This page has been archived and commenting is disabled.

The G-20's Solution To Systemically Unstable, "Too Big To Fail" Banks: More Debt

Tyler Durden's picture




 

It's been 6 years since Lehman went bankrupt overnight, stunning bondholders who were forced to reprice Lehman bonds from 80 to 8 (see chart below) in a millisecond, and launching the world's worst depression since the 1930s, which courtesy of some $10 trillion in central bank liquidity injections, has been split up into several more palatable for public consumptions "recessions", of which Europe is about to succumb to the third consecutive one even if for the time being the Fed's has succeeded in if not breaking the business cycle, then certainly delaying the inevitable onset of the next major contraction in the US economy.

Paradoxically, instead of taking advantage of this lull in volatility and relative economic calm, and making the financial system more stable, all so-called regulation has done, is paid lip service to the underlying problems, hoping that should the next crisis appear the Fed will be able to delay it yet again by throwing countless amounts of taxpayer money at the problem. In the meantime, the biggest banks have gotten so big that the failure of one JPM or Deutsche Bank, and their hundreds of trillions in gross notional derivatives, would lead to the biggest financial and economic catastrophe ever witnessed and make 2008 seem like a fond memory of economic euphoria.

So finally, with a 6 year delay, the western world's "government leaders" have finally decided to do something about a TBTF problem that has never been more acute. According to Reuters, in November said leaders will agree "that the world's top banks must issue special bonds to increase the amount of capital which can be tapped in a crisis instead of calling on taxpayers to come to the rescue, industry and G20 officials said." In other words, suddenly the $2.8 trillion in Fed injected excess reserves, split roughly equally between US and European banks, are no longer sufficient, and while regulators are on one hand delaying the implementation of Basel III and its tougher capital rules, on the other they are tacticly admitting that whatever "generous" capital buffer banks have on their books right now will not be sufficient when the next crisis strikes.

Enter GLACs.

The bonds which will be issued by the top banks known as "gone concern loss absorption capacity" or GLAC, are seen by regulators as essential to stopping the world's 29 biggest lenders from being "too big to fail."

We will have some more to say on the "irony" of that statement in a moment, but here is the punchline - according to the G-20, instead of having to collapse liabilities to offset that scourge of the New abnormal, namely Non-Performing Loans, banks are hoping to lever up, pun intended, the current scramble for yield and instead beef if up their cash asset, even if it means increasing the liability side of the balance sheet by issuing more debt. Because really all the GLAC do is limit how the banks may use the proceeds from such bond issuance. Then again, these being banks, one can be certain that the moment the GLAC cash is wired in, the funds will be used to ramp risk instead of sitting in a drawer somewhere, awaiting rainy days. Because nobody in a bank is paid for avoiding a crisis, and everyone is paid to generate a return even if it means making the systemic bubble even bigger.

The plans are being drafted by the Financial Stability Board, the regulatory task force of the Group of 20 economies which declined to comment ahead of a G20 summit in November, when G20 leaders will discuss the reform before it is put out to public consultation.

 

The reform would put in place the final major piece of G20 regulation on banking as the global body turns to a "post-crisis" agenda of fostering economic growth and bedding down the rules it has approved.

 

There had been unease in Asia and parts of Europe over how big the bond issues need to be to provide this cushion but there is now a new optimism amongst bankers and regulators that the G20 will reach a deal in November.

What is unsaid is that the "unease" was there because banks were unsure there would be enough risk appetite for such bond issuance. But now that the central bank credit bubble is so immense it allows Ebola-stricken African nations to issue bonds at a 7% yield, there is nothing preventing the banks from merely funding their way to stability.

Of course, one has to be an idiot at this point and observe that the "risk buffer" would have to come from retained earnings, not from more debt, the source of the risk in the first place. However in a world in which banks can't generate either the required GAAP earnings and certainly cash flows, to build said buffer, the G-20 will hope that everyone is dumb enough not to comprehend the fundamental flaw in this brilliant plan.

Speaking of the plan, it continues:

"The industry is definitely in favor of making resolution, supported by an appropriately flexible concept of GLAC, work. That is the key pending aspect on ending too-big-to-fail," said Andres Portilla, director of regulatory affairs at the Institute of International Finance, a Washington-based banking and insurance lobby.

