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Forget Glencore: This Is The Real "Systemic Risk" Among The Commodity Traders
Back in July, long before anyone was looking at Glencore (or Asia's largest commodity trader, Noble Group which we also warned last month was due for a major crash, precisely as happened overnight) which everyone is looking at now that its CDS is trading points upfront and anyone who followed our suggestion last March to go long its then super-cheap CDS can take a few years off, we had a rhetorical question:
Which will be first: Trafigura, Mercuria or Glencore
— zerohedge (@zerohedge) July 22, 2015
Judging by what happened less than two months later, it appears that we have our answer: for now at least, Glencore, which is now flailing and which Bloomberg reported moments ago is set to meet with its bond investors tomorrow (supposedly to allay their fears of an imminent insolvency), is firmly the "answer" to our rhetorical question.
And yet, something stinks.
First, a quick look at Trafigura bonds reveals that the contagion from the Glencore commodity-trader collapse, which "nobody could possibly predict" two months ago and which has rapidly become the market's biggest black swan, has spread and we now have a new contender. And while Trafigura's equity is privately held, it does have publicly-traded bonds. They just cratered:
... sending the yield soaring to junk-bond levels.
As discussed below, this may just be the beginning for the company which, because it does not have publicly traded equity - but has publicly traded debt - has so far managed to slip under the radar.
But who is Trafigura? Only the world's third largest private commodity trader after Vitol and Glencore.
From the company's own description:
Trafigura is one of the world’s leading independent commodity trading and logistics houses. We’re at the heart of the global economy. Every day and around the world, we are advancing trade – reliably, efficiently and responsibly. We see global trade as a positive force and we go further to make trade work better.
More important than some pitchbook boilerplate, is the company's history: Trafigura was formed in 1993 by Claude Dauphin and Eric de Turckheim when It split off from a group of companies managed by Marc Rich, aka "the king of oil" in 1993.
Who is March Rich? Why the founder of Glencore of course who as a reminder, was indicted in 1983 on 65 criminal counts including income tax evasion, wire fraud, racketeering, and trading with Iran during the oil embargo. Upon learning his prison sentence may be as long as 300 years, Rich promptly fled to Switzerland; he was so afraid of US authorities, he even skipped his daughter's funeral in 1996.
Marc Rich got a presidential pardon from Bill Clinton in a decision which was blessed by the kingpin of corruption, former DOJ head Eric Holder. Clinton himself later expressed regret for issuing the pardon, saying that "it wasn't worth the damage to my reputation."
But back to Trafigura, whose summary financials reveal that the company - with $127.6 billion in revenues in 2014 and $39 billion in assets - is absolutely massive. In fact, in terms of turnover, it is virtually the same size as Glencore.
But the most important and relevant numbers are on neither of the pretty annual report grabs above. They are highlighted in red in the excerpt from the company's interim report: the $6.2 billion in non-current debt and $15.6 billion in current debt for a grand total of 21.9 billion in debt!
Now, this is less than Glencore's $31 billion (the implication being that Trafigura has a solid $6 billion equity cushion although judging by the bond plunge the market is starting to seriously doubt this) but the problem is that Trafigura's EBITDA is lower. Much lower.
According to CapIq, Trafigura had $1.8 billion in LTM EBITDA, suggesting a debt/EBITDA leverage ratio of a whopping 12x. If one wants to be generous and annualizes the company's disclosed 6-month EBITDA (for the period ended 3/31/2015) of $1.1 billion, the EBITDA grows to $2.2 billion. This lowers the debt/EBITDA for Trafigura to "only" 10x.
Indicatively, Glencore's own debt/EBITDA, and the reason for so much conerns about the company's solvency, is about half of Trafigura's.
At least on the surface, it appears that Trafigura, which is as reliant on the ups and down of commodity trading as Glencore, is far more levered, and exposed, to any commodity crush than the Swiss giant.
But what really set off our alarm bells, is that a quick skim through the company's annual report reveals something disturbing: a commissioned report titled "Too Big To Fail: Commodity Trading Firms and Systemic Risk" whose purpose was to explain why, as the title implies, commodity trading firms are not systemically important. The timing, just months before a historic rout for commodity traders, is odd to say the least.
As a general take, any time someone first brings up, and then tries to talk down the impact of something as being "Too Big To Fail", run.
