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The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation

Tyler Durden's picture




 

Now that the rehypothecation bogeyman has been let loose, and the question of just how many paper (and apparently physical) assets have been double, triple, and n-counted (where n can be a number up to "infinity") by the infinitely daisy-chained modern global financial system in which one's liability is someone else's asset....apparently up to infinity times, the next logical step was for the firms named in the original Reuters article to step up and begin denials they had anything to do with anything. Sure enough, below is the first (of many) such response, by Interactive Brokers, claiming it has been greatly misunderstood and unlike MF Global, it has done nothing wrong at all. Of note is that IB was simply one of many brokers mentioned in the Reuters piece, where we read that "Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion)."  Sure enough, we predicted a firm would have to promptly step up and "deny all charges." To wit: "Oh Jefferies, Jefferies, Jefferies. Barely did you manage to escape the gauntlet of accusation of untenable gross (if not net) sovereign exposure, that you will soon, potentially as early as tomorrow, have to defend your zany rehypothecation practices." As it turns out Jefferies, and all the other mentioned banks tried to avoid this festering can of worms by completely ignoring the topic... until Interactive Brokers' response now demands that every single named bank has to do the same and come out with an outright explanation of why it has billions in hyper-hypothecation, or else not journalists and bloggers, but the market itself will suddenly start asking questions. Something tells us it will not be nearly as easy enough for the others to deny all charges... Incidentally, if this indeed becomes "the next big thing", what the potential collapse of (re) hypothection means is that PBs will be unable to lend out shares anymore, in effect collapsing stock shorting as there is one giant short stock recall/forced buy in. Ironicaly the unwind of the biggest market fraud could result in the entire market pulling one last "Volkswagen"style hurrah, before all hell breaks loose.

From Interactive Brokers

Mr [REDACTED],

 

Below the response we have put forth regarding the Thomson Reuters article:

 

Recently, much has been written about the safety of customer assets held by brokers and we believe that customers are justified in their concerns. And so, we are writing to help clarify your understanding of how brokers are permitted to operate and, in particular, how Interactive Brokers protects its customers assets while servicing their needs to trade on margin.

 

To start, and so as not to leave any confusion as to the position of IB vis-à-vis the Thomson Reuters news article, IB DOES NOT, in any way:

 

1. Circumvent U.S. securities or commodities rules at the expense of our customers;

 

2. Invest customers’ segregated funds in foreign sovereign debt or utilize in-house repurchase agreements;

 

3. Commingle or utilize customer segregated assets for proprietary operations;

 

4. Enter into agreements which are designed to take advantage of supposedly unrestricted U.K. re-hypothecatio n rules; or

 

5. Engage in transactions deemed as “hyper-hypo thecation”.

 

More specifically, regarding hypothecation and the level of such activity at IB: - The hypothecation and re-hypothecation of customer assets is a standard and essential practice, which U.S. brokers employ in the course of financing customer activity. The rights to do so are longstanding, have been explicitly provided by regulation and one should not be surprised to see boilerplate consent language in each broker’s customer agreement acknowledging this.

 

For example, a customer who incurs a margin debit by virtue of the fact that they have purchased securities with only partly their own money, thereby relying upon the broker to lend them the funds to pay the balance at settlement, subjects a portion (up to 140% of the amount borrowed, also referred to as the margin debit) of those securities to a lien on behalf of the broker. The lien is also known as hypothecation. The broker, in turn, may pledge or re-hypothecate the securities upon which they have a lien to replace the cash.

 

In the case of IB, this re-hypothecatio n typically takes place in the form of a stock loan. In simple terms, IB borrows money from a third party, using the customer’s margin stock as collateral, and it lends those funds to the customer to finance the customer’s purchase. -

 

Similarly, a customer who carries a futures position must place a margin deposit with IB. IB may pledge the customer’s cash deposit to a futures clearing house in support of the margin required on that position.

 

While IB is not in a position to comment on the practices of others and whether they comply or fail to comply with these regulations, or do so in a manner which introduces unwarranted risk to the firm and its customers, we can state that we comply with all regulations and utilize investment policies that tend to be more conservative than those permitted under the regulations.

 

The Thomson Reuters news article alleged that IB, among other brokers, engaged in a practice that the author categorizes as “hyper-hypo thecation” (apparently a term used to describe a process in which a broker alters the risk of one financial instrument into the exposure of multiple other instruments and perhaps multiple counterparties through a daisy-chain series of pledges) at an amount of $14.5 billion.

 

While we are not sure of the author’s source for this number, we would refer interested parties to footnote 10 (“Collateral ”) on page 17 of our June 30, 2011 financial statement, which is posted on the IB website (http://www.interactive brokers.com/d...Unaud_Finls .pdf) and reads as follows:

 

“At June 30, 2011, the fair value of securities received as collateral, where the Company is permitted to sell or repledge the securities was $16,817,859,287, consisting of $13,022,386,422 from customers, $2,886,934,605 from securities purchased under agreements to resell and $908,538,260 from securities borrowed. The fair value of these securities that had been sold or repledged was $4,526,153,369, consisting of $2,583,920,633 deposited in a separate bank account for the exclusive benefit of customers in accordance with SEC Rule 15c3-3, $761,740,278 securities loaned, $877,478,486 securities borrowed that had been pledged to cover customer short sales and $303,013,972 securities that had been pledged as collateral with clearing organizations.”

 

A closer examination of this $16.8 billion balance reveals the following:

 

1.$13.0 billion represents the amount IB is authorized to pledge (largely based upon 140% of customer debit balances), of which only $0.8 billion has been repledged, largely through stock lending.

 

2.$2.9 billion represents the investment of customer’s cash balances in reverse repurchase agreements where the underlying collateral is U.S. treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (FICC). $2.6 billion of this collateral, technically a repledge (i.e., part of the $4.5 billion “sold or repledged”), is not re-hypothecated and it remains in the possession of IB and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. The remaining $0.3 billion represents collateral pledged to clearing organizations.