So according to Mr. Portilla, the solution to a TBTF problem resulting from record amounts of debt is more debt? Ok, just making sure everyone got that.

"What is likely to happen is that there will be a consultative proposal, but without all the detail that a lot of people would like," Portilla added.

However, a G20 source said a deal was not only expected but would also be more detailed than some parties anticipate, which is essential for conducting a thorough impact assessment before finalizing the rules.  "The authorities and the FSB are working to have a proposal that will contain sufficient granularity of numbers to be a meaningful consultation and quantitative impact study to calibrate the final rule," the source said.

Top banks expect they will have to hold GLAC bond capital equivalent to about 10 percent of their risk-weighted assets on top of their core capital buffers which currently stand at around 10 percent. But they hope for some leeway if they can show that they can already be wound down smoothly in a crisis because of simplified structures.

The G20 source poured cold water on this, saying regulators believe all the world's top 29 banks earmarked for tougher supervision will need a significant cushion of such so-called "bail-in" bonds for some time to show they can be shut without public aid.

Regulators ultimately want to price bank debt better and end the cheaper funding that too-big-to-fail banks enjoy because markets assume governments would never allow them to collapse.

And the hilarious conclusion:

"Adopting GLAC is the final chapter in reforming the condition of banks," said Thomas Huertas, a former UK banks supervisor and now a regulatory consultant with EY.

 

The plans for bail-in bonds are among the last of what G20 officials call the "heavy lifting" on banking industry reforms that came in the aftermath of the financial crisis.

So, to summarize: in lieu of being able to actually generate and retain funds from operations, banks will once again scramble to raise epic amounts of debt, only this time, the proceeds will be retained "pinky swear" as a capital buffer, i.e., cash on the books. Cash which nobody makes a single dime in bonus on anywhere in the bank's org chart. Would anyone wish to wager how long before the trillions in GLACs are "mysteriously" found to have funded shanty town developments in Shanghai, to buy the S&P500 at the all time high, and naturally, the purchase of a golden commode or two in various US banks? How could this possibly fail...

And the absolutely brilliant punchline: who do these regulators and "leaders" think will be the purchasers of said debt? Why other systemically important, TBTF banks of course! Which means that, in the by now quite familiar "daisy-chaining" of counterparties and collateral, once one bank fails, its exposure via collateral, repo and certainly, funding of other bank balance sheets, everything will promptly freeze as risk reprices, a la Lehman bonds.

Because if one thing is certain when one bank's liabilities are another bank's assets, it is that such an arrangement is simply screaming for a systemic crisis to prove to everyone just how dumb this idea was from the get go.

And another certain thing: the only entity on the hook when this plan unravels like a house of cards the second a bank with a few trillion in "assets" collapses, will be the same one as always: the taxpayer. Only this time the total amount that will be handed over to the bankers who control the central banks pulling the strings of the next bail out, will be that much bigger, or X+GLAC for those mathematically inclined.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 08/23/2014 - 20:52 | 5135632 TeamDepends
TeamDepends's picture

One more for the road...

Sat, 08/23/2014 - 20:57 | 5135643 zorba THE GREEK
zorba THE GREEK's picture

Debt is the new wealth. 

Sat, 08/23/2014 - 21:17 | 5135684 philipat
philipat's picture

So let me see if I understand this correctly. Even with non-GAAP accounting, using mark-to-myth "asset" valuation, dumping all the bad mortgage debt on the Fed, off-balance sheet SPV's and being given free money by the the Fed, they still can't make money to repair the self-created problems? I suppose it will be Pension Funds that buy these wonderful new instruments, just to ensure that Pensions and 401K's can be gutted now that all souces of income and savings have already been gutted? Aren't our "Leaders" wonderful......

Sat, 08/23/2014 - 21:24 | 5135718 jellen
jellen's picture

Now Im really confused, Bank A buys bonds from Bank B, Bank B buys bonds from Bank C, and Bank C buys bonds from Bank A and all banks will keep the proceeds from the sale of thease bonds as cash reserves???? Yea this should work well.

Sat, 08/23/2014 - 23:15 | 5136029 espirit
espirit's picture

I have un-rehypothecated collateral.

What have they got?

