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The Unspoken, Festering Secret At The Heart Of Shadow Banking: "Self-Securitization" ... With Central Banks
By now everyone has heard of securitization: the process whereby banks take risky assets on their books, package, tranche them, and then re-sell them to yield chasing fiduciaries of widows and orphans. The conversion process can be nebulous, usually involving a 20 year-old evil French mastermind working for Goldman, and a billionaire hedge fund manager, who select the worthless securities put into the weakest tranche, just so the abovementioned two parties can short it while misrepresenting their conflicts of interest, and make a boatload of money when the whole securitized structure implodes. The process usually takes place "off balance sheet" via Special Purpose Vehicles so it is completely unregulated, and as such allows massive leverage.
According to many, the hidden leverage embedded in the securitization pipeline is what catalyzed the 2008 near-death experience of the financial markets.
All of this is well-known to most.
What however is certainly not known, because until a few days ago the concept did not technicall exist, is what emerged deep from the bowels of the FSB's 2013 "Global Shadow Banking report", and what is barely even defined anywhere in popular literature, which thus we have defined as the "unspoken, festering secret at the heart of shadow banking."
Presenting self-securitization.
What is "self-securitization"? Go ahead and Google it: there doesn't exist any technical definition of this heretofore unheard of phrase.
Rather the term, conceived by the FSB as a means of making the total size of the $71 trillion shadow banking sector somewhat more palatable, is defined as follows:
Self-securitisation (retained securitisation) is defined as those securitisation transactions done solely for the purpose of using the securities created as collateral with the central bank in order to obtain funding, with no intent to sell them to third-party investors. All of the securities issued by the Structured Finance Vehicle (SFV) for all tranches are owned by the originating bank and remain on its balance sheet.
At this point alarm bells should be going off. And if they aren't, here is some more color.
The numbers for OFIs presented in sections 2 to 4 of this report include all financial assets of Structured Finance Vehicles (SFVs), regardless of who holds the securitised products. However, in a number of jurisdictions, some of these products are returned back onto the balance sheet of the bank that originally provided the asset to be securitised. This so called self-securitisation, or retained securitisation, is defined as those securitisation transactions done solely for the purpose of using the securities created as collateral with the central bank in order to obtain funding, with no intent to sell them to third-party investors. All of the securities issued by the SFV for all tranches are owned by the originating bank and remain on the bank’s balance sheet, so that third-party investors do not own any of the securities issued by the SFV. These assets should not be included in the shadow banking figure, as prudential consolidation rules consider them as banks’ own assets and as such subject to consolidated supervision and capital requirements.
... some of the assets that are currently ‘self-securitised’ by banks may at some point be sold to third parties when financial conditions improve.
Wait a minute: a company is "securitizing" assets.... which it then keeps, but only after it has "obtained funding with a central bank"? What?
Judging by the countries whose shadow bank institutions are the most aggressive participants in "self-securitization", it gets clearer just what is going on here:
While Italy and Spain are clear, why is Australia on this list?
While the large increase in Australian banks’ self-securitisation of residential mortgage-backed securities (RMBS) started in 2008 (i.e. before Basel III was developed), the amount of self-securitisation is expected to stay high going forward as these securities are eligible as collateral for the Reserve Bank of Australia’s Committed Liquidity Facility (CLF). Indeed some banks are gearing up already for the CLF. Given the low level of government debt in Australia, the Australian prudential regulator has adopted elements of the Basel rules that allow banks to count a committed liquidity facility provided by the central banks as part of their Basel III liquidity requirements.
So that very strict Basel III requirements are permissive enough to allow... shadow "banks" to engage in self-securitization with their central bank? Just brilliant.
Finally, what amount of circularly (non) securitized, central-bank backstopped securities are we talking here?
Answer: $1,200,000,000,000.
That is the amount of unlevered notional that shadow (and regular) banks engage in circular check-kiting games with central banks for, and in the process obtaing "funding." As one trading desk explained it:
you take yr worst assets... package up in an spv (which removes em from yr gaap balance sheet) then flip to central bank for cash at modest haircut and boom revenues...
And presto: magic balance sheet clean up and even more magical "revenues."
But wait, there's more (spoiler preview: take the above quote and put in on constant rewind)
Where this mindblowing, circular scheme in which riskless central banks serve as secret sources of incremental bank funding, i.e., free money, gets completely insane, is the realization that these self-securitized assets can also participate in rehypothecation chains. Recall from our exposition yesterday on the permitted leverage resulting from collateral reuse in a repo chain which is fundamentally what shadow banking is all about: unregulated, stratospheric leverage.
