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Collapsing CDS Market Will Lead To Global Bond Market Margin Call

Tyler Durden's picture




 

Submitted by Daniel Drew via Dark-Bid.com,

As Zero Hedge previously noted, liquidity is there when you don't need it, and it promptly disappears once it is in demand. Consider it "cocktease capitalism." If liquidity lasts longer than 4 hours, call the CFTC because you may be experiencing a spoof. Right now, the ultimate spoof is setting up as the credit default swap market collapses, and a global bond market margin call is just around the corner.

The most serious risk at the moment is the lack of bond market liquidity. This problem was created by the Federal Reserve. By flooding the market with liquidity, the Federal Reserve paradoxically destroyed the liquidity it sought to create. Initially, the Federal Reserve's actions helped stem the panic selling when it stepped in as the buyer of last resort. However, the Fed is quickly becoming the buyer of first resort. The CME even has a Central Bank Incentive Program to encourage foreign central banks to buy S&P 500 futures. It's not a stretch of the imagination to presume the Federal Reserve is buying S&P 500 futures alongside the foreign banks.

As the Fed's balance sheet expanded ever larger, they transformed from being a mere market participant to becoming the market itself. The Federal Reserve, along with the rest of the world's central banks, are essentially engaging in a multi-year effort to corner the global bond market. As we have seen in every case, no one has ever successfully cornered a market indefinitely. From the Hunt Brothers in the 1980 silver market to the Saudi royal family in the modern fractured oil market to the Duke brothers in the frozen concentrated orange juice market, it simply has not worked. Running a monopoly is an uphill battle that eventually results in a spectacular blowup. Why would the central banks be any different?

As Zero Hedge pointed out recently, the run on the central banks has already begun. For the first time ever, QE failed. The first casualty was the Riksbank in Sweden.

Swedish 10 year yield

The Swedes have shown there is a limit on how low interest rates can go. The limit may be different for every country, but it does exist. Investors will eventually revolt against the post-crash Bizarro bond markets that dot the global landscape.

The same problem that brought Long-Term Capital Management to its knees is what will bring down the central bankers: liquidity. They seem to have forgotten that without liquidity, there are no markets. You can't be the only player in the game. It is often said that cash is king, but what that really means is liquidity is king. In the capital markets, investors will pay a premium for liquidity. Right now, liquidity trumps credit ratings in the bond market. As liquidity thins out dramatically, that premium is becoming smaller and smaller. One day, every central bank will have their Riksbank moment when, despite their best efforts, it all blows up.

In one of the largest ironies in regulatory history, the crackdown on the CDS market may ultimately exacerbate the inevitable bond market crash. A credit default swap allows someone to speculate on or hedge against the risk of a credit default. The outrage behind credit default swaps was not actually about the swaps themselves; it was about the leverage. AIG was just in over its head. Leverage is power, and like an amateur gun enthusiast, AIG couldn't handle the recoil on the trillion dollar caliber CDS market. However, used properly, credit default swaps can function effectively - particularly when the underlying markets have been squeezed dry of every last drop of liquidity by the bond market monopolists at the Fed. If the bonds themselves freeze up, perhaps the CDS market will continue trading.

This kind of derivative-driven salvation was one of the defining legacies of the stock market crash of 1987. When the market was at its lows and the stock exchanges considered closing, Karsten "Cash" Mahlmann, Chairman of the Chicago Board of Trade, decided to continue trading the Major Market Index (MMI) futures contract when virtually all other trading was at a standstill. A large rally in the MMI futures eventually led to a rally in the Dow Jones, proving once again that the futures market is the tail that wags the dog. In a moment of crisis, Wall Street took a back seat to Chicago.

All of this points to the power of the derivative to bolster confidence during a crash. As we have seen, the derivative market is many times larger than the actual underlying securities they represent. This is due to the nearly infinite amount of side bets that can be created. Even a casual investor can see this aspect in the proliferation of ETFs. However, the CDS market has been in a state of deleveraging and decline since the 2008 crash as a result of risk mitigation and new regulations.

Credit Default Swaps Notional Principal

Initially, this was a positive development, but now, the CDS market is slowly disappearing altogether. Last year, Deutsche Bank dropped out of the "single name" CDS market, which means less liquidity for anyone who has a legitimate need to hedge risk in particular entities. Without "single name" credit default swaps, hedgers and speculators alike are left with imprecise index swaps, such as the 10-year Markit CDX North America Investment Grade Index Series 9, the contract that cost JPMorgan $5.8 billion in 2012.

The central bankers are already anticipating the collapse of quantitative easing. They meet in Basel every other month at the Bank for International Settlements. A year ago, they met to attend a workshop called "Re-thinking the lender of last resort." One of the papers discussed was written by Perry Mehrling. It is called "Why central banking should be re-imagined." Mehrling said,

A market-based credit system requires market pricing of capital assets as a prerequisite for market funding. The assets are collateral for the funding, and if the market does not believe the asset prices then it's going to be pretty hard to get the funding, and if the private sector won't fund private holding of the Fed's asset positions then exit is de facto impossible.

When the bond market collapses, no one will be able to sell. And if they can't hedge, their hands are tied.

 

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Sun, 06/28/2015 - 16:05 | 6245888 knukles
knukles's picture

Tony wants his taste.

Sun, 06/28/2015 - 16:13 | 6245922 kliguy38
kliguy38's picture

Gulfstream flightplans changing to New Zealand as we keystroke....grab the Picassos and lets go

Sun, 06/28/2015 - 16:15 | 6245928 fuu
fuu's picture

I can't remember if I cried,

when I read about the receding tide,

something touched me deep inside,

the day the music died.

