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At $72.8 Trillion, Presenting The Bank With The Biggest Derivative Exposure In The World (Hint: Not JPMorgan)
Moments ago the market jeered the announcement of DB's 10% equity dilution, promptly followed by cheering its early earnings announcement which was a "beat" on the topline, despite some weakness in sales and trading and an increase in bad debt provisions (which at €354MM on total loans of €399.9 BN net of a tiny €4.863 BN in loan loss allowance will have to go higher. Much higher). Ironically both events are complete noise in the grand scheme of things. Because something far more interesting can be found on page 87 of the company's 2012 financial report.
The thing in question is the company's self-reported total gross notional derivative exposure.
And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.
The amount in question? €55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000.... Or roughly $2 trillion more than JPMorgan's.
The good news for Deutsche Bank's accountants and shareholders, and for Germany's spinmasters, is that through the magic of netting, this number collapses into €776.7 billion in positive market value exposure (assets), and €756.4 billion in negative market value exposure (liabilities), both of which are the single largest asset and liability line item in the firm's €2 trillion balance sheet mind you, and subsequently collapses even further into a "tidy little package" number of just €20.3.
Of course, this works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain as we have shown repeatedly in thh past, and not only does the €20.3 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $70 trillion.
Which, of course, is the primary reason why Germany, theatrically kicking and screaming for the past four years, has done everything in its power, even "yielding" to the ECB, to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion that is what causes Anshu Jain, and every other bank CEO, to wake up drenched in sweat every night.
Finally, just to keep it all in perspective, below is a chart showing Germany's GDP compared to Deutsche Bank's total derivative exposure. If nothing else, it should make clear, once and for all, just who is truly calling the Mutually Assured Destruction shots in Europe.
But don't worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable €575.2 billion in deposits, or just 100 times less. Of course, a slighly more aggresive than normal bail-in may be required in case DB itself has to followin the footsteps of Cyprus...
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But stocks are way up!
wtf? let me know when it hits a quadrillion kazillion shitzillion, then we should maybe get the authoities to start some kind of investigation into overextension. for now, what the fuck could go wrong?
psst, It hit a shitzillion two weeks ago. Bernanke forgot to turn his computer off.
Overheard in the DB Boardroom: "i think we're going to need colonize the moon....and grant landshares to account holders in exchange for their deposits."
lebensraum fur DB
That's trillions, quadrillions, and then SQUILLIONS. Get yer terms straight.
"Of course, this works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain..."
At that point we really will not care which ban has the honor of having managed to create the largest liability because all of the TBTF's are chained together.
My guess is that it will be some small bank you have never heard of which will provide the spark to the discontinuity event....it will be a seemingly little thing, but through the magic of re-hypothecation, it will result in a nuclear blast.....look for the lost horshoe nail.
I kind of thought Cyprus was gonna be that little 'spark.'
It only takes a spark...
To Get a fire going.
and soon all those around...
can warm up to its glowinggg...
I kinda think it was the spark.
Sorry . . .
The spark got rained on, and
it fizzled.
PISSED ON, and it fizzled.
Thank God there are only thorough fiduciaries at DB and they have the best risk management on the planet.
I see deadbeat depositors making unsecured loans to irresponsible banksters.
All netted exposure, who cares. Who cared about Bear, Lehman, AIG? Markets all time high. I am wondering, that we don't have INDU 20k, with all Ben's (free) help.
Well, this puts a new light on why Deutschland is so desperate to austerisize everyone else - they're hoping to be the best house in a bad neighborhood, hoping being the operative word. Except, it looks like a shutter just fell off one of the windows...
DB is bad in quantity of exposure, but AXA is worse in quality of exposure.
I think people are missing the point. They issued a shitload of new stock and someone bought it. I don't care who it is. Japanese pension funds...the ecb....the fed....whoever.
DB just got 3 bil stronger. That's all I see.
Thats the point, u put it in a nutshell!
It really depends how much 'off balance sheet' liabilities they have, doesn't it?
Those lenders want 100 cents on the dollar, so they told DB to hose the shareholders, so they can get paid before any sort of restructuring?
time for a stronger eyeglass prescription if thats all you see:
http://pvcycling.files.wordpress.com/2011/11/thick_lenses.jpg
3 billion is peanuts
Kito tell me what you see.
i see dead people.............................
