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The Mother Of All Infographics: Visualizing America's Derivatives Universe

Tyler Durden's picture




 

A month ago we presented the latest derivatives update from the OCC, according to which the Top 5 US banks held 95.7%, or $221 trillion of the entire US derivative universe (which in turn is just a modest portion of the entire $707 trillion in global derivatives as of June 30, 2011). And while the numbers of all this credit money, because that's what it is, and the variation margin associated with all these trillions in bets is all too real, appeared impressive on paper, they did not do this story enough service. So to present, visually this time, the US derivatives problem, we go to our friends from Demonocracy, who put the $229 trillion derivative 'issue' in its proper context. For those curious what a paper equivalent of bailing out the US derivatives market would look like, now you know.

 

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Thu, 04/19/2012 - 14:50 | 2359126 centerline
centerline's picture

If they did, it is probably what get's you on the fast-track to being the blessing for a volcano god or the like.

Thu, 04/19/2012 - 14:54 | 2359139 Rubbish
Rubbish's picture

12/21/2012

Thu, 04/19/2012 - 17:23 | 2359611 Handyman
Handyman's picture

There could be just enough superstition working on that day to trigger it. You never know.

Thu, 04/19/2012 - 16:25 | 2359455 blu
blu's picture

If they had then they would not have needed to put the world down for destruction in December.

Thu, 04/19/2012 - 14:45 | 2359112 carbonmutant
carbonmutant's picture

Creditocracy...

Thu, 04/19/2012 - 14:47 | 2359114 firstdivision
firstdivision's picture

Derivatives are ways to spread the risk....so that we're all fucked.

Thu, 04/19/2012 - 16:00 | 2359365 mayhem_korner
mayhem_korner's picture

 

 

Bailouts are pretty effective at spreading risk.

Thu, 04/19/2012 - 16:26 | 2359456 blu
blu's picture

They're justing being extra careful. Between CDS and bailouts, it's gonna be covered.

Thu, 04/19/2012 - 14:49 | 2359122 centerline
centerline's picture

Just add a shitload of zero's on the bills and that pile won't look so big.  What's to worry about?  I always wanted to be a millionaire!

(... wait, don't answer that).

Thu, 04/19/2012 - 14:54 | 2359134 reTARD
reTARD's picture

I prefer to call them Federal Reserve Notes. Some many prefer Toilet Paper. Others only computerized digits.

Thu, 04/19/2012 - 15:56 | 2359359 jarrollin
jarrollin's picture

did you get a haircut btw?

Thu, 04/19/2012 - 16:03 | 2359381 reTARD
reTARD's picture

No, bankers don't really take haircuts. I just running the show with my eyes sealed shut. LOL

Thu, 04/19/2012 - 19:07 | 2359799 BlueCollaredOne
BlueCollaredOne's picture

Best avatar pic ever.

Thu, 04/19/2012 - 14:52 | 2359135 SilverRhino
SilverRhino's picture

Definitely seconding what that other poster said.   They should put silver, gold and platinum cubes representing all the known metals mined in all of history just to drive the comparison home.

And a stack of 100's to demonstrate comparisons. 

Thu, 04/19/2012 - 14:55 | 2359144 Silversem
Silversem's picture

A credit implosion of this magnitude asks only for one thing: Gold

a cfd position against the big financials can also be interesting

Thu, 04/19/2012 - 14:55 | 2359145 manhunter
manhunter's picture

In what sense is credit money all too real?

Thu, 04/19/2012 - 14:58 | 2359158 TMT
TMT's picture

$221 Trillion ... come on TD that is GROSS exposure.  NET exposure is around $1.3 million.

Nothing to worry about.

/sarc

Thu, 04/19/2012 - 15:35 | 2359276 mayhem_korner
mayhem_korner's picture

 

 

I attended a conference of CROs earlier this week, and one of the bankers said, in earnest, that "everyone" missed the boat on the the MBS/CDO play.  I slipped a question to the moderator as to whether or not the dood had heard of Micheal Lewis and The Big Short.  Never got asked.

Thu, 04/19/2012 - 19:32 | 2359855 The Alarmist
The Alarmist's picture

CDO / CLO / CRO / M-O-U-S-E

Thu, 04/19/2012 - 14:58 | 2359163 jarrollin
jarrollin's picture

Unfortunately, most posters see this graphic all wrong.  These were just some things Blythe Masters was browsing for at London's World Famous Sex Toy Shop.  Apparently, such things aren't as taboo in Europe.

Thu, 04/19/2012 - 14:59 | 2359164 Paul Atreides
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TIMBER!!!!

Thu, 04/19/2012 - 15:02 | 2359183 Yorick7
Yorick7's picture

But they all net to zero.  For every buyer of a derivative theres a seller and vice versa.  The real risk is that if one of these too big banks fails it takes the rest with them and most of the banking system because the market is very intertwined.  Also these are notional numbers and don't really reflect the true size of the risk.  Any way, neat to see visually how big a trillion is.

Thu, 04/19/2012 - 15:08 | 2359202 Tyler Durden
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They all net to zero, but by the time one bank's gross exposure is var margined to zero (because there is real money exchanging hands every EOD), it will blow up several thousands times in a row courtesy of real Tier 1 capital ratios of 4-5% or so.  So unless the counterparty is willing to bail out the bank on the other side of the trade, it will be the Fed over and over.

Read more here.

Thu, 04/19/2012 - 15:11 | 2359210 ZeroIQ
ZeroIQ's picture

Conclusion: WE NEED BIGGER SKYSCRAPERS!!!!

Thu, 04/19/2012 - 16:54 | 2359547 prains
prains's picture

But they all net to zero.

 

didn't laffer say the same thing 06'

Thu, 04/19/2012 - 19:57 | 2359893 Seer
Seer's picture

One could also say that the velocity of money would hit zero; and you know what this would mean...

Geez, people!  Wake up!  That which cannot continue forever won't!  Pretty simple to assess, no need for fancy graphics or complex numbers!

Thu, 04/19/2012 - 15:18 | 2359230 amadeusb4
amadeusb4's picture

Thank you.

I am more than a bit disappointed for a site like ZH to fear monger this way. This is akin to saying that every lotto number issued IS a winner and multiplying the jackpot times the number of tickets outstanding to scream about the state's shortfall in paying out winnings. Clearly not every option will be in the money when it expires. In fact the vast majority of options expire worthless!

This kind of sensationalism misdirects focus from institutional exposure to derivative risk.

Thu, 04/19/2012 - 15:29 | 2359258 centerline
centerline's picture

Wrong.  the argument you guys are posing is about as realistic as Krugman's arguments about debt levels not being of concern because it is debt we owe ourselves (one man's debt is another man's asset - feel free to laugh).

In the "real" world of endogenous money creation, the risk is in what is different between banks, agreements, timing, borders, etc.  Assuming it all nets to zero is a fallacy of double-entry accounting which does not take into account the dynamics of money, let alone human behavior.