More seriously, there are two problems with this analysis: as events in the past week have shown, commodity trading firms clearly carry a systemic risk: after all, one after another news outlet rushed to explain why yesterday's market plunge was the result of Glencore fears. It would have been the same with Trafigura's equity plunge... if the company had publicly-traded equity instead of just debt.
The second problem is the subheader to the paper:
Trafigura commissioned a white paper this year on commodity trading firms and systemic risk. Its author, Craig Pirrong, explains why he believes these firms are unlikely to have a destabilising effect on the global economy.
The paper's conclusion: "Commodity trading firms are not a source of systemic risk."
Oops.
Who is Craig Pirrong? As the NYT explained in a 2013 article titled "Academics Who Defend Wall St. Reap Reward", Pirrong, a University of Houston professor, is just a member of that all too pervasive "paid expert for hire" group, academics without actual credibility inside their own circles, and who as a result will "opine" on anything and everything - usually involving Wall Street regulatory and "risk" matters, just to get paid.
This is precisely what Trafigura did when it commissioned him to "explain" why Trafigura is not systemic. Ironically it did so in August, just as all hell was about to break loose for the commodity traders, especially the most systemic ones.
And while the market has shown how the paid opinions of such "experts for hire" should be completely ignored, the question remains: just what was Trafigura so concerned about when it commissioned a well-compensated study meant to goal-seek the company's explicit conclusion: that it is not systemic, when it obviously is.
Opinions aside, at the end of the the market will decide just who is systemic and who isn't. One look at the price of Trafigura's bonds above has given us the answer: it is a move comparable to what happened to Lehman bonds - if not equity - the day after the bankruptcy filing.
Clearly the Lehman bonds could not believe what just happened until it was too late. For Glencore, and increasingly Trafigura, the bond price is finally signalling the realization that "this is indeed happening."
* * *
We'll save our discussion of Mercuria for another day.
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Just BTFD
What can go wrong ??
They're coming for you......
https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/pictures/2012/10...
Ponzi.
If the insolvency of these trading platforms leads to a meaningful loss in campaign contributions, then these firms are critical to the system and must be saved at any cost to the taxpayers.
s/
SHUT.THEM.DOWN.
Geez, you guys (The Tylers...whoever you are)...
I hope you guys are as good at predicting your own fate and that of ZH in the months and short year(s) to come as you are about predicting the fates of all these massive companies that are crumbling and taking the world down along with them.
You're not exactly "under the radar" anymore. And I have this reeeeeaaaaally bad feeling that one of these days TPTB are going to blame you guys for all these problems. They'll call you "economic terrorists" or some such type of fucked up thing, and put all targets on you for doing the research and for explaining your analysis to those of us who read ZH as the cause of all these problems...they won't blame the companies or the greedy banksters or the scumbag, treasonous politicians and Quadrillions in debt they created.
They'll blame it all on you for ever saying anything about it for so long. It only makes sense this will happen, because as we all know now in this fucked up world:
“Truth is treason in the empire of lies.”I sincerely hope you guys have a good bug-out plan in order.
And before you blow up the server farm (wherever it may be), please wipe all user accounts clean. Do us a solid "Hilary" on the entire archive and shoot us all a heads up so we can get a head start too before our doors get pounded in by the "Truth Police" storm troopers.
Tyler: You’re gonna start a fight and you’re gonna lose.
The real question is how are Mortimer and Randolph doing?
https://www.youtube.com/watch?v=emvySA1-3t8
Damn you ZH, you destroyer of companies!! <shaking fist>
I am become debt, destroyer of worlds.
I'd upvote you SA but i'd inevitably be put on 'the list'.
P.S. Consider this my tacit approval <wink>
SELL !!! SELL !!!! SELLL !!!!!!!!!
https://www.youtube.com/watch?v=obAoPP1bdIM
"Opinions aside, at the end of the the market will decide just who is systemic and who isn't"
In what "end" are you referring to? it seems that TPTB are the ones who decide who gets saved and who gets cannibalized and there's a massive amount of special interest affirmative action at this level. So much so that a Presidential Pardon will even be used if needed. So....Clinton didn't think the millions he probably got 'under the table' was worth his reputation!! What a bunch of shit.
ZH was on the top ten financial blog list in the Wall Street Journal years ago.
