Shadow Bank Liabilities Plunge By $700 Billion In Q2, $2.1 Trillion Year To Date

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Fri, 09/17/2010 - 20:16 | 588868 MiningJunkie
MiningJunkie's picture

Superb observation. Thanks.

The "Long Gold Short ES" trade is flat now. Thank God I am triple-long Gold.

"Never underestimate the replacement power of equities within an inflationary spiral."

"Ain't no fever like gold fever".



Fri, 09/17/2010 - 21:04 | 588949 GoldSilverDoc
GoldSilverDoc's picture

Holy mother of Gold. 

Find all you can.  As soon as you can.  Not much time left.

Sat, 09/18/2010 - 05:10 | 589348 Oh regional Indian
Oh regional Indian's picture

Holy mommy of Silver is where it is at GSD. Gold, long hold will get old. Quickly.

On a related/unrelated note, any whiners looking to become warriors? 

American readers, may I suggest you visit

You might "make" or better yet, "make back" more money than you can imagine.

I wish I knew this when I was a US rezzi-dent!





Sat, 09/18/2010 - 07:58 | 589390 THE 4th Quadrant
THE 4th Quadrant's picture

20 years in a federal cage. Nice advice, Indian.

Sat, 09/18/2010 - 09:02 | 589419 Oh regional Indian
Oh regional Indian's picture

Takes Cajones to play 4th.

Easy to be a compliant complainer rather than an active resistor.

The darkness is closing in and you might be amongst the ones who will be soothsaid to sleep.

It takes courage to be awake in a world full of those walking with eyes wide shut.

No pain no gain? ;-)


Sat, 09/18/2010 - 09:29 | 589426 THE 4th Quadrant
THE 4th Quadrant's picture

The actions of your superhero will be ruled upon by a Federal Judge. Get it?

Incarceration will prevent his final blog posting. Which should be title: "Stupid is as stupid does".

You seem intelligent to me but you may want to work on your poor judgment. There are better ways. That poor misled man may have gotten back $17k but in doing so with his continued baiting and challenges will in my estimation loose in excess of 3 - 4 times his temporary gains via penalties, fines, and legal costs.

*edit* That is; if your superhero is infact not a shill for the author or character created to increase sales. *endedit*

When you step inside the casino you WILL obey the rules of the establishment. Enforcement is trivial and potent.

Sat, 09/18/2010 - 09:45 | 589432 Oh regional Indian
Oh regional Indian's picture

Every change cycle takes a few brave men/women along and crushes them under the wheels/in the mill etc. Inevitable. I'm sure Jay is aware of consequences.

Of course the establishment rules with an iron fist, question is will you rise up and face it or cower back?

The Tao Teh Ching is replete with advice on matters such as these.

The soft will overcome the hard etc. 

I feel Jay's work, if well informed and meticulously done, is non-violent resistance.

To paraphrase Jack London, "I'd rather be ashes than dust"...


Edit: Read your edit... if you read deeply enough into the man's writing, you can see he is no shill, but a broad-spectrum truth seeker. 

Sat, 09/18/2010 - 12:38 | 589615 Orly
Orly's picture

The Dao is replete with vague bullshit worse than anything Michel de Nostradame ever came up with.

Most of the teachings can be summed up fairly easily by noting that, "Stupid is as stupid does."

Sat, 09/18/2010 - 12:56 | 589637 Oh regional Indian
Oh regional Indian's picture

Orly, seeing that you are such a deep philosophical genius (wiser even than Lao Tzu, wow!), writing with such grace, fluidity and panache, I'll indulge you.

Study a geological feature called the grand canyon.

It is in the United States.

It was made by water wearing down rocks.

The soft wins over the hard, ultimately, every time. And spectacularly.

Shame on the committee who gave your your PhD.

Honoured to have shared words with your august, erudite and graceful self nonetheless..




Sat, 09/18/2010 - 13:46 | 589698 Kayman
Kayman's picture

Uh... ORI

I love the philosophy, but....

comparing the human condition to geology is a chasm as wide as the uh...

Grand Canyon.

Dang, dern it I forgets my mantra, and I falls asleep.

Sat, 09/18/2010 - 21:44 | 590187 Oh regional Indian
Oh regional Indian's picture

Hey Kayman, as above so below you know.

As every pattern watcher knows, it's a fractal world.

There is a human condition because there is geology.

I hope you can make the further connects.


Sat, 09/18/2010 - 13:47 | 589700 Fish Gone Bad
Fish Gone Bad's picture

The soft wins over the hard, ultimately, every time. And spectacularly.

Fantastic claims require fantastic proof.  Let's take a look at the moon, it is rather hard.  Let's take a look at space, it is rather soft.  So the vacuum of space will dissolve the moon?

