Will The Record Plunge In Shadow Liabilities Impair Current Account "Shadow" Deficit Funding And Guarantee A Double Dip?

Tyler Durden's picture

Last week's European stress test is by now, luckily, part of propaganda history. Easily the most ludicrous finding of the "test": all seven of Germany's largest Landesbanks, NordLB, WestLB , LBBW, BayernLB, HSH, Landesbank Hessen Thueringen and Landesbank Berlin, magically passed with flying colors. As the Landesbanks are at the same level (or far worse) of capital deficiency, courtesy of underwater and mismarked real estate assets accumulated over decades of lax lending practices and still marked at par, as are Spain's cajas (of which 5 were generously allowed to fail, although with laughable tier 1 capital shortfalls of a few hundred euros each), this finding alone is worth a few chuckles, for those who actually care. We won't speculate on the stress test any more - everyone knows it is a farce. Yet the role of the Landesbanks in European, and especially American markets, deserves a prominent discussion. And not just any market, but the very shadow banking system which at last check was vastly bigger than regular plain-vanilla commercial banking. As even the New York Fed acknowledges in its recent paper "Shadow Banking", by Zoltan Poszar, in which there is a whole section on the critical Landesbank function in the shadow economy, "As major investors of term structured credits “manufactured” in the U.S., European banks, and their shadow bank offshoots were an important part of the “funding infrastructure” that financed the U.S. current account deficit," the proper functioning of the Landesbanks is crucial to maintaining a stable and efficient market funding structure. This is actually extremely important, as for years most economists and pundits have considered only the non-shadow banking funding aspect of the massive US current account deficit (a topic most critical now that even the US is embarking on fiscal austerity, and the government sector will be unable to further fund the multi-trillion deleveraging ongoing in the private sector, thus pushing the topic of the current account to the forefront as Goldman did recently). Generically, everyone has always looked at China and Japan as those parties responsible for funding the US Current account deficit. Alas, that is only (less than) half the truth. As the New York Fed suggests, the shadow banking system is likely a more important economic funding factor than even China and Japan combined when it comes to the CA. Which is why the all time record decline of over $1.3 trillion in shadow banking liabilities should be a far greater warning sign than any month to month change in China's UST purchasing patterns, than whether WestLB is "really" broke or only "never never" so, and than the debate whether China will decouple, float or just continue posturing vis-a-vis the CNYUSD exchange rate. As everyone contemplates navels, a major portion of liability funding is literally evaporating as shadow banking implodes. Yet nobody bothers to discuss this most important to the future of the US economy topic.

For those who have not read the Poszar seminal and must read breakdown of the shadow banking system (an analysis we will discuss much in the coming weeks), and which he defines as: "financial intermediaries that conduct maturity, credit, and liquidity transformation without access to central bank liquidity or public sector credit guarantees", the salient section discussing European bank importance, and especially that of the Landesbanks, in the shadow banking system is as follows:

Some parts of the “internal” shadow banking sub-system specialized in certain steps of the shadow credit intermediation process. These included primarily undiversified European banks, whose involvement in shadow credit intermediation was limited to loan warehousing, ABS warehousing and ABS intermediation, but not origination, structuring, syndication and trading.

The European banks’ involvement in shadow banking was dominated by German Landesbanks (and their off-balance sheet shadow banks—securities arbitrage conduits and SIVs), although banks from all major European economies and Japan were active investors. The prominence of European banks as high-grade structured credit investors goes to the incentives that their capital charge regime (Basel II) introduced for holding AAA ABS, and especially AAA ABS CDOs. As major investors of term structured credits “manufactured” in the U.S., European banks, and their shadow bank offshoots were an important part of the “funding infrastructure” that financed the U.S. current account deficit.

Similar to [Financial Holding Companies'] credit intermediation process, the maturity and credit transformation performed through European banks’ ABS intermediation activities were not adequately backstopped: First, while European banks had access to the ECB for funding, they only had access to euro funding, and not dollar funding. However, given that ABS intermediation involved mainly U.S. dollar-denominated assets, a euro-based lender of last resort was only a part of a solution of funding problems, as borrowed euro funds had to be swapped into dollars, which in turn needed willing counterparties and a liquid FX swap market at all times. As the crisis has shown, however, FX swap markets can become illiquid and dysfunctional in times of systemic stress. Second, similar to other shadow banks, the liabilities of European banks' shadow banking activities were not insured explicitly, only implicitly: some liabilities issued by European shadow banks— namely, German Landesbanks-affiliated SIVs and securities arbitrage conduits—benefited from the implicit guarantee of German federal states' insurance. European banks’ and other banks’ and nonbanks’ involvement in ABCP funded shadow credit intermediation activities is listed in Exhibit 12.

