash? Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail. In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts. So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts. Overall, there is about 190 trillion dollars of total debt on the planet. But global GDP is only about 70 trillion dollars. And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars. So we have a gigantic problem on our hands. The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives. We are living in the greatest financial bubble in world history, and it isn’t going to take much to topple the entire thing. And when it falls, it is going to be the largest financial disaster in the history of the planet.
The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed. As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point. A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.
YouTube Added: 21.03.2013
Tags: AIG, Bank of England, Banking, Bonds, Collapse, Cyprus, Debt, Derivatives, Derivatives market, ECB, Economy, EU, Europe, Fed, Federal Reserve, Global News, Government, Hillary Clinton, JPMorgan, Lehman Brothers, Max Keiser, MF Global, Obama administration, Politics, Quantitative Easing, Reggie Middleton, Society, U.S.
- Former US Treasury Official – US Financial System To Collapse (King World News, March 16, 2013):
Today a former Assistant Secretary of the US Treasury warned King World News, “This type of situation is extremely dangerous. The world has never seen it before.” Former Assistant of the US Treasury, Dr. Paul Craig Roberts, also told King World News that JP Morgan now threatens the stability of the entire global financial system. And if the Fed loses control and we collapse, “Nothing and no one would be safe anywhere.”
- Monte Paschi says no more derivatives losses (Reuters, Feb 7, 2013):
Italy’s Monte dei Paschi said there were no more derivatives losses beyond the 730 million euros ($988 million) it has disclosed, which have rattled financial markets and become a campaign issue ahead of parliamentary elections.
The derivative trades are at the heart of a fraud probe into former management of the world’s oldest bank, raising doubts about the effectiveness of banking supervisors, including European Central Bank chief Mario Draghi, who was Bank of Italy governor from 2006 to 2011, and the role of politicians, who agreed a state bailout for the lender.
Later on Thursday at an ECB news conference, Draghi is likely to be asked how much he knew of the trades.
- $600 Billion In Trades In Four Years: How Apple Puts Even The Most Aggressive Hedge Funds To Shame (ZeroHedge, Jan 27, 2013):
Everyone knows that for the better part of the past year Apple, Inc. (“AAPL”, or “The Company”) was the world’s biggest company by market cap, with Exxon finally regaining that title on Friday, following AAPL’s latest price drop in the aftermath of its disappointing earnings. Most know that AAPL aggressively uses all legal tax loopholes to pay as little State and Federal tax as possible, despite being one of the world’s most profitable companies.Many also know, courtesy of our exclusive from September, that Apple also is the holding company for Braeburn Capital: a firm which with a few exceptions (Bridgewater; JPM’s CIO prop trading desk) also happens to be one of the world’s largest hedge funds, whose function is to manage Apple’s massive cash hoard, with virtually zero requirements, and whose obligation is to make sure that AAPL’s cash gets laundered legally and efficiently in a way that complies with prerogative #1: avoid paying taxes.
What few if any know, is that as part of its cash management obligations, Braeburn, and AAPL by extension, has conducted a mindboggling $600 billion worth of gross notional trades in just the past four years, consisting of buying and selling assorted unknown securities, or some $250 billion in 2012 alone: a grand total which represents some $1 billion per working day on average, and which puts the net turnover of some 99% of all hedge funds to shame!
Finally, what nobody knows, except for the recipients of course, is just how much in trade commissions AAPL has paid over the past four years on these hundreds of billions in trades to the brokering banks, many (or maybe all) of which may have found this commission revenue facilitating AAPL having a “Buy” recommendation: a rating shared by 52, or 83% of the raters, despite the company’s wiping out of one year in capital gains in a few short months.
The Perfectly Legal Tax Evasion Scheme
- Geithner’s Legacy: The “0.2%” Hold $7.8 Trillion, Or 69% Of All Assets; And $212 Trillion Of Derivative Liabilities (ZeroHedge, Jan 26, 2013):
As of this morning Tim Geithner is no longer Treasury Secretary. And while Tim Geithner’s reign of clueless pandering to the banks has left the US will absolutely disastrous consequences, an outcome that will become clear in time, the most ruinous of his policies is making the banks which were too big to fail to begin with, so big they can neither fail nor be sued, as the recent fiasco surrounding the exit of Assistant attorney general Lanny Breuer showed. Just how big are these banks? Dallas Fed’s Disk Fisher explains.