 

3.$0.9 billion represents short sale transactions whereby the sales proceeds have been pledged as collateral to fully secure the borrowed securities. These transactions are classified as securities sold (i.e., part of the $4.5 billion “sold or repledged”).

 

Based upon this information, which reflects prudently risk-managed broker financing transactions, we believe a fair-minded author would have drawn a different conclusion regarding IB and hyper-hypotheca tion given a minimum level of investigation and contact.

 

Regards,
IB

 

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Sun, 12/11/2011 - 12:26 | 1967506 Cassandra Syndrome
Cassandra Syndrome's picture

Rehypothecation Bitchez.....

Sun, 12/11/2011 - 12:32 | 1967518 DormRoom
DormRoom's picture

How I turned free markets into ponzi schemes: The Rehypothecation Approach.

 

On every primary brokers top ten reading list this year.

Sun, 12/11/2011 - 12:38 | 1967533 Cassandra Syndrome
Cassandra Syndrome's picture

Happened a lot in Ireland. The same green field for property development may have been used to secure 4 or 5 mortgages from different banks who then in turn collateralised many separate projects and sold them on internationally. That's why the government set up an SPV called NAMA, to hide the fraud, and protect the elite. Taxpayers are having to foot the €100 Billion bill with the loss of our soverneignty. It appears we're a mere microcosm of the world of 21st century finance. 

Sun, 12/11/2011 - 12:42 | 1967549 Kayman
Kayman's picture

Canadian banks engaging in rehypothecation ?  Why, that must be an error...

Dome Petroleum, Bre-X, Asset Backed Commercial Paper, and Sino Forest.  Why that must have been some other country...

Sun, 12/11/2011 - 12:51 | 1967565 CPL
CPL's picture

You left off Bell Northern Research, Nortel, BlackBerry, Tyco....lol

 

Practically the foundation of the entire pension pool of all Canuck pensions with the regulation changes on Canadian content in Mutual funds and pension portfolios.

Sun, 12/11/2011 - 13:00 | 1967582 GeneMarchbanks
GeneMarchbanks's picture

It's OK. I heard many 'Nucks have pensions with Fink over @ BLK. So they got that going for them...

Sun, 12/11/2011 - 13:51 | 1967684 The Big Ching-aso
The Big Ching-aso's picture

 

 

With so many denial rivers flowing at once things are bound to get damned up.

 

Sun, 12/11/2011 - 14:04 | 1967729 Manthong
Manthong's picture

All is well as long as you assume the position and accept double secret hyper hypothecation.

http://www.youtube.com/watch?v=rnVKkJFYkhg

and..

http://www.youtube.com/watch?v=zDAmPIq29ro

Sun, 12/11/2011 - 14:22 | 1967779 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I can't pretend to know how fast this will unwind but i do know that THIS IS IT.  this is why europe just moved to give banks unlimited funding.  this is what will bring the house down.

Sun, 12/11/2011 - 14:49 | 1967803 Ahmeexnal
Ahmeexnal's picture

1 over unlimited is equal to....

PMs will surge big time.

But if you really want the best bang for your buck, try chickens, seeds, earthworms.

Yeah, laugh as you may today, but tomorrow you cry.

Sun, 12/11/2011 - 17:10 | 1968229 Little Red Rooter
Little Red Rooter's picture

Ya! Potatoes bitchez! 

Chickens are da bomb - eggs, meat, fertiliser, easy to keep. 

 

Sun, 12/11/2011 - 18:03 | 1968312 Ahmeexnal
Ahmeexnal's picture

Time is seriously running out now.

Credit crunch in eurobanks:

http://www.telegraaf.nl/dft/nieuws_dft/11102802/__EBA__Kans_op_nieuwe_kr...

Swiss banker calling global financial crash:

http://www.tdg.ch/actu/buzz/banquier-genevois-denonce-clip-systeme-finan...

The dominoes are about to collapse at full speed now!

Sun, 12/11/2011 - 14:40 | 1967824 trav7777
trav7777's picture

Let me just give the abridged version of what IB is disclosing above.

"IF IB FAILS, YOUR MONEY IS GONE."

It's as SIMPLE AS THAT.  Brokers are in the business of trying to MONETIZE every single thing they can.  They lend your securities.  They lend the securities you have borrowed.  They lend your cash.  They lend anything in any account, anyWHERE, and there is boilerplate that permits them to do it.

IB borrows money, buys the stock for your margin trade and then lends that stock back to someone else for the cash.  At that point, YES, they probably play roulette with that cash just like all the rest of the cash the firm has access to.  When I worked on MS's NY money desk, they were doing $30B of repo transactions per day back in the early 90s.  This is orders of magnitude bigger now, trying to create money from thin air.

So who really owns anything at this point?  The answer is you own it if it's in your hands and hasn't fallen out of your canoe last camping trip.

If shit goes sideways, the BIG FISH have PURCHASED special "face down trap cards" (YuGiOh reference) from the Congress which WILL put their claims ahead of yours.  PERIOD.  Don't argue, don't dispute, don't question; accept.

Sun, 12/11/2011 - 15:30 | 1967984 macholatte
Sun, 12/11/2011 - 18:00 | 1968314 Pegasus Muse
Pegasus Muse's picture

The historical parallels between pre-war Germany and

pre-??? USA today is troubling. 

We are already well down the path to an ugly destination. 

Watch this video before you read the They Thought They Were Free

Sen. Rand Paul on Freedom Watch with Judge Napolitano - 11/29/11

http://www.youtube.com/watch?v=AKaTxjxnYfE&feature=relmfu

Sun, 12/11/2011 - 19:54 | 1968547 Johnny B Good
Johnny B Good's picture

Everything thats beeing broadcast on a big TV Station like FOX is, even if called "Freedom Watch", by DEFINITION a smokescreen pulled up to misdirect the peoples attention.

 

BY DEFINITION. If it where the real deal, they wouldn't, or wouldn't be allowed to, broadcast it. PERIOD.

Sun, 12/11/2011 - 20:44 | 1968655 Bearish News
Bearish News's picture

Nah, Judge Nap is solid. He's a big Ron Paul fan, I've seen him win a few supporter polls for who people favor for VP candidate.

