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The $70 Trillion Problem Keeping Jamie Dimon Up At Night

Tyler Durden's picture




 

Yesterday, in a periodic repeat of what he says every 6 or so months, Jamie Dimon - devoid of other things to worry about - warned once again about the dangers hidden within the shadow banking system (the last time he warned about the exact same thing was in April of this year). The throat cancer patient and JPM CEO was speaking at the Institute of International Finance membership meeting in Washington, D.C., and delivered a mostly upbeat message: in fact when he said that the industry was "very close to resolving too big to fail" we couldn't help but wonder if JPM would spin off Chase or Bear Stearns first. However, when he was asked what keeps him up at night, he said non-bank lending poses a danger "because no one is paying attention to it." He said the system is "huge" and "growing."

Dimon is right that the problem is huge and growing: according to the IMF which just two days earlier released an exhaustive report on the topic, shadow banking (which does not include the $600 trillion in notional mostly interest rate swap derivatives) amounts to over $70 trillion globally.

What he is very much wrong about is that nobody is paying attention to shadow banking: Zero Hedge has been covering the topic since early 2009.

Which is why we urge anyone who is curious to catch up on the issues surrounding non-bank lending, to read our 1,000+ articles on the topic.

However, for those who are time-strapped, here is a recent take from Bloomberg summarizing the IMF's 192-page report on Shadow Banking released last wee titled "Risk Taking, Liquidity, and Shadow Banking."

In a summary of the report, the IMF estimated the shadow banking industry at $15 trillion to $25 trillion in the U.S.; $13.5 trillion to $22.5 trillion in the euro area; $2.5 trillion to $6 trillion in Japan; and about $7 trillion in emerging markets.

 

Not included in the summary were estimates of the size of shadow banking in countries including the U.K., and Gelos said later at a press conference said the industry globally exceeds $70 trillion, citing figures from the Financial Stability Board.

One can see why Dimon is concerned.

“Shadow banking can play a beneficial role as a complement to traditional banking by expanding access to credit or by supporting market liquidity, maturity transformation and risk sharing,” the IMF said in the report. “It often, however, comes with bank-like risks, as seen during the 2007-08 global financial crisis.”

 

The report urges policy makers to address shadow banks with “a more encompassing approach to regulation and supervision that focuses both on activities and on entities and places greater emphasis on systemic risk.”

 

“Shadow banking tends to take off when strict banking regulations are in place, which leads to circumvention of regulations,” Gaston Gelos, chief of the IMF’s global financial analysis division, said in a statement accompanying portions released today of its Global Financial Stability Report. The full report is scheduled to be released Oct. 8.

 

Non-traditional lending “also grows when real interest rates and yield spreads are low and investors are searching for higher returns, and when there is a large institutional demand for ‘safe assets’” such as insurance companies and pension funds, he said.

 

Shadow banks include money-market mutual funds, hedge funds, finance companies and broker-dealers. They pose a risk to the broader financial system because they rely on short-term funding, “which can lead to forced asset sales and downward price spirals when investors want their money back at short notice.”

Below are the main findings reported by the IMF regardign shadow banking. Note: those following our periodic updates on the state of the US and global shadow banking system know all of this.

  • Although shadow banking takes different forms around the world, the drivers of shadow banking growth are fundamentally very similar: shadow banking tends to flourish when tight bank regulations combine with ample liquidity and when it serves to facilitate the development of the rest of the financial system. The current financial environment in advanced economies remains conducive to further growth in shadow banking activities.
  • Most broad estimates point to a recent pickup in shadow banking activity in the euro area, the United States, and the United Kingdom, while narrower estimates point to stagnation. Whereas activities such as securitization have seen a decline, traditionally less risky entities such as investment funds have been expanding strongly.
  • In emerging market economies, shadow banking continues to grow strongly, outstripping banking sector growth. To some extent, this is a natural byproduct of the deepening of financial markets, with a concomitant rise in pension, sovereign wealth, and insurance funds.
  • So far, the (imperfectly) measurable contribution of shadow banking to systemic risk in the financial system is substantial in the United States but remains modest in the United Kingdom and the euro area. In the United States, the risk contributions of shadow banking activities have been rising, but remain slightly below precrisis levels. Our evidence also suggests the presence of significant cross-border effects of shadow banking in advanced economies. In emerging market economies, the growth of shadow banking in China stands out.
  • In general, however, assessing risks associated with recent developments in shadow banking remains difficult, largely because of a lack of detailed data. It is not clear whether the shift of some activities (such as lending to firms) from traditional banking to the nonbank sector will lead to a rise or reduction in overall systemic risk. There are, however, indications that, as a result, market and liquidity risks have risen in advanced economies.
  • Overall, the continued expansion of finance outside the regulatory perimeter calls for a more encompassing approach to regulation and supervision that combines a focus on both activities and entities and places greater emphasis on systemic risk and improved transparency. A number of regulatory reforms currently under development try to address some of these concerns. This chapter advocates a macroprudential approach and lays out a concrete framework for collaboration and task sharing among microprudential, macroprudential, and business conduct regulators