We added:
So... three participants result in 4x leverage; four: in roughly 6x, and so on. Of course, these are conservative estimates: in the real, collateral-strapped world, the amount of collateral reuse, and thus the number of participants is orders of magnitude higher. Which means that after just a few turns of rehypothecation, leverage approaches infinity.
Which means that should these same banks that self-securitize with Central Bank X, then proceed to re-use the same security with the same counterparty - i.e., their host central bank, or the Fed of course - then this $1.2 trillion in assets, already carried off-balance sheet with Basel III's blessings, can get 2x, 3x, 5x, 8x, 13x or more turns of leverage on them, as for the shadow bank it is the central bank that is the (up to infinity) levered counterparty. And the central bank, as everyone knows, can always just print money if and when the worthless collateral backing the bank's self securitization ends up worthless.
The implication of this unprecedented shadow banking circle jerk, which could very easily make even the direct wealth transfer resulting from trillions in QE pale by comparison, is so stunning that we leave it up to the reader to come to their own conclusion.
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That is SO fucked up!
In many ways, this is similar to a nuclear reaction. One electron (one loan) hits another and releases all this energy (more rehypothecated capital), and continues in an exponential fashion, until things go boom.
http://hyperphysics.phy-astr.gsu.edu/hbase/nucene/u235chn.html
"rehypothecation chains" == Uranium 235.
That's why they called it the "Manhattan Project"
It all makes sense now.
is that why my head exploded after reading this?
Allow me to clear this up for you...
92U235 +0n1 --> 55Cs140+ 37Rb93 +3 0n1 + Energy
what?
What do you think caused that orange glow in the briefcase every time I opened it. I couldn't show it to the audience because they might have thought we were turning Japanese.
you really think so?
I couldn't show it to John Q Public either.
That is some fucked-up repugnant shit
Careful, he might start reciting Ezeikiel 25:17.
The last straw is finally taking form. The law of exponents is reaching its inevitable culmination.
Remember Chris Martenson's analogy of the magic exponential water drop in a stadium that doubles in size every minute. It may go hours or days without anyone noticing the tiny puddle, but once they start getting water around their ankles it will be less than 10 minutes to stampede for the door before the stadium is filled. We are on that cusp now. Time is not your friend in this game. Don't waste it.
And don't get suckered in by BitCoin or leveraged assets. Tangible assets will be king before the decade is done.
Exponential growth....
I love this old guy
http://www.youtube.com/watch?v=F-QA2rkpBSY
He spells it out in ways that even a central banker could understand, but I doubt they care.
So I want to create a security backed by my collection of Wayne Newton signed vinyl record albums and post it with the Federal Reserve for a one billion dollar loan (they are worth 10x's that at least) and I get to keep my Wayne Newton albums ? Win Win !!!!
These guys make it so complicated now. (Smoke screen.)
When they get their global neo-feudalism in place, they'll just make commands & decrees and get whatever they want from the serfs. No 'money', 'markets' or 'accounting' required.
The system is DOOMED.
"self securitization"
Ha!! The last time I heard this term was at the peak of 2007. This was happening wrt mortgage lenders who were packaging things up so quickly, that they resorted to this practice so they could re-hypothecate their own shit loans into additional warehouse lines, compounding their ability to borrow in advance of their ability to sell.
Of course, when the credit markets collapsed, it compounded their problems. In this case, it is even worse because it's no longer the shite mortgage lenders like CW, but their "counterparties" up the chain who are involved in these shenanigans.
I don't see the problem. We've been doing it for years and it hasn't blown up yet has it?
Chill baby chill, and oh, er, go buy some gold...
BitCoin just hit $450.
I think it's time to take some profits. In anything you have profits to realize. You are now experiencing the parabolic phase of the market.
Meanwhile, on ground level.... the "real" economy isn't doing so well. Perhaps even recessionary.
I have been here twice in the last decade. This is exactly what it felt like near the top. You hear that? That's the mythical bell they don't ring at the top.
BitCoin just hit $450. I think it's time to take some profits.
That's just what they would be expecting us to do. Don't fall for it.
danke schoen
http://www.youtube.com/watch?v=0m_giioppT4
Almost. You are backing up your collection of Wayne Newton signed vinyl record albums with unmatched socks from your sock drawer.