Sun, 12/11/2011 - 17:11 | 1968232 WmMcK
WmMcK's picture

"Ally of Justice Decisive Armor", YuGiOh bitchez.

Sun, 12/11/2011 - 17:14 | 1968238 tmosley
tmosley's picture

And yet no-one should own silver.

BRILLIANT!

Sun, 12/11/2011 - 17:52 | 1968306 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

silver smells bad and attracts gypsies

Sun, 12/11/2011 - 19:20 | 1968465 trav7777
trav7777's picture

At NO POINT did I ever say people shouldn't own any silver you binary-minded idiot.

I said that they should NOT LISTEN to silver pumping moron shills like YOU as to how to allocate their wealth.  And I have correctly pointed out that real wealth in silver is too heavy to run with and may end up being a TOTAL loss.

If, for some reason, you don't have access to a TRUCK that you can drive out to wherever you're going, you face the possibility of TOTAL LOSS with silver.

1000oz bar is a mere $32k at today's prices.  That is 31.1 kilos.  Do you really think you can pack that?  That's at the upper limit of a professional soldier's pack and you ALSO plan to truck all your ammo and guns and the rest of it.  If you have $320k in silver, you are going to be forced to WALK OUT on 90% of your wealth even if you can pack 62lbs with you.

With gold?  $32k is a mere 18oz at $1700/oz.

Silver is a get rich quick scheme pumped on the internet by people who are MORONS.

Sun, 12/11/2011 - 19:52 | 1968536 Ahmeexnal
Ahmeexnal's picture

Yeah, right. So instead of silver people should...carry a wallet full of fucking credit cards.

What about your fucking home, do you also pack that with you when you have to pick up and leave?

 

 

 

Sun, 12/11/2011 - 19:54 | 1968551 SilverRhino
SilverRhino's picture

People should have a variety of wealth options.  

Trav is merely pointing out that you should have silver AND gold. (and guns, food, water, portable power, etc .... )

 

Sun, 12/11/2011 - 21:07 | 1968698 tmosley
tmosley's picture

lol, this is the first time you posted that argument.  What's wrong, did some reality finally crawl into your brain like an earwig?

You are fucking clownshoes.  Ridiculous.

Sun, 12/11/2011 - 23:14 | 1968954 tmosley
tmosley's picture

Also, thinking back, you specifically said not a month ago that there would be NO SHTF.  Yet here you are talking about how silver is a terrible investment because you can't grab it and run, as though you expect a SHTF situation.

Which is it, douchebag?  Can't have it both ways.

Sun, 12/11/2011 - 21:45 | 1968789 vamoose1
vamoose1's picture

pucker up and slurp  even if you dont have a truck, maybe that awesome brain of yours could ,  uh,  rent one,  then you can  go shopping with an 1800 dollar coin  you quarter wit

Sun, 12/11/2011 - 22:02 | 1968831 Matt
Matt's picture

While carrying 31 Kg is certainly a pain in the ass, its not near upper limit. Average Emergency Approach Load in Afghanistan is around 59 Kg http://thedonovan.com/archives/modernwarriorload/ModernWarriorsCombatLoadReport.pdf

While 30 Kg is more in line with Average Fighting Load. At the start of a panic, I don't think everyone will start shooting each other right off the bat, it could be days before that happens. These weights are counting everything being carried total, water, food, armor, etc.

Pesonally, I'm out of shape and wouldnt be carrying that, but I'm in a thinly populated rural area and don't plan on going anywhere.

Sun, 12/11/2011 - 18:07 | 1968336 Howard_Beale
Howard_Beale's picture

Bravo Trav. Well said without pissing anyone off. You feeling ok? :)

Sun, 12/11/2011 - 19:21 | 1968470 trav7777
trav7777's picture

why, because everyone agreed with me?

wait until I push them toward their mental 3rd rails.  Everyone here is aboard with the fact that the brokerage/trading/market system is a scam.

But there are many planks of MSM orthodoxy they would defend with violence.

Sun, 12/11/2011 - 19:53 | 1968544 Ahmeexnal
Ahmeexnal's picture

Yeah, such as the MSM promoted "white supremacy" shit.

 

 

Sun, 12/11/2011 - 20:18 | 1968602 Eally Ucked
Eally Ucked's picture

So maybe at the end of that 3-rail you will disclose to us your plan for the END. We always hear we're idots because we do that or this, what's your plan The Great One, commit suecide or you have that special solution you don't want to share with us?  

Sun, 12/11/2011 - 21:10 | 1968708 tmosley
tmosley's picture

Cut your balls off and have the priviledge of becoming his slave as Supreme Overlord of the Earth.

Or some such egomaniacal jerk-off fantasy.  This idiot can't even keep a family together.

Sun, 12/11/2011 - 18:11 | 1968344 PonziBeaver
PonziBeaver's picture

+1 Yeah! Dam it!

Unwind the ponzi and let the real economy come back!

Sun, 12/11/2011 - 14:54 | 1967868 Kayman
Kayman's picture

CPL

I have relatives living in Canada. The media is even more controlled than the U.S.

I don't know how Nortel slipped past me.  "What do you want the Internet to be ?  Anything you want it to be... "  Well, I'll have a ham sandwich then...

I couldn't help but notice all the insiders and the banks were out of Nortel around $80-90, before running it over $100 and down to zero.

Sun, 12/11/2011 - 12:52 | 1967570 TheFourthStooge-ing
TheFourthStooge-ing's picture

Interactive Brokers reassured everyone with:

To start, and so as not to leave any confusion as to the position of IB vis-à-vis the Thomson Reuters news article, IB DOES NOT, in any way:

[denials 1 through five snipped for brevity]

Of course they don't. They do it through their subsidiary, IARUK (Interactive Ass Rapers, U.K.).

 

Sun, 12/11/2011 - 16:22 | 1968125 Squid-puppets a...
Squid-puppets a-go-go's picture

yer, "does not engage in hyper hypothecation"

... comes down to a definition of hyper, then, dunnit?

