from The Daily Bell:
Derivatives Reform on the Ropes … New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come … The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by [...]
Bill Black: Weakness of financial regulators shows you can not “tame the scorpion”.
5 commercial mega-banks continue to trade roughly $300 trillion in unregulated derivatives. In other words unregulated derivatives are 32 times total U.S. deposits and 11,900 times the FDIC’s paltry $25 billion insurance fund.
The $639 trillion over-the-counter derivatives market began the largest transformation in its 30-year history Monday with rules intended to contain another financial crisis, trimming profits for Wall Street banks.
Companies from JPMorgan Chase to BlackRock are now required under the 2010 Dodd-Frank Act to have most of their privately negotiated swaps trades backed by a clearinghouse that’s capitalized by the world’s largest banks.
That means dealers and their customers have to post up-front collateral [...]
How to Fix the Fix
by Adrian Ash, BullionVault
Friday, 15 March 2013
US regulator the CFTC is anxious about the London gold fix. But what is the fix, and why…?
SO IS the London gold fix a fix? US derivatives-market regulators think it might be.
The CFTC is no doubt absolutely within its rights to question the use of certain prices as reference points (aka “marks”) in US transactions. Joining the International Roundtable on [...]
Forget the Housing, Bond or Derivatives Bubbles … Fraud Is the Biggest Bubble of All Time
The housing bubble which burst in 2007 or so was the biggest bubble of all time.
Many argue that the bubble in U.S. bonds has surpassed the housing bubble as the largest ever.
Of course, given that the derivatives market is more than a thousand trillion dollars, and that is is backed by thousands of times less collateral, a good case can [...]
by Phoenix Capital Research
The US Fed is committed to keeping interest rates low for the simple fact that if interest rates were to rise then the payments on the debt would send the US into an EU-syle debt crisis along with the commensurate intense austerity measures being implemented.
Unfortunately for the Fed, the bond markets may indeed force this in spite of the Fed’s efforts.
Weimar Germany, like most historic episodes of [...]
London Gold Market Report
from Adrian Ash
Weds 19 Dec, 07:55 EST
Jim Roger Sees “Overdue Correction” Hitting Gold as Unleveraged Money Buys at 3-Month Lows
PRICES to buy gold with Dollars rallied from their lowest levels since late August on Wednesday morning in London, recovering 0.7% from yesterday’s drop to $1662 per ounce.
The drop came as Greece was upgraded Tuesday by the S&P ratings agency from “selective default” to “junk” status, following payment [...]
by Phoenix Capital Research
Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.
Because of this, the entire Western financial system has sovereign bonds (US [...]
ATM Guilt: Your Paper Receipt is Destroying the Earth
November 7, 2012
When you pay a $2, $3, $4 or even $5 fee to retrieve your money from one of the hundreds of thousands of ATM machines located across the country, you apparently haven’t sacrificed enough to the banks that run the globe.
Now, at many of those cash dispensaries, the user is asked to do just a bit more.
By simply skipping your paper [...]
“Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal,” Warren Buffett wrote in 2002
Lindsey Williams Highlight – Derivatives to Implode Economy
How the perfect derivative storm could cost you 90% of your retirement
Those on the wrong end of the coming crash are going to be absolutely wiped out.
Most Americans do not understand what “derivatives” are, so they kind of tune out when people start [...]
Markus Stanley: Derivative bets not a zero sum game, have far reaching real world consequences.
Starting next year, new rules will force banks, hedge funds, and other traders to back up more of their bets in the $648 trillion derivatives market by posting collateral. While the rules are designed to prevent another financial meltdown, a shortage of Treasury bonds and other top-rated debt to use as collateral may undermine the effort to make the system safer.
Derivatives allow buyers to bet on the direction of currencies, interest [...]
According to Bloomberg the Banks have started a new scheme to get more money invested in derivatives. Since they make a commission every time a derivative is created, they are salivating for ways to allow more money to come into this market. Hence the “collateral transformation” desk at JPM and 6 other banks.
Why “collateral transformation”? Because customers have run out of available treasuries and money to buy more derivatives.
How does [...]
“We just keep piling on lots of operational risk as we convert one form of collateral into another.”
“The dealers look after their own interests, and they won’t necessarily look after the systemic risks that are associated with this.”
JPMorgan Chase and Bank of America are helping clients find an extra $2.6 trillion to back derivatives trades amid signs that a shortage of quality collateral will erode efforts to safeguard the financial system.
Starting next [...]
One of the world’s most popular and widely-owned stocks could be in big trouble
Is Apple Stock About To Crash?
I’m serious. Does it make you angry to read that? Do you feel like you’re doing something wrong going short America’s favorite stock? Is it a bad thing to wish awful things upon a company who provides us with such glorious technology?
Fortunately as market participants, we don’t have to care about any [...]
This Next Economic Collapse will be greater than the Great Depression… what makes this one different?
Well for starters, it’s not going to happen in just one country. It’s going to happen to the whole world. The reason for this is we have centralized and globalized everything. So few things are separate from each other and trade lines are very blurred. As a result, if one country goes down, they all go down…
The other problem [...]
There are now 1.5 quadrillion in derivatives floating around. The banks said the US government must bail them out in 2008. Now there are 3 times the derivatives as in 2008.
By the end of 2012 there might be 2 quadrillion in derivatives, I don’t see how we can continue much longer with this massive bubble being blown up by the banks. When it pops it will take down the whole [...]
