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US Deposits In Perspective: $25 Billion In Insurance, $9,283 Billion In Deposits; $297,514 Billion In Derivatives
Earlier today, the American Banking Association reminded Americans that there is absolutely nothing to worry about when it comes to the sanctity of US deposits: after all there is a whopping $25 billion in the FDIC insurance fund which means "insured depositors are safe and their deposits are protected by a strong FDIC fund....The FDIC insurance fund has over $25 billion in reserves and the banking industry " Obviously supposedly "insured" depositors in Cyprus also though there was nothing to worry about, until they woke up on Saturday with a haircut between 6.75% and 9.9% on their money in the bank. Sadly, it may be the case that the ABA is being just modestly disingenuous in its statement. Why? Instead of explaining it in detail, here is a snapshot that does more than thousands of words ever could.
Chart drawn to scale.
The $25 billion in touted deposit insurance is supposed to preserve and protect (granted not in their entirety) some $9,283 billion in total US deposits. A far bigger problem, however, is when one considers the "asset" side of the US banks' ledger: remember deposits are unsecured liabilities. And for US banks, sadly, over the counter derivatives represent the vast majority of "off the books" assets. According to the latest OCC quarterly report, the total derivative notional outstanding of the Top 25 holding companies is $297,514 billion, or nearly $300 trillion. In other words there are 32 times more notional derivatives than there are total deposits, while the ratio of gross derivatives to deposit insurance is a concerning 11,900-to-1.
And with that, we hand it back to the ABA to comfort all US depositors that Cyprus could never possibly happen in the US.
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hahahahahaha
I'm going to be honest here: I never knew the numbers were that bad.. $25bn insurance on $9.2tn in deposits... that's a 0.27% (yes, less than 1%) coverage...
Honest question: If the government can't levy bank accounts to protect the integrity of the banking system, what do you think would happen to savers in the event of a bank run? Are you people also against the FDIC?
Your whole collectivism mentality makes me sick
From my earlier post: Tue, 03/19/2013 - 10:04 | 3346646
FDIC:
And further, as we have at least 1 cent in reserve for every dollar of deposits we insure, there's nothing to worry about!
And if we happen to fail we can go to the Treasury.
And if the Treasury needs money they can go to the FED.
And circle jerk complete!
Printing press, bitchezz. Get one.
Does the FDIC protect against theft by the bank holding the deposits or by the government!
No, nor does it protect against The Inflation Tax.
I'm almost afraid to click that youtube link.
gold, bitchez!
At which bank is the FDIC's $25bn being custodied? JPM's CIO group, I suppose?
Maybe it's time to start banking at the local pawn shop. They only charge 1% to cash a check. I haven't done the math, but it might make more sense to do that than accept all the banking fees.
ALL HAIL THE BANK..ERRR..S$%T !!
Where's the problem? There's no problem here unless someone starts doing math.
Algebra is the enemy here, and I think we all know why.
The word algebra comes from the Arabic language (al-jabr: restoration).
Strike one.
Muhammad ibn Musa al-Khwarizmi, a major contributor to the establishment of algebra as a mathematical discipline, was Iranian (Persian).
Strike two.
Many of algebra's methods came from Arabic/Islamic mathematics.
Strike three.
It is plain to see that algebra is a terrorist conspiracy that is out to get all Americans.
Still have doubts? Look again at the word al-jabr, or restoration. What is being restored? A worldwide, global Islamic caliphate to cover the whole planet!!!1!
Americans must steadfastly embrace their natural loathing for mathematics, as this is the only thing which will protect our way of life and our precious bodily fluids.
fortunately, the $297,514 billion is just a notional amount that all nets to zero.
as far as the $25B insuring $9283B in liabilities, that's more than 0.26 percent.
which more than offsets the thousand-to-one risk of system failure
and when you look at the insurance industry overall, the picture is very reassuring.
nearly 90 percent of *their* assets are in bonds (corporate, municipal, treasuiry), common stock, and mortgages. the values of which can only go up.
http://www.naic.org/capital_markets_archive/110819.htm
if depositors need to deeply tap fdic because of bank failure (resulting from, say, cities in michigan being unable to pay their debts), it is reassuring to know that the insurance is back-stopped by bonds issued by, and property located in, those same cities, and by stocks invested in those same banks.
anti-hedging!
