Here There Be Big Nymbers (Sic)

Tyler Durden's picture

The earlier discussion of CDS, Einhorn, and the US UST-CDS basis trade, sparked a flurry of queries on the topic of "really big numbers." Therefore, even as ZH staff awaits the most recent data out of the BIS, we present for your numeric (in)comprehension pleasure lots and lots of zeroes. The chart below summarizes the biggest relevant numbers currently out there, appearing as pixels occasionally on every single computer in the financial world. And what does it say? That the total notional value of all OTC derivative contracts as of the most recent count (sucks to be on the recount committee), was $592,000,000,000,000.00 at the end of 2008. Fear not: this number is actually a reduction from the most recent previous read of $683,700,000,000,000.00 in June of 2008. Well wait, that thing we said about fear not, ignore that: because the net notional, or the market value of all OTC contracts, i.e. what someone (cough taxpayer cough) would be on the hook for when the Fed's plans go astray, increased by 66.5% over the same period, to $33,900,000,000,000.00. Like we said, big numbers - and this is just OTC. The real number includes regulated exchanges, and to estimate that, double the numbers above. In totality, the "sidebets" on everything from interest rates, to F/X to corporate default risk, amount to about $1.3-$1.4 quadrillion (that's 15 zeroes before the decimal comma) in terms of uncollateralized liquidity (think inflation buffer): take all those zeroes away and the value of the dollar would go down by 1E10-15: you listening yet American middle class? And the actual exposure, or "money at risk" is roughly $60 trillion: a number which is about the same as the world GDP if one were to remove all the various stimulus programs. Take away Goldman, JP Morgan, and all the other wannabe BSD's, and this is what you end up with: the heart and soul of the Too Big To Fail monster itself. And there is no way on earth to stop that mangled, mutated heartbeat without destroying the very fabric of both our capital markets and societal system. Please give the Federal Reserve a golf clap for this truly amazing accomplishment.

So with everyone and the kitchen sink focused on CDS and the neutron bomb that they undoubtedly must be if even such anointed shamans of CDSology as David Einhorn (one wonders, will David donate the billions of dollars he has made while trading CDS to charity?) say they are evil incarnate, here is the truth about CDS courtesy of the Fed's Fed- the Bank of International Settlements.

The volume of outstanding CDS contracts fell 27.0% to $41.9 trillion against a background of severely strained credit markets and increased multilateral netting of offsetting positions by market participants. This was a continuation of the developments seen in the first half of 2008. Single-name contracts declined by 22.8% to $25.7 trillion while multi-name contracts, a category that includes CDS indices and CDS index tranches, saw a more pronounced decrease of 32.7%, to $16.1 trillion.

Despite the lower outstanding volumes, the gross market value for CDS contracts increased by 78.2% to $5.7 trillion as a result of the credit market turmoil. Gross market values grew 95.6% to $3.7 trillion for single-name contracts and 52.5% to $2.0 trillion for multi-name contracts. [As noted previously, the $5.7 trillion number has since collapsed to under $3 trillion as per most recent DTCC data].

Greater use of multilateral netting during the second half of 2008 also resulted in a change in composition across contract types (Graph 3, left-hand panel). Amounts outstanding of multinamecontracts fell 32.7% to $16.1 trillion, while the 22.8% decline in single-name contracts to $25.7 trillion was somewhat smaller.

The composition across counterparties also changed during the second half of 2008 (Graph 3, centre panel). Although the amount of CDS contracts between reporting dealers declined 24.4%, this was smaller than the 29.8% decrease in outstanding contracts between dealers and other financial institutions and the 47.7% drop in contract volumes between dealers and non-financial institutions.

Developments in gross market values across counterparties reflected the uneven declines in the outstanding volumes for the different market segments (Graph 3, right-hand panel). The market value of contracts between reporting dealers grew by 89.3% to $3.2 trillion, representing 56.2% of the total market value of outstanding CDS contracts. The market value of contracts between reporting dealers and other financial institutions increased by 66.3%, while the market value of contracts between dealers and non-financial institutions was 51.0% higher.


Less than $3 trillion? I mean, how is that even worthy of an FT op-ed? Most people won't even bend over to pick up a $3 trillion bill on the street: sorry - if it doesn't have a quint-, or at least a quadr- in front of the -illion, people frankly don't give a shit, thank you Tim Geithner. Trillion is just so..... pre-Obama.

