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Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives

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Panic Button - Public DomainCould rapidly falling oil prices trigger a nightmare scenario for the commodity derivatives market?  The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than 40 dollars in less than six months this time either.  If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses.  In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts.  The companies enter into these derivatives contracts for a couple of reasons.  Number one, many lenders do not want to give them any money unless they can show that they have locked in a price for their oil that is higher than the cost of production.  Secondly, derivatives contracts protect the profits of oil producers from dramatic swings in the marketplace.  These dramatic swings rarely happen, but when they do they can be absolutely crippling.  So the oil companies that have locked in high prices for their oil in 2015 and 2016 are feeling pretty good right about now.  But who is on the other end of those contracts?  In many cases, it is the big Wall Street banks, and if the price of oil does not rebound substantially they could be facing absolutely colossal losses.

It has been estimated that the six largest “too big to fail” banks control $3.9 trillion in commodity derivatives contracts.  And a very large chunk of that amount is made up of oil derivatives.

By the middle of next year, we could be facing a situation where many of these oil producers have locked in a price of 90 or 100 dollars a barrel on their oil but the price has fallen to about 50 dollars a barrel.

In such a case, the losses for those on the wrong end of the derivatives contracts would be astronomical.

At this point, some of the biggest players in the shale oil industry have already locked in high prices for most of their oil for the coming year.  The following is an excerpt from a recent article by Ambrose Evans-Pritchard

US producers have locked in higher prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over three-quarters of their output for 2015.

Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production.

So they are protected to a very large degree.  It is those that are on the losing end of those contracts that are going to get burned.

Of course not all shale oil producers protected themselves.  Those that didn’t are in danger of going under.

For example, Continental Resources cashed out approximately 4 billion dollars in hedges about a month ago in a gamble that oil prices would go back up.  Instead, they just kept falling, so now this company is likely headed for some rough financial times…

Continental Resources (CLR.N), the pioneering U.S. driller that bet big on North Dakota’s Bakken shale patch when its rivals were looking abroad, is once again flying in the face of convention: cashing out some $4 billion worth of hedges in a huge gamble that oil prices will rebound.

Late on Tuesday, the company run by Harold Hamm, the Oklahoma wildcatter who once sued OPEC, said it had opted to take profits on more than 31 million barrels worth of U.S. and Brent crude oil hedges for 2015 and 2016, plus as much as 8 million barrels’ worth of outstanding positions over the rest of 2014, netting a $433 million extra profit for the fourth quarter. Based on its third quarter production of about 128,000 barrels per day (bpd) of crude, its hedges for next year would have covered nearly two-thirds of its oil production.

Oops.

When things are nice and stable, the derivatives marketplace works quite well most of the time.

But when there is a “black swan event” such as a dramatic swing in the price of oil, it can create really big winners and really big losers.

And no matter how complicated these derivatives become, and no matter how many times you transfer risk, you can never make these bets truly safe.  The following is from a recent article by Charles Hugh Smith

Financialization is always based on the presumption that risk can be cancelled out by hedging bets made with counterparties. This sounds appealing, but as I have noted many times, risk cannot be disappeared, it can only be masked or transferred to others.

Relying on counterparties to pay out cannot make risk vanish; it only masks the risk of default by transferring the risk to counterparties, who then transfer it to still other counterparties, and so on.
This illusory vanishing act hasn’t made risk disappear: rather, it has set up a line of dominoes waiting for one domino to topple. This one domino will proceed to take down the entire line of financial dominoes.
The 35% drop in the price of oil is the first domino. All the supposedly safe, low-risk loans and bets placed on oil, made with the supreme confidence that oil would continue to trade in a band around $100/barrel, are now revealed as high-risk.

In recent years, Wall Street has been transformed into the largest casino in the history of the world.

Most of the time the big banks are very careful to make sure that they come out on top, but this time their house of cards may come toppling down on top of them.

If you think that this is good news, you should keep in mind that if they collapse it virtually guarantees a full-blown economic meltdown.  The following is an extended excerpt from one of my previous articles

—–

For those looking forward to the day when these mammoth banks will collapse, you need to keep in mind that when they do go down the entire system is going to utterly fall apart.

At this point our economic system is so completely dependent on these banks that there is no way that it can function without them.

It is like a patient with an extremely advanced case of cancer.

Doctors can try to kill the cancer, but it is almost inevitable that the patient will die in the process.

