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The Global Financial Pyramid Scheme By The Numbers

Tyler Durden's picture





 

Via Michael Snyder of The Economic Collapse blog,

Why is the global economy in so much trouble?  How can so many people be so absolutely certain that the world financial system is going to crash?  Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail.  In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts.  So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts.

Overall, there is about 190 trillion dollars of total debt on the planet.  But global GDP is only about 70 trillion dollars.  And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars.  So we have a gigantic problem on our hands.  The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives.  We are living in the greatest financial bubble in world history, and it isn't going to take much to topple the entire thing.  And when it falls, it is going to be the largest financial disaster in the history of the planet.

The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed.  As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point.  A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.

We got a small taste of what that is like back in 2008, and it is inevitable that it will happen again.

Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about.  Just look at the numbers that I have posted below.

The following is the global financial pyramid scheme by the numbers...

-$9,283,000,000,000 - The total amount of all bank deposits in the United States.  The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to "guarantee" those deposits.  In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.

-$10,012,800,000,000 - The total amount of mortgage debt in the United States.  As you can see, you could take every penny out of every bank account in America and it still would not cover it.

-$10,409,500,000,000 - The M2 money supply in the United States.  This is probably the most commonly used measure of the total amount of money in the U.S. economy.

-$15,094,000,000,000 - U.S. GDP.  It is a measure of all economic activity in the United States for a single year.

-$16,749,269,587,407.53 - The size of the U.S. national debt.  It has grown by more than 10 trillion dollars over the past ten years.

-$32,000,000,000,000 - The total amount of money that the global elite have stashed in offshore banks (that we know about).

-$50,230,844,000,000 - The total amount of government debt in the world.

-$56,280,790,000,000 - The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.

-$61,000,000,000,000 - The combined total assets of the 50 largest banks in the world.

-$70,000,000,000,000 - The approximate size of total world GDP.

-$190,000,000,000,000 - The approximate size of the total amount of debt in the entire world.  It has nearly doubled in size over the past decade.

-$212,525,587,000,000 - According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

-$600,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

Are you starting to get the picture?

Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.

What we witnessed back in 2008 was just a little "hiccup" in the system.  It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.

Next time it won't be so easy.

The next wave of the economic collapse is quickly approaching.  A full-blown economic depression has already started in southern Europe.  Unemployment is at record highs and economic activity is contracting rapidly.

The major offshore banking centers in Cyprus are on the verge of collapsing.  It was just announced that they will now be closed until Tuesday, but nobody really knows for sure when they will be allowed to reopen.  And there is already talk that when they do reopen that there will be strict limits on how much money people can take out.

And now the IMF is warning that the three biggest banks in Slovenia are failing and that a billion euros will be needed to bail them out.

The dominoes are starting to tumble, and the United States won't be immune.  In fact, the greatest financial problems that the United States has ever seen are on the horizon.

But you can just have faith that Ben Bernanke, Barack Obama and the U.S. Congress know exactly what they are doing and will be able to save us from the coming financial collapse if you want.

The mainstream media will provide you with all of the positive economic news that you could possibly want.  They are giddy about the fact that the Dow keeps hitting all-time highs and they would have us all believe that we are in the midst of a robust economic recovery.  You can listen to them if you want to.

But when you are tempted to believe that everything is going to be "okay" somehow, just go back and look at the numbers there were posted above one more time.

There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer.  At some point it is going to totally collapse.  When that happens, will you be ready?

 

 


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Thu, 03/21/2013 - 17:24 | Link to Comment idea_hamster
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$26,000+ per oz -- the "real" price of gold, per GATA....

Thu, 03/21/2013 - 17:48 | Link to Comment blu
blu's picture

You better hope not. If it ever gets to that price and that fact becomes general public knowledge then armed gangs (and bankers) will be openly patrolling the streets cutting peoples' hands off for their wedding rings and their heads off to get at the gold fillings in their teeth. The only defense will be to not wear any jewelry, have all your teeth pulled out so you can wear dentures and you put them in only at table to eat.

You think I'm kidding. I am 100% not kidding.

Thu, 03/21/2013 - 18:06 | Link to Comment blindman
blindman's picture

but if they are shot on site after a moment they
will cease to exist.
no?

Thu, 03/21/2013 - 18:29 | Link to Comment blu
blu's picture

If you mean in the video game version of life --  then yeah sure. Go nutz.

Thu, 03/21/2013 - 18:35 | Link to Comment blindman
blindman's picture

roaming hordes of criminal elements were accepted
as the norm when? it doesn't happen that way.
if they are not the government or soon to be government
they are disbanded or destroyed on site.
go nutz? done. occupation scenarios aside.

Thu, 03/21/2013 - 18:46 | Link to Comment Buck Johnson
Buck Johnson's picture

Actually your right and wrong.  Yes roving bands will be disbanded or killed on site, but it will be larger and well organized roving bands that will be the winner and still do the exact same thing to get gold.  It will be warped version of mad max but financially and the us will be a country of 1,000 leaders controlling areas like their own fiefdoms. 

Thu, 03/21/2013 - 19:13 | Link to Comment Bastiat
Bastiat's picture

Easy solution on the gold crowns -- go to the dentist and have them replaced with ceramic covered gold crowns, then sell the gold. 

Thu, 03/21/2013 - 19:21 | Link to Comment MrX
MrX's picture

Marijuana is the currency of the future

Thu, 03/21/2013 - 21:18 | Link to Comment Supernova Born
Supernova Born's picture

Jim Grant on CNBC today: This Bernanke "experiment" will end in "immense inflation".

(I'm surprised it hasn't been linked here yet...I thought it was his most powerful appearance ever)

Thu, 03/21/2013 - 21:25 | Link to Comment HulkHogan
HulkHogan's picture

pothead

Thu, 03/21/2013 - 21:32 | Link to Comment Supernova Born
Supernova Born's picture

And the "currency of the future" is soon to be the jurisdiction of the BATFE[M].

The ATF is primarily about tax collection and control of currency alternatives. Potheads will be financing a further expansion of the BATFE[M].

