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Bank Of Japan May Buy Derivatives Next
Because having legal authority to buy corporate bonds, ETFs and REITs, in addition to everything else the Fed now buys, is apparently not enough to crush, mangle and suicide its currency, the BOJ is now considering adding yet another "asset" to its cocktail of eligible securities for purchase: those which Buffett once declared weapons of mass financial destruction - derivatives.
From Bloomberg: "Bank of Japan governor nominee Haruhiko Kuroda said that the central bank will consider buying derivatives if he’s confirmed as governor and signaled a readiness for a quick expansion in monetary stimulus. “We will carefully consider such a proposal,” Kuroda, the Asian Development Bank chief, said in response to a lawmaker’s question in his second Diet confirmation hearing today." This development makes intuitive sense: central banks are desperate to destroy their currencies in the fastest and most spectacular fashion, and what better way than to have your central bank load up on the riskiest of "assets", which would be one brief downturn away from wiping away all the of the bank's capital and then some, and thus sending the currency into an even greater tailspin - just the outcome sought.
After all, in the new normal, it is he who "collateralizes" their currency with the most toxic biohazard, that wins. The Bank of Japan may have just taken a commanding lead over everyone else. The question now is: how soon until Bernanke follows suit and demands that the Fed be allowed to monetize equities, HY bonds, and other E-Trade baby specials.
There is a possibility that the new BOJ head is just bluffing:
“This is a communications strategy, rather than an actual policy at this moment,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “Kuroda wants to impress the markets. Any type of asset, including derivatives such as interest rate swaps, should be on the table.”
Kuroda said in an interview last month that the BOJ could purchase the equivalent of trillions of dollars of assets to expand its balance sheet.
Although with Goldman's Carney about to join the BOE and show the rest of the world how currency destruction is really done, it is much more likely that Kuroda meant every word.
Central bank purchases of derivatives are rare, according to Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo who has done research for the Bank of Japan.
“This would be a first as a systemic policy,” Schulz said. “Central banks need to be very transparent in regard to the risks involved in buying structured products, and that limits the possibilities for what they can buy.”
Ah yes, central bank transparency: all we want to know is if the BOJ will also use Citadel as an arms-length agent through which to transact its swap purchases. Like the NY Fed that is.
Whether buying derivatives could be adopted by the BOJ is “not just an issue of persuading other BOJ board members, but also the technicalities in the market,” said JPMorgan’s Adachi. “If the market is very small and the intervention by the BOJ is significant enough to collapse the market, then perhaps even Kuroda will think it’s not a good idea.”
The good news, at least for one former JPM employee, Bruno Iksil, is that his IG and HY CDX manipulation skills may soon be in great demand. Only this time he will truly have an unlimited balance sheet to whiplash the market around as he desires.
As for the consequences, we just hope to be far away when the house of derivative cards finally comes toppling down.
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Good. That takes them one step closer to an epic crash.
Popcorn please!
I wonder what Japanes Manga would look like if they were merged with R. Crumb (ZAP Comix)
Or, they could just sell puts on the Nikki Index. Crazy as ape shit?
Yes, and the Kingdom of Denmark, actually did it, on the Nikki shortly before the market crashed in 89. Remember portfolio insurance? What a cluster fuck, and they are looking for this stuff. A strong currency is their best tool. Maybe that radiation is further along than we thought.
makes sense to me, they need to bail out somebody who is short these derivatives.
GE nominates Mary Schapiro to its boardhttp://www.reuters.com/article/2013/03/11/us-generalelectric-schapiro-id...
The Crony-Capitalist circle is complete.
It's like giving Iran nukes...let's destroy the world,or at least hold it hostage!
If you've ever watched a Japanese game show on TV, you would know they are a bit nutso.
The Bank of Japan is buying my used underwear via 'Subscribe & Save' for 20,000,000 yen per month.
I think it's a win-win.
http://www.youtube.com/watch?feature=player_detailpage&v=SyEX1W3UD1s#t=246s
GE nominates Mary Schapiro to its board
Wow.....on purpose? Didn't anyone think to call Jon Corzine first?
Ummmm...yeah, sense...and an exercise in the processes and mechanics of monetization, sterilization, etc.
