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As Lie-Bor Unwinds, Just How Much Is At Stake?

Tyler Durden's picture


This much:

That's $504 trillion with a T.


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Mon, 07/02/2012 - 08:33 | Link to Comment Cursive
Cursive's picture

Is this where Osbourne's inquiry begins and ends?

Mon, 07/02/2012 - 08:39 | Link to Comment slaughterer
slaughterer's picture

<-- Sell-off today

<-- Robo-rally.

Mon, 07/02/2012 - 08:50 | Link to Comment gojam
gojam's picture

With any bet there are always winners and losers, and with extreme outcomes there are always big winners and big losers.

The record low interest rates over a sustained period is an extreme outcome.

Could someone explain to me, in the context of interest rate swap derivatives, who the big winners and big losers are ?

Thanks in advance.

Mon, 07/02/2012 - 08:51 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Not sure who the winners are, but the losers are easy to spot.
Just look in the mirror.

Mon, 07/02/2012 - 08:54 | Link to Comment gojam
gojam's picture

lol, well that would have been the case either way, wouldn't it ?  :-D

Mon, 07/02/2012 - 12:03 | Link to Comment strannick
strannick's picture

whew. thats a biiiiigggg number.

Mon, 07/02/2012 - 08:56 | Link to Comment cossack55
cossack55's picture

But my mirror has "You're looking at a winner, and a handsome one at that" printed in big, bold letters on the top and bottom.   

Mon, 07/02/2012 - 09:07 | Link to Comment TuesdayBen
TuesdayBen's picture

You'd best get that mirror returned to the White House, pronto.

Mon, 07/02/2012 - 10:40 | Link to Comment DeadFred
DeadFred's picture

I was just wondering where I could find one of those. Too bad.

Mon, 07/02/2012 - 16:38 | Link to Comment phyuckyiu
phyuckyiu's picture

If you can't find that mirror, will work in a pinch.

Mon, 07/02/2012 - 08:33 | Link to Comment Sutton
Sutton's picture

Anything less than a Quadrillion doesn't concern me.

Mon, 07/02/2012 - 10:25 | Link to Comment prodigious_idea
prodigious_idea's picture

Most every figure on the left side is nearly a quadrillion, several key figures on the right are approaching same.  The trend on gross market value is alarming.

Mon, 07/02/2012 - 14:17 | Link to Comment Kobe Beef
Kobe Beef's picture

Well, I've got 200 Trillion Zimbabwe right here in my wallet. Why doesn't anybody ask me for a bailout?

Mon, 07/02/2012 - 12:30 | Link to Comment mudduck
mudduck's picture

Oh, I don't know, 100 trillion here, 100 trillion there, pretty soon you're talkin real money.

Mon, 07/02/2012 - 08:34 | Link to Comment Don Diego
Don Diego's picture

Priced in, no worries

Mon, 07/02/2012 - 08:46 | Link to Comment Tijuana Donkey Show
Tijuana Donkey Show's picture

Priced into our ass! As in they will be fucking everyone real soon.

Mon, 07/02/2012 - 08:52 | Link to Comment ArkansasAngie
ArkansasAngie's picture

Will ? ... they have been screwing us for quite a while now

The banksters believe their own horse manure

Mon, 07/02/2012 - 08:35 | Link to Comment world_debt_slave
world_debt_slave's picture

uh, the Universe o_0

Mon, 07/02/2012 - 08:38 | Link to Comment SheepDog-One
SheepDog-One's picture

But dont we have a 'firewall'? Sure it may be made of gasoline soaked paper towels, but its the concept of it that counts. The media muppets tell us 'the new smart thing' is plowing cash into treasuries for the race to implosion. Happy days!

Mon, 07/02/2012 - 08:58 | Link to Comment Sauk Leader
Sauk Leader's picture

If the firewall goes out. they can just unplug it, wait for 30 seconds and plug it back in. Fixed.

Mon, 07/02/2012 - 10:42 | Link to Comment DeadFred
DeadFred's picture

Sometimes 30 seconds can be a very long time.

Mon, 07/02/2012 - 12:08 | Link to Comment Zero Debt
Zero Debt's picture

The firewall has been quite effective in keeping everyone inside the burning building

Mon, 07/02/2012 - 08:37 | Link to Comment Catullus
Catullus's picture

As someone who has had money with Vanguard, T Rowe Price, and Schwab, I fully expect that you fulfill your fiduicary responsibilities and seek demages from the banks manipulating the rate that feeds into my money market accounts I've had with you over the past 7 years.  Failure to do so means that you've violated your fiduicary responsibility toward me.  It's either you or them.  Make a decision. 