Sun, 12/11/2011 - 17:15 | 1968235 defencev
defencev's picture

Listen,motherfucker. It is all very simple. You do not like or do not understand standard practices involved in margin trading, do not do it. You all, motherfuckers, like one thing: do nothing and speculate. The truth is that security markets are essential for functioning of capitalist system. And, in principle, the only necessary function of brokerages is to provide customers with an ability to buy stocks for cash.

If you do that and brokerages are not involved in fraud, the risk for you as a customer is minimal. (setting aside, of course, the risk of market fluctuations).

But no, motherfuckers, you want to trade on hude margin, you want to speculate on future prices of everything, you want to bet on sovereign debt, you want to short your mother and expect everything to be honkey dori. In real world you participate in ponzi scheme- you get what you deserve.

 I have my brokerage account with IB and I know that I am absoluely safe no matter what you , stupid motherfuckers are spewing.

Mon, 12/12/2011 - 05:43 | 1968281 Al Gorerhythm
Al Gorerhythm's picture

You seem to be as sure of yourself and your relationship with IB as all those happy campers lined up, cap in hand, outside of the office of the trustee of MF Global.

Sun, 12/11/2011 - 17:47 | 1968296 Killtruck
Killtruck's picture

Unnecessary Motherfuckering. 15 yards. Repeat first down.

Sun, 12/11/2011 - 22:58 | 1968932 Cathartes Aura
Cathartes Aura's picture

the honkey dori gets a yellow card.

http://en.wiktionary.org/wiki/yellow_card

Sun, 12/11/2011 - 18:50 | 1968411 pods
pods's picture

Bit "defencev" aren't we?

Who would have thought you would have the foresight to pick  a username so fitting?

Sounds like you are really confident in your statement?

Either that or you have realized someone else has first dibs on YOUR money.

pods

Sun, 12/11/2011 - 20:00 | 1968556 defencev
defencev's picture

Well,motherfucker. You seem to do not understand elementary things. If you bought security for cash , you own it. Even if your brokers goes under, it is yours. See e.g. what happened with Lehmann customers. You are involved in leveraging and playing with derivatives and you are on your own. See what happened with MF customers. You, guys, is a bunch of ignorant, brainwashed idiots who do not understand anything and listen to other motherfuckers whose only goal is to fear monger you in total panic. What I really recommend to you does not require any kind of intellectual effort but just a little bit of house bookkeeping. Just keep track of the accuracy of "predictions" posted in the "articles" over here. And you just quickly realize who is who. If someone posted an "article" on a "website", it does not mean that it is not an absolute, fucking bullshit.

Sun, 12/11/2011 - 22:09 | 1968849 pods
pods's picture

I do understand elemetary things.  Quite well in fact.

If you are secure in your conclusions then what is the problem?

If all of us are crazy assed tin hatters, then why bother trying to convince us of anything?  You are just that much further ahead.

We have a difference of opinion, that is all.  Nothing to get upset about.  In fact, you have such courage in your convictions that you will trust your money to them.

I am not panicked at all.  Quite the contrary.  

Maybe you could follow a bit of your own advice?  Your money is safe.  

Right?

pods

Mon, 12/12/2011 - 04:25 | 1969331 Don Keot
Don Keot's picture

My sentiments exactly.  I have never understood their compulsion to attack preppers.  If you are happy with your decision, STFU and live with it.  It's your business and your money. 

Sun, 12/11/2011 - 23:06 | 1968945 Squid-puppets a...
Squid-puppets a-go-go's picture

Sure, you own it.

but just try and redeem it

AAAAAHAHAHAHAHA, man are you a dolt. millions of investors the world over are losing their shirts to deliberately complex bullshit shadow instruments and you think you are somehow exempt?

Go on. Redeem your investment, then come back to ZH and post an image of the cheque .

Sun, 12/11/2011 - 23:07 | 1968946 Gohn Galt
Gohn Galt's picture

There are two kinds of hedgefunds left, those who think they can turn a profit for their customers and are thus are targeted to fail and those who understand the message and loose their customers money to unaccounted nameless entities. 

The commodities exchange was sold as a way for farmers to hedge against price fluctuations and weather.  A lot of remaining farmers were counting on these contracts for their survival.  Now crops prices will be low at harvest and medium and small farmers will sell at a loss.

Sun, 12/11/2011 - 23:45 | 1969013 TheFourthStooge-ing
TheFourthStooge-ing's picture

pods hit the nail on the head with:

Either that or you have realized someone else has first dibs on YOUR money.

Bingo. The butthurt is strong in this one.

 

Sun, 12/11/2011 - 19:09 | 1968439 IamMarla
IamMarla's picture

I hear that creepy music to 'valley of the dolls' As I read your words http://www.zerohedge.com/users/defencev .

Sun, 12/11/2011 - 19:16 | 1968454 Piranhanoia
Piranhanoia's picture

See if you can get your money tomorrow before you get upset.

Sun, 12/11/2011 - 21:31 | 1968754 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey Defencev....

Eat a horse cock,mother fucker....and your going to take it and your going to like it.

Now go lay down,and behave,FuckTard.

Mon, 12/12/2011 - 00:49 | 1969131 Godisanhftbot
Godisanhftbot's picture

I tell you what.

 If the clowns that post here , had to hypothicate their houses, their wives, their net worth, for every Erroneous , libelous reference they make here, they'd keep their fat ignorant yaps shut.

 

 Bet on it.

 

Sun, 12/11/2011 - 21:50 | 1968799 vamoose1
vamoose1's picture

If i received that missive from ib i would scream all night before storming their office monday  morning

Mon, 12/12/2011 - 00:51 | 1969136 Godisanhftbot
Godisanhftbot's picture

First you'd have to have enough cash to have an account with them, so in your case, its a hypothetical, (not to be confused with hypothicatal ).

Sun, 12/11/2011 - 21:50 | 1968800 vamoose1
vamoose1's picture

If i received that missive from ib i would scream all night before storming their office monday  morning

Sun, 12/11/2011 - 13:10 | 1967603 DormRoom
DormRoom's picture

write an email to your MP, the CIBC & RBC ombudsman, and Jim Flaherty, and the bank of Canada and ask them to look into the hypothecation practice, and to stress test the banks.