Thu, 03/21/2013 - 19:33 | Link to Comment Hi Ho Silver
Hi Ho Silver's picture

I guess you haven't been to Mexico in the past 10 years. Or Guatemala. Or

Thu, 03/21/2013 - 20:44 | Link to Comment blindman
blindman's picture

nor Honduras, Columbia or Nicaragua. etc...
do they have precious metal based monetary systems?
and if they did would it make a difference to the
behavior you see or anticipate in those locations?
the future and truth are not bound by fear alone or
at all, my guess.

Thu, 03/21/2013 - 21:17 | Link to Comment new game
new game's picture

a study of the animal world will give one insight.

start with the wolf...

small groups of like minded people with the utmost ability to kill without conscience.

all the do gooders will hesitate and be done in first

next will be the talkers

then the know it alls

then the game is on

there will be plenty to go around at this point, but humans are never satisfied with enuf.

the greedy fucks will expose themselves needlessly and be taken for their easy bounty...

and so goes the great reset.

Thu, 03/21/2013 - 19:10 | Link to Comment Croesus
Croesus's picture

@ Blu:

You might enjoy reading this one:

http://www.grandpappy.info/honehour.htm

 

Thu, 03/21/2013 - 20:37 | Link to Comment The Navigator
The Navigator's picture

Thanks Crosesus - great link that points out that a total meltdown CAN happen in 1 hour... where banks and ATMs stop working without notice (a la Cyprus) and after that, it goes downhill really fast.

The good thing about owning/holding physical metals, it makes you think just a little bit ahead, like 'OK, now where can I put it where it's safe' and 'how do I protect it'.

And then you start thinking of expanding your pantry, medical supplies, water supplies etc

Even if the melddown doesn't happen in 1 hour, Cyprus should be ringing all kinds of warning bells for those with ears - we've had ample warning here at ZH University.

Thu, 03/21/2013 - 21:12 | Link to Comment ChrisFromMorningside
ChrisFromMorningside's picture

The fundamental problem is that the "economists" who centrally plan our economy don't understand that there is a disjunct between the financial economy of equity, securities, and synthetic credit and the real economy of energy, food, raw materials and physical labor. They think the financial economy is reality. If we can get the DJIA up to a certain level, or if we can produce X amount of credit, or recapitalize banks to Y level ... then everything will be fine. Meanwhile, the real economy is contracting and stagnating. See: food riots in the Third World, our degraded environment, tens of millions of people leaving the labor force in the developed economies, annualized decline rates in energy production, etc. We're not going anywhere until the people in charge can actually see and acknowledge reality, instead of sticking to the delusional pathology that the heavily-manipulated, filtered quantitative statistics on your Bloomberg terminal actually say anything about our material economy. 

Fri, 03/22/2013 - 00:25 | Link to Comment Liberty2012
Liberty2012's picture

Thank you Croesus - excellent website - and very plausible scenario. I don't think it has to be that way though. Two reasons: 1. Current control people develop new controls while keeping basics like debit cards in place, and 2. People develop their own payment system.

One, or a ccombination of both, of those things are more likely to happen than the total collapse of society.

Thu, 03/21/2013 - 21:06 | Link to Comment Jackagain
Jackagain's picture

I think maybe he's talking about the US government....Presidential Executive Order 6102 part II.

Fri, 03/22/2013 - 00:23 | Link to Comment curbyourrisk
curbyourrisk's picture

Blu...  you can forget all that happening.  Long before it reaches tha tprice, the .gov will simply confiscate what they can and make it illegal to own/sell/trade the rest.

Fri, 03/22/2013 - 00:28 | Link to Comment RafterManFMJ
RafterManFMJ's picture

-"You better hope not. If it ever gets to that price and that fact becomes general public knowledge then armed gangs (and bankers) will be openly patrolling the streets cutting peoples' hands off for their wedding rings and their heads off to get at the gold fillings in their teeth. The only defense will be to not wear any jewelry, have all your teeth pulled out so you can wear dentures and you put them in only at table to eat.

You think I'm kidding. I am 100% not kidding."

 

 

Great, and I just bought the Mr. T starter set.  I guess I can only wear it in the safe room.

Thu, 03/21/2013 - 18:43 | Link to Comment Buck Johnson
Buck Johnson's picture

I know, once the manipulation is off and the economy starts to unwind it will shoot up to that amount. 

Thu, 03/21/2013 - 17:24 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"$70,000,000,000,000 - The approximate size of total world GDP." --  Which begs the question, precisely who is the world selling to and what are they offering us of real value in exchange?

Thu, 03/21/2013 - 17:29 | Link to Comment tickhound
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"Can someone please tell me who we owe all this fucking money too?"

Beppe Grillo

Thu, 03/21/2013 - 17:33 | Link to Comment LawsofPhysics
LawsofPhysics's picture

If it is a few people, let them be known, if it is us.  Well then, shit, we're rich!!  Crisis averted.

Thu, 03/21/2013 - 17:46 | Link to Comment francis_sawyer
francis_sawyer's picture

joobux... get 'em while they're hot... [might need them to cook some soup]...

Thu, 03/21/2013 - 19:34 | Link to Comment MSimon
MSimon's picture

It is the Pagans you have too worry about. You are fixated on the front men.

Thu, 03/21/2013 - 17:32 | Link to Comment localsavage
localsavage's picture

They offer us the illusion of wealth.  I just hope that the anger is focused on the Rothchilds Banksters. when the shit hits the fan.

Thu, 03/21/2013 - 18:59 | Link to Comment Darth Rayne
Darth Rayne's picture

The world was a very different place when the first Mr Rothschild started his financial empire. A few families of aristocrats ruled the world. It is quite concievable that Mr Rothschild plan was and is to get the entire planet of people to wake up to the fact that this is our planet and not all owned by a small group of aristocrats.

The Rothschild devised 'money' system we use today is designed to explode in a dramatic manner such that the explosion actually awakens mankind into a new era of consciousness.