I'm eating my steak today.
dont forget the wine...................
MOAR wine!!!!!
I was thinking fava beans and a nice chianti
They might flunk the stress test if that number balloons to a few hundred trillion or more. Until then, bullish!
Clearly the goal has been to beggar the world with debt. The buggering comes next.
Sinclair: The Elites Frightening plan to Control the Masses:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/28_Si...
Sinclair: The Elites Frightening plan to Control the Masses:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/4/28_Si...
http://www.youtube.com/watch?v=S3z00CmDcvw
Food for thought, WHY hasn't it been released yet?.
It costs a lot to buy Europe.
They do have a plan B from the late 30's early 40's.
Sorry, but that's Plan A. There simply is NO Plan B, as destruction is the only play they can successfully pull off.
Amazing, how is this possible after the 2008 financial meltdown?
Well, it explains the oddities of Merkels politics.
If you watch the PBS frontline documentary it was some German bank that was the first dominoe to fall in 2008.
Here again is another reason Germany wants their gold back.
Certainly not to sell it, but to give the elite something to spirit away before this tower comes tumbling down.
thh thh thh... wtf...
What a chart. I had to scroll down a whole page to see the bottom.
I remember a time when in the press racket, whenever someone spoke about billions, it was "shocking". Now today, billions hardly ever get the raising of an eyebrow. Holy #uck, we're in trouble.
Ya - us PMers are crazy alright.
Don't worry...
DB have it covered in advance by planning a bail-in where their depositors take a 10000000000% haircut.
(I might be a few zeros off....)
CNBC bringing out some fed guy Warsh right now to explain that inflation is running way too low and QE should be extended and upped. End of story.
Obama wants to play golf for 3 more years. not give orders to collapse banks.
Sorry for being so positive on a Monday, but we are so # U C K E D, its not even funny...
Even if TPTB decided to do a right-wing turn we are so far down the curve, we are probably close to an acceleration point that it can't be reversed.
why do a right turn when you can make 3 lefts?
Moar QE is coming. Moar and Moar and Moar.
LOL - you're funny in a not so funny way!
that's the one problem with economic tricks. After a while, they stop working
correction - after a while their destruction becomes obvious
just waiting for the GCE to call it a game and start over again.
I've had similar thoughts; its weird, I know rationally that the guy is either (a) bought and paid for, or (b) a loon (c = both?), but I can't seem to shake the feeling that it would explain every insane thing we have seen over the last 2-20 years...
I mean, we can logically deduce that the endgame is known to persons high enough on the food chain; why this desperate grab for time, with the knowledge that all these parlour tricks (especially since 2007) will only make the collapse that much more explosive and destructive? Really would make sense if they are just buying time until nature makes the whole thing irrelevant, ya know?
Time enables them to create hobgoblins to distract us with. With the incident in Boston people were willing to open their doors for The Man. Pretty soon people will be offering money AND their children (well, kind of too late on the later).
The koksuckers are already working on that... what they can't kill through abortion, they're working on taking them away from us parents. Just recall that "your children are not your responsibility" witch that was posted on here a couple of weeks ago.
You don't need to read history books and study NAZI Germany to understand how societies change... we're in the midst of change right now... and it always leads back to economics.... The crippling debt overhang of WWI set the stage for Hitler. All that is missing from the US now is some unforeseen mishap such as a major natural disaster, or a derivative explosion and martial law is a given... for years... and then some stooge/messiah come along (they're bred in the US), then watch out.
unbelievable, unbelievable, unbelievable...
55.6t yeah.
Well ok let's stay positive folks I'm sure we can fudge the figures somehow.
What is the GDP of the entrie planet again?
About $34 trillion.
Hmmm forget it, were screwed.
Then it's only a couple of years of paying, right? Kind of like the fact that I could pay off all my loans if I quit spending money!
AND WE HAVE A WINNER!
woaaa ; mutti merkel is now totally in charge of the financial sphere of toxic fiat!
wunderbar!
No wonder the socialist party in France is tickling Mutti's funny bone in open challenge.
So, how do we short them and bring them down? It'd be a great first start, and send a real mesaage to the TBTFs.