I love "net". "Net" is my friend. If I bet that apples will rise in price, I will hedge with oranges with an offsetting bet.
I need not regard bananas, grapefruits, pears, berries, and mangos in any equation, as they are not actually fruit.
Where's my nobel prize?
the values of which can only go up.
Are you on drugs? When there's a panic, people will withdraw deposits + your ``assets`` will crash... all of them.
"I'm almost afraid to click that youtube link."
Don't worry: it's such mindless babble that you won't listen to its entirety.
That my friends is the 18 inch red dildo of pain
I kinda liked the misspelling. It had a Ned Flanders-like "did-lee-O" twist to it.
Bankers are parasites. Whether charging usurious interest rates(off of money created from nothing!), devaluing currencies, or seizing savings, the result is the same: THEFT OF LAND, LABOR, RESOURCES AND LIBERTIES.
Revolt now or pay later, citizens of the world.
@ Banksters,
Fuck that,
at this point. Pac a Gun and pay no Income Tax.
Aaron Russo's Documentary ''America Freedom To Fascism'' Dir cut. http://www.youtube.com/watch?v=ZKeaw7HPG04For every tilt of her head, I detect a lie.
Was that about two tilts per sentence?
It's very scary to see that most people still actually believe the FDIC has the ability to insure their deposits. In fact, most people will be mentally destroyed when they learn what a fool they were for believing their wealth is safe in the banks and a green piece of paper and digital code in their bank account are reliable stores of wealth. For them to accept reality, they first have to admit their own follies. When someone becomes so tied up in the lie, they often support the lie so as not to appear as though they were taken. Never underestimate the power of denial.
Far more scary is that in the event of collapse, MF Global showed us that deposits rank BELOW derivatives, hence all depositors will have their faces ripped off.
Ummm... you forgot the "#winning" tag.
I hope the $250,000 FR note comes with the face of "The Honorable John Corzine". That will be awesome!
If anything, we can always add his face to Mount Rushmore, right next to Evil Lincoln.
Exactly, your savings are nothing more than a Vegas style gambling chip to the banks. In fact they are less than that since a real gambling chip can be levered into a 10X plus bet.
This was my epiphany moment on ZH. For 45+ years I had believed when I deposited my money in a bank I had " money in the bank". Then I learned here I did NOT have money in the bank but instead was OWED the money I had deposited. Everything fell into place then and the scam discussed here finally became clear. I finally realized the only way to fight back at my level was to engage only in tangible realities. This is the only hope to escape the " Poof.....and it's gone"
Miffed;-)
Yup, it's a worldwide fiat monetary ponzi 100+ years in the making that's soon to implode. Never before has the entire world gone through currency collapse at the same time. It will be the most significant event in human history and will be the largest / swiftest transfer of wealth ever.
It's realism. We need government. Tax is necessary, and so are bank account levies. If you can't handle these facts, then I suggest you join the kiddies table, and leave the adults to discuss real, progessive solutions to the problems we face.
your "fairness doctrine" makes me want to puke...
You mean we "face problems"?
What happened to green shoots? What happened to housing recovery? What happened to modest economic growth? LOL...... MDB admits we face serious problems. Now that in itself is funny coming from a troll.
Aside from that tidbit, I stopped reading MDB quite a while ago. At first the comedy routine was funny. Now he just shows how stupid he is. Nothing funny about stupidity.
We are on the road to recovery, but that doesn't mean we don't face the threat of instability. We need to put in Federal safe-guards against this type of problem. The FDIC takes care of depositors, but which department is underwriting the equity of our banking institutions? This is just another piece of the puzzle in the quest to build a stronger, safer, more liberal economy.
"...which department is underwriting the equity of our banking institutions?"
I believe that falls under the purview of the Fed, and CNBC.