Molon Labe.

Sun, 08/24/2014 - 05:42 | 5136456 Oracle 911
Oracle 911's picture

Bunch of sneaky bastards, I mean the leaders of G-20. It is such a devious game, they intentionally imploded the Western banking system.

It is so simple, they basically said "let them not just continue the fraud, but multiple their bets". And of course they will fall, and the anger will be directed towards politicians and banksters. And the whole stuff doesn't end here. Because the Chinese and Russians purchased or will purchase some Western banks outside of/on periphery of banking Cabal.

My point is this: When the TBTF banks finally implodes, who will be standing and laughing?

Exactly, the Chinese and Russian banks,. Elegant albeit dirty move for eliminating the concurrency and the treat.

Sun, 08/24/2014 - 07:55 | 5136589 OC Sure
OC Sure's picture

Macroprudential solutions to busy giddy minds away from the Microreckless cause of the problems.

More Fractional Reserve [Lending] of counterfeit for believers that productive work can be conjured.

Will the debt funding come from the existing pool of currency or will new currency be "produced?"

Sun, 08/24/2014 - 08:58 | 5136657 knukles
knukles's picture

And.... the excuse list!
Volcano in Iceland (travel disrupted, good for -10% GDP)
Earthquakes in CA  (fear of earthquakes in CA curtail expected shopping spree in Ohio and Kentucky) -1%
Global Warming during the coldest year on record (Confuses consumers so they buy neither winter coats or bathing suits) -4%
Cordon Sanitare quietly enforced about West Africa.  TPTB say no such thing as Ebola ( 1,000,000 brown people die, white people cheer, +5% GDP)
Broken windows in Ukraine, Syria need replacing (Krugman Brand Windows, buy 3 get 6 for free) +10%
ISIS/L whoeverthefuckitisnow Lays waste to already waste area of middle east.  No material damage, but press hype and confusion cause gun and pepper supplies to skyrocket because of threat to Las Vegas (+1%, all cash)

Net net of all events, +1% to global GDP to help offset -2% due to crappy economies.... only 1% decline amidst localized rioting in Western wrold blamed on the non-religion of peace that doesn't exist and increased harmony of races, increased social and financial equality.

There... fixed it for ya.

Sun, 08/24/2014 - 09:53 | 5136732 Stackers
Stackers's picture

For the record: Lehman did not "go bankrupt overnight". Lehman was purposely collapsed by JPM in the same play book the bankers have been using for centuries of coordinated deflationary collapse to be able to go around buying up assets for pennies on the dollar.... and like other times, they lost control of their own overleverage system.

 

As covered here

http://www.zerohedge.com/news/2013-03-03/did-jpms-cio-intentionally-and-...

Sun, 08/24/2014 - 09:02 | 5136667 Oldwood
Oldwood's picture

we will all be offered the opportunity to buy these bank bonds as the only means of preserving whats left of our savings. we are trapped...there's no way out.

Sat, 08/23/2014 - 21:30 | 5135727 El Oregonian
El Oregonian's picture

You know if you cram enough paper in a very hot desert out-house sometimes you'll get spontaneous combustion.

In other words, when you get enough heat, along with enough paper-stuff'in in a closed-system outhouse, eventually the law of thermo-dynamics kicks in.

Can someone say "KA-BOOM!"

Sat, 08/23/2014 - 23:48 | 5136107 Rakshas
Rakshas's picture

..... you wouldn't happen to know what two houshold chemicals spontaneously combust when mixed would you?? - for the record I just don't want to store them next to each other in my cleaning closet.... ;-)

Sun, 08/24/2014 - 06:46 | 5136532 jefferson32
jefferson32's picture

Potassium permanganate and glycerine

Sat, 08/23/2014 - 22:19 | 5135850 Da Yooper
Da Yooper's picture

Stop bailing out the tribal banks

 

Bail out the people

 

at least they will spend the money

 

the bankers just butt stroke each other & call it good

 

what a friggen scam & the taxpayers pay for it

Sat, 08/23/2014 - 23:33 | 5136056 Rakshas
Rakshas's picture

the circle of death is complete ..... ok death spiral 

Western Politicians Banksters special interest groups are all locked in a lufbery circle against the taxpayers..... actually lets say the enslaved citizenery  and oh what a  series of scams they've hatched to rob America of it's resources - not the least of which its human resources turning the nation into the bipolar ticking time bomb that it is today

 

 

Sun, 08/24/2014 - 01:43 | 5136323 teslaberry
teslaberry's picture

there is no such thing as a bailout of the people. you are a fucking liar. there is something called a 'jubille' which is a forced government destruction of debt with the creditors taking the hit. 