Yet where it gets moderately interesting is when analyzing Interest Rate derivatives (swaps, options and forwards), not only because the numbers suddenly really perk up, but because of the $420 trillion in notional OTC total, about $200 trillion is held by none other than the usual zombie stooges: Goldman, JPM, BofA, C and WFC. Do you see now why the Fed will kinda, sorta always and forever be forced to bail out this unholy pentagram? The shitstorm as a result of the collapse of one or more of the five major spokes of at least $420 trillion (and as much as $840 trillion) in IR derivs would basically wipe out anyone and everything in its path. No exceptions.

BIS on Interest rate derivatives:

In the second half of 2008 the market for OTC interest rate derivatives declined for the first time, after recording an above average rate of growth in the first half of the year. Notional amounts of these instruments fell to $418.7 trillion at the end of December 2008, 8.6% lower than six months before (Graph 2 and Table 3). Despite the decrease in notional amounts outstanding, declining interest rates resulted in a notable 98.9% increase in the gross market value of interest rate derivatives, to $18.4 trillion. [yes, that is a lot]

The amount outstanding of interest rate swaps decreased 8.0% to $328.1 trillion. Outstanding volumes of US dollar- and yen-denominated interest rate swaps remained virtually unchanged relative to the previous quarter. In contrast, interest rate swap markets denominated in euros (–10.6%), sterling (–24.2%), Australian dollars (–27.8%), Canadian dollars (–16.7%), Swedish kronor (–21.2%) and Swiss francs (–6.9%) all saw declines in the amounts outstanding.

The gross market value for interest rate swaps – the largest market by far – grew 105.7%, from $8.1 trillion to $16.6 trillion. The most significant increase took place in the US dollar swap market, where the gross market value surged 201.2% to $9.3 trillion. [gee, whose favorite Federal Reserve was singlehandedly responsible for this dollar swap love explosion?]

Outstanding volumes of options contracts declined 17.5% to $51.3 trillion. The gross market value of options grew by 51.3% to $1.7 trillion. The amounts outstanding of forward rate agreements (FRAs), the smallest of the interest rate derivative segments, remained stable at $39.3 trillion, while the gross market value of outstanding FRAs grew 74.4% to $153 billion.

Thus net notional exposure in IR land is nearly $20 trillion or almost double the US GDP (or triple if one excludes the impact of Obama funny-money). So why are we reading again how CDS is anti-social? By that logic IR swaps, sloshed around by the JPM-Goldman-BofA trio of Mutually Assured Destructors, is the pinnacle of delusional, schizophrenic, psychotic behavior. Which is not to say that the CDS' destructive impact should be underestimated. On the contrary: CDS, when handled by the current group of greedy, risk seeking idiots, will undoubtedly destroy the world. It is just a matter of time. However, to keep things in perspective, how about we also consider Interest Rate swaps, whose numerical danger is more than 5x that of CDS (again, really big n(y)mbers here). And we haven't even touched on FX, commodity, and equity derivatives.

Which brings us to our point: thank you Mr. Einhorn for finally starting to focus people's attention on one of the many facets of the Fed's uncontrollable liquidity Frankenstein. CDS, while destructive, is merely the appetizer. What will truly annihilate financial markets are all those instruments that are in place only to perpetuate the myth that a 5% interest rate in 30 year Treasurys is somehow exorbitant (based on a quick back of the envelope calc, should prevailing interest rates move higher by 1%, the net IR exposure will rise by $3 trillion... in the wrong direction... at an exponential pace). Yet what better way to keep rates where they are than than to tell China: "Hey guys, you bust one auction, and this spring loaded balloon full of $420 trillion pieces of worthless Washington feces will blow up right in your face (and take us all down with you)." In essence this is an amusing revision of that old fable: the Fed owes the world a few billion here and there: well, Ben, you are out of luck, "You're Fired"; the Fed owes the world $1.4 quadrillion in naked and worthless pieces of paper (whose nudity will become apparent the second someone calls Bernanke's bluff) and the Fed owns the world.