A strong economy would be built on institutions that don't depend on the backing of the government. We are on the road to max pain because when the credit bubble bursts and the government goes bankrupt, the credit / government dependent economy will be utterly devastated to the likes of which has never been witnessed.
That liberal economy you 'Progressives' dream brought Argentina from a top 5 economy to its knees. You know about Europe, now you want the same in the USA. When will you realize that the only thing Government has a fantastic track record of is controlling and killing people. Everything else they do turns to rubble - sometimes instantly, sometimes slowly. You are a mindless, worthless sheep MDB. I actually have pity for your lack of intellect.
Dear Million Dumb Bloviations
YOU CAN"T COUNTERFEIT YOUR WAY TO UNIVERSAL PROSPERITY, you shit for brains asshole. Your vacuous bullshit has quit being mildly entertaining and is now merely tedious and dull. Get yourself together so at least you'll look good going down with the ship over the next several months.
Ok Harry, I think its time you give up and go sit in the corner and spank your Wanger.
Clearly, a federal tax is not necessary because the US went most of its history without one. Likewise, clearly a central bank (and therefore a bank levy) is not necessary because the US went most of its history without one.
What's necessary is capitalism and freedom, and there will never be capitalism with the central planning of the currency because money is 1/2 of every transaction.
"Adam Smith focused on understanding how people can freely make a living, which was what Brits had been doing with considerable success for hundreds of years. He grasped the concept that people prosper when they can freely choose the terms of their business or their work and trade freely, unhampered by government or monoplies, and protected by the rule of just law from unprincipled exploiters."
Freedom and Capitalism do not necessarily go hand in hand
I don't see how your quote has anything to do with the your statement at the end, but yes, freedom and capitalism do go hand in hand. Capitalism simply means you have the freedom to keep what you earn, and you have the freedom to do whatever deals you please. What capitalism does not mean you have the freedom to commit fraud and the freedom to impeed on other people's property (not free to pollute, steal, injure). If you don't have capitalism, you are not free because then your life (labor) and property are not your own.
when I see people mention capitalism I am always reminded that "true" capitalism can not exist in a corrupt and unprincipled society, e.g our Klepotocratic banking/government alliance.
To many people equate capitalism as allowing apple to offshore jobs to cripple, exploit and create slavery in another country. Which does absolutely nothing to promote freedom.
Unfortunately, that is very true. Many will blame the coming collapse on capitalism, when it is the exact opposite of capitalism that's the cause (central banking, government debt, government involvement in housing markets, government dependency on entitlements, student loans backed by government, government regulation, government bailouts, government picking winners and losers). My main concern is not if the collapse will come...the collapse is inevitable and may be entering the eminent stage. My main concern is that capitalism gets the blame. When the real pain comes, cries for the government to help will grow the loudest and if these cries are answered, the US may literally be no more. On the other hand, if capitalism, freedom, and the constitution are returned to, we may shortly see prosperity that is almost unimagineable. Which path will we choose?
Agreed. In my little corner of the world the terms freedom, constitution and capitalism have become almost Orwellian. Redefined in such a manner asw to suit ones own political agenda. This scares me as how many crimes will be committed in these names and called just.
My fear, or I am pretty much convinced, at this stage of the game is that "We the People" will choose the path we are told to follow.
I would be very sad to see my friends and family live through that. Personally, I won't subject myself to an ultra repressive state. Hopefully freedom and capitalism win out.
Well, you don't understand what capitalism is then (note the lower-case "c").
Capitalism is NOTHING more than owning your own labor as well as any means of production you require, in order that you can produce more than you consume, in order that you can take your surplus (savings) and use it to invest in further productive tasks.
Without freedom, there can be no capitalism. without capitalism, there can be no freedom.
I submit that for most of the public, capitalism has been redefined. I would go so far as to say the legislature as redined it.
Oh yeah banks are there to serve us, right?
So today, I had to go swap British Pounds for another major currency - one which all High St banks DEFINITELY have in notes (so, yeah, you can narrow it down to about 3). As part of my business, I already have an account denominated in this currency. It's business travel, so it's all kosher.