Of course, none of this should come as a surprise to anyone who has followed the Goldman Abacus scandal in depth: the primary dumb money recepticle of all toxic ABS and CDO exposure was long ago decided to be the German banks, which due to a regulatory arbitrage deriving from Basel II exemptions, and for other various reasons, discussed in the Fed paper, and on which we as well will touch upon in the future, were eager to gobble up any and every piece of structured debt biohazard to be kept on their "shadow" SIVs. After all they are off balance sheet - why worry? Speaking of, we wonder if Europe tested the tens of trillions in underwater assets held by Landesbanks on off-balance sheet vehicles - actually that is rhetorical.

But the issue here is much more nuanced. In essence, the Landesbanks, due to their very explosive holdings, are the German equivalent of our own bankrupt multi-trillion shadow bank extraordinaire: the GSEs - Fannie and Freddie, which served as the very basis for the creation of the entire US shadow banking system which at last count was $15 trillion - around $3 trillion larger than the non-shadow system (it is also likely hundreds of trillions globally, although nobody will stick out their neck with a near or even rough estimate). Just like our own GSEs warehouse around $7 trillion in "shadow" loans - implicitly guaranteed, but not "really" debt - just ask Larry Summers and Ben Bernanke, with an implicit but not explicit guarantee from the government, so the Landesbanks are in precisely the same position. Yet some could argue that the Landesbanks potentially have a far greater impact on the US economy due to their marginal impact as provider of current account deficit funding, than the GSEs, whose recent function has been merely to house hundreds of billions in securitized delinquent mortgage loans, and thus keep mortgage rates low, preventing an all out collapse of the US economy.

All of this must be kept in mind when considering that according to the most recent Z.1, the collapse in the US shadow economy in the quarter ended March 31, was unprecedented. The decline in shadow banking liabilities (defined as the total shares outstanding in money market mutual funds, the total liabilities of GSEs, total pool securities in the GSE mortgage pool, the total liabilities of ABS issuers, the total amount of securities loaned by funding corporations, the total liabilities of Repo markets, and total outstanding Open Market Paper: all of these can be found in the Z.1) between December 2009 and March 2010 amounted to $1.33 trillion! This was nowhere near even remotely offset by the $250 billion increase in liabilities of Commercial Banks. The full detail of the collapse in the shadow banking system is presented in the charts below.

The real question one should be asking, instead of the asinine debate over whether the Landesbanks are solvent or not (for the immediate answer, look no further than our own GSEs), is just how much of an impact on US current account funding will the massive deleveraging that is occurring in Germany have? And furthermore, if indeed German bank exposure via the shadow banking system is comparable, if not much larger, at least on the margin, to that of China and Japan, whose role in deficit funding via the non-shadow economy is well understood and extensively discussed, then what will the consequences of the continuing collapse in shadow banking liabilities be for America in the coming quarters and years? Because while the Fed may pretend to reliquify the market one day at a time using money that is stored at bank vaults, and never makes it into broad circulation aside from being used to purchase Treasuries, barrels of crude, and occasionally 3x+ beta stocks, the unwind that is occurring in the shadow system is, paradoxically contrary to its name, all too real, and orders of magnitude greater than the reverse reliquification process. Case in point: from its peak of $20.9 trillion in liabilities in Q1 2008, shadow banking has lost $3.8 trillion in liabilities in just the past two years. Indeed, over the same time period, liabilities of commercial banks have increased by $2 trillion. Which means that the Fed has been responsible for plugging the hole: curiously enough, the amount of securities purchased as part of the non-Treasury portion of QE amounts to roughly $1.7ish trillion. Merely a coincidence? In other words, with commercial banks unwilling to ramp up lending activity, and the shadow system vomiting risk each quarter, with a stunning $1.3 trillion flowing out in Q1 alone, should Q2 demonstrate a continued collapse in shadow banking lending, then the Fed will have no option but to get involved yet again, even if that means to merely plug the differential between the shadow and non-shadow system, as the inability to keep this necessary equality balanced would result in a collapse in the US current account funding, which in turn would kill the economy, absent yet another fiscal stimulus. In other words, the Fed's monetary stimuli do to the shadow economy what Obama's fiscal stimuli do to the plain vanilla backstopped deposit lending. And the scary conclusion is both reflation attempts are not only failing, but doing so at an accelerating pace.