It is, Mr. Einhorn, unfortunately as simple as that. Which is why may we suggest after you are done with your philosphical anti-CDS crusade, that you take a long hard look at this BIS report and consider just who your friends in the business are: something tells us that of the JPM/GS/BofA trio you Prime with at least two of them. If you really want to make a stand against those who are abusing weapons of financial annihilation, maybe you can demonstrate your seriousness by cutting all prime brokerage relationships with Goldman and JP Morgan. Then, and only then, will we, and everyone else, know you are willing to put your money where you mouth is (and where your CDS P&L used to be).

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Anonymous's picture

Should have just gone with scientific notation.

berlinjames02's picture

Regean said it best: "If you had a stack of thousand-dollar bills in your hand only 4 inches high, you'd be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high."

Right now with ~$11 trillion in public and private debt, the stack of thousand dollar bills would run along I-95 from Washington DC to Jacksonville, Florida.

LiquidBrick's picture

Doesn't seem right. We should call Myth Busters and put this to the test.

Anonymous's picture

You are correct. If the bills were $1000's, it would run 1058.6 miles; $100's would get you from the Fed to any point on the Earth; $1's would get you to the moon and back, twice.

For the pedants out there, there are 164 bills per inch; that is the official thickness of banknote paper.

Rollerball's picture

Less than $3 trillion? I mean, how is that even worthy of an FT op-ed? Most people won't even bend over to pick up a $3 trillion bill on the street: sorry - if it doesn't have a quint-, or at least a quadr- in front of the -illion, people frankly don't give a shit, thank you Tim Geithner. Trillion is just so..... pre-Obama.


The shitstorm as a result of the collapse of one or more of the five major spokes of at least $420 trillion (and as much as $840 trillion) in IR derivs would basically wipe out anyone and everything in its path. No exceptions.


Definitely a(nother) candidate for a Nobel (noble?) piece Prize.



Mazarin's picture

There has to be a way to make the real risk in this mess clear to the average American: what's at stake, and how the bet would unwind unfavorably. ZH/Tyler, your reporting here is exemplary...the next step is to condense and simplify so mere Senators, Reps, and their peeps can understand the bottom line AND commence some serious ass-whooping..  

Cognitive Dissonance's picture

"There has to be a way to make the real risk in this mess clear to the average American."

At first I thought the average American was simply too frightened to process information about the severity of these problems and to a certain extent I still hold that view.

But the problem sweeps across the education and occupation spectrum and in my view actually gets worse as you move up the ladder. This isn't simply an education or exposure issue. After I began asking more detailed questions, the picture became clearer to me. Mr. & Mrs. average American is worried about their piece of the pie, that they won't get out of the poker game before it's busted.

They bought into the economic system, often working at miserable jobs for years or decades in order to accumulate wealth and pensions. Now, with retirement around the corner, the economic vehicle is coughing and sputtering and might not make it to the end. I've posted before on ZH how Americans are deep captured by the system. In their minds, their ticket is stamped and thus non refundable, they're on the plane at 35,000 feet, it's two thirds of the way to their destination and they're committed regardless of how they feel about the situation.

The higher up the social/economic curve you travel, the more they're dependent upon a functioning system in order to "cash out" and retire. And that's how they see it. Cash out. While they do understand that most of their assets must actually remain in the system in order to be usable, they see a finish line, not a 20-30 year retirement process. They see their money as a pile that once accumulated, can be moved off the table to somewhere "safe" which is the actual word they use.

Reasonable or not their view is mostly fearful optimism. While things are going to hell, they will probably survive the plane crash mostly intact. This is more along the lines of wishful thinking or even head-in-the-sand denial than a thoughtful careful analysis of their own situation. You might be surprised how many doctors, lawyers, engineers and upper management types secretly pray to the God of their choice to just get them to their destination. 

Not everyone feels this way and awareness varies. Those lower down the curve have less accumulated and thus less to lose. We ZH readers must remember that we do not represent "average" people, Americans or otherwise. We are engaged, curious, reasonably informed and for the most part mad as hell. Average Americans are not and I'm becoming convinced that up to a certain point and for the most part, this is a deliberate and conscious decision. 

BTW, here is a link to a .PDF chart showing outstanding derivatives as measured by the BIS. Please don't leave it lying around for little children to pick up and possibly shoot someone with. -> Statistics -> Derivatives

This table is chart 19 but there's other data there that will curl your hair.

Anonymous's picture

Fearful optimism, cashing out, and moving money to a safe place off the table. That sounds about right. I now realize that every cent I have set aside in the past 25 years is at risk, no matter where I put it.