The main risks surrounding shadow banking per the IMF:

  • Run risk: Since shadow banks perform credit intermediation, they are subject to a number of bank-like sources of risk, including run risk, stemming from credit exposures on the asset side combined with high leverage on the liability side, and liquidity and maturity mismatches between assets and liabilities. However, these risks are usually greater at shadow banks because they have no formal official sector liquidity backstops and are not subject to bank-like prudential standards and supervision (see Adrian 2014 for a review).
  • Agency problems: The separation of financial intermediation activities across multiple institutions in the more complex shadow banking systems tends to aggravate underlying agency problems (Adrian, Ashcraft, and Cetorelli 2013).
  • Opacity and complexity: These constitute vulnerabilities, since during periods of stress, investors tend to retrench and flee to quality and transparency (Caballero and Simsek 2009).
  • Leverage and procyclicality: When asset prices are buoyant and margins on secured financing are low, shadow banking facilitates high leverage. In periods of stress, the value of collateral securities falls and margins increase, leading potentially to abrupt deleveraging and margin spirals (FSB 2013b; Brunnermeier and Pedersen 2009).
  • Spillovers: Stress in the shadow banking system may be transmitted to the rest of the financial system through ownership linkages, a flight to quality, and fire sales in the event of runs (see Box 2.1 and the section “Systemic Risk and Distress Dependence”). In good times, shadow banks also may contribute substantially to asset price bubbles because, as less regulated entities, they are more able to engage in highly leveraged or otherwise risky financial activities (Pozsar and others 2013).

And for the visual learners, here is the chart breakdown:

Much more in the usual place

 

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Sat, 10/11/2014 - 18:51 | 5319066 gdogus erectus
gdogus erectus's picture

No one pays attention because it takes an interest combined with an IQ of about 130 to understand any of this. They count on it.

Sat, 10/11/2014 - 19:07 | 5319099 X.inf.capt
X.inf.capt's picture

the only thing that keeps him awake at night is his $25000 a night 'companion'...

Sat, 10/11/2014 - 19:27 | 5319136 Pladizow
Pladizow's picture

Sociopaths don't worry!

Wolves don't lose sleep over the opinion of sheep!

Sat, 10/11/2014 - 19:31 | 5319156 Squid-puppets a...
Squid-puppets a-go-go's picture

wow, man, Sooooo much stuff that is crying for gold backing.

What are we up to now, $200 000 per ounce to properly deleverage?

Sat, 10/11/2014 - 19:45 | 5319194 Rememberweimar
Rememberweimar's picture

Seventy Trillion pieces of green confetti... That's a lot of confetti...

Sat, 10/11/2014 - 20:33 | 5319306 stinkhammer
stinkhammer's picture

edward quince 

Sat, 10/11/2014 - 20:54 | 5319338 strannick
strannick's picture

"600 Trillion in Interest Rate Swaps''. Its ALL about these interest rate swaps. These are the Primary dealer banks swapping variable rate interest rates against fixed interest rates. This is the hydralic hammer that keeps a lid on interest rates for the moment, and are similar in nature to the gargantuan naked shorts that banks sell to keep a lid on the gold price. Since there is no way in hell they will ever pay, or deliver, they just pile it on to infinity (they are 600 trillion dollars on the way to infinity already)

These Primary Dealer Banks have 600 trillion bet that interest rates will go lower. And it is the magnitude of these interest rate swaps that pushes interest rates lower, right up until the day it doesnt. Nothing else is pushing interest rates lower, and interest rates certainly are not at alltime lows because of the credit worthiness of the US Treasury, whose debt/GDP has never been higher.

Be very scared, and load the boat with gold (and find a GPS corordinate for it when you dump it in the lake)

Sat, 10/11/2014 - 21:05 | 5319386 knukles
knukles's picture

"The problem, Jamie thought to himself, "is those fuckers taking away our business."

Sat, 10/11/2014 - 21:48 | 5319507 X.inf.capt
X.inf.capt's picture

that is probably closer to the truth than we all realize...

on so many levels...