In short, a swelling market of private debt (or contracts made against private debt that would force government debt to be pulled into existence to avoid debt deflation in a calamity) ought to scare everyone.

Thu, 04/19/2012 - 15:35 | 2359277 Yorick7
Yorick7's picture

derivatives arent debt in the sense that a bond is.

Thu, 04/19/2012 - 15:41 | 2359298 centerline
centerline's picture

The are contracts for/against debt.  What happens when they trigger?  Money (debt) is called.  The derivatives market is a massive pile of conditional private IOU's for government IOU's.

Thu, 04/19/2012 - 20:34 | 2359969 DaveyJones
DaveyJones's picture

why don't people see that??

Thu, 04/19/2012 - 21:37 | 2360076 centerline
centerline's picture

Too busy watching American Idol.  I like to think the public at large has the ability to process this.  But, I know better.  Rather than turning against those who have perpetrated this, they will turn on themselves and you and I - by design.  This is what really pisses me off.

Fri, 04/20/2012 - 00:45 | 2360353 Bear
Bear's picture

By the way ... who got kicked off this week?

Thu, 04/19/2012 - 15:57 | 2359362 engineertheeconomy
engineertheeconomy's picture

@centerline - I think you are the one thats wrong here. If I remember correctly, there's an equal sign in the middle of every equation. I think they call it mathematics or physics or something. Of course, all the mathamaticians and physicists in the world COULD be wrong. Not

Thu, 04/19/2012 - 16:11 | 2359393 mayhem_korner
mayhem_korner's picture

@engineertheeconomy

 

No.  Centerline has it right.  But let's try a little math experiment to help some of y'all understand.

If you bet $1 on the outcome of a flip of the coin coming up heads, the expected value is $0.50.  So you can come up with a whole bunch of equations using the $0.50 expected value.  Here's the problem: $0.50 will never be the outcome - it will always be $1 or $0.  So if you get too many tails in a row, you are out of cash before the expected value comes to be.

The expected value of every (correctly priced) option is $0.  Yet, somehow, some way, they (almost) never payout $0.  Guess what happens if enough of that $229T comes up tails too many times in a row?  (And, unlike flipping coins, the behaviors of the underlyings in options tend to be pretty correlated = more risk, yeehaw!)

Thu, 04/19/2012 - 16:19 | 2359420 engineertheeconomy
engineertheeconomy's picture

I think you are wrong.

If we both bet $1 on the outcome of a flip of coin, the expected value would be $2 since you also would have to put a dollar on the table.

So, you got an F in math.

I'm sure you're good at something.

Why are your pants all worn out around your knees?

Thu, 04/19/2012 - 16:23 | 2359436 mayhem_korner
mayhem_korner's picture

 

 

The expected value is $2?  And you think I got an F in math? 

Oh dear...

Thu, 04/19/2012 - 16:25 | 2359452 tmosley
tmosley's picture

Good lord, you both get an F.

If two people each put a dollar on the table, the expected value for each player is ONE DOLLAR.  There are two possible outcomes, one where you walk away with nothing, and one where you walk away with $2.  You get the expected value by taking the weighted average of all possible outcomes.

Thu, 04/19/2012 - 16:30 | 2359464 mayhem_korner
mayhem_korner's picture

 

 

Thanks Tmosley, but I got that part.  I never said that there were two dollars at stake.  I said one dollar, bet against a 50% outcome of success yields an expected value of $0.50.  I didn't expect Vinny Barbarino to show up and confuse you and everyone else...

Thu, 04/19/2012 - 16:47 | 2359520 engineertheeconomy
engineertheeconomy's picture

I stand corrected. There is a value of $1, but a net pot of $2. Either way the math works out. My point is that the bankers would have us believe that 1+1=3 or something like that. They use a lot of technical nutshell nonsense to hide good ol fashion money printing. Did anyone actually believe that Quantitative easing was  any different from what happens every day?

Thu, 04/19/2012 - 20:06 | 2359906 Seer
Seer's picture

"There is a value of $1, but a net pot of $2."

But it's a magical pot...  The $2 doesn't exist in this game.  There is, just like with fractional banking, only a fraction (IF THAT!) behind each bet.  There's not enough "liquid" to fill the glasses.  Someone MAY get a full glass, but after that that's likely it.

Nothing like making all of humankind one big bluffing game.  And now that things are getting serious the big players expect REAL money is to be paid out, and that's NOT going to happen.  Thus commences wide-scale war...

Thu, 04/19/2012 - 16:30 | 2359475 EvlTheCat
EvlTheCat's picture

'you also would have to put a dollar on the table.'

You're still assuming everyone is betting with "tangible assets" instead of leveraged IOU's..

Thu, 04/19/2012 - 17:00 | 2359522 hedgeless_horseman
hedgeless_horseman's picture

 

 

You all have the wrong perspective.  Try this...

You are Jon Corzine. 

You have had a run of bad luck at the casino.

You borrow a dollar from Jamie Dimon, with two of your client's dollars as collateral, and you put it on the table...

Thu, 04/19/2012 - 17:16 | 2359599 EvlTheCat
EvlTheCat's picture

or there's that.. hahaha

Thu, 04/19/2012 - 19:46 | 2359874 The Alarmist
The Alarmist's picture

... and your expected outcome (and likely outcome) is $1.0B ....

Thu, 04/19/2012 - 20:11 | 2359920 Seer
Seer's picture

Via the taxpayer-funded payout window!

Thu, 04/19/2012 - 16:25 | 2359451 Yorick7
Yorick7's picture

Someone has the other side of the bet.  You can't create a bet out of nothing.  The net value of your bet and the guy/gal who lays the bet is zero in your example.

Thu, 04/19/2012 - 16:28 | 2359459 mayhem_korner
mayhem_korner's picture

 

 

So you're ok if you give me $10 million today and I give it back to you next week?  Net value is zero, right?  There wouldn't be a solvency issue in there anywhere, would there?

Thu, 04/19/2012 - 16:51 | 2359533 Yorick7
Yorick7's picture

Thats a credit issue, not betting.  Betting is slightly different from derivatives because with derivatives you can hedge in the underlying, thus the name "derivative", the price is derived from an underlying asset which you can buy or sell to reduce your exposure.  But it still all nets out when you consider the value of payout on the derivative and the hedge.  

This is not to say that derivatives in the hands of people who don't understand them aren't dangerous, rather that you end up with zero and the other side gets all your money.

 

Thu, 04/19/2012 - 17:11 | 2359587 centerline
centerline's picture

It is all betting.  Period.  There is no fundamental difference except the instruments of betting are usually pretty simple.  In the case of the financial world, the bets are constructred by teams of lawyers.

Real world productive use for "betting" (err.... hedging) is okay.  Just a part of doing business.  Hell, life insurance is a bet.  What we have here though is a ponzi profit machine based on betting.  The consequence is that once put in motion, you can't stop it without breaking it.  The gains are recursive though - so there is an end.  But, by then the stakes will be too high to avoid a major calamity.