Sun, 06/28/2015 - 16:20 | 6245948 Tall Tom
Tall Tom's picture

All I know is that I sat down as quickly as I could in the game of Global Musical Chairs....when the Music stopped.

 

I have got a chair to sit upon. Do you have one?

Sun, 06/28/2015 - 16:41 | 6246048 cossack55
cossack55's picture

Barcalounger

Sun, 06/28/2015 - 16:44 | 6246065 kaiserhoff
kaiserhoff's picture

I'd like to belive this, but good grief.  Rates all the way up to 1%???  Sweden is the outlier.

And then there are Japan, China, the USSA, and all of Europe, with different results so far.

Don't bet the farm.

Sun, 06/28/2015 - 16:58 | 6246134 God
God's picture

"global bond market margin call "

My only issue with that statement is that they are all in on it. So no one will call in the other because they all will lose.

GOD has spoken!

Sun, 06/28/2015 - 17:12 | 6246209 NihilistZero
NihilistZero's picture

My only issue with that statement is that they are all in on it. So no one will call in the other because they all will lose.

They may all be in on the game but they are still looking out for their individual interests.  Juxtapose the current state of Central Banking with the "prisoners dilemma" or other example of game theory.  An analogous parable...  Two bank robbers discover that the only getaway possible is solo.  One Robber has the money, the other the means of escape.  They both know the only viable escape destination.  What happens???

In other words Banksters are criminals and conspiracies among evil people are actually pretty hard to pull off.  If we're lucky the scheme will fall apart before WW3 gets started...

Sun, 06/28/2015 - 17:14 | 6246227 God
God's picture

"GOD has spoken" means DO NOT RESPOND TO THIS COMMENT!

Sun, 06/28/2015 - 18:13 | 6246510 Renfield
Renfield's picture

Marked up for sounding like the teleprompter was RIGHT THERE with you.

Sun, 06/28/2015 - 18:48 | 6246654 jefferson32
jefferson32's picture

This is what it says in the intro of the BIS paper linked at the end of the article (about how to "re-imagine central banking"):

[...] the new “balance sheet policy” [is] nothing more than an extension of traditional techniques of FX intervention to a broader asset class and [...] nothing more than use of the central bank balance sheet to implement debt management policy that is more traditionally undertaken by the Treasury.

In other words: get ready for QInfinity

Sun, 06/28/2015 - 18:32 | 6246618 NihilistZero
NihilistZero's picture

NihilistZerO is an Atheist.  So either you're not really God, or I did way more drugs today than I thought I did...

Sun, 06/28/2015 - 20:23 | 6247007 TeethVillage88s
TeethVillage88s's picture

Ah I just poured my drink down the chair, my foot, and the carpet since I am past the 4th drink.

Look you don't think conspiracies can be orchestrated past a few years?

The bible was created from pagan, Syrian, Persian, and Christian traditions. Jesus is said to be an Essene, a master of the esoteric, a Gnostic. The Gnostics can be many traditions or religions and date pre-Egyptian to Mesopotamia. And yet the Bible survived as our best history document since TPTB would often destroy all books, libraries, and documents... which it turns out is all of our history. 150 Years ago we started finding the truth in Artifacts and Papyrus and Scrolls and Clay Tablets. And yet we still don't show understanding of what these documents mean since they challenge the existing power structure and university status/professor status/Professor Opinions.

Oh well it is probably not Important. Don't look at Dea Sea Scrolls, those of the Gnostics, or those of the Essenes at Nag Hammadi.

Sun, 06/28/2015 - 21:06 | 6247149 Tall Tom
Tall Tom's picture

The bible was created from pagan, Syrian, Persian, and Christian traditions.

 

You forgot Babylonian...

 

Other than that I must agree. It is the Truth.

 

But that does not indicate that there is no God, : )

Sun, 06/28/2015 - 16:45 | 6246070 weburke
weburke's picture

yeah, but just about all my neighbors dont.

Sun, 06/28/2015 - 17:07 | 6246182 Tall Tom
Tall Tom's picture

I am sorry about your neighbors.

 

Hell I was screaming at my brother yesterday to withdraw actual cash from the Bank and keep it at his home.

 

Finally I just told him, "Look. I am not asking you to buy anything, or sell anything. If I am wrong then you can just redeposit the cash. Just have some cash on hand in case I am right."

 

He told me that he would but I think that he just said it and has no intent on following through.

 

I cannot save him. I am a Cassandra and it seems so with you as well.

 

We see it coming and scream the warning sirens and there is not one thing that we can do ther than to batten dwn the storm hatches and ride this out.

 

Any Propaganda Ministers who survive this will be tried for Treason, and summarily executed, as they will have caused the deaths of millions who bought into what they have said.

 

They are deserving of no mercy.

 

A defense of,"No one could have seen this coming.", IS BULLSHIT!!!

 

I am someone. Aren't you? Anyone of you who are reading?

 

Aren't you somebody?

Sun, 06/28/2015 - 18:20 | 6246544 Renfield
Renfield's picture

<<They are deserving of no mercy. A defense of,"No one could have seen this coming.", IS BULLSHIT!!! I am someone. Aren't you? Anyone of you who are reading? Aren't you somebody?>>

To those eyes, not unless you're a talking head on teevee, no.

It sucks that so many loved ones will die, for being idiots.