Being clever with words does not make you a poet or an artist, but it can certainly make you a politician, or friendless.

Sat, 09/18/2010 - 15:14 | 589843 JR
JR's picture


Old Chinese proverb, “With time and patience, the mulberry leaf becomes satin.”

Old Japanese proverb, “Fall seven times, stand up eight.”

H. Jackson Brown quote, “In the confrontation between the stream and the rock, the stream always wins- not through strength but by perseverance.”

ORI: “The soft wins over the hard.”

Or, Winston Churchill, “If you are going through hell, keep going.”

Sat, 09/18/2010 - 21:35 | 590174 Irish Virus
Irish Virus's picture

Or, as the famous Roman philosopher put it, "Semper ubi sub ubi," which can be roughly translated as, "Always wear underwear."

Sat, 09/18/2010 - 21:52 | 590193 Oh regional Indian
Oh regional Indian's picture

FGB, wearing down required friction. Space is known to be resistanceless, as we currently understand resistance anyways.

And if a heavy dose of sarcasm delivered to someone who says the Tao Teh Ching can be paraphrased as "Stupid is...etc." loses me a friend, I feel lighter already! 

Also, clever? Don't like. Wise (ancient wise-dom), anytime. 



Sat, 09/18/2010 - 09:18 | 589427 Hulk
Hulk's picture

Don't forget the "lube"

Sat, 09/18/2010 - 18:28 | 590024 carlosschw
carlosschw's picture

QEII will be the first attempt by the US to replace dollar for dollar the "money" dissapearing from the system due to this deflationary deleveraging. It is unlikely that they will succeed. What can go wrong? If they don't create enough it will be unsuccessful. It is likely that in the current environment even if they match or slightly exceed, it will be usuccessful. If they overshoot or the world's creditors think they might, they will demand an inflation premium on US long paper. (Start of Greek-like spiral and probable check-mate). Most likely scenario, a crash in risk accompanied by a sharp sellof in precious metals as people try to turn whatever they can into dollar bills. Cash in the mattress will be the best investment. When metals crash, buy with both fists until they can get the choppers off the ground laden with cash.   

Fri, 09/17/2010 - 21:50 | 589018 Getagrip
Getagrip's picture

Is it too late to pull my FRN's out of the Shadow Bank's or should I buy the pullback?? 

Fri, 09/17/2010 - 20:16 | 588869 unununium
unununium's picture

Look at the outflow from money markets alone.  Er, wasn't that the cash on the sidelines?

Fri, 09/17/2010 - 21:55 | 589023 Getagrip
Getagrip's picture

Yep..went into PM's..

Fri, 09/17/2010 - 20:18 | 588876 AccreditedEYE
AccreditedEYE's picture

deflation bitches.

Fri, 09/17/2010 - 21:07 | 588953 nope-1004
nope-1004's picture

+1 bitch (on sale)

Fri, 09/17/2010 - 20:27 | 588892 Mitchman
Mitchman's picture

Am I reading this right?  Did the GSE's go through the ceiling?

Fri, 09/17/2010 - 20:47 | 588922 Tyler Durden
Tyler Durden's picture

It was a reclassification from GSE liabilities to mortgage pools. The two should net out

Fri, 09/17/2010 - 20:49 | 588923 Mitchman
Mitchman's picture

Thank you.

Fri, 09/17/2010 - 20:28 | 588893 Carl Marks
Carl Marks's picture

Long term actuarial models suggest decoupling of equity and credit markets along a sideband equilibrium distribution which would bode well for commodities.

Fri, 09/17/2010 - 22:06 | 589031 Terra-Firma
Terra-Firma's picture

in plain language, what did you just say? Thanks in advance.

Sat, 09/18/2010 - 12:38 | 589613 Eternal Student
Eternal Student's picture

To put it simply: Gold, B*tches!

That's a translation of what CM said. Translating the chart and report is something else; words don't do it justice. But it's similar to watching the Towers fall on 9/11.

Fri, 09/17/2010 - 23:31 | 589128 RockyRacoon
RockyRacoon's picture

Sure.  Markets will act according to the laws of physics? 

That would be nice.  Should make charting a lot easier.

Sat, 09/18/2010 - 18:56 | 590051 Orly
Orly's picture

I know, right?  Where do I sign up?

Fri, 09/17/2010 - 20:28 | 588896 frankTHE COIN
frankTHE COIN's picture

Don't get caught long. Something wicked, this way comes.

Fri, 09/17/2010 - 20:33 | 588902 VK
VK's picture

The wicked ben of oz!

Fri, 09/17/2010 - 20:54 | 588934 Miles Kendig
Miles Kendig's picture

The actions by authorities to date clearly demonstrate where the primary focus of the losers cum winners is to be found...