Why spend ANY energy at all when they've woven their own nooses and will hang themselves?
What a load of old shit.
What is wrong the people who write these articles?
It is impossible for DB to realise losses of $72trillion dollars (which is what this article implies).
Derivatives involve two parties. It's a zero sum game. You create a liability and simultaneously you create an asset. It's the same basic principle as debt. When the value of the assets is cancelled so is the value of the liability.
You cannot ignore the assets and analyse the liabilities in isolation. They are hedged. They are opposing positions in the same underlying markets.
DB makes a profit from creating these markets writing the derivatives for both sides of the book and collecting the spread.
IT IS EXACTLY THE SAME AS A BOOKMAKER.
There is no outcome of a horse race where the bookmaker pays out every bet they took.
Zerohedge is a fucking atrociously biased website. WHY?
Why shred all credibility simple to pander to the neo-doomster goldbugs.
What a pathetic fucking article.
Shite!
If the only horse the bookie took action on is Orb. Then he will pay out on every bet , when Orb wins the Derby.
That's not bookmaking.
That's some dickhead in a pub.
A bookmaker operates floating prices to maintain their arbitrage. Exactly the same as large financial institutions that write derivatives.
If 100% of the betting is on one outcome they close that market at a predetermined VAR threshold.
What ZH are claiming in this article is pure fantasy.
It's obvious and fucking stupid.
You are naturally 100% dead wrong, as has been explained previously here:
How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper
Also, see this comment which addresses your complete confusion
Finally for you and anyone else who just can't seem to get it, bilateral netting chains, such as those in derivative transactions, are only as strong as the weakest link. If said weak link breaks, net becomes gross. See: AIG.
He's kind of a dick. Lets hope he gets educated.
TylerD:
I have had this same argument with other people, that the "netting" isn't the true number. But as a technical matter, where exactly is the debit-credit calculation made? For example, suppose there is $100 billion exposure to Greek bonds. Bank buys CDS "hedge/insurance" in the amount of $90 billion for $5 billion per year for the five year life of the bonds, or $25 billion in total.
On the banks book's, you have an asset (debit) of $100 billion, and if booked at all as a liability, a credit of $25 billion as CDS/Insurance liability, which would be reduced each year as the payment was made.
Now to a risk committee, the bank could make the argument that the risk on the bonds is either:
1. Zero to $10 Billion, because the risk is basically fully insured. . . $100 billion in bonds (debit) less $90 billion in insurance coverage (unbooked notional or credit amount of the insurance) which nets out to zero if the bank gets 10 cents on the dollar for the bonds;
2. $5 billion which is the amount of the CDS payment on a one year basis;
3. $25 billion which is the full amount of the payments necessary to obtain the 5 year coverage;
4. $100 billion if the bonds go totally to crap and the CDS is not honored;
5. Between "Zero" and $100 billion, depending on the actual value of any payments from the crap CDS/Insurance and the amount of the haircut on the Greek bonds.
6. None of the above, because the "netting process" deals only with the actual purchase of the CDS/Insurance and the imaginary coverage of $90 billion is considered as both sides of the transaction, the potential insurance coverage being measured against the potential loss in the face amount of the "policy."
If this analysis is correct, which one of these is the actual one which is typically presented as the "net"??? I have tried to keep this scenario simple and assumed the bank used its own capital to buy the bonds, which is pretty unlikely.
Thank you for looking at this!
Squeeky Fromm, Girl Reporter
Squiggy From said:
C'mon, dude, this isn't that difficult. The debit-credit calculation is made from the desired final result. The math is then worked backwards to calculate the input figures. It's all based on lies; the calculations are only done to make the lies look better.
Dude, you only need one question mark to terminate the sentence.
The scenario where the bonds are crap and the CDS insurance is worthless is closest to the truth, so the damage is $100 billion plus the $25 billion wasted on the CDS. The one presented as the net is whichever one results in the biggest bankster bonuses.
There is no way you believe what you typed. Seriously? If enough of the counterparties can't pay off, the whole tower of dominoes starts to fall over and the bookmaker ain't getting his spread (Unless it is spread open and raped).
*
Based on your prior comment, let me expand the notation:
* >>> 0
And that is how screwed DB and the Germans will be if they drop a plate.