The Rothschild plan could be to destroy the Vatican and the western Governments 'hold' over the planet. The price the Rothschilds will pay is heavy. They lose everything. Perhaps they believe the human race is worth it.

Personally, I believe that 'money' cannot be a store of value and a currency. The Rothschilds know this. Currency needs a certain velocity to have value. It needs to change hands. A store of value needs to lie very still.

Unfortunately, the Rothschild plan came about in 2007 and we did not wake up. Six years later and only a few are awake and conscious. I fear for the human race, luckily the Rothschilds are patient.

Cyprus is a joke. The media is not giving us the full story, apart from ZH. When the people do wake up and make demands the Government will learn who is the dog and who is the master. As will the banks. I won't hold my breath.

 

Thu, 03/21/2013 - 19:28 | Link to Comment Peace is the x-axis
Peace is the x-axis's picture

"'money' cannot be a store of value and a currency." - Well said.

 

The People's NWO - Every Man His Own Central Banker

Thu, 03/21/2013 - 21:09 | Link to Comment Jackagain
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Oh...then.."Money is like fertilizer....you got to spread it around a little bit." ~Curley Howard

Thu, 03/21/2013 - 17:35 | Link to Comment Harbanger
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It's mostly the West, not the entire World.  At 10-20% of GDP, the BRIC's debt is still very managable.

Thu, 03/21/2013 - 17:24 | Link to Comment Encroaching Darkness
Encroaching Darkness's picture

Lies, all the way down....

There is no way to pay this off, no way to "restructure" it into acceptability; I hope your plans for the Crunch are sufficient and in place, for it's a-comin'....

Eventually, deceit catches up with the deceiver. I take no pleasure in this, for it's going to catch up with the rest of us too.

 

Thu, 03/21/2013 - 17:26 | Link to Comment SDRII
SDRII's picture

Q the Hendry vis witrh Sachs

http://www.youtube.com/watch?v=3oZtPK6hqLU

Thu, 03/21/2013 - 19:16 | Link to Comment GS-DickinDaMuppets
GS-DickinDaMuppets's picture

SDRII - what a great video!  Thanks, I had not seen it before. That was back in 2010 and the Economics Professor says "Greece will be able to service it's debts on a "normal" basis within the next three years..." !  Who pays these idiots to spout this crap and gives them lifetime tenure while they fuck up the minds of our young people!

These are the bastards that are running our banks and schools and government???  Please, GMAFB

Doing God's work...GS-DickinDaMuppets

Thu, 03/21/2013 - 17:26 | Link to Comment toys for tits
toys for tits's picture

Douchebag Ackman is more worried about the pyramid scheme of Herbalife than the global-shit-in-your-pants one.

Thu, 03/21/2013 - 17:27 | Link to Comment natronic
natronic's picture

I'm trying to get ready about to place another Apmex order today.

Thu, 03/21/2013 - 17:34 | Link to Comment Seasmoke
Seasmoke's picture

i have alot of past orders smooth with Apmex, but at this time, i am afraid to place another order with THEM OR ANYBODY....my gut says, its too late

Thu, 03/21/2013 - 23:45 | Link to Comment willwork4food
willwork4food's picture

That's kind of funny you said that. I placed two orders with two companies a few weeks ago. One has taken the funds out and is suppose to deliver, the other...don't know wtf is going on.

But I always pay with a CC, so if I get fucked..then they have to prove delivery.

Thu, 03/21/2013 - 21:03 | Link to Comment Jackagain
Jackagain's picture

Placed mine on Monday....200 Eagles.

Thu, 03/21/2013 - 23:47 | Link to Comment willwork4food
willwork4food's picture

Thx. You're my first stop when TSHTF. Keep a beer chilled for me, will ya?

Thu, 03/21/2013 - 23:34 | Link to Comment WillyGroper
WillyGroper's picture

How's this for irony------they're located in an old FederalReserve building. 

Thu, 03/21/2013 - 17:28 | Link to Comment quietdude
quietdude's picture

Got wheat, rice, beans, sugar, coffee, liquor, etc etc ?

Thu, 03/21/2013 - 17:49 | Link to Comment Seasmoke
Thu, 03/21/2013 - 17:29 | Link to Comment JustObserving
JustObserving's picture

You missed one:

$123,206,000,000,000 are the current US unfunded liabilities and growing at $6,924,000,000,000 a year.

Thu, 03/21/2013 - 17:31 | Link to Comment ebworthen
ebworthen's picture

"...the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1."

Yet Bernanke will exclaim they are solvent and strong; while condoning ECB theft of depositor money and not saying he won't do the same to U.S. Depositor money.

Thu, 03/21/2013 - 19:03 | Link to Comment Darth Rayne
Darth Rayne's picture

One of the big four UK banks is leveraged at 415 to 1. Too big to fail or too big to live?

Thu, 03/21/2013 - 17:32 | Link to Comment flexforthecamera
flexforthecamera's picture

 let's get physical

Thu, 03/21/2013 - 17:33 | Link to Comment NihilistZero
NihilistZero's picture

"...there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts."

This seems a false correlation as debt is often backed by assets.  You'd need to add 9 trillion PLUS the value of RE, factories, etc. to use this metric.

 

Thu, 03/21/2013 - 18:39 | Link to Comment Just Ice
Just Ice's picture

Futhermore, debt is generally presumed to be paid from future earnings...thus people have 15 or 30 year mortgages, 4 year car loans, etc.  It isn't usually necessary to have cash on hand adequate to cover one's debt.  (If no one could buy a home until could pay with cash, we'd be back to feudal aristocracy days where only the very wealthy had the option of owning land and castles.)

Additionally, wrt the article, FDIC insurance is not supposed to cover ALL bank account deposits.

Thu, 03/21/2013 - 21:00 | Link to Comment Dr Benway
Dr Benway's picture

Bull fucking shit. If we didn't have housing bubbles created by debt, housing would be affordable. The whole idea that society needs debt fuelled bubbles for people to be able to afford to buy a house is just so stupid.

It really is very easy. Debt for nonproductive purposes is bullshit.