And, I may be wrong on this, but the Tyler type isn't the bunker/canned food/ammo for miles type.
There's no bug-out plan. Just a lotta booze and swanky ladies phone numbers for the Last Waltz, if and when that time comes.
Just guessing.
Most people who think 'THEY' can just 'get out' are idiots anyway.
A lot of present virtual company excepted, of course!
Ow! Stop hitting me with rifle butts and trench shovels! C'mon!
What?! Are you calling me an idiot? Listen, I invested a lot of my money to build a spacehip by a Nigerian company. Sure, I haven't tested it. But if things go wrong, I'll just hop in and I am out. And when I am looking out of my cockpit to planet Earth - I will think about your words, Mister!
If that doesn't work out you can collect the Nigerian bank money they are holding in your name.
Such is only true in China so far. Only the sellers and negative buyers go to jail for causing equity drops.
...please wipe all user accounts clean. Do us a solid "Hilary" on the entire archive and shoot us all a heads up so we can get a head start too before our doors get pounded in by the "Truth Police" storm troopers.
We have been archived all over the place on the net. It is far too late. They can wipe their servers clean and your posts, and my posts, will still be found. Furthermore they already know who you are.
So stop worrying. And when the time comes then you will not need someone else to tell you. You are quite capable for figuring that out on your own...I hope. From your posts it seems as if you are capable.
The day we have a legit Truth and Reconciliation trial, I will be holding my head up high.
The same can not be said of 'the other guys', regardless of how many billionaires they have been to mass orgies with.
@SA,
I saw what you did. And...
Oh, I'm sure that will be one of their defenses at their trial. That is before their conviction and execution ..
Why do I say this with high confidence? Well, you see after 11 years of imprisonment ('93-'04), and numerous assassination attempts, President Reagan's Secret Agent (Totten Doctrine [1875]) Amb. Leo Wanta, was observed at the Jan. 20, 2005 Presidential inauguration, sitting with top brass (aka generals). Later that year, at the World Series in Minute Maid Park, he waves at "Sr." pointing out that his security detail is bigger than his.
Now do pay attention to the following:
https://app.box.com/s/hfgvcqg7gqh7i27at6sv53ywu87lwarp (listen to the 11 minute teaser. notice where it mentions the military [meaning generals])
In the Dec. '14 interviews, Wanta relays that he has DHS protection. (yes, there are some good elements in the DHS, as there is bifurcation in all the agencies). So, if we can deduce that Amb. Wanta has superior security compared to the provisional head of the DVD, what does that tell us? It tells us that most of what we hear from the MSM (and unfortunately too much of the so-called alt-media) is BOVINE EXCREMENT! Let's put it in other terms via Jim Sinclair. It's all PSYOPs. So, let's do keep our eyes on -- the ball ..
Video: "We're growing prosperity by advanced trade".
WTF. What's that?
Advanced trade = trading the future today. Nothing left for tomorrow.
Just another way of saying this fraud is a pyramid scheme;)
Have you watched Looper? Basically, gold is traded back to this world and hid for future caches, and the future traders are essentially Blackwater mercs collecting on all the derivatives.
Yellen is laughing at this article.
Fear the Talking Fed.
What does blackened swan taste like?
Tastes like mutton.
… It’s very similar to eating crow.
Well...Properly served, it is traditionally overcooked after all. That is why it is charred. Some will mention that it is burnt to a crisp.
But do not worry too much. Dinner will be served...shortly. You will find out soon...soon enough.
Bon appatite. Choking on the ashes is not appropriate.
They serve an excellent black swan at the Goldman cafeteria - from what I've heard.
It's the equivalent of MUFF diving on the Wookie.
LMAO. But how do you know?
You'll definitely know when you hit the G-spot.
https://www.youtube.com/watch?v=WmVXJ3hQrPo
Few have lived to tell that tale
it's a little less gamy than bald eagle...
Yes, and not as salty, somewhere between California condor and spotted owl.
Lehman are still paying partial coupons. If you picked them up at 2cents on the dollar, you won!