You were not paying attention in 2008. You have the basic concept of how they want you to look at it. But in real life things do not work out like they do in the text books. If they are 1% wrong they are fucked.
Do you really believe what you just wrote? How strange. You must be a supremely intelligent person, more so than even the dweebs that Buffet hired to try to figure out what his just bought re-insurance company was exposed to in terms of losses on derivates that were written before he bought the outfit.
So, in your estimation there is no concern, right? Its all good because really intelligent people such as yourself could never, ever make a mess of things, right?
Spare me.
"since the NYSE’s founding fathers met under the buttonwood tree in 1792."
Or sycamore tree, plane tree. I don't know any other arborist that calls them buttonwood trees.
Good article!
mit dem angriff steiners wird das alles in ordnung kommen
mit dem angriff steiners wird das alles in ordnung kommen
Translation: "With the attack everything is working out the Steiners"
WTF?
With Steiner's attack, everything is going to be allright
What's a few trillion among friends.
edit: shit someone already beat me to it!
Austerity for PIIGS will create zero counterparty risk thus ensuring maximum german bank executive bonuses. Or something like that.
Don´t worry about Deutsche Bank. Think about those that are exposed to DB...
http://youtu.be/RlOAMKTj0hU
You got me.
Never have guessed it was DB in a... billion years. That was a big WTF. I would have bet on the squids.
Now I have to figure out how this colossal exposure affects the probability of pan-euro bonds. I reckon it's good to high that euro bonds will rear its ugly head to follow the Fed in endless debt and QE unless Germany reverts back to the DM. I thought the germans had better sense, or at least guys who can do simple arithmetic. Just fantasy punts based on the idiotic notion that parallel universes full of money will play counterparty to their risks. Crazy.
"I thought the germans had better sense"
repeat that phrase three times
would you have ever guessed in seventy short geologic years, America would pull itself inside out?
the only thing for sure is history repeating itself
and human arrogance
Fiscal prudence from Germany's finest.
ZH published an article in September 2011 that shows that Deutsche Bank as of June, 2011 only had $27 T in derivatives.
Have they been adding $2.5 T per month since then?
What's going on here ?
Kyle Bass?
Last time they lied? I'm sure there is no pattern in the escalating lies...
I presume that's what we're all supposed to be looking at. At a total clueless guess, either the EU has done remarkably well over the last 2 years and business is booming (thus doubling the derivatives due to massive deals done), or... ?
2011 Report Direct link [warning: PDF, and extremely slow servers at their end.]
I'll let more informed minds than mine answer the question.
In case you need a whiskey, and are feeling maudlin, pour one then watch possibly the creepiest thing you'll see this week [full screen it, note that the sound is all post-effect, there's only two actual sound recordings from this stuff, but otherwise the footage is real].
thats net derivatives-net of offsets--pre offsets its 30-35% higher.
but the offsets are basically reinsurance and who knows what reinsurance counterparties you have an ability to pay off.
puts JPM around 91 Trillion, DB around 95 Trillion
Bundle that and sell it into the market. No buyer big enough to swallow that pill. Oh wait, we all did...
All based on a hill of promises (to cover or repay). Awesome.
how's the garden?
I was going to guess the Bank of Smackover, Arkansas.
oh my god.
truly ... and thanks for the laugh, sometimes short&sweet says it best
How dare they out-derivatate JPM?
they are very sophisticated at db.. im sure they know what there doing .
learned it from LTCM.. <sarc>
Jeeze, some big gorilla farts in the Congo and the whole pile of Blankfein (shit) comes unravelled...
"If there is a problem, yo, we'll solve it
Check out the spreads as my structurer revolves it"
Internal email from 2005 describing Deutsche CDO traders view of the bubble
https://en.wikipedia.org/wiki/File:Cdohbaby1.png
All nets out, Baby, with equity to spare. Redo those spread sheets, Boyz, I sense moar equity value. But don't breathe on the House O Cards.
Okay. So the German gold in New York will be worth alot more in seven years? Right. So do a back of the envelope calc. and the deal is ta da: The Yanks get to keep the gold and the German debt load is dropped way down. Europe saved. Then put Nigel Farage in control...