Fri, 09/17/2010 - 21:00 | 588945 Yes We Can. But...
Yes We Can. But Lets Not.'s picture






Fri, 09/17/2010 - 21:11 | 588959 traderjoe
traderjoe's picture

I don't know how anyone could look at these graphs and not realize two things: (1) our expansion, especially from 2001 to 2008 was nothing more then an unsustainable debt-fueled binge; and (2) there is one hell of a hangover coming. 

And I add, imho, that the end of the ponzi, fractional reserve fiat system is certain, planned. Don't know dates, and times, but my guess is soon. 

Fri, 09/17/2010 - 21:23 | 588977 Eally Ucked
Eally Ucked's picture

Probably end is very close because american consumer decided to take on new loans like there is no tomorrow:

Fri, 09/17/2010 - 23:11 | 589114 the grateful un...
the grateful unemployed's picture

hey that's good. the consumer chickens coming home to roost. actually i was going to suggest this was the fallout from the obama healthcare plan, people forced out of the system putting that cancer operation on their credit card. 

Fri, 09/17/2010 - 23:56 | 589155 RockyRacoon
RockyRacoon's picture

Whoa there big fella.  Please go back and read your linked article.

The dramatic increases [in consumer
loans] over the past few months have
been caused by a new reporting
requirement issued by the Financial
Accounting Standards Board.

Look at figure 3 for the real picture.  There is NO consumer credit increase!

Sat, 09/18/2010 - 07:08 | 589375 Ned Zeppelin
Ned Zeppelin's picture

Of course not. There is still some belief out there as part of the money on the sidelines nonsense that consumers are ready, willing and able to resume borrowing at a frenetic rate if just a few things would change. Reality is the consumer is tapped out, leveraged up to the hilt, and it will take years of debt paydowns and income increases to achieve a renewed appetite for credit. What the economists call the savings rate increase (as if people are wisely stashing cash in their bank accounts) is really a measure of monies directed at debt pay-downs which are non-discretionary, and the cash available for doing anything else is going there. 

Sat, 09/18/2010 - 11:08 | 589515 RockyRacoon
RockyRacoon's picture

You nailed it.  As I understand it, the "savings rate" is calculated as the simple difference between wages and "consumption" numbers.  As if whatever is left over is saved.  It is going to deleveraging as you point out.

One of my pet peeves is people reading headlines or bold text and making assumptions as to the theme or focal point of an article.  The linked article above was NOT READ and its headline was put forth as its thesis.  Many ZH articles are skimmed only and the reader goes on to the comments to get embroiled in debate which wanders off topic, sometimes into tin-foil hat fringes.   Oh, the humanity!

Sat, 09/18/2010 - 14:06 | 589733 Kayman
Kayman's picture


Perhaps Eally Ucked was referring to the transition point in the fall of 08. I don't know.

I, for one, cannot keep up with all the ZH material, since I have another life.

I think, most ZH'rs read and understand the substance of most things they comment to.

It is the things in the shadows that are the most perplexing.  Derivatives in the shadows, off balance sheet liabilities including guarantees and contractual commitments hang like a guillotine. 


Sat, 09/18/2010 - 14:20 | 589754 RockyRacoon
RockyRacoon's picture

Well, no.  He just didn't read the article link he posted.  It is a short .pdf and quite clear.  Not any more complex than that.

Sat, 09/18/2010 - 14:06 | 589734 Uncle Remus
Uncle Remus's picture

into tin-foil hat fringes

You say that like it's a bad thing...

Sat, 09/18/2010 - 14:22 | 589756 RockyRacoon
RockyRacoon's picture

Oh, hell no.  Some of my best friends are of the tin-foil hat persuasion.  They are a lot of fun to debate.  I love 'em all.

Fri, 09/17/2010 - 22:00 | 589030 frankTHE COIN
frankTHE COIN's picture

I feel in my heart that the Fed knows it's inevitable that we are going much , much lower. They just want to slow the fall down as much as they can. They know they can't stop the inevitable, they are working against a crash.  To me, it looks like a crash is unavoidable.

Sat, 09/18/2010 - 04:07 | 589332 StychoKiller
StychoKiller's picture

E = mv^2, when a large mass under a large velocity undergoes a sudden de-acceleration, a LOT of mass gets converted to energy to balance the equation (BOOM!) 

Sat, 09/18/2010 - 11:21 | 589525 trav7777
trav7777's picture

uh, no it doesn't.  Mass is always conserved except in nuclear reactions.

Sun, 09/19/2010 - 18:42 | 591042 Athena
Athena's picture

Actually, for non-relativistic kinetic energy, E = mv^2/2.

Fri, 09/17/2010 - 22:23 | 589050 Eternal Student
Eternal Student's picture

Indeed. This is the kind of information that I'm looking for.

As for who could look at this and downplay it? Oh, I suspect the Gonzo economists could.

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