Now, if this were a closed system (say just one island nation with no ties to the rest of the world) we might be get through it okay.  But, the counterparty exposure here crosses many borders, political regimes, ideologies, etc.  It simply won't end well.

Thu, 04/19/2012 - 19:54 | 2359892 mayhem_korner
mayhem_korner's picture

But it still all nets out when you consider the value of payout on the derivative and the hedge. 

 

Not if

a)  You don't have the underlying...

b)  Don't have access to the underlying...

c)  and/or there doesn't exist sufficient underlying on the planet.

 

I think you're assuming these banks have no naked positions, which is a wrong assumption.

Thu, 04/19/2012 - 20:22 | 2359948 Seer
Seer's picture

"I think you're assuming these banks have no naked positions, which is a wrong assumption."

EXACTLY!

I don't think anyone here would state that standard, run-of-the-mill banks and their fractional reserve requirements is anywhere nearly as potentially fucked up as the derivative "market."  HOWEVER, one has to ask what happens to those nice, up-front banks when people all of a sudden feel like they need to get their hands on the Fractions...

Thu, 04/19/2012 - 16:30 | 2359465 tmosley
tmosley's picture

DINGDINGDING.  We have a winner!

Thing is, these derivatives are sort of like betting your buddy "a million billion dollars" about something, and then expecting him to pay up when he loses the bet, and worse, betting everything that you have somewhere else, assuming that if you lose that bet, you will win big off of your buddy.

Thu, 04/19/2012 - 16:59 | 2359562 centerline
centerline's picture

LOL.  Funny.  It does net out my friend... on paper to some degree within a span of time.  That is the static double-entry accounting that gets numnuts into trouble.

The system is not in balance and it is not static.  It is in a constant state of disequilibrium and is very dynamic.  And the complexity of these instruments adds yet another layer of smoke and mirrors over an already shadowy system.  Likewise, there are human factors to this.  God forbid we cross international borders, have to deal with politicians, etc.  Yeah... I wouldn't bet on the "all things being equal" working out!

 Econonics and finance are more social sciences.  The math is only part of it.  Not akin to physics at all.

 

Thu, 04/19/2012 - 15:44 | 2359310 mayhem_korner
mayhem_korner's picture

 

 

Poor analysis and/or understanding of derivatives.  We have minds like yours to thank for the logic that drove the CDO mess.  When the exposure is a high multiple of the notional value of the underlying, then there is by definition enormous leverage in the transaction books.  That leverage is the tinder that ignites cascading losses.  Netting and offsets of theoretically zero-sum positions only count if they occur simultaneously in terms of settlement (which never happens in cascading events).

Folks that look at nameplate risk don't understand correlation and contingent event risk.  All you need to do is look at what happens to PMs every time equity managers get squeezed for margins - they liquidate PMs to meet the margin call, which precipitates a further liquidation to meet margins on PM positions.

If you see the picture correctly, you understand why Ag sat at $50 for only a few fleeting hours last summer before a panicked JPMorgan systematically monkey-hammered it down before it was bankrupted by all its Ag shorts.  That is one of likely a thousand examples of deeply layered and leveraged option positions that will have no out if reality sets in against their positions.

Wake up and see reality, dood.

Thu, 04/19/2012 - 16:14 | 2359407 TMT
TMT's picture

How about a casino analogy (please help if I'm off here):

So a casino takes $230 trillion of action on a bet (or collection of bets).  Supposedly they are netted out since they move the line to net out their exposure (kind of like banks buying CDS' on counterparties).  In this casino, assume the gamblers buy their bets with leverage (to reflect the real world of CDS).  So when it's time to net out these bets, there's no way the casino will be squared.  The casino would owe over $100 trillion to the winners, but in order to pay out, they would have to collect from the losers (who were leveraged).  Many of them won't be able to pay (think AIG) so the casino and consequently the winners (counterparties essentially) won't be squared.  Now the casino goes under, which renders them unable to pay other debts because their capital is redeployed to try to pay the winners.  Then the entire daisy chain unravels.

Maybe I just confused myself.

Thu, 04/19/2012 - 16:25 | 2359446 mayhem_korner
mayhem_korner's picture

 

 

You do realize that after you hit all of those letter keys that you don't have to hit the "Save" button?

Thu, 04/19/2012 - 16:33 | 2359479 TMT
TMT's picture

LOL b/c I actually was going to delete it prior to saving.  But I thought it would be instructive to create an analogy for those of us who don't fully understand the intricacies of the derivatives market (like me).  You appeared well versed on topic.

 

Thu, 04/19/2012 - 16:30 | 2359467 engineertheeconomy
engineertheeconomy's picture

You are correct mathamatically. But when it comes to Wall St. they play a nutshell game to cover up what they're up to. When they can't cover their bets, they just go get more pker chips and keep playing. The Fed loans them money for nothing. They know that eventually they will make their money back trading because people are stupid enough to pile money into their 401K's. And we all know thats money they'll never see. What little they will eventually  see won't buy a loaf of bread. This is the truth that the trolls so adamantly attack. It's actually fun to bash trolls.

Thu, 04/19/2012 - 16:38 | 2359495 TMT
TMT's picture

The Fed, the great equalizer.  Nothing to worry about with Bernank at the helm.

Thx for feedback ... still trying to wrap my head around a lot of this stuff.

Thu, 04/19/2012 - 19:15 | 2359818 ebworthen
ebworthen's picture

Yorick7,

"For every buyer of a derivative theres a seller and vice versa."

puff...puff...pass..

(and not to Corzine)

Thu, 04/19/2012 - 15:13 | 2359214 Catullus
Catullus's picture

For those of confused net approaches gross as your counterparty does not return phone calls.

Thu, 04/19/2012 - 15:31 | 2359262 centerline
centerline's picture

LOL.  Exactly.  And corresponds to cash flow driving to zero.

Thu, 04/19/2012 - 15:13 | 2359216 Yorick7
Yorick7's picture

Agreed, thats what I was trying to say by the intertwinedness of the market.  However if a counterpart fails they will generally try to net all the exposure between the two entities first and determine the balance.  Of course there will be residual issues around how the position was intially hedged but that gets complicated.

Thu, 04/19/2012 - 15:21 | 2359238 Paul Atreides
Paul Atreides's picture

What if there are 10 or 20 or more counterparties all betting on the same item let's say Spanish sovereign debt. How are you going to net all the exposure between entities then? It's going to be a jolly clusterfuck.

Thu, 04/19/2012 - 15:27 | 2359250 Yorick7
Yorick7's picture

That's why they bailed out the idiots at AIG, everyone knew they were under pricing risk so everyone took the otherside and presto, when things went wrong there was a risk of as you say, a huge clusterfuck.  

Thu, 04/19/2012 - 15:45 | 2359316 centerline
centerline's picture

Now just imagine the chain of events moving from weakest link to weakest link in global unwinding of this magnitude.  Shit, we still don't know what happened at MF Global.  Anyone here think a multi-TRILLION event will somehow work itself out nicely?  I don't think so.