So let me clear my throat (sorry Beasties)
Here we have the Germans with their iron will and steely eyed austerity acting all moralistic over the indebted (cough dark dirty Catholics cough) in the 'bad periphery'. But the Germans are towered over by DB with it's greed-based, ultra-fragile Triumph of Leverage.
Basically the Germans are broke too, and lest we forget, there's only 80 million of them, like a quarter of the US population.
Where the fuck are the Germans going to get any money from to give the Greeks (Cypriots, Italians, Spaniards, Irish etc.)?
The Germans should stop acting like pricks and requiring conditions for EU cooperation. They should also stop paying for anything they can't afford.
The fucking game is over already. It's just coffee meetings for suits now.
I saw the shittiest looking BMW I've ever seen in the Costco parking lot the other day. It looked like a blue shoe, like a 3 series got fucked by a Subaru Forester.
Next to it was an awesome new Z, driven by a Chinese diplomat who couldn't seem to figure out the (what I would believe would be) intuitive operation of the hard top canopy.
"A Blue Shoe" That is funny
I am sick to the back of my Irish bollocks of those pious fuckers from Germany telling us how to live our lives,after their 10 year low interest rate fuckfest to pay for their own historical fuckups.
FUCK YOU ANGELA YOU FAT BANKERS WHORE!
WAY back when, when everyone was proclaiming Germany to be head and shoulders above all the teetering other countries, I was stating that Germany was fucked. I'm not thinking that I've missed a call yet...
The equation is VERY, VERY simple: you have to have physical resources, energy and minerals, as without them you cannot generate competitive margins. Germany built up because it was able to help create cheap/false loans to other European nations who would in turn buy Germany's stuff; yeah, everyone was looking at the front-door, at the products going out, while failing to see the payment debts building up (which, as it seems to be, DB was swallowing on its books).
Sure shit Germany is good at manufacturing. ZERO arguing about that. BUT, I did not make the mistake of allowing this to blind/shield from its fundamental weaknesses.
Germany, aging population, energy poor, and now with serious possible financial losses. It's really little different than Japan.
I would have bet it was Deutsche Bank.
Nothing to do with austerity for all the rest, isn't it?
Consequently, if a bank’s leveraging factor is 10, then injecting $1 billion in the bank’s capital makes it possible for it to create at least $10 billion in new money, or carry $10 billion in problem assets. In fact, the multiplier is typically much higher. For instance, Lehman’s and Goldman Sachs’ ratio of assets to capital were respectively 30 and 26. Some European banks had even a higher leverage: BNP Parisbas at 32; Dexia and Barclays’ leverage ratios are both estimated at about 40; UBS’ at 47; and Deutsche Bank’s a whopping 83
http://sapiens.revues.org/747
I'm thinking that bankers didn't comprehend the Archimedes quote... (Archimedes was talking the physical)
Who was looking out for us the global taxpayers, depositors, and general population, when these banks were allowed to put on these positions, and who now, that there in place?
It's only a matter of time until the daisy chain explodes.
Don't worry, they're just hedging their positions with JPM.
Uh oh.
Yeah, I was wondering whether this could be all between DB and JPM.
Herbert Morrison: It's practically flat now. The volume is dropping at the NYSE, and thw bond market is settling down too. It's starting to dive again; the market had slacked up a little bit. The market buyers are just holding it, just enough to keep it from...
[The Market suddenly implodes]
Herbert Morrison: It just burst into flames! Get out of the market! Get out of the market! Get this, Cramer! Get this, Cramer! It's fire and it's crashing hard!
It's crashing terrible! Oh, my! Get out of the market, please! It's collapsing, bursting into flaming panic! All the folks agree that this is terrible. This is the worst of the worst catastrophes in the world! Oh, it's crashing... oh, 5000... 2000 and it's a terrific crash, ladies and gentlemen. Oh, the humanity, and all the investers screaming around here!
[Morrison begins sobbing]
Herbert Morrison: I told you... I can't even talk to people... around there. It's... I can't talk, ladies and gentlemen. Honest, it's just laying there, a mass of panic and wreckage, and everybody can hardly breathe and talk... I-I'm sorry. Honest, I can hardly breathe.
[Joel "Spicoli" Barnanke enters]
Joel Bernanke: Relax, all right? My old man is a Central banker, he's got this ultimate set of printing tools. he can fix it!