Can I get notes of this currency paid out from my foreign-currency-denominated (FCD) account? NO! There's a 24 hour wait, AND they charge 1% to give me what is essentially MY money. I could - on the spot - have this currency and pay for it via my GBP account, OR I could exchange my FCD money on the spot and have it exchanged (so essentially, they'll rip me off twice in the process) into the desired currency. But, alas, they insisted that regardless of what I do, I get ripped off, or they have no interest in doing business.
Fuck banks, and fuck those deluded assholes who apologize for them (facetious or not).
Realistically speaking, we do not need taxes. The fact that they enforce them on us with the threat of jail should be proof enough for you that I am right.
Bank account levies on day 1 leave banks with ZERO deposits by day 2. I hope YOU can handle that, should your income depend on having deposits by day 2.
I sincerely do not see levies as a solution, and even less as a progressive solution.
THE FACT IS THAT THE MEZZANINE TRANCHE IN EURO BANKS CASHED OUT LAST YEAR WITH LTRO MONEY, LEAVING DEPOSITORS AS THE NEXT IN LINE. SO, THE SAME MOTHERFUCKER DRAGHI WHO PRINTED THE MONEY FOR THE BANKSTERS TO TENDER THEIR BONDS IS THE ONE WHO NOW DISHONORS THE GUARANTEE ON DEPOSITS. I CALL THAT THEFT, AND YOU SIR?
Typical socialist moron. Your so called "progressive" solutions have completely fucked over Western civilization. You're just to dumb to realise it.
Kudos MDB_
I particularly like your use of the word 'progressive', that's a nice touch.
Shove your "real, progressive" solutuions up your ass, thief.
Those who made the right decision and put their money in a sound bank win while those who made the wrong decision and put their money in an unsound bank lose?
Making people face the consequences of their actions. Craziness!
The real problem, at least as I see it, is understanding which banks are "sound" and which are not. At some level every bank becomes unsound during a system wide failure.
Worse, the government is encouraging "unsound" banks not to mark to market their bad loans and investments and are allowing them to reduce loans reserves below even "known" losses. B of A comes to mind in this case, but there are plenty of others.
Given that today ppl have the choice between banking systems all over the world, not to mention gold and silver as an alternative store of wealth, I remain unsympathetic.
While I agree completely with the gold and silver alternative store of wealth the average Joe Blow has little to no access to banking systems all over the world.
Not saying we should be 'sympathetic', but we should truly understand how trapped (mentally and financially) the average wage slave really is within the present day socioeconomic system.
Yep; they're trapped. And I think more by their mentality than anything else. Even poor people can stand up and leave if they have the mental wherewithall. So sympathy for the mindless? Not a chance.
I'm happy to see the bankers have established reasonable leverage.
LOL. Yeap, there is no escape within the system. Like an interstate with a 20 big rig pile up. All the lanes suck. Only option is to go off road. Buy gold and silver.
MDB, one man's poison is another man's pleasure.
Really, it doesn't matter what chaos looks like at this point.
Premise of your question...the government can steal your money to save their money...hmmm.
Quite frankly I don't give a shit. If you're stupid enough to hold your money in a bank after all that's happened then you deserve what you get.
The only hope I have at this point is for the time to get my finances aligned as best as possible.
Keep the sheep moving and don't panic them yet.
as from tyler's post
and the vast majority of people still think that their money in the bank is some special, sacrosanct, private property they have a right to. no they dont: http://tinyurl.com/cner4my
A better question is what happens when the fiat is no longer trusted as worth the paper it is written on?
"...as worth the paper it isn't printed on."
Fixed it for ya.
You mean are we against the false sense of security that the FDIC provides? Yeah, guess you could say that.
So you're advocating the 'we had to steal your money from you to save it for you' position then?
Let them steal your money and then we'll see how you feel.
MDB- Honest answer: As your question is starting from a false premise it cannot be answered.
Their is no integrity in the banking system.
