Is The Entire Global Banking Industry Carrying Naked, RISKY, Unhedged "Risk Free" Sovereign Debt? Quick Answer: Probably!

Reggie Middleton's picture

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Arkadaba's picture

So ... get the fuck out (GTFO)


HD's picture

No worries. Even if the entire financial system collapses it still won't be a "credit event".  As of this moment I will be offering CDS contracts to anyone for anything - just send me your money...


john39's picture

the lawyer is right about the CDS contracts.  Have never reviewed one, but would be curious to know what law is selected and what jurisdiction...  What the 2nd Circuit says might be totally irrelvant if the majority of CDS contracts select some banker friendly law and jurisdiction outside the U.S.  But certainly those holding CDS could sue for a determination as to whether the obligations have been triggered.  can't even imagine what a clusterfuck that would be.  Though I do suspect that some will be able to blackmail some money with just a threat.

Buck Johnson's picture

And that is the horror, the cluster that would insue.  It would literally lock up the whole banking system and money flow.  Because if your suing because of an event and the counterparty is saying essentially I'm not paying, then your going to do everything you can to get him to pay and that includes getting your money out of anything associated with that counterparty.  On top of the fact that if financial law isn't enforced or negated, then who's to trust their counterparty or bonds you bought.  It would be a run on the bonds and the banks don't have the money for that or the money for the CDS.  This whole thing is a cluster and there is no way out of it nicely.

falak pema's picture

What gets me by the short hairs of financial system star gazing, in this current wind-down of greek tragi-comedy of epic proportions, is to see the great speculative brigade that is now frozen into uncertainty; all that was supposed to trigger the Euro demise has occured to Pi squared, the current greece fiasco has attained epic pseudo comical proportions. Yet the scions of speculative vigilante action who should have hung every euro shill bank by his cojones, nailing their hide to the pillory of market ridicule, stay passively silent; like if the Billy the Kids of the global Lincoln county war had lost all their bullets.

One gets the feeling that the US Oligarchs have lost their compass as they are not sure that the Governor of New Mehico is on their side and will always come to help pax americana win the day. Come hell or high water.

Now if that is true in the Oligarchical financial world, when TPTB cannot hang a heretic like G-Pap to the wall, nor bring down a neo-Keynesian Ponzi like the Euro one has to ask oneself : is there a bigger canary in the global coal mine?

Whadya all say...?

Mario Draghi says I'm gonna print, print, that's a new angle to ECB play! He starts with euro Zirp...


Bansters-in-my- feces's picture

Thats Goverment Sachs to you...

Information overload,but still love it.

Great stuff Reggie.

Seasmoke's picture


there fixed it for you

ebworthen's picture

Interesting interview of Sean Egan of Egan Jones regarding Jeffries having 13-1 leverage of Sovereign debt and short hedges that were not sufficient "in the current environment" (i.e. - post Lehman and MF).

I'd love to see a run on GS, but the rats would simply jump from the sinking ship to the next one in port; look at John Thain.

SlorgGamma's picture

Reggie, that photo is priceless. Keep on doing what you do and speaking truth to the bankster, scamsters and squidsters -- you rock!

Commander Cody's picture

Because GS is not a bank in the traditional sense (its an IB, or more accurately, a hedge fund) and does not hold depositor funds (only investors), so what if it blows up?  Investors beware as prior performance does not guarantee future returns.  The acceptance of GS as a taxpayer backed bank is fraud and should be rescinded.  Bring back Glass-Steagal for God's sake to deal with the rest of the crooked banksters.

Zero Govt's picture

I agree with your views my only gripe is with your technical 'fix' of Glass Steagal

Law and Regulation does not work. Never has. Never will.