Confession: ZH is at the edge of my English major brain's ability to process financial data, but I am doing my best. As an observer of human beings, however, I surmise your average person is far more focused on 1) how wonderful it is that we're going to have "free" healthcare, 2) how nice it is that the government is extending unemployment and helping people pay for their houses when they lose their jobs and 3) praying that they're not the next one to need to use the aforementioned benefits.

JohnKing's picture

Average Productive American:

6:00 AM - wake up, get coffee, wake up 2 or 3 kids, take shower

6:30 AM - feed kids, guzzle coffee, say hi to others, get dressed in corporate garb

7:00 AM - load kiddies in vehicle.

7:30 AM - drop off kiddies, head to mind-numbing job.

8:00 AM - 5:00 PM - Arrive at mind-numbing job, put up with moron boss, play politics, do some work, worry about keeping mind-numbing job.

5:30 PM - Pick up kiddies, grab grub from somewhere, head home.

6:00 - 7:00 PM - get home, make dinner, maybe have a drink, talk with spouse (or fight and bicker with spouse). Talk to kids (maybe).

7:00 - 9:00 PM - turn on corporate propaganda device, select propaganda channels of the day. Feed mind with propaganda of choosing. Have another drink or 2 or a xanax.

9:00 PM - 10:00 PM - put kids to bed, talk, bicker, clean up house.

10:00 PM - Go to sleep looking forward to next day.

Repeat as neccesary.

Once a month they open the statements, maybe up, maybe down, maybe call broker, maybe pray, go to bed get up at 6:00 AM..

They don't stand a chance.


Anonymous's picture

You forgot homework and
the car broke down
the lawn needs mowing
the dishwasher broke
grandma's sick
mom's got the flu
business trips
the dog needs walking
the cat litter needs changing
the house needs painting
the kids need braces
the PTA meeting
the parent/teacher conference
the bills need paying
the laundry
the food shopping
the sleepovers

and most important....the neighbors are assholes.

Anonymous's picture

What the hell are we doing this all for? So our kids can grow up and do the same thing?

Here is a great piece of appropriate Internet forwarding material with a few threads of truth:

Old Indian Chief “Two Eagles” was asked by a white government official, “You have observed the white man for 90 years. You’ve seen his wars and his technological advances. You’ve seen his progress, and the damage he’s done.”

The Chief nodded in agreement. The official continued, “Considering all these events, in your opinion, where did the white man go wrong?”

The Chief stared at the government official for over a minute and then calmly replied.. “When white man find land, Indians running it, no taxes, no debt, plenty buffalo, plenty beaver, clean water. Women did all the work, Medicine Man free. Indian man spend all day hunting and fishing; all night having sex.”

Then the chief leaned back and smiled. “Only white man dumb enough to think he could improve system like that.

Problem Is's picture

That is a really accurate/excellent analysis. I think you forgot something though... in the last 10 years the "corporate propaganda device" now comes on at 6:00am along with the coffee maker.

Average Middle Class American:

6:00am- Turn on corporate propaganda device, select propaganda channel and take in propaganda while performing morning chores in zombie bank like fashion:

Sheeple By Groups:

Financially Literate: CNBC.

All American Anti Socialist Militarists: Fox Pinhead Broadcasting.

Socially Responsible America is a Wonderful Place: Today Show starring Matt "the Idiot" Lauer.

7:00am- Have now watched 43 minutes of rehearsed propaganda intermixed with 17 minutes of corporate product propaganda convincing them they have depression, irritable bowl and restless vagina syndrome and are inadequate or left behind if they don't buy this or that...

9:00am- Stand in line at TBTF behmouth bank and watch more "corporate propaganda device" behavior programming while waiting...

By the end of the day, they believe all of it. This is the vaunted American Middle Class.

Don't bug them with the details. They just want their home prices back, their home as ATM back, their 401k values back, their sleazy easy SUV leases back and their 80" plasma TV sales back...

How that all works, they don't care. They don't like having to work with numbers and anal details... pass the viagra and the paxil. As Jim Kunstler likes to say a "nation of overfed clowns." I like to say a "nation of overfed used mortgage salesmen"... or used insurnance salesmen, or used car salesman, or used mutal fund salesman, or used electronics salesman...

