Infinite Unknown

- Buffett Joins Team Whitney; Sees Muni Pain Ahead As He Unwinds Half Of His Bullish CDS Exposure Prematurely (ZeroHedge, Aug 20, 2012):

Just under two years ago, Meredith Whitney made a much maligned, if very vocal call, that hundreds of US municipalities will file for bankruptcy. She also put a timestamp on the call, which in retrospect was her downfall, because while she will ultimately proven 100% correct about the actual event, the fact that she was off temporally (making it seem like a trading call instead of a fundamental observation) merely had a dilutive impact of the statement. As a result she was initially taken seriously, causing a big hit to the muni market, only to be largely ignored subsequently even following several prominent California bankruptcies. This is all about to change as none other than Warren Buffett has slashed half of his entire municipal exposure, in what the WSJ has dubbed a “red flag” for the municipal-bond market. Perhaps another way of calling it is the second coming of Meredith Whitney’s muni call, this time however from an institutionalized permabull. Continue reading »

Tags: Bonds, cds, Debt, Derivatives, Derivatives market, Economy, Global News, Meredith Whitney, Muni Bonds, U.S., Warren Buffett

- Aaaand It’s Gone: This Is Why You Always Demand Physical (ZeroHedge, Aug 14, 2012):

We have said it over and over, we’ll say it again. For all those who for one reason or another would like to boycott the broken markets, yet trade gold in paper form, please understand that all the invested capital is at risk of total loss and can and will be lost, commingled and rehypothecated, not necessarily in that order, with little to zero recourse and the residual claim on liquidating assets pushed to the very end of the queue. Because if Lehman, MF Global, Peregrine, and countless other examples were not enough, here comes Amber Gold: a gold-based investment ponzi scheme out of Poland, in which it is likely needless to say that the gullible investors never had actual possession of the gold. And when they tried, it was gone. All gone.

From the WSJ:

This week’s collapse of a gold-derivatives business that Polish regulators say was a Ponzi scheme has hit tens of thousands of customers, shaken confidence in the effectiveness of the nation’s financial regulation, and is roiling national politics in the European Union’s largest emerging economy.

On Monday, the company, Amber Gold, Sp. z o.o., which sold a gold-indexed investment of its own design and offered higher interest rates than banks, said it was halting operations. It pledged eventually to repay about $24 million it said it owed to roughly 50,000 clients in Poland.

Continue reading »

Tags: Amber Gold, Derivatives, Derivatives market, Economy, Global News, Gold, Poland, Ponzi schemes

YouTube Added: 01.08.2012

Tags: Adolf Hitler, Al-Qaeda, Al-Qaida, Alex Jones, Bank of England, Banking, Barack Obama, Cancer, cds, Civil rights, Constitution, Derivatives, Derivatives market, DHS, Dictatorship, Drones, Economy, EU, Europe, Facebook, Fascism, FDA, Fed, Federal Reserve, Fertilizer, Genetically Modified Organisms, Global News, GMO, Goldman Sachs, Government, High Frequency Trading, Homeland Security, HSBC, India, Israel, JPMorgan, Law, Libor, Martial Law, Max Keiser, Mitt Romney, Monsanto, New World Order, Obama administration, Police, Police State, Politics, Quantitative Easing, Rainwater, Roundup, Roundup Ready, Society, Suicide, Terrorism, Terrorists, U.K., U.S., Wall Street, Water

- The Financial Crisis Was Foreseeable … Thousands of Years Ago (ZeroHedge, July 20, 2012):

We’ve known for 4,000 years that debts need to be periodically written down, or the entire economy will collapse. And see this.

We’ve known for 2,500 years that prolonged war bankrupts an economy.

Continue reading »

Tags: cds, Central Bank, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Financial Crisis, Global News, Government, Great Depression, Military, Politics, Quantitative Easing, War

- Criminal Inquiry Shifts To JPMorgan’s Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond? (ZeroHedge, July 16, 2012):

On the last day of May, when we first learned via Bloomberg that there was even the scantest likelihood that JPM may have been massaging its CDS marks within the (London-based of course) CIO organization – the backbone of hundreds of billions in notional exposure, and thus a huge counterfeited benefit to trader bonuses and corporate earnings – we wrote, “The Second Act Of The JPM CIO Fiasco Has Arrived – Mismarking Hundreds Of Billions In Credit Default Swaps“ in which we explained precisely how this activity would and did take place, precisely why other traders caught doing the same are on the verge of being thrown in jail, precisely why everyone else does it, and precisely why the biggest CDS self-reporting and client/banker owned-organization (this is where images of Libor should appear), MarkIt, may well be implicated in everything – very much in the same way that the BBA is the heart of Lie-borgate. Because unlike all other allegations of impropriety, most of which rely on Level 2 and Level 3 assets whose valuations are in the eye of the oh so very sophisticated beholder (in this case JPM) who has complex DCFs and speaks confidently when explaining marks to naive, stupid outsiders (in other words baffles with bullshit), when it comes to one of the last places where Mark to Market is still applicable and used: the OTC CDS market, and where daily P&L records are kept, it will take any regulator, enforcer, or criminal investigator precisely 1 minute to find out if there was fraud, or gambling, going on here.