 

info@bankofcanada.ca,
ombudsman@cibc.com,
finpub@fin.gc.ca

 

If Canadian banks have counterparties, which are overleveraged with re-hypothecation, they are doomed, by extension.  They may need to be stress tested.

Sun, 12/11/2011 - 13:14 | 1967616 GeneMarchbanks
GeneMarchbanks's picture

Lol.

De-nile ain't just...

Stress tested, hehe, I'll have to remember that one.

Sun, 12/11/2011 - 20:21 | 1968604 Ahmeexnal
Ahmeexnal's picture

Don't waste your time writing those letters.

Just empty your fucking account.

Sun, 12/11/2011 - 21:01 | 1968682 GoinFawr
GoinFawr's picture

Better yet: do both, and then some.

Sun, 12/11/2011 - 13:26 | 1967650 Global Hunter
Global Hunter's picture

The BOC governor is a Goldman alum and Harper has tied his boat to the USA, by emailing them you'll only succeed in getting on a list someplace.  They know full well what is going on, they've allowed it and perpetuated it.

Sun, 12/11/2011 - 13:34 | 1967668 Terminus C
Terminus C's picture

Exactly.

Sun, 12/11/2011 - 21:56 | 1968815 vamoose1
vamoose1's picture

The 10th Mountain Division squats at Fort Drum, northern NY State  about  a 45 minute debouchement from Gananoque .Is there a problem officer?

Sun, 12/11/2011 - 13:43 | 1967687 LeonardoFibonacci
LeonardoFibonacci's picture

CIBC  & RBC are but two of the big 6 banks in Canada.  How about TD Bank, Bank of Montreal, Scotia Bank & lastly National Bank of Canada the quebec based bank.  National Bank of Canada is a chartered bank out of Quebec Canada and the hardest hit with ABCP penalties in 2010 by regulators to the tune of $75 million.  Could any of these others be dabbling in re-hypothecation if they have already sinned with ABCP?

Sun, 12/11/2011 - 14:35 | 1967808 Ahmeexnal
Ahmeexnal's picture

2012 might indeed be the year when Quebec secedes from british Canada.

Sun, 12/11/2011 - 14:46 | 1967843 mick_richfield
mick_richfield's picture

Good! 

Then they can start speaking English full time, because nobody will put up with their bullshit.

 

Sun, 12/11/2011 - 15:02 | 1967893 Kayman
Kayman's picture

As my brother-in-law in Calgary says- Quebec can leave Canada on 1 condition- they take Ontario with them.

Sun, 12/11/2011 - 16:06 | 1968077 earleflorida
earleflorida's picture

just leave my happy-grounds, montreal, out of the mix - pretty please

Sun, 12/11/2011 - 21:57 | 1968818 ZeroPower
ZeroPower's picture

Montreal FTW.

Sun, 12/11/2011 - 16:12 | 1968098 peekcrackers
peekcrackers's picture

Well 12ga and Maple pork&beans

Beaver fuckers

Sun, 12/11/2011 - 20:22 | 1968607 Eally Ucked
Eally Ucked's picture

Your brother in law is fucken moron with his head immersed in oil mud.

Sun, 12/11/2011 - 21:43 | 1968782 Ahmeexnal
Ahmeexnal's picture

EEEEH?

Sun, 12/11/2011 - 16:22 | 1968124 english serf
english serf's picture

It's always the cheese eating surrender monkeys fault anyway

Sun, 12/11/2011 - 14:42 | 1967831 trav7777
trav7777's picture

WTF good is that going to be?

they're going to have their lawyers REITERATE the boilerplate in the contracts you signed and then they will go and DO the opposite!

Sun, 12/11/2011 - 16:01 | 1968064 Manthong
Manthong's picture

Sounds like folks up there should consult with Dick the butcher.

Hamburger anyone?

Sun, 12/11/2011 - 14:46 | 1967847 Desert Irish
Desert Irish's picture

Harper would have a stroke if Canadian banks were forced to be stress tested - hence it will never happen. In saying that I'm sure if the opposition found out about this they'll create some grief for the conservatives. Peggy Nash of the NDP is the official finance critic.

peggy@peggynash.ca

Sun, 12/11/2011 - 20:27 | 1968620 falun bong
falun bong's picture

While you're at it may as well write to the people who oversee every pension plan in existence...they all allow re-hypothecation of their assets (your assets) held in things like index funds...why do you think Vanguard can charge such low fees for their index funds? It's called "securities lending".

Sun, 12/11/2011 - 21:33 | 1968758 azusgm
azusgm's picture

Yeah, write to AIG and the NY Dept of Insurance about securities lending. Don't bother to call them. The laughter from over at Goldman Sachs will drown out the conversation.

Securities lending has always sounded like pure suicide to me.

Sun, 12/11/2011 - 21:36 | 1968765 Bansters-in-my-...
Bansters-in-my- feces's picture

...DormRoom.

Good Idea,but Jim Flaherty can't read.

Sun, 12/11/2011 - 13:51 | 1967712 Freddie
Freddie's picture

Helped by those Irish tax cheats - Bono and U2.  Bono loves the UN and America's muslim.

Sun, 12/11/2011 - 14:25 | 1967787 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

freddy, it's good to have you hear (sp correct), but we get it, you think obama is a muslim

Sun, 12/11/2011 - 15:19 | 1967947 CIABS
CIABS's picture

freddie seems to think there's something wrong with being a muslim.

(i don't know for sure what obama is, in any sense, by the way.)

Sun, 12/11/2011 - 15:24 | 1967966 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

its like when kids on a playground see someone and start yelling, "stranger danger!"

Sun, 12/11/2011 - 18:05 | 1968329 stacking12321
stacking12321's picture

i've never heard that expression.

is that what kids say when they see perverts like yourself come near?

Sun, 12/11/2011 - 18:25 | 1968371 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

you got a problem?