Sat, 10/11/2014 - 23:35 | 5319739 palmereldritch
palmereldritch's picture

Sorry....was it,

"...he has throat cancer..." or "...he is throat cancer..." ?

Sun, 10/12/2014 - 00:26 | 5319803 Kirk2NCC1701
Kirk2NCC1701's picture

+1. Bingo! We have a winner!

I know 'people' who are making private investments and bypassing the banks.

Sat, 10/11/2014 - 19:33 | 5319159 kaiserhoff
kaiserhoff's picture

Gee, at that price, you would think he could find a hooker who doesn't snore.

Sat, 10/11/2014 - 20:12 | 5319253 NoDebt
NoDebt's picture

You don't pay them for sex, you pay them to leave.

Sat, 10/11/2014 - 20:06 | 5319240 RaceToTheBottom
RaceToTheBottom's picture

Building complexity for the sake of concealment has always been used by the WS PTB.  

Most of what WS produces takes one basic idea: "Time value of money" and makes it more complex.

Sat, 10/11/2014 - 20:26 | 5319291 failure to perform
failure to perform's picture

He's not paying attention because he'll be dead before it matters.

Sat, 10/11/2014 - 20:25 | 5319292 booboo
booboo's picture

I would disagree, any 3rd grader would know not to trade a peanut butter and jelly sandwich for an empty ziplock bag.

Sat, 10/11/2014 - 18:52 | 5319068 Hohum
Hohum's picture

I sleep less; that's why I am richer than you!

Sat, 10/11/2014 - 19:03 | 5319076 e_goldstein
e_goldstein's picture

That's what's keeping Jamie Dimon up at night?

I was hoping it was the throat cancer.

Sat, 10/11/2014 - 19:17 | 5319123 A Lunatic
A Lunatic's picture

I almost hoped it was his conscience, but that would have been really fucking stupid.....

Sat, 10/11/2014 - 19:35 | 5319172 kaiserhoff
kaiserhoff's picture

Yeah, does he really have throat cancer, or is that just wishful thinking, and voodoo dolls?

Sat, 10/11/2014 - 19:38 | 5319178 Freedumb
Freedumb's picture

I suppose all the carcinogenic bullshit, faulty advice and hot air constantly coming out of his mouth must have caused it

Sat, 10/11/2014 - 20:01 | 5319223 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

Nah, like Michael Douglas- bad pussy!

Sat, 10/11/2014 - 21:24 | 5319433 angel_of_joy
angel_of_joy's picture

His Karma is a bitch... for a reason.

Sun, 10/12/2014 - 00:55 | 5319848 Conax
Conax's picture

JD might be faking it for sympathy.

'Don't hang me, my throat is sore.'

He can also turn down interviews, get free ice cream, all sorts of perks.

Sun, 10/12/2014 - 09:42 | 5320261 mendolover
mendolover's picture

If he's truly a globalist and not just a minion he had the cancer vaccine years ago.

Sat, 10/11/2014 - 21:45 | 5319494 mendolover
mendolover's picture

Finally a cancer joke.  I was wondering if the ZHers were getting soft.

Sat, 10/11/2014 - 23:13 | 5319696 IndyPat
IndyPat's picture

I'm going with the pervasive smell of brimstone and sulfur coupled with the ear piercing screams of torment from the pit.
Contract...is almost up. "He" won't take paper, this time. Taking delivery of the physical.

Sun, 10/12/2014 - 01:54 | 5319888 Yen Cross
Yen Cross's picture

 Indy Pat. I'm afraid to ask.

Sun, 10/12/2014 - 02:39 | 5319911 IndyPat
IndyPat's picture

What keeps him up at night...

Sat, 10/11/2014 - 18:58 | 5319077 holdbuysell
holdbuysell's picture

"Much more in the usual place"

Holy sh*t. To my chagrin, I never realized that the Tylers organized past articles so well by tags. Great job!

Sat, 10/11/2014 - 19:03 | 5319084 Hellone
Hellone's picture

WHAT KEEPS THE BABYLONIAN TALMUDIC PRINCE UP AT NITE LOL???

NOTHING!!

HE SLEEPS WELL KNOWING THAT THE FILTHY WHITEY DOG GOYIM HE CAN ROB AND KILL IN THIS CENTURY ARE ESPECIALLY NITWIT FAT LAZY IMPOTENT NIMRODS!!

HIS ONLY AND I MEAN HIS ONLY CONCERN IS WILL HE GET A MEDICAL RETIREMENT BONUS FOR LEAVING ON ACCOUNT OF THE LUNG CANCER HE MAGICALLY ACQUIRED.