Should the Q2 Flow of Funds report confirm another $1.3 trillion (or near) decline in shadow liabilities, it is pretty much game over, for both the US economy, and, when one factors  the Fed's only logical response, for the US dollar.


1. Comparison of total Traditional and Shadow Banking Liabilities since the 1960s. The inflection point was Q1 2008, since which we have seen a whopping $3.8 trillion in liability reduction.

2. A detailed overview of the components comprising the $17 trillion US shadow banking lending market (the recent reclassification between GSE liabilities and GSE mortgage pool securities has been netted out).

3. And the shocker: the sequential quarterly change in shadow banking liabilities. The outlier is prominently noted.

Source: Z.1, Federal Flow of Funds Report

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hedgeless_horseman's picture

Do sovereigns repo 105?  Surely, they must.  No shortage of new shadows in which to hide. 

Never forget 7/21/09: http://www.youtube.com/watch?v=n0NYBTkE1yQ

B9K9's picture

It's all just a big-assed circle jerk designed to buy time in order to preserve the existing status quo. The bottom line is either humanity stumbles upon some new miraculous economic driver that will induce/encourage the global population to willingly contract new debt, or this fucker is going down.

The banking-political-bureaucratic triumvirate is absolutely committed to the current course of action because each benefits to a tremendous degree in their own respective fashion. However, like any three-legged stool, it's a very unstable arrangement due to the weakest link: the political leg.

If the central bankers are unable to create another publicly subsidized credit-leverage vehicle like Fannie, Freddie, Sallie, FHA, etc, AND successfully blow another illusionary bubble utilizing this tool, the political monster(s) may finally begin to show its face(s).

Once a new breed of true representatives are placed in power which did not benefit from the prior arrangement, then not only do they have nothing to lose (very important!), but they will also be propelled by the building public resentment & rage. (Jealousy & envy are two of the seven cardinal sins - never underestimate the power of revenge.)

That's why we haven't seen any indictments so far - each group is protecting the other. Shit, they probably quote Franklin to each other to remind themselves of their predicament. ("We must all hang together, or assuredly we shall all hang separately.") We will only live to see thousands of financial/political/governmental officials frog-marched if & when we get regime change.

I really enjoy ZH because it's just about the only place anywhere where anyone really gets what's goin' down. But still, it's also a bit of a waste of time. Either we get reflation, in which case it's "sayonara suckers" as the smart money loads up on every leverageable vehicle possible. Or, most likely, math, physics & logic prevail, in which case we get to live through "interesting times".

Being able to say "I told you so" & a $1.50 will only get you a coffee. The key is to be one of those who can articulate to the mob exactly what crimes were committed and why the culprits must pay (literally & figuratively, if you get my drift).

Gully Foyle's picture


Dude we are fucking doomed.

I stumbled across this topic at REDDIT

What Congress spends "on itself" --(infographic)



Fucking people are actually condoning or PRAISING the exorbitant amount of TAX PAYER dollars spend by MILLIONAIRE politicians to feed their fat asses!

We deserve that fucking apocalypse!


G-R-U-N-T's picture

A little off topic, however a note worthy reminder of just how misdirected the minds of Obama,  and his administration really are.



Noah Vail's picture

No amount of reflation is going to ignite the "consumer economy" which is now deader than a door nail. The consumer is going down as the middle class is being sucked dry. They may keep their scam going for a few years longer, but all too soon they will discover that that all that debt they heaped on the nation will not be repaid. There is no IF about our future, only WHEN. Pick a number, 1 to 5, that's how long we got, tops.

colonial's picture

excellent post and comment

bugs_'s picture

"reflation attempts are not only failing, but doing so at an accelerating pace"

Hey Bernanke, have you decided wether or not you can "break the back of this thing" yet?


StychoKiller's picture

I too am "Unusually Uncertain" -- could be all these ice picks ZH keeps sticking into my skull!

NoBull1994's picture

It's hard for me to focus on the article with the flashing Jim Cramer advertisements.

Noah Vail's picture

Hah! He doen't know it yet but he will be one of the first to meet the figurative guillotine that will soon make its debut in a town square near you. It can't happen here? Ya wanna bet yer life on that?

