"The End Game: 2012 And 2013 Will Usher In The End" - The Scariest Presentation Ever?

Tyler Durden's picture


If Raoul Pal was some doomsday spouting windbag, writing in all caps, arbitrarily pasting together disparate charts to create 200 page slideshows, it would be easy to ignore him. He isn't. The founder of Global Macro Investor "previously co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul came to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe... Raoul Pal retired from managing client money in 2004 at the age of 36 and now lives on the Valencian coast of Spain, from where he writes." It is his writing we are concerned about, and specifically his latest presentation, which is, for lack of a better word, the most disturbing and scary forecast of the future of the world we have ever seen....

And we see a lot of those.

Consider this:

  • We are here...

  • We don’t know exactly what is to come, but we can all join the very few dots from where we are now, to the collapse of the first major bank…
  • With very limited room for government bailouts, we can very easily join the next dots from the first bank closure to the collapse of the whole European banking system, and then to the bankruptcy of the governments themselves.
  • There are almost no brakes in the system to stop this, and almost no one realises the seriousness of the situation.
  • The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives…
  • Yes, that equates to 1200% of Global GDP and it rests on very, very weak foundations
  • From an EU crisis, we only have to join one dot for a UK crisis of equal magnitude.
  • And then do you think Japan and China would not be next?
  • And then do you think the US would survive unscathed?
  • That is the end of the fractional reserve banking system and of fiat money.
  • It is the big RESET.

It continues:

  • Bonds will be stuck at 1% in the US, Germany, UK and Japan (for this phase).
  • The whole bond market will be dead.
  • Short selling on bonds - banned
  • Short selling stocks – banned
  • CDS – banned
  • Short futures – banned
  • Put options – banned
  • All that is left is the Dollar and Gold

It only gets better. We use the term loosely:

  • We have around 6 months left of trading in Western markets to protect ourselves or make enough money to offset future losses.
  • Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe.
  • After that…we put on our tin helmets and hide until the new system emerges

And the punchline

From a timing perspective, I think 2012 and 2013 will usher in the end.



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Fri, 06/01/2012 - 06:02 | 2482838 mind_imminst
mind_imminst's picture

This has got to be a bullish sign! Stocks will rip today! CNBC no doubt will say it is the best time to buy stocks! Wooohooo! Give me more FB shares!

Sun, 06/10/2012 - 16:59 | 2512753 ermes_c
ermes_c's picture

Raul's been super negative since 2009.... hiw have thise trades done?

View on a big reset / defaults and currency debasement makes sense, wouldnt hold my breath on the whole timing aspect though!

Thu, 05/31/2012 - 20:08 | 2481791 HyperinflatmyNutts
HyperinflatmyNutts's picture

Wake me up when Gold crosses  3k untill then I will be in bed... 

Thu, 05/31/2012 - 21:02 | 2481971 LeBalance
LeBalance's picture

alone? or counting...(ahem) your gold i mean!

Thu, 05/31/2012 - 20:08 | 2481792 LongBalls
LongBalls's picture

Tin helmets my ass. I'm putting on a concrete bunker.

Thu, 05/31/2012 - 20:09 | 2481796 justanothernerd
justanothernerd's picture

This is bullshit -- people have been calling for the end of time forever now and the reasons are always different. 

Thu, 05/31/2012 - 20:30 | 2481860 Cole Younger
Cole Younger's picture

What part of "The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives…" don't you understand?

Thu, 05/31/2012 - 21:21 | 2482028 cjbosk
cjbosk's picture

To assume that 700 trillion in derivatives is a one sided bet implies that it is you who lack an understanding of the system.

Thu, 05/31/2012 - 21:50 | 2482128 sunny
sunny's picture

Is that the same system that Greedspan and Bernanke said were well ontrolled and contained and there were no fundamental risks to the economy?  Just asking.


Thu, 05/31/2012 - 22:39 | 2482283 cjbosk
cjbosk's picture

So you're saying Greenspan and Ben created the CDS?

Just askin

Thu, 05/31/2012 - 23:36 | 2482447 nope-1004
nope-1004's picture

That bitch Blythe Masters did.  And by the way, you are correct that the 700 trill in derivatives is not a one sided bet.  But answer the next part of that:  Who is the counterparty to an insolvent sovereign?  Will Spain bailout Greece?  Will Latvia bailout Spain?

The point is we've hit the end of the rope.  This isn't just a bad bank problem, this is a sovereign debt problem.  And when you start to hear the likes of JPM taking on 100:1 leverage in the IRS complex to manipulate TNX, you know the end is near when JPM then announces "unforeseen massive losses".