Sat, 10/11/2014 - 19:07 | 5319098 holdbuysell
holdbuysell's picture

"NITWIT FAT LAZY IMPOTENT NIMRODS"

Actually Nimrod was a Nephilim from the Babylonian times; nasty evil cunning stuff and very much antithetical to how the name is used today.

Sat, 10/11/2014 - 19:19 | 5319128 A Lunatic
A Lunatic's picture

He prolly meant dilrods, cut him some slack.......

Sat, 10/11/2014 - 19:27 | 5319144 holdbuysell
holdbuysell's picture

It's all good; Hellone's point is well-said, and my comment was not meant to demean or to detract from it. I nitpicked on something ancillary to his main point but an area that is murky to interpret but potentially profound in understanding why we are where we are.

Sat, 10/11/2014 - 19:16 | 5319112 thewayitis
thewayitis's picture

 WTF  Blow up already. The sooner the better.........

 

Sat, 10/11/2014 - 19:17 | 5319116 Rubbish
Rubbish's picture

Why I always use new banks, trees still have the big stakes holding them.

 

Long Stihl

Sat, 10/11/2014 - 19:25 | 5319120 ekm1
ekm1's picture

Interest Rate Swaps are part of shadow banking, but anyway.

 

What Tylers are talking about is what I call USD RESERVE GLUT

 

There are about $70 trillion sloshing around the world constantly claiming $80 trllion annual world GDP.

That's why world is avoiding USD, just too, too, too, too many claims on world real assets and output.

 

The existence of shadow banking at $70 trillion, means that economy is not producing nearly enough output, hence now money is chasing money, not output.

When I use the term Shadow Banking Weimarization, it is precisely about this $70 trillion, money chasing down money, using oil, iron, ore, aluminum, grains, soybeans etc as collateral.

This is the Modern Weimar.

 

Economy is dying and will continue to die unless US Congress orders the Fed extinguish at least $10 trillion, if not $20 trillion, otherwise world will continue to avoid USD thus going local, death of globalization

 

Unlike Weimar times, people cannot burn paper money now. Only Fed or US Gov can electronically extinguish USD and they will, otherwise economic misery

Sat, 10/11/2014 - 19:28 | 5319145 Bangalore Equit...
Bangalore Equity Trader's picture

Listen 1.

Don't be ridiculous. You can't just "EXTINGUISH" USD's.

It must be taken first, from some one or some thing, then extinguished.

Sat, 10/11/2014 - 19:34 | 5319160 holdbuysell
holdbuysell's picture

EKM1...BE makes a good point. How do you extinguish said digital dollars? You speak of expropriating trillions from some unlucky oligarchs. Is that the path your thesis suggests?

Sat, 10/11/2014 - 21:06 | 5319174 ekm1
ekm1's picture

Yes.

Unplug offshore computers.

There are $20 trillion minimum as digits in computers in offshore banking centers

 

Bail-in idea itself ...is basically extinguishing of dollars by government order, just mark down digits on computers for everybody

Sat, 10/11/2014 - 21:26 | 5319447 angel_of_joy
angel_of_joy's picture

You extinguish money every time you CANCEL DEBT (also known as DEFAULT).

Sat, 10/11/2014 - 19:35 | 5319164 ekm1
ekm1's picture

Yes.

Unplug computers. Shut down offshore banks. Bank collapses

Eventually all comes down to typing up or down digits on computers.

So, yes, anything can be done.

 

There are no $70 trillion in paper cash to take away from people. Just change numbers on computers

Sat, 10/11/2014 - 19:41 | 5319180 holdbuysell
holdbuysell's picture

If you've considered such a thesis, then those in harm's way also sense this possibility, which would suggest they have contingency plans or protection in some form. Trillions held by oligarchs is not going quietly down a drain. It will look like a Horcrux being destroyed.

Sat, 10/11/2014 - 19:45 | 5319189 ekm1
ekm1's picture

That is what happened with Lehman, Bear Stearns, MF Global.

Elite always wars against elite for control of assets. That's why I always laugh at "world government" or IMF or any world institutions. 

It is humanly IMPOSSIBLE to have world institution that actually function.

 

There is no escape. The only contingency plan is controlling the government, like Buffett controlling Obama, Senate Banking Committee and House Finance Committee

Not all of them can, only few can. The rest? Sacrificial lambs, just like Lehman, Bear Stearns and MF Global and more to come probably Barclays, Merryll LYnch, etc etc etc

There is no escape.