Americans are the most propagandized and reactionary, easily led against their own interests people on the planet. They are wrapped in a cult of personality as they believe their favorite idiot politician from corrupt party A or corrupt party B, depending on which way their pinhead points, left or right, will save the day. They actually believe the idiot political theater on the "corporate propaganda device" is the reality.

JohnKing does an excellent job pointing that out.

Cognitive Dissonance's picture

"7:00am- Have now watched 43 minutes of rehearsed propaganda intermixed with 17 minutes of corporate product propaganda convincing them they have depression, irritable bowl and restless vagina syndrome and are inadequate or left behind if they don't buy this or that..."


restless vagina syndrome

Problem Is's picture

Look it up man...

Big Pharma paid doctors and medical researchers to invent that one to sell women some off label drug for higher profit...

In my day, restless vagina syndrome meant a woman who was lots and lots of fun...

She doesn't need medication, restless vagina syndrome can be worked out with time and extra effort...

BIG_Thymer's picture

Not a chance in hell, you're right.

LiquidBrick's picture

Nothing in that schedule screams "productive".


LiquidBrick's picture

Nothing in that schedule screams "productive".


Anonymous's picture

i submit the congress already know. all this talk about rebuilding the financial system is just if i am not mistaken, this sort of instrument first started appearing in about 1987. so the system cannot be saved. jim willie has been talking about this for two years and nobody would listen. thanks tyler. maybe some of those numbers will start to sink in to the people that come here and read this blog. the time bomb is ticking. all it takes is one small collapse in one weak link in the chain and this nation and the world will never be the same since. also may i suggest, now that we seem to be in corner and have nowhere to go. this was done on purpose to usher in the new world order. the nattering nabobs on the television and in congress cannot change this and never could really. the system cannot be fixed. it is broken. what does the future look like? i don't know for sure. as has been said before. we are in unchartered territory. got gold? got silver coin? got food and water and most guns and ammo. you are going to need it soon enough.

Voluntary Exchange's picture

The Gov ain't gonna whop their ass. Banking and and major finance players are allies of “government”. Didn't you notice, often the banks and big finance tell them what to do, not the other way around? This needs to be made simple for those of us who are honest and try to honestly work for a living: you work and slave away, they (connected “business”, gov, GS, JPM, and the other organized crime syndicates) suck your blood till it runs dry then get out of dodge fast before the pitchforks come out. That simple enough?


I just hope the parasites have gone so far this time that there is no way to save it, and the productive will be shocked into digesting what has been done to them by the parasitic class and their mighty tool of plunder the “State”. Maybe then the human race can get back on the path of progress: exclusively voluntary exchanges without aggression or fraud. The reset button must be pressed, complete the process of proving to human awareness that the invention: “State” is incapable of remaining a servant of the people. It always turns into a tool for plunder by the parasites. Monopolies of force (governments) lead to agression and fraud and are a bad idea. Strictly voluntary exchange is the way to go. We were almost there in America in the 18th century but we got hoodwinked by the Federalists.


Anonymous's picture

The productive classes tend to have more - and more effective - weapons, and know better how to use them. At least in this country... I don't think it will end well for the parasites. Lot of unused train cars sitting around.

Marley's picture

Dealing with numbers this large just exemplifies how much the masses are just roaches to the oligarchy.  Scurrying about, subsisting on their fecal matter.  Cannibalizing each other to survive, much to their enjoyment.  Complain and out will come the exterminator.

Voluntary Exchange's picture


Fellow human being Marley:


May I suggest that when you see others “cannibalizing each other to survive” that you suggest to them a constructive alternative? There usually are some if you look hard. Just remember that the “elite” are cowards. They prefer to hide in the shadows and get others to do the really dirty work. Extermination is a very dirty business. Most people's attention becomes very focused when they see folks starting to be exterminated. There are many more of the productive than parasite. Many of the henchmen of the parasites would willingly choose a more honorable life if they could. If they see a way out they can easily rebel. So I say, let the “exterminators” just try it. Anyone arrogant enough to view humanity in the way you describe is already halfway to a fall. That is just the way the universe works. In short take heart because so many are beginning to see things so clearly. I see GS and congress critter type ghouls trying to feed as fast and as hugely as they possibly can because they know the game is just about over. Just remember it is the parasite that needs the host, the host does fine without the parasite. When push comes to shove we shall see who the true cockroaches are!


msjimmied's picture

Thank you, that's how I see it as well. I wish I could ferry this article across to others, but it's scary, and its in a language that does not translate into anything that  most good people toiling to make a living can understand...this weights heavy, I am myself with yesterdays seven thousand years. We will probably have to let this play out, unless we can take this more main stream. 