Thu, 05/31/2012 - 22:28 | 2482240 Ropingdown
Ropingdown's picture

People fixate on the 700 trillion in derivatives, but neglect the serious issues of the 70 trillion G10 debt posted in large part as collateral.  Derivatives mean nothing in a true sovereign debt crisis.  It is the collateral itself which is crucial for ongoing finance of industry and primary finanial markets.  Governments can nulliify most of the derivatives contracts.  They cannot nullify their own debt without unthinkably horrible consequences.  What they can do is debase the value of their debt, as they have relentlessly for many decades.  The massive problem is the size of the banks and the risk they hold once nations pull away from the euro and insist on converting the value of euro debt at a fixed rate per new currency at the moment of adopting their national currency: The currency then, for most of them, depreciates 50% quickly...and the external banks holding the converter's bonds suffer very large immediate losses.  This is why Germany has to be the first one out, and soon: They need to control a currency with which to save their own banks, i.e. Deutsche, rather than all the banks of Europe.  The euro cannot fill that function.

Thu, 05/31/2012 - 23:20 | 2482416 Ookspay
Ookspay's picture

BIN-fucking-GO! We have a winner!

Thu, 05/31/2012 - 23:29 | 2482435 Stuck on Zero
Stuck on Zero's picture

Good job RopingDown.  The $700 trillion in derivatives is meaningless if the four largest banks aer simply nationalized.  As an example, my wife and I have issued $14 quadrillion in debt notes between us and still sleep nights.  There is nothing in the current financial crisis that cannot be solved quickly by throwing about 1000 people in jail and reorganizing the banking industry.  After that, market forces will put everything but the banks (and central banks) back into order.


Fri, 06/01/2012 - 06:45 | 2482889 twotraps
twotraps's picture

exactly, remember when the irish banks tried to conjure up a billion they could keep depositing in each others bank for collateral, hillarious.

Thu, 05/31/2012 - 22:24 | 2482248 constantine
constantine's picture

The point is that neither of the two sides could ever cough up the cash once it is called... and once a major bank implodes some will be called... then that bank will implode... which will cause it to default on all of its derivatives... and you have a sort of fission-based financial meltdown... should be interesting... 

By the way, I just bet $10,000,000 with my neighbor that the Spurs will beat the Heat in the NBA finals.  The local bank has issued insurance on this bet and apparently has decided to call it an asset.  In the meantime, I've already ordered my new New York Condo that I'll be able to easily afford once I collect my winnings.  I'm an E6 in the Navy and he's a roofing contractor.

Sat, 06/02/2012 - 12:09 | 2487232 kahunabear
kahunabear's picture

Thumbs way up!!

Thu, 05/31/2012 - 21:23 | 2482033 onelight
onelight's picture

Good point put I wonder if they don't just cancel 'em, net 'em out and done, too bad.

Find a way to adjust, in other words, since absent that factor the prolonged muddle through can happen otherwise, so some geniuses that helped make all this crap will figure out a way to nullify.

Seems like there would be a public way to say, enough with the crap those idiots invented -- net it out and nullify. Find a way, if that is the deal. One big global high level conference, to neutralize the threat, amortize over 3 generations the remainder.

Thu, 05/31/2012 - 22:07 | 2482192 Bonesetter Brown
Bonesetter Brown's picture

Fair 'nuff.

But what if everyone is using favorable marks on their positions?

These derivatives are supposed to net to zero, but do you really think the marks net to zero?

That is why this is a big deal.

You don't find out who has been swimming naked until the tide goes out.

Thu, 05/31/2012 - 21:44 | 2482109 Things that go bump
Things that go bump's picture

As the courts said when the tulip mania came to an end:  Gambling debts and thus legally unenforceable.  

Thu, 05/31/2012 - 22:24 | 2482244 Calmyourself
Calmyourself's picture

BREAKING NEWS: The President has just declared under executive order 256735 that all CDS and derivative contracts have been devalued by a factor of 1,000. 

Problem solved, what are you going to do about it...  You gentleman continue to place rules and law in the way of expedience as handicaps to our betters.  When will you learn it is easier to use the sycophantic media to cover the above than for the 1% to lose 99%...  No law, contract or agreement will be allowed to collapse the ponzi  (path of least resistance) it is always easier to lie and cheat and that will happen until the supply chain is interrupted..  Do you think the media was completely subverted over the last five -ten years for no purpose other than the ascension of BO?