Sat, 10/11/2014 - 19:47 | 5319195 holdbuysell
holdbuysell's picture

Who're the next sacrificial lambs? My take is Citi and Deutsche Bank, maybe BofAML.

Sat, 10/11/2014 - 19:49 | 5319201 ekm1
ekm1's picture

Saudis own part of Citi. I'd exclude Citi, or maybe partial restructuring keeping Saudi money safe

Barclays, part of Deutsche, Bofaml...etc

Sat, 10/11/2014 - 19:50 | 5319204 holdbuysell
holdbuysell's picture

Understood. The consolidation in banking continues. Running this trend and though experiment to its end, isn't the logical end to this a single bank that controls all, which in turn is controlled by the shadows?

Sat, 10/11/2014 - 19:53 | 5319211 ekm1
ekm1's picture

There is no such thing as central control of the globe. It is humanly impossible.

Sat, 10/11/2014 - 20:13 | 5319261 NoDebt
NoDebt's picture

Won't stop them from trying.

Sat, 10/11/2014 - 20:51 | 5319350 ekm1
ekm1's picture

Sure. But humans can never ever agree on anything.

Huge egos like oligarchs can never become humble enough to cooperate, particularly coming from different languages and cultures.

That is how humans function

Sat, 10/11/2014 - 21:06 | 5319396 holdbuysell
holdbuysell's picture

'But humans can never ever agree on anything.'

Nephilim are half human. Murky texts suggest that's the shadow that's running the show right now.

Sat, 10/11/2014 - 20:21 | 5319278 new game
new game's picture

upposing force thingy hold another temporary balance. but wouldn't war break out if say russia or china comes out short and pissed?

Sat, 10/11/2014 - 20:46 | 5319333 ekm1
ekm1's picture

Neither Russia nor China have such capabilites of getting engaged worldwide military in 2 or 3 wars simultaneously

Only USA does

Sun, 10/12/2014 - 00:27 | 5319804 StychoKiller
StychoKiller's picture

It only takes ONE nukular warhead to ruin yer day!

Sat, 10/11/2014 - 20:55 | 5319355 holdbuysell
holdbuysell's picture

EKM1: "It is humanly impossible."

To go back to the murky Babylonian territory, the Nephilim are not exactly human and that's what I find concerning if the record is accurate.

Sat, 10/11/2014 - 20:40 | 5319271 layman_please
layman_please's picture

" Elite always wars against elite for control of assets. "

it's strange that i can recall one trifling event about 100 years ago where fierce competitors warburgs, rockefellers, rothschilds, morgans, who, by mere happenstance, controlled meager one forth of the world's wealth back then, colluded to create a banking cartel in partnership with US government which now controls 60% of the world economy through the manipulation of the world reserve currency.

yeah yeah, there are no conspiracies and no constant centralisation of power, especially throughout the last century!?! in which fucking alternative universe do you live?

Sat, 10/11/2014 - 20:48 | 5319340 ekm1
ekm1's picture

They never did

Rothchilds made deals with the Queen and British Navy. It was british navy defending their assets in return for booty.

Gold was money at the time.

Rothchilds are now dead. Nobody cares about them. British navy is not what it used to be

Sat, 10/11/2014 - 21:34 | 5319462 holdbuysell
holdbuysell's picture

"Rothchilds are now dead."

Wait! What?! Then where did that purported ~180K tons of mined gold go?

Sat, 10/11/2014 - 22:33 | 5319607 sleigher
sleigher's picture

The deal with the English was before the Fed Reserve deal.  Rothschilds are not dead.  They were here 80 years ago.  What happened to their immense wealth?  It just went away when the news articles ended? (after they bought Reuters)  They aren't dead they just aren't written about anymore.  

Sun, 10/12/2014 - 00:29 | 5319807 JR
JR's picture

Layman, your summary sentence of what created the Fed and what it's about is the most succinct description I’ve ever read. The essence of the significance of the Fed founders is that, as G. Edward Griffin also explains, they were competitors.

They were competitors! and they joined together to compete no more but to monopolize a nation’s finance and its growth to planetary proportions.

Griffin points out in The Creature From Jekyll Island that the original purpose of the banking bill was to break the grip of the money trust, yet, in secret it was written by the money trust. Instead of breaking up the money trust, the Morgans, the Rockefellers, Kuhn, Loeb & Company, the Rothschilds and the Warburgs, all major competitors in the field of investment and banking in those days, came together completely and decided not to compete—instead they used the banking bill to form a cartel -- the “Federal Reserve System.”

This was the shift in the nation going away from competition toward monopoly.