Thu, 04/19/2012 - 16:25 | 2359432 Paul Atreides
Paul Atreides's picture

AIG should have never been bailed out, stupidity and fraud should not be rewarded and taxpayers should definitely not have to foot the bill.

And as for MF Global we know exactly what happened: Jon Corzine was gambling at 40 to 1 on foreign sovereign debt with customer segregated funds (which by way of banker loophool is the only thing you can gamble customer segregated funds on) and lost. Jamie Dimon threatened to kill him if he didn't pay up so he forked over the customer funds to a JP Morgan clearing house in the city of Lololololololololololondon before filing for bankruptcy. The SEC, the CME and the US Justice department are all in bed with the banks so the public gets no investigation and no justice.

Thu, 04/19/2012 - 16:33 | 2359481 engineertheeconomy
engineertheeconomy's picture

Military is in on it too. Hell, they're probably the ones behind it.

Thu, 04/19/2012 - 16:36 | 2359487 Paul Atreides
Paul Atreides's picture

Obvious troll is obvious.

Thu, 04/19/2012 - 22:38 | 2360197 Seer
Seer's picture

I think AIG had pictures... This entity has been tied in with "Secret America" since forever.  There was NO way that TPTB were going to let this puppy drown.

Thu, 04/19/2012 - 16:46 | 2359512 Catullus
Catullus's picture

Even if they had priced it correctly, it wouldn't have mattered. Promising money you don't have is fraudulent. You had no ability to make good on the contract in the event it demanded payment. This in theory is what a real stress test should be. But those seem to be too difficult to comprehend at this point. A lot of "we never thought it could get this bad" garbage.

In my deepest tin foil hat moments, I believe that the Fed is passively encouraging these derivative creations to augment the perceptions of these markets. This is what the Greenspan Put was really about. It was encouraging the large inner core banks to write IRS, FX, and CDS derivatives against significant dollar appreciation and interest rate increases. It's also why they put such a big emphasis on interest rate signaling in the Greenspan years. Letting the market know in well-defined increments when rate increases would occur.

Thu, 04/19/2012 - 15:17 | 2359222 defn8Dog
defn8Dog's picture

Just like I said in early 2008, I'm sure they know what they're doing and that everything will be just fine.

Thu, 04/19/2012 - 15:20 | 2359232 gaoptimize
gaoptimize's picture

"Yeah, but it's a balanced book.  Sure it's a big market, but we have little net exposure, we just make it."

Thu, 04/19/2012 - 15:40 | 2359242 Racer
Racer's picture

Eeeeeeeeeeeeeeeeeeeeeek!!!!!!!!!!!!!!!!!!!!

 

How on earth did the 'regulators' allow that to happen!

Thu, 04/19/2012 - 15:24 | 2359246 Troy Ounce
Troy Ounce's picture

 

 

Imagine a closed room, a bird flying inside and 1500 loaded mouse traps on the floor....

Thu, 04/19/2012 - 15:26 | 2359247 jarrollin
jarrollin's picture

This reminds of of two summers ago when Senators Levin and Coburn made that bi-partisan attack on the Goldman guys on live national tv -- so appauled and amazed they were that these derivatives existed.  Yet, no reform.  Why do so many think these cancel each other out?  They didn't then and they won't this time.

Thu, 04/19/2012 - 15:32 | 2359264 Downtoolong
Downtoolong's picture

This kind of takes the fun out of clipping that coupon in the newspaper to save 15 cents on your next can of beans, doesn't it?

Eventually, no one will even give a shit if they hit the lottery.

 

Thu, 04/19/2012 - 15:41 | 2359291 jarrollin
jarrollin's picture

I could never stop having fun doing that

Thu, 04/19/2012 - 15:34 | 2359272 KillerWhale
KillerWhale's picture

king kong would have trouble climbing those stacks

Thu, 04/19/2012 - 15:38 | 2359283 verum quod lies
verum quod lies's picture

A few facts and issues for the “it all nets to zero” crowd:

1.       As mentioned, this assumes all counterparties cover their positions. They will not. In fact, the largest counterparty is the least likely to cover its positions. Have you ever heard of AIG? What did that cost the taxpayer?

2.       Even the people who pushed and invented “it all nets to zero” don’t believe it. It was merely a mantra of sorts to convince the SEC, Fed, FSA, etc. that all is well and little or no capital needs to be set aside (see #1). Does the expression “regulatory arbitrage” ring any bells?

3.       By extension and analogy one could say that all debt sums to zero. After all someone’s debt/liability is someone else’s bond/mortgage/note/etc... Thus, we could say that as long as things net to zero and there is no counterparty issue all is fine and there is nothing to see. Hey, aside from those pesky interest payments what’s all the fuss?

4.       There is no truly free lunch.

 

Thu, 04/19/2012 - 15:48 | 2359329 Yorick7
Yorick7's picture

umm, i buy a derivative from u and choose not to hedge it but you do then hedge it, it still nets to zero, I'm long, your square and someone else (your hedge) is short.  all nets to zero but we've created systemic risk. 

Thu, 04/19/2012 - 17:47 | 2359644 KickIce
KickIce's picture

I think it might work if the liability was more evenly distributed and wan't being managed by sociopaths always in search of more power.

Actually, I think the biggest problem facing the Ponzi is keeping world leaders happy as well as government unions.  One of these days they're going to piss off someone with a large axe to grind which in turn will drive them off the CB reservation.

Thu, 04/19/2012 - 15:39 | 2359285 NidStyles
NidStyles's picture

FFS, there are typos all over that thing. You'd think who ever figured all of this out would at least be able to type and use the English language.

Thu, 04/19/2012 - 15:59 | 2359368 pirea
pirea's picture

Stange enough that this image generated your comment. You must be more interested in some insignificant typos than the significant issue shown in the image.

Thu, 04/19/2012 - 22:33 | 2360188 Calmyourself
Calmyourself's picture

Grammar blog is down the hall dood, this is the econ-cage match blog..

Thu, 04/19/2012 - 15:38 | 2359286 marcusfenix
marcusfenix's picture

ABSURD.

just like everything else the lunatics running this circus have managed to impose upon the rest of humanity. 

these people have gone way, way off the edge of the map and this is just another example.

Thu, 04/19/2012 - 15:42 | 2359296 Vince Clortho
Vince Clortho's picture

They must keep all that cash off-site somewhere.

Thu, 04/19/2012 - 15:50 | 2359332 I Am Not a Copp...
I Am Not a Copper Top's picture

NICE FUCKING RAMP!

Thu, 04/19/2012 - 16:02 | 2359375 eddiebe
eddiebe's picture

The visuals help but I still can't wrap my head around it. All these stacks of hundreds. What could they possibly buy that isnt bought already?

Thu, 04/19/2012 - 16:21 | 2359429 EvlTheCat
EvlTheCat's picture

The future?

Thu, 04/19/2012 - 16:54 | 2359540 engineertheeconomy
engineertheeconomy's picture

Go grocery shopping, FILL your gas tank, pay your rent and energy bills and THEN ask that question again.

