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    Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back...

CME Goes To Collateral DefCon 1: Makes Maintenance Margin Equal To Initial For... Everything!?

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Fri, 11/04/2011 - 21:24 | 1847266 jesse livermoore
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manic monday

Fri, 11/04/2011 - 21:27 | 1847283 SWRichmond
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Fri, 11/04/2011 - 21:35 | 1847308 Motley Fool
Motley Fool's picture

I sense a disturbance in the force.

Fri, 11/04/2011 - 21:47 | 1847353 High Plains Drifter
High Plains Drifter's picture

rick santelli was trying to talk about this stuff all morning long..........he was feeling a disturbance in the force..........

Fri, 11/04/2011 - 21:58 | 1847406 greased up deaf guy
greased up deaf guy's picture



sucks to be (listed below):


Fri, 11/04/2011 - 22:41 | 1847567 strannick
strannick's picture

I heard it doesnt refer to 'everything' only to 'performance bonds' (thanks Ulikadese)

Fri, 11/04/2011 - 22:48 | 1847581 sqz
sqz's picture

Performance Bond, in the case of CME or clearing parties, normally just another word for acceptable collateral.

I'm guessing the error is that it does not apply to all products otherwise things get "interesting" (in Chinese proverb sense) on Monday, lol.

Fri, 11/04/2011 - 22:54 | 1847597 island
island's picture

Worse comes to worse, Timmy and Bennie will provide the collateral.

I'm thinkin' this is a snoozer - no way will TPTB let the CME wreak havoc.

Fri, 11/04/2011 - 23:02 | 1847617 tmosley
tmosley's picture

Could be a "them or us" situation for the CME, if it's hand is stuck in the cookie jar.  They may well cut it off rather than being caught.  Damn the consequences from "TPTB".

Fri, 11/04/2011 - 23:15 | 1847644 nope-1004
nope-1004's picture

It's those damn evil speculators.  You know, the ones with the cash that the CME wants to steal.

They're all short now into early next week.  Going to ride this pig down and profit short, then steal positions back and ride it up as Ben announces more easing to come in the folloiwng weeks / months.  Money can't be made in a thin market without volatility.

It's all in a bankers life!  Get used to being stolen from and put aside the "injustices", and you begin to see the game for what it is:  The CME THEMSELVES are the evil speculators and bet wrong, now short on cash.  LMFAO!!



Fri, 11/04/2011 - 23:17 | 1847659 trav7777
trav7777's picture

nah...it's indicative of cash shortages.  The economy doesn't really support the growth of credit so everyone, in realizing that there is a shortage of it, is demanding more of everything upfront because the "down the road" picture doesn't look like anyone will be able to pay.

the system is no longer "creditworthy."

Fri, 11/04/2011 - 23:44 | 1847702 slewie the pi-rat
slewie the pi-rat's picture


it's tautological, trav!

  1. lack of liquidity = L0L
  2. L0L (EU) + L0L (US) = L0L (zH)

"We are not worthy!"

Fri, 11/04/2011 - 23:56 | 1847759 Ahmeexnal
Ahmeexnal's picture

so if you are holding PMs in your hand, that means you got a margin call too?


Sat, 11/05/2011 - 00:13 | 1847796 Mr Lennon Hendrix
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There will be a day when the Fiat Ponzi crumbles.  Debt/money has had little recourse considering it has zero value.  Debt/money is a ficticious creation of sore minds.  It is a way to leverage wealth from the base of the society to very few.

Along the way promises were made, and quiteness was kept.  People went about buying and spending, hoping to repay their loans with future earnings reamed of.  But these days were far out of reality.  Now we see that leverage makes no distiction among its prey.  We see that when the House comes down, those praying in it will be trapped.

Those holding real assets are far from this mess.  Those who have their ability are above the clouds.  Humanity creates, and it destroys.  This is a time of destruction.  The creation will come from its ashes.

Sat, 11/05/2011 - 00:34 | 1847836 JW n FL
JW n FL's picture


1. You can be "First".

2. You can be "Smarter"

3. or.. You can "Cheat".


Banks are open until 12 noon tomorrow unless you have a private banker and a branch that will open for you, ala' Northern Trust. http://www.northerntrust.com/pws/jsp/display2.jsp?XML=primary/locations/import_0921_39.xml&TYPE=locDetail&TYPE2=fl&TYPE3=Palm%20Beach&nxml=empty&ntype=/xsl/locIndex.xsl&nav=global_about&services=persServ


If you dont believe in tangibles or in backwardation.. unless this gets called off.. you will be a firm believer by 12 noon Monday when the Markets Open Late and still are diving past 7,000.. from a close today of 12,000(ish).


There is not enough energy to go around.. 300% +++ in monetary base growth.. and the World markets are still going to fast? and need to be slowed?