“This is extremely significant,” says Griffin, “because it happened precisely at that point in American history where business was undergoing a major and fundamental change in ideology. Prior to this point, American business had been operating under the principles of private enterprise--free enterprise competition is what made American great.”

As both you and Griffin point out, “the name of the game out there is not wealth, it is power.

“They are using this river of wealth to acquire power over you and me and our children. They are spending it to acquire control over the power centers of society… They are literally buying up the world but not the real estate and the hardware, they're buying control over the organizations, the groups and institutions that control people.”

Sun, 10/12/2014 - 09:12 | 5320155 Pie rre
Pie rre's picture

I read an interesting article that the above group colluded in forming the AMA and big Pharm back in the early 19th century and that's why our medical costs are so much more than the rest of worlds. I wish I had the link to share.

Sat, 10/11/2014 - 19:44 | 5319193 holdbuysell
holdbuysell's picture

While on the digital money topic. How do you view the safety (absolute and relative) of the following:

TBTF banks

Regional banks

Local banks

Credit unions

Bitcoin/digital currencies

Sat, 10/11/2014 - 19:48 | 5319198 ekm1
ekm1's picture

TBTF = zero safety

 

Regional banks, credit unions = mostly safe, but check their balance sheet. They do not have White House clearance to lie on balance sheets like TBTF

 

Bitcoing/digital currencies = Pyramid Schemes 

Sat, 10/11/2014 - 19:53 | 5319208 holdbuysell
holdbuysell's picture

Thx. Aren't ALL banks/credit unions subject to digital zeroing actions (bail-ins would be contingent on balance sheet strength as you point out), as they are part of the same system?

Sat, 10/11/2014 - 19:56 | 5319216 ekm1
ekm1's picture

Yes, but it depends how much leveraged they are. Hence check their balance sheets before you put your money into, because again they do not have White House clearance to lie on balance sheets.

TBTF has White House clearance to submit fiction balance sheets.

 

I do not think bail-in will happen at all, because americans are armed. It may happen in EU, even in Canada, but not in USA. Just my view

 

It all depends how much money you want to protect.

If you have $100k, yes you can. If you have $1 billion, then you have a problem

You can't hide $1billion electronic dollars

Sat, 10/11/2014 - 20:43 | 5319325 holdbuysell
holdbuysell's picture

"If you have $1 billion, then you have a problem"

Yup.

As an example, how Gates of MSFT changed when he became a multi billionaire suggests exactly this. It's rather clear he had a 'talking to' on how to 'manage his wealth'. These people can never get out of the status quo, so the 'talking to' educates them on this very reality.

And all they can do is speak status quo.

In other words, they are irrelevant in the next paradigm.

Sun, 10/12/2014 - 01:51 | 5319887 Yen Cross
Yen Cross's picture

 EKM you've got "frost bite" How's the weather in Canukistan?

 I sttill love you~

Sat, 10/11/2014 - 19:41 | 5319182 ekm1
ekm1's picture

Federal Rserve and USD Government are US Dollar black-holes.

They don't need dollars. For themselves they simply create them as digits on computers.

 

When Fed buys bonds, it creates dollars. When Fed sells bonds, dollars vanish into Fed blackhole.

If you pay IRS taxes with paper cash, IRS simply shreds that money

Sun, 10/12/2014 - 00:08 | 5319781 Wild Theories
Wild Theories's picture

Listen.

Bangalore just made more sense than ekm1

 

damn ZH is craaazeee on a weekend...

Sat, 10/11/2014 - 19:18 | 5319121 Bangalore Equit...
Bangalore Equity Trader's picture

Listen Zero's.

"What he is very much wrong about is that nobody is paying attention to shadow banking: Zero Hedge has been covering the topic since early 2009."

That is exactly correct. How dare he utter such a lie! Fucking self absorbed banker!

Sat, 10/11/2014 - 19:29 | 5319146 kamikun
kamikun's picture

Slightly OT: And like a lot of ZHers, Jamie also sees bitcoin as a threat. "Bitcoin will try to eat our lunch..." And by 'our lunch' Dimon of course means 'what we steal from the middle class.'

(More OT- Turns out Gartman is not such a big fan either, "I'm avoiding bitcoin like the plague." You get to know someone by the enemies they keep.)

Sat, 10/11/2014 - 19:30 | 5319155 Cautiously Pess...
Cautiously Pessimistic's picture

Listen Bangalore.

 

Jamie Dimon is RICHER THAN YOU.