Sat, 03/23/2013 - 04:41 | Link to Comment Just Ice
Just Ice's picture

Reading comprehension problem?  Who was talking about debt fueled bubbles besides you?  No one was discussing insane monetary policy and idiot credit expansion and lending standards that blow RE bubbles. 

My post was specifically a comment on the financing of assets that often cost more than one has been able to save up for, especially early in life, when one does not come from a wealthy or "old money" family.  There was no mention of purchasing something overpriced or driven into speculative territory.

So take your strawman arguments used as an apparent excuse for vulgar rant over stupidity and go play in your own sandbox.

Personally I consider having a home (shelter), and very nice shelter at that, quite useful and desirable even though it could certainly be placed in consumption category rather than that of a productive asset.     

Thu, 03/21/2013 - 17:38 | Link to Comment blu
blu's picture

"There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer."

The economy and thus the banking system have run out of primary inputs.

Meaning cheap oil, cheap oil and of course let's not forget -- cheap oil.

Cheap oil is not coming back ever, and nothing is going to replace cheap oil as the primary global input. That game is over because it is over.

Anyone thinks this situation will ever turn around in other than a temporary way is going to be in for a very nasty shock.

Thu, 03/21/2013 - 17:35 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

debt money is the root of all evil in this world

Thu, 03/21/2013 - 17:46 | Link to Comment Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

+100,000,000,000,000,000,000,000

Thu, 03/21/2013 - 17:51 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Update: Sen Lindsay Graham is the root of all evil in this world

Thu, 03/21/2013 - 18:59 | Link to Comment Croesus
Croesus's picture

Don't forget that fucking weasel McCain.

Thu, 03/21/2013 - 17:57 | Link to Comment Anusocracy
Anusocracy's picture

Morality comes the closest to that.

It is also the root of most good.

Thu, 03/21/2013 - 19:35 | Link to Comment Peace is the x-axis
Peace is the x-axis's picture

Look deeper. Usury is the real problem. Without the usury component attached to 'money', innumerable consequent evils are eliminated.

 

A Tale of Usury, Explosions, And A Used Car Salesman

Fri, 03/22/2013 - 22:25 | Link to Comment Liberty2012
Liberty2012's picture

Good story.

Thu, 03/21/2013 - 17:35 | Link to Comment MiloSpeaks
MiloSpeaks's picture

I make $100K per year and buy a house worth $250K.  I live on a block where 10 families all have $250K houses.  So my block has $1 Million in income (GDP) and $25 Million in debt.   Are we all doomed, so long as we keep earning our incomes and paying our mortgages?   

Thu, 03/21/2013 - 17:40 | Link to Comment Coke and Hookers
Coke and Hookers's picture

So each family has 10 houses? Yes I'd say you're fucked.

Thu, 03/21/2013 - 17:47 | Link to Comment Seasmoke
Seasmoke's picture

$25 million in debt......how many cars and boats , you fuckers own ???

Thu, 03/21/2013 - 17:49 | Link to Comment FecundaGoat
FecundaGoat's picture

Wouldn't that be $2.5 Million in Debt??  Just sayin....Debt has been around since Babylon....World keeps turning....Life goes on.....Better than War!!

Thu, 03/21/2013 - 19:17 | Link to Comment Bastiat
Bastiat's picture

A mere order of magnitude:  picky picky.

Thu, 03/21/2013 - 22:09 | Link to Comment dark pools of soros
dark pools of soros's picture

debt yet not usury....

Thu, 03/21/2013 - 19:19 | Link to Comment artless
artless's picture

Milo,

I think you inadvertantly slipped into answering your own question even without the bad math.

"Are we all doomed, so long as we keep earning our incomes and paying our mortgages?"

NFW any of the cul-de-sac middle manager/sales/bullshit/waste of time/cubicle filler types are going to keep earning their incomes.

Do you notice the massive lay-offs? Wait until the near 100,000 get the pink slip just in the Manhattan financial world.

Thu, 03/21/2013 - 20:10 | Link to Comment MiloSpeaks
MiloSpeaks's picture

Apologies on the bad math, but hopefully ya'll understood what I meant.  

 

What the analysis lacks is a good estimate of the assets (seemingly equal on the ledger) to the liabilities.  Can we service the debt, pay it down, and increase the net worth?  That seems to be the question.

Thu, 03/21/2013 - 21:23 | Link to Comment seek
seek's picture

The answer is no, we can't. That's why there's ZIRP and central banks are printing. The US is arguable better off than most, and if interest rates were where they should be, we'd be dangerously close to 100% of tax revenues going to interest, which is the game-over point of no return.

Thu, 03/21/2013 - 17:36 | Link to Comment max2205
max2205's picture

Its 1999...party

Thu, 03/21/2013 - 17:37 | Link to Comment thewayitis
thewayitis's picture

 

     Hell ya....Over 300K in gold and silver and counting. Should I get more? 

Thu, 03/21/2013 - 17:42 | Link to Comment blu
blu's picture

Dude. Seriously, better learn to keep yer mouth shut. Bragging about all your gold holdings is not a smooth move. The rule of law is gone. You pull that stunt with the neighbors (or the cops) and you'll be dog food before morning.

Thu, 03/21/2013 - 17:47 | Link to Comment thewayitis
thewayitis's picture

 

   You can't believe what I say......I'm a politician dude. 

Thu, 03/21/2013 - 17:50 | Link to Comment blu
blu's picture

Oh in that case you can shut up on account of being a lying politician. Every time you people open your yaps you make matters worse.

Thu, 03/21/2013 - 18:10 | Link to Comment Leto II
Leto II's picture

If/When things get really bad, clean water, ammo, livestock, and grains will look a lot better to trade for than a (practically) useless metal.

YOU CAN'T EAT OR DRINK GOLD.

Thu, 03/21/2013 - 20:46 | Link to Comment toys for tits
toys for tits's picture

True,

But what is nice is to take some mini bars and put them in a cool stream on a hot day and then they'll keep you cool while you're hiking and they're in your pocket.