 

this is what you mean. many of the free shit army types want free everything from government to balance the socialism for the banks and the rich. 

 

it DOES NOT WORK THAT WAY FUCKNUTS. 

Sun, 08/24/2014 - 06:29 | 5136528 disabledvet
disabledvet's picture

How about Social Security asshole.

Sun, 08/24/2014 - 09:15 | 5136687 Da Yooper
Da Yooper's picture

this is what you mean. many of the free shit army types want free everything from government to balance the socialism for the banks and the rich.

 

if we follow your logic

 

why

 

did the "TAXPAYERS" have to bailout the free shit army of "TRIBAL BANKERS" ?????

 

talk about getting "FREE SHIT"

 


 


 


Sun, 08/24/2014 - 13:25 | 5137303 teslaberry
teslaberry's picture

the world is the way it is not the way you want it to be. 

 

unless you are willing to start killing people and start the revolution, the idea of your 'peaceful' free shit army getting what it wants is a hialrious joke played upon you by the powers that be. to keep you peaceful and restive while they make plans for dealing with you when you inevitably respond to their predating upon you ---with your own violence. 

a

you have numbers, they have the technology. you have been schooled. so shut the fuck up. take of your 'it's not fair cap' or the "jews steal everythign cap' or whatever other cap and see the wrold for what it is , not what you'd like it to be. 

Sun, 08/24/2014 - 03:14 | 5136430 hedgiex
hedgiex's picture

YES. The Banksters not folding because there are still the lush pensions and 401K in mutual funds to predate.

Sat, 08/23/2014 - 20:56 | 5135640 Yen Cross
Yen Cross's picture

 I junked EKM   (for the first time)   " all knowing" - "bone throwing" - "no chart showing"- to a Trade off!

Sat, 08/23/2014 - 21:17 | 5135695 Rockfish
Rockfish's picture

If you think your headed for a currency war. What's wrong with a little debt?  

Sat, 08/23/2014 - 21:22 | 5135709 Seasmoke
Seasmoke's picture

If you can kick the can long enough, those who you cheat,  lie to, and steal from will die. 

Sun, 08/24/2014 - 03:02 | 5136421 Radical Marijuana
Radical Marijuana's picture

http://www.conspiracyarchive.com/NWO/silent_weapons_quiet_wars.htm

Silent Weapons for Quiet Wars

"Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)... They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ... War is therefore the balancing of the system by killing the true creditors (the public ...)"

THE BANKERS HAVE THE ONE THING THEY NEED:

TAXPAYERS ARE BRAIN-DEAD, ZOMBIE SHEEPLE!

Sun, 08/24/2014 - 09:08 | 5136674 Oldwood
Oldwood's picture

The silent weapon is our complicity. Heads down and full speed Forward

Sun, 08/24/2014 - 07:13 | 5136555 negative rates
negative rates's picture

You didn't help put out that fire.

Sat, 08/23/2014 - 21:27 | 5135720 GrinandBearit
GrinandBearit's picture

And the whole financial system stays intact.

 

How?

Why?

Sat, 08/23/2014 - 21:37 | 5135744 Rockfish
Rockfish's picture

Because it can.

Sat, 08/23/2014 - 23:38 | 5136091 Rakshas
Rakshas's picture

because we let it..... 

Sun, 08/24/2014 - 08:12 | 5136602 eddiebe
eddiebe's picture

How: Every time a crack appears in the dam, the Ppt. steps in with unlimited amounts of digits and papers it over. 

Why: To grab whatever resources and power that is left to grab.

Sat, 08/23/2014 - 21:39 | 5135750 Dead Man Walking
Dead Man Walking's picture

The shit may not hit the fan, it might just explode

or go down the crapper

 

Sat, 08/23/2014 - 21:52 | 5135777 MKD
MKD's picture

just kick the can further down the road

Sat, 08/23/2014 - 21:55 | 5135782 cpnscarlet
cpnscarlet's picture

No problems. Olies have it all under control - gold under $1300. All is well. Nothing can go wrong and everyone is happy with the new normal.