BTFC (crash)
As Glencore and now Trafigura get flushed down the commodities market toilet, Marc Rich must from his grave be laughing at what happened to these companies. Now if only Stemcor, the giant Oppenheimer trading company, files for receivership as its debts become insurmontable. No doubt, they will turn to Tony Blair, former UK Prime Minister, who is close to MP Margaret Hodge, the friend of pedophile degenerates, as she proved when she headed the London Borough of Islington. Hodge is a member of the Oppenheimer family who made it to Parliament when a long term MP died suddenly, leaving an opening. Exactly as what happened for Tony Blair, who became head of the Labour Party in 1994 after party leader John Lewis died suddenly of a heart attack.
John Lewis is a department store. John Smith was the guy who died.
Exactly right. I looked up Smith's name in wikipedia to double check when he died, then somehow put in the wrong name. The facts about MP Margaret Hodge are the main reason I made this posting.
If nothing else, the mushroom cloud should be awesome......
@proofreder
I'm calling a moratorium on "BTFD" comments. All.Done.Now.
BTFD.
DJIA 30,000 in 2016. (Of course the US Dollar will not be worth a shit...)
As Foreign Markets at the periphery collapse the wealthy oligarchs in those Nations will transfer their funds to the USA. We will be the last to fall. But we will fall.
I wouldn't count on order. Once the developed economies really start going, we're all going to go quickly.
Holy FUCK is this bullish!
Since June 2015 GLEN is down 70%. But today is up 11%. WOW! Of course, the -70% since June includes the much touted 11% rise today. LOL.
Worst should be over, right?
... right?
Don’t worry! The Fed’s got your back… and your front… your sides… your top… your bottom… your house… your wife… your kids…
All your base...
...bitchez
I believe I can fly.
I like to imagine old lady Yellen trying to shoo all these black swans away with her trusty broomstick. Gonna need some bigger artillery, Janet..just try not to kill us all with it.
Hitlery borrowd Yellens broomstick.Prolly deleted.
Can you imagine those two and Pelosi playing the witches in MacBeth ?
… must I ?
I always hated it when I had to read Shakespear. I was never really interested enough to put my mind towards deciphering the language, and thus reading it was painful. Accordingly, I am not going to try to imagine Yellen, Pelosi and Hillary as the witches in MacBeth.
But I don't have to imagine them being witches at all.
You have to see Shakespear performed by a good company. Especially over-acted hammed-up comedies. The way it was intended for the rabble.
Shakespeare wasn't the author.
Or 3 Girls 1 Cup?!?
If you are not systemic you can avoid audits which would show your assets do not really exist.
Zing! Razor sharp there, keep up the great work.
The Emperor and his entourage have no clothes!
"Clinton himself later expressed regret for issuing the pardon, saying that "it wasn't worth the damage to my reputation." "
Ahh... yes... the old Clinton standard. Damn, I sold out too cheap.
really...$150 Million and counting...Clinton's apolgies are too cheap. He is a liar
Good thing there are no such thing as defaults anymore.
Yeah… Whatever happened to them?
We're saving them all up for a rainy day. Swans don't like to fly in the rain.
Marc Rich, Pincus Green, Vinnie " OLA ", Gary Cohen, Marc Fischer.
NYMEX in the World Trade Center.
Anglo American, Glencore and all those others including Koch Bros, are now all being caught up in the deflationary circle of commodity kings.
Oh when the Kings go marching up the Hill
Great Movie : The Hill... with Sean Connery.
https://en.wikipedia.org/wiki/The_Hill_%28film%29
Sisyphus and the Oligarchs of Rule Britannia.
Just remember that Pericles's Funeral oration--it served nearly word for word as template for Lincoln's Gettysburg speech--mentions the word "Hoi Polloi"...
Hoi Polloi = The Unwashed or the plebes; aka the majority. (for, of and by the people)
Hoi Oligoi = The aristocratic (arrogant) few.
As Thucydides relates during the War of the Peloponnese, Athens was about Hoi Polloi and Sparta was about Hoi Oligoi !
Hey Hoi Oligoi....how does it feeeel on that Hill ?
Every man for himself and may the devil take the hindmost!
falak
Best movie to represent our overlords is Breaker Morant. Time to find a scapegoat to blame for their dirty, greedy deeds.
Too big is failed!
Could this be shy the PPT has been working overtime since late last night...?
look at that nasty, scruffy bastard on the video. shave you bitch!
That's a relevant comment. OMG! A hairy-faced man! The horrors!