Marley's picture

Voluntary Exchange;

Hegel would contend, "The ideality which is in evidence in war, i.e. in an accidental relation of a state to a foreign state, is the same as the ideality in accordance with which the domestic powers of the state are organic moments in a whole. This fact appears in history in various forms, e.g. successful wars have checked domestic unrest and consolidated the power of the state at home." Given the continual state of war we've been in for the last 8 years, implies anticipated unrest, perhaps post Enron.  With regard to honorable henchmen, the only winners in that conflict are those that choose not to participate.  I do appreciate your attempt to cheer me up.  Sorry for the cynicism, I'll get back to my old self.

Voluntary Exchange's picture


Marley and my Fellow Humans:

I quote Hans-Hermann Hoppe:

“A state, in accordance with generally accepted terminology, is defined as a compulsory territorial monopolist of law and order (an ultimate decision maker). “

(“On the impossibility of Limited Government and the Prospects for a Second American Revolution”

In those rare moments in history where a group of people have won their freedom and attempted to preserve their freedom for future times and generations they have resorted to various means to try to preserve it, as history records: monarchy, democracy, oligarchy, and so on up to the 18th century when a minority of Americans tried using a republic with strictly limited powers as granted in a constitution. Any such endeavor that grants a territorial monopoly of law and order must ultimately fail. (Failure in the sense that it must sooner or later cease to be efficacious in preserving life, liberty and property of the people in general and become a tool of plunder by the few against the many).

To be brief: the characteristics inherent in a monopoly of this sort ultimately create the conditions for that failure. The natural laws that govern human action will always lead to this failure, given the starting condition of monopoly that meets the above definition of a State. Its being as such a monopoly, over time, will naturally attract the minority of individuals who consider taking from others through force or fraud a preferred survival strategy. The early stages of their aggressions take on various forms of deception that have become more sophisticated though history, leading of late to central banks, fiat currency, grants of economic and business privileges and so on. In earlier ages religion was often used but that trick is wearing a little thin by now. Eventually as the non-parasitic class becomes aware of the nature of the deceptions and how it has been enslaved, (and eventually it always will happen given the human power of reason, learning and communication: hence the state's perpetual war against reason, learning, and communication), the system enters into its final stage that America is quickly approaching: overt despotism, and open aggression, being unable to exploit by deception any longer.

Many American Colonists reasoned that they needed some kind of minimalist state in order to survive in a world populated by other aggressive states, not at that time in history being aware of how a strictly voluntary system of exchanges amongst individuals and groups could arise and long endure to solve the primary needs of individual and group security and justice. As is always the case, along side such individuals were those who viewed aggression and deception as a preferred way of life and saw the forming of a state as their opportunity. The dynamic of these two forces, the subsequent struggles that ensued, in the formation of and subverting of the United States is a fascinating study, or as is often said: “ the rest is history”.

For those who want to understand how to form a viable, strictly voluntary contractual society may I suggest they study Ludwig Von Mises, Murray Rothbard, and Hans-Hermann Hoppe as a good starting point.

We are at a very exciting moment in human civilization. The State and its thus empowered despotism has never been so vulnerable in known human history. The understanding of how to end the “State” and what to replace it with is well developed. Once the appropriate manifestos/declarations ( I suggest “the Manifesto of the free” as a possible title) are properly formulated and globally communicated in a readily digestible form we could see the rapid, total collapse of State-ism similar to the mostly non-violent collapse of Communistic Eastern Europe and the Soviet block. Given an intact internet This could sweep the planet in a matter of weeks or months.

To put it simply, for we who wish to be FREE, the foundation has been staring us in the face since the beginning of civilization:


To all the States of the world and their allies, let the proclamation sound: All those who initiate aggression or use fraud are declared illegitimate. Your system rests upon that which cannot and ought not to endure. You will no longer be obeyed or served. You who have lived by plunder will plunder us no more. Make restitution and go in peace, or face the consequences of open aggression against your moral and just teachers.

