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CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion
What is $55 trillion between friends? Very little according to the CFTC. In perhaps the biggest under the radar news of the day - to be expected with every watercooler occupied by taper experts - the WSJ reports that the Commodity Futures Trading Commission said Wednesday that technical errors at two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn't it curious how all these "glitches" always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!
Regulators aren't sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting.
One just has to laugh: the total US swaps market is what - roughly $400 trillion? So... just add enough notional to that number equal to the GDP of the entire world - or 4 times the size of US GDP - and call it a day. And in this environment somehow the Fed and other central planners are expected to have any clue what they are doing on a day to day basis?
Naturally this discovery makes a mockery of such transaprency enchancing initatives as Dodd-Frank.
The lack of clarity over the size of the market may undermine a key plank of the 2010 Dodd-Frank law aimed at bringing transparency to the opaque derivatives market. Swaps, which were at the heart of the 2008 financial crisis, are complex financial contracts that allow financial firms and their clients to hedge against risks or bet on an asset's value.
The CFTC has issued a number of rules to bring transparency to swaps trading so regulators can detect risks that could pose a threat to a firm or the financial system.
It would appear that those rules, uh, failed. It gets better:
The CFTC said in a footnote to its weekly swaps report that the largest data repository, the Depository Trust & Clearing Corp., "has informed us that due to a…technical coding issue, the notional values in the interest rate asset class have been understated." The agency also reported "a processing error" by a separate repository operated by CME Group Inc. A CME spokeswoman didn't respond to a request for comment. A CFTC official characterized the data problems as "growing pains." The agency formally began to report swaps data on a weekly basis just last month.
A technical coding issue with 12 zeroes?
Sure enough, the CFTC was quick to scapegoat someone for this epic clusterfuck - naturally, this someone was evil Congress for not spending even more money on the CFTC's toothlessness, something popularized recently by the recently departedBart Chilton, who more or less told gold traders that manipulation in the gold market will continue because the government just doesn't have the funds to stop it.
The official said the error also reflects the agency's chronic lack of resources. Just two employees at the agency are charged with putting together the weekly swaps report and it takes them 12 days to prepare the data for publication compared with three for another report the agency publishes. The agency is reviewing the matter and hopes to have firmer figures by next week's report, due Thursday.
In a statement, DTCC said: "We notified the CFTC immediately after we uncovered this matter and are working overtime to resolve these issues as soon as possible to ensure that the agency has timely access to the most accurate, highest quality market data."
Oh that's ok then, after all what's a little eletronic $55,000,000,000,000 shuttling back and forth between insolvent counterpa.... oh hey look, over there everyone, the Fed just tapered!
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Come on, Bart. Get your head outta your Krugman.
55T......................that's alot of SMOKE!
and mirrors
Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!
55 trillion? Is that all you got?
Wake me up when they discover it's 55 quadrillion.
Oh yeah, bitcoin is the bad guy over here with 9 billions in total, yeah, it's a bubble all right, and CDS are not.
CFTC as in Commodity Fraud Trading Cartel?
these notional amounts are unimportant
if you agree to pay me the difference in interest rates on a hypothetical amount, such as a trillion dollars, the trillion dollars doesn't exist
and the difference in interest rates is likely to be small, so that you might pay only 0.1 percent on it, or a billion dollars
that billion dollars sounds like a lot, but you are using it to hedge, or offset, a larger position, thereby reducing your overall risk, which might have cost you several billions rather than just one billion
the actual first-order risks on those hundreds of trillions are probably on the order of only hundreds of billion, which are offsetting larger positions.
consequently, the real "risk" of these seemingly large notional amounts of swaps is probably on the order of only a few tens of billions, spread across the entire market so that no single participant assumes more than negligible risk in these safe and stability-assuring instruments.
with kindest regards,
tim and mike and friends
http://www.banking.senate.gov/public/index.cfm?FuseAction=CommitteeInfor...
aw c'mon..
what's a couple of 25 or 50 trillion between wise guys anymore?
Yeah because these are only "swap" they are unimportant, ... no interest rate risk, no counterparty risk, no credit risk, ... only in the hundred of billions of exposure after all like you say, ... because after all we live in a TBTF zero interest rate world. It's such a safe world out there
With kindest regards, from rainbow unicorn financial ltd.