Remember, Gartman is a commodity bull... at the moment.
Ponzi
You forgot to mention this:
Trafigura found guilty of exporting toxic waste:
http://www.bbc.co.uk/news/world-africa-10735255
Complete scum bags
"Complete Scumbags...."
Sure are! I even remember watching the BBC progamme, I think they call it Panorama, from the time?
Trafigura'a actions came to most people's attention when they took out an injunction in the British Courts in a perverse attempt to bury any and all stories about the dumping of toxic waste in Africa being picked up and reported in the media. If I also recall correctly a UK satirical publication known as "Private Eye" published anyway and told Trafigura's lawyers to F... Off!
Exciting times indeed.
Cargill is a)the largest privately owned company in the world and b) is in fact the largest commodity trader in the world and c) will mop the floor, at 20 cents on the dollar, with the likes of 1)Glencore, 2)Trafigura, and 3)--just you watch, Dreyfus. Vitol will survive unscathed.
Funny story: I interviewed and got nearly hired as Cargill's Director of North American (something, something, mumble mumble). There were only two candidates left.
Then the VP doing the interviewing apologized and said the upper management had realized that they never hired anyone that high up who hadn't been in 'the Cargill Way' for most of their career. I guess they kind of forgot or this was specialized enough that they didn't have anyone so they let it ride....almost.
I hope 'the Cargill Way' encompasses more than the golf course jocularity, secrecy, and paranoic levels of loyalty that it appears to. Or, Cargill ain't cleaning up anything but their own entrails.
With all due respect to the family. It's just.....
We Ain't In Kansas/Ioway/Minnesoder No More.
Back in the early days of the dot com 1.0 Cargill had more profit, than Bill Gates' Microsoft, David Glass's Walmart, Jack Welch's GE, and even Lee Raymond's Exxon.
And yet thousands of mad tinfoil hatters cannot seem to put two and two together when trying to idenitfy them.
What a spectacle.
funny how you pull the ponzi master Goldman and JP Morgan out of commodities and all prices fall and the other players get destroyed. Who doesn't love an oligopoly....with access to an unlimited printing press
It is also strange that falling prices bring down giants,the public benefit.......our rulers don't,why can't our politicians and regulators see through this conundrum?
Craig Pirrong is a professor at the University of Houston (not Housing, haha). Sometimes I wish ZH would invest in a good copy editor...
Well, time for them to start lightening up on their booked/hedged shipping.
Time for route rates to "poop that corn."
Ooops... There went 16k in the dow.
I told y'all those DOW 15K hats would be useful again.
ZH:
Clearly the Lehman bonds could not believe what just happened until it was too late. For Glencore, and increasingly Trafigura, the bond price is finally signalling the realization that "this is indeed happening."
No, a better way to say this is that the market for bonds is pricing in the "risk" of a Lehman style event. Wrong or right, this is the current "market" for the risk of that. If you disagree, place your bets!
Should have done an IPO. What idiots.
Of course there will be a full scale investigation and forensic audit into the culprits behind the commodity rigging causing mass financial destruction.
Guys: stop worrying so much. DB just pledged some of their derivatives as collateral to a new fund managed by Corzine that is now plasantly long Trafigura 2018s. We're good.
Bullish!
commodity traders are useless parasitic cunts who will be first up against the wall when the revolution comes.
I find that doubtful. If most people started blaming the banks for their misfortune in a SHTF scenario, it isn't the executives or major shareholders that would be dragged out into the street, it would most likely be the tellers who know about as much of what their bosses are doing as the people dragging them out into the streets.
You want to start a revolution? We don't have the logistical supply trains to fight one.
meanwhile, somewhere near Queensland: 18000 Glencore coal-miners are watching their canaries....
Share market sheds $56 billion as commodities tank; Glencore crash shakes resourcesThe Australian share market has lost $56 billion in value, as a share price crash for global commodities giant Glencore raised fears about companies across the sector.
Despite carnage for local mining and energy stocks, nothing in Australia matched Glencore's near 30 per cent plunge in London overnight and a matching slump in Hong Kong on Tuesday.
Fears about the heavily indebted Glencore's ability to survive caused the rout in its share price and a surge in the cost of insuring its debt, leading many analysts to question whether this might be the commodity sector's Lehman Brothers moment.