StychoKiller's picture

I've got the woodworking skillz to make the frame -- do ya want the blade to be sharp or dull?!

hack3434's picture

It must be painful to watch that fucker flashing all over...try the following if you have Firefox:https://addons.mozilla.org/en-US/firefox/addon/1865/

Google Chrome:https://chrome.google.com/extensions/detail/gighmmpiobklfepjocnamgkkbiglidom?hl=en



nwskii's picture

no kidding, I saw him and threw up in my mouth

Vampyroteuthis infernalis's picture

Good post. This almost reads like an expose on the mafia. Shadow banking system and missing money. I guess that in itself reveals how much banksters are criminals.

jtmo3's picture

Isn't all this talk pointless? Everyone who pays attention, including investors, knows that banks are lying and deep in the toilet. The issue here is will they be allowed to realize those losses? No. That fact has been hammered home by the actions of the .gov over the last two years. They will print and illegally loan to prop them up. So in reality, all the talk about dead banks is mute.

Commander Cody's picture

Exactly, the banksters run the governments and the governments have guns.  World governments will feed the monster off the backs of ordinary citizens while the gap between the haves and have nots continually expands until we are all serfs to the machine.  No government, aligned under the new world order, will allow its banksters to suffer the mistakes they make in the name of greed.  It is the way it is.  Bernanke will print whatever is necessary to feed his bankster masters and the Congress will support them forever.  It is a corrupt system.  Deal with it.

MachoMan's picture

You presume that monetary policy (combined with a complete lack of enforcement) can keep up the charade.  The article should at least draw attention to the fact that monetary policy's sphere of influence is limited.  In a vacuum (bubble?), maybe you would be correct, for a long time.  The problem here is that their card is going to get pulled and the dynamic credit system is going to implode, forcing their hand.  B9K9 had a good post in the open thread regarding this issue and where the stimulus money went...  and why it went there...  it's a losing proposition.

We are only in controlled demolition now...  and soon it will give way to uncontrolled collapse.  Apparently, god can create something too heavy for him to lift. 

Everyman's picture

++100 Machoman!

The goobermint could not "control" any of the bubbles that burst.  The only issue they seem to care about is giving a few a "soft landing" at expense of the many.  Kind of backwards in the "Vulcan" line of "the needs of the many outweigh the needs of the few ... or the one".

Commander Cody's picture

The fascists in control have been, are continuing to and will always create bubbles that burst on the backs of the many in support of the few.  There are no Vulcans on this planet.  Live long & prosper?

B9K9's picture

The fascists are not & have not always been in control. Sometimes, the time lapse between burst bubbles and new economic paradigms is too great. In fact, it could be merely a matter of years.

Look @ revolutionary France - it the royalty had just been able to squeak out another 10 years or so, instead of Napoleon, the Bourbons (with perhaps Napoleon as one of their leading generals a la' Patton) could have led the armies which conquered Europe.

In all of mankind's history, nothing quite satisfies & delivers the goods/services to the general public as does conquering foreign territory. I mean, look how long of a run both GB & the USA had from 1620 up until fairly recently. Christ, we show up with all of our fancy technology, and the only people here were wearing animal skins for doG's sake! Dang, it was like, "I think I'll be having that, thank you very much!"

The poor suckers who are gonna inherit our current mess will enjoy getting both a demographically altered & resource depleted husk in which to dress up & pretend to re-live the glory years. LOL

Btw, what MM was referring to was my comment on an previous thread that all this QE talk is utter bullshit. Monetary policy has very limited affect when credit represents around 99% of the total aggregate money-credit system.

The key is debt, debt & more debt. The fascists must, MUST first create another publicly financed credit leverage vehicle and then they must, MUST be able to successfully blow another bubble. Lacking either or spells doom; money by itself (QE) has no effect on credit leveraged purchases like houses, education, autos and other big ticket items.

That is why Ben correctly directed QE I towards propping up Fannie/Freddie, by far & away the single most critical component in this entire charade. (Second was equities, but only from an '"animal spirits" perspective.) Unlike his jawboning declaration, Ben did not shower money from a helicopter onto the public, and he will not do so, for the simple reason that money in the hands of individuals only means non-financed asset prices increase 1:1 in lock-step with money supply. (For example, food, gas, utilities, etc.)

Again, if the global herd cannot be induced into willingly contracting for credit (ie go into debt), and soon, in a mad chase for illusory gains, this baby is crashing. It is up to us, the informed & knowledgeable, to explain to the mob why the criminals must pay.