Thu, 05/31/2012 - 21:03 | 2481973 IAmNotMark
IAmNotMark's picture

Don't believe it then!  Go about your happy life, singing the glad song.

I almost wish I didn't see the approaching hurricane...I almost wish I was oblivious to the oncoming disaster.

Thu, 05/31/2012 - 22:08 | 2482194 HomeBrewPrepper
HomeBrewPrepper's picture

The problem with that statement is I have and many do a family to tend. Me personally a hot wife and three adorable kids at there young age are learning basic and advanced skills of farming and defense. Even though they might not realize it. They are learning tools of life passed along for generations. Other people learn it in books at an older stage if they are lucky..

Thu, 05/31/2012 - 23:36 | 2482436 Ranger4564
Ranger4564's picture

Me:  We can insert you back in, no problem.  You'll be someone famous like, a movie star, and rich.  We have a deal Mr. IAmNotMark?

You:  I won't remember anything?  I don't want to remember anything... You understand?

Me.  You won't remember anything.


ha ha ha ha hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha

Thu, 05/31/2012 - 21:16 | 2481998 Cabreado
Cabreado's picture

"This is bullshit -- people have been calling for the end of time forever now..."

Perhaps you should elaborate...

Which part of the presentation is "bullshit?"

Where in the presentation does it call for the "end of time?"

And I say kindly... be careful to eliminate emotions in your consideration of what's what, as best you can.

Fri, 06/01/2012 - 04:01 | 2482409 1984
1984's picture

Perhaps the objection/bullshit part refers to the timing, not how things will play out.  I'd be inclined to believe the timing if I read it back in 2007.  But after witnessing the miracle of the last 5 years, I realized how totally I've underestimated the the lengths people are willing go through to avoid facing reality.  The more dire the consequence, the more they're willing to suspend belief.  Therein lies the real power of Bernanke's printing press. 

Thu, 05/31/2012 - 23:37 | 2482453 The Monkey
The Monkey's picture

I'll elaborate for him. The presentation sucks because it DOESN'T connect the dots. There is no cogent argument offered. Explain each of these dots which connect the picture, quantify them, and go through the counterpoint.

Tyler, really?

Fri, 06/01/2012 - 00:45 | 2482561 Itch
Itch's picture

Im reminded of that preacher who said the world was going to end a few months back, and now that he’s wrong he just conveniently admits that he got his dates mixed up...that has been the general dynamic of the “doomer” argument more or less from the seventies…”ok we weren’t right this time so move the goal posts out a little (again), it‘s ok though, because our followers are too hysterical to notice“ .

Is it really the correct objective analysis of a chaotic system that doomers are in possession of, or is it just unhinged hysteria? Knowing the absolute weakness of the human mind and its susceptibility, I have to go with the later, and im sorry if that offends.

I know that bad things happen in the world, I know how perilous the situation is, and its true that this time it could be about to turn ugly; but things are always about to go wrong at any minute, that’s the nature of reality and our interpretation of it. Then, something comes from nothing, just like the universe did, just like you did (you can dust down your unicorn argument for that I suppose…). Do you die in hope, or live in fear?

And by the way, before you say you are just erring on the side of caution… erring on the side of caution is what you do when you bring an umbrella to the beach, fear is what happens when contemplating economic collapse.

Fri, 06/01/2012 - 06:56 | 2482916 twotraps
twotraps's picture

Caution is bringing that umbrella to the beach, perhaps rethinking your financial situation in light of disruptions or changes that could come from tremendous imbalances, panic etc.  Economic collapse is dramatic and I believe at a minimum bernanke and the crew respect the prospect of a major dislocation.  The only place I can agree with your point is there will likely be so many rule changes that there is no way to prepare for anything or game it unless you are on the inside.   If you mean 'fear' like the paralyzing kind that clouds your thinking and is paranoid...then yes.  Otherwise, I think a little fear might do someone good just to review what steps they can take now to protect what they have.  Hate to split hairs but you make it sound like Any part of this article/idea is totally wrong, I don't agree with all of it but the point is that major imbalances could finally overwhelm the system.

Thu, 05/31/2012 - 21:20 | 2482021 Dead Canary
Dead Canary's picture

A FEW people have been calling for the end forever. Now MANY are. That's the difference.

Thu, 05/31/2012 - 23:55 | 2482482 The Monkey
The Monkey's picture

When MOST are, I'll be buying stocks, not selling them.

