And Now, A Present: "Are The Brokers Broken?" - A Reprise

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 12/25/2011 - 12:25 | 2010357 diogeneslaertius
diogeneslaertius's picture

Thank You.

Sun, 12/25/2011 - 13:09 | 2010431 Manthong
Manthong's picture

Nice blast from the past.. thanks.

“now leaves regulators worried, given the scale of repo’s importance.”

Maybe the regulators aren't worried this time around because they are all on the payroll.

I have a suggestion for the name of the next policy maneuver.

I propose it be called the Progressive Overnight Notational Zirp Interchange.

Sun, 12/25/2011 - 13:27 | 2010449 Oh regional Indian
Oh regional Indian's picture

This is what I find interesting about news reportage and analysis in general.

It now seems to be common knowledge that AIG and MFG both failed due to excessive leverage, specifically in their London units where it is apparently legal to hypothecate the same collateral a hundred or more times over, to different parties. Or so MAx Kieser and Stacy told me.

What the heck is the point in any of these long winded discussions and papers and arguements?

There is a fractional collateralization scam being played out in London. Kill that loophole perhaps? First? That is huge. It has caused two humongous, system threatening shocks.

Are the brokers broke. No they are not, they are over-hypothecated.



Sun, 12/25/2011 - 13:36 | 2010462 LowProfile
LowProfile's picture

Are the brokers broke. No they are not, they are over-hypothecated.

Which actually means they are broke * 100.

Sun, 12/25/2011 - 14:30 | 2010500 spiral_eyes
spiral_eyes's picture

All I want for Christmas is free market capitalism. 

Sun, 12/25/2011 - 15:52 | 2010593 LeonardoFibonacci
LeonardoFibonacci's picture

To Lowprofile:  Hate to disappoint you, but brokers are still buying $250k Ferrari's by the truckloads!

Sun, 12/25/2011 - 17:42 | 2010692 e_goldstein
e_goldstein's picture

I wonder why, you can't eat Ferraris.

Sun, 12/25/2011 - 18:21 | 2010725 KickIce
KickIce's picture

I'm sure they are still charging commisions but if they are indeed losing money how much longer can they keep their clients.  I believe we saw this scenario played out several times in 2008 as well.

Sun, 12/25/2011 - 19:27 | 2010781 Sudden Debt
Sudden Debt's picture

Problems explained / Simplistic view

This rather brilliantly cuts thru all the political doublespeak we get.
This puts it into a much better perspective .

This shows how long daddy government can still fund the banks fucked up behavior:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts: $385

Sun, 12/25/2011 - 20:45 | 2010833 TheSilverJournal
TheSilverJournal's picture

Sudden debt, Rick Santelli basically agree with your numbers. If someone needs a video of it, click here to Watch Rick Santelli Make Government Math Easy.

Sun, 12/25/2011 - 20:50 | 2010839 strangeglove
strangeglove's picture

Intrest on debt 142710.00 @ .00025%=$35.0

Lobster for dinner

Sun, 12/25/2011 - 21:19 | 2010857 KickIce
KickIce's picture

Yeah, but I'm still the boss and have a kick ass health plan compared to my peasants.

Mon, 12/26/2011 - 14:05 | 2011944 ZeroPower
ZeroPower's picture

Wierd, our brokers over here are the ones buying us a friday lunch of wahtever we want (ordered in, of course) week in week out, just so that the next time someones looking for a fill on xy equity or credit product, we do it through Tullett as opposed to BGC as opposed to Cantor as opposed to THE LIST GOES ON. These brokers have nermous lawsuits against each other already, just because they try and win clients back since a lunch doesnt exactly keep a trader satisfied for long...

So no, i dont actually think brokers are buying Ferraris by the truckload.

Sun, 12/25/2011 - 18:17 | 2010719 KickIce
KickIce's picture

No, it means the ponzi will continue as long as there is not a run on PMs and food commodities stay reasonably priced.

 Commodity prices are key to this ponzi as is not waking the sheeple

Sun, 12/25/2011 - 22:46 | 2010968 Rynak
Rynak's picture

food commodities stay reasonably priced.


Sun, 12/25/2011 - 22:59 | 2010989 KickIce
KickIce's picture

With the amount of money printed I'd have to say very reasonable.

Sun, 12/25/2011 - 23:11 | 2011010 Rynak
Rynak's picture

You're not living in one of the countries to which inflation is "exported", hmm?

How about - 33% foodstuffs price inflation in one year? VERY REASONABLE? WTF? Technically, this is something in-between "typical fiat rip-off inlation" and "hyperinflation" (and together with static wages, in-between business as usual, and hyper-stagflation).

When does stuff stop being "very reasonable" to you - when it goes BOOM!?!?

Mon, 12/26/2011 - 00:32 | 2011156 Manthong
Manthong's picture

Those edible iPads are coming down in price a bit.