Seriously, what DON'T they buy?

Thu, 04/19/2012 - 22:44 | 2360204 Seer
Seer's picture

Protection from the angry masses; until, that is, it doesn't...

Thu, 04/19/2012 - 16:24 | 2359449 j.tennquist
j.tennquist's picture

I love the fact the ZH and a few others have the guts to publicize this stuff but I do worry that one day I will try to access the site and it will be gone.  

Our government is so steeped in fraud and bullshit that it can't take this kind of raw honesty for long.  
After all, peasants occasionally do revolt.

Thu, 04/19/2012 - 17:14 | 2359592 ltsgt1
ltsgt1's picture

There is no need to worry. Nobody would listen. I learn to keep my mouth shut before I loss more friends.

Thu, 04/19/2012 - 19:10 | 2359806 ebworthen
ebworthen's picture

"Hey, did you see the game last night?"

"I'm looking at a new Audi A8, what do you think?"

"Have you tried that new sushi place?"

Instead of:

"Can you believe Corzine stole $1.2 Billion from farmers and little old ladies and he isn't in jail?"

"Aren't those idiots thinking about the future and their children and grandchildren?"

"Have none of them studied the history of civilization?"

I'm expecting a roll or two of tin foil for my Birthday from Friends and Family; they aren't stupid they just don't want to be awakened from their delusions.

Thu, 04/19/2012 - 16:33 | 2359482 aerial view
aerial view's picture

Fractional reserve on steroids:

This entire system is a sham: imagine if you could bet with extreme leverage (via derivatives) on any financial instrument including oil, bonds and sovereign debt knowing that if you are wrong, the govt will bail you out: this is the protection enjoyed by the TBTF; in other words, heads I win, tails you lose.

Since the bailout amounts are nothing more than digits on a Federal Reserve computer, the amounts can continually increase until hyperinflation destroys everyone's net worth except the elite with their trillions of dollars. 

Thu, 04/19/2012 - 16:40 | 2359498 engineertheeconomy
engineertheeconomy's picture

Rome fell hard and landed face down.

And it didn't even have derivitives.

Gasoline will be $100/gallon by December and they will blame it on every imaginable thing under the sun.

 Except, of course, central bankers and their printing presses 

Thu, 04/19/2012 - 16:49 | 2359523 Seasmoke
Seasmoke's picture

the bigger they are, the harder they fall (how come all those corny old time sayings, always turn out to be true)

Thu, 04/19/2012 - 16:52 | 2359537 resurger
resurger's picture

Call Basel's for Cash delivery on 800-Basels

 

 

Thu, 04/19/2012 - 16:55 | 2359542 penexpers
penexpers's picture

Why didn't we build two 935ft towers of paper money for al Qaeda, excuse me, the CIA/Pentagon/Mossad, to crash drone passenger aircraft into instead of the Twin Towers? I mean, come on, I'd rather see trillions of paper PHYSICALLY burn than be DIGITALLY vaporized.

 

Thu, 04/19/2012 - 16:56 | 2359553 futuretrader21
futuretrader21's picture

WHATS AFTER A TRILLION?!

 

FOR SURE WE'LL GET THERE....

Thu, 04/19/2012 - 17:05 | 2359572 MrBoompi
MrBoompi's picture

Anyone who could actually do something about the derivatives market would quickly receive the same treatment as JFK or Lincoln.

99.9999% of the world cannot play in this game, nor should they stick their nose where it doesn't belong.

 

 

 

 

Thu, 04/19/2012 - 17:18 | 2359602 q99x2
q99x2's picture

I can see why they want to go cashless. There aren't enough forests.

Financial Terrorism has the trees shaking in their boots.

Thu, 04/19/2012 - 17:29 | 2359618 EvlTheCat
EvlTheCat's picture

Yea... And they say Ted Kaczynski is crazy.

Thu, 04/19/2012 - 17:36 | 2359629 Fix It Again Timmy
Fix It Again Timmy's picture

What's the problem?  I have a quadrillion [10-$100 Trillion bank notes] Zimbabwe dollars in my wallet!

Thu, 04/19/2012 - 17:42 | 2359640 A82EBA
A82EBA's picture

Very Cool

Thu, 04/19/2012 - 17:52 | 2359658 Bunga Bunga
Bunga Bunga's picture

Get over it. This money does not really exists. It's just an illusion.

Thu, 04/19/2012 - 18:58 | 2359778 bunnyswanson
bunnyswanson's picture

Insurance makes the difference.

 

Edited to add link. 

 

http://boingboing.net/2009/03/09/aig-has-insured-16-t.html

Thu, 04/19/2012 - 19:05 | 2359798 ebworthen
ebworthen's picture

Does that mean the taxes I had to pay were an illusion?

Thu, 04/19/2012 - 18:06 | 2359692 Widowmaker
Widowmaker's picture

What part of conjuring fraud out of thin air don't the quacks on ZH get?

The part of making it vaporize in the same way it was brought into this fucking racket.

END THE FED FRAUD CARTEL!  END TOO BIG TO JAIL!!!

Thu, 04/19/2012 - 18:27 | 2359745 saulysw
saulysw's picture

Cash on the sidelines.

I get the impression that this little game may implode the worlds currencies, one day. But when?

Thu, 04/19/2012 - 18:48 | 2359769 Alex Kintner
Alex Kintner's picture

Can I say "Holy Crap" on the internets? Well then, Holy Crap!!

Thu, 04/19/2012 - 19:06 | 2359796 ebworthen
ebworthen's picture

You can say "Holy Shit" too if you want to because this is ZeroHedge.

;-)

Thu, 04/19/2012 - 21:25 | 2360051 Yes_Questions
Yes_Questions's picture

 

 

Goddamn fucking shit for brains sheeple got motherfucking towers of shit about to dump hell all up in their ass and no motherfucker up in Goddamn fucking lie'n ass DC gonna do shit to stop it.

Cunts..

Thu, 04/19/2012 - 18:55 | 2359775 sgt_doom
sgt_doom's picture

EPIC GREED:  The Social Singularity Has Been Achieved

Some years back, a poster or commenter in the United Kingdom named Dan, suggested that the social singularity had been achieved, that the economic elites had become so powerful, and their power wielded so subtly and covertly, that few realized just how easily the populace was being manipulated.

A peek behind the curtain, at the inner working of the Koch brothers, their astroturfing, their political and media manipulation, was long in coming; from their Liberty Lobby reaching widespread circulation in 1960, to the present, is a very lengthy period.  Little traction was achieved when, at the beginning of the Bush administration, we tried to publicize that President Bush’s sister was Mrs. Koch, and that Dick Cheney’s godson, D.G. Gribbin IV, was a Koch company employee, and the Kochs aren’t even at the top of the power pyramid!

Today we are assaulted by the usual political theater on taxes; the so-called media babbling about a “broken tax code” --- obfuscating the obvious truth of a tax code designed to favor the super-rich while discriminating against the workers and the poor.