MachoMan's picture

I just hope we have the wherewithal to bring them to justice.  My guess is, by the time we get our shit together, they'll be long gone.  And we'll be too worried about trying to relive our mistakes.  It's a shame we have a hankering for the pound of cure instead of the ounce of prevention.

robobbob's picture

"induced", you say that like there is going to be a choice. Increasing taxes, decreasing services, increasing costs of every life critical commodity, decreasing real wages, cronic unemployment, decreasing health care quality

people are going to be put in a vise just to survive.

And who will be there waiting with the payday loans, credit cards, reverse mortgages, and student loans? All with new found enforcement and recovery laws, and repayment through gov service.

"confess quickly son, before you hurt your credit rating"-Brazil

Eternal Student's picture

Re: time lapses. Another example, arguably the most significant one, is if the Ottoman Empire managed to last another 10-20 years. Then they'd have control over enough oil revenue to continue, and could conceivably be in charge of most of the world's energy today. The past 100 years would be quite different.

Getting involved on the losing side of WWI was an extremely expensive mistake.

DoctoRx's picture

Quite a read.  Thanks, Tyler. 
But what was that about:

even the US is embarking on fiscal austerity, . . .?

I must have slept through the past 2 days.  Did Congress legislate sanely while I slept?


DavidRicardo's picture

No, you just don't understand what "austerity" means today: it means liquidation.  That doesn't mean government spending is lessened.


Surprised?  You shouldn't be.

Caviar Emptor's picture

It means soft default. Government will not honor promised disbursements from social security, medicare and other "trust funds" that collected tax money. They'll legislate away the liability through the usual tricks: raising age thresholds, phase ins, community rating, income phase outs etc... You won't recover your money cause it's gone...suckers 

fiddler_on_the_roof's picture

Yes we are all suckers. What a bad hand we are dealt. Should make everyone angry.

Social Security Tax is just another Tax. Powerless to do anything - people

MrTrader's picture

Hum, check : Mercedes Benz enjoys record June sales. BMW predicts sales this year to rise 10%. VW sales icrease 5.7 % yoy. BASF raises end year guidance. Machine tool orders up over 50 % yoy. Do I care about Landesbanken ? LOL ! Hum, no....:=)))

Zina's picture

But where are the jobs?

Bam_Man's picture

But where are the jobs?

Stuttgart, Munich and Hannover.

Bam_Man's picture

Unemployment rate in Germany dropped to 7% in May.

Weak euro + continued banksta looting = happy times for German manufacturing.

bmwmc's picture



Compare sales to 2007 please.

lizzy36's picture

wow, i think i read the exact same thing at exactly this time in july of 2007. 

isn't is ironic don't you think?

bmwmc's picture

What a perfect analogy with the BP spill.  As long as there's no oil on the surface everything is a rainbow of optimism.  Yet underneath the surface lies millions of barrels of oil.  The gulf underneath the surface is dead but everything looks fine from space.  Thats what the global banking system looks like from the space between Ben & Timmy's ears.

knukles's picture

The gubamint be tellin' us to Judge the Book by its Cover; No Oil on the Beach... Everything's OK.
Back to work, slaves. 

uno's picture

Now we have to include


Back to work and/or government handouts, slaves.

JR's picture

More on the home front…at Main Street and Wall…

Shadow Banking Makes a Comeback: Reflating High-Risk Assets by Mike Whitney | CounterPunch | July 23-25, 2010


Credit conditions are improving for speculators and bubblemakers, but they continue to worsen for households, consumers and small businesses. An article in the Wall Street Journal confirms that the Fed's efforts to revive the so-called shadow banking system is showing signs of progress. Financial intermediaries have been taking advantage of low rates and easy terms to fund corporate bonds, stocks and mortgage-backed securities. Thus, the reflating of high-risk financial assets has resumed, thanks to the Fed's crisis-engendering monetary policy and extraordinary rescue operations.