 

 

Sat, 10/11/2014 - 19:36 | 5319170 Herdee
Herdee's picture

Check-out what Art Cashin has to say on King World News.He's the Director of Floor Operations at UBS.He's been around a long time and people listen to the wise...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/10_T...

Lots of other good reads and you can listen to Dr. Paul Craig Roberts who served under Ronald Reagan.He'll wake you up,this is a real Republican,not the phoney baloney you see today.He's old school.

 

Sat, 10/11/2014 - 20:29 | 5319299 Bill of Rights
Bill of Rights's picture

You must be new here

Sat, 10/11/2014 - 22:08 | 5319554 gwar5
gwar5's picture

Agreed, PCR is good. But mostly the stuff at KWN has been permanently set at maximum hyperbolic volume  -- "That will shock the world!"  You'll see.

But it's still worth a look. I still do.   

Sat, 10/11/2014 - 20:22 | 5319196 MasterOfTheMult...
MasterOfTheMultiverse's picture

Despite upbeat attitude in media, Dimon acknowledges his throat cancer has already spread to lymph nodes which indicates advanced disease and metastasis and potential further undetectable spreading to other organs. This means it was not early detection as reported by media, since early disease means there would be no spread to lymph nodes from primary cancer yet. Hopefully this terminal illness will give him some insight about finiteness of life and perhaps make him share some vital data that would otherwise be kept from public. Rather doubt it though. Short JPM.

Sat, 10/11/2014 - 20:24 | 5319283 gwar5
gwar5's picture

JD has had more than his "fair share." Let's send him to Zeke Emanual,MD to stop his broken clock to keep him from suffering.   

Sat, 10/11/2014 - 20:18 | 5319272 OC Sure
OC Sure's picture

LMFAO!!! Look at all of those visuals again. Where is the economy of productive work? Where did it go? Into hiding?

"Shadow banking" cannot be and is not the cause of any risk.

It is approriately named though since it is the being that casts the shadow which must be the cause: Authoritarian "banking." The problem is with the entity, not its shadow.

The microrecklessness of authoritarian "banking" necessarily begets macrorecklessness.

The best regulator and determiner of value in any marketplace is demand unhindered by law and banking is no exception.

Sat, 10/11/2014 - 20:19 | 5319276 gwar5
gwar5's picture

Vampires like Jamie Dimon don't sleep at night... but when he shuts the lid he has nightmares about middle class picket fences.  

Sat, 10/11/2014 - 21:42 | 5319486 mendolover
mendolover's picture

And silver bullets!  Haha!

Sat, 10/11/2014 - 21:54 | 5319518 gwar5
gwar5's picture

Yep! Say, what's the melting temperature of silver anyway? I completely forgot to ask Van Helsing at the seminar.

 

Sun, 10/12/2014 - 01:33 | 5319873 Conax
Conax's picture

1763 degrees F  (962 C)

tough stuff.

Sat, 10/11/2014 - 20:29 | 5319300 q99x2
q99x2's picture

Arrest that man and put an end to it.

Sat, 10/11/2014 - 21:00 | 5319327 Salsipuedes
Salsipuedes's picture

As a Shadow Banker, excuse me, "Non-Banking Financier", I've found it advantageous to sleep with FED people and Regulators as often as possible.

       Your Welcome!

                        Ciao!

                             Samantha Blythe Masterfully Powerful, 24, N.Y.C.

Sat, 10/11/2014 - 21:17 | 5319416 red1chief
red1chief's picture

That $600 trillion of mostly interest rate swaps is basically a Ponzi scheme.  They trade this stuff among themselves, mark the price up a tiny bit on each transaction, take profits and pay bonuses.  How big is the hole in all this crap? Who knows, but if the Fed ever actually gets the guts to tighten credit look out below.  Even the end of QE might cause a collapse, as the pyramid constantly needs more liquidity to feed the beast. Guess who will eventually fill the hole?  That's right, taxpayers!

Sat, 10/11/2014 - 21:22 | 5319425 Salsipuedes
Salsipuedes's picture

     That's it in a nutshell red1.

         Some friends of mine would like to know how to "get ahold of you".

              Don't call me. They'll call you.

                     Cordially,

                           Samantha

 

 

Sat, 10/11/2014 - 21:33 | 5319461 nathan1234
nathan1234's picture

The Devil nevers sleeps.

The Demon is in the Devil

 

Sat, 10/11/2014 - 21:45 | 5319490 americanspirit
americanspirit's picture

Hey Jamie - throat cancer is what you get for eating way too much dirty pussy with HPV. Couldn't happen to a better victim. Your last days will be sucking air through a hole in the side of your throat. In case they haven't told you yet all the money in the world isn't going to save you - but they'll be happy to take it, just like you were. Good riddance.

