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There’s No Way In Hell We’re Making It To Nov 2012

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Adding to last night’s BBC spot of Mr. Rastani’s truth-telling, we have yet another experienced market trader telling the full-monty of truth:

Here is a piece from ZeroHedge.com that hopefully will make you all understand, once and for all, that this ain’t the 1930′s, and that there is absolutely no way in hell that this Republic is going to make it to November 2012.

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure; Is Morgan Stanley Sitting On An FX Derivative Time Bomb?

Summary: The five largest banks in the U.S. (JP Morgan Chase, Citibank, Bank of America, Goldman Sachs and HSBC) are carrying $238 TRILLION dollars in derivative exposure. JP Morgan alone is carrying $78 TRILLION in derivative exposure BY ITSELF.

Okay, what the hell is derivative exposure? What this is referring to are over-the-counter non-exchange traded forward delivery (or “futures”) contracts of various kinds. I am a futures broker, but I only execute futures contracts on the futures exchanges, namely the Chicago Mercantile Exchange and the New York Mercantile Exchange. About ten years ago a new “novelty” emerged in the futures business – the so-called “over-the-counter” contracts. There was a kid in the office I worked in who got wind of this and had all kinds of stars in his eyes about making a killing off of these “OTC” contracts because the brokers’ commissions were not a flat fee but a percent of the contract value. Here’s the problem with OTC contracts: there is no exchange standing between the buyer and seller as a guarantor.

In my business, when a customer executes a trade on a futures or options contract, it makes no difference who the other guy is on the other side of the trade, be it executed electronically or in the pit. None of us have to worry for a second about the counterparty on our executions because the EXCHANGE ITSELF stands between ALL transactions as the ultimate guarantor. The exchange then enforces the financial requirement rules with the Clearing Houses, the Clearing Houses enforce the financial requirement rules with the brokers, and the brokers enforce the financial requirement rules with the customers. That is the chain of financial responsibility. So, even if a customer bugs out and fails to financially perform on a contract, the contract WILL BE MADE GOOD by extracting the money from the broker, then the Clearing House and finally the Exchange.  This massive enforcement buffering is what gives the system integrity.

OTC contracts have no exchange. They are a flipping free-for-all. If someone bugs out on a contract, the poop hits the fan. The counterparty has their pants around their ankles and the broker is caught in the middle. That’s why when that kid in my office years ago got all starry-eyed, I thought to myself, “I wouldn’t do that OTC crap if you put a gun to my head – no matter what the commissions were. It would be Russian Roulette. Eventually someone would default and it would financially destroy the broker instantly, and perhaps the counterparty as well.”

Let’s take my business – cattle futures. One contract is 40,000 pounds of live cattle. The spot contract settled at $119.725 per hundred pounds today. So, 40,000 pounds X $1.19725 (shift the decimal) = $47,890 total value of the contract. Since this is an exchange traded instrument, the customer doesn’t really don’t have to worry about default and can go ahead and book that $47,890 today, and it will be offset at a later time, and the net of the entry and exit will be the P&L. The contract isn’t going to default, so the derivative exposure is limited.

Okay. These banks are carrying these OTC futures contracts with NO exchange to guarantee anything. And they are carrying these contracts largely WITH EACH OTHER. So JP Morgan might be the long and Goldman Sachs, or some insolvent bank in Europe is the short on the other side. If these banks default, which is now a mathematical certainty because they are not only insolvent, but insolvent multiple times over and there isn’t enough money in the world to bail them out, there is going to be a cascading default on all of these OTC contracts.

Now look at the value and exposure of these OTC derivatives again: the top 5 banks in the US alone have exposure of $238 TRILLION dollars.

The total GDP of the United States is $14.5 Trillion.

The total GDP of China is $6 Trillion.

The total land mass on earth is 36.8 billion acres. If every acre of land on earth was “sold” for $6467 per acre, that would total $238 Trillion.

JP Morgan BY ITSELF has derivative exposure equal to over FIVE TIMES the value of the entire US GDP.