Sun, 12/25/2011 - 15:34 | 2010466 GeneMarchbanks
GeneMarchbanks's picture


The point of these 'long winded discussions', is that they are exceptionally helpful for those of us who are interested in the actual inner-workings of shadow banking. The hyper re-hypothecation scam has been a revelation into the horribly flawed logic with which this cotton candy 'financial innovation' fiasco.

Since much of the resources have now been fully backed into the financial sector in London, the rest of the UK has been marginalized as has been evident for the past thirty years or so. Cameron has to stand behind the collapsing banking oligarchs no matter what. Good-bye UK.

Sun, 12/25/2011 - 16:28 | 2010631 Al Gorerhythm
Al Gorerhythm's picture

I feel you ORI. After replying angrily to a poster about his demands of proof of manipulation of the PMs markets and you replied to my post offering empathy over my frustrations, it got me thinking about the anger in my reply and it made me realize that some of us have known or understood "The Game" for some time. What I have to remember is that the awakening has only just started and that there are literally billions of folk who don't have the message yet. It will be a long road and I just have to put aside my frustrations and hope that articles like this get the attention of one more sheep.

Are the brokers broke? The global reply to that is; if the world's monetary system is predicated on credit or debt or promises to settle accounts, rehypothecated promises, leveraged promises, and that account was opened on credit, and the credit was accepted without the means to settle (just like the $US since 1971), then the account holder is bankrupt from the start. How will the entire world settle a promise that has nothing backing the promise? It literally can't and we were warned by many.

It is obvious that the system is a sham but you can only see the sham if you accept the system as it really is and not how it has been portrayed. That takes a quantum leap.


Sun, 12/25/2011 - 18:14 | 2010709 Rusty_Shackleford
Rusty_Shackleford's picture



Are the brokers broke? The global reply to that is; if the world's monetary system is predicated on credit or debt or promises to settle accounts, rehypothecated promises, leveraged promises, and that account was opened on credit, and the credit was accepted without the means to settle (just like the $US since 1971), then the account holder is bankrupt from the start. How will the entire world settle a promise that has nothing backing the promise? It literally can't and we were warned by many.

The force is strong with this post. 



There is no spoon.

Sun, 12/25/2011 - 21:42 | 2010886 buckethead
buckethead's picture

This is my first exposure to this article. I must say, the language within would have been indiscernible to me just a few months ago. Reading ZH among others is a means for laypersons like me to educate ourselves.

I'm truly grateful for the re-run. It also helps to remind me that even within these corporations there are good people willing to call it like they see it.

I suppose that is what Tyler(s) is/are to begin with.

As grateful as I am for this site, part of me wants to take the blue pill.

Seeing a glimpse of truth is frightening.

Sun, 12/25/2011 - 23:08 | 2011006 StychoKiller
StychoKiller's picture

In essence, Shakespeare was right:  "Neither a borrower, nor a lender be."

Mon, 12/26/2011 - 09:29 | 2011597 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

Quite correct.

With the exception of our coin on which no interest is due, there is no money!


Mon, 12/26/2011 - 10:23 | 2011653 ZDRuX
ZDRuX's picture

There's limits on how many times you can rehypothecate something in the U.S. - the difference is in London you can do it virtually an unlimited number of times.


Rehypothecation is not "necessarily" a bad thing as its used in finance all the time to provide things like leverage accounts (you deposit $1000, but get to play with $3000). But there has to be a limit on this, and unlimited rehypothecation is an obvious and clear problem, especially when it comes to physical assets used as collateral by multiple parties.


For example your house is used as collateral by YOU, and then rehypothecated by the bank since it's on their balance sheet as "possibly" being theirs, so they use it as collateral as well. This is where it all starts becoming a cluster fuck as there's only a limited number of physical assets, but 10 "potential" claimaints to that asset.

Sun, 12/25/2011 - 15:31 | 2010566 mkkby
mkkby's picture

Excellent.  Thanks ZH.

It would be great to see something similar on 2 other current topics -- derivatives and hypothecation at brokers.  Then mere mortals might actually understand the broker business.

Sun, 12/25/2011 - 12:25 | 2010359 rajat_bhatia
rajat_bhatia's picture

Man! You just couldn't resist, could you? Let just one day be filled with intoxicating Hope.. however fucked up the world may be...

Sun, 12/25/2011 - 12:39 | 2010375 I think I need ...
I think I need to buy a gun's picture

there is some hope out there,,,,,mcdonalds stock has a great trend line and walmart appears like it just broke out,,,,these two retailers appear to have a fantastic future right now

Sun, 12/25/2011 - 14:04 | 2010480 lynnybee
lynnybee's picture

Yup, WALMART does have a great future ....... in other countries.     I'm deliberately avoiding WALMART like the plague.    It's obvious they don't need my money; after all, CHINA awaits.    This country has been WALMARTIZED .    Let someone else support that company ...... i'm out.     what little i have left goes straight into local business or physical metal & foodstuffs.   

Sun, 12/25/2011 - 15:49 | 2010589 DaveyJones
DaveyJones's picture

you said it.