Assuming you're not being sarcastic, isn't this what forced the FED to bail out an INSURANCE company...AIG? You are refering to the difference between gross and net, and it is clear that gross can become net quickly when a big counter party folds.
Collateralized Mortgage securities were assumed to be safe because people pay their mortgage. That assumption of safety lead to greater and greater risk taking. Will your assumption of safety lead you to greater and greater risk taking? Thank you for posting.
Don't worry, it's just bus fair chaps, pocket change, penny shrapnel, nothing to see here move along...
Even if that's correct, it would be easier to untangle the Ghordian knot!
and lubricant
recently departedBart Chilton, who more or less told gold traders that manipulation in the gold market will continue because the government just doesn't have the funds to stop it.
Uhhh, it's the government that is maniipulating the gold price Bart, but you already knew that, didn't you?
Headline for next week:
BLS Announces It Is Overcounting Size Of Job Market By As Much As 55 Million Jobs
That's alot of drugs.
A trillion here, 50 trillion there, before you know it we are talking some real money.
If you add up the entire derivatives market you come close to 1 QUADdrillion dollars on paper. That's 999 trillion + 1 trillion.
So.....with that in mind......55 trillion is not such a bad oversight.
sarc/off
Yeah, I mean, what's the big deal? 55 trillion is only 0.055% of the entire market.
Besides, if 55 trillion in derivatives bets went south, those losses will be taken by the banks, and the Fed will just bail them out! So, what's the big deal? Why is everyone so upset about this?
When ZH gets obsessed with trifles like this, it only makes us look bad. The real threat to the economy is all the money laundering and arms and drugs trafficking that could happen with bitcoin. That and the continuing UFO/alien coverup that is going on at the highest levels of government. Not to digress. I mean, no-one could ever launder money with derivatives! Let's get it straight: Bitcoin will make it almost impossible for the CIA and the big banks to eliminate competiton in the money-laundering and illicit-drugs-and-arms-business! The entire monopoly could be at risk!!!! So, let's stop being henny-penny with all this worrying about derivatives. The stock market goes up, the unemployment numbers are going down, and my bonuses are getting bigger every year!
PS, if you don't know whether or not I'm being sarcastic, you should indicate your below average reading and comprehension skills with a down-vote.
Nice post.
Dunno how long you've been around but under the radar during the Greek debacle, ZH and the commenters here were on top of the CDS risk there like white on rice.
Swaps are THE black swan swimming around waiting for a chance to kill people, literally. They are the biggest elephant in the room that not only does no one talk about but that daring to do so probably will get a knock on the door.
This is the story of the year from ZH, but it will scroll quickly.
If Zerohedge knows whats good for it, it will keep this read "in gray" at the top of it's site until the prices for PMs exceeds what it was at the end of 2011.
He's got his Bernanke up his Krugman so far not even a pair of yellen pomos could pull it out.
With every day that passes we get closer to the end.
We are already a banana republic. What comes after banana?
55 Trillion banana peels lying around gave the CFTC the hint it needed.
The NSA gets all the latest techmology.....the CFTC is still using a TRS80 to keep tabs on things.
It's just a liitle "oops", no biggie...a newer machine would only complicate matters...
Hahah, probably using a program i wrote when i was 12 using basic. Just after I made a zork knockoff
We are already a banana republic. What comes after banana?
banana ..........................skin!
America isn't a Banana Republic.
IT'S THE FAST FORWARD ZAPPER NATION!
galactic empire?
curfew and FEMA camps
Put the lime in the coconut an' drink it all up...
A trillion here, another trillion there, soon we're no more talking about real money...
and the FED could only manage 10B
Maybe we could take up a collection?
Does any of it matter anymore. Surely everybody knows everything is a facade and that below is miles empty space...so keep looking up and all will be fine.
Happens to me all the time.
Jusat a little coding error. They happen all the time. No biggie.
Whoops, I must have missed another 5. It's 555 guys, my bad.
Dude, it was in cell S55 of the worksheet, a total brain fart! My bad!
Now back to business. Due to the adjustment, Santa won't be coming around for 3.8 generations or until such time as debts are paid. Have a nice day.