Friends, it is high time that we figuratively fight like “warrior poets” and win our freedom! Let those who stand with me against aggression openly declare to each other”



tip e. canoe's picture

VE, interesting that zizek's latest (linked in today's frontrunning) takes a very similar direction from the other side of the spectrum.

marley:  "With regard to honorable henchmen, the only winners in that conflict are those that choose not to participate."

this is actually not contradictory to VE's point, in fact it is quite complementary.  feel your cynicism, just think you two are much closer to each other than you may realize imo.

Apocalypse Now's picture

Buffalo Soldier -

They are just compensating for something small, just like the guy that drives a hummer or has a giant sky scraper built.

The tall buildings and numbers with many zeros after them are designed to impress and intimidate - to make you look at your shoes instead of holding your head high or to make you look away just because the scale is incomprehensible.  You have heard it said if you are faithful in little you will be faithful in much - the opposite is also the case for the faithless and I'm not impressed.

The takeaway should be that they run a debt based deficit system so it is bankrupt to begin with, no matter how many zeros they add.  The scale is imaginary based on computer transactions - if you want to really wonder at scale consider the scale of the universe being at least 13.8 billion light years across, but don't lionize a paper tiger.

Interesting perspective on how we got here:

Lincoln understood who was really pulling the strings and what was at stake for the American people. This is how he explained his rationale. The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers… The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the government’s greatest creative opportunity…By the adoption of these principles the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.” –Abraham Lincoln

“If that mischievous financial policy, which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe...claimed that Lincoln was assassinated , not only because international bankers wanted to reestablish a central bank in America, but because they also wanted to base America’s currency on gold. Gold they controlled. In other words, put America on a gold standard. Lincoln had done just the opposite by issuing U.S. notes. Greenbacks, which were based purely on the good faith and the credit of the United States…They were the men interested in the establishment of the gold standard money system and the right of the bankers to manage the currency and credit of every nation in the world. With Lincoln out of the way they were able to proceed with it in the United States. Within eight years after Lincoln’s assassination silver was demonetized and the Gold Standard money system set up in the United States.

3 years later the people elected republican James Garfield president. Garfield understood how the economy was being manipulated. As a congressman, he had been chairman of the Appropriations Committee and was a member of Banking and Currency. After his inauguration he slammed the money changers publicly in 1881.“Whosoever controls the volume of money in any country is absolute master of all industry and commerce… And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate. "Unfortunately, within a few weeks of making this statementon July 2nd of 1881, he was assassinated.”

sgt_doom's picture

"..the next step is to condense and simplify so mere Senators, Reps, and their peeps can understand.."

Sorry, Mazarin, but I used to belong to a political action group which attempted to do that very thing, and it was a no go for several reasons.

Firstly, IQ tests aren't required (surely everyone has figured this out by now) for entrance into the hallowed halls of the US Congress.

Secondly, only a few Senators and Reps are truly of upright moral and ethical standing (shoutouts to Peter DeFazio, Oregon, Dennis Kucinich, of course, Ohio, Russ Feingold, Wis. and Bernie Sanders of Vermont --- Cynthia McKinney was run out of congress by those neolibs like Rahm Emanuel, but likewise to her).

Honorable mentions to Dorgan and Massa.....

torabora's picture

Population growth in developed countries is actually declining...leaving the hangover debt to an increasing population of third worlders. And they ain't gonna pay it. That means a greater debt per head on the 1st world with an increasingly needy 3rd out there. Trouble is afoot.

Chumly's picture

That means a greater debt per head on the 1st world with an increasingly needy 3rd out there. Trouble is afoot.

Especially when the Great Banana Republic, the U.S.A., is joining the ranks of the third worlders.

faustian bargain's picture

Reading the word 'quadrillion' makes me feel a little ill.

Anonymous's picture


They use FORCE to make you do
What the DECIDERS have DECIDED you must do

And now you do what they told ya
And now you're under control
And now you do what they told ya
And now you're under control

Fuck you I won't do what you tell me




Mazarin's picture

Shepard Fairey "I don't want my taxes to pay for the new world odor"

(same guy who created the famous obama "hope" poster...

Anonymous's picture

Idiots plain and simple. The history of Fiat currency will be honored as epic morons as they righty are "dullards".

Stevm30's picture

what is the actual back of the envelope calc please.