Pretty soon, a silver quarter won't be worth 2 bits.

Sat, 08/23/2014 - 21:57 | 5135790 ThroxxOfVron
ThroxxOfVron's picture

"Of course, one has to be an idiot at this point and observe that the "risk buffer" would have to come from retained earnings, not from more debt, the source of the risk in the first place."

 

I guess now we know why GS and Morgan Stanely management have been handing out raises: get rid of the cash before they are told to sequester it.  

Pay yourself today and sell bonds for your mismanaged and financially impaired institution tomorrow if the .GOV teat is pulled outta your mouth...

Sat, 08/23/2014 - 22:07 | 5135814 kchrisc
kchrisc's picture

If the movie Wall Street had been made about the banksters it would have been called "Bank Street," and the memorable quote would have been "Fraud is good!"

An American, not US subject.

Sat, 08/23/2014 - 22:18 | 5135846 q99x2
q99x2's picture

Financial terrorism. They are moving the wealth into their pockets and going to collapse the system. They are banksters. That's what banksters do.

Good article.

Sat, 08/23/2014 - 23:59 | 5136135 ebworthen
ebworthen's picture

Oh sure, more debt, more leverage, and 'ere long more bailouts for the fucks on Wall Street while Main Street is put in the stocks and ass raped.

Fuck you fucking bankers and your government lackey's to Hell and back on a rail, tar-and-feathered, then drawn-and-quartered on the public square.

You dumbshits are forging your own doom, along with that of a lot of decent innocent people.

Sun, 08/24/2014 - 01:10 | 5136261 Joebloinvestor
Joebloinvestor's picture

When I saw "BAIL -IN" I assumed they would issue bonds based on deposits which could be seized at any time and "bailed-in".

WHEEEEEEEE!

Sun, 08/24/2014 - 01:28 | 5136298 Penniless Spectator
Penniless Spectator's picture

Times to walk deep into woods and never look back.

Sun, 08/24/2014 - 01:37 | 5136315 Notsobadwlad
Notsobadwlad's picture

I have often wondered if, when loan principal is paid back, banks actually return the fiat to the ether from whence it came or do they simply keep in play most likely embezzling it as freshly laundering fiat.

Can anyone tell me for certain?

Sun, 08/24/2014 - 03:22 | 5136432 Catullus
Catullus's picture

In a commercial loan, the credit expansion naturally contracts as the loans are repaid.

When the fed purchases a bond, the same is true. The dollars, which are liabilities to the fed, come back to them in the form of stub payments. The money supply contracts. Unless of course the fed turns a "profit" on their money printing and will remit that money back to the US Treasury. For UST, the government pays interest on its bonds only to have the money paid to the fed for UST it owns come right back to them. It's a gigantic circle jerk.

The problem of course is when the bonds mature. But that was the whole point of QE2. The fed swapped out its shorter time duration bonds and bought longer term bonds. "Twisting" the yield curve by selling 2-3 yr bonds and buying 7-30 years.

Sun, 08/24/2014 - 05:25 | 5136489 Tinky
Tinky's picture

That's an articulate explanation. Please do contribute more along those lines when possible!

Sun, 08/24/2014 - 16:39 | 5137787 OC Sure
OC Sure's picture

.

Sun, 08/24/2014 - 02:34 | 5136383 Yen Cross
Yen Cross's picture

 Charts? I like charts!

 Yes Tyler, I see the equity/ bond convergence. I'm not retarded.

Sun, 08/24/2014 - 02:39 | 5136393 Yen Cross
Yen Cross's picture

 Equities are linear? Alan Keynes (ghoast) wrote this< I can feel his tug<

Sun, 08/24/2014 - 02:54 | 5136409 Yen Cross
Yen Cross's picture

 I hope these kids learn how to understand " Fractional Lending" Yes I own a couple Ferrari's ass clown children.

   If I could say anything! TORT REFORM!

  Pathetic scumbag lawyers are draining the liquidity of this country!