Thu, 03/21/2013 - 22:15 | Link to Comment dark pools of soros
dark pools of soros's picture

if shit hits the fan then things like sudafed, lithium batteries, lighter fluid..... etc will be worth more than lives

Thu, 03/21/2013 - 23:40 | Link to Comment WillyGroper
WillyGroper's picture

chickens.

Thu, 03/21/2013 - 17:38 | Link to Comment max2205
max2205's picture

A simple 80% devaluation would take care of everything.   No explosions. ..sorry

Thu, 03/21/2013 - 17:50 | Link to Comment sitenine
sitenine's picture

While the numbers alone paint a grim picture, they don't even do justice to the actual magnitude of the problem. When we start looking at flows and/or velocity along with stagnant global economic activity it becomes clearer and clearer that we have peaked this time around. The financial system is a ponzi, and it will now fail as have all past ponzis. Sadly, the World is so raped of resources right now that I find it hard to believe our grandchildren will be able to find a better way forward. I have faith that they will though. We're done for now. Done.

Thu, 03/21/2013 - 17:41 | Link to Comment 22winmag
22winmag's picture

The Economic Collapse Blog went down hill when the sinking ship header image was removed and if I see another "99 reasons" post I'm going to heave.

Thu, 03/21/2013 - 22:17 | Link to Comment dark pools of soros
dark pools of soros's picture

there aint one reason to read 99 reasons of anything

Thu, 03/21/2013 - 17:41 | Link to Comment Dineroguru
Dineroguru's picture

A better question is why did the French police go on a panty raid of Christine Lagarde's home....maybe another DSK set up in the works?  Maybe she had the wrong answer for someone???

Thu, 03/21/2013 - 17:51 | Link to Comment sitenine
sitenine's picture

Maybe she's just another crooked banker?

Thu, 03/21/2013 - 22:18 | Link to Comment dark pools of soros
dark pools of soros's picture

they only promote pervs in that next of the woods

Thu, 03/21/2013 - 17:42 | Link to Comment q99x2
q99x2's picture

Well when you put it that way I'd say, "run for cover this puppy's about to blow."

Thu, 03/21/2013 - 17:44 | Link to Comment gwar5
gwar5's picture

Rick Rule: Knock on effects of Cyprus may last for months.... companies not able to pay for deliveries, or make payments on loans, etc., may snowball and affect other banks in a chain reaction. Everything is very interconnected and fragile.

 

Sounds about right.

Thu, 03/21/2013 - 17:46 | Link to Comment Z'
Z''s picture

Perhaps someone enlightened in derivatives can answer something I have often wondered about:  Is it possible to, by law, subordinate derivatives/swaps etc. in the financial accounting?  It seems to me that if these contracts were subordinated below Bonds/Equity/Customer Accounts then incentive would be reduced to light the fire under stressed financial institutions... the risk of losing that bet might not be worth taking.

The Sentinel ruling is obviously a roadblock (our very own accountholder plunder law), but it seems to me that if CDS and other derivative payouts were subordinated to a position of Dead Last, as in beneath-the-cockroaches last, that this would help to prevent the 'piling on' effect since the risk would be high of receiving the big Nothing at the bottom of the pile.  It might help to reduce the extraordinary compulsion to use derivatives.

Admittedly I do not work in finance; hopefully some of the bright ZH contributors can put forth an opinion.  TIA

Thu, 03/21/2013 - 17:49 | Link to Comment earleflorida
earleflorida's picture

it used to take a century to go from million [106] to a billion [109],... but now, were in a new paradigm, where a decade is  now a trillion [1012], and at present-- the past five years, it's a quadrillion [1015]... and, all based on the 10% rule?

the money tree is now but a twig, a shadow of financial atrophy,... all because of a goldie-lock's wetdream based on 1's and 0's, a binary conflagration of spontaneous combustion of the 'base3'`3rd kind?! 

Thu, 03/21/2013 - 17:52 | Link to Comment Firehawk734
Firehawk734's picture

I am with the author on this, it is not sustainable, but this has not happened overnight, or even over 5 years (even though maybe exponentially it has expanded).  So, WHEN does this house of cards come crashing down?  If it's still 100 years away then we still have to play in the market and hope to retire...

If the ENTIRE world system collapses, then what difference will it make if you have money in cash or in gold or in equities, things with hard assets?  WTF do you do?

Thu, 03/21/2013 - 18:01 | Link to Comment web bot
web bot's picture

Actually, webbot technology (of which I am not associated with) is predicting a global event before June 1st, where there is an information gap. The guy who runs it is a bit of a quack and he thinks we're looking at some sort of global costal event... but I think... we just may be looking at a financial collapse that once it begins, is unstoppable, which takes down everything.

 

Thu, 03/21/2013 - 22:20 | Link to Comment dark pools of soros
dark pools of soros's picture

what is collapse?? many places will go untouched..  many have already been ruined..  no one will stop anything..  climb on top of your brother like ants escaping a fire

Thu, 03/21/2013 - 18:44 | Link to Comment dolph9
dolph9's picture

Actually we are in desperate need of collapse.

Imagine sound money, little debt, and firesale prices for everything.  Imagine the prudent ants and the reckless grasshoppers getting their due.  

The reason why this isn't allowed is because bankers would lose and everybody else would win.

Thu, 03/21/2013 - 21:28 | Link to Comment seek
seek's picture

This is why you should have supplies prioritized above gold in one's list to survive.

Having a stockpile of food (and a means to hide and protect it) will make a difference to you. Gold will make a difference a few years down the road, where at least you'll have some savings that survived the reset.

I'm still maintaining the big event is 2015-2018. The Cyprus situation seems different than past glitches, but my sense is that it's the little pre-quake tremor, not "the big one." I would expect we'll see more Cyprus-like events as we lead into the big show.

Thu, 03/21/2013 - 18:02 | Link to Comment Racer
Racer's picture

$1,500,000,000,000,000 derivatives

               6,000,000,000 people on the planet

Therefore =   $250,000 derivatives for every single man, woman.... and child on the planet

We have to thank these f*&k!n& banksters for THAT! How can we stop them?