Here's an excerpt from the Wall Street Journal:

"A new quarterly survey of lending by the Federal Reserve found that hedge funds and private-equity funds are getting better terms from lenders and that big banks have loosened lending standards generally in recent months. The survey, called the Senior Credit Officer Opinion Survey, focuses on wholesale credit markets, which the Fed said functioned better over the past quarter." ("Survey shows credit flows more freely", Sudeep Reddy, Wall Street Journal)

In contrast, bank lending and consumer loans continue to shrink at a rate of nearly 5 per cent per year. According to economist John Makin, there was a "sharp drop in credit growth, to a negative 9.7 per cent annual rate over the three months ending in May." Bottom line; the real economy is being strangled while unregulated shadow banks are re-leveraging their portfolios and skimming profits.  Here's more from the WSJ:

"Two-thirds of dealers said hedge funds in particular pushed harder for better rates and looser nonprice terms, and they said some of the funds got better deals as a result. ... (while) The funding market for key consumer loans remained under stress, with a quarter of dealers reporting that liquidity and functioning in the market had deteriorated in recent months."  ("Survey shows credit flows more freely", Sudeep Reddy, Wall Street Journal)

As the policymaking arm of the nation's biggest banks, the Fed's job is to enhance the profit-generating activities of its constituents. That's why Fed chair Ben Bernanke has worked tirelessly to restore the crisis-prone shadow banking system. As inequality grows and the depression deepens for working people, securitization and derivatives offer a viable way to increase earnings and drive up shares for financial institutions. The banks continue to post record profits even while the underlying economy is gripped by stagnation. …

The Fed is paving the way for another catastrophe. …

The meltdown in subprime was the spark that set the shadow system ablaze.

Even so, Bernanke has fought all attempts to strengthen regulations, raise capital requirements, or tighten lending standards. Thus, the pieces of the shadow system have been reassembled with no fundamental change. Now it appears that the Fed's bubblemaking efforts are starting to pay off. Here's a clip from an article in the Wall Street Journal which clarifies the point:

"Even as lenders struggle to pull themselves out of the credit crisis, signs of a new and potentially dangerous infatuation with risky borrowers are emerging. From credit cards to auto loans to mortgages, the hunger for new business as the crisis ebbs is causing some financial institutions to weaken lending standards and woo borrowers who mightn't be able to pay...


“Credit-card issuers mailed 84.8 million offers of plastic to U.S. subprime borrowers in the first six months of this year...Fannie Mae, seized by the U.S. government in 2008 to avert the mortgage company's failure, launched an initiative in January that allows some first-time home buyers to get a loan with a down payment of as little as $1,000. ... The thawing securitization market for auto loans is helping AmeriCredit increase its loan staff and dealer network...Kathleen Day, a spokeswoman for the Center for Responsible Lending, said the consumer group is "seeing banks re-enter the subprime market at a steady clip and make loans to borrowers who don't have the ability to repay.


“There is no doubt that the credit supply still is tight. ... But some lenders are starting to take more chances on consumer loans. Many financial institutions that survived the credit crisis and resulting recession are desperate for earnings growth." ("Signs of Risky Lending Emerge" Ruth Simon, Wall Street Journal)

Financial system instability is no accident. It's Central Bank policy.  As financial institutions discover they can no longer count on organic growth in the real economy to increase profits, (because consumers are too strapped to spend freely.  They will rely more heavily on dodgy accounting, bogus ratings, opaque debt-instruments, high-frequency trading and lax lending standards. This is the shadowy regime that Bernanke is trying so hard to rebuild. The Fed is laying the groundwork for another disaster.


DavidRicardo's picture

Why is this news to you?  It happens in every liquidationist period.  Look at Germany after 1929?  And why would oligarchs oppose it?  It destroys the competition.


In short, this is not a "collapse," it is a premeditated step on the way to corporatism.

Caviar Emptor's picture


There's only a short distance between where we stand now and corporatism aka fascism. The unholy alliance between the financial sector and government is like bringing church and state together. Elite bankers may soon increase demands such as control over wages and prices paid. They hold the ultimate blackmail weapon, the sword of Damocles over the heads of middle class America and any politicians who oppose them: screw with us and we'll precipitate a collapse.

snowball777's picture

Where've you been?

Bankers have had control over your wages and prices for decades and made out like bandits by seeding the shitstorm clouds in the 80s and 90s too.

They're just perfecting their technique now.

DR's picture

Good article but I gotta ask-is it smart or dumb money that is buying into the reflation of shadow risk assets? Sure these assets are back by the US sovereign but at this point the US has the credit credibility of an Argentina.



spekulatn's picture

Nicely done, JR. Thanks for sharing this lil ditty.

Miss Expectations's picture

"Who knows what evil lurks in the hearts of men? The Shadow knows! HA-HA-HA-HA-HA!"