When the IRS tax rule 401(a)(5) states:  “A classification shall not be considered discriminatory merely because it is limited to salaries or clerical employees” --- the intent should be obvious.

When private equity firms – private banks such as Fortress and the Blackstone Group – go public, yet continue to pay the lower capital gains tax rate (when they do actually pay taxes), instead of the higher corporate tax rate which they should be paying, the absolute corruption should be obvious.

Confused and ignorant people, people who are used to being classified as “consumers” and are bewildered as to what true citizenship means, sincerely believe themselves to be team members, either on the Blue Team (the democratic wing of the Bankster Party) or the Red Team (the republican wing of the Bankster Party) --- wallowing within the political theater of the absurd!

When several economists from Goldman Sachs were quoted in a New York Times article (Aug. 28, 2006) explaining the obvious:

“The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income”

they were blithely repeating the number one commandment and strategy of the plutocrats, or the Transnational Capitalist Class; namely, absolute wealth transfer so they could realize the greatest concentration of wealth imaginable!

What has occurred with each successful presidential administration since Reagan?

Has economic inequality and the concentration of wealth decreased or increased during each administration, from Reagan to Obama’s?
Increased ! ! !

What is the oldest and largest private bank in America?

Brown Brothers Harriman.

Someone connected with them has been in a senior power position in America for thirty-some years:  either a Bush in the presidency or vice-presidency (effectively the presidency under Reagan), or Alan Greenspan at the Federal Reserve.

And where did Brown Brothers’ wealth originate from prior to their merger with Harriman?

Slavery and the slave trade, of course.

Harriman was responsible for bringing over boatloads of Chinese scab workers during the late 1800s and early 1900s to undercut the American gandy dancers (white, black, Japanese and immigrant gandy dancers), working the majority of them literally to death!
Today, they offshore jobs to China, offshore technology to China and offshore investment (and foreign aid) to China --- and still bring over Chinese scab workers ---- now that’s progress!

Few comprehend the financial power and connections between JP Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, Brown Brothers Harriman, Blackstone Group, Carlyle Group, Rockefeller Financial Services, etc. (and the oil companies, biopharmaceutical companies and weapons makers they own).

Only a few Americans comprehend the total surveillance state America is today; for few have both the time and resources to keep current, or aren’t technically astute enough to understand EPs or IXPs, Narus boxes, MASINT, Unit 8200, NDA NXX NPA, IMSI, etc.
Today, 99% of economists, or pseudo-economists, are paid to simply serve as apologists for differential income inside a system of arbitrary and functionless ownership.

Thorstein Veblen once remarked, “There are no iron economic laws; there are only man-made institutions.” 

Veblen explained what economic surplus was, and how the economic elites routinely steal it and destroy it --- the ultimate amoral wealth transfer!

(Whenever a brilliant and honest analysis by Prof. Michael Hudson is posted generally on the Web, a chatbot --- automated software --- is programmed to counterpost that he’s a “kook.”)

Empires are not about the efficient use of resources and the spread of happiness.

Empires are about epic greed!

Thu, 04/19/2012 - 21:57 | 2360119 Yes_Questions
Yes_Questions's picture

 

 

You had me at Epic Greed front and back

Thu, 04/19/2012 - 22:50 | 2360213 Seer
Seer's picture
Archimedes by "Twark Main"

http://www.henrygeorge.org/archimedes.htm

 

Thu, 04/19/2012 - 19:01 | 2359783 blindman
blindman's picture

Levon Helm - "Only Halfway Home"
http://www.youtube.com/watch?v=tQ5Jl3zxabo
.
Levon Helm - Wide River to Cross
http://www.youtube.com/watch?v=gm2_7o8DGtI&feature=related
.
19 April 2012
Frontline: Money, Power, and Wall Street
http://jessescrossroadscafe.blogspot.com/2012/04/frontline-money-power-a...
..."The truth of what really happened was led down a blind alley, and strangled. And no one saw or heard anything." .. jca
.
"It's After The End of The World". (A song from the 1974 movie "Space Is the Place")
http://www.youtube.com/watch?v=ALe-Q9nFehA
.
Don't Do It
http://www.youtube.com/watch?v=11Y987Uf1wY
.
r.i.p.

Thu, 04/19/2012 - 21:09 | 2360029 Pinktip
Pinktip's picture

Add the Last Waltz..."The night they drove old Dixie down"

 

http://www.youtube.com/watch?v=eOi0tC00Luc

Thanks!

Thu, 04/19/2012 - 19:05 | 2359793 ebworthen
ebworthen's picture

Nice use of the World Trade Center Towers.

Think they will send the military after these financial terrorists? (oh, sorry, "banks").

Nah, they'll send Timmy Tax Cheat Geithner and Bailout Ben to ask them how much "Ctrl-P$" they need.

Thu, 04/19/2012 - 19:13 | 2359812 Stuck on Zero
Stuck on Zero's picture

My wife and I have insured each other with $trillion promissory notes.  We couldn't afford $10 trillion in notes.

Fri, 04/20/2012 - 13:49 | 2361738 The Alarmist
The Alarmist's picture

Bet AIG would have undewritten that for only a couple million in premia.

Thu, 04/19/2012 - 19:20 | 2359824 Atomizer
Atomizer's picture

“Empire of Dirt”

 

Johnny Cash |Hurt 

Don't be afraid, they're more terrified in losing their [debt paper wealth] illusion status.  :>)

Hope everyone on ZH is doing well.  A bit tied up lately, will return shortly.

Thu, 04/19/2012 - 20:13 | 2359924 blindman
blindman's picture

Love Hurts - Gram Parsons + Emmylou Harris
http://www.youtube.com/watch?v=lLNFDvSYhB8

Thu, 04/19/2012 - 19:23 | 2359833 ManOfBliss
ManOfBliss's picture

These infographics are so fucking retarded. I did not get any better conceptual understanding of the derivative figure by seeing stacks of paper money.

Thu, 04/19/2012 - 19:58 | 2359890 TWSceptic
TWSceptic's picture

If this doesn't do it for you then what does? Maybe you simply lack the cognitive capability to grasp the numbers, both conceptually and visually?

 

But even the most uneducated understand this is a shitload of money, excuse me.. currency units.

Thu, 04/19/2012 - 19:24 | 2359837 Herdee
Herdee's picture

So,we know that the derivative situation is gigantic and we know that the naked short selling of stocks and other securities is huge and largely unknown(according to DeepCapture).Looks like the banksters have got all the politicians where they want them.Ready for hyper-inflation anyone?It's the only way that corruption can pay off the war debt.Throw in housing for a laugh.

Thu, 04/19/2012 - 19:59 | 2359895 Atomizer
Atomizer's picture

Global Bust-Out revisions to be released soon. Those unknown faces will begin to appear in the open, as Herdee as stated.

 

http://www.deepcapture.com/ 

I can predict a high political suicide rate in coming months. Nothing new to Central Planners who crumble under the very weight of failed society changes.