So, riddle me this: in order to sterilize the entire Dx market one would need to eat it whole, in an instant, and simply BE the singularity, owing and being owed to one's self alone...yet in the process of consuming the Dx universe what amount of "cash" does one will into existance which then runs amock in the real world? $1 QUADRILLION? $100 TRILLION, $10 TRILLION???.
And the very act of eating the entirety of Dx in more than 1 nanosecond, means that part of Dx is still vulnerable to the flash of monetized hyperinflation which induces bond prices in the secondary market to collapse to about 2% of their current value, which ignites the destruction of all un-swallowed parts of the Dx universe.
An interesting exercise, if failure did not mean the immolation of the planetary financial network.
Your point being....? ;)
Welcome to the party, friend.
pink mist may be in our future
Rethinking this a bit in the AM. What is there to "buy"? Essentially these contracts are risk off putting for a price. So, does this mean the BoJ becomes the counterparty of last resort, guarranty to all losses??? I think that is the only thing that makes sense in the context. Essentially BoJ will print whatever money is needed in order to cover the losses of any party whose counterparty fails to fulfill.
Pink mist indeed!
Finally? Take a close look at any parking lot in America.
They should have thought of this sooner! DOW 20,000 here we come!
This will get MDB licking his chops
End of Ponzi Prosperity
http://www.youtube.com/watch?v=VgrQsc2bRaM
Usually when they say they're "going to do it" that means they're already doing it.
And if they say they "have no intention" of doing something, it means they're getting ready to do it.
"We have no intention of using drones on Americans," etc.
.....and only fags need "legal authority" just ask the USSA where the order of events goes like this;
central bank trades derivatives,
somehow a fed audit gets passed,
central banks ask for "legal authority" to trade derivatives,
"legal authority" is granted,
audit is performed,
central bank passes audit.
(no offense to actual fags)
EXACTLY , just interpret it the same way as analyst buy/sell/hold ratings.
Goodness me, derivatives? They'd do better with gold stocks. At least they're backed by some holes in the ground.
As Grillo said, why go to all the trouble of digging the gold out of the ground just to put it in the ground again under a bank. Might as well just build the bank on top of where the gold is and skip the rest of the process.
Schultz .
Figures .
Schultz ? You mean the guy from Hogan's Heroes, or the one from that Operation Bernhard series ?
impossibru!
Leave it to the BOJ to buy the biggest pile of pigshit in the world.. Call BAC their ooverflowing with the stuff!
Japan is more desperate than we are (currently). Therefore, their intervetions will be more insane. When we reach that level of desperation we will do similar things.
Japan is the canary in the coal mine. They're hurt, they're LONG since broke, they've got the biggest debt/GDP ratio, and they're big enough the whole world can't possibly bail them out of their mess.
Pay attention. They may be where the real hell-on-earth financial crash begins.
here. here.
ding, ding, ding....we have a winner.
China may push them over somehow (when the timing is right)...
My derivates menu for the BoJ:
- engage in long term interest rate swaps to suppress interest rates on JGBs
- sell calls on JPY.
- 3x long nikkei vs 3x short shcomp spread
- package and securitize life insurance policies for any Japanese citizen >80 years.
- sell long term potassium iodine calls
Well done. Love the potassium iodide.
How about adding a line of Hurricane, and Sink Hole insurance for Florida?
Maybe a crocodile farm and a chimpanzee act.
Hey, if you combine the crocodile farm, and chimpanzee act, replace the chimpanzees with politicians on a tightrope, wearing pink tutus, on unicycles, riding over the croc pit; I will back that investment 100%.
Right, I forgot about cat bonds...
My cats signed their NINJA loans with pawprints (in purple ink) for their empire of rental property. Are you saying they qualify to issue bonds as well?
Lugol's Solution. 2 drops a day and you're covered for lots of stuff.
Do you guys want more proof that the Fed has been doing QE1,2,3n with the only goal to provide money to primary dealers and major euro banks recently in order to do CDS payouts?
I have question for those in the know. Can the Fed legally buy derivatives?
they can do it in around about way thru the banks if the wish
As I said, they are paying for the payouts, but can they legally buy derivatives outright?
