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Largest Central Banks Now Hold Over 15 Trillion in Fictitious Capital

ilene's picture


Russ focuses on Japan's problems in this article, but Japan's not alone when it comes to the list of countries with ponzi-like financial systems. ~ Ilene 

Largest Central Banks Now Hold Over 15 Trillion in Fictitious Capital

Courtesy of Russ Winter of Winter Watch at Wall Street Examiner  


I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc.  The strong yen strikes again: Honda decides to build a high-performance hybrid Acura in Ohio – instead of its home nation of Japan. The firm’s continued shift in production to North American capacity signals a wider trend of Japan’s automakers to battle currency-related losses by moving operations.

Japan is on life support. The largest buyers of its debt are now sellers.  Japan Post Holdings holds almost 3 trillion dollars of JGB’s and GPIF, the retirement fund, holds over $1 Trillion of JGB’s. Japan Post is the largest financial institution in the world and has 75% of assets in JGB’s and now wants to diversify. The retirement fund is liquidating $80+ billion per year to pay out benefits. I just read that the banks across Japan have 25% of assets in JGB’s. If rates were to move 1% (double), what would be the impact to the capital of the banks?  

One argument is that Japan's banks are going to step in lieu of the big dwindling pensions. I merely point out that the IMF is go to stress test the banks against a modest move higher in rates. That would discourage the banks from buying debt at current levels. 

The insurance companies are big holders and the people are getting old and dying. The savings rate is at 2% and headed negative (also demographics). The trade surplus has turned to deficit. The budget for this year was to have more JGB issuance than government revenue (about 50% of spending to be borrowed), then the earthquake hit. There are projections that the end total may approach two thirds of total spending that will be borrowed for the current fiscal year. There are no new large buyers to replace the ones mentioned above, and to sell bonds outside of Japan would require much higher rates. The Japanese people have trusted their financial institutions to the government and the trust has been violated.  The money is gone and the government is not fiscally responsible. This party is about to end.  John Mauldin called Japan, “A bug looking for a windshield” and Kyle Bass, “A giant ponzi scheme that is running out of time”.

Japan is just one insolvent country; there are others. In tandem, the central banks of these nations hold $15 trillion plus in inflated securities, loans and sovereign securities, in one giant Ponzi pool holding increasingly insolvent debt and "liquidity" loans to banks. As defaults and more credit downgrades gather steam (UK, US, France, Germany and others), the markdowns of these $15 trillion will accelerate. It is important to remember that the capital for central banks is provided by the participating govts. For example, this is who backs the tiny $81 billion ECB capital used to lever 2.75 trillion in "assets." 

When central banks (CBs) expand their balance sheets, they buy securities and accept collateral of securities. As such they take risks, especially when defaults occur. And what is the quality of those securities? 

These charts are actually dated. The CBs own these markets, use thin capital bases, and are going to be handed the losses on the fictitious capital they hold. Tattoo this on your forehead, CBs hold well over 15 trillion in securities and loans to banks of various and often dubious quality, an immense gamble. These are all ultimately the responsibility of the sponsoring country, and represents a monster contingent liability. That will be the end game.

Barry Ritholz has each CB chart.

Check out Russ’s premium service, Russ Winter’s Actionable. Click here for information.  

Pic credit: Banksy (See more Banksy pictures here, via Bruce Krasting)

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Sun, 01/29/2012 - 13:52 | 2107417 Eric L. Prentis
Eric L. Prentis's picture

The effete financial elite are running the world into the ground. Central banksters monetize $15 trillion dollars in bankster and sovereign debt, in order to save their scrawny necks. Monetizing debt is what tin-pot dictators do just before they are forced to flee the country.