Sun, 12/25/2011 - 15:50 | 2010590 mkkby
mkkby's picture

Too late for that.  The big retailers have taken out most of the locals.  It's about time people started learning that.  Their own greed to save a few fiat cents resulted in the walmatization of USSA. 

OTOH, it was entirely predictable for stupid TV hypnotized sheep to go where they were herded.

Sun, 12/25/2011 - 18:09 | 2010713 Tijuana Donkey Show
Tijuana Donkey Show's picture

Two words: flea market. Avoid local sales taxes, regs, and registration, and get ready for your black market future. We have ICE agents running around at ours, big brother is watching.......

Sun, 12/25/2011 - 19:43 | 2010797 WonderDawg
WonderDawg's picture

Lynnybee, I'm with you. I think we're on the cutting edge of a movement that will gain traction with more and more people.

Sun, 12/25/2011 - 19:59 | 2010806 Theosebes Goodfellow
Theosebes Goodfellow's picture

You nailed it, Lynnybee. Let me advise that people begin now to develop those relationships with local retailers. When TSHTF they might be highly selective with whom the choose to do busniess. It would be most wise for you to be one of them. The future of economies is not global, it's local and way smaller than you can guess.

Sun, 12/25/2011 - 21:37 | 2010881 Spigot
Spigot's picture

Each $ spent at a big box store yeilds about $2 in economic activity for the community. Each $ that "goes local" (ie - is recirculated as local purchases for local goods and services yeilds $7 in economic activity for the community.

By doing repeated, habitual bargain hunting at places like Walmart we have been spending ourselves poor.

We need to understand how we have, by our minor, daily purchasing habits, ruined this country...

...and then change that mind set and rebuild our communities.

Each of us can do that, now. We must in order to win back our economic freedom.

Mon, 12/26/2011 - 12:28 | 2011804 RiverRoad
RiverRoad's picture

It's a comforting thought to know though that the big international US companies are getting screwed right now with their money earned overseas sitting there in Euros.  They desperately want it back here tax-free, of course, which ain't happening so far even though Jeff Imelt suddenly became Obama's BFF.

Mon, 12/26/2011 - 02:40 | 2011354 nowhereman
nowhereman's picture

Until you can't afford the gas to get there.

Mon, 12/26/2011 - 09:39 | 2011610 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

Maybe thats why the Dollar Stores are becoming more popular (I don't shop at them or own shares). This only shifts the cause of the problem from Wal-Mart to a different source, local businesses are still screwed.

Sun, 12/25/2011 - 13:34 | 2010459 LowProfile
LowProfile's picture


I hope that the public is educated to the point that they understand the crime of debt-based money, that the whole thing collapses literally overnight, and then a lightning-fast reform is implemented, with a functioning, constructive system put in place.

What the Hell were you hoping for?

Sun, 12/25/2011 - 15:54 | 2010594 boattrash
boattrash's picture

rajat...The fuc@#$% Hope was elected about 3yr ago. Many/most of us detest that word now. Thanks, and Merry Christmas to ya!

Mon, 12/26/2011 - 21:39 | 2012516 ThrivingAdmistC...
ThrivingAdmistCollapse's picture

Yes it is very detestable.  The one has brought about the collapse of American Power in the world.

Sun, 12/25/2011 - 12:26 | 2010360 CalibratedConfidence
CalibratedConfidence's picture

Spot on Tyler.  The underground world of intelligence thanks you for your contributions and continued awesomeness.  Thank you also for the foresight to remain annoymous and focus on "connecting the dots".  Rock on through 2012 ZeroHedge!

Sun, 12/25/2011 - 12:27 | 2010362 GeneMarchbanks
GeneMarchbanks's picture

'As for a book, we are more than confident enough "independent" bloggers out there will succumb to the very system their protest against, and pen a few hundred pages on the goal-seeked topic of their choosing - the last thing the vast upcoming book pyre needs is our own intellectual self-pleasuring'


Sun, 12/25/2011 - 12:28 | 2010364 Gloomy
Gloomy's picture

This is just such a nice, clear explanation of the mechanism of European QE.

Sun, 12/25/2011 - 15:47 | 2010588 Rusty Shorts
Rusty Shorts's picture

O/T, not sure if this has been confirmed...


Julian Assange is dead (kidnapped and killed)

Sun, 12/25/2011 - 16:07 | 2010614 GeneMarchbanks
GeneMarchbanks's picture

If true, we're in for a grim last week of 2011 and beyond...

Sun, 12/25/2011 - 17:24 | 2010676 emsolý
emsolý's picture

I like this one (Detlev Schlichter, Paper Money Collapse):


Sun, 12/25/2011 - 12:33 | 2010365 francis_sawyer
francis_sawyer's picture

Don't call 'em 'BROKErs' for nuthin...

Sun, 12/25/2011 - 12:43 | 2010378 youLilQuantFuker
youLilQuantFuker's picture

Are the brokers broken? How can I read on? This is what I see:

Nothing. Broken. No link. Room for improvement.

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