Your sentence structure using the word "if" was the giveaway.
But thanks for playing anyway
Resulting from the 2008 crash thousands of banks closed. How many people received cks from the FDIC? None, instead they cut deals with other banks to take over the accounts by promising to pay the bad debts for 8 years. What happens after 8 years? Why didn't the FDIC do what is was supposed to do and insure the depositors of the failed banks? Why didn't they just cut cks and give them to the people? Why were they praised for the way they handled the crisis when they didn't even do what the are supposed to do?
Because back in 2008, the FDIC was stressed badly and we were all worried that it would crack. People on here and on Denninger's site were making daily trips to pull out cash. We were very close to collapse that year.
Think about it MDB. The bankrupt bank would go to the Fed and the Fed would print it. Why do you think people keep droning on about owning Gold FFS?
If it wasn't for the brainless idea of the Euro then the Cypriot govt/central bank would be able to do the same thing.
"Honest question:...."
I take that to mean the rest of your posts are not honest. Whew! What a relief!
Has to be pretty easy to be honest looking at that steaming shit pile, huh?
So if about 4 million Americans turned up to collect they would have to bring down the shutters, wow.
There's no real need for insurance. The US and the EU could adopt the emergency law Iceland used in the 2008 crash, granting depositors precedence over other bank creditors and stockholders. Under that scheme, banks would be allowed to fail, their assets converted into cash and deposit owners compensated (usually in full). Everybody else would get the rest or get 100% burned.
I'm sure everybody would be willing to do this since it's only fair and in spirit of capitalism.
/sarc
It's a shyte sight better than having your head sawed off with a rusty hacksaw.
MDB ??....paging MDB
yeah that seems normal.
and of course that 300 Trillion in derivatives is ALL fully collateralized
Happiness returns to the world when bankers jump (or are pushed) off the fucking rooftops.
All I see is red, usually a bad thing especially when its on a flag
What could possibly go wrong?
Nothing, 2008 never happened, the eu is just having a minor tif and the democrats and republicans took a break this am to sing Kum-by-ya.....
So...what Tyler is saying here...is that a problem could crop up in the $300 trillion [eyes rolling into back of head] opaque derivatives market, and that the TBTF banks might then approach the people [Congress] and suggest a buy-in...OR ELSE? That couldn't happen, could it Bazooka Ben? I mean, is there a precedent for a super banker demanding a trillion dollars real quick...or everything goes bust?
I think the rules say it has to happen on a Sunday while everyone is in church with a major football game on in the afternoon. Otherwise the people would get wind and never allow it.
Every day I say a little prayer of thanks that I started taking an interest in finance in time to see the writing on the wall and pull my skin out of this fucking greek tragedy. That chart is insane.
Before this is over, a lot of folks are going to get fucked harder than they would have thought possible in their most vivid drug induced hallucination.
It boggles the mind.
The FED is the unofficial US deposit insurance - until it isn't when tptb pull the plug.
With all of the various government agencies coming out to "comfort" the flock, I would say the plug pull be coming soon.
It's definitely time for another big bank to be sacrificed for the benefit of JPM and GS.
The FED is the unofficial US deposit insurance - until it isn't when tptb pull the plug.
Unfortunately, the Fed is leveraged more than 50-to-1.
When interest rates 'normalize,' the Fed expects to lose up to $500 billion -- more than seven times its capital.
If you think little Cyprus has a problem, wait till the Federal Reserve blows out.
There's an academic debate going on on how negative equity would limit the abilities of a central bank.
They can always print money ( https://www.youtube.com/watch?v=q6vi528gseA ), so I guess they can keep going for a while even in an insolvency scenario.
The only thing that could really bust a central bank is a hyperinflation, ie a complete loss of trust in the currency.
We will already be in a big war, nobody will hardly notice.
Math is a bitch when the lies are flying from various government entities.
Gold price looking tasty today!
Don't worry. Ben has a printing press and helicopters.
"...a strong FDIC fund... "Strong", now THAT is funny!
Strong as in "strong smell." Like the strong smell of shit.