The USD is confetti... but lets keep calling it money and never look down, or in the mirror.
the moar swaps you have the moar $ you make. simple really.
If this doesn't tell you that it's one big fucking joke that they are making up as they go along, I don't know what will.
+1 making up as they go along
Who's gonna stop 'em?
Reality
Also, 'they' are dysfunctional.
.
They are masters at manipulating, lying and perverting and it will eventually lead to their collapse.
The snake eating its own tail eventually gets smaller and smaller...
Sounds like they either don't know what they're doing or they don't want us to know what they're doing. My guess: both are probably true at the same time.
Jamie and Lloyd just read this and decided to increase the size of their lawyers' and lobbists' Christmas Bonuses. And, of course, they increased their own as well.
Fine work, gentlemen. Fine work. One might even say God's Work.
I think they shoud go meet with him.
Part of God's work was to be crucified on a cross. They stepping up to the plate?
So, this means there is 10-55T of extra paper in the TBTFs hands that has no physical gold behind it?
Don't be surprised if you never hear this again. That is, until everyone is shocked, shocked I tell you, that there is 500T in unbacked paper in the gold market.
No one goes to jail and there will be no investigation. Transparency 'you can believe in.'
Pitchfork and torches bitchez!
I wonder what the true figure is if they admit to $55tn.
Well, they say it could be anywhere between $10T and $55T. Which is to confirm what we already know - they have no idea what they are doing. The CFTC is a ruse, a holding pen for political wannabes and over-starched quantitative finance dropouts who struggle to figure the tip on a lunch tab.
Must have worked for John Corzine before going to the CFTC
Chump Change
I miss calculated my proffits by 55T on my tax return
Will anything happen!! ??
If I may add, Sinclair called this one a long time ago. Time to revisit his other forecasts.
But will it snow today?
Depends.
What do Depends have to do with snow.....other than yellow snow ?
Oh sure, drag the Japanese demographic into this with your raaaacist diatribe. Add homonym attack!
Jim Sinclair talks in such high highfalutin esoteric gibberish, most of the time, I can't even tall what the hell the guy is trying to really say.
"If I may add, Sinclair called this one a long time ago."
Been quite a while now, nearly a year think, but on KWN interview he stated that Gold was NOT GOING BELOW $1,600! Personally, I'm tired of crystal balls.
Actually, he does spout a lot, something that rings in my mind is "learn to sell". He also said to be prepared to ride a 30% roller coaster.
Learn to sell? You talking about Gold? I don't sell Gold. I might be willing to spend it. But sell it? No f'ing way!!
For instance, let's say a car dealership has a sign out front that they're accepting Gold/Silver for their cars that they have for sale on their lot. I might be willing to buy one. It would depend upon how much Gold and Silver they are wanting for one though.
I spent some once, in order to pay a guy who does some work for me. In other words, I paid for something in Gold.
If you don't care to sell, what do you care about $1600?
You're right ParkAveFlasher. I shouldn't care about anything at all in the entire foooking world, about anything fucking thing. I shouldn't point out, for a fact, what Jim Sinclair said, and the fact, that I am tired of crystal balls. And I should just SELL all my Gold. Happy now?!?
Perhaps you you could tell me what exactly it is that you want from me.
Gimme back me pot o' gold!
Fun and Games with taxpayers money
The whole system of crony capitalism works towards making a minute portion of the population rich at the cost of the others. In true capitalism, weak and inefficient organisations fail to be replaced with better managed ones whereas in the current democratic system those very incompetent organisations are made bigger by tax payers funded bailouts.
http://www.marketoracle.co.uk/Article40231.html
And people are calling Bitcoin a Ponzi Scheme????!!!!
LOL
Bro - I hear ya. Every single day there is stuff like this. This is one reason why my attitude has been "Why not hedge with some?"
People need to be repeatedly hit over the head with a frying pan and forced through a long castration process apparently before they absorb that there is a way to at least try to make it through the inevitable collapse of the house of cards.
Its ALL a Ponzi scheme right now.
There is nowhere to hide anymore.
Ben's true legacy.
I understand and respect your sentiment but disagree. We all know eventually this collapses. One line of thinking seems to be that we fall back into the stone age and those that have been "stacking" and buying farm land will be just fine and dandy. Well, if we end up in complete chaos then you better have a militia to protect that farm land and gold. if bullets are flying just so people can use violence in order to eat do we really give a shit at that point?