I dont know, I am just spit balling with the rest of you.

God Bless and Good Luck!


Sat, 11/05/2011 - 01:19 | 1847900 FrankDrakman
FrankDrakman's picture

What, did you watch the movie "Margin Call" last night?

Jeremy Irons does not cheat, and Kevin Spacey will think he's a great guy while he rapes every client the firm has. And life imitates art.

Sat, 11/05/2011 - 06:32 | 1848126 French Frog
French Frog's picture

Will it matter that much if it's only for "performance bonds"?

Sat, 11/05/2011 - 11:32 | 1848461 redpill
redpill's picture

In CME-speak I believe that's a generic term referring to collatoral margin requirements, so if true would seem to be a fairly significant event.

But I tend to think we don't see the whole story here, I can't believe CME would "go rogue" with something that would cause a major disruption in financial markets like this.

Sat, 11/05/2011 - 13:48 | 1848801 tmosley
tmosley's picture

These are the people in charge of our commodities exchanges.

The incompetence is simply STUNNING.  Taking on more risk in this environment is nothing short of insanity.

In any event, this is good.  No collapse Monday.

Sat, 11/05/2011 - 13:55 | 1848819 trav7777
trav7777's picture

another day, another mosely-claven prediction falls flat on its face

Sat, 11/05/2011 - 14:20 | 1848874 Max Fischer
Max Fischer's picture



So after 75,000 views and 800+ comments, all of this was for.... nothing?


Sat, 11/05/2011 - 08:38 | 1848217 monkeyboy
monkeyboy's picture

Weird. Just watched the film last night.

Sat, 11/05/2011 - 11:09 | 1848435 ToNYC
ToNYC's picture

With the well-known Jungle compensation plan: "You Eat What You

Kill", are ther many wonders why evisceration of assets is a fine art. Smart monkeys move on while the patriarcal baboons deeply-rooted in their entitlement by hierarchy try to buy love with the merde at hand.

Sat, 11/05/2011 - 01:50 | 1847945 trav7777
trav7777's picture

every dollar owed relies on another borrower to borrow.  This is the problem in the face of aggregate contraction.

The issue we face as plebes is that the BANKS are the sole conduit of money into the economy.  So, when the economy grew, the banks prospered.  As the Bernank prints, the banks prosper.

This is the point of the deflationists, credit becomes artificially scarce not because of individual borrowers' inability to repay but the fact that there don't exist the MORE borrowers in the future who will have to borrow the interest owed.  It's a systemic problem.  It's that proverbial someone else, the lack of growth, that prevents the system from functioning.

So, everyone has to repay, everyone has to put everything up front, everything real and in existence now trades at a premium.  The system can't grow to pay today's interest, so nobody will lend even if the individual interest or venture lent to would be viable.  The system in a state of contraction makes the credit growth necessary for a compounding interest system untenable, therefore lending ceases.

Today's principal P becomes tomorrow's principal P + interest I.  The system necessarily requires someone to borrow (request the creation of money) more at every future point time T+1.  It always has to grow.  There always must be more credit created.  A loan today can't be created, exist, be viable, be repaid, without that.

Sat, 11/05/2011 - 03:12 | 1848013 zhandax
zhandax's picture

Then let the fucker collapse.  Except it won't happen next week because our inimitable central banker has decided he is both the party to request the creation of money at every T+1 and the creator of that money and he is still running loose.

Sat, 11/05/2011 - 09:26 | 1848261 Madcow
Madcow's picture

yes exactly - unless 

- they unveil a new fiat pyramid 10x the size of the old one

- they let gold go to 20K to refinance the old system

- a technology comes along to economically harvest heavy oil and bitumen

or some combination of the above ...  i know you don't believe that last one is possible - but that's really the only way forward. i'm not prepared to live in a mad max deflation.  positive EROI is possible with the right technology breakthrough(s)

Sat, 11/05/2011 - 10:57 | 1848403 Hansel
Hansel's picture

Yes, it is systemic.  I'll add that one person cannot have money without another person/entity going into debt.  When work is performed no money is added to the system; one person is paid cash and another goes into debt, but the money to cover the interest never existed.

Sat, 11/05/2011 - 00:15 | 1847800 PeterB
PeterB's picture

No, but beware the leveraged neighbour who can't wait to give it away to save his ass. I'm afraid it was always going to be every man financial entity for himself & let the devil Wall Banks take the hindmost MF Global

Sat, 11/05/2011 - 02:03 | 1847967 Ag Star
Ag Star's picture

I don't think so dude. My pm's resting nicely and still doing better than any stock over the last year.

No counter-party risk--ahhhh,  I'm sleeping real good.  Remind when the last time gold or silver went to zero.