Herbert Morrison: It's practically flat now. The volume is dropping at the NYSE, and thw bond market is settling down too. It's starting to dive again; the market had slacked up a little bit. The market buyers are just holding it, just enough to keep it from...
[The Market suddenly implodes]
Herbert Morrison: It just burst into flames! Get out of the market! Get out of the market! Get this, Cramer! Get this, Cramer! It's fire and it's crashing hard!
It's crashing terrible! Oh, my! Get out of the market, please! It's collapsing, bursting into flaming panic! All the folks agree that this is terrible. This is the worst of the worst catastrophes in the world! Oh, it's crashing... oh, 5000... 2000 and it's a terrific crash, ladies and gentlemen. Oh, the humanity, and all the investers screaming around here!
[Morrison begins sobbing]
Herbert Morrison: I told you... I can't even talk to people... around there. It's... I can't talk, ladies and gentlemen. Honest, it's just laying there, a mass of panic and wreckage, and everybody can hardly breathe and talk... I-I'm sorry. Honest, I can hardly breathe.
[Joel "Spicoli" Barnanke enters]
Joel Bernanke: Relax, all right? My old man is a Central banker, he's got this ultimate set of printing tools. he can fix it!
After reading Daniel Kahenman & Nassim Taleb, I think the alfred e. neuman saying of "What, me worry" finance is becoming more apparent, but hey, that is what useful muppet taxpayers are for, right?
I'm all out of clever and witty remarks...So, I bought a shitload of Jun OTM puts for a suicide trade. Let them run this bitch to the moon, I can say by protest vote was in dollars!!
I would not bet on this shit blowing if there is a counter party on the other side of the bet. When it really blows, most counter parties will not be in a position to pay out. Many "someones" are going to be left holding the bag.
MOST VULNERABLE BANKS IN TEV VS DERIVATIVE BOOKS EXPOSURE (Source:Peterssen)
Societe Generale
BNP
Commerzabank
Eurohypo
Aareal
Landesbanks (whole are engaged with Covered Bonds)
Dexia
Generali Assecurazioni
Axa
RBS
HBOS
Barclays
Santander
Popular
MontePaschi Siena
Erste
***
This illustrates why the Germans, despite all their tough talk, have no choice but to prop up the Euro no matter what the cost. Because if the Euro ever breaks up, their entire banking sector will crumble into dust.
So ... what does this finally collapse to?
What is the size of the rubble pile then?
All the ordinary people who make money to pay their bills have collectively become trivial compared to those who could make money out of nothing to gamble with. The irony is that is supposed to be the same money! The dollars ordinary people work for to buy bread are inside the context of millions of dollars more, made out of nothing by banksters to gamble with over the future price of bread!
The banksters are on a qualitatively different race track, surrounding the rat race that ordinary people are on! Legalized counterfeiting, to feed legalized gambling with that money made out of nothing, is running around the shrinking reality of ordinary people, in ways that makes everything ordinary relatively trivial in comparison!
Poof, another trillion units, made out of nothing, then used to leverage up bets of even more trillions of units, while everybody else operates in orders of magnitude less. Poof, and the money to buy a billion cars, or a million houses, gets made out of nothing! Poof, and money made out of nothing gets leveraged up to the point where the total of the money made out of nothing "accounts" for more than 10 planet Earths, beyond the one and only real planet Earth that ordinary people are living on ...
This all tracks back to its fundamental basis, which is that the fraud is backed by force. The global electronic fiat money system is backed by atomic bombs. Since atomic bombs can theoretically kill the whole planet Earth many times, the electronic "money" was also able to go beyond worth more than many planet Earths combined.
It was always a combined money/murder system, which went electronic and atomic, so that trillions and trillions of electronic units of money could be created out of nothing, and allowed to be gambled with, because the ONLY thing backing that up is the REAL ability to kill almost everyone over and over and over again ... to some similar trillions of times!
Therefore, it a very interesting question to ask what will this runaway system of astronomically amplified force backed frauds finally collapse down to, since, inside of that context, all the lives of all the ordinary people are represented by relatively trivial amounts of money, to measure their realities, while the world of banksters making money out of nothing to gamble with is many orders of magnitude greater!
