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[daz] They're gonna do it....It's gonna happen....the rates are great....its gonna be the best thing to ever happen to any of us....its gonna be AWESOME!
James Wilson] “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”
[antonymous] I think something must be up... seems to be a real Intel black-out this morning - only news anybody is talking about is Syria - makes me think "misdirection, maybe?"
[tight wad] maybe we couldn't RV today because the "BIGS" are busy like a dog with a new bone trying to hide 600 trillion "Doggie Bisquits" from our sight. (MOON
[john316] i believe the 600t was scheduled several months ago for today, in order for this to happen the rv must go first. So to imply the RV should go today to stay on schedule for the 600t
Read More Link on Right
[ShawnW] john316 another train of thought is that 600T needed to happen before the RV could take place so that the $$ was in the right place to handle the influx of dinar...
[john316] ShawnW yes but if it goes before would it get the new GCR rate? seems we (usa) would see more if the rate changed first.
[Great] shawnW i dont know, I could be wrong, but this 600T deal could be something else they are using to distract us. We are now talking about this 600T and all of a sudden it now becomes a part of the equation.
[ShawnW] Great sure, but I do not think that was supposed to leak out. It happened by accident. So rather than confusion, I think we only have a small portion of the real story. so wont to speculate much other than we dont really know what that all means
[sczin11] BAGHDAD – Iraq's top court said Tuesday that it had rejected a law that would have prevented embattled Prime Minister Nouri al-Maliki from seeking a third term in office after 2014 national elections. The Supreme Federal Court said in a brief statement on its website that it had ruled unconstitutional a controversial law that limits the premier, president and the parliament speaker to two terms of office. Al-Maliki first became prime minister in 2006. He secured second term in office after nearly nine months of political wrangling after the 2010 national elections. His political rivals accuse him of consolidating power, bringing the security forces and other state institutions under his control, and sidelining rivals. They say he has plunged the country into political infighting that has contributed declining security and some of the worst violence in years. His backers say he is a unifier who has restored a shattered Iraqi state, and that the Iraqi electorate should decide whether to keep him as prime Minister http://www.foxnews.com/world/2013/08/27/iraq-court-rejects-law-that-would-impose-term-limits-on-prime-minister/
Sona: Derivatives: The $600 Trillion Time Bomb That's Set to Explode By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning
October 12, 2011
[Author Image for Keith Fitz-Gerald] Keith Fitz-Gerald
Do you want to know the real reason banks aren't lending and the PIIGS have control of the barnyard in Europe?
It's because risk in the $600 trillion derivatives market isn't evening out. To the contrary, it's growing increasingly concentrated among a select few banks, especially here in the United States.
In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.
The four banks in question: JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and Goldman Sachs Group Inc. (NYSE: GS).
Derivatives played a crucial role in bringing down the global economy, so you would think that the world's top policymakers would have reined these things in by now - but they haven't.
Instead of attacking the problem, regulators have let it spiral out of control, and the result is a $600 trillion time bomb called the derivatives market.
Think I'm exaggerating?
The notional value of the world's derivatives actually is estimated at more than $600 trillion. Notional value, of course, is the total value of a leveraged position's assets. This distinction is necessary because when you're talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30, or, in extreme cases, 100 times greater than investments that could be funded only in cash instruments.
The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.
Compounding the problem is the fact that nobody even knows if the $600 trillion figure is accurate, because specialized derivatives vehicles like the credit default swaps that are now roiling Europe remain largely unregulated and unaccounted for.
To be fair, the Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks is between $2 trillion and $8 trillion, which is still a staggering amount of money and well beyond the billions being talked about in Europe.
Imagine the fallout from a $600 trillion explosion if several banks went down at once. It would eclipse the collapse of Lehman Brothers in no uncertain terms.
A governmental default would panic already anxious investors, causing a run on several major European banks in an effort to recover their deposits. That would, in turn, cause several banks to literally run out of money and declare bankruptcy.
Short-term borrowing costs would skyrocket and liquidity would evaporate. That would cause a ricochet across the Atlantic as the institutions themselves then panic and try to recover their own capital by withdrawing liquidity by any means possible.
And that's why banks are hoarding cash instead of lending it.
The major banks know there is no way they can collateralize the potential daisy chain failure that Greece represents. So they're doing everything they can to stockpile cash and keep their trading under wraps and away from public scrutiny.
What really scares me, though, is that the banks
think this is an acceptable risk because the odds of a default are allegedly smaller than one in 10,000.
But haven't we heard that before?
Although American banks have limited their exposure to Greece, they have loaned hundreds of billions of dollars to European banks and European governments that may not be capable of paying them back.
According to the Bank of International Settlements, U.S. banks have loaned only $60.5 billion to banks in Greece, Ireland, Portugal, Spain and Italy - the countries most at risk of default. But they've lent $275.8 billion to French and German banks.
And undoubtedly bet trillions on the same debt.
There are three key takeaways here:
There is not enough capital on hand to cover the possible losses associated with the default of a single counterparty - JPMorgan Chase & Co. (NYSE: JPM), BNP Paribas SA (PINK: BNPQY) or the National Bank of Greece (NYSE ADR: NBG) for example - let alone multiple failures.
That means banks with large derivatives exposure have to risk even more money to generate the incremental returns needed to cover the bets they've already made.
And the fact that Wall Street believes it has the risks under control practically guarantees that it doesn't.Seems to me that the world's central bankers and politicians should be less concerned about stimulating "demand" and more concerned about fixing derivatives before this $600 trillion time bomb goes off.
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