Those numbers have to be adjusted. Just sayin'.
But, the fact that the derivatives are big, they are not insured by the FDIC. True, they may trigger the need for the insurance to be paid out, but derivatives won't be paid off with insurance.
Definitely good to note and should have been mentioned above for those that might make an erroneous connection. The main thrust of the article still completely stands with this clarification
Starve the beast.
Withdraw what you can from the financial services industry. Buy what you need from locally owned shops and stores.
Black market's thriving in most U.S. cities. Every weekend at "flea markets" nationwide, fruit, produce, name brand clothing, auto parts, autos, home goods, tools, anything and everything in between legal and illegal, is available for a price.
There's not much difference between black market and free market.
We're gonna need a bigger boat.
Just think about how Kyle Bass bought Japan risk for 1 bps. Yeah, the derivatives are perfectly balanced. Don't worry.
That must be because Japan is such a super-safe, super-conservative society that NOTHING COULD EVER GO WRONG there.
Yeap. Housing has never gone down. Nothing to worry about.
modern finance & banking rules
we few, we happy few, we band of silver holders . . .
exactly...picked up some Libertads yesterday...
hell, with 25 billion in insurance, 300 trillion in toxic bullshit, and 9 trillion in worthless debt coupon dollars held by people who dont know that that shit aint money, what could possibly go wrong.......
Keep stacking........................
If this doesnt make you want to stock up on bottled water, TP, guns, ammo, gold, silver, nickels...not sure what to tell you.
Probably not a bad idea to have at least 1-2 months living expenses in physical cash readily available as well outside the banking system. Might need it when things start breaking down.
How long do you think that cash is going to be worth anything after this breaks? I'll give you 2 weeks before people stop accepting it.
Go brass, lead and dried lentils. And the cheapest vodka you can find. Those will be the new currency.
If you hold mostly nickels and the rest paper currency you'll be fine...
Pre 64 coins....I buy quarters/dimes ....90% silver
Better idea to keep several months of living expenses in "cash." Roughly, 1/3 in a local bank, 1/3 in a local credit union and 1/3 in the matress, for example. If one bank goes down, it is merely an inconvenience. If both go, there are still options. If the house burns down, or is buglarized, there are options. Don't put all your eggs in one basket.
1 to 2 months ? Looks to me like if the average american stopped eating out of the fast food drive through and instead all at once bought a week's worth of groceries that thin layer of deposits would go *poof*
This is your deposit. This is the banking system. This is your deposit after nation wide (global) bank failures.
<Any questions?>
clearly this is another evidence that powers that be dont expect any major bank to fail. and the major banks know it. the rest is a show to keep people trust in the rule of law ))))))))
That's fantastic - 297,514 billion in assets against a lousy 9,283 billion in liabilities! That's like a 30:1 ratio! We can all relax now, everything's totally covered - looks like the bankers aren't the evil, self-serving pricks they've appeared to be over the past 10+ years, turns out they were just lookin' out for us all along. No wonder they get the big bonuses. Thanks Jamie.
What could possibly go wrong ……
It won't be long before we'll be measuring this shit in light-years.
But if you seasonally adjust these numbers it's $297,514 Billion in Insurance, $9,283 Billion in deposits and $25 Billion in derivatives.
....which is just excellente!!!
Looks good to me.
What could POSSIBLY go wrong?
Gold has no counterparty risk! Wake up people!!
we are so fucked
Tyler,
Easiest post you ever "researched and wrote."
And who is on the other side of all those derivitive bets? Other banks!
That's how they've created this "sword of Damocles" they keep threatening our governments and citizenry with. Fuck them, withdraw everything, and let them disappear into the void from which they emanated.
Senate Censors Part of Report on JPMorgan About Its Stock Trading
By Pam Martens: March 18, 2013
The 307-page report the Senate released last Thursday on JPMorgan’s cowboy culture was deeply unsettling; the testimony under oath at the related Senate hearing on Friday was equally shocking with eyewitness accounts confirming that CEO Jamie Dimon ordered the withholding of financial data to a regulator while both he and the Chief Financial Officer at the time, Douglas Braunstein, presented an Alice in Wonderland version of facts to the public in April 2012.