But in nature, the stupid (or gullible, or trusting) don't survive long. We are beginning a reversion to mean in this regard. Stupid will soon = extinct, again, even (or especially) for the human species. Those of us who survive -- if we do -- are going to do so by avoiding the mass traps set for the stupid.

And yes, I hope the MSM will pay for their part in this. The stupid will die for being stupid, but the MSM -- and their parasitical betters -- must die for being criminal, or none of us will make it. I hope those who are left will see to that.

Sun, 06/28/2015 - 20:37 | 6247055 Tall Tom
Tall Tom's picture

It sucks that so many loved ones will die, for being idiots.

But in nature, the stupid (or gullible, or trusting) don't survive long

 

My brother has a 150+  IQ and works as a Systems Analyst, a Computer Whiz. I stand in his shadow.

 

He does not see this as a result of indoctrination combined with misguided faith.

 

He lacks the relevant information and cannot emotionally process negative messages.

 

But that does not change the fact that he is a Mathematical Genius.

 

Some very smart people will also die as a result of this also.

 

But damn it. He is my brother.

Sun, 06/28/2015 - 17:06 | 6246179 new game
new game's picture

ah, not sure i want to sit. thinking running to somewhere, but not sure where. 360 degrees of decisions...

Sun, 06/28/2015 - 19:32 | 6246838 Yancey Ward
Yancey Ward's picture

Musical Caskets is the game being played.

Sun, 06/28/2015 - 16:21 | 6245950 MsCreant
MsCreant's picture

Not only American Pie.

Sun, 06/28/2015 - 16:28 | 6245975 Winston Churchill
Winston Churchill's picture

I will let you know if/when I get that call to gather up treasured hierlooms ,kids and grandkids,

from my clients..Those will not be left behind.

It  hasn't happened yet.

Sun, 06/28/2015 - 18:15 | 6246519 Not Too Important
Not Too Important's picture

No call if there's no place safe to run. How many of your clients are just going underground?

Sun, 06/28/2015 - 18:58 | 6246715 Winston Churchill
Winston Churchill's picture

None that I know of, and I would have.

They do have overseas boltholes though,and some have large yachts >100 ft.

Sun, 06/28/2015 - 16:52 | 6246100 gimme-gimme-gimme
gimme-gimme-gimme's picture

Opa!

 

May the traders just from the building windows and their blood run in the streets!

 

If the CB's decide to pull out the pluge protection algos', may it be costly to them as well!

Sun, 06/28/2015 - 16:04 | 6245894 Dragon HAwk
Dragon HAwk's picture

To the store Jake... we need more Popcorn..

 Monday is going to be Interesting...

Sun, 06/28/2015 - 16:17 | 6245933 Wookie
Wookie's picture

My thoughts exactly, time to melt some real butter and pour on the plain popcorn......this is going to be fun. But just when I thought that in the past, my silver gets monkey hammered down....this feels different, but who freakin knows, good to be hedged properly with the real deal. I will sleep like a freakin Joey in Mama's pouch.

Sun, 06/28/2015 - 18:24 | 6246570 Renfield
Renfield's picture

<<this feels different, but who freakin knows>>

That's the FUN of centrally planned, gov-controlled 'markets', innit?

There are NO market signals left, to tell us what's really going on.

The only way we'll know for sure it's real is when the real parasites start dropping. (Not just their political fall guys.) THAT, they won't have planned.

A market fall -- including this one which really hasn't happened yet -- counts for nothing when there are no real pricing signals left to watch. It's like trying to tell when the storm has started, when you're wrapped up in cotton wool, blinders, and earplugs, inside the house. The only way you'll really know, is when the house blows down on top of you.

Sun, 06/28/2015 - 16:37 | 6246030 RiverRoad
RiverRoad's picture

Ahh so.....mark to market.

Sun, 06/28/2015 - 16:47 | 6246081 ThroxxOfVron
ThroxxOfVron's picture

NO SHIT.

"A market-based credit system requires market pricing of capital assets as a prerequisite for market funding. The assets are collateral for the funding, and if the market does not believe the asset prices then it's going to be pretty hard to get the funding, and if the private sector won't fund private holding of the Fed's asset positions then exit is de facto impossible. "

 

Go talk to Kanjorski about that, dumbass.

Sun, 06/28/2015 - 18:23 | 6246566 Chauncey Gardener
Chauncey Gardener's picture

Groundhog day again?

Sun, 06/28/2015 - 16:04 | 6245895 This is it
This is it's picture

Awwright! This is good news right?

Sun, 06/28/2015 - 16:17 | 6245937 Tall Tom
Tall Tom's picture

If you celebrate Fraud and Corruption and invested your energy and Capital into that then this is very bad news, the worst of news.

 

So I am celebrating!!! These events are music to my ears.

 

Short Fraud and Corruption.

 

Long Honesty and Justice.

Sun, 06/28/2015 - 16:06 | 6245902 davidalan1
davidalan1's picture

And to think LCTM was run by the smartest guys in the room, much like Enron..

Seems life leaves clues..

Sun, 06/28/2015 - 16:08 | 6245909 Carpenter1
Carpenter1's picture

Translation - Bulls are FUKKED

Sun, 06/28/2015 - 16:09 | 6245912 Mrs. Cog
Mrs. Cog's picture

Is this a re-run? I think I saw this episode already. This is the one where they rewrite the definition for credit default event, right?

Sun, 06/28/2015 - 16:18 | 6245940 espirit
espirit's picture

Yes Mrs. Cog, thar be some Deja Vu at work here.