I enjoyed your insightful comments, Say What Again. Your name could hardly be more appropriate handle to comment on this excellent Zero Hedge article! I see it as the Bizarro Mirror Worlds being on hinges, that can be turned in on each other, so that their reflections reflect back on each other an increasing number of times. Self-reference in the form of self-securitization! Of course, this is all based on its fundamental source, which the legalized counterfeiting of the public money supply out of nothing, as debts, by private banks. After that fundamental fraud was achieved by the international banksters throughout the Anglo-American (Zionist) empire, which was able to dominate most of the rest of the world, it automatically runs away with itself, indeed, by a kind of chain reaction of frauds, which is best understood as its exponential growth driving overshoot in a nutshell ...
Jack, seeing that you go by the fine name of "Napier"*, I'd imagine you know plenty about exponential functions. :-)
* John Napier... https://en.wikipedia.org/wiki/Logarithm
Ahh memories of a well worn "Napierian" log book and slide rule.
@ Jack Napier
<<<<< but once they start getting water around their ankles it will be less than 10 minutes to stampede for the door before the stadium is filled. >>>>
But if this doubling continues for several more minutes, the waters of the whole Pacific ocean will be needed.
Run for cover and accumulate food, ammunition gold and silver. Water will be plenty and toilet paper will be reduntant
self-securitization
You gots to be pretty limber to do that.
If I could lick my own balls, I'd never leave the house
Old joke.
"why does a dog lick his balls?"
Because he can.
jqp, your comment is the real reason I read ZH.
Hear that? That's the sound of bankers LAUGHING at us.
I'm thinking that it IS about time to roll the guillotines. Obviously SOMEBODY blessed this new ponzi variant. Who? Oh yeah, other bankers.
It's like when a phony phone caller keeps calling the puppet head TV host a jizz face and dipshit, then finally needs to tell the empty suit that he is being pranked. The bankers must be flabbergasted that they can pull any scheme, make up any bullshit and hardly any Americans even care. Goldman could restart the slave trade and I don't think it would result in an indictment!
Yeah, I've said the same thing - I bet they have internal office contests to see who can get away with the most flagrant, egregious lie, breach of public trust, criminally fraudulent activity, etc... Of course by now it's gotten so far out of hand that the fun must be running out - break the law, rape the public enough times and the thrill and novelty must wear off.
I bet it never gets old for them.
This is why they'll need to up the ante going forward and add erotic asphyxiation and speedballs to the mix.
Next they'll tell us, "Yeah, as a matter of fact, one of the ingredients in matzo is the blood of gentile children who we kidnap and then slaughter every Easter. Those old "myths" were spot on; our massive PR machine (publishing, television, edukation, gov't) put a stop to them and demonised all who doubt us...kinda like everything else we do."
"On a related note, do you think it's a cohencidence that the abortion mill industry and pro-abortion groups are founded, funded, and promoted by us?"
The guys that dreamed this scheme up are a sure bet to receive this years John Law award for Advancing the Science of Banking at the Bankers Ball
Call it what you will but outside the banking industry it would have no value what so ever. That alone should tell you that we are dealing with some magic fairy dust believing mother fuckers and give you a hint to what the value of a dollar of currency will be worth 5 years hence.
During the rehypothecation chain, are the assets used as collateral tangible or intangible?
Intangible, although i guess that you could pretend that somewhere deep deep down there was a claim to something real..
uhhh... goldman did restart the slave trade. it's called most favored nation trading status with china. you are correct. no indictments
I'll lay you 10:1 odds that whomever dreamt this one up is a 33rd degree Freemason; purely Luciferian.
Yeah fine, just don't forget the govt and decades of prime ministers, and all the past cabinets and congresses that allowed it and all the public servants and 'advisory' parasites and lawyers who enabled it.
a former office wife (Mrs. Questions undisclosed the first) thought it was your soul.
had something to do with that band aid on your neck.
and you rock tonight btw.
SAY WHAT AGAIN MOTHER F**CKER!!!!!!!!
Seriously? Uranium gets hit by netron releasing 3 neutrons, energy, Rubidium and some cesium. Sheesh.
Yes, I'm Serious.
Sincerely, Mr. Schrödinger
Finally, someone who speaks English!
<delete> off topic, sorry
That looks like the empirical formula for instant water.