But it now appears that the worst of this story may be so unsettling to the markets and the public perception of Wall Street that it must be censored from public viewing. Throughout the Senate Permanent Subcommittee on Investigation’s 98 exhibits of emails and internal memos on the wild trading schemes at JPMorgan, the word “Redacted” appears. In a high number of the areas where the material is censored, it concerns trading in the stock market, not the credit market where Bruno Iksil, the trader known as the London Whale, was causing giant ripples and eventual mega losses for the largest bank in the U.S. To date, there has been no media attention to the issue of stock trading within the Chief Investment Office nor has the issue been raised by investigators.
That the words equity trading (meaning stock trading) appear at all in this investigative report raises more serious red flags for JPMorgan. As Wall Street on Parade has repeatedly reported, the Chief Investment Office at JPMorgan, which oversaw the London Whale trades, was using insured deposits of the bank to place its casino bets. Senator Carl Levin, Chairman of the Senate Permanent Committee on Investigations, confirmed on Friday that JPMorgan used insured deposits as well as funds corporations had placed on deposit. That’s clearly not compatible with the Nation’s safety and soundness rules for banks and likely explains why the FBI is involved in an investigation.
To date, Jamie Dimon has attempted to present the giant bets in the credit markets as a hedging operation to offset risks in the company’s overall balance sheet. The credibility of that stance has lost its luster as Levin revealed that the Chief Investment Office in the first quarter of last year had actually taken on more exposure to credit risk rather than hedging it.
The reason for the existence of banks is to make business loans to help grow new industries, jobs and the economy. If one genuinely wants to hedge that risk, as opposed to gambling for the house with proprietary bets, a credible hedge would be to short corporate loan exposure – not buy more of the same exposure. But that is what the Chief Investment Office did – it purchased billions of additional exposure via an illiquid credit index from which it could not untangle itself.
The $6.2 billion in losses thus far acknowledged by JPMorgan from the trading of credit derivatives within the Chief Investment Office is bad enough. But trading stocks with customers’ savings deposits – that truly has the ring of the excesses of 1929 and inexplicable to explain as a hedge against the corporate loans made by the bank.
Although the “Redacted” stamp has censored much of the relevant information on this stock trading, a few snippets can be pieced together. We learn, for example, that the original budget proposed for stock trading in 2006 was twice that for credit trading. The plan was to trade a maximum of $5 million in credit derivatives and $10 million in stock trading – the specific type of stock transactions have been redacted from the document while those for credit trading have been left in. Since the notionals (face amount) of the credit derivatives eventually grew to hundreds of billions of dollars by early 2012, one has to wonder what the stock-related trading grew to from a proposed $10 million since it was originally slated to be twice as large as credit trading.
LINK ABOVE TO ENTIRE ARTICLE.
Wow, well if it's really unsettling news, I'm glad they didn't tell me, otherwise I might worry about it. This whole 'we're disconnecting the smoke detectors because the house is a really dangerous firetrap - maybe already on fire, and we don't want people to panic' bullshit is really starting to get to me. For fucks sake, if the house IS on fire, PANIC is the appropriate reaction. And if they're not telling me something BECAUSE ITS SO FUCKING BAD, THEN THEY'VE ALREADY TOLD ME EVERYTHING I NEED TO FUCKING KNOW.
Fuck, I never used to be an all-caps kind of guy, but after so many years of this shit...
That's great, it starts with an earthquake, birds and snakes, an aeroplane -
Lenny Bruce is not afraid. Eye of a hurricane, listen to yourself churn -
world serves its own needs, regardless of your own needs. Feed it up a knock,
speed, grunt no, strength no. Ladder structure clatter with fear of height,
down height. Wire in a fire, represent the seven games in a government for
hire and a combat site. Left her, wasn't coming in a hurry with the furies
breathing down your neck. Team by team reporters baffled, trump, tethered
crop. Look at that low plane! Fine then. Uh oh, overflow, population,
common group, but it'll do. Save yourself, serve yourself. World serves its
own needs, listen to your heart bleed. Tell me with the rapture and the
reverent in the right - right. You vitriolic, patriotic, slam, fight, bright
light, feeling pretty psyched.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.