I would hope that your corporate clients feel the same way.

Mon, 07/02/2012 - 10:43 | Link to Comment Bringin It
Bringin It's picture

At this point, it looks like the corporate clients are with the program.

Mon, 07/02/2012 - 08:44 | Link to Comment Cast Iron Skillet
Cast Iron Skillet's picture

That's sort of a lot. Btw, does anybody happen to know whether the Barclay's Lie-bor manipulation problem could be related in any way to the JPM "whale" trade problem? ... I have no idea, but from scanning the news & blog posts, the topics seem similar.

Mon, 07/02/2012 - 08:38 | Link to Comment ziggy59
ziggy59's picture

But wait, surely news of some dumbass celeb getting a divorce or kirdashs ass got bigger will eclipse this

Mon, 07/02/2012 - 08:46 | Link to Comment Bob
Bob's picture

If you've seen that ass, you know it will. 

Mon, 07/02/2012 - 08:39 | Link to Comment oogs66
oogs66's picture

The thing that sucks is that no individual counterparty had enough of an obvious loss on any given trade to figure out how to sue the banks properly

Mon, 07/02/2012 - 08:47 | Link to Comment spinone
spinone's picture

Banks skim a little from each transaction.  Market goes up or down they win.  The want to win more, so the cheat, and no one stops them.

Mon, 07/02/2012 - 08:39 | Link to Comment q99x2
q99x2's picture

Ring fence it with some green shoots.

Mon, 07/02/2012 - 12:09 | Link to Comment Zero Debt
Zero Debt's picture

Make sure you hedge those green shoots, the bears are in the woods...

Mon, 07/02/2012 - 08:43 | Link to Comment El Oregonian
El Oregonian's picture

Lie-Mor? Million... Billion... Trillion... Quadrillion... Gazillion... When there is no limit to the zeros it just becomes numbers right?

Mon, 07/02/2012 - 08:48 | Link to Comment d edwards
d edwards's picture

Yeah, remember what happened in Zimbabwe? (sp)

Mon, 07/02/2012 - 08:45 | Link to Comment paddy 57
paddy 57's picture

Not to shabby!!!!!!!!!!!!!



Mon, 07/02/2012 - 08:51 | Link to Comment i-dog
i-dog's picture

Is that like "Not to worry!" in some Irish dialect?

Mon, 07/02/2012 - 08:48 | Link to Comment Benjamin Glutton
Benjamin Glutton's picture

So you want to buy an interest rate swap?


no problem.

Mon, 07/02/2012 - 08:48 | Link to Comment NaiLib
NaiLib's picture

Seems to me its time for a Reverse Split in various currencies.........

Mon, 07/02/2012 - 08:50 | Link to Comment Joshua Falken
Joshua Falken's picture

This is a global probrem and goes way beyond LIBOR fixing

Current market abuses that need investigation are co-location, HFT and algo trading, rehypothecation, insider trading, dark pools, shadow banking repo's, ETF's, money market funds, MBS, CDS's, CDO's, asset backed securities, commercial paper, securities lending and wilful manipulation of official statistics and indicators.


Unfortunately for the UK, by uncovering and investigating this abuse, the City of London will be vilified by all central bankers and regulators as corrupt and evil English villains, whilst defending the integrity of their domestic institutions.


This is going to get messy and it has only just started.


Mon, 07/02/2012 - 09:53 | Link to Comment tabasco71
tabasco71's picture

Don't forget the markets for copper, PM's, oil, property, used cars, carbon and good old frozen OJ!!!

Oh sorry, those markets are not rigged and operated by self-interested, rip-your-face-off traders... yeh, right, so if you believe that....

Seriously you can find corruption in your kid asking you for £10 pocket money and you give him £5 instead.... 

Shouldn't we be focusing on becoming productive again instead of trying to pull our own guts out of our assholes?

Mon, 07/02/2012 - 08:53 | Link to Comment writingsonthewall
writingsonthewall's picture

People are always talking about "how we need banks" in order for our capitalist society to function correctly.


So far the banks have sold us PPI (immorally and now illegally), they have fixed LIBOR, they are borrowing at 0.5% and lending to us at 20%, they have traded against themselves with their prop trading and cost the consumer more - they have foreclosed on properties but not resold them back to the market (maintainging prices) -  valued their assets on 'fantasy' and required a multi-billion dollr bailout. tell me - what the fuck have they done for us lately?