Sun, 06/28/2015 - 16:25 | 6245966 disabledvet
disabledvet's picture

More like "verja de"...that feeling that where you are is a place you have never been before.

There is no problem with liquidity in the USA...this is the biggest energy boom ever seen in global history going on here.

The problem is that prices are too LOW would appear.

Since when is that bad news for an economy?

"Too much product too cheap"'is a full blown catastrophe?

Sun, 06/28/2015 - 16:31 | 6245991 espirit
espirit's picture

The problem is that retail sales suck wind when they raise fuel prices.

Too much, and the peeps quit working altogether.

Sun, 06/28/2015 - 16:36 | 6246022 disabledvet
disabledvet's picture

We have free energy now in the form of a Tesla Model S.

In Greece "they have enough gasoline to last a week."

Sun, 06/28/2015 - 18:24 | 6246573 azusgm
azusgm's picture

Where do I get a free Tesla Model S?

On a practical basis, if the cost of the energy production/management is not factored in, the energy is not free.

Sun, 06/28/2015 - 17:21 | 6246078 Tall Tom
Tall Tom's picture

"Too much product too cheap"'is a full blown catastrophe?

 

 

Disabledvet...

 

Ask the people over at Douche Bunk who took out the leveraged long positions on Oil when it was at $70...

 

They are INSOLVENT as a result.

 

We do not need inflation.

We do not need deflation.

 

WE REQUIRE STABILITY for construction of a solid foundation upon which to build an economy.

 

Other than that the economy will fail and crumble.

Sun, 06/28/2015 - 16:48 | 6246085 Al Tinfoil
Al Tinfoil's picture

'"Too much product too cheap"'is a full blown catastrophe?'

It seems to me that "Too much product too cheap" is indeed a problem for those that invested too much to produce it, and a problem for those that lent the money to the producers who now cannot meet the debt payments.

Too much product too cheap would seem to be a boon to the consumer, but if the consumer is operating on credit, and the credit system freezes up, or if the consumer maxes out his/her credit limit, the consumer cannot consume.

Sun, 06/28/2015 - 17:02 | 6246156 ThirteenthFloor
ThirteenthFloor's picture

+1. Let me finish that thought. No one buys, capital leaves the market. Factories close down unemployment grows.

With your comment above the balance by me you have the astonishing results of QE.

Sun, 06/28/2015 - 16:40 | 6246042 kaiserhoff
kaiserhoff's picture

It comes down to the definition of "is".

Yup, Ground hog day;)

Sun, 06/28/2015 - 16:47 | 6246055 falak pema
falak pema's picture

Its a recurrent bad dream. 

Once upon a time a king said he wanted a harem. It got so that he could not satisfy the women who had come to have high expectations given that boss man being Sultan was supposed to have xtra superhuman energy.

Turned out the emperor had no bullets and was moar slothful than the cheapest and thinnest of his eunuch slaves; one nutted creatures who could perform better than god's anointed big hitter of home runs.

One day he said to his most fragile slave : I want a default swap I want you to perform in my place. The guy put on such a show the Sultan said: Everytime I default I want you to pinch hit for me. In the course of a year the pinch hitter had lost 10 pounds and the Sultan thought he could fake it more and more.

And then one day the poor pinch hitter just faded away and now the Sultan had to step up to the plate and swing for state! 

He could call time out once, twice, thrice but then Time caught him by the nuts and said : either you perform or your nuts gets roasted and your butt gets toasted, Sultan or no Sultan, i'll tan your skin until it burns.

And that was the sad end of the Sultan who went down as a failed nut cracker who had lost his symphony. 

Moral of story : if you want your skin tanned and your nuts hot and roasted avoid Sultans and stick to doubting Thomases who sing "I'm cognitive but i'm not toasted."

Sun, 06/28/2015 - 20:02 | 6246950 TeethVillage88s
TeethVillage88s's picture

Stunned to find you are a joke teller!

Sun, 06/28/2015 - 16:49 | 6246061 Tall Tom
Tall Tom's picture

The declaration of that event is moot and irrelevant Mrs. Cog.

 

For the past few days I have written essay upon essay describing that whether or not a Credit Default is declared the end rusult is that Banks will become insolvent.

 

In fact an article on Zerohedge pointed that out TODAY.

 

http://www.zerohedge.com/news/2015-06-28/why-ecb-suddenly-has-huge-headache-its-hands-one-chart

 

The key paragraph in that article was as follows...

 

Incidentally the chart above is why earlier today Varoufakis said that "if ECB were to stop support for the Greek banking system would mean that Europe has failed." Because if indeed the ECB were to pull the carpet from under Greece as it hinted it would do on Tuesday when the Greek program runs out, when it froze the Greek ELA despite the ongoing Greek bank run, it would promptly set off a chain of events that would not only crush the Greek banking system but destroy any credibility Greek sovereign collateral had as a state, impairing all Greek national and corporate collateral, including bonds and loans currently held by the ECB, to zero.

It would also mean that as that €126 billion or so of total ECB/Eurosystem claims on Greek banks were "charged off" in case of a terminal Greek "event" then the entire ECB capital buffer would also be wiped out, leaving the ECB with negative equity. Translated: dear Eurosystem members: we need more cash.

 

In a comment which I posted in response to that article I pointed out that

 

First and foremost this means that THE EUROPEAN CENTRAL BANK IS INSOLVENT. That IS THE TRANSLATION.