Sat, 11/05/2011 - 02:20 | 1847983 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Zero what?  Dollars?  They can't.  Dollars are leveraged on gold; just ask Bernanke how his 14k tonnes are doing. 

Sat, 11/05/2011 - 03:17 | 1848018 derek_vineyard
derek_vineyard's picture

First rule of having physical PM:   Do not tell anyone

Second rule:  If you tell, it will be taken.

Sat, 11/05/2011 - 11:11 | 1848440 ToNYC
ToNYC's picture

How do you use something in trade that you can neither show nor tell?

Sat, 11/05/2011 - 18:06 | 1849359 derek_vineyard
derek_vineyard's picture

You await until you need to trade. Then you will have to change your life and gaurd your valuables and take extreme security measures.  In the meantime STFU.

Like the kid growing the pot plants....if you tell anyone , they will be gone.

Sat, 11/05/2011 - 19:46 | 1849514 ToNYC
ToNYC's picture

When does your army of one sleep when you do deed one with your stash in the midst of real strife?

Sat, 11/05/2011 - 03:19 | 1848022 derek_vineyard
derek_vineyard's picture


Sat, 11/05/2011 - 03:20 | 1848023 awkward squad
awkward squad's picture

Same rule applies when you're growing weed in your house.


Sat, 11/05/2011 - 03:33 | 1848028 MsCreant
MsCreant's picture

So where you shacked up theses days?

Sat, 11/05/2011 - 09:40 | 1848276 JPM Hater001
JPM Hater001's picture

A commodity is a commodity whether you grow it or mine it.  Personally, I prefer to smoke it.

Sat, 11/05/2011 - 11:57 | 1848530 topcallingtroll
topcallingtroll's picture

Cant wait till I get home today. Got a little sativa sensamilla (sin semilla or "without seeds") waiting for me. Wish I could still find juahacan or acapulco gold. You kids can keep your skunky indicas. Old fashioned sativas, particularly sensamilla wakes you up and clears your mind. I dont like the comatose buzz from indica.

Sat, 11/05/2011 - 23:13 | 1849794 BigDuke6
BigDuke6's picture

My sort of chat.

U should come to oz, u'd be impressed with the resources here...

Sat, 11/05/2011 - 07:10 | 1848151 mayhem_korner
mayhem_korner's picture

the system is no longer "creditworthy."


The system was never creditworthy.  Returns (interest) aren't high enough to cover quantum default risk plus a profit.  So it's a losing battle from the get go.  Problem is, when those "prosperous" 4-6 year episodes take hold, the illusion of lending profitably becomes a contagion, and the system levers up (i.e., fractional reserve lending, investing on margin, etc.).  No one "learns" because the purveyers of each wave are either promoted up or kicked out, and the next wave of creditor enthusiasts repeat the pattern, only with new tools and more confidence.

But as you say, every dollar of debt is owed and must be resolved on someone's balance sheet.

The weight of the unrepayable debt is so ugly I don't think even those that know what's happening can aptly imagine the crushing pain that is coming.

Sat, 11/05/2011 - 12:18 | 1848583 trav7777
trav7777's picture

the system was creditworthy as long as the aggregate economy was growing

Sat, 11/05/2011 - 12:23 | 1848595 GenX Investor
GenX Investor's picture

It's called Debt Deflation bitchez!!!

Fri, 11/04/2011 - 23:00 | 1847610 JustObserving
JustObserving's picture

CME lists margin for 3186 products.  How can they increase margin for all products simultaneously?  - this will require trillions.

Something does not compute


Sat, 11/05/2011 - 00:12 | 1847794 bernorange
bernorange's picture

Maybe someone copy & pasted all the numbers from one column into the other by accident.  /fat finger

Sat, 11/05/2011 - 07:45 | 1848172 Smiddywesson
Smiddywesson's picture

Yes, but the real story is the system is so complex and so close to the edge of the cliff because of can kicking that some fat finger can come along and push it over the edge.  Then, like the assassination of Archduke Ferdinand, everybody will say, "how did it all happen because of this?" when the real answer is it was just time for the lemmings to jump.

Sat, 11/05/2011 - 13:37 | 1848765 TheSilverJournal
TheSilverJournal's picture

Is it time for the dollar collapse now? Or do we have months? Or Years?...

My vote is in the months category.

Thu, 11/10/2011 - 16:08 | 1867327 Smiddywesson
Smiddywesson's picture

My guess was Jan or Feb of 2012, but I don't know either, I'm just guessing how many jellybeans are in the jar.

Sat, 11/05/2011 - 19:48 | 1849516 ToNYC
ToNYC's picture

How far is KreditAnstalt from Erste Bank and Dexia besides rhyming in time and fashion?

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