Thu, 04/19/2012 - 19:42 | 2359869 Freewheelin Franklin
Freewheelin Franklin's picture

It could look worse. It could be in Lyra. 

Thu, 04/19/2012 - 20:03 | 2359878 TWSceptic
TWSceptic's picture

You know the ironic thing about this is that paper currency was invented because it was more practical than gold because of weight & size...

Thu, 04/19/2012 - 21:19 | 2360044 Yes_Questions
Yes_Questions's picture

 

 

 

Ah, but the PMs could never be so suited for kindling and wiping ass.

 

Not to mention defacing with "END THE FED".

 

Thu, 04/19/2012 - 19:47 | 2359880 SHRAGS
SHRAGS's picture

posted in 2010 by Miramanee http://www.zerohedge.com/article/explaining-derivatives-and-goldmans-dom...

 

Welcome to the cautionary tale of the Global Poker Tour.

The GPT, or Global Poker Tour, had humble beginnings. Back about 11 years ago or so, a few high-stakes Texas Hold ‘em aficionados got together in a dark room somewhere and began to hatch a plan that would change the poker world forever. Their birth child: The GPT.

It was a simple proposition really. The founders---we’ll Blithely refer to them as “the Masters” for lack of a better moniker---the founders each called a couple of their friends from Vegas and Monte Carlo and Macau and planned to meet one evening for a game of poker. They rented a room at the local Holiday Inn Express, rented a table and some chips, and they were ready to rock!

So, on this pretty starlit evening in 1997, all of the players descended upon room #1600 at the Holiday Inn and the game was on. And it was a good game, with lots of big pots and exciting show downs. And the game went on well into the wee hours of the morning. And by dawn everyone was pretty beat and hungry and in need of fresh air, and so they decided to settle up their accounts and come back tomorrow night for another game.

Now, one of the really groovy parts of the new GPT was that none of the players actually had to bring cash with them. The Masters figured that all were good for their markers, and besides, carrying a lot of cash around ain’t so safe these days.

So at the end of the inaugural game of the GPT, over 3 million dollars had changed hands. (Well you know what I mean. 3 Million chips we'll say.) The big winner this night was poker giant HP who had won over a million dollars in chips! Many others hovered around the break even point, and only AG found himself in the hole over $500,000. Of course, no debts were settled on this evening. The game would continue tomorrow, and trust among fellow gamblers runs as deep as blood.

Night 2 arrived, and 8 more players joined the game! And so the Masters went out and rented another table, and a few more poker chips, and took a bigger room at the Holiday Inn Express, and as the clock struck 8pm it was game on! And what a spectacular night it was for poker lovers!! Over 15 million dollars gambled, with BB finishing the night as the big winner with over 5 million in chips. Again, most players hovered close to even, and only 2 or 3 players had losses over 1 million $$.

Again, as this was a small game and everyone at the tables was considered good for their debts, no actual money exchanged hands. A few IOUs were scratched out on napkins and torn pieces of dominoes pizza boxes, but that was primarily just for references sake. The GPT was off to a rousing start, and the game was just beginning!!

Well as I’m sure you can imagine, the GPT really took off. Soon games were organized all over the country, and no longer were mere rooms at the local Holiday Inn Express sufficiently large enough---now we were talking ballrooms, and even auditoriums and arenas for the really huge events. And thousands of players had joined the ranks of the GPT brethren, and tens of BILLIONS of dollars was changing hands. And so the Masters met one night and penned a few rules to keep things running smoothly.

The 1st rule of the GPT was that all members were considered absolutely good for their debts. The 2nd rule of the GPT was that no member could cash out and leave the tour without the permission of the other members and particularly without the blessing of the Masters. As such, none of the tens of billions of dollars in debts and winnings needed to take place in cash. It was perfect! And all of the IOUs and markers and debts were recorded in a central repository run by the Masters---and all of the players trusted the Masters as they trusted their own family members. In fact, the GPT became a sort of surrogate family for the members, and loyalty ran deep.

So one day the Masters were discussing how they could grow the GPT without adding too many more actual players. You see, the games had gotten so unwieldy and massive---sometimes involving 10,000 players or more---that entire city blocks had to be rented out to accommodate not only the players but also the growing crowds of spectators.

And then it hit them! The Masters decided that they would create two new parts of the GPT: one would be a method by which spectators could wager with each other on who each thought would win the tournament, who would survive longer in the tournament, who would win a given hand, even who would finish their free cup of coffee first! The spectators could bet on anything and everything that pertained to the GPT! The second part would be a program by which players AND side-betting spectators could purchase insurance against their bets AND debts, just in case some member of the GPT or some member of the spectator group had unexpected bills to pay or, god forbid, broke rule #2 and asked for cash instead of the usual and expected IOU.

Well this idea took off like a jet plane! Soon Trillions and trillions of dollars were being bet and "swapped" by players and spectators and insurers and side-bettors. The excitement was palpable, and the GPT became the world’s highest "grossing" institution. My gosh, at one point it was estimated that the Global Poker Tour was worth, in total assets, almost half a QUADRILLION dollars!!! Of course because the rules were clear, and because a member's word that he could pay his debts if absolutely necessary was good, of that 500 Trillion dollars in assets, only a very small fraction existed in cash, or equity. The rest was debt, or leverage. What a great institution the GPT had become!!

But as we must remember, the 2 rules of the GPT were sacrosanct. All of the transactions were accounted for through IOUs and promissory notes and contracts and everyone in the GPT abided by these rules, and all grooved along quite swimmingly….that is, until the fateful day. The fateful day to which I refer----it makes me shudder to remember that awful day---that fateful day was the day that Bobby Lehman, one of the tours rising stars, realized that he couldn’t pay some of his bills…and he broke the 2nd rule! He went to his friend and fellow star, Franky Goldman, and told Franky that, as unfortunate as it was, he needed to cash in on Franky’s IOU to Bobby----an IOU totalling 22 billion dollars.

Franky was stunned. Franky didn’t have 22 billion dollars in cash!! The only way Franky could pay Bobby was to find his buddy Tommy Stearns and demand the 56 billion dollars that Tommy owed Franky.

Well I needn’t tell you what happened next. T’was a sad day in not only the life of the GPT, but also for the whole wide world. The avalanche of margin calls and requests for payment of debts and requests for payments of side bets and demands for payments of insurance policies exploded. And while theoretically the whole thing added up to zero---many people just figured that it wasn’t a big deal because everyone could just get together and exchange all the money and everything would work out---there were lots of flies in the ointment.

First it was discovered that the clearing house created by the Masters for all of these IOUs hadn’t really done a great job of accounting for everything. There were lots of holes in the books and strange entries and "fuzzy math" and missing pages. Second of all, the web of IOUs and debts was so tangled and so huge, that there was no way for everyone to be able to work out their debts with everyone else simultaneously and in a way that would leave everyone back at zero. Thirdly, literally MILLIONS of players and spectators and side-bettors had used their IOU "winnings" as collateral to buy stuff like houses and yachts and airplanes, and so the IOUs really didn’t represent the zero-sum dynamic that everyone said it did. And fourthly, some of the players and side-bettors and insurers were more entangled than others---just like O’Hare airport is more entangled with flights that the airport in West Lebanon, NH----and so lots the more entangled players ended up getting so overwhelmed that they----I hate to say it---took their own lives and left all of their counterparties holding IOUs that had no way of being paid.