Six o'clock - TV hour. Don't get caught in foreign tower. Slash and burn,
return, listen to yourself churn. Lock him in uniform and book burning,
blood letting. Every motive escalate. Automotive incinerate. Light a candle,
light a motive. Step down, step down. Watch a heel crush, crush. Uh oh,
this means no fear - cavalier. Renegade and steer clear! A tournament,
a tournament, a tournament of lies. Offer me solutions, offer me alternatives
and I decline.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine.
The other night I tripped a nice continental drift divide. Mount St. Edelite.
Leonard Bernstein. Leonid Breshnev, Lenny Bruce and Lester Bangs.
Birthday party, cheesecake, jelly bean, boom! You symbiotic, patriotic,
slam, but neck, right? Right.
It's the end of the world as we know it.
It's the end of the world as we know it.
It's the end of the world as we know it and I feel fine...fine...
It may also be the case they are a bunch of lobbying propagandist whores. No offense, but, I’ll give anyone ten to one odds in favor of my opinion, and no, I won’t write you a default swap on the bankster morality index to hedge your bet.
Derivatives are the ticking financial 200 megaton thermo nuke.
You posted that statement as collateral. I will now take it and post it as collateral elsewhere. I will also buy insurance against your statement failing.
I find I have become addicted to all news Cyprus.
I MUST STEP AWAY FROM THE TRAIN WRECK IN PROGRESS.
LMFAO!!
I asked this before but nobody proferred an opinion. in the event of a confiscation, would corporations fare any better than individual depositors. In other words, would it make sense to incorporate oneself now in the hopes that they would leave business accounts untouched? I realize this is very theoretical at the moment, but any layer of possible protection would be welcome.
Good question.
I have to keep about 6 weeks of payroll and AP in the system.Memories of 2008
are fresh and painfull;.Every client just stopped paying.
No,your business accounts will be stolen first if you are a 'small business'.
Its only fair as you didn't build that. I can hear it now.
Yup. +++
LARGE corporations will be fine - small corporations like the one you propose would get fucked. Nice try, but they're way ahead of you on that. There's plenty of precedent already for differential treatment of corporate entities based on size.
from the same report:
'Four large commercial banks
represent 93% of the total banking industry notional amounts and 81% of industry net current credit exposure.'
oops.
Bernanke just called and said not to worry because gross isn't net.
I asked him about liquidity risk, duration risk, settlement risk, concentration risk, etc. I suggested to him that the net value paints a picture of false confidence when all these risks are accounted for because realized risks destroy netting.
He was quiet for a while, then muttered something about being late for a meeting and hung up. I enjoyed the silence for a while until this annoying distant buzzing started up, like some plane circling in the sky. Took a look outside but couldn't see anything. Probably nothing.
skynet must have stumbled across this post cause the morning ramp is dead, NASDAQ and S&P just went red and the DOW is desperately clinging to green...
as a side note it appears that the western media darling freedom fighters in Syria just lobbed a chemical weapons grenade into the most militarized, tense, ready to explode region on the face of the planet...
sure am glad our government spent hundreds of millions of tax dollars supporting them.
Cyprus and the EU fiasco is important just don't get caught staring to hard at one train, or you just might miss the one coming from the other direction.
This brings back memories of Happy FDIC Fridays.
It was fun, but I was nervous on a lot of Fridays--I had an account at Netbank, which was the very first domino to fall back then. FDIC had my back, but my biggest problem was that I was using their online bill pay to pay my bills and had a huge mess on my hands when it all fell apart.
That derivative exposure is everything....
EVERYTHING, and it's way more than that number
I prefer to be 6 months early than 1 day late to the "RUN on US Banks"
Best to own Gold/Silver Bullion as opposed to Bernanke Bucks!