 

Thu, 03/21/2013 - 17:59 | Link to Comment Leto II
Leto II's picture

Water...learn to find it and purify it.

Thu, 03/21/2013 - 18:09 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Dowsing Bitchez!

 

Good advice though.

Thu, 03/21/2013 - 22:24 | Link to Comment dark pools of soros
dark pools of soros's picture

i should never have fixed my leaky basement... used to flood a few years ago.. I'm stupid!!!  water right into my home for free!!

 

pro tip:  move to places that look green from outerspace

Thu, 03/21/2013 - 18:01 | Link to Comment tony bonn
tony bonn's picture

debt is a cancer - and has become virulent......people whine about taxes, and beyond a certain point they are lethal, but they are the only honest way to finance spending....the rockefeller nazis established the federal reserve to facilitate deficit spending which engorges their pockets with fabled wealth, and the fucktarded people love it because they get GOVERNMENT BENEFITS. the fucktards are like esau who sold his birthright for a mess of pottage....

 

Thu, 03/21/2013 - 22:29 | Link to Comment dark pools of soros
dark pools of soros's picture

usury is a sin against nature and god's law....  money from money which is production from non-production is perverse and hell spawned

 

Thu, 03/21/2013 - 18:02 | Link to Comment FecundaGoat
FecundaGoat's picture

All this Chicken Little...Sky is falling!!

There is good debt and bad debt....there is no reason to believe these large numbers are not mostly good debt....All this printing will help to inflate the assets and shrink the debt....Worst case, a few million people file for bankruptcy...Big Deal!!

Better than War!!

Thu, 03/21/2013 - 18:11 | Link to Comment Schmuck Raker
Schmuck Raker's picture

"Riiiiiiight. Who are you really?"

         -Cosby

Thu, 03/21/2013 - 18:18 | Link to Comment FecundaGoat
FecundaGoat's picture

Debt is a promise to pay not a Nuclear Weapon....If you cannot pay, the assets go back to the original owner....Why So Serious??

I do believe that debt will slow growth....But I don't think the world will melt down into a Zombie Apocalypse!!

Thu, 03/21/2013 - 21:18 | Link to Comment jomama
jomama's picture

you're right, zombies aren't real.

Thu, 03/21/2013 - 22:30 | Link to Comment dark pools of soros
dark pools of soros's picture

go to a midwestern Walmart

Thu, 03/21/2013 - 19:07 | Link to Comment Croesus
Croesus's picture

I'm one of the lucky ones, who doesn't owe anyone a damn thing, and I sleep well at night.

My best friend is $86K in the hole for "good debt", i.e. student loans.

My ex is $100K in the hole for a mortgage she's underwater on.

I don't buy that bullshit about "Good debt" and "bad debt".......ALL debt is "good" but only if you're the creditor and people are paying on time.

 

Fri, 03/22/2013 - 01:15 | Link to Comment Xanadu_doo
Xanadu_doo's picture

"All this printing will help to inflate the assets and shrink the debt...."

 

Yep. bring on the inflation. Can't wait.

/sarc


Thu, 03/21/2013 - 18:03 | Link to Comment blindman
blindman's picture

this is what happens when your financial and monetary
authorities and the bleating public do not know what
"money" is, or publicly behave accordingly. the only cure
is failure and desperate pain and that is no cure if the lesson
is denied, ignored or otherwise concealed/obfuscated. there the media
to obfuscate the meaning of the message revealing complicity in
the crime of extending ignorance for the sake of further stealing
and fleecing of the innocent and ignorant. and so on .....

Thu, 03/21/2013 - 18:11 | Link to Comment blindman
blindman's picture

let us not forget that the gdp number includes astronomic
fraud and deceit, Enron accounting and wet dream estimates
that result in back stabbing knife wounds, bleeding out
on the side walk type economic activity, not to mention
genocide and hucksterism. ( no one mentions that anymore ).
gdp number, farce Ville estimates.

Thu, 03/21/2013 - 18:25 | Link to Comment Edward Fiatski
Edward Fiatski's picture

Rothschilds' networth = $700 Trillion.

For everything else, there's Masterc... Printing press. 

:)

Thu, 03/21/2013 - 18:33 | Link to Comment Brazen Heist
Brazen Heist's picture

Total Notional Value of Derivatives is the total amount of underlying securities or collateral based on the derivative. It really isn't an accurate measure of the actual values of the derivative contracts.

But still, this baby is going. I hope we will see bankers and elites getting hung in public squares, once their police lackeys realize they can't fight the people anymore. Prepare for bloody pitch battles against the tyrannical "democratic" state!

Thu, 03/21/2013 - 19:40 | Link to Comment Bastiat
Bastiat's picture

But what happens to the "actual" value vs the "notional" value when the counterparty fails?

Thu, 03/21/2013 - 22:32 | Link to Comment dark pools of soros
dark pools of soros's picture

gunshots

Sat, 03/23/2013 - 07:54 | Link to Comment Liberty2012
Liberty2012's picture

From another perspective - what are the real values of everything when the veil of chasing debt is removed?

Thu, 03/21/2013 - 19:00 | Link to Comment Herdee
Herdee's picture

I was watching Canada's Finance Minister Flaherty bring down the budget today.I'm wondering if Tyler Durden caught the significance of a little tax loophole that is being closed for corporations to show losses and yes it is all about using derivatives.I wonder what the Canadian Finance Minister knows that the average taxpayer doesn't have a clue about?

Thu, 03/21/2013 - 19:18 | Link to Comment MaxThrust
MaxThrust's picture

May be you could put the FDIC number into more context. I believe the FDIC only guaranttees deposits up $250,000

so up to what value will the 25 billion will it really cover?