Fri, 06/01/2012 - 01:53 | 2482642 CvlDobd
CvlDobd's picture

I think I can round up a few to sell you.

Thu, 05/31/2012 - 21:48 | 2482123 DionysusDevotee
DionysusDevotee's picture

You just defined "Normalcy Bias".  You know that right?

Thu, 05/31/2012 - 20:09 | 2481797 B-rock
B-rock's picture

Bring it.

Thu, 05/31/2012 - 20:09 | 2481798 Joshua_D
Joshua_D's picture

This is not the end. This is not the beginning of the end. It is the end of the beginning.




Wooo hooo! Hang on for the ride babies!

Thu, 05/31/2012 - 20:14 | 2481808 rubearish10
rubearish10's picture

Kris Kristoferson/ THE Millenium 

Thu, 05/31/2012 - 20:35 | 2481882 Joshua_D
Joshua_D's picture

-2?!? Who doesn't love Millenium!

Thu, 05/31/2012 - 20:12 | 2481800 uno
uno's picture

so he's a financial terriorist who lives in Spain and hears knocking on the door, could be 6 months left for him.  Good Riddance

Thu, 05/31/2012 - 22:40 | 2482292 Sabibaby
Sabibaby's picture

He just realized he got Zuckerberged!

Fri, 06/01/2012 - 10:24 | 2483534 onelight
onelight's picture

Interesting point, about the financial terrorist stuff.

This article was removed from BW, but here he is, saying the same thing in "late May 2010":


When I hear someone say "in terms of timing, it seems" and then the result is Armageddon, although i like the simple charts he showed, they also seem too obvious not to be worked around, and I would want to see deeper analysis, not just histrionics.

That said, fwiw, I think the whole derivatives mess was fraught w corruption and damaged our democracy and free enterprise system, and I speak as one who wants to restore that, so no Pangloss here

Thu, 05/31/2012 - 20:13 | 2481806 urbanelf
urbanelf's picture

Damn.  I'm gonna need two tinfoil hats.

Thu, 05/31/2012 - 21:07 | 2481985 Coast Watcher
Coast Watcher's picture

Tinfoil hats AND tinfoil Depends. Got to cover all the possibilities.

Thu, 05/31/2012 - 21:56 | 2482147 Ness.
Ness.'s picture

Cast iron pots work well too, and you can cook fresh eggs on it when you're done.

Fri, 06/01/2012 - 03:36 | 2482726 The Navigator
The Navigator's picture

I don't mean to start a run on aluminum window screening at Home Depot (cause I still need several more rolls) but that's the product you need to protect against EMPs and any Military projecting radio waves to cook you. You can see thru it (to monitor enemy movements) and still be protected.

Thu, 05/31/2012 - 20:14 | 2481810 francis_sawyer
francis_sawyer's picture

A few quadrillion here, a few quadrillion there... Pretty soon you're talking about some serious money...

Thu, 05/31/2012 - 21:26 | 2482049 Al Gorerhythm
Al Gorerhythm's picture

I know you're being facitious but....... you can't be talking about serious money when you start printing chits with zeros to the power of 12 on them.They'll have to reduce the size of the dead president on them.  That's getting funny or.........."unfunny".

Thu, 05/31/2012 - 20:14 | 2481811 Beevreetr
Beevreetr's picture

I got a question... with gold going teir 1... Will silver still follow it upward at the same rate?

Thu, 05/31/2012 - 21:06 | 2481980 IAmNotMark
IAmNotMark's picture

FOFOA gives reasons why it will not.

I believe that the natural ratio will be re-applied and 15 ounces of silver will trade for an ounce of gold.

Thu, 05/31/2012 - 21:25 | 2482043 flacon
flacon's picture

Then I'd better get me more of the white meat while the ratio is 50+!

Thu, 05/31/2012 - 22:38 | 2482282 Ropingdown
Ropingdown's picture

If a crisis of the magnitude suggested by the posting occurs, what happens next is no mystery.  The military takes over under the nominal leadership of the exective.  They call up all Guard units.  They print their own money for use during the emergency and your money becomes, at least temporarily, worthless.  They focus control on food and energy supplies and transport.  If you have gold you hide it for the duration.  I don't think this will happen but that is how things really work during an "emergency," whether in  europe, asia, or the US.  SSN checks still go out for exchange into new currency when the check is verified, etc.  Your world may come to an end but the government's world definitely does not come to an end.  You know who gets the petroleum reserve, right?  The grain in elevators?  The stockpiles of cheese and powdered milk?  Not you, unless you are "vital" or compliant.

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