Is there any loophole for them to do it? That would mean can Obama find a loophole to order Benny to do that?
The outcome of doing it is a different story.
I think Bernanke takes his orders from someone(s) higher up the food chain than Obama.
Military complex. Bank lobby is just a minion compared to military complex's power.
I've heard from a pretty reliable source that the big bank Derivative exposure is 3-4 times what's reported. The whole thing is totally out of control. AS far as the FED buying them legally? They're going to do whatever they have to do.
agree
Every single number is so skewed...I mean totally out of control skewed.
And yet the band plays on....They're buying way more of our debt than what you think also.
The perfect storm is going to be Quasar......
As I read their charter, there is nothing they can't buy. Which is to say, it's silient on line-iteming what they can and can not buy or sell. If it bears any passing selmblance to "maintaining stability in the banking system," it's fair game.
Enjoy. (Or weep. Whatever floats your boat.)
Even if it was specifically prohibited from doing so would you sleep any better tonight?
Like there could be an exit?
They own everything now, Literally everything...
How do they proceed forward? serious question
Thx for reading the charter for us.
Or the Fed balance sheet......That's even a bigger hoot
You'd have to be a moron to believe any of these numbers......
Who, Michelle?
Do some research on the "Exchange Stabilization Fund..."
I have, a lot time ago. It's not that big.
There is no a concentrated plunge protection team the way I see it.
What we call ppt is basically trading desks of primary dealers who buy stocks that anybody else sells and trade to each other.
'LEGAL'?...
~~~
http://www.youtube.com/watch?v=fQaavQNGsMY
Can the Fed legally bang the close or suppress the Vix? Can the Fed legally bailout the EU banks on the US tax payers dime?
Legal doesn't matter. Who is going to enforce whatever law is on the books - the politicians who benefit from the lies and theft?
The only cop on the beat is reality, and it's not a fan of hubris.
I am talking strictly legal.
Do you know how?
I'm talking out of my ass here - but no I don't believe they can mate. I remember a ZH story from a while ago about a back door deal with Japan - Fed supplied them with cash and Japan bought US stocks.
As I understand it - the Fed is like an underage kid buying beer. They can't buy it directly but they can pay someone else to buy it for them.
This makes sense. Thx.
So it is feasible. As to the outcome, we have to think about.
Legal like a drone stirke on US citizens on US soil drinking coffee?
Impeach Obama Now! - Bitchez...
Can The Fed legally be?
Can the Fed legally buy derivatives?
Who is there to tell them they can't?
They have a charter. Derivatives were made legal with the commodity modernisation act pushed by bob rubin and clinton.
I do not think derivatives are in the charter.
Has the charter been amended? If it was, would we even know?
As I said, above, it's SILENT on that. Which means they can do whatever they want "to preserve the stability of the banking system". Interpret how you want, but it sounds like a "yes" to me, if things get desperate and they decide to get "creative". In short: desperate times call for desperate measures.
If the shit was hitting the fan do you want to be the guy placing a bet that they CAN'T do it??
The only check against the Fed is impeachment.
you answer is in your statement; operation twist is a type of interest swap that helps the PDs and HFs. Zirp allows huge carry trades and all sorts of derivative leveraged plays. Uptil now Fed has let the professionals make the clever plays as that is where the big margins are required; keeping in mind QE/ZIRP is feeding the shadow banking balance sheet. So why play derivatives when you are reserve? Just make it easy for your shareholders!
BOJ is NOT reserve; it has to take MORE risk and remember that Jap banks are already totally upto their ears in Jap bonds, its vvery incestuous the Jap financial market; all of it, the debt, is held locally in closed loop; whence the need for BOJ to venture out and challenge FED/China in currency plays.
I'm talking about outright purchase. So far they've been simply providing money to do CDS payouts.
I am not talking about ignoring the law. My question is: Are there any loopholes in their charter? The fed existed before derivatives became legal with the commodities modernisation act
ask the man; TD.
TYLER DURDEN
Can the Fed by derivatives outright legally?
Yes.
Can the Mafia steal?
Does a bear shit in the woods?
Correct, but nobody can sue the mafia.