Thu, 03/21/2013 - 20:10 | Link to Comment Lordflin
Lordflin's picture

Years ago... long before I became interested in economics, and at a time when I naively thought I had an understanding of history, a close friend of mind was entwining himself with one George Soros... this was back during the bank plunder of Russia as it was transitioning from the old Soviet Union... my friend spoke several languages, including French, Russian, and German... which made him a useful tool... He eventually went on to his MBA at Harvard Business and went to work at the upper levels of Soros' organization. At the time he was my closest friend, but we have since parted ways...

In any event he attempted to explain the monetary system to me... debt was money, he said... nonsense, I replied... no sane human being could possibly believe that... such a system could never work...

Turns out we were both right...

Thu, 03/21/2013 - 22:37 | Link to Comment dark pools of soros
dark pools of soros's picture

and the truth shall set you free....falling into the abyss

when the public can grasp it... their mad minds will let loose of everything else

Thu, 03/21/2013 - 20:13 | Link to Comment ozzz169
ozzz169's picture

If my memory serves me correctly then then derivatives don't have a clearing market/exchange and that if I bought a 1 trillion then sold the same one it would show that there is 2 trillion outstanding but really its not as they are offset positions. I might be wrong bout that but I read or heard that somewhere.

Can someone set me right on this?

This also makes intuitive since to me, as the numbers really don't make much since, if the number was truly that large, small moves would collapse banks/hedge funds/etc. if they were on the wrong side. Just doesn't really pass the smell test for me. Would have to see HUGH transfers of wealth on a daily/weekly/monthly basis, and you don't see it in the financial statements.

Thu, 03/21/2013 - 21:58 | Link to Comment StychoKiller
StychoKiller's picture

These CDO's, CDS's, etc, are just like a circular string of firecrackers; does it matter which fuse gets lit?

Thu, 03/21/2013 - 22:01 | Link to Comment Liberty2012
Liberty2012's picture

Aren't they off balance sheet?

Thu, 03/21/2013 - 20:27 | Link to Comment Solarman
Solarman's picture

The more important question is the cash flowing to cover the debt.  Have you statistics regarding that?  A one to five cover is not bad.  We produce 11 trillion a year in output.

 

Not being snarky, I'd like to know.

Thu, 03/21/2013 - 20:57 | Link to Comment Croesus
Croesus's picture

I know this is off-topic, but I thought the following article might be of some interest to all of us following the events in Cyprus:

 

http://www.microsofttranslator.com/bv.aspx?from=&to=en&a=http://www.news...

For several weeks, a little old lady was going to her bank and withdrawing her money every Friday like clockwork. She'd redeposit it on Monday. The bankers all laughed at her response, when asked why she did this:

"my son is an economist in Russia and told me that if something is done with the banks will make the Weekend. So he told me every Friday to take my money home. ""

Thu, 03/21/2013 - 21:13 | Link to Comment blindman
blindman's picture

there is only one topic and everything is included,
thanks for the link.

Fri, 03/22/2013 - 22:09 | Link to Comment Mark Urbo
Mark Urbo's picture

Haircut = Confiscation

Thu, 03/21/2013 - 21:13 | Link to Comment jomama
jomama's picture

i've got a whole stack of bitcoins.  i should be ready for what's coming, right?!

Thu, 03/21/2013 - 22:04 | Link to Comment StychoKiller
StychoKiller's picture

So long you also have beans, bullets, bandages and bullion (mebbe one broad!), then sure.

Thu, 03/21/2013 - 21:18 | Link to Comment de3de8
de3de8's picture

Haven't seen MDBoner around in awhile. Not that I'm disappointed.

Fri, 03/22/2013 - 09:22 | Link to Comment 10mm
10mm's picture

I call MDB "Tokyo Rose"if anyone remembers or heard of her.

Thu, 03/21/2013 - 21:27 | Link to Comment uno
uno's picture

moved comment to new post

Thu, 03/21/2013 - 21:27 | Link to Comment snblitz
snblitz's picture

So much verbiage for such a simple fact.

The people in power maintain their power by buying votes.  They long ago ran out of money and have been stealing wealth any way they can to maintain their power.

When they exhaust all the wealth the game is over and will start anew.

Thu, 03/21/2013 - 21:30 | Link to Comment chindit13
chindit13's picture

I wonder about an author when he just uses the term "notional" to describe derivatives, rather than net notional or gross notional.  While even net notional outstanding is bad, there is a major difference between gross and net, especially across the range of instruments collectively called "derivatives".  The gross notional level of interest rate swaps is not particularly unsettling, even if the number is huge.  On the other hand, even gross notional in CDSs can be unsettling, given counterparty risk.  Derivatives may well be a time bomb, but---if it's any consolation---we might be wiped out by small arms rather than a W80.

By the way, is there a bubble in "economic collapse" blogs?  Can they all cover the nut through Adclick and Google tie-ins?  Other than Zerohedge, there's a whole lot of plagiarizing and regurgitation going on.  People still applaud the unoriginal, but that is not because anything new was learned, but rather because some find comfort when they see another shares similar fears and misery.

Fri, 03/22/2013 - 12:26 | Link to Comment Z'
Z''s picture

 

By the way, is there a bubble in "economic collapse" blogs?  Can they all cover the nut through Adclick and Google tie-ins?  Other than Zerohedge, there's a whole lot of plagiarizing and regurgitation going on.  People still applaud the unoriginal, but that is not because anything new was learned, but rather because some find comfort when they see another shares similar fears and misery.

A bubble in "economic collapse" blogs?  Until the drowsing sheep awaken from their fleecing I would say not.  However, there is definitely a bubble in parasitic bankers "covering the nut" through fraud and outright theft.  No worries though, when the SHTF, we can look forward to a bubble of "poor me banker wanker" blogs discussing the glory days of pocketing the public purse and politicians.  Schadenfreude will make those some of the best reading around.

Thu, 03/21/2013 - 21:33 | Link to Comment GeorgeHayduke
GeorgeHayduke's picture

"Why is the global economy in so much trouble?"

Because the myth of infinite growth is just that, a myth. Economists just haven't figured it out yet.