Another possible scenario is that yes the world's financial system does indeed collapse but not only do individuals and businesses but also sovereign nations seek to adopt a new system and a new currency/platform. Will that be bitcoin? Hell if I know. One thing I do know is that IF, and I emphasize IF, society does find a way to move forward peacefully and productively the ONLY way to do that is with a financial system/platform that is NOT controlled by humans.
It will probably be bitcoin, and then followed by others.
For those who want electronic gold and silver payment systems, they will come, but first the GOV's need to be destroyed.
E-gold failed because it was centralized. Crypto will succeed because it is de-centralized.
Then it will be e-gold and e-silver versus crypto, competing as it should be.
Let battle commence
goldmoney (James Turk) HASN'T failed and it's centralized.
"the ONLY way to do that is with a financial system/platform that is NOT controlled by humans"
That day will mean humans don't live here anymore.
Timing seems perfect. Taper, USD, bonds and market smash.
I'm just shocked that they could manipulate the numbers like that, what are they the BLS now!?
just everyday, run of the mill government workers. nuff said.
Everyone take a chill pill....the invisible hand will sort this all out....
Long live the free market and its efficieny.
I just wish the "invisible hand" would take itself out of my ass once in a while.
I always knew that Captain Nemo had his place in there somewhere!
Looking for the giant Squid!
With all 800 trillion of its tentacular electronic poisonous kiss and carry trades.
Well done..I think I saw this on the science channel last night trying to explain what the fourth dimension looked like.
I like this depiction. Easier to understand than what they claim they are doing in the markets.
Of note that there are no units of distance (light years). In reality, it matters not whether the numbers spewed forth by the financiers and government are millions, billions, trillions, or quadrillions, because even exponents are not accounted for.
WB7 brillant
consciousness expanding art.
Where is "Gold Member" in all of this?
Where does quantum debt entanglement fit in?
Is that 'Mandrake Pattern" at the tip of the enclosure 'pre' or 'post' Ponzi Event ejaculation?
I'm sure Ben got the best "bang" for his "buck" before pulling out!
who needs oversite or regulations and proper accounting? and paper silver and gold aren't fraudulently and criminally manipulated consistently on a daily basis either...
BTFD, folks...we have another sale on phyzz this morning. Silver spot currently at 19.20 and dropping.
Ya gotta love it.
Can't wait for 12pm EDT today either...Turd will be having a live webinar interview with G. Edward Griffin until 1pm EDT. Should be very kick ass!!!
Register here to listen in live today from 12 to 1pm EDT: https://attendee.gotowebinar.com/register/1450633324671744513
My bullion dealer appears to be completly sold out, dropped him an email yesterday - he said he would call me today but I didn't hear from him.
oversight ga-rawn-teeed!
Must be the 2 taking 12 days to put out a weekly report as writing healthcare.gov!
$55T, everyone dig around and get your pocket change, that should cover it!
Incompetence knows no bounds we these fools!
"Incompetence knows no bounds we these fools!"
It's not Incompetence, it's intentional.
55 trillion? Even by today's standards, this is not a "rounding error."
roll the motherfucking guillotines.
With fantasy accounting it's probably more. What's a 55 or more trillion among fellow criminals.
One big black hole.
And yet, the mainstream media is consumed with Phil Robertson accurately quoting Scripture.
Does this sound to anyone else like someone added some code that rounded all transactions off to the nearest cent and then deposited those fractions of cents into an off-shore bank account... only, there was a problem with the code--a decimal was misplaced and within a month the bank account grew to $55T, far too big for no one to notice.
They did the same thing in Superman 3.
It was also done in the movie " Office Space". Which for me is one of the best comedies ever made.
Either that or it's time to bring back "Fat Finger II: Man Hands."
HE KNOWS
If no one had won Mega Milliions this week, the next winner might have been able to cover that with ease.
After all of the exposed manipulation, fraud, crimes, fines and lack of prosecutions in recent memory how can anyone take government / financial agency / bankster / Fed reported numbers seriously? 10 billion a month reduction by the Fed next month my ass, who the fuck knows how much they create and where it's funneled. My eggnog latte is good though, cheers.