Sun, 01/29/2012 - 00:23 | 2106662 San Diego Gold Bug
San Diego Gold Bug's picture

Look at what gold has been telling us this month.....shit is going to hit the fan soon so the smart money (ZH readers etc) are buying gold and silver.  there are a lot of things happening around the world and most of them are bad...so filter out the noise and see that some really bad (gov controlled times) are coming.  Prepare yourself and your family and try (if possible to warn some friends) of what is coming.  this is just a repeat of history and it will not be kind to the unprepared.  Get the best prices you can on all goods like long term storage food, ammo, water, silver (comparesilverpricesdotcom) gold and much more.  If you can, leave the big cities when it starts to go bad.  This will end poorly for most.

Good luck. A friend

Sat, 01/28/2012 - 18:30 | 2105995 anonnn
anonnn's picture

There is continuing fallout from Fukushima.

Would you buy a car made-in-japan without certainty that there is no nuc contamination?

 What would be the source of your certainty? A paper certificate signed by the lot-boy? By someone who profits from the sale or is penalized by each failure to sell? By a verbal assurance that the product is not contaminated?

How would they know? How could they test to determine such? Hint: There is no definitive test for absence of internal radiation particles.

Recall the  "no immediate danger" assurances? Do you understand the difference between internal and external rad sources? Do you understand there are several kinds of sources that are difficult and expensive to detect, thus are not directly tested?...or only inferred by some "assumed average" algorythm?

Welcome to America, Honda. Smart move.

Sun, 01/29/2012 - 07:08 | 2106952 The Alarmist
The Alarmist's picture

It has become a lot harder to get your hands on a good Geiger counter the last couple of years. Supply/Demand imbalance, or sinister scheme to keep us in the dark?

As to buying the Honda, I would be buying it for the cool radioactive neon-like glow so that I don't have to spend a whole lot more to pimp it up.

Sat, 01/28/2012 - 16:17 | 2105868 non_anon
non_anon's picture

then let us hold onto that relic called gold

Mon, 01/30/2012 - 21:41 | 2111505 Papasmurf
Papasmurf's picture


Sat, 01/28/2012 - 15:52 | 2105829 Georgesblog
Georgesblog's picture

That's good to know. It will be important when the issue of who is holding the bag on this mess, turns into the collapse of currencies.


Sat, 01/28/2012 - 15:42 | 2105814 ebworthen
ebworthen's picture


Look at that Keynesian ramp job in the last chart; from 4 to 15 TRILLION in five years.

And the only thing it has done is to float equities on low volume.

The charts for Gold and Silver would probably match that chart fairly closely.

Wonder if the Keynesians know what that means?

Sun, 01/29/2012 - 10:47 | 2107100 midtowng
midtowng's picture

Parabolic moves are always a sign of danger.

This is all beyond Keynesianism. What we are looking at is the heart of fiat currency systems.

Sat, 01/28/2012 - 17:06 | 2105954 jimmyjames
jimmyjames's picture

Look at that Keynesian ramp job in the last chart; from 4 to 15 TRILLION in five years

The charts for Gold and Silver would probably match that chart fairly closely.

Wonder if the Keynesians know what that means?


I see that the spike up happened in the same time frame as gold decoupled from the dollar/euro trading pattern-


Sat, 01/28/2012 - 18:31 | 2106055 ebworthen
ebworthen's picture

Nice chart, thanks, would probably blind Krugman.

Sun, 01/29/2012 - 13:57 | 2107440 Vendetta
Vendetta's picture

Krugman has made his own blinders out of the duct tape the fiat regime provides freely and requires of its paid shills.

Sat, 01/28/2012 - 14:34 | 2105695 Ned Zeppelin
Ned Zeppelin's picture

CBs: immense bloated ticks with overstretched abdomens, unwilling and unable to disconnect themselves from their host.


Sat, 01/28/2012 - 14:27 | 2105670 Problem Is
Problem Is's picture

+5... It's Not Fictitious...

Like the Vatican... It's Faith Based Banking...

I am sure The Bernank has some Fractional in his Reverses some where...

Sun, 01/29/2012 - 14:13 | 2107484 Kayman
Kayman's picture

Sorry to inform you- you are Bernanke's alter boy.