Before one every buys a single troy ounce of gold and silver, one should ensure first and foremost that one understands that gold and silver are volatile in price every single year. Many people commit the same mistake in buying gold and silver that they commit when buying into the stock market – they don’t buy assets when asset prices are low, and only buy them after prices have soared [...]
This means that ALL THE HOUSES which are for sale now, only are 10 or 15% of whats REALLY foreclosed already and what should be available for sale.
This means we are so fuxored right now, that the banks can’t even put them on the market because it will collapse everything. Then if there is an uptick in their 10-15% of houses, they get to play that as a gain in [...]
By Robert Scheer
Forget Bernie Madoff and Enron’s Ken Lay—they were mere amateurs in financial crime. The current Libor interest rate scandal, involving hundreds of trillions in international derivatives trade, shows how the really big boys play. And these guys will most likely not do the time because their kind rewrites the law before committing the crime.
Modern international bankers form a class of thieves the likes of which the world has never [...]
This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
Forget Bernie Madoff and Enron’s Ken Lay—they were mere amateurs in financial crime. The current Libor interest rate scandal, involving hundreds of trillions in international derivatives trade, shows how the really big boys play. And these guys will most likely not do the [...]
by Washington’s Blog
We noted Friday:
Barclays and other large banks – including Citigroup, HSBC, J.P. Morgan Chase, Lloyds, Bank of America, UBS, Royal Bank of Scotland– manipulated the world’s primary interest rate (Libor) which virtually every adjustable-rate investment globally is pegged to.
That means they manipulated a good chunk of the world economy.
We actually understated the impact of the Libor scandal.
Specifically, more than $800 trillion dollars worth of investments are pegged to the Libor rate. As the Wall Street Journal reports today:
More than $800 trillion in [...]
#1 Historical Trends
A recent IMF research paper by Luc Laeven and Fabián Valencia showed that a banking crisis is far more likely to start in September than in any other month. The following chart is from their report….
So what will this September bring?
#2 JP Morgan
Do you remember back in May when JP Morgan announced that it would be taking a 2 billion dollar trading loss on some derivatives trades gone bad? Well, [...]
Regulators delivered the first blow in a major investigation into whether big banks had improperly set key interest rates that affected how consumers and companies borrowed money around the world.
On Wednesday, Barclays agreed to pay $450 million to resolve accusations that it had tried to manipulate rates to benefit the bank’s own bottom line. At the height of the financial crisis, regulators say, the big British bank reported bogus figures that in [...]
Most people have no idea that Wall Street has become a gigantic financial casino. The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end. The word “derivatives” sounds complicated and technical, but understanding them is really not that hard. A derivative is essentially a fancy way of saying that a [...]
Do you want to know the real reason banks aren’t lending and the PIIGS have control of the barnyard in Europe?
It’s because risk in the $600 trillion derivatives market isn’t evening out. To the contrary, it’s growing increasingly concentrated among a select few banks, especially here in the United States.
In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report [...]
Warren Buffett once said that derivatives are “financial weapons of mass destruction”, and that statement is more true today than it ever has been before. Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad. Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this [...]
Wall Street Journal says Comex has been classified as ‘too big to fail’
Submitted by cpowell on Fri, 2012-05-25 06:09. Section: Daily Dispatches
A Mess the 45th President Will Inherit
Taxpayers Now Stand Behind Derivatives Clearinghouses
From the Wall Street Journal
Thursday, May 24, 2012
President Obama’s standard gripe is that the economy has performed so poorly during his term because of the financial crisis he inherited from George W. Bush. But this week it is Mr. Obama [...]
Source: AOL Daily Finance
One of the biggest risks to the world’s financial health is the $1.2 quadrillion derivatives market. It’s complex, it’s unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost — and as much as risk managers and regulators might want to limit that risk, they lack the power or [...]
The 4 hard lessons of 2008 that Dimon must accept
By Paul B. Farrell, MarketWatch
SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, Jamie Dimon’s still J.P. Morgan Chase’s CEO. But has he finally learned the four hard lessons about taking high-risk gambles in the global $650 trillion derivatives market that in 2008 virtually bankrupt Wall Street and the economy?
Will he stop fighting all reforms? Or will he just get cleverer [...]
Would the Volcker Rule harpoon the London Whale?
A London-based trader with JPMorgan Chase has amassed a big position in credit default swaps that is disrupting that part of the derivatives market, according to reports. With the swaps, the trader, Bruno Iksil, is effectively betting that the creditworthiness of a group of companies will improve, not deteriorate. Some hedge funds are said to be taking the opposite stance.
Some may ask why JPMorgan [...]
Whether it’s applying the basic rules of calculus to map the dynamic topology of “financial space” or by simply cutting down human costs, the inexorable rise of HFT towards market-wide dominance is a revolutionary trend that is changing the way we think about investing and how to best deal with such a fast-growing phenomenon.
For a close follower of financial and technological trends, it’s been interesting to watch the evolution of high frequency [...]
By Paul B. Farrell, MarketWatch
Hot global real estate: 416 land-grab deals
Commentary: Rich nations get richer snatching agri-wealth from poor
SAN LUIS OBISPO, Calif. — Yes, 416 fabulous real estate deals across the globe. If you’re rich, looking for 25% returns and want to get even richer, start by downloading the 62-page list of 416 land grabs from Grain.org . Yes, 416 large-scale real estate deals in 66 [...]