Then lo and behold, none other than JPM admitted minutes before releasing its Q2 earnings that it had been doing precisely what Zero Hedge accused it of doing nearly 2 months earlier (but of course Jamie Dimon had no idea, no idea, what the media accused his firm of doing), and in doing so exposed itself to just as much litigation risk as Barclays in the Lie-borgate scandal, while further throwing a monkey wrench into the CDS market, where all the other banks (who had been doing just the same), will no longer be able to pick off the bid/ask spread in the process crushing CDS trader bonuses, and resulting in billions in foregone imaginary profits.

Most importantly, it opened up the firm to a criminal investigation. Which as Reuters reports, is precisely what has now happened.

From Reuters’ Matt Goldstein and Jennifer Ablan: Continue reading »

Tags: Banking, Bob Diamond, cds, Derivatives, Derivatives market, Economy, Fraud, Global News, Jamie Dimon, JPMorgan, U.S.

Flashback:

- Blythe Masters: JPMorgan Employee Who Invented Credit Default Swaps is One of the Key Architects of Carbon Derivatives, Which Would Be at the Very CENTER of Cap and Trade

As readers enjoy JPM squirm his way through the JPM conference call (webcast live) explaining how it is that he not only was fooled by the CIO traders to the tune of billions, but more importantly to mismark hundreds of billions in CDS over the years, here is some delightful irony: “The J.P.Morgan Guide To Credit Derivatives” By Blythe Masters. Because it is truly ironic that the firm which created CDS will be the one responsible for destroying them.

Investing in Credit Derivatives – Blythe Master

Tags: Banking, Blythe Masters, cds, Derivatives, Derivatives market, Economy, Global News, JPMorgan

“The Entire Global Economic System Is In Collapse.”

YouTube Added: 27.06.2012

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
- CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

Tags: Afghanistan, Al-Qaeda, Al-Qaida, Alex Jones, Bailout, Banking, Barack Obama, Bilderberg, Bilderberg 2012, Bonds, Collapse, Constitution, Crime, Debt, Derivatives, Derivatives market, Dictatorship, Dollar, ECB, Economy, EU, Euro, Europe, Fascism, Fed, Federal Reserve, Gerald Celente, Global News, Government, Greece, Indefinite Detention, Iraq, Italy, Law, Libya, Martial Law, Military, NATO, NDAA, New World Order, Obama administration, Police, Police State, Politics, Society, Spain, Syria, Terrorism, Terrorists, TSA, U.S., WWW III

- The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See (Economic Collapse, June 7, 2012):

Why is the economy going to collapse?  Have you ever been asked that question?  If so, what did you say?  Sometimes it is difficult to communicate dozens of complicated economic and financial concepts in a package that the average person on the street can easily digest.  It can be very frustrating to know that something is true but not be able to explain it clearly to someone else.  Hopefully many of you out there will find the list below useful.  It is a list of 70 numbers that show why we are headed for a national economic nightmare.  So why does the title of the article single out Barack Obama?  Well, it is because right now he is the biggest cheerleader for the economy.  He is attempting to convince all of us that everything is just fine and that the economy is heading in a positive direction.  Well, the truth is that everything is not fine and things are about to get a whole lot worse.  Certainly others should share in the blame as well.  Congress has been steering the economy in the wrong direction for decades, the “too big to fail” banks have turned Wall Street into a pyramid of risk, leverage and debt, and the Federal Reserve has more power over the financial system than anyone else does.  Our economy has been in decline for quite a while now, and soon we are going to smash directly into an economic brick wall.  Unfortunately, a lot of Americans are in denial about this.  A lot of people out there doubt that an economic collapse is coming.  Well, if you know someone that believes that the U.S. economy is going to be “just fine”, just show them the list below.

The following are 70 facts that Barack Obama does not want you to see…. Continue reading »

Tags: Banking, Barack Obama, Bonds, cds, Collapse, Debt, Derivatives, Derivatives market, Dollar, Economy, Fed, Federal Reserve, Global News, Government, Obama administration, Politics, Society, U.S., White House

- When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook (Economic Collapse, May 29, 2012):

Warren Buffett once said that derivatives are “financial weapons of mass destruction”, and that statement is more true today than it ever has been before.  Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad.  Well, it turns out that JP Morgan did not tell us the whole truth.  As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars.  But no matter how bad things get for JP Morgan, it will not be allowed to fail.  JP Morgan is the largest bank in the United States, so it is essentially the “granddaddy” of the too big to fail banks.  If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it.  Because of this “security blanket”, banks such as JP Morgan feel free to take outrageous risks.  Today, JP Morgan has more exposure to derivatives than anyone else in the world.  If they win, they win big.  If they lose, U.S. taxpayers will be on the hook.  Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis.  So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill. Continue reading »

Tags: Banking, cds, Derivatives, Derivatives market, Economy, Government, JPMorgan, Taxpayers, U.S.

- Spanish CDS Storms Above 600bps (ZeroHedge, June 11, 2012):

Spanish 5Y CDS broke back above 600bps (just shy of their record 603bps level) and 35bps wider of their intrday low spread from 5 hours ago. Spanish 10Y yields are over 50bps wider/higher than their intraday lows just after the open in Europe. Italy also just broke 550bps. EURUSD is almost unch now.

Spain 5Y CDS > 600bps

Italy 5Y CDS > 550bps

Tags: Derivatives, Derivatives market, Economy, EU, Europe, Global News, Government, Italy, Politics, Spain