Sun, 08/24/2014 - 02:55 | 5136414 Yen Cross
Yen Cross's picture

 I most certainly didn't earn those assets without the help of "well provided" for management!

Sun, 08/24/2014 - 03:11 | 5136428 hedgiex
hedgiex's picture

G 20 party cocktail (GLAC)  probably concocted in Davos for implementation by the real G Zero regulators.

Sun, 08/24/2014 - 03:12 | 5136429 Catullus
Catullus's picture

Our conclusion is that fractional reserve banking doesn't have enough reserves to pay back deposit holders. So we've come up with a deus ex machina solution: get more money to pay depositors. This reserve is like a like buffer to "loses".

Just make checking accounts 100% backed by reserves. Like "don't loan out the transactional accounts". Everyone and everything else is on their own.

Sun, 08/24/2014 - 03:22 | 5136433 Yen Cross
Yen Cross's picture

 Here's some icing on the cake. I'm renting an airplane to finish my multi engine and instrument ratings, when I fly to Oceania next week to check on my property.

  You children, haven't the slightest incling of what it takes to manage a business... You see the cars and jets, but don't understand. it's NOT a game. People are having "face to face" meetings that effect massive swaths of trade.

Sun, 08/24/2014 - 04:47 | 5136471 Yen Cross
Yen Cross's picture

 Are the Jumbo" Steven Tylers" rats  done feasting yet?  The N.Y. goldfish.

 I'll be thinking of you tomorrow morning from my deck that overlooks the Pacific Ocean.

Sun, 08/24/2014 - 08:19 | 5136611 eddiebe
eddiebe's picture

Lucky you!

Sun, 08/24/2014 - 05:37 | 5136495 FreedomGuy
FreedomGuy's picture

Seems to me that this is the same idea as Fukushima. You have radioactive debt (water) and you are trying to dilute it with more debt that is theoretically better. This will work as long as no more radiation is produced.

It looks to me that they are still creating more bad debts and the tax payer will be left with the radiation casualties.

Sun, 08/24/2014 - 06:09 | 5136509 B2u
B2u's picture

WTF??? ...how about using English....

 "The authorities and the FSB are working to have a proposal that will contain sufficient granularity of numbers to be a meaningful consultation and quantitative impact study to calibrate the final rule," the source said.

Sun, 08/24/2014 - 11:05 | 5136940 BiPolarFrenchman
BiPolarFrenchman's picture

"If you want to do something really evil, you need to make it really boring." - John Oliver

Sun, 08/24/2014 - 07:45 | 5136561 AGoldhamster
AGoldhamster's picture

As long as the ultra dumb sheeple continue to elect the boot lickers of the big oligarchs - they get what they deserve.

This all is not about fairness or democracy or some other BS - but just about how much money you/they can make the fasted way. The most and most easy money is made if you are in bed with the government boyz. So to say almost free money in exchange for this and that. If smart directly from the printing press or the taxpayers pocket. Right into their bank accounts. Backed by criminal laws they have written for themselfs. For example the agrar mafia in Europe has achieved that the biggest farmers get the biggest subsidies. Or the bankers provide themselfs billions of bail out tax payer money. The system has become as corrupt as possible. Period.

As long as the sheeple support such stuff, such a system, where lobbyiest are making the laws - and Ron Paul or Nigel Farage (just as 2 example) - are ignored - they are truely begging to pay the next tax bills. They truely get what they deserve. The more the better - maybe at some point they finally wake up. 500 years from now. So this is business as usual - and they moneylords know it very well - that all the sheeple are in need for is: food (stamps), TV, Coke, Burgers, Chips, Porn and Games.

Wake me up in another 500 years.

Sun, 08/24/2014 - 07:51 | 5136583 zerocash
zerocash's picture

You will wake up in the world of Idiocracy.

Sun, 08/24/2014 - 08:32 | 5136620 AGoldhamster
AGoldhamster's picture

Could well be ... in the end it doesn't matter.

Anyway it's sheeples choice right at the next election(s).

Again - wake me up in another 500 years. As the sheeple are dumb - and get dumber year after year. That is no joke - as average IQ is declining since early 19xx.

We ALL can see how corrupt America and Europe has become.
And still the sheeple continue to elect the very same system and the very same criminals.