Stockbroker Marcus Padley said the market scare on Glencore was based on an analyst report out overnight.
"If current commodity prices continue, in other words there's no bounce from here, then they've effectively said Glencore and Anglo American have no value," he told the ABC's The World Today program."Every analyst will be going through Australian companies working out how much debt they have, much like everybody was looking for who's in debt during the global financial crisis."
IG market strategist Evan Lucas said Glencore may have as much as $US50 billion in debt, and markets seem to have twigged to the implications of that last night.
"It's all stoked fears about: a) China; b) around the future of commodities; and, c) what does that mean about the future of those who do have a high level of debt on their balance sheet going forward into the uncertain future," he told ABC News.
http://www.abc.net.au/news/2015-09-29/australian-shares-tumble-on-steep-...
WR;)
That was yesterdays news. Todays close was up over 100 points or 2.1% again today. I guess there are still true believers out there in BTFD.
Anyone want to guess their off balance sheet exposure?
"Clinton himself later expressed regret for issuing the pardon, saying that "it wasn't worth the damage to my reputation."
A-ha-ha. A-Ha-Ha-Ha. A-HA-HA-HA-HA... A-HA-HAABBBBBBBEWWWWWWEEEEHHAHHAHAHAHAHHAHHAAAA!!!!!!!!!!!!!!!!!!!!!!!!!!
when the bond price craters it's time to mark it zero
Current Assets - Current Liabilities - (30-50% write down in inventory from march 2015 should be close to toast)
And what about the Koch Industries?
Rehypothocated to shit is my guess. So when does the fed pull the plug?
The Fed is not going to pull the plug on purpose. If it is the Fed that pulls the plug, it will be by tripping over the cord.
Understand this: Pulling the plug will be a shitfest for everybody in any economy that even resembles being developed. Even oligarchs will be wading in shit.
They did it in 08 and it worked out great for TPTB. Look at how much dirrect control they ended up with. That has always been the goal friend.
HFT will run everybody down trying to exit. A few rules changes here and there. And simply take the rest with margine calls on your banks funds.
We did not get here by chance. They wanted this for a reason. Theft is the reason.
Edwin Star asked the question. War, whats it good for? A. Stealing gold by the train load.
Either this time around or the next, they are going to start breaking physical supply chains. They depend on them just as we do. Our entire global economy is a Ponzi scheme, and all Ponzi schemes collapse. Always. When this one goes, there will be no place to run. The only reason that the Fed did what the Fed did from 2008 on was to ensure that the theft could continue. It's been going on for a lot longer than 7 years.
One more big payday then the shooting starts.
in their defense they probably didn't think they were in danger of failing when they wrote that. in hindsight they probably wish they hadn't because they would probably love a crony fascist bailout right about now. pretty funny actually. marc rich sounds like a serious asshole, just the type to get a bailout even now.
The part that Pirrong misses is that the commodity futures are used at collateral in loans financed in China.
Moreover, money is a commodity. Not a popular Thing to say in economics, but a futures contract is a loan. If you have any knowledge of the gold standard, you know this is the case. Pirrong is arguing that commodities dealers shouldn't be regulated like banks because they're just intermediaries. Bullshit. You only make the argument of how big of a fraud fractional reserve lending is in the current banking construct.
That, and if commodities stop flowing, well fuck you. Fuck me too. Fuck all of us!
They are sitting on most if not all of the actual goods is my guess. Full spectrum dominace baby.
About a decade ago, there was a study done on the supply chain interactions required to get Swedish Ketchup to market. It was mind bogglingly complex for such a simple product. It gets far worse when talking about something like going from raw materials to a finished car. Break the wrong supply chain, and they can sit on a pile of iron ore all they want, it will do them no good. It will never get turned into a car. The economy is too complex to actually be controlled indefinitely by anybody. Remember, oligarchs eat, breath and shit, just like we do.
All that complexity works for them very well. We get billed for it. Remember they dont have to follow any rules. Prison labor is another ace up TPTB sleave.
It can and has been under tight control for a very long time. Trust me on this the oligarchs are very well insulated in a redundant fashion. MF Global is a fine example. Just scale it up.
Scale it up and you break supply chains. That means that things like food stop getting to supermarket shelves. Oligarchs are not insulated from the laws of nature, and that is what they will be up against. Without a working economy, they have nothing to skim.