Thu, 03/21/2013 - 21:44 | Link to Comment Joe moneybags
Joe moneybags's picture

The "house of cards", "string of dominoes" and "tower of derrivatives" analogies are popular with the ZH audience, since they portray the world's financial system as very fragile, and interconnected in such as a way that once a single major failure, occurs, the whole structure (system) falls apart.

Clearly, the 2008 financial meltdown showed that the system is more forgiving, and compliant.  Many individuals and individual corporations got hammered, but the world's GDP only went down a few percent.  When a major bank fails, like Bear Strearns or Lehman, it created opportunity for the surviving bailed-out banks.  Unfair?  Yes, but that's the reality of what happened.  We Humans make economic rules, not mother nature.  We make or change the economic rules when things go amok.  We can choose to forgive debt, default as a counterparty, or accept a few cents on the dollar....whatever keeps the party going.

Forget EconoArmeggedon.  Expect crises, chaos, bankruptcies, market crashes.  But there will be more bailing wire and duct tape to keep economies functioning, albeit reduced levels. Own your home in a good neighborhood, keep your day job, stack your gold, hold onto some good stocks, buy a few long-dated SPX puts, and sell your bonds.

Thu, 03/21/2013 - 21:47 | Link to Comment Peter Pan
Peter Pan's picture

it is not gold that needs to be revalued. It is the debts that need to be devalued and written off.

Unserviceable  debt is fake debt. And the asset on the other side of that debt is therefore fake as well as it is not supported by either cash flow or by sufficient asset values.

We need to stop pretending and take our losses, lower our expectations of government , take more responsibility for ourselves and stop consuming crap and creating GDP from fresh debt.

Gold and silver will survive the bloodbath although what its value relative to food, fuel and housing will be is anybody"s guess.

 

 

Thu, 03/21/2013 - 22:17 | Link to Comment kchrisc
kchrisc's picture

God, Gold, Guns, Grub, Ground and Guillotines?!                     hujel

Thu, 03/21/2013 - 22:22 | Link to Comment GeorgeHayduke
GeorgeHayduke's picture

Thanks, but I'll leave the God part behind. Unfortunately, we'll all likely need the guns for those who insist on shoving their god down everyone else's throats.

Tue, 03/26/2013 - 20:47 | Link to Comment kchrisc
kchrisc's picture

GeorgeHayduke,

I am not one of those people. I can't stand most hypocrites, I mean religious people, and could give a shit in what others believe. I only added God as place holder for faith even if none.

I do have to thank the wonderful hypocrites that I have had the misfortune of interaction with over the years. The cognitive dissonance that they wear like a tight leisure suit only strengthened my critical thinking skills and independent mindedness.

The last church just amazed me with their anti-gay petitions while half the church was divorced and remarried. Oops!

The amount of time put to refuting Evolution was monumental. I once asked the pastor why he flew on planes. He responded in a puzzled manner and then I told him that God said he created the birds of the air but did not lay out aerodynamics so how could he justify using a product of science that imitates the birds. You would have thought that he was a dog responding to a high-pitched noise--just a cocked head and dumb look.

And on the subject of anti-gay/homosexuality. I could give one iota of a shit what someone does with someone else and in private. With that said, should this be anyone's priority in the current times? Seriously, NDAA, drones, cops killing a few citizens a day, etc. and people are running around trying to stop two people from porking each other and saying that they are married. Let's just assume you are right, but can we move it down the priority list a bit. Like, below throwing off this criminal government and its bankster minders and restoring the Constitutional republic.

I'm just saying.                     hujel

Thu, 03/21/2013 - 23:26 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Speaking of roving gangs, they won't be doing too much roving without food and gas.  Rather than it being a raving, vicious, violent episode, total collapse will be more like a flashlight whose batteries are dying.  Read any book on the Siege of Leningrad during WWII....

Fri, 03/22/2013 - 01:12 | Link to Comment Xanadu_doo
Xanadu_doo's picture

uh, I'm pretty sure I heard and read that they fixed it.

CNBC, I think, or maybe it was the ed show on msnbc.

Anyway, I'm sure they'll fix it if they haven't already.

This is Amerika after all.

Right?

/sarc

-i think the term might be Fux-ord-

Fri, 03/22/2013 - 01:16 | Link to Comment ozzz169
ozzz169's picture

funniest misconception I see here is that if the banking system were to collapse you should be in gold, which is completely false. gold is an inflation hedge, if banking system collapses that is extremely deflationary (but the fed has committed to not let this happen.) The over-leveraged banking system is a deflationary pressure, thats why fed is printing the crap out of money. if your really afraid of banking collapse the you should be sitting on stacks of Benjamen Franklins (not a bad idea to keep some gold AND cash (nothing is more liquid then a $100 bill (except a $20 as not every place will take a hundred), as its the only asset that will not depreciate and doesnt have risk of being "levied" or lost to the banks recklessness and FDIC insolvency. gold didnt drop as much as other commodities during crisis but still dropped a lot. I dont remember exactly but think it was 30% or so.

Fri, 03/22/2013 - 02:52 | Link to Comment Olympia
Olympia's picture

How is it possible that the European Union allows the weak states to enter the international money market and borrow the money they need without help – based on their own potentials? How is it possible that the “chain” of interests of euro can let its weak “links” exposed to outside pressuresHow is it possible for a “herd” with common interests to let each “ship” defend itself against the wolves, without help, and its general security threatened? How is it possible for Greece, which represents a minor 3% of the Eurozone’s economy, to be allowed to threaten the other 97% of that economy, due to the latter’s weakness?

The European Union should be the one borrowing from the national banking system – thus dealing with profiteers itself based on its overall potential – not its weak “links” alone. The latter should be under the EU’s protection and constant monitoring. They should borrow from it at a subsequent time and if they became victims of profiteering, the problem should be kept in the bosom of the euro. Domestic profiteering should bring profits to Europe’s influentials, therefore bring profits in the euro area, and not threaten it.

From the Wall Street Crash of 1929 to the Global Financial Crisis of 2007

 

www.eamb-ydrohoos.blogspot.com/2010/02/ten-plagues-of-pharaoh.html

 

Authored by Panagiotis Traianou

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