 

I made certain that the reader understood that "CAPITAL BUFFERS" are just another label for FRACTIONAL RESERVES.

 

Then I pointed out the similarity of what happened in 2008 WHEN AMERICAN BANKS became UNDERCAPITALIZED....which was a resultant GLOBAL CREDIT FREEZE...which came within HOURS of DESTROYING OUR SYSTEM.

 

Then I pointed out that every single BANKER..IN THE WORLD...is going to be asking the same question as to which European Banks are INSOLVENT..OR NOT...and make decisions to extend them OVERNIGHT LOANS.

 

Of course this leads to GLOBAL CREDIT FREEZE II.

 

Then I used whatever semblance of wit I could muster to finish the essay.

 

I, of course, CELEBRATE the COLLAPSE OF FRAUD AND CORRUPTION.

 

Now you may read my essay here...

 

http://www.zerohedge.com/news/2015-06-28/why-ecb-suddenly-has-huge-headache-its-hands-one-chart#comment-6245570

 

And to be very honest there is not enough LIQUIDITY, GLOBALLY, to bail out the $1,500 TRILLION DOLLAR DERIVATIVE MARKET.

 

I implore you to read both the article and the comment and point out any flaws in my logic.. In a macabre sense I hope that I AM WRONG. But I do not think so.

 

 

Sun, 06/28/2015 - 16:55 | 6246115 falak pema
falak pema's picture

Even the Pope thinks this system poops all the time. He has hired Naomi Klein to dance the boogey boogey with him to the tune of : This Pope don't sing global warming is God's will be done. 

The Encyclical on climate change is "God's will be done" and now puts the Fossil chain squarely in the Devil's camp.

Alleluiaa !

Sun, 06/28/2015 - 19:17 | 6246767 TeethVillage88s
TeethVillage88s's picture

While the Bible in its many versions is our main history book until 150 years ago, it is the proof of how long a conspiracy can last.

I kinda like what da pope been sayin', except for climate control bank incorporated.

But that is a stingy org with big coffers.

Quasi Christianity is like Quasi Capitalism of Wall Street & London and Quasi Government of the people in VICHY DC.

Moo. Moo. Baa. Baa.

Okay, sorry for dividing ZH.

We can rally around the life of our Saints or Great Men and enjoy celebrating the life of Christ.

But the Financial Schemes of Bankers, Lawyers, Judges, Lobbyist, Foundations, King Makers, Mayors of the Palace, and politicians... they gonna kill us.

Sun, 06/28/2015 - 16:57 | 6246130 Al Tinfoil
Al Tinfoil's picture

Super Mario Draghi has already come out saying he and his ECB will do "Whatever it takes" [again] to deal with the Greek poblem.  It sounds like you doubt Super Mario's abilities.

On the other hand, this might be the greatest opportunity in modern times for the Rothchilds and their friends who run central banks to use a few electrons to fill bank accounts, and end up owning just about all market and financial instruments that exist.  Nathan Rothchild would be smiling down from his cloud.

Sun, 06/28/2015 - 17:26 | 6246300 Tall Tom
Tall Tom's picture

Well the Greece Fire seems to be out of his control as there is now destruction and rioting in the streets.

 

All of thse electronic inputs can buy up some Carbon in the form of Embers and Ashes. I guess.

 

They may own the Financial Instruments. They may own the Market Instruments...all of which are abstract.

 

But the tangible wealth is heading into a very real firestorm of destruction.

 

What good will it do them?

Sun, 06/28/2015 - 18:28 | 6246602 Renfield
Renfield's picture

The Troika is counting on that Greece fire to torch the current Greek government... and not touch them.

I'm not even gonna say good luck with that. They may succeed in dethroning the Tsipras goverment. But the status quo since 2010 is history now in Greece, and nothing the Troika can do will bring it back.

If they want to subdue Greece now, they're going to have to use open force.

Sun, 06/28/2015 - 19:04 | 6246740 TeethVillage88s
TeethVillage88s's picture

I'm going to read your linked Comment, Tom.

You sound like you understand the system much deeper than I.

I would posit that the Rothschilds may have owned and controlled all Anglo Countries since the Napoleonic Defeat against Wellington.

So now on the brink of full globalism, one world government or nearly... I would hazard that Banking Collapse could mean a new world order of Banker/Corporate Rule in the Western World. And my sense is we are more similar to the Chinese government already than we care to admit.

Timing would be Great with TPP, TTIP, TISA, TAA, TPA all lined up.

Sun, 06/28/2015 - 19:56 | 6246927 TeethVillage88s
TeethVillage88s's picture

I posted same on article.

There is a topic which I have discussed with my Father about.

Where are the Capital Reserves, which kinds are they, can we quantify the requirements, and stratify them for bullet charts or discussion.

Basel III plays into this.

- There are Bank Reserves deposited at the US Federal Reserve
- There are Fractional Reserve Deposits held as Deposits on which Banks make Loans
- There are Capital Reserves for the Bank itself which are separate from deposits, and which could be located in different places or accounts
- There are Capital Requirements which maybe different or the same from those at the Federal Reserve and which exist at the Bank or in an account or place of their choosing

All I'm wondering is if there are 4 different Capital Reserve Accounts, what are they, and what are the percentages to deposits that they operate under. Basel III would seem to be the standard.

- But we have state banks, National banks they are all private banks. Then you have Private Hedge funds or Shadow Banking. And you have Public Banks. I think Credit Unions are considered Private Banks.