The Fed can be sued as far as I know, the same way groups of intellectuals sued bundesbank and the german gov for bailouts of greece and ireland.
Yes they can, and yes they have. But all have been unsuccessful to this date for one reason or another. Give it time and it should either collapse on it's own, or be swept away by a rising tide.
Thx a lot.
Did they simply discard the law or is there a loophole?
Is the Pope Catholic or just retired?
You do realize derivatives can be as plain vanilla as calendar spreads on gold or an equity index right?
No I don't.
Please explain
Why not?
when a CB buys derivatives that means that there are NO checks n balances in the system; Mike Milken would be a baby in this junk bond, interest swapped, CDS pumped world....
It has been rumored for years that the US PPT (Plunge Protection Team) buys stock index futures to prop up markets. That is the easiest way to goose US markets.
Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole."
In August 2005, Sprott Asset Management released a report that argued that there is little doubt that the PPT intervened to protect the stock market.[10] However, these articles usually refer to the Working Group using moral suasion to attempt to convince banks to buy stock index futures.[11]
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
That's the PPPT - pre-plunge protection team.
This will be worth watching when it blows skyhigh
Jesus, if they want inflation that badly, why not hand out 10 million Yen to every man, woman and child in the country?
Dude. 10 million yen is like $50 or something. Or is that pesos?
Maybe the New Lira -- I do pray for Grillo, though.
It would be more honest. However it would also put the money in the hands of the prols, NOT into the hands of TPTB. Remember that the entire ediface of the financial (scam) system is to benefit TPTB, in sum and total.
Monetary expansion? The BoJ was the second biggest swaps borrower behind Europe on those POMO charts on Friday! What the fuck do you think BoJ is doing with all those reserve? Buying usd!
Not only usd but also xau, xag, chf, eur, rmb, aud, cad, gbp, sek, nok, zty, hun, isk, zmk - and almost everything from Amazon.
Hey, I've heard that on japanese creditcards they already have negative rent. That's the future!
They must. This is what fukushima was about.
I can't wait until it bows sky high...didn't know derivatives were assets lol ok...whatever BOJ...lol according to you logic the drawer full of save 10cents off of shaken n bake coupons is actually booked as a drawer full of shake n bake...
This has to be the final act in the scam....we're else can they turn? In a corner with fresh paint all around you what's your next move....
Effin bankers...
I cannot wait until every banker gets their pretty little throats cut...
The Fed should see them and raise them. Up the fiat ante, Ben! Stoke 'er and smoke 'er real good, till the fiat boiler goes kaboom!
Our future's so bright, we gotta wear shades! Now where's that Gamma sunscreen? Never mind... Chekhov, raise the shields! Clearly we are not in the Virgo cluster. Sulu, ready us to leave orbit! /sarc
The bullshit question is whether anything tangible bought with counterfiat can constitute a legal transfer of ownership. If a public company is bought with fiat and owned by the state, is that not expropriation? And if a private company is bought with counterfeit and owned by a private bank, is that not fraud and theft?
i bet that the jp will only buy good derivatives....
According to the central banks there are no bad derivatives. They will make any bad ones good, like magic.
They will turn a turd into a skittle pooping unicorn.
But the 3rd derivative is a jerk.
Does anyone think China and South Korea are just going to sit around and watch this? US T-10s are back over 2% so inflation plus the strong dollar are going to create headwinds for the so called us recovery.
I see a light at the end of the tunnel!
Oh wait it's getting closer ...
DXJ.
That's all I'm gonna say.
Today.
OK.
> he who "collateralizes" their currency with the most toxic biohazard, that wins.
The global financial system is a giant ponzi clusterfuck that has spun outta control
When do they officially unwind though?
Fukushima 2.0
the light looks like this:
http://www.travelskyline.net/view-japanese_flag-1600x1200.html
Since Central Banks are in the business of buying bad assets that no one else will buy this must mean that derivatives of all flavors are about to blow up. A quadrillion worth of derivatives, yeah sure. Who's in line for the great moral hazard and which companies are gonna be targeted for bk? Can this get any sicker?
Sure, those derivatives are closely tied to health care gambling. You know, the cadilliac plan, if you can't afford a cadillac, your taxes just bought some derivatives.
