|I must say having posted hundreds of times on this Blog since it's beginning 19 years ago ....it has been very difficult to connect the daisy chains of failure to their source and beyond ... |
It is a cataclysm of effect .
Well .... here it is ....
Derivatives.....the ticking financial time bomb!
written by HoHo the bumbling idiot. , January 21, 2017
A LETTER TO THE EDITOR ….
HoHo ( the bumbling idiot ) in the house...
So here we are 89 years after the kick off of Black Tuesday October 1929.
Three years later the stock market lost a cumulative 90%. And the Gates of the Depression opened up for business.
Today we are in a parallel universe, the global debt build up, record margin and market manipulations unimaginable 89 years ago. Derivatives or gambling bets are approximately hovering at 287 $Trillion Dollars in the US by the 6 largest banks.
These banks use their balance sheets which include all the depositors cash which pays them 0% interest for the privilege of having a seat at the largest Poker table in the world. However the depositors do not reap any of the wins and only are exposed to absolute loss if the banks lose. Yes, you heard me right....there really is no FDIC at these 6 large US banks. You say to your self, how could that be?!...there are those official looking FDIC plaques proudly displayed when I visit my local Citibank?
Well children, the fact of the matter is: "there is no Santa Claus"
Let me explain...but first turn off Dancin’ with Stars, Monday night football and other opiate mind numbing diversions, please... The Dodd Frank Laws as of 2010 No longer allow for Bailouts(by the taxpayer) via the US Treasury Dept. of failing banks that are gambling in multi-trillion derivative bets that leverage their balance sheets on the order of 40-50 to 1.
What the law does provide for however is a benign sounding term namely "Bail Ins."
Well let me explain what a Bail In is and how it will impact those FDIC protected depositors at those very large 6 systemically important banks. A bail in is simply this: CitiBank has approx. 59 Trilllion$ of derivative bets against 2.2 Trillion dollars of value on their balance sheet. (much of which is the depositor cash base earning .01%)
Let's say, for example, they have taken bets that are highly leveraged say on certain banks in Europe will not fail.....but then out of the blue on a beautiful late Friday afternoon Deutsche Bank's doors close due to systemic failure.
Well someone is going to lose and someone is going to win that bet.
And remember there are thousands of counter bets against these exponential bets. But rather than get too complicated, lets just cut to the chase, CitiBank say loses $1.5 trillion on this European bank failure bet and creates an insolvency problem for themselves.....
Well this time the Treasury will not bail out the bank, due to the law, remember Dodd Frank, and please pay attention, not Rick Perry, our new energy secretary, dancing with Beyonce on Dancing with the Stars.
Next step. The Bank will have to Bail itself In.
According to the GSIFI rules and regulations put into affect December 2012 by the FDIC, the bank is now permitted to write off all it's debts down to 0$ ie. senior corp bonds issued and all it's unsecured creditors.
BTW the largest class of unsecured creditors is .....yes...depositors.
Imagine that, you thought that when you deposit your cash into the bank it is FDIC insured up to $250K. It might as well be $1 million dollars FDIC this dollar amount is now meaningless. By the way the GSIFI rules also state that if a bail in is executed by your illustrious bank(that may even sponsor golf tournaments at pebble beach) they must exchange your confiscated deposit with a newly issued stock certificate in the new zombie bank.
Now go try to sell that or as they say on Wall Street hit the bid! Wow, can you imagine the SHTF moment when one of these casino banks fails?!!! I was just reminiscing when Bernie Sanders was making all those crazy comments regarding banks during his campaign. Remember his warnings regarding these Casino Banks and how they need to be regulated and the Glass Steagal laws that need to be reinstated & reinforced. This law basically would re-separate the traditional banks from the investment bank gambling houses. (kind of like removing a vampire from it's victim)
This is a sick parasite system around the world where an estimated one Quadrillion dollars (that's one thousand Trillion dollars) amount of derivatives are on the books of very large banks like Deutsche Bank, HSBC, BofA, Citi, Credit Suisse and more!!! While the world watches Dancing with the Stars, Sports in the Gladiator Colosseum and those mean dispirited ISIS Terrorists......
Big Trouble is baking uncontrollably in our esteemed Banking Institutions. Why do our politicians continue to talk about terrorists and other diversions when they know the Biggest problem are these derivatives.
Answer- because they are held hostage and they have allowed themselves to be duped into such a precarious and vulnerable position by these investment banks around the world. Think about it why did the ECB bail out Greece multiple times. And are now terrified that Britain will finally exit the EU, and France, and Italy and the Netherlands and later Germany??? The answer is the Derivative bets and their destructive outcome.
These Weapons of Mass Financial Destruction are about to be unleashed and daisy chain globally.
Now I understand what it would of been like on the promenade deck of the Titanic as it sailed directly towards the Icebergs after being warned several times of the impending danger. But for the sake of making a worlds speed transatlantic record full stimulus ahead, pour me another glass of champagne and let the music continue the promenade deck.
Oh it's a commercial break on dancing with the stars........when we return Rick Perry will perform the Charleston with Beyonce 1929 style!