It is important to have an accurate view of the landscape of banking today in order to understand the impact of this proposal.
As of third quarter 2012, there were approximately 5,600 commercial banking organizations in the U.S. The bulk of these—roughly 5,500—were community banks with assets of less than $10 billion. These community-focused organizations accounted for 98.6 percent of all banks but only 12 percent of total industry assets. Another group numbering nearly 70 banking organizations—with assets of between $10 billion and $250 billion—accounted for 1.2 percent of banks, while controlling 19 percent of industry assets. The remaining group, the megabanks—with assets of between $250 billion and $2.3 trillion—was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets.
What does this mean numerically? Continue reading »
Tags: Banking, Barack Obama, Ben Bernanke, Derivatives, Derivatives market, Fed, Federal Reserve, Global News, Government, Lanny Breuer, Obama administration, Politics, Society, Timothy Geithner, U.S.
You can’t make this stuff up!
- Italian Scandal Widens As Italy’s Third Largest Bank Set To Get Third Bailout In 3 Years; Draghi, Monti Implicated (ZeroHedge, Jan 26, 2013):
While little has been said in the mainstream western press about the ongoing fiasco surrounding Siena’s Banca Monte dei Pasci, Italy’s third largest bank and the world’s oldest which may get its third bailout in three years - or even be nationalized – as soon as today, for fears that it may break the thin veneer of “recovery” in the European financial system, the situation on the ground in Italy is getting more serious by the minute, and will have implications on both next month’s general election, on Mario Monti, on Silvio Berlusconi, on frontrunner for the Prime Minister post Pier Luigi Bersani, and reach as far up as the head of the ECB – Mario Draghi.Several hours ago, on Saturday morning, the four-member board of the Bank of Italy – this time without its prior president Mario Draghi – met to consider the position of scandal-hit bank Monte dei Paschi di Siena and decide whether to authorize its request for 3.9 billion euros ($5.3 billion) of state loans.
Tags: Bailout, Banking, Derivatives, Derivatives market, Deutsche Bank, ECB, Economy, EU, Europe, Global News, Goldman Sachs, Government, Italy, Mario Draghi, Mario Monti, Politics, scandal, Silvio Berlusconi
- 65 Percent Of Americans Believe That 2013 Will Be A Year Of Economic Difficulty (Economic Collapse, Jan 3, 2013):
Do you believe that economic trouble is coming in 2013? If so, you have a lot of company. According to a brand new Gallup poll that was just released, 65 percent of Americans believe that 2013 will be a year of “economic difficulty” while only 33 percent of Americans believe that 2013 will be a year of “economic prosperity”. Gallup has been asking this question for a lot of years, and the percentage of Americans that are anticipating economic difficulty in the year ahead has not been this high since the early 1980s. And without a doubt, there are a whole lot of reasons to be deeply concerned about the economy as we head into the new year. But it isn’t just 2013 that Americans are pessimistic about. According to the new Gallup poll, 50 percent of all Americans believe that the best days of America are behind us, and only 47 percent of all Americans believe that the best days of America are ahead of us. Those are very sobering numbers. Half the country believes that it is only downhill from here for the United States. Unfortunately, they are exactly right. Things are rapidly going to get worse for our economy and for our nation as a whole. We are going to start reaping the consequences of decades of very foolish decisions, and the pain is going to be immense.
Gallup asked some other very interesting questions as well. The following are some of the other results from the poll…
-68 percent of Americans believe that 2013 will be a year of rising crime rates.
-57 percent of Americans believe that 2013 will be a year in which American power will decline in the world.
-82 percent of Americans believe that 2013 will be a year in which taxes in the United States will rise.
Tags: Barack Obama, Bonds, Bubble, Collapse, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Global News, Government, Military, Obama administration, Politics, Ron Paul, Society, U.S.