The same thing could be said about our relationship with the “too big to fail” banks.  If they fail, so do the rest of us.

We were told that something would be done about the “too big to fail” problem after the last crisis, but it never happened.

In fact, as I have written about previously, the “too big to fail” banks have collectively gotten 37 percent larger since the last recession.

At this point, the five largest banks in the country account for 42 percent of all loans in the United States, and the six largest banks control 67 percent of all banking assets.

If those banks were to disappear tomorrow, we would not have much of an economy left.

—-

Our entire economy is based on the flow of credit.  And all of that debt comes from the banks.  That is why it has been so dangerous for us to become so deeply dependent on them.  Without their loans, the entire country could soon resemble White Flint Mall near Washington D.C….

It was once a hubbub of activity, where shoppers would snap up seasonal steals and teens would hang out to ‘look cool’.

But now White Flint Mall in Bethesda, Maryland – which opened its doors in March 1977 – looks like a modern-day mausoleum with just two tenants remaining.

Photographs taken inside the 874,000-square-foot complex show spotless faux marble floors, empty escalators and stationary elevators.

Only a couple of cars can be seen in the parking lot, where well-tended shrubbery appears to be the only thing alive.

I keep on saying it, and I will keep on saying it until it happens.  We are heading for a derivatives crisis unlike anything that we have ever seen.  It is going to make the financial meltdown of 2008 look like a walk in the park.

Our politicians promised that they would do something about the “too big to fail” banks and the out of control gambling on Wall Street, but they didn’t.

Now a day of reckoning is rapidly approaching, and it is going to horrify the entire planet.

  • Townsaver

    I don’t normally comment here, but when I do… FIRST!

  • kfilly

    I hate to say it, but it might be a good thing if the too big to fail banks failed. At least, it would put an end to this corrupt system. I would like to see the likes of Goldman Sachs disappear.

    • K

      They will not be allowed to fail. They would be bailed out again. The fascist states of America, of the rich, by the rich, and for the rich.

      • Guest

        Lehman Brothers failed, which precipitated the last crisis. I agree the Fed will do everything in its power to keep the TBTF banks from going down. But if the first domino in the derivatives complex falls, the Fed may not be able to stop a systemic implosion.

        • socalbeachdude

          Lehman has nothing of any conseuqences to do with the 2008 bogus “financial crisis” at all.

      • Mudpie

        It is where a lot of the quantitative easing money has ended up.

        • socalbeachdude

          Totally false. 100% of the QE funds ALWAYS REMAINED INSIDE THE FEDERAL RESERVE in the excess reserves accounts there of the banks from whom the Federal Reserve purchased securities.

          • Mudpie

            Nonsense. You re taking just one measure of the money supply. Go study some more.

    • K2

      Close to half the country survives a lot on buying things on credit, if banks fail buying things on credit will become impossible. There are many more sectors,industries that have tons of jobs, that depend on loans from banks to function that will fail.

      • MichaelfromTheEconomicCollapse

        Very well said.

        Michael

    • MichaelfromTheEconomicCollapse

      It is true – the “solutions” that the elites provide are always worse than what came before.

      Michael

    • socalbeachdude

      What a moronic comment. The failure of major banks in the US would totally destroy the entire US financial and economic system and result in tens of trillions of dollars of losses. Isn’t that totally obvious?

      • kfilly

        Apparently, you like being ruled by a corrupt fascist banking system. Yep, let’s keep socializing banks with money we don’t have when they lose money. Brilliant! I would rather see this entire corrupt system implode, and the masses target everyone who was responsible. Would it be easy? No, it would not be easy or pleasant, but rewarding criminal behavior only encourges more criminal behavior.

  • Mondobeyondo

    May we all live in interesting times….

    • MichaelfromTheEconomicCollapse

      I think that your wish is going to come true Mondo. :)

      Michael

    • ron17571

      Buy plenty of popcorn. For the show that is going on.I say its a good one for the next two years. I don’t like the idea of listening to Hillery screech for that long.And that laugh of her’s.

  • Mike Smithy

    Oil in the ground has been treated as collateral for trillions of dollars in junk bonds, loans, derivitives as well as over-the-counter non-reported agreements and private contracts. Know this, even a slight problem in a market this size could collapse the entire house of cards. I take great solace in knowing that the U.S. taxpayer will bail them out.

    • T.