And no, there will not be a 1:1 offsetting in a collapse, because the collapse will be asymmetrical, and the bankrupt party will first pursue FULL payment on its “longs” (think of these as accounts receivables) while its “shorts” (accounts payable) will only pay out 20 cents on the dollar OR LESS. In other words, these entities will tear each other apart in a mad dogfight and this dogfight will take the entire world down with it.

TWO HUNDRED AND THIRTY-EIGHT TRILLION DOLLARS.

AND THAT IS JUST FIVE BANKS.

AND THE MASSIVELY CORRUPT AND INCOMPETENT SECURITIES REGULATORS, BOTH GOVERNMENTAL AND PRIVATE, SAT BY AND WATCHED THIS HAPPEN. That is what happens when you let a group of criminals run a bureaucracy of affirmative action hires to “audit” the financial industry. Scroll down and read my post titled “There Must Be A Reckoning.”

It’s over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken.

Ann Barnhardt – Barnhardt Capital Management, Inc.

 

I’m going to add to what Ann has explained so well:

By the end of 2007, all the Too-Big-to-Fail (TBTF) banks were writing these things hand-over-fist because they already knew they were in doo-doo.  All this did was put massive leverage into the system…..debt, leveraged upon debt, with no asset value behind much of it.   And here is where it gets truly ugly for my conservative friends who refuse to look at Wall Street as the criminals they are:  THEY DID THIS KNOWING FULL WELL THE MAJORITY OF THE DERIVATIVES THEY WERE CREATING WERE FRAUDULENT AND BACKED BY NOTHING.   How do I know this?  A myriad of lawsuits filed all over the country with a literal shitton of depositions on discovery.  These are not lawsuits filed by merely disgruntled foreclosure victims; these are lawsuits filed by large insurance companies like Allstate and MetLife, and even The Federal Housing Finance Agency (FHFH) because they all realized far too late that they’d been sold worthless crap.  This is not to mention how adamantly the TBTFs have lobbied against any whiff of the idea of forcing these things onto an exchange where they would be made transparent.  That’s pretty much a tipoff that they’re hiding something very bad.  If the used car salesman won’t let you look under the hood, you can be pretty sure there’s something there you won’t like much.

The idea Wall Street had here with creating these fraudulent pieces of toxic waste was that if even a fraction of these ‘paid out’ for them, they could ‘save themselves.’  Unfortunately this doesn’t work when Wall Street runs out of suckers; you know, pension plans, insurance companies, retail investors and other places they could sell these things to without anyone understanding what they were buying.  Most importantly, when they ran out of suckers they could put into home loans they couldn’t afford, this was the beginning of the end and the whole scheme began to unravel.

Even better, our government not only looked the other way when they were made aware of what was going on, they began to aid and abet the criminal activity….because the TBTFs convinced the government that ‘economic meltdown could be avoided’ if they were just given time for the ‘asset values to come back.’  THIS whole game was facilitated by none-other than Hank Paulson.  You know, ‘Mr-I-Have-A-Bazooka.’

Our entire global economy is a giant Ponzi Scheme.  Makes Social Security look like a rounding error.  This also gives one a better perspective on the stock market movements.  (Yeah, 400 point Dow Jones Industrial ranges in a day is a ‘stable market’.)  What the market is now is merely the TBTF banks chasing government cheese.  Where is the next bailout coming from?  Wherever they THINK it is (and since they push for it, they have a good idea), they front run it and pile in, using HFT to try to position better than the next TBTF.  Who is going to get the next ‘exemption from the law’?  Wherever they think THAT is coming next, again, they go ‘all-in’ – thus providing the massive swings in the market with both bonds (treasuries and corporate debt) and stocks.   Any idea that there is ANYTHING left of a ‘free-market’ is a LIE.  Wake up and smell the Ponzi conservatives, and stop defending the criminals with your cries of ‘it’s anti-capitalist to protest against Wall Street.’  It’s not about your neighbor getting a free house, it’s about massive, global, legalized financial rape.

Wall Street a/k/a the Too-Big-To-Fails are chasing corruption.  They’re chasing legalized theft sanctioned by our government and you can watch it in real-time every day….just pull up a stock chart.  Any stock chart.