Years, decades earlier I thought there is a chance for change.

That has long gone - and has changed much to the worse - with the lobbies now making most of the laws. And the trend finally also coming to Europe and Bruessels. TTIP just as an example. Where nobody cares about the sheeple anymore - but just about how they can get their hands on the resources and the lawmakers.

ONLY another french revolution is gonna change that.

But in military states french revolutions rarely are successful.

As long as there is food on the table. And riots don't get out of control.

Sun, 08/24/2014 - 07:51 | 5136584 Solio
Solio's picture

Debt is like radiation; get enough of it and it leads to death of the souvereign nation/self and security for everyone, anyone.

Sun, 08/24/2014 - 08:25 | 5136622 GubbermintWorker
GubbermintWorker's picture

"What is likely to happen is that there will be a consultative proposal, but without all the detail that a lot of people would like," Portilla added."

 

LOL! Details, details details. Those aren't neccessary.

Sun, 08/24/2014 - 10:01 | 5136697 techstrategy
techstrategy's picture

Triple hit.  Sorry.

Sun, 08/24/2014 - 09:59 | 5136698 techstrategy
techstrategy's picture

Double hit.

Sun, 08/24/2014 - 10:04 | 5136699 techstrategy
techstrategy's picture

The novel way to build a capital buffer in the banking sector would be to cut compensation 25% (or more).  The reality is that the Fed put simply subsidizes banking sector comp at all of our expense.  If EVERYONE had to cut comp to rebuild capital, the war for talent shit wouldn't hold because those folks couldn't make half what they do now in any other sector.  Anyone else wildly sick and tired of WS raises and bonuses going through the roof as they set us up for another round of pain through epic agency issues and moral hazard?  The bail in should come from clawbacks and employee compensation cuts across the sector.  

Sun, 08/24/2014 - 10:28 | 5136855 shovelhead
shovelhead's picture

I could get a bunch of unemployed salesmen and sell default insurance.

I'd have em lined up aroung the block tossing millions at me. Selling IOU's seem's a better business than plywood or auto parts. Selling stuff you have to buy first puts a hole in your cash flow.

Selling promises. Now that's a business that's a winner.

Sun, 08/24/2014 - 10:59 | 5136925 AdvancingTime
AdvancingTime's picture

A great deal of our economic system is about debt. It is important to remember not all debt is created equal. A mirage is a naturally occurring optical phenomenon in which light rays are bent to produce a displaced image of distant objects. Joining the idea of a mirage and contagion with the reality of collapsing debt forms an interesting subject.

Holding debt carries a great deal more risk than most pople think. It is important to remember all debts and obligations do not come due at the same time. Also, it must be noted when a bill is not paid or defaults it often starts a long and drawn out legal battle, this collection process that may extend years without harsh consequences. This my friends is the reality of modern life in America and much of the world. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/05/debt-mirage-always-moving-into-di...

 

Sun, 08/24/2014 - 11:03 | 5136938 CHX
CHX's picture

How did the world go bankrupt? Slow at first, and then very fast. We're now at a point where all debts and liabilities are so exceedingly huge that doubling down with even more debt is the ONLY way forward. When this fails it'll be a effin' ugly mess across the globe.

Sun, 08/24/2014 - 11:17 | 5136967 AdvancingTime
AdvancingTime's picture

At some point the return on loaning money is simply not worth the risk!  At that time it would become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward.  When this happens we are at the end game.

 Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants. The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008.

Sun, 08/24/2014 - 11:11 | 5136949 AdvancingTime
AdvancingTime's picture

 The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system. In postponing this collapse the Fed has created a whole slew of new problems. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html

 

Sun, 08/24/2014 - 15:47 | 5137678 dizzyfingers
dizzyfingers's picture

A.T.

"derivative market"

Agree with you. Where's Brooksley Born?!

Sun, 08/24/2014 - 11:15 | 5136968 Solio
Solio's picture

Subjugation over all!

Sun, 08/24/2014 - 15:51 | 5137665 dizzyfingers
dizzyfingers's picture

Tend to critical neccessities. http://www.surewatertanks.com/ made in usa. Be invisible. Vote all incumbents out.

Do NOT follow this link or you will be banned from the site!