      This is just more of the “Breaking” of the United States of America. From 18 trillion dollars DEBT now, to a completely open Southern border, to the recent safety from prosecution for 5 million or more illegal aliens “By Presidential Decree”, to the opening up of our nation to people coming from Ebola infected African nations and appointment of a lawyer as Ebola czar, to now sending of 100 M1 tanks and Bradley fighting vehicles into the Ukraine, to the fighting of endless and senseless foreign wars, to the gross neglect by our Government for proper treatment of our injured returning fighting men, to the control and manipulation of all the financial and commodity markets of the world by the central banks and their children and on and on and on. Our once great nation is being taken down from within by a most evil and insidious force. Truly America’s days are numbered – Probably in months. Our once great nation can not take many more of these type of body blows.

      • ron17571

        But,they are representing your best interests.

    • MichaelfromTheEconomicCollapse

      Very good point Mike.

      Michael

  • Tatiana Covington

    “We’re too big to fail.” — the dinosaurs

    • MichaelfromTheEconomicCollapse

      That made me smile.

      Michael

  • Beanodle

    The Saudi oil minister is on record of saying that now prices are down they will be allowed to stay down for the foreseeable future.

    • MichaelfromTheEconomicCollapse

      The Saudis are making their move against the shale oil producers.

      Michael

  • VegasBob

    If the collapse of one of the ‘Too Big to Fail’ banks brings about an economic collapse, I say BRING IT ON!!!

    Anything that would annihilate the Wall Street bloodsuckers would be a net positive in nearly any circumstance.

    First, even though millions would suffer, the suffering would be mitigated by immediate 30-70% price declines in the cost of living once we are able to stop paying tribute to the Wall Street leeches.

    Second, perhaps we would finally smash the delusions that (1) there is such a thing as a free lunch and that (2) we can create wealth without working for it through the Wall Street casino and the Federal Reserve printing press.

    I’d rather take my chances in an honest society rather than continue to toil in the deluded fraud that our society has become.

    • http://lastdayrapture.blogspot.com/2011/08/jesus-said-at-last-day.html TK

      +100

    • Mudpie

      I pretty much feel the same way with the exception that, unfortunately, the politicians would print toilet paper cash at an even faster rate, utterly debauching the currency.

      • socalbeachdude

        They can’t.

        • Da_Neutral_Observer

          Sure they can. The U.S. Treasury was doing it to the tune of $85 billion a month for QE until the Fed finally realized it was not creating enough investment in the economy to be worth it. And Congress continues to raise the debt ceiling. They are out of ideas! This is the last way they can stall the inevitable depression that is about to hit!

    • MichaelfromTheEconomicCollapse

      A lot of people would agree with you VegasBob, but I think that we seriously underestimate how painful the suffering would be for the general population.

      For example, would you be willing to give up your house and all of the money that you have in the bank just to see one of these banks go down? I don’t think so. But a financial collapse on Wall Street would truly wipe out tens of millions of American families.

      Michael

      • VegasBob

        Michael, you underestimate me. I’ve become old enough to have outgrown fear. So actually, I would be perfectly willing to watch my assets disappear in an economic collapse.

        Don’t forget that even during the Great Depression economic activity continued at a rate of about 75%.

        Yes, millions who are already suffering would continue to suffer. But these days, we still have a few tattered sections of the social safety net in place.

        In a collapse, what would the banksters do? Foreclose on 30 million mortgages? And sell the houses to whom? Force 40 million credit card debtors into bankruptcy? And collect what?

        No, the only way for the people to reclaim control of their destiny is to cast off the chains of debt slavery and oppressive government. And the only way that will happen, unfortunately, is with economic collapse.

        • MarkM

          VegasBob I agree. They rely upon our fear that everything would collapse and our paralyzing fear that “we’d have to give up our houses” etc. That fear is what has led to so much apathy and inertia and resulted in so many losing their homes anyway – and continuing to do so. We all need to grow up, grow a pair and realize it that it won’t be anywhere near as bad as what will happen if we continue to be so fearful and allow them free reign.

      • JustSayin’

        Michael: Obviously you mean well, but at this point, its too late. Derivatives are what they are, and WallStreet is not going to stop betting them. My friend, we have been warned for a long time now. Why not prepare for the worst? The only way to solve this is to take the heroine away from the drug dealers! Don’t you understand? THEY ARE NOT GOING TO STOP UNTIL IT COLLAPSES TOTALLY!