Prudence favors tangible, unlevered, assets, especially productive assets.
Do you really think the Fed never had to exceed $85 billion to keep the up trend in place in recent years?
Do you really think a taper statement means they will allow a reversal of their wealth effect strategy?
Jim Grant has it correct, "The Fed can change how things look, it cannot change what things are."
Just this article reveals obligations in the CB penumbras that equal almost four years of total U.S. economic activity. How does an obligation like that get resolved?
$55 Trillion is hardly worth mentioning. All it would take to cover that are three tubes of 20 coins - if you use the $1 Trillion Obama-Coin...
this is the pilot speaking. were cruising at 45000 feet at mach one. will everyone kindly leave your seats and step out onto the wings in an orderly fashion... women and children first... thanks ... the crew and i will be ejecting in our bail out taxpayer funded capsule... good luck..your captain..
Corzine, Hank Greenberg, Madoff, Milken and Dimon can straighten this out in a nano second with one hit on the enter key...
Is this why "Bukake Bart" part just split?
http://www.salon.com/2013/12/18/jamie_dimons_perp_walk_why_it_could_be_this_years_christmas_miracle/
I have one of those 100 Trillion notes hanging on my office door, with a little blurb explaining what it is. I had a guy with a masters in economics stare at it, perplexed; he had never heard of the Zimbabwe hyperinflation. This story just shows that, no one really knows what's going on; it's all best-guesses, I think.
What it actually shows is the people who claim to be most qualified to know in fact are out to lunch permanently
The higher the degree of "education" from an Ivy League the smellier the bullshit and larger the pile.
Peter Schiff: the best way to silence a Nobel laureate economist is to ask him about the economy: http://youtu.be/mFdnA5UNmVw
$55 trillion ?
'Tis but a mere rounding error.
A few years back, Chris Christie worked as Bernie Madoff's lobbyist-apologist (look up Securities Industry Association) and barely a word has ever been spoken about this.
Maybe Christie can help with a little PR for the CFTC.
Commodore86's at the CFTA.You'd think that a lot of zeros like that would be of concern to national security.Terrorism takes mostly the economic route against the United States.The site DeepCapture just brushes the outskirts of it.Why isn't the NSA concentrating on economic terrorism instead of watching a lot of kids playing Xbox?
$55 Trillion...it's only a flesh wound.
It is historically very difficult to get accurate data on the swaps markets -- many transactions are still OTC despite the move to central clearing and exchanges, i.e., more disclosure and transparency. Many swaps (and forwards) are tailored to two parties, so OTC has served its purpose, but it is also important to get the market sizing data, notional and market values of the swaps, etc. to understand flow, risk, etc. The participants that don't make this happen are only screwing themselves.
.
The entire global economy is only 75 Trillion and these clowns missed they projecton by $55 Trillion? lol!!
55, 56 trillion, whatever it takes...
"The spiraling debt of the Federal Government to "Federal" Reserve, is due to repeated quantitative easing policies, i.e. primarily "printing" new money, supposedly made to stimulate the economy. Instead, however, the money went solely to bailout biggest banks, some of which participate in the "Federal" Reserve! Which means that, money returned to the banks through a circle, while uploaded US government with more debt, which will be passed on to future generations! Unanswered questions remain also, about the case on the basis of which, the "Federal" Reserve secretly supplied through the "back door" with more than $ 9 trillion, various financial institutions with questionable balance sheets during the financial crisis in the US. Nobody seems to deal with this issue today. [http://www.counterpunch.org/2010/12/20/the-tax-payers-tab-a-cool-9-trill...]"
http://failedevolution.blogspot.gr/2013/10/new-deal-vs-obamacare-one-rea...
When the squid is fully in control the number will be in the squillions.
If you are going to re-re-re-re-re-re-re-re-re-hypothecate every particle of asset out there, you need to re-re-re-re-re-re-re-hedge every transaction, all by trading the risk to the next sucker.
Come on! What's $55 Trillion among friends?
Well if you want your swaps you can keep your swaps
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Why was this being hidden?
And what was this hiding?
•J•
V-V
How fortunate for the Lamborghini class that the CFTC is using Radio Shack TRS-80 computers programmed by their moles.