You know ...
Empty a packet of "Instant Water" into a glass. Fill the glass with water, and voile, INSTANT WATER!
I believe self-securitization is the only available structure to rehypotecate counterfeit currency before it's actually printed.
Figured out what the shutdown was all about. Lamestream cadres of Krugman (the guy that gave America's Shabby Sheik Wal Mart Elite the prospect of a War On Space Aliens as medicine for the dead broke dead beat US of A's mafia economy) clones were blabbing out their well boned and sloppy honed kazoos that the shutdown will hair cut a half point off GDP.
Why is that significant. Well the White Shoe Boy K-Street Kiddie Brothel Queens on CSPAN and our new FED chair have another double faked stat providing some voodoo logic thingamabob for another one of them "what's new" arguments to continue easing.
Lest we forget. "Soylent Green is People". But a banker's flanks make some mighty tender and tasty USDA premium fillets. That why people breed bankers and politicos, sweet meat for the spit.
Actually one thermal neutron which causes a U235 atom to fission then releases 2.43 neutrons of which one in a critical reaction then causes one other fission. The other 1.43 neutrons are lost to reactor "poisons", or are lost to the outside of the reactor, or absorbed by the control rods. In a supercritical reactor more than one neutron goes on to cause a fission this is used to increase power, ....Financially we are at the prompt critical stage......this is bad....
Prompt-critical assemblies are created by design in nuclear bombs.
Our financial system is just about at the prompt critical stage.
Arnie Gunderson calls it an 'Uncontrolled Criticality' (in reference to fhe Fukushima thing).
All that is now needed is a big financial earthquake, followed by a tsunami. The reactors are ramping up to 110%, now.
http://www.youtube.com/watch?v=LLCF7vPanrY
Is this like the ARM Treasury sales coming up?
Self-securitization sounds a lot like a twisted sex act. Unfortunately, all humanity is gonna get fucked by these actions.
nice little trick to avoid marked-to-market accounting of shitty assets and leverage them at an inflated value !
and banks were probably advised by Big4 accounting firms to do this (who remembers Enron anyhow..)
Smartest guys in the room.
kicked off the era of greatests heists.
oh, and they did not kill kenny..
Re: That's why they called it the "Manhattan Project"
+10 too funny!
Isn't it a bit odd that the UN never looked for rehypothecated loans when they were investigating Iran?
Even John Corzine would blush.
(well maybe not)
Like the way he does in jail when taking it up the ass......... oh wait, never mind.
You are correct sir. I am thinking about "self-securitizing" as well. Get your LOP "notes" here!
Once this thing goes "nuclear";
The good will be the we will all be trillionaires and the bad new will be that we will all be trillionaires.
.
Substitute neutron for electron and you may be on to something here.
When nuclear reactionary nitpickings of US 'american' eternal nature asspire to blob-up the progrational seeking of symmetry between leptons and hadrons (not to mention the embareassingly diminutive Chinese Citizenism hardons), hey, it's just the same old US 'american' inability to sustain the logical chain reaction of monolizing the fissionizing of the speeching means. Same old song on the other foot, one more than is less and then some.
You're right. It is clear in the following formula
92U235 + 0n1 --> 55Cs140+ 37Rb93 +3 0n1 + Energy
there is one 0n1 being added to the soup. Also note that there are some Unleaded Gas Futures (RB) that are left over as a byproduct
Sorry, I skipped out on that class to hang out with a hot co-ed, specializing in "business administration" It was worth every last neutron I had.
BTW - I did give you a +1 because its good to know these things for future reference.
Then you must know about the "Sex life of an Electron"... something all 1st-year engineering students have learned, no doubt:
One night when his Charge was high, Micro Farad decided to try and find a cute Coil to discharge into. He picked up Milli Amp and took her for a ride on his Megacycle. They rode across the Wheatstone Bridge and parked in a Magnetic Field near a Flowing Current.
Micro Farad became Attracted to Milli Amps Characteristic Curves, and finally had her Resistance at a minimum, and with his Field fully Charged, he laid her on the Ground Potential, raised her Frequency and lowered her Capacity and pulled out his High Voltage Probe, inserting it into her High Voltage Socket connecting them in Parallel, and began to Short Circuit her Shunt.
Fully Excited, Milli Amp shouted "Mho, Mho, give me Mho". With his Tube operating at maximun Peak, and her Coil Vibrating from the Current Flow, she also reached her maximum yield.