If you're not already walking up the street with a molotov to pay a visit to your local bank - then you're just another slave asshole.

Mon, 07/02/2012 - 09:07 | Link to Comment tmosley
tmosley's picture

Lashing out at local bank branches isn't going to do any good.  If you want to use violence as a means to change, you should attack the source of the problem--the Fed.  Or at least burn down Brian Sack's house (or Jamie Dihmons, or Lloyd Blankfein's).

Mon, 07/02/2012 - 08:54 | Link to Comment ItsDanger
ItsDanger's picture

Need more detail.

Mon, 07/02/2012 - 08:59 | Link to Comment MrBoompi
MrBoompi's picture

A .001% fudge factor on the interest rates of $504T is only $504 Billion   Certainly the banks have earned the right to skim that much from us sock puppets right?

And it's always good to set a fine before you know the size and scope of the crime.  It increases our confidence.

I think these "banks" have been given the green light to defraud the rest of us to their hearts content.  And there seems to be no stopping it.

Mon, 07/02/2012 - 09:18 | Link to Comment Vince Clortho
Vince Clortho's picture

We are fortunate to have such fair-minded and compassionate overlords.

Mon, 07/02/2012 - 12:42 | Link to Comment mudduck
mudduck's picture

Don't y'all see. It's $500 plus trillion worth of HEDGING to protect the little guy. And besides all the counterparties are fully solvent and no-one has taken any bets that aren't dead flat either way. 

Mon, 07/02/2012 - 14:21 | Link to Comment Kobe Beef
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I'm Maxine Waters and I approve this message.

Mon, 07/02/2012 - 09:00 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Could someone clarify, do these funds even exist?  My guess is no, so what would really happen if this were to unwind tomorrow?  My guess is nothing (aside from making all my physical assets worth even more).

Mon, 07/02/2012 - 10:52 | Link to Comment DeadFred
DeadFred's picture

Unwind tomorrow freezes the financial system, like draining the oil out of your car. Everything physical looks fine but without transactions it's useless. We need a good backup system because this one is going down hard onces it starts and I don't want to waste my time trading turnips for heating oil.

Mon, 07/02/2012 - 09:05 | Link to Comment tmosley
tmosley's picture

I would bet it is more like $650T, given the trend with seasonal variation in that chart.

Mon, 07/02/2012 - 09:09 | Link to Comment gojam
gojam's picture

Well, if you were right then $504 Trillion would disappear off of the balance sheets of banks and hedge funds.

But I don't think you are right. Consider the recent FSA announcement of the investigation of the mis-selling of interest rate swaps to small businesses in the UK.

Certainly those swaps cost small businesses billions over the last 5 years or so, and that money was definitely real.

Mon, 07/02/2012 - 09:21 | Link to Comment LawsofPhysics
LawsofPhysics's picture

better define "money" first.

Mon, 07/02/2012 - 09:29 | Link to Comment gojam
gojam's picture


Well, some of those small businesses went under. So, the 'money' was tangible in their cases.

Mon, 07/02/2012 - 09:10 | Link to Comment bigwavedave
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Mon, 07/02/2012 - 09:15 | Link to Comment Plymster
Plymster's picture

If this mildly arcane crime garners even the slightest bit of traction, this has the potential to be the Black Swan event of the decade.  My question is, where are the investment mavens shouting "Fraud!" at the top of their lungs?  This doesn't just affect mortgage holders (whom I would expect to be woefully ignorent).  Every major bond trader, CRE investor, institution, and for that matter bank that played by the rules should be crying out for justice, but instead, I hear only crickets. 

Mon, 07/02/2012 - 09:59 | Link to Comment tabasco71
tabasco71's picture

Exactly, because institutional investors are considered to be big and bad enough to understand the way rates and markets work. And they do.

Its only retail investors who have protection and where regulations would spring up to defend them but they aren't really affected - banks tell them what rate they will lend at (SVR) and after that its the customers choice to take the deal or not.

Mon, 07/02/2012 - 09:17 | Link to Comment falak pema
falak pema's picture cheat on the CDS shit pile; all the while you say "I cover risks for my clients, not my own naked plays". In fact to feed the HF speculative fire with ZIRP and then sell them insurance on the side. Then you cheat on the interest swaps, vie Lie-bore, a much bigger pile, saying, "I cover risks for myself and my clients, Don't look at nominal amounts, its no big deal, it doesn't feed the fire". And in fact as its all non regulated sleight of hand, manipulated by your crony club, you make huge margins by cheating all and sundry! 