Sat, 10/11/2014 - 23:22 | 5319712 Ban KKiller
Ban KKiller's picture

Harsh but fair.

Sat, 10/11/2014 - 23:42 | 5319748 Fuku Ben
Fuku Ben's picture

I love it when ZH pats themselves on the back with a link to a 2009 story pointing out how out of touch Jamie is with reality "nobody is paying attention to shadow banking: Zero Hedge has been covering the topic since early 2009." Could it be the effects of the chemo? Or has he been living on Planet Z for too long?

Then ZH patronise him by saying he has some ability to comprehend what's going on "Dimon is right that the problem is huge and growing"

And then for the cherry on top coup de grace they rub it in by pointing out he's soon going to drop dead of cancer with the Saturnine metaphor "However, for those who are time-strapped,"

Sometimes you boys/girls/purple penguins are the best

http://www.foxnews.com/opinion/2014/10/09/gender-inclusive-school-distri...

Sun, 10/12/2014 - 01:44 | 5319882 Yen Cross
Yen Cross's picture

 Okay, I'm looking at those MWAP charts.

   Then I start thinking about VIX, and VWAP. I'm looking at where the charts have pegs.

 The blue spots plotted. Any how, here's how I see things, from a currency perspective.

  MWAP(bond yield) monthly on all those charts, VS  cash tells me Yields are going to rise.

  Here's where it get's trickie. Cash is going to stay cash.

 In other words, the USD is slowly losing purchasing power.

  Long story short/ I'm short USDX next week. You guys can beat me up. I just think I'm right, in this particular situation.

 

 

Sun, 10/12/2014 - 01:49 | 5319885 PaperWillBurn
PaperWillBurn's picture

Jamie Dimon: Bitcoin will "Try to eat our lunch"

 

http://www.tonewsto.com/2014/10/jp-morgans-jamie-dimon-bitcoin-will-try....

Sun, 10/12/2014 - 08:25 | 5320082 Ghostdog
Ghostdog's picture

I thought it might be those 70 trillion dildo's up he was hoping to get for chrostmas

Sun, 10/12/2014 - 10:01 | 5320327 geekz_rule
geekz_rule's picture

really, this is a bunch of noise, that actually, obfuscates the real problems.

P < P + I

the global banks are owned and operated to this end. much smoke and mirrors and wringing of hands, but, duh. the global money supply is privately owned, and publicly paid for. Privitized profit, socialised loss.. and everything is LOSS in the end.

One can only chuckle at attempts to paint it as ignorance, or stupidity, or bad guys, or anything but what it is: a multi generational plan to own the world, like a Bond nemesis.

everything else, especially the granular details about the charade? noise.

the monopolists have already won. they own the world. no messiahs coming to save us. it all just churn. fake L vs fake R, no one person whether obummer or putin, or Jaimie D. every person we can name is merely a puppet on a string, answers to someone else, some other star chamber.

Sun, 10/12/2014 - 11:03 | 5320561 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.

About 95% of the $230 trillion in US derivative exposure is held by four US financial institutions. The article below looks into how this could collapse the economic system.

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

Sun, 10/12/2014 - 11:42 | 5320696 falak pema
falak pema's picture

When we all came to ZH post 2009 collapse, we all asked ourselves the big question : what is happening in the shadowy world of shadow banking and derivative concoction and how does THAT effect the real economy and our lives.

Well, inspite of the official message : "we are deleveraging, and its under control", the likes of ZH and others have reminded us that this has not really happened; if anything its gotten worse since 2009, as the subsequent Euro crisis and now Japan "Abe-print" circus augmenting the FED/BOC/BOE fiat spewing bonanza has proven. 

For the first time since 2009, BIG FINANCE now admits that releveraging in the financial shadow world is way beyond the official deleveraging of the front banks and financial institutes.

Which explains why the world is still in doldrums and why the CBs cannot stop cheap money plays.

And now the geopolitical risks are there adding to the financial cloud of debt = asset baloney.

When the "Good Empire's exceptionalism"  looks like its mirror opposite...Dorian Gray's picture.

Sun, 10/12/2014 - 14:53 | 5321319 Hannibal
Hannibal's picture

Collapse what,.....left brain abstractions?

Well then good riddance!

Sun, 10/12/2014 - 20:38 | 5322361 Otto Zitte
Otto Zitte's picture

What happens in shadow banking? Losses are privatized. Oo, the moral hazard.

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