Sun, 12/11/2011 - 19:15 | 1968449 stacking12321
stacking12321's picture

yeah, you wanna take this outside!?

Sun, 12/11/2011 - 19:59 | 1968563 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

what's your problem

Sun, 12/11/2011 - 20:01 | 1968566 stacking12321
stacking12321's picture

i don't like lennonists-marxists

Sun, 12/11/2011 - 20:25 | 1968614 Eally Ucked
Eally Ucked's picture

Fuck you then!

Mon, 12/12/2011 - 00:31 | 1969103 PsychicWebbah
PsychicWebbah's picture

Indeed, John Lennon was a commie bastard.

 

So why the fuck does gold keep going down? $25 since open tonight.

Sun, 12/11/2011 - 15:59 | 1968057 john39
john39's picture

if he was a real muslim, as opposed to a souless bootlicker luciferian banker ass puppet, the world would not be headed in the (wrong) direction it is.  the whole muslim thing is just another part of the divide and conquer that works all too well on gullible americans.

Sun, 12/11/2011 - 16:13 | 1968102 Canaduh
Canaduh's picture

I'm going to have to ask you to put your blinders back on, sir.

Sun, 12/11/2011 - 16:23 | 1968129 Eireann go Brach
Eireann go Brach's picture

Freddie, you look like a fucking inbred mongrel half breed, that was created at the circus when a sheep and a goat got together and created a new species and named it "Freddie"

Sun, 12/11/2011 - 18:06 | 1968334 stacking12321
stacking12321's picture

you shouldn't judge freddie by his looks.

instead, judge him by the stupid things he says.

Sun, 12/11/2011 - 18:27 | 1968373 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

so we will judge you based on being an idiot

Sun, 12/11/2011 - 19:17 | 1968457 stacking12321
stacking12321's picture

ooh, good one!

have you considered stand-up comedy as a career?

with zingers like those you'd sure be popular.

Sun, 12/11/2011 - 20:00 | 1968564 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

yer an idiot how about that one

Sun, 12/11/2011 - 16:56 | 1968191 Canaduh
Sun, 12/11/2011 - 18:05 | 1968316 nmewn
nmewn's picture

Yeah, but its been a real blast screwin with his head about attending a madrasah in Indonesia.

I mean...hasn't every American President? Its like apple pie or sumpin ;-)

Sun, 12/11/2011 - 18:47 | 1968399 Canaduh
Canaduh's picture

Some presidents attend 'mock' human sacrifices in front of a 40 foot tall stone owl, in the middle of a redwood forest, with hundreds of 'people' wearring druidic robes attending, while being guarded by the secret service. Smells like apple pie to me.

Sun, 12/11/2011 - 18:49 | 1968410 nmewn
nmewn's picture

Bohemian Grove...lol...well played ;-)

Sun, 12/11/2011 - 18:56 | 1968418 IamMarla
IamMarla's picture

His Gradmother was also a banker

Sun, 12/11/2011 - 18:56 | 1968419 IamMarla
IamMarla's picture

His Grandmother was also a banker

Sun, 12/11/2011 - 19:20 | 1968464 Piranhanoia
Piranhanoia's picture

Who, Freddie?  

Sun, 12/11/2011 - 19:23 | 1968474 Kiwi Pete
Kiwi Pete's picture

We don't get all the news down under but I thought Obama got into some bother during his election campaign because the pastor of his Christian church made some inflamitory comments that Obama then had to distance himself from. How come you are convinced he's a Muslim?

Sun, 12/11/2011 - 19:33 | 1968497 Everybodys All ...
Everybodys All American's picture

Obama's father a Kenyan was Muslim though no one would consider either of his parents devout. It's a non-issue for most. It would seem that he is what will get him elected when it comes to religion.

What is of more concern is that he is a devout progressive which to my way of thinking is going to leave us in Greece. Pun intended.

Sun, 12/11/2011 - 20:14 | 1968592 philipat
philipat's picture

And now Ireland has just given up its rights to set its own taxrates and budget policy, which was the one competitive advantage that Ireland had left. For the life of me, I can't see how in any way this benefits the people of Ireland. Ireland should have changed the "R" to "C", as in Iceland, and told the Banks to fuck off. Then done the same to Brussels.

Where is Nigel O'Farage?

Sun, 12/11/2011 - 14:31 | 1967796 Madcow
Madcow's picture

the ponzi only collapses if people head for the exits.   becuase there is so much abundant trust in the system, surely people will not move to IMMEDIATELY take posession of their physical assets and stock certificates.  

right ???

Sun, 12/11/2011 - 14:43 | 1967837 trav7777
trav7777's picture

good luck.  The exits in nightclubs are seemingly purpose-built to trap people in case of a conflagration.

Recognize that.

The REALITY is that the credit system NEEDS margin purchasers the same as the mortgage debt needed a physical person's wet signature to close the loop.  The actual mortgage was just the tip of a huge iceberg of credit growth.

Sun, 12/11/2011 - 19:23 | 1968472 Piranhanoia
Piranhanoia's picture

It would probably be a percentage of money that reaches critical mass. It happened with the housing market hence bailout when they couldn't pay the tab.  With the other withdrawals noted here from the market, banks everywhere and funds,  that may not be too long.  

Sun, 12/11/2011 - 14:59 | 1967801 LMAO
LMAO's picture

"On every primary brokers top ten reading list this year"

Are you sure it's not called "primarily broker"?

Primarily broke

Primarily broker

Primarily brokest

as to their interactive hoodlums,

interactively broke, interactively broker, interactively brokest

Sun, 12/11/2011 - 19:39 | 1968504 sitenine
sitenine's picture

Rehypothecation. Great. I work with hundreds of accountants, and not one of them that I've spoken with has ever heard of the term, little-lone the practice. If what we know is this bad, try to imagine how bad it really is. Frightening. It seems there is no end in sight. New schemes are being hatched as I type - check this out: "Goldman Said to Plan CDs Tied to Equities" http://www.bloomberg.com/news/2011-12-09/goldman-sachs-is-said-to-start-...