I don't know how many times every single Law in the world has to fail (at stopping anything) and every single regulation (at preventing anything) before the majority of people 'get it'

...maybe people just aren't familiar with reality, history or human experience? Do most people live in an idealised world where they just knee-jerk gob off "Oh we need a Law for that, that'll fix it"

Take any 2 Laws or 20 Regulations and go through them and see if they work why don't you? Indeed why doesn't everyone actually test their idealism and problem solving by researching actual practice? Say 'Hello' to stone cold reality and not these idealistic answers and stupid belief systems (in Govt institutions)

How about another 300 Countries take on Glass Steagal and it fails (as it 100% will for sure) in all 300... would you 'get it' then or would you simply say we need Glass Steagal the Sequel?

PianoRacer's picture


Phallic.  That's like a penis, right? 

ebworthen's picture

As long as the banks control the governments, the only losers will be the 99% of the world.

They can tax and austerity and outright ROB us to pay for their perfidy and malfeasance.

Until, of course, the 99% decide that the heads of the 1% must roll.

Reggie Middleton's picture

You guys forget that banks need to lend to make money. If you kill your livestock, what do you eat then. Printing is not a panacea. Ask those from Zimbabwe's banking system. There are no free lunches.

mind_imminst's picture

Printing is not a panacea, that is right, there will be bumps in the road (MF Global?) but the central bankers are getting pretty adept at managing the debt/fiat issuance, so the "livestock" doesn't quite die and doesn't realize they are getting screwed.

DavidC's picture

Well Reggie,
All I can say after today's events is it looks as though they might all be getting away with it.

A 200 point drop in the Dow last night and a 350 point turnaround today.

I was doing well with day trading until March 2009 (the start day of the G20 in London), I've been consistently losing money since then. I've just about had enough.


mind_imminst's picture

I'll give you a heads up. The central banks, the international bureaucrats, and the TBTF banks, all know they are screwed, as Reggie has so meticulously pointed out. Even Greenspan said as much 10 years ago or so, when he said we wouldn't want to regulate the derivatives market because it is just a black hole. So.....what is a central/national banker to do......hmmmm.....there is only one way out. Print, Print, Print, Print, Print, Print, and Print more. That is the only way I can figure the TBTF banks will remain whole (while everyone else gets poorer, of course). Therefore, I am not anticipating major banks runs or systemic collapse (barring any unkown unkowns = real black swans). The collapse will be managed by printing money. That is what happened in 2008. That is what I expect in the next few months. The sad part is that most of the world's population (outside of Germany) is too poorly informed or educated about economics to realize they are getting screwed by massive-money printing. They just look at the FRNs in their pocket, listen to "prophets" like Krugman, and think everything is ok. Sigh. Keep up the good work Reggie, but don't bet (financially naked) on a huge bank run.

Zero Govt's picture

Print, print, print is not "the only way out" is only kicking the can propping up the bankrupt which is no way out of anything

printing zeros neither does anything for the real economy (in fact fuking with the currency fucks it up) nor will it 'cleanse' the bankrupts. There will be no turnaround from all Bennys futile actions ...Central Bwankers change nothing, they are incompetent and always impotent

Ancona's picture

G-Pap is a gutless wonder. He is being led around by the nose by the EUrotards who still believe their little experiment can work. I guarantee you that this is just the beginning folks, and when it does unravel, Goldman will be cut wide open and the world will see just how evil the Brotherhood of Darkness is.

Cue torches and pitchforks.

El Viejo's picture

EU to determine if
economic coercion or true voluntariness exists.

Sounds like a French drug test at the Tour de France.

covert's picture

fantastic writing! so what is the future of gs beyond the bailout? maybe I should buy some?

ty for such a great post!


falak pema's picture

well if you're lance then you're king of the mountain and its broke back like bare back, its not kosher nor is it amateur. Which is better  on corruption scale, Oligarchy coercion or statist shill cover up of oligarchical coercion. 

El Viejo's picture

"if it is proven that a Greek default is not truly a default, hence not a credit event, then
isn't Goldman trading extreme risk naked and unhedged?"

I sure hope you are right reg.

Bastard banks are making a play for democracy itself and they've got the US govt in their pockets.