The excess Current had got him hot, Micro Farad was rapidly Discharging and was soon drained of every Electron.
They Fluxed all night, trying various Connections and Sockets, until his Barmagnet had lost its Field Strength.
Afterwards, Milli Amp tried Self Induction and damaged her Solenoid. With his Battery fully discharged, Micro Farad was unable to Excite his Generator, So they ended up by Reversing the Connections and Blowing each others Fuses.
<<<<<<< He picked up Milli Amp and took her for a ride on his Megacycle. >>>> Only to find out that she was on her menstrual-cycle
Two atoms were walking down the street when one stopped and said to the other, "I think I just lost an electron." The 2nd atom replied, "Are your certain?" The 1st said, "Yeah, I'm positive."
God I'm getting old. That garnered groans from Gen Chem students 30 yrs ago too.
So when the goddamn motherfucker blows and the medium priced home is worth $500, every Tom, Dick and Mary will be on the hook to payoff their $200K mortgage. Except Tom, Dick and Mary have now lost their jobs due to the banks blowing up the worldwide financial system.
Ergo, banks and central banks then foreclose on their ass and now own 99.8% of all homes worldwide.
Ok, got it.
bingo, mofo, bingo!
which begs the question: can a money-price really be determined on one's home?
for example, if the mother blows and the fuck tards squeezing themselves with the notion of owning everthing start receiving body parts of those they've hired to actually carry out the attempted theft instead of the deeds, well..
then they'll have to hire replacement collection folk and what if our squeezers continue to receive only their parts, and no deeds?
juss riffing
Banks can not handle a large number of foreclosures as the maintenance and the taxes will be overwhelming. They will let the buyers stay in for free or squaters will invade them.
We need a reset which may take sometime but it would be sudden. Don't get caught with too much paper money in the bank or the safe.
Large city dwellers will be very vulnerable. (Yes that includes cannibalism)
I thought that was the plan last time around? However it seems like a bunch of private equity firms took the property off their hands, and only for a trade. I dont think this is the end game
The Great Depression still ranks as the largest transfer of wealth in world history. Zero Sum Game.
Provided that the relationship between the value of labor and the cost of housing holds, then all will be well.
Oh, wait, if we import 15MM laborers willing to do your job for less, and if we import $500BN/yr of goods (outsourced labor), then that relationship has been blurred and corrupted.
<smacks self in the head> Shit, ok, NOW I get it.
Maybe that Adolph guy was right on several fronts.
"So when the goddamn motherfucker blows and the medium priced home is worth $500, every Tom, Dick and Mary will be on the hook to payoff their $200K mortgage. Except Tom, Dick and Mary have now lost their jobs due to the banks blowing up the worldwide financial system.
Ergo, banks and central banks then foreclose on their ass and now own 99.8% of all homes worldwide."
so, it's back to serfdom? perhaps, but i highly doubt this possibility...
i cannot imagine corporations who would sacrifice all their high-margin, western-paying customers to sell to the bottom of the pyramid in latin america, africa, asia, ...? to the same bottom of the pyramid that derives its current livelihood from selling agricultural and tech products to the western middle class that just got sold out by the bankers. this would only work if there's an emerging market consumer class large enough to displace the western one. maybe, but it's a bit more of a longshot...
in any case, no one with any humanity wants to blow up the financial system, because the consequences are too great to bear. they know it, which is why we have QE. we are past the point of no return, and the only answer it to continue QE until the real powers behind scenes finish their debate on the design and implementation of the next international financial and monetary system. it'll be announced on a sunday...
but just to entertain your scenario once more, it only makes sense if said bankers want to seriously depopulate the western world and turn it into a jackson pollock canvas full of human blood. besides, where do the bankers go to hide from a middle class who just got fucked over big time? elysium? fuck elon musk and his extra-planet colony dreams. he can't even build a stable automobile.
" But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism . . . "
Thomas Jefferson - Declaration of Independence 1776
I don't think we'd again find 56 people willing to mutually pledge to each other their lives, their fortunes, and their sacred honor.
not in Congress, that's for sure
re 'Say What Again' comment on U235 reactions...
I'd liken the Derivatives market to the Deuterium core inside an A-bomb, waiting to get ignited and lead to a MF'ing FUSION reaction. Presto, a Hydrogen bomb!
The fallout? Unbearable Fukushitsa hits the fan.