Sun, 12/11/2011 - 12:32 | 1967519 The Shootist
The Shootist's picture

What the hell's this 'commingling' stuff?

Sun, 12/11/2011 - 12:51 | 1967564 Unprepared
Unprepared's picture

*Cummingling: some nasty sh*t

Sun, 12/11/2011 - 13:15 | 1967620 TheFourthStooge-ing
TheFourthStooge-ing's picture

I think it results in santorum.

http://www.urbandictionary.com/define.php?term=santorum

 

Sun, 12/11/2011 - 13:05 | 1967593 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...you got chocolate in my peanut butter!

Sun, 12/11/2011 - 13:19 | 1967625 francis_sawyer
francis_sawyer's picture

you got peanut butter on my chocolate!

http://www.youtube.com/watch?v=DJLDF6qZUX0

 

Sun, 12/11/2011 - 13:19 | 1967635 macholatte
macholatte's picture

 

Ironicaly the unwind of the biggest market fraud could result in the entire market pulling one last "Volkswagen"style hurrah, before all hell breaks loose.

It's bullish, of course!

Sun, 12/11/2011 - 14:26 | 1967789 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

this is lehman on steriods

Sun, 12/11/2011 - 18:27 | 1968369 macholatte
macholatte's picture

The chart could end up looking like someone doing a swan dive from the high board. The dive walks out to the point of beginning, takes a couple of decisive steps, adds a bit of bounce in the knees, the board flexes under the weight and then springs the diver up and into a graceful arc as the diver sails down, down, down to the water below.

 

 

Sun, 12/11/2011 - 14:34 | 1967807 kito
kito's picture

Its not commingling or hypopontification or any of that nonsense that our trusted financial institutions would never engage in. Its TIME SHARING!!! bob gets the gold on christmas and labor day. Fred gets the gold on memorial day and new years. Sharon gets it thanksgiving and valentines day. Oh, and if there is a run on the gold, well thats a holiday reserved for jp morgan!!!!

Sun, 12/11/2011 - 14:38 | 1967815 Ahmeexnal
Ahmeexnal's picture

Or it could be touted as the ultimate incarnation of socialism.

All your assets belong to everyone else.

All my liabilities belong to everyone else.

Sun, 12/11/2011 - 15:09 | 1967916 Kayman
Kayman's picture

What the hell's this 'commingling' stuff?

Well, if you "commingled" your neighbors property, you would go directly to jail.

If your bank "commingles" your property, you will be long dead before you see justice.

Sun, 12/11/2011 - 12:53 | 1967572 LeonardoFibonacci
LeonardoFibonacci's picture

Erect the gallows, lads.  Once a century or so, it becomes obvious its time to use them again.

Sun, 12/11/2011 - 15:11 | 1967925 Kayman
Kayman's picture

But Lloyd doesn't have a neck.

Sun, 12/11/2011 - 15:22 | 1967958 XitSam
XitSam's picture

I'm wondering.  When was the last time ... oops, I mean previous time a banker was hanged?

Sun, 12/11/2011 - 19:05 | 1968434 IamMarla
IamMarla's picture

I want those silly fools to live and have to face the music of their making. Why kill them and put them out of their misery for being miserly. Don't you dare jump you slippery numb nuts you are going to get a cheap seat to the next game and no chips to play with. I want to watch the waxed brows grown in and the manicure get chipped and the hand made suit go shiny. I want them to worry, dead is easy.

Sun, 12/11/2011 - 13:00 | 1967574 SRSrocco
SRSrocco's picture

AHH THERE SHE BLOWS..........

The way up the FIAT PONZI FINANCIAL PYRAMID IS ALWAYS FUN...the way down will be the end of a way of life here in the US of A.  We are living on borrowed time.  The US Dollar should have died years ago.  With the use of HOOK and CROOK we have been able to swindle the middle east of their oil at bargin basement prices to keep the SUBURBAN LEECH AND SPEND ECONOMY going long past its effective expiration date.

Now we stand on the precipice.  We watch in slow motion (soon to speed up greatly) as the clowns and morons in Govt, Banking and the Corporate world try to put Humpty Dumbty back together again.  The system broke in 2008 and now we are heading into STAGE 2 of the collapse which is the COMMERICAL COLLAPSE.  This is where E-V-E-R-Y-O-N-E will no longer be in the delusionary state that "Everything is Fine".

Unfortunately, due to Peak Oil and the Falling EROI we cannot return to manufacturing to save our economy.  We have spent a great deal of captial spreading the Surburban Leech and Spend Economy.  All the captial is sunk in the massive infrastructure, Super Shopping Malls-Strip Malls, Warehouses, Commercial Buildings, and oversized Residiental Real Estate.  This cannot be undone. 

We have bascially BLOWN OUR WAD OF CASH on the wrong lifestyle, and there is no way to transition now that we have all this stuff.  If you ever have driven by St. Louis on the interstate north through the town you will see mile upon mile of old brick buildings that were the manufacturing base of the country back in the middle of the 1900's.  Today they are mostly abandonded.  Today we just thought we could drive around in SUV's, drink Starbucks and shop all day long forever.  Unfortunately...forever is here.

I hate to be so damn pessimistic...but it doesn't look good.  Once the vail of BANKING-BROKERAGE fraud is revealed... we become a third world nation overnight.  Forget about Deflation.  Anyone who still believes in that should check themselves into the nearest clinic for a MRI.  It will be hyperinflation and shortages of food and goods. 

Time to go see a movie... grab a starbucks and browse through the shelves at Barns & Noble before the FIAT PHAT LADY SINGS her last song.

AUTHORS NOTE:  I expect some negative votes on this comment.  The truth hurts.

Sun, 12/11/2011 - 13:02 | 1967587 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

We can rebuild our manufacturing. In fact, that is the only way. We got into this mess by moving away from our industrial base giving everything to the banksters. We can get out by giving it back to real production.

Sun, 12/11/2011 - 13:12 | 1967607 GeneMarchbanks
GeneMarchbanks's picture

'We can rebuild our manufacturing.'