Have a nice day.

Perhaps now you will start screaming STOP THE LOOTING & START PROSECUTING!

 

Read more at FedUpUSA.org



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    Total 13 comments
    • Anonymous

      And Evelyn Rothschild says he is/was worth 600 trillion dollare woth of … and most of it was in Gold at less than 300 dollars a Troy Ounce on 2004 and iis now woth over 999 Trillion.

      Why dosn’t he step up and buy the whole world’s debt and let us start over. He can save us and be King of the Earth.
      WLarry in Torontohy indeed.

      Larry in Toronto

    • End of Empire News

      great read! thank you for posting this, it really has helped me better understand what is going on and how some of these things work.

    • Anonymous

      Larry grow up.

    • Anonymous

      This debt is nothing but paper–throw it in the wastebasket–it doesn’t exist.

    • Dust

      Rothschild’s might be planning that after all they did it to the bank of England, France and most other country’s. They own most of the big banks like Chase Manhattan and others here. They buy on lows they create and sell high, if they sell at all. It is said they either own or control seventy percent of the wealth in the world. Why did Ford not need bail out money, they are owned by Rothschild. Funny how you never see their name on anything yet they own or control it. Sell what you can and head for the woods, buy the things you will need to stay alive there and do it now. Walk away from your job if you have one and take what money you can out of the bank and market. A country boy can survive. Guns and ammo would be a good thing to have, they don’t like it when their slaves run away. Good Luck, your going to need it.

    • Electrolux

      Long story short: if I behaved, thought or spoke kindly and compassionately today toward living beings I created true value. No one and nothing can ever take that effect away from the world. I sleep well and wake up rested. I’m a retiree and have worked hard and long and I know that some day
      my modest savings will evaporate. Certainly at death I will leave everything behind. These thoughts are not meant to excuse crime. The powers that be control by fear and violence. If we respond in this way we enpower them. Take control of your mind with effort, aspiration and concentration and the chains will dissolve. The world will take shape around the new discipline.

    • turfangel

      it is satanists-they have taken over everything. Even the military and police join masonry-which is satanic. I go to ASU-I just started but, it is very obvious it has been taken over by satanists. The world is getting very creepy-but the worst thing is that most young people consider it just normal-they are all either brainwashed or just brain dead-maybe from the vaccines the satanists push on them-there is no hope for planet earth-except the removal of all these satanists-and then there will only be, maybe 1 or 2 people left here to start over.

    • Anonymous

      Take one male and one female rat and put them into a cage. They will multiply until they eat each other. Humanity has much in common with the rats.

    • Cwilly

      When time runs short for mankind there will be one common dominator “FOOD”. The bible says in the end time a loaf of bread will be worth a bag of gold. You can’t eat gold, silver or stock futures but you can bread, beans and rice.

    • NO NWO

      Doesn’t look good BUT neither did Nineveh. The people of Nineveh repented and were spared for another 150 years. Who is to say that now is the time for the end? Not one soul knows when they will take their last breath.
      We have all put our trust in the systems of this world which will fail in due time but in the mean time, hope thou in God. Maybe this current generation and the next will be laying in a grave while the wheels are still grinding away. Jonah could only see doom and gloom and wished for that city’s destruction but God is merciful towards a repentant heart.
      Who knows?

    • Cwilly

      I agree with you, It’s going to come on us as a thief in the night. But Yeshua said those that pay attention will be able to figure out the signs. Myself being a mid-triber feel we will go through man’s wrath, but i also think this could only be a stepping stone in time.

    • Anonymous

      Let`s everybody renounce to money starting from today! , the next day all the rich guys will be nada, 0,nothing the same as us!!….the difference between them and us is that we can survive by the only thing that they don`t know: WORKING!

    • Anonymous

      This financial trigger along with the political and religious situation in the Middle East will start the 6th trumpet war where 1/3 of mankind (approx. 2.3 billion people will die).

      See: WWIII Entrance Ramp For The Antichrist at: Endtime.com

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