Google it now and there are over 800,000 results -- with the ZH article at the top.
Talk about your going viral....
Did you try "TWERKING" or "DIXON CIDER"
Over here we call it Dickens Cider but your way works too. "I just can't start the day without my Dickens Cider".
Specialty drink made at an olde English Pub they built near a poultry farm so they called it The Cock and Pullet.
My wife sometimes prefers a hot Dickens Cider, but she always opts for a Hard Dickens Cider.
We bought her car at Pinkley Ford. We didn't opt for the warranty because she pefers that only I service her Pinkley Taurus.
dudes
you're all making it sound WAY more complicated than it need be.....it's a ponzi
plain, vanilla ponzi, two scoops is all......,ponzi,ponzi,ponzi
In plainspeak-the portion of the sh*^ the taxpayer is now on the hook for is off the bank's books
Senator Vitter (R-LA) asks Janet Yellen about Audit the Fed. Who owns the Federal Reserve?
And the answer is ... no surprises here.http://sufiy.blogspot.co.uk/2013/11/senator-vitter-r-la-asks-janet-yelle...
Mike Maloney: The Biggest Scam In The History Of Mankind - Hidden Secrets of Money 4 GLD, MUX, TNR.v, GDX "Finally, in this episode everything comes together and Mike Maloney presents The Federal Reserve System in all its glory. With over 1 million views only on this YouTube channel the information is going out now. Mike Maloney has made the great job - everything is explained in crystal clear terms and now you can start move forward and understand why FED is as "Federal" as Federal Express and who owns it, why there is ongoing manipulation of Gold and Silver and nobody can be held accountable for it and what will happen next with QE and Taper."
Glenn Beck Exposes the Private Fed; Gets Fired by Fox
http://sufiy.blogspot.co.uk/2013/11/senator-vitter-r-la-asks-janet-yelle...
Cool, thx!. I like G. Edward Griffin's comment about the MANDRAKE MECHANISM* (26:10)
* Mandrake Mechanism explained: http://www.freerepublic.com/focus/f-news/888963/posts
This Mechanism + Derivative, etc, etc --> MASSIVE Wealth Transfer, from the many to the few. The 0.5% or less turn the rest of the 99.5% into their Debt Slaves, via a series of Nested, Leveraged Controls (NLC). Even many ZH readers (much less the common Joe Public or even the the "educated") have a clue about NLC. / They'd rather yip & yap like a bunch of puppies, or topic-hop ADHD kids. /s
I'm confused...
I thought that less regulations was supposed to make things work better, and here we are complaining that things are fucked up because of a lack of regulations?
Re: I thought that less regulations was supposed to make things work better, and here we are complaining that things are fucked up because of a lack of regulations?
I think the "invisible hand" is "Self-Securitizating" itself - which can cause banksters to go blind and get hair on the back of their hands.
You should read; "All the Devils are Here"
The book talks about how hard the Banks & Mortgages companies fought to remove regulation. There are examples of a city placing a restriction of the type of loan that could be made, and the Mortgage Bankers Lobby group went to the state (and Federal) supreme court to have the restriction overturned, forcing the municipality to watch in horror.
And... they never went to court for that (of course they would NEVER go to jail).
How FU is that?
OFC! They dont want fucking regulation ever!
They were supposed to implement Basel III in 2013, got pushed to 2016 and then again maybe to 3013 who fucking knows.
Basel III can never regulate anything, i think we have passed the regulation point long time ago.
CAR (Capital Adequecy Ratio) Tier 1+ Tier 2/ RWA (Risk Weighted Assets), how much do you think they assign for the RWA?! OF course a fucking zero.
The Tylers have posted so many articles about the REPO operations to aquire cheap fundings, REHYPO till you eyeballs bleed.
FUBAR!
2018
"If you are being raped and can't do anything about it. You might as well at least try to enjoy it."
- some dude from India
Yeah, but I heard he was just requoting Blankfiend.
it was actually a politician from Texas
Clayton Williams, Texas millionaire
http://www.dailykos.com/story/2012/08/20/1122097/-Clayton-Williams-Victims-of-Rape-Should-Relax-and-Enjoy-It
Hello--Hello?-- I want to report a crime--------
The # you are trying to call has been disconnected. No forwarding # is available. Thank You and good -bye....
the unfettered market where prudence is rewarded and unprofitability punished is the best regulator. No backstops and bailouts. Everything voluntary, and reputations would matter. Just like FDIC, which makes people abdicate any responsibility when it comes to ascertaining integrity of the institution in which they are putting their money, as they couldn't care less right now that these banks are leveraged to the hilt in CDS and other synthetic derivatives notionally in the stratosphere. In a true free market there would be private, competing consumer report-like agencies that would rate banks as with any other business on trustworthiness, etc, and the bad ones would lose business in a hurry.