Um, everybody has an iThingy. Even the gypsies in Europe have iPhones. But good luck with that I'm sure the Chinese or Germans won't mind...

Sun, 12/11/2011 - 14:38 | 1967818 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

homeless people have nicer phones than i do

Sun, 12/11/2011 - 15:29 | 1967978 GeneMarchbanks
GeneMarchbanks's picture

Nomads. A way of life, have some respect.

Sun, 12/11/2011 - 16:43 | 1968173 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

i respect those that choose the way for political reasons.  that doesn't change the fact that they have cell phones

Sun, 12/11/2011 - 16:51 | 1968187 Ahmeexnal
Ahmeexnal's picture

You can buy iPads at Walmart with foodstamps.

Sun, 12/11/2011 - 21:44 | 1968784 azusgm
azusgm's picture

The Roma.

Sun, 12/11/2011 - 23:10 | 1968950 mkkby
mkkby's picture

The american bedoin, formerly known as the middle class.

Sun, 12/11/2011 - 19:28 | 1968485 Piranhanoia
Piranhanoia's picture

shovels, plows, clothing, glass, metal...  the things we used to be famous for.

Sun, 12/11/2011 - 23:44 | 1969011 wisefool
wisefool's picture

I disagree with this. Sure, if you go to a big box store you'll pay $30 for a quality shovel. But if you go to the local flea market, consignment shop, or estate auction you'll find more shovels than we have people to use them. Lots of the older folks in the 70s & 80s are going into nursing homes or dying. There is so much quality homewares and hardware about to hit the market. And the boomers are not going to buy this stuff.

Big agra, yeah, cause you always need better tech, cause the soils are more and more depleted, more and more eroded. But 

Sun, 12/11/2011 - 19:48 | 1968533 Archduke
Archduke's picture

uhm. no.  the manufacturing boost in demand that followed the 50s came from a number of

factors that all reflected the changing conditions of the post war period.  a massive number

of men-folk were killed and women entered the workforce, both factors which created a pressure to

depress wages and fill a shortage of labour.  said labour was to be rightly fixed by automation

technology, conveniently aided by the offshoots of the research bubble of the war.  that kind of

joint product demand and labour automation need is happening in asia, but the west has already

done its labour reallocation.  our only hope is that ageing babyboomers may create some kind

of new demand, say in healthcare and asset management

Sun, 12/11/2011 - 23:27 | 1968974 Cathartes Aura
Cathartes Aura's picture

well, "ageing babyboomers" are creating demands in the "health" care industry, thanks to shit corporate fud, poisoned water and decreasing oxygen in the "air" - the corporate "healthcare" industry will thrive until fewer & fewer people can afford to be addicted to its pharma, aided and abetted by the MEDyCare, etc.

but to be honest, the whole country is on meds, from the ritalin kidz to their parents on "anti-anxiety" and "mood enhancer" pills - who isn't hooked on pharma?

http://www.youtube.com/watch?v=13olfeD026g

"what a draaaag it is getting up. . ."

Sun, 12/11/2011 - 13:13 | 1967613 LawsofPhysics
LawsofPhysics's picture

WRONG.  This is exactly what everyone and every soverign nation on the fucking planet will try to do next.  If the whole fucking planet is going to become the "producers" who will the customers be?  Did I miss something or has another fucking planet come forward with something of value to offer the earth?  You also ignore the fact that in order to make a profit producing anything, you need a cheap energy source, but this is another conversation that actually requires that people understand math. Wake the fuck up dude.

Sun, 12/11/2011 - 13:37 | 1967677 JLee2027
JLee2027's picture

We will be our own customers. No need to import when the US can make it here.

I have to say that peak Oil is incorrect. Shale Oil technology is here to stay and we have the largest reserves on the planet in the Western US and Canada.

Sun, 12/11/2011 - 13:42 | 1967689 Teamtc321
Teamtc321's picture

And the sweet smell of natural gas. 

Sun, 12/11/2011 - 13:50 | 1967708 ouchtouch
ouchtouch's picture

What's the ROEI for shale oil?

Sun, 12/11/2011 - 14:28 | 1967791 LawsofPhysics
LawsofPhysics's picture

There you go.  My brother has worked in the oil and natural gas field for 20+ years, it ain't pretty.  Lots of fucknuts talking shit on blogs everywhere.  In the real world details matter, go talk to an engineer who runs the actual process.  Oh yeah, you consume a shitload of water too, how are those levels in Lake Mead and the Glen Canyon reservoir again?

Sun, 12/11/2011 - 14:40 | 1967822 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

zh ain't the kids table

Sun, 12/11/2011 - 14:42 | 1967830 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

zh ain't the kids table

Sun, 12/11/2011 - 14:24 | 1967778 LawsofPhysics
LawsofPhysics's picture

LOL!  Sure buddy.  As I have pointed out many time before, the technology you speak of is not cheap and requires a HUGE energy input and capital cost right up front.  But I digress,  we will tap those resources, because we will have too.  There are many other resource and elemental shortages that will cause real problems long before we get even close to running out of fossil fuels.

I presume that the "we" you are refering to is America.  Perhaps you haven't noticed dumbass, but the "we" you are refering to is BROKE, so that we can not buy anything, even from themselves.

Sun, 12/11/2011 - 14:42 | 1967834 Ahmeexnal
Ahmeexnal's picture

Broke, fat, spoiled, emasculated, undereducated (but with multiple Ph.D.s)...

Pretty much sums up the entire western "civilization".

Sun, 12/11/2011 - 15:49 | 1968040 Teamtc321
Teamtc321's picture

I always get the feeling when I bring up having a few good saddle horses that some think I'm foolish, well I have to tell you that having or having access to a few good saddle horses imo will prove to be a very smart move within a few year's.

 

 

Sun, 12/11/2011 - 16:52 | 1968188 Doña K
Doña K's picture

Great idea; Don't forget to stock on horse food and if it all fails, you can always eat the horses.

Sun, 12/11/2011 - 18:18 | 1968358 stacking12321
stacking12321's picture

horses will be the glue that keeps our society together

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