Everything that I have ever worked for during my whole life is practically nothing, compared to what the banksters can create out of nothing, at the push of a button on their computers, and that is the same for almost everyone else. All the cars and houses, and everything else in the real economy, that people can see and touch, have become practically nothing inside of the context of the gambling being done via banksters, with the SAME MONEY, made out of nothing, to use to gamble with, that ordinary people have to use to pay their bills and taxes with.
Collectively, this delusional, globalized, yet privatized, system of a state religion built on faith-based money, backed by the collective power of all the governments' police and military forces, to enable the high priests of the financial world to make more and more faith-based fiat money out of nothing, to gamble with, IS backed up by the REALITY that those governments' armed forces DO have enough fire power kill almost everyone many, many times over and over ... and so, that has "sustained" the gambling with more and more money made out of nothing, until the money made out of nothing operates a surreal video game world where that money made out of nothing is orders of magnitude greater than everything physically real that it could actually buy.
As far as I can tell, pretty well everything now operates in that way, where the leverage ratios are utterly unbalanced, and as insane as having an overwhelming abundance of weapons of mass destruction, constantly ready to commit global omnicide. For instance, there is supposed to be 100 times more "paper gold" than there is actual physical gold, and so that goes, on and on, throughout every other aspect of what our current electronic "money" gambling casinos have allowed each other to runaway doing ...
Therefore, one has to ask (although there are NO known answers) WHAT happens to a global system which has generally leveraged itself to become throughout roughly 100 fantasy units to 1 actual unit, wherein all the ordinary people represent the 1, while the banksters' world represents the 100?
All the ordinary people now combined, considering everything they actually do, have become less than 1% of the world of electronic money made out of nothing, which has become 100 times bigger ... and that insanity has no other way to continue to operate than to grow towards becoming 1,000 times bigger, and so on, and so on ... Everywhere I look I see a similar ratio regarding the degree to which our current civilization is unbalanced to a degree of 100 to 1, headed towards being unbalanced to a degree of 1,000 to 1. That includes our political processes, which are similarly unbalanced, and therefore, impossible to imagine being able to resolve their problems!
So ... how does this end ??? I continue to see nothing less than genocidal wars, along with democidal martial law, finally wiping out the majority of ordinary people, if, or when, there is ever something which short-circuits between the actual world that ordinary people are living in, and the fantasy world that the banksters have been able to build with money made of out nothing, which somehow is still supposed to be related to the collateral in that actual world that ordinary people are living in. The banksters' fantasy world has the SAME MONEY flowing through it as does the ordinary world of actual people, BUT, the banksters video game cybercasino world of money made out of nothing used to gamble with has become roughly 100 times bigger, and is headed towards becoming 1,000 times bigger, in order to keep its systems going.
Since that system is electronic frauds, backed by atomic force, it has been able to become amplified billions, then trillions, and now quadrillions of times, while its absurd leverage ratios have been able to leave behind the physical realities of collateral, in the ordinary world of the economy, where people can see and touch things, that they can therefore comprehend ... to become something that only very abstract mathematics can barely intellectually imagine.
Although the seeds of this go back thousands of years, and there have been regenerations of this sort of thing again and again ... at present, I trace what exists now back to the beginning of the Bank of England, where it happened that that private bank was given the legal power by the government to issue paper for metal 50% more than the metal which physically existed. Thus, we started with the legalized fraud of fractional reserve banking, with a ratio of merely 2 to 1. Two units of fiat paper "money," for every unit of actual existing physical money, which ran away faster and faster, as the empire of fraud, backed by force, was able to grow and grow, staking claims all over the world, and backing up those claims with violence.
Again, there were seeds of that in America, that were planted, uprooted, and replanted ... however, since the Federal Reserve Board in 1913, there has been a continuous process of more and more money made out of nothing, used to be able to gamble with. That maybe started with a ratio of 10 to 1 ... however, in practice, that soon spread out and diversified until it became about 100 to 1, which is intrinsically headed towards attempting to become 1,000 to 1.
The ordinary people in the physical world gradually had their lives more and more taken over by the fantastic fantasies of the banksters, who were legally able to create more and more money out of nothing, as long as the borrowers promised to repay, so that that money made out of nothing still had some relationship to the real world. However, that relationship of the collateral, which was supposed to connect the real economy to the gambling casino, or the financial video game world, ran away, faster and faster, until we are at the point in history where the combined collateral is less than 1% of the banksters' bets, which are leveraged on top of that collateral.