Ah, well I probably waste most of my time. I should be able to read fast, but can't. That is why I ask.

Sun, 06/28/2015 - 21:00 | 6247082 Tall Tom
Tall Tom's picture

I do not know the percentages of allocations or if the allocated balances are fraudulently double accounted...or not.

 

With all of the Fraud and Corruption which is rife within the system I just cannot trust that any rules are being followed at all or any reporting from these Fraudulent Institutions whatsoever.

 

So I do know that any unwind will be complicated at best and impossible at worst.

 

And with the information that I have, and that is very little, my bet is for the worst.

 

See my response on the other thread as well. Thanks.

Sun, 06/28/2015 - 23:45 | 6247740 TeethVillage88s
TeethVillage88s's picture

Tom, Thanks for the Response. I seem to make a good Doc Holiday at this point.

We all can demand to see the actual numbers in a Conservative Audit of our Banks, Governments, Corporations and all local bonds. This means we can audit our Financial Ratings Agencies for the Overhead, Executive Compensation, Admin Costs, Perks for the Executives, and compare to normal citizens on the street.

But I think it will take bustin' some heads.

I think the USA is headed down the Tubes.

What? US Presidential Candidates posit that we have a government of the People!!! What!!

@#@%$&#@ Yeah.

I hear Money Talk now saying that FDIC has enough to cover all banks or to cover the banks that fail... What an Estabilishment Propagandist.

Money Talk.

Well I am interested in the specific capital reserves for banks and have to research more. I have so much to learn.

The pull from mark to market in our markets is a great risk. If we don't have real markets, then it is something else. But this is just as you have stated above.

Scaring people to invest or to buy a program... is criticism. Most of Capitalism is selling useless shit.

- Signed Robot

Damn, drank like 3/4 of 750 ml.

Late Add:

- 2013 Total FDIC Trust Fund in Treasuries = $36.9 Billion + $18 billion in the DIF (Risky)

Understand, there is no attempt to repair, maintain, monitor, track, implement, or fund the FDIC. While the FDIC is touted as the Basis of US Banking & Security.

oops.

Wow.

What that hell am I talking about? Maybe people read this and think "Oh can't be right".

FDIC is Defunct.

- 2013 Total FDIC Trust Fund in Treasuries = $36.9 Billion + $18 billion in the DIF (Risky)

Mon, 06/29/2015 - 00:05 | 6247824 TeethVillage88s
TeethVillage88s's picture

Bob Brinker sounds like he is in a panic 6-28-2015.

RADIO show spinning out of control. I like the guy. Great voice. But doesn't reflect Banking Risk for Households, Nonprofits, Non-financials, Governments, or Financial organizations.

Money Talk.

FDIC, Bob??

How is Pension Benefit Guaranty Corporation doing Bob?

Negative $6 Billion?

2014 Monthly Treasury Statement 30 September 2014.*****

Pension Benefit Guaranty Corporation Outlays, 6 Billion a year to back up corporate Pension Corruption.

Bob Brinker = Kudlow?

Naw, Brinker is much better.

But what the hell. Brinker doesn't know FDIC Reserves or Deposits?

Brinker Sucks.

Mon, 06/29/2015 - 00:17 | 6247849 TeethVillage88s
TeethVillage88s's picture

Bob Brinker is a Shill for the SRO Exchange Markets.

Damn, if he is a market pumper like all the rest, then who can trust the markets?

Money Talk Radio Show.

Going Down. I love to listen to Money Talk. But I have been harmed by markets and by the Mafia VICHY DC USA that is in control.

I lose. You Lose. We both go Down. That is the American Way.

You screw me. I try to take you down.

You Screw Veterans, We take you down.

You refuse service to veterans, we refuse to answer your questions. We stand against you. You took over the US Government.

You the Corporate Government want answers?

Fuck you.

You didn't fund FDIC.

You have undermineded the US Banking/Pension/Retirement/Savings/Fixed Income/Social Charity System

Screw you Foundations.

Screw you Social Engineering.

Mon, 06/29/2015 - 14:44 | 6247887 TeethVillage88s
TeethVillage88s's picture

deleted.

Sun, 06/28/2015 - 16:10 | 6245914 TeamDepends
TeamDepends's picture

This is the captain speaking, we have entered a shit storm. No really, a shit storm. Never seen this before. We actually can't see anything. Probably not good for the engines. My advice to you is to place your head between your legs

Sun, 06/28/2015 - 16:24 | 6245964 Model T
Model T's picture

LOL. I liked that one.  I used to have a white shirt and shoulder tabs and take Japanese Tourists out over the Pacific Ocean to photograph the Whales when they were migrating. My friend who was a reitred United Airlines Pilot told me the white shirt with the shoulder tabs and the hat were important; cause they re-asured people. I have to admit I never got to anounce; "Attention, we have entered a Shit Storm"; but it would have been fun.

Sun, 06/28/2015 - 16:41 | 6246047 RiverRoad
RiverRoad's picture

and kiss your butt goodbye.

Sun, 06/28/2015 - 16:14 | 6245927 Antifaschistische
Antifaschistische's picture

So, what you're saying...is when someone buys a 10 year Bond, or a 30 year bond...they may actually need to wait 10 year or 30 years for the payout.   What a novel freakin idea.

What we live in, is a world where people have grown to believe that long term debts can be short term investments.  When this becomes group think...something will snap.

ps...and stop using the word "capitalism" in the same article where every paragraph is littered with the Federal Reserve, International Settlements Bank, etc.....there is nothing capitalistic about these organizations.