Sat, 01/28/2012 - 10:19 | 2105370 847328_3527
847328_3527's picture



The prospects of a housing recovery in 2012 seem unlikely as continued weak momentum carries over from the second half of 2011. Globally, housing bubbles are entering into peak mania phases as hot money seeks a safe harbor for the short-term. Back here in the United States, we can look at the cold hard reality that 2011 saw a record low number of single family completions.





Sat, 01/28/2012 - 10:45 | 2105384 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

2011 saw a record low number of single family completions

At least they are slowing down construction before the final bust stage. I figured those still building owned the land before things went under in 2007 and are just now getting to building even though there is no market.

Sat, 01/28/2012 - 13:51 | 2105585 optimator
optimator's picture

Construction is booming on Bankster McMansions, for example, one tore down a 40 room mansion on the sea to build a 60 room mansion there.  Times have never been better for the .005%, their family, friends and professional insiders.

Sat, 01/28/2012 - 14:37 | 2105702 Ned Zeppelin
Ned Zeppelin's picture

Interest rates are super low and benefit the speculating and manipulating wealth-extraction games of the super-borrowers;  the same low rates slowly starve the middle class lender with stuck wages and the bargain of "the miracle of compound interest" as a tool to build wealth stolen by the elites to serve their own needs and stuff their gullets. 

Sat, 01/28/2012 - 15:40 | 2105809 rbg81
rbg81's picture

I think the solution being tried (by the Powers-That-Be) is to have their Central Banks create $$ out of thin air, then turn around and buy sovereign bonds at artificially low interest rates. That’s been going on since at least 2009 to keep the bond vigilantees at bay. So far, its “working” in the sense that the Economy hasn’t melted down; but neither has it recovered.


The center-of-gravity of the strategy is to keep interest rates suppressed to almost zero. If Sovereign interest rates rise, then the Welfare State quickly becomes unaffordable and all Hell breaks loose. You see this happening in Greece and the smaller European countries. These are countries that have no Central Bank and are no one’s reserve currency, so they will suffer because they are “expendable” compared to the US and Japan.


Its not free, however. Keeping interest rates near zero is a HUGE STEALTH TAX on savers. Make no mistake, they are the ones paying the price for everyone else’s mistakes.

Sat, 01/28/2012 - 15:51 | 2105825 jimmyjames
jimmyjames's picture

I think the solution being tried (by the Powers-That-Be) is to have their Central Banks create $$ out of thin air, then turn around and buy sovereign bonds at artificially low interest rates. That’s been going on since at least 2009 to keep the bond vigilantees at bay. So far, its “working” in the sense that the Economy hasn’t melted down; but neither has it recovered.


Japan is a good example of it not working-

After two decades of printing all it has to show for it is a debt to GDP nearing 230% and that was during an economic boom where unemployment was low and exports were strong-now that is being lost and as the population ages-savers will start selling off bonds and sooner or later-yields will spike and at that point Japan will have a currency crises and as all fiat is linked at the hip-the contagion will spread through all of them and there's only one thing left at that point to stop the contagion-

Central bankers bidding against each other in the open market for gold-willing to buy your gold at any price-

Sat, 01/28/2012 - 14:46 | 2105720 Dermasolarapate...
Dermasolarapaterraphatrima's picture

"High Yield Savings" rate now 0.9%.



Sat, 01/28/2012 - 09:30 | 2105327 rsnoble
rsnoble's picture

New Jersey votes to outlaw guns Jan 30. Get the word out:


Sat, 01/28/2012 - 15:16 | 2105778 Problem Is
Problem Is's picture

Isn't "conservative" Fat Fucking Christie coming to your veto rescue?

Perhaps the vaunted Christie is a NWO stooge? Like NJ criminals are going to suddenly disarm because of a gun law...

"When guns are outlawed, only outlaws will have guns"

Sat, 01/28/2012 - 16:09 | 2105859 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He looks like Mafia muscle outside of a Jersey stripclub.