Meanwhile, those political processes of the methods of organized crime totally taking control over the powers of sovereign states, in order to back up the banksters frauds with the legalized violence done by governments, to enforce the banksters' legalized lies, has been matched by the People being turned into Zombie Sheeple, who do not understand, and do not want to understand what the banksters are doing.
That enables this sort of insane competition to manifest, where old rivals have their banksters attempt to out do each other. Thus, today, the Anglo-American (Zionist) empire of banksters finds that German banksters, or Chinese or Japanese banksters, are giving them a run for their "money" being made out of nothing, to be gambled with, in a race towards ... INDEED, TOWARDS WHAT???
"More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly." - Woody Allen
Casey: All Banks Are Bankrupt
The whole banking business is corrupt from top to bottom today. Part of the problem is that banks are no longer financed by the individuals who start them, putting their personal net worth on the line. Now, they are all publicly traded entities - just like all brokerages - playing with Other People's Money. Management has no incentive to do anything but pad their wallets, so they pay themselves gigantic salaries and bonuses, and give themselves options. These people aren't shepherding their money and that of clients they know personally. They've got zero skin in the game.
http://homment.com/bank-bankrupt
Towards nothing.
Vapor.
It was never real.
You end up with a circle of bankers yelling at each other "You owe me a kajillion dollars."
It's not like anyone is really stupid enough to put their shiney money in a bank, is it?
"It was never real."
Exactly!
It's like a gag gone all wrong. People wanting "their money back" when it really never did exist; it only existed by the shell game that the banksters were serving up. And now that the point has come that the music is stopping the banksters are starting to fear about the consequences, that the game cannot be perpetual (housing prices never going down, all the other make-believe shit that they likely started to believe themselves).
Why are you guys getting your panties in a bunch? The regulators and politicians have complete control.
But seriously, this is how banks in the 21st century function. These instruments - which mostly are currency and interest rate swaps - are used to immunize loan portfolios and are plain risk managment instruments. Get over it.
http://www.youtube.com/watch?v=UaoRtFYkT6E
They did.
.
Yes, of course, much in the same way that a diphtheria vaccine immunizes people against bird flu.
Enjoy your immolation. The pain won't last long. After you realize you just lost everything you ever worked for, or stole, you'll end up a bit wiser. After that you can fight with the others of your cohort who are tussling over dead cat carcasses, and pigeon dung for food. Bon Apetit!!
Much has been the case for most of the world...
Here is where my wife is from:
http://craigandange.com/?p=1965
She, however, was fortunate enough growing up to have missed the big influx of people from the north. Things weren't quite so stressed, but not exactly easy either.
Using GNP, net worth of the Earth is ~72 trillion.
There's good news and bad news here. The good news is that the capital raise probably has nothing to do with known or expected loan losses or derivative issues. The bad news is that like with JPM and its whale trade, it is unlikely senior management even knows the true risk or market value of its positions. The positions are simply too many, the formulas behind all but the plain vanilla i-rate swaps and maybe some FX forwards too arcane (as in purposefully obfuscative and ultimately wrong), and management too lacking in the requisite math skills to understand.
More likely this capital raise is related to Ben and the Fed's demands that foreign subs in the US ring fence their assets so that in the event of a blow-up, the US has sieze-able assets on which it can get it hands. Also, using Euro-accounting standards, DB is still running close to 40:1 leverage on its visible balance sheet, and given the levels equity and sovereign debt markets have have reached (anybody seen Italian 10-year paper recently?), a 2 1/2% wipeout move is more likely than ever.
Question for Tyler: if US banks had to use the same accounting methods as the EU, what would US banks' leverage be? Certainly JPM and BAC would be a lot higher than under the more generous and forgiving US rules.
Investing 200$ in bitcoin is starting to see as no-so-stupid right now compared with the stock market and the derivative market.
but the show must go on ! don't let the music stop or you will run out of chairs!
www.getbitcoins.tk
The sooner the collapse, the sooner I can stop paying my mortgage like the other 11M households...