Sun, 06/28/2015 - 16:30 | 6245983 disabledvet
disabledvet's picture

If it's denominated in euros apparently...

Sun, 06/28/2015 - 16:17 | 6245938 ebworthen
ebworthen's picture

Let's get this party started!

And this time hang the bankers!

Sun, 06/28/2015 - 16:24 | 6245954 espirit
espirit's picture

eb, they'll be hanging themselves when they can't afford coke, hookers, ex-wives, girlfriends, Hamptons,  and Bugatti's.

 

Let it rain Banksters.

Sun, 06/28/2015 - 16:32 | 6245997 disabledvet
disabledvet's picture

You could send them off to Ukraine to have them say hello to their Russian Bankers...

Sun, 06/28/2015 - 16:38 | 6246031 Ace006
Ace006's picture

Not having Coca Cola seems a strange thing to kill yourself over.

Sun, 06/28/2015 - 16:43 | 6246059 espirit
espirit's picture

They'll definitely ex-out when they can't afford a Coca Cola.

Sun, 06/28/2015 - 16:17 | 6245939 Bighorn_100b
Bighorn_100b's picture

I'll believe it when I see it. Untill then, getting drunk on Saint Archer IPA. 7.0% alc/vol. never mind, already drunk.

Sun, 06/28/2015 - 16:20 | 6245947 Commodore64
Commodore64's picture

I live in Sweden. Am i going to die now?

Sun, 06/28/2015 - 16:26 | 6245969 Model T
Model T's picture

No, you'll be fine; just don't buy any bonds, and put part of your retirement fund in Silver Bullion.

Sun, 06/28/2015 - 16:30 | 6245988 813kml
813kml's picture

Wrap yourself in Swedish models to avoid contagion.

Sun, 06/28/2015 - 16:38 | 6246035 disabledvet
disabledvet's picture

How will Sweden survive with interest rates at two percent and zero euro problems????

(Starts singing Abba's "Dancing Queen" to himself...

Sun, 06/28/2015 - 17:07 | 6246183 commishbob
commishbob's picture

If I lived in Sweden my first order of business would be to find the hot blonde with the "NASTY" tattoo.

Sun, 06/28/2015 - 18:19 | 6246543 Not Too Important
Not Too Important's picture

And get the 'gift' that never goes away.

You'll lose some weight, though, there's that.

Sun, 06/28/2015 - 17:29 | 6246320 Jugdish
Jugdish's picture

Yes. You will get raped by a Somali or Algerian first though.

Mon, 06/29/2015 - 15:35 | 6250857 Stevious
Stevious's picture

No, you'll live as long as you grow a beard and forgo any alcohol.

Sun, 06/28/2015 - 16:22 | 6245952 Wookie
Wookie's picture

Is it me, or has the 800lb gorilla that has been in the room the whole time been that it's very ironic the creators of Democracy are the ones that finally had the balls to stick it to the bullies? It's not a done deal yet with the vote, but I sure hope that the Greeks heritage comes through in the end and they can hold their heads up high by sticking their fingers up to the Euro's. Their lovely way of life and islands are not going to disappear overnight, they will be just fine,just look at Iceland!

Sun, 06/28/2015 - 16:33 | 6245999 Model T
Model T's picture

I keep hoping they'll tell the Fucking French to Fuck Off, (the Euro is their invention and their game); but it seems unlikely. People have a hard time making real deal changing decisions. Greece has a long history of serial default and devaluation of the Drachma, combined with "muddling through"; no reason they can't go back to it.

Sun, 06/28/2015 - 16:27 | 6245974 rsnoble
rsnoble's picture

Take that fucking confederate flag down now!!! LMAO.

Even the distractions are a gdm joke.

Sun, 06/28/2015 - 16:39 | 6246040 espirit
espirit's picture

You left out that SCOTUS ruled that it is a CONstitutional right to be homosexual.

Sun, 06/28/2015 - 16:45 | 6246074 cossack55
cossack55's picture

Article 2, section 3 I think. Or maybe the 14th Amend., you know, the one that says whatever you want it to say. I wonder if the Oracle of Delphi was actually the 14th amend. in disguise?

Sun, 06/28/2015 - 18:59 | 6246721 azusgm
azusgm's picture

SCOTUS ruled that marriage is anything you want to call it.

Justice Kennedy said that it is a matter of dignity. (I thought he was supposed to decide constitutional issues, not emotional ones.)

Just wait until someone wants legal recognition and "dignity" for incest or bestiality.

Sun, 06/28/2015 - 17:28 | 6246315 Savyindallas
Savyindallas's picture

We need a massive ceremony of homos getting married while in the background a giant screen video of burning the confederate flag- Caitlan Jenner can preside over the ceremony - that should calm the markets by letting the world know the USA is in charge and tht all is well in the World.  

Sun, 06/28/2015 - 16:37 | 6246025 The Duke of New...
The Duke of New York A No.1's picture

Yellen just placed a huge order for new Ink Jet refills last week.

Sun, 06/28/2015 - 16:41 | 6246049 disabledvet
disabledvet's picture

"Exxon Mobil pays out another 25 billion in dividends in their current quarter...announced one trillion stock buyback plan

Sun, 06/28/2015 - 16:41 | 6246050 Fun Facts
Fun Facts's picture

The Credit Default Swap is a financial weapon of mass destruction.

Sun, 06/28/2015 - 16:50 | 6246095 espirit
espirit's picture

Yes it is, but the trigger mechanism is rusty.