Sat, 01/28/2012 - 14:50 | 2105726 My Days Are Get...
My Days Are Getting Fewer's picture

Thank you.  I have sent my emails to Trenton and am trying to get as many people as possible to do the same.  Only the bad people and the police will be armed.  And, no policeman in my town is assigned to watch over and protect my family and my house 24/7.

Sat, 01/28/2012 - 17:19 | 2105976 Manthong
Manthong's picture

"As an increasing number of gun manufacturers make handgun models that shoot rifle caliber ammunition, the line between “handgun” vs. “rifle” ammunition has become blurred, and the New Jersey State Police have already begun treating rifle ammunition in this category as if it were handgun ammunition for regulatory purposes. So long as a handgun exists that shoots a particular caliber of rifle ammunition, New Jersey treats that ammunition as if it were handgun ammunition."

If that's true, it's a real hoot.

So I guess that means folks in the Peoples Republic of New Jesrey should lose the .22 long rifles and buy .50 BMGs.


Sat, 01/28/2012 - 09:12 | 2105314 falak pema
falak pema's picture

15T  tons and whadya get, another day older and deeper in debt...Saint PEter...

Sat, 01/28/2012 - 09:18 | 2105319 Money never sleeps
Money never sleeps's picture

Europe will fall apart this year: http://bit.ly/ywzqNI

Sat, 01/28/2012 - 09:47 | 2105347 falak pema
falak pema's picture

If you believe a HF manager, you'd have bought a second hand car from tricky Dicky, and worshipped "Elmer GAntry" Ronald as the Messiah of new american age, which he was and stays...to the benefit of...?

Sat, 01/28/2012 - 05:33 | 2105189 Peter Pan
Peter Pan's picture

How come the ratings agencies do not give ratings on central banks?

I guess if they do, that will be the end of the game for them and us.

Sat, 01/28/2012 - 21:54 | 2106331 frosty zoom
frosty zoom's picture

how come the ratings agencies don't give ratings on ratings agencies?

Sat, 01/28/2012 - 09:14 | 2105307 JuicedGamma
JuicedGamma's picture

An interesting mind game; Monopoly played with Free Parking generating an ever expanding pot ( the Fed and other CBs ZIRP and QEs ). Eventually all the money ends up in one person's hands (banksters, China?) everyone else goes bust in spectacular fashion.

Right now we have multiple games being played out worldwide at various stages leading up to the final implosion, the games are linked by the Fed who is the ultimate Free Parking.

Sat, 01/28/2012 - 14:04 | 2105626 SofaPapa
SofaPapa's picture

Nice analogy.  We've reached that point in the game where the game rules say, "if you run out of money in the bank, you can use paper with the numbers on it to substitute".  Just proving that it's all worth the same without the players' faith: nothing.  Good times.

Sat, 01/28/2012 - 11:32 | 2105400 Are you kidding
Are you kidding's picture

Then what? What does China do with a devastated world? It won't be able to control anyone, it doesn't have the means. Dark ages 2.0?

Sun, 01/29/2012 - 14:09 | 2107476 Kayman
Kayman's picture

What does China do with a devastated world?

Don't know if you noticed all the countries they are colonizing...

Sat, 01/28/2012 - 20:20 | 2106179 WolfePaq
WolfePaq's picture

I don't watch tv anymore- but when i did, there was a show called stargate.

There was an advanced race of space ferrying people who subjected entire worlds by keeping them stupid, outlawing the written word and forcing them, well, by force, to mine raw materials by hand.

so yes, for most of us- it will be firewood and looms for basic clothing... but the elite will have technology and arms to suppress the rest.