Exactly so, my friend, exactly so...
Derivatives are a quadrillion in USD. In Yen that is 1018.
Is that a quintillion or a cotillion?
Ahmmm....wouldn't the BOJ buying derivatives be a "Arbitrary and capricious" decision?
Seems this thread has struck a nerve! If you read the multiple postsby ZH and theyre junked, and most are valid, and junked, well... Someone or some peeps cant handle the truth..
TFB!
It's amazing how fast people forget the BS slack jaw misinformation C/Banksters spew. I can't wait to see the squeeze that is coming in usd/jpy.(remember the 1/2 life on Draghis' speeches?) The pair hasn't even put in a 23.6% retrace since the Feb.25 drop. (90.80- 96.60) 6 big figures. The $ is being treated like a risk on currency right now, and it's extremely overbought. Something is going to snap.
POMO is not keeping rates in check, right now. The more fuel Chair Satan pours on the fire, the stronger the $ gets. His little house of cards is facing some headwinds.
"Banzai!"
http://online.sfsu.edu/amkerner/Kaiten/Gallery_pops/USSMissouri_kamikaze...
what kinda derivatives?
Jim, the question is: "Which counterparty who needs a bailout can sell what to the BOJ?" for ten points.
Note however that in Canada ... Carney did NOT print. One of the few exceptions out there.
bill - lets not be naive here....BOC does swaps with US Fed and ensures low vol in Canuck markets. BOC does not "print" openly like the Fed because the jig would be up. The Fe3d has been providing "liquidity" for all western CBs via their printing mechanism.
If markets knew that ALL CBs were printing...price of gold = 2000/oz in a week. Fed (maybe BOJ) will be the only one that admits it. Otherwise Int'l chaos before the Fed (and its owners) are ready to deal w/ chaos.
"As for the consequences, we just hope to be far away when the house of derivative cards finally comes toppling down."
And which space colony might you be referring too?
No worry.
Bubble Bernanke and the Fed will buy everything. Print and throw money at stocks, buy toxic mortgages, toxic debt as well as derivatives.
This whole banksta thing is really getting beyond ridiculous. And you who are wondering if this is legal:
Do you honestly think that matters one bit and to whom? And if it does, what can they do about it?
It's all good. Hyperinflation is unthinkable. If inflation rises by more than 2%, the central bank will just do what is necessary to reduce it again.
http://e.nikkei.com/e/fr/tnks/Nni20130311D1103N05.htm
I thought it was a bit strange the other day when I had a parking ticket from the Bank of Japan.
Go Japan, you are nearly there, your past is your future. All with the blessing of Keynesian voodoo.
"The current situation has been caused by the Japanese side single-handedly," Yang said, noting that "the root cause of the Diaoyu islands issue lies in Japan's illegal seizure and occupation of China's territory."
http://www.chinadaily.com.cn/china/2013npc/2013-03/09/content_16294020.h...
Major Bull Trap formation on EJ Daily. Looks like the real deal.
This derivative thing seems like it went over like a lead zeppelin. I'm going to look to sell with a failure of the push above the Fibo @~126.5.
How do you think, Chump?
:D
straddles (bet on both extreme up as well as down side) , as it could go ballistic against you as well...hyperinflation tends to lift all paper boats.
Orly,
So far bear traps on the AUD, EUR (constant on the 1.30 handle support = ECB intervention). USD and forwards are all bid, not from recovery trades, more so from rates going up and Asia/S.A buying. The FX market is showing more volatility and less suppression of volatility, hence the good movements. Note GBP/AUD trades.
Short YEN on futures, you got a 1.24 on the 5day MA which is a HFT support, so there is a sell there on overbought signals (126 and 127 handles). The FX/bond and parts of the ETF (emerging economies) are actually showing reality. The suppression of volatility on equity markets is all central banks - who are now out of control. They have crushed stock volatility on stock markets with Japan leading the charge ala insane in the membrane, if they now are attempting to suppress derivative volatility, more so CDS volatility (print and buy 80's and 90's commie/cartel style ends-in-tears trade).
It appears Japan, from a financial perspective, is readying for war.