The market protects us better than could any bureaucrat. And obviously the revolving door between bureaucrats and the 'private' sector speaks for itself, but even 'well intended' bureaucrats just create moral hazard, and obviously in the first place any statism implies the use of coercion and theft.
Well you really are confused. This is being done in accordance with rules provided by "the regulators", ie this is being done in accordance with regulations, not in the absence of them.
Regulations exist for the benefit of the regulators and those parties who own them or pay them. It was always so. If you don't understand that, you are worse than confused.
Yep. Regs like licensing and whatnot are just to create more jobs for bureaucrats and control over people and resources. Cronyism at its best.
The big corporations use regs that cost a ton to comply with to build moats around would be competitors into their market share, as only they can handle the legal costs. This along with the inflation is why many of these big publicly traded companies are doing so well. The small businesses are getting swallowed up. In many cases it's not the economies of scale efficiency why there isn't more competition, it's the special interests on behalf of the big companies using the state to keep out competitors.
Regulations are used to destroy competition by small growing businesses, keeping the big boys in power. They have the regulators/politicians on the payroll so ignore the regulatuions anyway.
Re-hypothecate like a BOSS!
What! Really! Maybe the banks can resecuritize the payoff on all mortgages that will close 30 years from now and throw that amount on top
whats a word to describe a ponzi ponziing a ponzied ponzi scheme?
Fæces.
No shit, this economics system will collapse, the good news is, the big vampire squid corporations like Monsanto, BP, ESSO or Goldman Sachs will collapse within it.
They will hold on to dear life and try to febreeze away the USD with SDR. It's the only way to continue this exponential function. We cannot stop.
*runs off the cliff*
Nah, as usual the board of directors and all the C level folks will pull the ripcord and wind up in Buenos Aries, while letting the working stiffs hang in the breeze.
FederalReserve.
F-ed.
If you say Ponzi one mo time....
with this one secret trick................
so that's where all the hypothetical came from.
My conclusion is that students and anyone else that owes debt to banks or bank controlled governments have a moral obligation not to pay them a penny because bankers are the enemies of humanity and have declared war against everyone else.
Yeah, but they made it so you can't afford anything with a job so you need to use credit, and you can't get credit unless you attempt to pay them back.
q99x2
Let me guess, You spent 6 years on an arts degree and are 120k in debt and want someone to bail you out of your poor decision?
You're missing the (evil) beauty of it... "your" debt obligation has already been packaged and flipped back the central bank... the bank has already replaced the fiat it indebted you with, and pocked some NIM (profit) and moved on to the next "customer"... by not paying back the indebtedness you are defaulting on an obligation to the CB, which the congress critters will bail out with EVEN MOAR of YOUR MONEY... Welcome to the debt serf circle jerk, the bankers took FDRs words (we owe it to ourselves) to heart when it came to restructuring risk transference after Ben & Hank deployed the nuclear option. Did people actually think there were customers (other than the FED) lining up around the block for the increasing volume of vintage 2012 and 2013 Gen-Y Mutant NINJA CDO's?
The way I see it is if you (a real person) signs up with a corporate entity (a fiction) for a loan and accept a ledger entry as "money" then you are complicit. I can talk but, I exchange hours of my week for a ledger entry that gets me stuff.
Are you fucking kidding me?????????????????????????
So a CEO walks into his CFO's office and says, "What the fuck man, this financial statement says we're bankrupt."
The CFO says, "Really, well I told you that acquisition was a bad idea."
CEO, "No you said it was a good idea."
CFO, "Shit really. Hold on."
CFO changes one of the Excel formulas. "There, now we have a $1.2 billion profit."
CEO, "Yeah I thought so. That's better."
Or even reclassifying some expenses as assets, and then there was that money the company borrowed that was accidentally recorded as revenue....
that's even better than QE. with QE, stuff sits on balance sheets. this is like central bank buying bonds without actually getting them.
This article reads like a Marla Singer.
