Mar 11

Crushed-Car-By-UCFFool

We Are In FAR Worse Shape Than We Were Just Prior To The Last Great Financial Crisis (Economic Collapse, March 10, 2014):

None of the problems that caused the last financial crisis have been fixed.  In fact, they have all gotten worse.  The total amount of debt in the world has grown by more than 40 percent since 2007, the too big to fail banks have gotten 37 percent larger, and the colossal derivatives bubble has spiraled so far out of control that the only thing left to do is to watch the spectacular crash landing that is inevitably coming.  Unfortunately, most people do not know the information that I am about to share with you in this article.  Most people just assume that the politicians and the central banks have fixed the issues that caused the last great financial crisis.  But the truth is that we are in far worse shape than we were back then.  When this financial bubble finally bursts, the devastation that we will witness is likely to be absolutely catastrophic. Continue reading »

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Feb 02

Market Cornered: JPMorgan Owns Over 60% Notional Of All Gold Derivatives (ZeroHedge, Feb 1, 2014):

Perhaps the only question we have after seeing the attached table, which shows that as of Q3, 2013 JPMorgan owned $65.4 billion, or just over 60% of the total notional ($108.2 billion) of all gold derivatives in the US, is whether the CFTC will pull the “our budget was too small” excuse to justify why it allowed Jamie Dimon to ignore any and all position limits and corner the gold market?

JPM Gold Derivatives

And purely as a reference point, the chart below compares the total value of gold held in JPM’s vault (registered and eligible) as of Friday’s closing price with its reported gold derivative notional holdings.

JPM Gold Physical vs Derivatives

Finally, for the purists out there, we realize that gross is not net… until there is a breach in the derivative counterparty collateral chain, and gross becomes net.

Source: OCC, Comex

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Jan 28

MY-BANK-Russia-1

Russian Bank Halts All Cash Withdrawals (ZeroHedge, Jan 28, 2014):

It would appear the fears of a global bank run are spreading. From HSBC’s limiting large cash withdrawals (for your own good) to Lloyds ATMs going down, Bloomberg reports that ‘My Bank’ – one of Russia’s top 200 lenders by assets – has introduced a complete ban on cash withdrawals until next week. While the Ruble has been losing ground rapidly recently, we suspect few have been expecting bank runs in Russia. Russia sovereign CDS had recently weakned to 4-month wides at 192bps.

Via Bloomberg, Continue reading »

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Jan 27

China Halts Bank Cash Transfers - Forbes
The Forbes article has been removed. (Google screenshot)

No, There Is No Stoppage Of Cash Transfers In China (ZeroHedge, Jan 26, 2014):

Earlier today, Forbes managed to spook readers with a bombastic report that China’s commercial banks had been instructed by the PBOC to halt cash transfers – something which would have dire implications on China’s banking system ahead of its new year holiday, and send the banking system into a tailspin just as China is desperate to avoid all turbulence ahead of a potential shadow banking default.

Leaving aside the fact that one should typically rely on official PBOC advisories, posted quite clearly on its website (where one finds no mention of this notice), one could simply keep track of interbank liquidity indicators such as repo and SHIBOR, both of which dropped, indicating that liquidity actually improved.

Anyway, here is what really happened, as reported by China Compass. “Forbes columnist Gordon Chang claimed in a much-quoted item today that the Peoples Bank of China had instructed commercial banks to halt cash transfers. Chang’s column, entitled “China Halts Bank Transfers,” specifically refers to Citibank’s Chinese branches. The report is entirely misleading.” Our advice – focus on the real “weakest links” in China’s banking system, of which there are many and are backed by facts, not the least of which is the potential upcoming shadow banking default. Ignore groundless rumors and speculation. Continue reading »

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Jan 25

Bank Of America Caught Frontrunning Clients (ZeroHedge, Jan 25, 2014):

Every time a TBTF bank releases its 10-Q, we head straight for the section, usually well over 100 pages in, that discloses the bank’s total profitable trading days.

This is what the most recent Bank of America 10-Q said on this topic:

The histogram below is a graphic depiction of trading volatility and illustrates the daily level of trading-related revenue for the three months ended September 30, 2013 compared to the three months ended June 30, 2013 and March 31, 2013. During the three months ended September 30, 2013, positive trading-related revenue was recorded for 97 percent, or 62 trading days, of which 69 percent (44 days) were daily trading gains of over $25 million and the largest loss was $21 million. These results can be compared to the three months ended June 30, 2013, where positive trading-related revenue was recorded for 89 percent, or 57 trading days, of which 67 percent (43 days) were daily trading gains of over $25 million and the largest loss was $54 million. During the three months ended March 31, 2013, positive trading-related revenue was recorded for 100 percent, or 60 trading days, of which 97 percent (58 days) were daily trading gains over $25 million. Continue reading »

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Jan 22

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

The Hows and Whys of Gold Price Manipulation (Paul Craig Roberts, Jan 17, 2014):

Paul Craig Roberts and Dave Kranzler.

The deregulation of the financial system during the Clinton and George W. Bush regimes had the predictable result: financial concentration and reckless behavior. A handful of banks grew so large that financial authorities declared them “too big to fail.” Removed from market discipline, the banks became wards of the government requiring massive creation of new money by the Federal Reserve in order to support through the policy of Quantitative Easing the prices of financial instruments on the banks’ balance sheets and in order to finance at low interest rates trillion dollar federal budget deficits associated with the long recession caused by the financial crisis.

Continue reading »

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Jan 09

European-Union

If You Are Waiting For An “Economic Collapse”, Just Look At What Is Happening To Europe (Economic Collapse, Jan 8, 2014):

If you are anxiously awaiting the arrival of the “economic collapse”, just open up your eyes and look at what is happening in Europe.  The entire continent is a giant economic mess right now.  Unemployment and poverty levels are setting record highs, car sales are setting record lows, and there is an ocean of bad loans and red ink everywhere you look.  Over the past several years, most of the attention has been on the economic struggles of Greece, Spain and Portugal and without a doubt things continue to get even worse in those nations.  But in 2014 and 2015, Italy and France will start to take center stage.  France has the 5th largest economy on the planet, and Italy has the 9th largest economy on the planet, and at this point both of those economies are rapidly falling to pieces.  Expect both France and Italy to make major headlines throughout the rest of 2014.  I have always maintained that the next major wave of the economic collapse would begin in Europe, and that is exactly what is happening.

The following are just a few of the statistics that show that an “economic collapse” is happening in Europe right now:

Continue reading »

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Dec 08

The Bitcoin Derivatives Market Has Arrived (ZeroHedge, Dec 8, 2013)

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Nov 10

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 »

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Sep 16

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 »

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Sep 11

Flashback:

Will JPMorgan’s ‘Enron’ Be The End Of 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


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 »

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Aug 06

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.

Continue reading »

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Aug 01

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.

Continue reading »

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Jul 17

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.

In particular, the yield on 10 year U.S. Treasuries is a very important number to watch.  So much else in our financial system depends on that number as CNN recently explained… Continue reading »

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Jun 26

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 »

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Jun 16

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.

Related info:

Former Fed President Thomas Hoenig: Deutsche Bank ‘Is Horribly Undercapitalized … It’s Ridiculous’

America’s Giant Bubble Economy Is Going To Become An Economic Black Hole:

$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.

Coming Derivatives Panic Will Destroy Global Financial Markets

At $72.8 TRILLION Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)

Flashback:

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


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.

Continue reading »

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Jun 15

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 »

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May 22

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?

Continue reading »

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Apr 03

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 »

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Mar 22

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.

Continue reading »

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