"It appears Japan, from a financial perspective, is readying for war."
And by that, I suppose you mean a shooting war with the Chinese. Frankly, I am not seeing the value in it for either side, except to say that they can dredge up their Ancient Bogeyman and make him The Sick Man of Asia again.
If there were bullets flying, that would certainly lead to a very heavy risk-off move, which would favour selling yen crosses and buying dollars big-time.
Central banks out of control...did you see that blatant vol suppression at the close of the US session, the robots going nuts into the close? I mean, seriously? And somehow that's okay with everybody?
I think they're losing control here and, perhaps in order to have a bogeyman of their own to blame for equities falling off a cliff, we're going to get a major event, like, say...The South Asian Sea War.
Always interesting. Thanks, Chump.
:D
I think it's likely, check this: http://www.bloomberg.com/news/2013-03-05/ge-russia-s-sakhalin-agree-to-d...
Russia is now tapping the Nat gas in that region, Japan, if they could tomorrow would begin gas exploration around the Senkaku islands, as would China. This is the dispute. Also a war is a great distraction to inflation and other self induced economic blunders. Both China and Japan are fretting. Japan going all in and China worried about market collapse i.e housing. All the elements are there, just a matter of when. Could be close.
Failed empires always create bogeymen for their errors of judgment.
As for the HFTs. I think ZH has reported it, current rally is like a handful of HFT companies and Wall Street. Great combo ;)
I got a bad link there.
I figured with the desperation on the faces of the central bank heads these past couple of weeks that something major is in the cards.
It would be a great time to revalue both the Euro and the Pound as USD strength soars. DXY has been soaring anyway, so why not let 'er rip.
With the movement in the DollarCHieF going firmly against the grain these past couple of weeks, it could be that someone knows something somewhere. Interesting in that it all fits together...
So you think the major event is going to be in South Asia? Any timeline? Look into your crystal ball.
:D
try this: http://www.bloomberg.com/news/2013-03-05/ge-russia-s-sakhalin-agree-to-d...
Crystal ball? No, just my guts doing flips lately, had to suppress it with Tequila last Friday night. What is scary, commodity markets tanked on USD strength, which means, any major stock crash will send indust commodities further down. Polly don't like that cracker.
http://www.youtube.com/watch?v=Qd3rpF9v-1o
Great tune.
:D
What are the implications for jgb's thx fellas
I'm pretty sure I stated the Fed would end up buying anything and everything, eventually, back in the QE3 On/Off days. I didn't have the BoJ in mind as an archetype, but they are ahead of us, chronologically, in the whole ponzi game.
Even better: sell puts on everything. Oh wait....
As usual the BOJ are twenty steps ahead of the Fed with equal measures of failure...
This might be the moment of Japan' ritual suicide. They are either going full retard to add to the infinite mountain of dx out there or become the dumping ground for the tbtf banks' off book crap in the trillions of dollars. Either way, they are dead. We'll know in a year if/when JPM, AIG, BOA, GS & the rest announce themselves to be suddenly solvent and free from toxic assets.
Derivatives are the ultimate multiplier. Its supply is infinite, and you can even have a derivative of a derivative of a...you get the picture, although it's hard to imagine what multiples of infinite might look like. All related vaguely to something in the real world whose outcome determines whether the whole thing is worth anything or nothing. It's pure greed and pure gambling in a nutshell, created to circumvent the fact that the world has finite resources.
What's the game here? "You take our toxic waste, we'll support you in a war with China"? In that case, somebody remind Abe that the last leader who asked his close allies in Washington permission to invade his neighbour and got a go-ahead was a chap called Saddam Hussein shortly before he invaded Kuwait.
Whatever the truth of the situation, I think Japan is being set up to die. Its economic cancer is terminal anyway.
You're probably right. Japan is now the global "bad bank."
:/
And i thought that the ECB was.
This Article is for Kyle Bass
I think I'll buy some silver tonight
.
"Bank of Japan MUST buy derivatives next"
I would advise the BOJ to sell Yen put options to itself at 100. Comes the end of March they should be able to book their first profit. They can do it again in April at 110, more profits... Some relaxing in May for Golden Week; it should easily become the most profitable central bank by the end of the year.