Great stuff here, ZH.
maybe she heard my call to show a signal... ;-)
We who cry wolf must be honest and admit that despite the rotteness of the system they not only manage to keep the system standing but to also keep the rotteness growing.
The question as always is, what will trigger the explosion?
Hubris usually is the downfall of human driven systems.
who knows?
But, one thing is for sure... the more this goes on the more unstable it gets.
This is definitely one of the more enlightening articles as of late. Someone who understands this in greater detail really needs to explain it to enough people over in Rand Paul's office so they can sell the audit the fed bill with a possibly higher degree of success in getting it passed in turn for Yellow Stains nomination. Might want to explain it to the Sqauw's people also.
Could someone explain Rand's hair while you're 'splainin' things...
He's an opportunist, next time an opportunity requires pragmatic dumping of principle, he'll just do it again. His hair is the expression of the inner-conflict.
(sorry, all I got dave)
That apple may not have fallen far from the tree, but I think it rolled down hill after it hit the ground.
The number one way Ron Paul was compromised was through his son, IMO. Wouldn't want anything to happen to Rand's burgeoning political career, now would we?
Hey, I am going to use that line:
"Don't worry honey, I promise to "Self Securitize""
I guess that means mucho of this!
http://www.youtube.com/watch?v=AhQ-CEJpx3o
Liar loans for the bankers!
And you fuckers laughed at the trillion dollar coin! At least that was straight forward money invention.
Plus it's easier to roll that coin down the street than to kick the can.
it sounds like they are monetising dog shit
That's pretty much the definition of collateralized subprime mortgages.
No that would be a PPP for a methane power plant, and those actually pre-date the financial crisis...
And if you think I'm joking about bankers monetizing LITERAL SHIT...
www.epa.gov/agstar/documents/conf06/roos1.pdf
Not surprised at all. Leverage is going to hit near infinity due to diminishing returns. Financial transactions have to get more and more clever (criminal one would argue) to allow for such leverage.
Sure enough, when this puppy blows, the entire banking sector as we know it is going down. The only thing that will matter at that point will be what you physically have.
So, instead of a yard sale I should self-securitize with the FED.
yeah, have your dog shit and eat it too. meanwhile you can buy moar dog shit.
This particular mechanism reminds of the reversble suit that came out some years ago. Do you really have two suits or one?
Yes, so the shit stains shows all the time, sounds about right.
Excellent piece of work here. My compliments. We need to explain this to a wider audience.
I agree but what success have we had so far in exposing fiat, fractional banking, QE, manipulation of LIBOR, gold, silver and commodities, Snowden's revelations and so on?
The fact of the matter is that 95% of people have sheep brains that can't see or think beyond their daily routine. The strength of that routine combined with money tricks and a steady flow of propaganda maintains the momentum more than we can imagine.
Habit is thus the enormous fly-wheel of society, its most
precious conservative agent. It alone is what keeps us all
within the bounds of ordinance, and saves the children of
fortune from the envious uprisings of the poor. It alone
prevents the hardest and most repulsive walks of life from
being deserted by those brought up to tread therein. It
keeps the fisherman and the deck-hand at sea through the
winter ; it holds the miner in his darkness, and nails the
countryman to his log-cabin and his lonely farm through
all the months of snow ; it protects us from invasion by the
natives of the desert and the frozen zone. It dooms us all
to fight out the battle of life upon the lines of our nurture
or our early choice, and to make the best of a pursuit that
disagrees, because there is no other for which we are fitted,
and it is too late to begin again. It keeps different social
strata from mixing. Already at the age of twenty-five you
see the professional mannerism settling down on the young
commercial traveller, on the young doctor, on the young
minister, on the young counsellor-at-law. You see the little
lines of cleavage running through the character, the tricks
of thought, the prejudices, the ways of the shop, in a
word, from which the man can by-and-by no more escape
than his coat-sleeve can suddenly fall into a new set of
folds. On the whole, it is best he should not escape. It
is well for the world that in most of us, by the age of thirty,
the character has set like plaster, and will never soften
again.
William James 1890 "The Principles of Psychology"
What keeps you alive - per Zorba:
“A man needs a little madness, or else... he never dares cut the rope and be free.”
? Nikos Kazantzakis
The great culling is on the way
He said........yaddayaddayadda....
.......(up to infinity)......yaddayadda.
It's enough to turn you into a wife-beater, (unless your wife's bigger than you, maybe?)