We have a broken economy now. The supply chains keep rolling anyway. Force is how they will keep them going.
Looks to me all the pieces are in place.
It takes energy to apply that kind of force, and we stand to lose half of our most important energy supply. Again, they are up against nature. They will lose if they push it.
I never said it was a good plan. It will be comming down to will. Do they have the will to try and can we muster up the will to stop them.
I like the stall thing. We could all just simply stop everything dead cold where it stands.
At some point, they'll have to make some choices, and those choices will involve the production and shipment of basic necessities. Those of us in flyover country can make that choice for them. Few of them live where the oil is actually pulled out of the ground and few of them live where their food is actually produced. If it gets bad enough where that is being used as a weapon against them, the police in the relevant regions will have disappeared of their own accord.
Agreed. It comes down to will.
It comes down to will...
So, was it his daughter that produced his "interview"?
How close is he to her? (if it was her)
just wonderin'
Plus ten to the Breaker Morant movie comment. Rule 303. I hunted in South Africa with a PH whose grandfather dodged the Brits with rifle in hand on the family property I was hunting after the women and kids were hauled off to prison camps. If those hills could talk. Messy business is Empire building .
They were concentration camps. About 25% of the civilian captives died due to conditions beneath what 'prisons' provide.
http://www.boer-war.com/Details2nd/Camps.html
I never studied economics but learned everything I now know from the late,great Tanta, whose posts are archived at Calc. Risk.
If a firm is leveraged 25 to 1 and suffers a 5% swing against their position (see Copper now,and oil also) they are pretty much toast because they will need to find cash to meet the margin call from lenders to re-establish the prior lending/collaterol relationship.
They will need to sell "real" assets (not paper) in order to do this.This is where highly leveraged positions fall apart spiralling down in a flat spin.
The hedge fund LTCM took a large,longish position on the Russian Ruble in the late '90s (this was an unwise bet) .The FED stepped in,forced the Wall Street banks into a boardroom (at gunpoint?) and ordered them to sort it out under penalty of castration.
This was a huge,potentially catastrophic screwup but they were able to unwind the position over several years.Much strife could've been avoided (2008) if this firm had been allowed to fail.I think (guess) that if LTCM went bankrupt it could have started an avalanche of default thru counter-party exposure (derivatives,JPM?).
I only mention this because there was an issue concerning 400 tons of hypothecated Italian State gold involved which the big guys were very sensitive about discussing.
Yes, but all of this happened before TBTF.
Financial Chernobyl in the making...meltdown imminent.
'Nother:
http://www.vitol.com
http://www.theglobeandmail.com/globe-investor/investment-ideas/why-glenc...
Trafigura - 'Taking our cut wherever we can, however we can'
Fixed that strapline for you. MFs.
Damn..is this whole market infested with cockroaches..some have recently surfaced..are there more hiding in the shadows?
Naw. Those who just surfaced represent a rare exception to anotherwise fair and honest system. Don't be cynical.
Here are some signs of a coming recession.
http://michaelekelley.com/2015/09/27/vix-predicts-pits-while-pundits-have-fits/
http://www.zerohedge.com/news/2015-07-27/when-will-we-ever-learn/
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
http://michaelekelley.com/2015/02/24/would-you-pay-39-more-than-asked/
Here is how to respond.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Cybot to humanoid:
why does my algorithm not work when I need it most ?
An algorithm (pronounced AL-go-rith-um) is a procedure or formula for solving a problem.
The word derives from the name of the mathematician, Mohammed ibn-Musa al-Khwarizmi,
who was part of the royal court in Baghdad and who lived from about 780 to 850.
At a very young age Mohammed ibn-Musa al-Khwarizmi realized, that algorithms don't work,
during fundamental and structural systemic failures. (garbage in - garbage out)
WR;)
Anybody know any ETF's that contain Trafigura bonds? Been doing some research but cant seem to find any info. Any insight would be much appreciated!
Well Jim Cramer says everything is fine. That's good enough for me.
Will any of this effect used, junk box truck prices? The Van-Down-By-The-River is too small for the family and we're thinking split level box truck with master loft. Plus the higher ground clearance will accept shopping carts.. and the baby's milk goat.
Green shoots!
They will protect their own to the death. Your death that is.
I agree completely.