Sun, 06/28/2015 - 16:48 | 6246084 WTFUD
WTFUD's picture

Get On Early Folks

The Large Bookmakers have just opened a book/market on Bankster Suicides/Deaths between now and the referendum in Greece, next week.

1-49 Ev.
51-100 7/4
101-200 9/4
201-300 7/2
301-400 6/1
401-500 14/1
501-600 25/1

33/1 Any other named Score

ALL claims will be subject to final examiner Death Certificates.

Sun, 06/28/2015 - 16:51 | 6246098 espirit
espirit's picture

I'm in.

Sun, 06/28/2015 - 17:21 | 6246277 Stormtrooper
Stormtrooper's picture

Give me the 33/1. Sure bet! And then, in round 2 ...........

Sun, 06/28/2015 - 16:59 | 6246140 BI2
Sun, 06/28/2015 - 21:37 | 6247258 tarabel
tarabel's picture

 

 

The only creature piling it on is thou.

The same nazi spam every day

At least change a word or two just for variety's sake.

Sun, 06/28/2015 - 17:15 | 6246230 Gunner
Gunner's picture

Easy, boy!

Sun, 06/28/2015 - 17:15 | 6246231 Gunner
Gunner's picture

Easy, boy!

Sun, 06/28/2015 - 17:15 | 6246232 Gunner
Gunner's picture

Easy, boy!

Sun, 06/28/2015 - 17:15 | 6246233 Gunner
Gunner's picture

Easy, boy!

Sun, 06/28/2015 - 17:17 | 6246253 Joebloinvestor
Joebloinvestor's picture

So some entity like a big financial institution/government(?) gets stuck with a big fat turd that is worthless and picked clean.

Since it is initially based on nothing of value, then I say retire it.

As long as it fulfilled it's original purpose, which was to grease the wheels of the financial world with fiat, then poof it.

On the other hand, they could start seriously prosecuting financial crimes.

NAH, just poof it.

Sun, 06/28/2015 - 17:44 | 6246387 Lady Jessica
Lady Jessica's picture
"Collapsing CDS Market Will Lead To Global Bond Market Margin Call"

Voellig uebertrieben.

(But secretely hoping that's not the case).

Sun, 06/28/2015 - 21:07 | 6247153 grunk
grunk's picture

When the going gets tough, the tough change the accounting rules.

Sun, 06/28/2015 - 21:48 | 6247321 q99x2
q99x2's picture

Good. The less government the better.

Mon, 06/29/2015 - 02:41 | 6248067 polo007
polo007's picture

According to Macquarie Research:

http://personal.crocodoc.com/lHeFs3w

China drama & Greek farce

Are Central Banks at the end of the road?

Greek and Chinese dramas question role of Central Banks…

- The latest developments in China and the Eurozone inevitably invite the question whether Central Banks are coming to the end of the road. Given the limited impact of their policies on real economies with stimulus largely being confined within walls of financial assets, has the time of reckoning finally arrived?

- As discussed in the past (here & here), the only sustainable LT outcomes for the over-leveraged and over-supplied global economy are either: (a) allowing the deflationary cycle to go through, thus eliminating global excess capacity in service and merchandise economies; (b) elimination of excess debt via some form of hyperinflation and/or co-ordinated debt cancellation; or (c) banning capital markets via nationalization. Given that neither of these alternatives is attractive, involving pain for either borrowers or savers; intergenerational transfers or courting sharply lower ROIC, CBs would rather kick the can down the road in the hope that a solution would be eventually found.

…and should CBs place monetary policies in neutral gear?

- PBoC’s half-hearted attempts last week to slow the pace of appreciation of the equity market have inevitably and predictably resulted in severe correction. The double-barrel reduction in interest rates and RRR on Saturday is a belated realization that it is courting a significant economic backlash. As discussed here, we do not believe that China’s de-leveraging is either possible or desirable. Having reached leverage of ~3:1, any debate about the evils or virtue of debt has passed a long time ago, and the only viable choice from now on is to continue leveraging, though perhaps at a somewhat slower and safer pace.

- In order to continue leveraging, PBoC has to make sure that: (a) there is no sharp correction in any of the key asset prices; (b) at least some asset prices are appreciating; and (c) there is no further contraction in nominal GDP. This requires a combination of exceptionally stimulative monetary and fiscal policies as well as trust that a country is not yet in a liquidity trap and that it is capable responding to stimulus in safeguarding nominal GDP. The game is no longer about reaching 7% real GDP growth but avoiding zero nominal GDP.

- The same dynamics are playing out in Europe. The battle is between politicians who have not yet grasped that deleveraging is no longer feasible, and the ECB, which is fully onboard. Whether Greece is allowed to exit does not alter the basic argument that the numbers do not work, unless leveraging continues.

China is at very early stages of stimulus

- We maintain that China is at an early stage of significant (probably the largest globally) stimulative action. We expect that over the next two years, RRRs would be reduced to historic levels (i.e. 5-6%); interest rates would be lowered to zero and fiscal spending would become much more aggressive (including multiple banking re-capitalizations). The only question is whether China would send a massive inflationary pulse through global economy or would aim for more moderate impact. Initially, the PBoC would be aiming for moderate outcomes, ensuring support for asset prices but avoiding more disruptive action. However as we progress into 2016-17, more drastic actions might be needed. In the meantime, we remain O/W MSCI China, as equities remain the least systemic asset class that can be leveraged, at least for now.

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