Cognitive Dissonance's picture

"what is the actual back of the envelope calc please."

Short of netting out all the derivatives and bringing the numbers down to near zero, the back of the envelope calculation is as follows.


Stevm30's picture

I meant the calculation mentioned...

CDS, while destructive, is merely the appetizer. What will truly annihilate financial markets are all those instruments that are in place only to perpetuate the myth that a 5% interest rate in 30 year Treasurys is somehow exorbitant (based on a quick back of the envelope calc, should prevailing interest rates move higher by 1%, the net IR exposure will rise by $3 trillion... in the wrong direction... at an exponential pace).

Cognitive Dissonance's picture

I understood.

But I think regardless of the calculation the boom is coming. How much worse can it get beyond catastrophic? We are so desperate to believe there is some way out that we ignore the obvious.

Stevm30's picture

It is not obvious to me... that's why I wanted the calculation - so I could better understand the argument put forth in the article...

Tyler has been arguing over a series of articles about an impending rush for the exits, liquidity crunch scenario, based on dollar short exposure... but I have had trouble measuring what the threat actually is (this article helped)... his calculation would be helpful.


Cognitive Dissonance's picture


My apologies. I was using the collective "we" and didn't indicate so.


ph012's picture

It's nice that you have a glossary, but try putting the acronyms you use in it!  For instance, BSD (or was it BDS?) and IR (although that's probably just "interest rate").  Thanks.

Hansel's picture

BSD - Big Swinging Dick

IR - Interest Rate

MsCreant's picture

You don't mean bad. You have a nice teddy bear icon. You are just asking questions. It is your right to be new to this without being criticized or harassed for it. So don't take this personally but I want to rip your fucking teddy bear face off and spew the stuffing everywhere then come after you, you trite, triffling, point missing, ARRRRRGH!!! Good fucking thing we are on a board, I would hit you. Get this through your head innocent, well meaning dipshit. THIS IS THE MOST IMPORTANT THING I MAY HAVE EVER READ IN MY FUCKING LIFE. IT IS THE MOST IMPORTANT THING YOU WILL EVER READ, TOO. SO READ IT CAREFULLY AND MAKE SURE YOU GOTS ALL THE WORDS RIGHT.

I probably shouldn't post this and just type it as a catharsis, but you and everyone needs to get this. WE ARE FUCKED.

MsCreant's picture

So some lame assed little weasel junked me and did not leave a comment.

Coward. Douche.

Let's all be nice now. Wouldn't want to be rude and offend anyone.

Wouldn't want to get real or anything. Nah, not that.

chumbawamba's picture

Wow.  I'm realizing that some people are only now figuring out what I've known for a good long while, thus bringing explanation to my pithy, sometimes callous, always mocking tone of writing. I remember when I first learned the truth: I freaked out, too.  I maxed out all my credit cards, started stocking up on more ammo and guns, bought dry and canned food, got more serious about my garden, started mappoing out the neighborhood to identify strategic sniper positions and chokepoints that could be blocked off for enhanced security, and bought more gold and silver (and have been on a perpetual hunt for ever more ever since).

Welcome to the team, Ms!

Now that you've arrived, there are a few things you should know.  First, no, you are not crazy, you simply took the red pill.  Second, more people are to come, eventually in droves, so its your job to get fully up to speed with the program and assist the newcomers as they stumble through the door.  You'll recognize their faces.  It's the same one you're currently seeing in the mirror.

Sanity and irreverance will return shortly.  The trick is to not let it cloud your vision.  There is still much work to do.

Your task now is to continue building your store of wealth: Gold and silver, guns and ammo, seed and garden.  Once you put your mind to these important tasks you'll forget all about the big problems in the outside world.  They aren't yours anymore anyway.  You took the red pill.

I am Chumbawamba.

Problem Is's picture

Dude... just drink the Kool-Aid and believe in the new Prez with the Nobel "Piece" Prize...

Put the seeds down and go to McDonald's like a good American robot... ur, uh, citizen... seed and garden talk makes Conagra and Monsanto very, very angry.

You can not GROW food... that is an urban legend. You buy food at a corporate retail outlet in a box made by the wonderful people at Kraft, General Mills, Coca-cola and the New Jersey chemical industry...

Drink your Kool-Aid and have a nice Jim Jones day...

Put Chumbawamba on the terrorist watch list, Leon...