How can you lose? You can! by letting the wheel spin beyond control, yours and those of your cronies. Now the wheel controls you, like madness controls greed.

Mon, 07/02/2012 - 09:20 | Link to Comment FischerBlack
FischerBlack's picture

LOL, 504,098, not 504.098. So, what's a half quadrillion in notional between friends?

Mon, 07/02/2012 - 09:40 | Link to Comment Shizzmoney
Shizzmoney's picture

They'll just print and monetize this, don't worry

Mon, 07/02/2012 - 09:44 | Link to Comment JackT
JackT's picture

Of course it's the 504T, it couln't possibly be any of the lesser values on that sheet...always the largest. 

Mon, 07/02/2012 - 09:48 | Link to Comment Sunshine n Lollipops
Sunshine n Lollipops's picture

Boy, they've really done it now. Don't these banks know they can be fined upwards of......wait for it......a hundred million dollars! for this kind of cheating? Sheesh, when will they learn that crime doesn't pay?

Mon, 07/02/2012 - 10:00 | Link to Comment zilverreiger
zilverreiger's picture

So if they messed with the percentages only 1 percent, the minimum damages already are 5T?


Mon, 07/02/2012 - 10:03 | Link to Comment monad
monad's picture

Terminal velocity is 168 mph @ sea level. 500T is overkill.

Bug, meet windshield.

Mon, 07/02/2012 - 10:15 | Link to Comment MongolGold
MongolGold's picture

We keep hearing about these trillions of derivatives but what does it mean? How do they collapse and cause a debt black hole. Help me out I'm a fucking idiot. Will the Libor rate unwind now they zone in on the fixing of it? How screwed are we cause I'm impatient for the world economy to collapse so I get rich in Gold.

Mon, 07/02/2012 - 10:15 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

A half a million?  No problem!  baah baah the sky is falling.  oh wait

Mon, 07/02/2012 - 10:24 | Link to Comment tenpanhandle
tenpanhandle's picture

I'm going to Disneyland to see my broker.  Good ole Mickey will get me through this. 

Mon, 07/02/2012 - 10:40 | Link to Comment dizzyfingers
dizzyfingers's picture

Chart is wrong? Clearly specifies "In Billions of US Dollars"

Mon, 07/02/2012 - 10:57 | Link to Comment ugmug
ugmug's picture

I need to visualize $504 trillion dollars. How big of a armored bank car would be needed to haul away $504 trillion dollars?

Perhaps we'll have our first armored bank cruise ship soon.

Mon, 07/02/2012 - 10:58 | Link to Comment El
El's picture

This is the first I've heard about anyone unwinding anything as far as LIBOR goes. Sounded to me like they were just going to start from here with everyone properly chastized and told to sit in a corner for five minutes before continuing with business as usual.

Mon, 07/02/2012 - 11:03 | Link to Comment dizzyfingers
dizzyfingers's picture

So.... because all this went on, inflation of everything happened, including expectations of returns on investments including pensions (and everything else)...

Not good. Very very bad.

...and so on, around the world.

We're all cooked.


Mon, 07/02/2012 - 11:29 | Link to Comment rosiescenario
rosiescenario's picture

You'd think that anyone who purchased LIBOR based interest rate swaps as "protection" for rising interest rates should have grounds to sue if the bank selling them was part of this cartel. This appears to me to be an obvious case of price fixing and treble damages should be sought.


Someone please correct me if I am wrong.

Mon, 07/02/2012 - 11:59 | Link to Comment slewie the pi-rat
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if they hadn't lied, the world woulda died

no CTRL+P without representation!

no representation without taxation!

we insist, BiCheZ! 

it is for your own good

trust us

send us your POMO prayer requests

call now!

welcome to america, BiCheZ!


Mon, 07/02/2012 - 16:44 | Link to Comment monad
monad's picture

All the banks in the world are inside the event horizon. If this isn't enough, the Nibiru of derivatives casinos seals it. What do you think one military drone per 10,0000 civilians is for?

Tue, 07/17/2012 - 17:03 | Link to Comment whatmeblog54321
whatmeblog54321's picture

Correct, that highlighted 504,098 figure is in billions of US dollars-- which is bad ebough-- in Table 19 as shown,

not designated in trillions..[yet]... as the submittal mentions.

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