What a disaster this was. What a mess! What had begun so innocently and had been so small at first became the engine that ended up bringing the entire world’s economic system tumbling down. And all of the leaders of the world got together and decided that they still wanted the GPT to exist, because it made them really really rich, but that they could never ever let anyone break rule #2 again! And so there would be no more Tommy Lehmans. Anytime a player was broke and needed cash for some reason, the governments of the world would give them the money and the people of the world would pay back the government through taxes. And that way the Global Poker Tour could survive and live on forever! Because the survival of the GPT, after all, is best for everyone.

 

Fri, 04/20/2012 - 02:23 | 2360410 Revert_Back_to_...
Revert_Back_to_1792_Act's picture

You left something out of your story.  "The Rake".  This is my own little personal parable about that.

In most casinos they keep the rake hidden.  They drop it into a small slot and the rake box is removed every now and then during play.  For non poker players here, the rake is a small amount taken from each pot.  It is normally a percentage (say 5 percent) and is normally capped at some figure.  Generally speaking, the rake is a much smaller percentage in private games.  In theory, it is to pay the dealer, the casino, etc for hosting the game.

One time I went to a private poker game where they didn't hide the rake.  There were about 7-8 players.  The guy hosting the game was providing beer and pizza, all you could eat.

Each of the players put up about $100.00 stake and bought chips at the beginning of the night.  They were playing small stakes like 1-5.   About half way through the game they took a break, I noticed the dealer who was hosting the game had the rake under the table in a KFC bucket - he decided it was time to empty the bucket.   He took it back into his bedroom to put it back into chip racks.  It was full of chips.  I would guess there were about $300-400.00 of chips in the bucket.   He had about half of the total amount of money that the players bought into the game with.  To make things worse, some of the players were tipping him and giving him complements on all of the 'free food' he put out for them to eat. 

After the break, many of the players bought in for another $100.00 or so.  The dealer gladly sold them the same chips he had just racked up from the KFC bucket.

I went home.

Since some people are posting songs, here are a couple.

The Gambler - Kenny Rogers

http://www.youtube.com/watch?v=6q2mFiN7GIc&feature=related

Saga - Wind Him Up

http://www.youtube.com/watch?v=7J0QdXBY0wo

 

Thu, 04/19/2012 - 20:25 | 2359952 blindman
blindman's picture

We Are Witnessing The Largest Financial Bubble In History
With continued volatility in global markets, 40 year veteran, Robert Fitzwilson wrote this exclusive piece for King World News. ...
..."The biggest bubble in human history is in sovereign debt, the obligations of governments around the world. The classic signs of a bubble are present. Despite the fact that virtually all governments are insolvent (the Reality), there exists an almost universal belief that sovereign debt is safe (the Perception). There is a massive gap between reality and perception." ...
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/19_We...

Thu, 04/19/2012 - 20:41 | 2359982 scragbaker a ca...
scragbaker a cape cod clamdigger's picture

YIKES !

Thu, 04/19/2012 - 21:16 | 2359962 Yes_Questions
Yes_Questions's picture

 

 

The Twin Towers in the one panel summarizing the total?

Perhaps a new symbol for Collapse has arrived. 

Thu, 04/19/2012 - 22:07 | 2360024 blindman
blindman's picture

http://maxkeiser.com/2012/04/19/kr277-keiser-report-vicious-circle-of-ba...
[KR277] Keiser Report: Vicious Circle of Bankster Huddles
Posted on April 19, 2012 by stacyherbert
.
http://maxkeiser.com/2012/04/17/jp-morgans-goodfellas-approach-to-beleag...
Alabama Bond Fight Begins a New Round
By MICHAEL CORKERY And KATY STECH
.
... " A J.P. Morgan spokesman declined to comment. " ...
.. " Jefferson County collects sewer payments of about $160 million each year but takes out about $5 million a month to pay for the system's operating costs before emptying the rest into a bondholder account controlled by BNY Mellon, according to court documents.

Eventually, Mr. Klee said, the county will assess how much of the debt went into improving the value of the sewer system and how much went toward other purposes, such as enriching the former county officials and others who went to jail. A former county commission president, who signed off on many of the sewer financings, was accused of accepting money and expensive clothing from a local banker who was involved in many of the debt deals.
" ...
so go the commons (slaves) in the face of derivative weapons of mass
enslavement monetary system of fraud and government puppet capture for
a few thrills and insecurity satisfaction in the age of financial terrorism
from within. wave your flag here.
.
Flag Decal - John Prine
http://www.youtube.com/watch?v=m1qE2vJdDw4
.

FLAG DECAL By John Prine

C
while digesting Reader's Digest
C7 F
In the back of the dirty book store,

A plastic flag with gum on the back,
C
Fell out on the floor.

well I picked it up and I ran outside
C7 F
And I slapped it on my windowshield,

And if I could see old Betsy Ross
G C
I'd tell her how good I feel.

F
chorus
but your flag decal won't get you
C
Into Heaven any more.
G
They're already overcrowded
F C
From your dirty little war.
F
Now Jesus don't like killin'
C
No matter what the reasons for,
G
And your flag decal won't get you
G7 C
Into Heaven any more.

(Well) I went to the bank this morning
the cashier said to me,
"If you join our Chrismas club
we'll give you ten of them flags for free."
So I didn't mess around a bit
and I took him up on what he said.
And I stuck those stickers all over my car
And one on my wife's forehead.

(Chorus)

(Well) I got my windowshield so full of flags
I couldn't see.
so i ran the car upside a curb
right into a tree.
By the time they got a doctor down
I was already dead.
And I'll never understand why the man
Standing at the Pearly Gates said...

Final Ch. Oh but your flag decal won't get you
Into Heaven any more.
they're already overcrowded
From your dirty little war.
Now Jesus don't like killin'
No matter what the reasons for,
And your flag decal won't get you
Into Heaven any more.

Thu, 04/19/2012 - 23:40 | 2360289 blindman
blindman's picture

" .. you know them shadows over there you been studying in that window,
they can come back to haunt you, if you're
not careful.
take care of your self." levon helm.
.
the voice of the land and the people has passed away,
but nothing has ended.

Fri, 04/20/2012 - 01:48 | 2360401 Bartironomics
Bartironomics's picture

It is all Notional value and hedged even the hedges are hedged. 

Someone will go tits up when the showdown arrives, last go around it was Lehman.

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Fri, 04/20/2012 - 08:27 | 2360648 VyseLegendaire
VyseLegendaire's picture

The lossess will accrus to the banks. Whose heads will already be squirreled away in their mountain undergeound hideouts by the time the crash hits the news.  The feudal dark age proceeding that will be a fun time. 

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