Sun, 01/29/2012 - 02:23 | 2106838 dhengineer
dhengineer's picture

I am not so sure that the "elites" will actually make it to the big game when the system blows up.  It occurred to me one day that there may be an epic double-cross in the works.  When the system implodes and the ogligarchs own the world, the "useless eaters" will be those who cannot contribute to the post-financial world.  Yes, the great unwashed will be culled out, but there is another group that will be totally useless:  the bankster class.  I am in a position, professionally, to observe them up close and personal (I am a private chef).  Believe me, they are not the freshest sandwiches in the picnic basket.  Some of them are downright idiots.  Sure, they may know everyone who is anyone in the cesspools of washDC and NYC, but they have no real world skills and thet have bloated expectations of their worth and future value.  What's to stop the uber-rich from tossing the merely-rich to the masses as a sacrifice and to passify the masses thirst foir revenge?  As for the rest of us, I see a feudal existance, where craftsmen are once again respected and allowed to ply a trade for a decent wage.   And I also see a lot of people going John Galt, hiding in plain sight, living under the radar.  The "elite" cannot subjugate everyone, technology or weapons notwithstanding.  If they try to force the rest of us into slave labor, they had better be paying their muscle very well.  Otherwise, their lives will last only as long as the paychecks keep coming.  If the muscle is dissatisfied or feels cheated in any way, they will just step aside and let the masses have their way with the slime at the top of the pile, and it will make Cristal Nacht look like a Sunday School tea social.

Sat, 01/28/2012 - 05:03 | 2105175 Zero Govt
Zero Govt's picture


Largest Central Banks Now Hold Over 15 Trillion in Fictitious Capital

Says it all

The banking system is about as real as leprechaun toes

Dump this sham, be your own bank, buy heavy metal


Sat, 01/28/2012 - 13:54 | 2105601 optimator
optimator's picture

The Bankster Bonus is real enough, no fiction there.

Sat, 01/28/2012 - 15:10 | 2105764 Problem Is
Problem Is's picture

+1... (NBLB) No Bankster Left Behind

Front man extrodinaire, Useful Idiot, Puppet 'n Chief, Barry Soetoro's only economic policy...

Because the Teleprompter (and puppet strings) says so...

Sat, 01/28/2012 - 04:43 | 2105168 AUD
AUD's picture

CBs hold well over 15 trillion in securities and loans to banks of various and often dubious quality

Any wonder then the price of gold is rising? The amazing thing is that the various currencies that these central banks issue haven't burned in the crucible of hyperinflation long ago.

Doesn't say much for the intelligence of the human race.

Sat, 01/28/2012 - 23:37 | 2106562 Chuck Walla
Chuck Walla's picture

Doesn't say much for the intelligence of the human race.


Or maybe it does. If they never admit the music has stopped, then they never have to fight for chairs do they?

Sun, 01/29/2012 - 14:06 | 2107470 Kayman
Kayman's picture


The band on the Titanic couldn't play under water.  Or at least that was the rumor.

Sat, 01/28/2012 - 15:05 | 2105750 Problem Is
Problem Is's picture

"Any wonder then the price of gold is rising?"

Not if fractional reserving at the COMEX and LBMA physical markets and bankster massive derivative shorts have anything to say about it...

Just think where Gold and Silver would be today without Jamie & Blythe et al...

Sat, 01/28/2012 - 12:28 | 2105432 disabledvet
disabledvet's picture

I really am trying to cut back "on the Zero Hedge thing" cuz i really feel like i've been an annoyance here for far too long. Unfortunately articles and comments like this suck me back in. Great article...great comment...of course what should terrify "Planet Peon" (tm) is the fact that the yen is surging on all this news. Obviously this is factually correct...which only goes to show who the "biggest losers" are in this sad tale. If gold isn't the answer...silver certainly is. Here's an update on the Flekenstein vs Gensler fight:

Sat, 01/28/2012 - 04:30 | 2105150 BlackholeDivestment
Sat, 01/28/2012 - 04:04 | 2105126 Cult of Criminality
Cult of Criminality's picture

Just one more thing NWO
If that is what you think
You got another thing coming.

Judas Priest



Sat, 01/28/2012 - 03:55 | 2105117 Cult of Criminality
Cult of Criminality's picture

Love the New World Order Maypole poster it fits well with History and the 'New' reality.

If people know the true Maypole story and its history, it should point out

Radiation does not promote fertility although the powers that be would like you to believe that................perfect.

Do NOT follow this link or you will be banned from the site!