    • Pinky

      Yo big tough guy yea you want it

    • JustSayin’

      Amen, Bro! After 2008, if any American out there didn’t heed the warning to prepare for what’s coming down the road, then so be it. Not feeling sorry for ANYONE (well, maybe children) who ignored the facts. Let’s just get it over with, please, because we all know its coming soon anyway.

    • socalbeachdude

      Those are phenomenally ignorant and stupid assertions, VB.

      • VegasBob

        No doubt my ignorance and stupidity are why I was able to retire from Fortune 500 Corporate Finance as a multimillionaire 7 years ago.

        I finally left because I just couldn’t take the blatant dishonesty anymore.

        If you believe that Fortune 500 Corporate Finance departments are paragons of honesty and ethical dealing, I have some bridges in Arizona I can sell you.

    • Fred

      Agree with you on everthing except one issue – there will not be major price declines, there will first be massive inflation as the Fed turns on the printing presses 24/7 in a desperate attempt to keep the collapse from happening. It’s just human nature – they won’t give up until the last piece of paper is printed in green ink. Then, only after hyper-inflation in the 1000% of percent kick in, will you see the total collapse and price “declines”. Problem is those declines won’t be in dollars (which everyone will stop accepting as payment), they will be in Yuan, Rubles, gold, silver, etc. so don’t think you can hold onto dollars and then pick up everything at 20 cents on the dollar. It won’t work that way.

    • saxa

      i think that the american taxpayer is who will pay because of provisions set forth in the dodd frank act allowing for confiscation of shareholders money next time the big bank fails occur. look up the video for proof
      “Money Is Not Safe In The Big Banks”

  • Bill

    A chance to save a dollar and——-we are still d o o m e d.

  • Mudpie

    But now White Flint Mall in Bethesda, Maryland – which opened its doors in March 1977 – looks like a modern-day mausoleum with just two tenants remaining.

    –Same thing with Tallahassee Mall in Tallahassee.

    • Douglas M. Green

      Keep in mind, that mall is in the armpit of DC and big government spending. If malls can fail here, they can and will fail anywhere.

      • MichaelfromTheEconomicCollapse

        Very well said Douglas.

        Michael

    • MichaelfromTheEconomicCollapse

      When I was a kid, White Flint Mall was a really big deal.

      Michael

      • Jodie Lynn Gaeta

        But isn’t White Flint Mall closing because its owners want to build another type of complex in its place? Something like a “mini-city” I’ve heard.

    • ron17571

      I wonder about the market numbers. When people talk about how good things are. I tell them to take a drive and see all the empty commercial buildings. For sale signs are everywhere. Some stores and restaurants i used to go to,Have gone out of business.
      Just look at how bad the big box stores are doing. The country is a mess and sliding downhill.

  • DesertPaine

    Don’t the banks roll out of out-of-the-money positions like the rest of us mere mortals? Its Options 101.

  • velisetremis

    This is an interesting situation, thanks!

  • Robert What?

    Do you actually think the government is going to let these large financial corporations sustain large losses? Just like in 2008-2009 the losses will be put on the taxpayers.

    • alan

      Hit the print button problem solved! It probably won’t even make the news this time.

      • jsmith

        Both of you seem to understand and are correct. They will just print the money, and the Dollar will be further devalued in the form of third world nations like Mexico. Essentially then we become part of the third world where a coke will cost $5.00 and a loaf of bread $10.00. There is no other recourse but currency devaluation for our government.
        People adjust and will only say “my, prices have certainly gone up!” Maybe by voting for the Demopublicans things will change. No chance in hell!

    • Argus

      Not to mention bail-ins

  • Midwest Values

    For most of pre-2000 oil has rarely been above $40 in 2014 dollars. Why would anyone think that oil would stay above $80 long term. Eventually high prices create conservation and hot money investing in new projects. All the countries that thought high prices would last forever are foolish and all the investors and lenders with their MBA Educations should have figured it out. Now we will all pay for another senseless bailout.

    • alan

      The shallow oil is gone, “low hanging fruit has been picked”. So to get the oil out of the ground now requires way more effort and deep wells.

      If its a demand problem, then we should should have seen cheap oil about three years ago.

      The smells of the Saudi’s poking a stick in the eye of Russia to me.

  • WK

    Hey Michael, I was being nice to you this time. You deleted my earlier post?

  • alan

    I still think this is a ploy to start $hit with Russia. Its started with the Saudi pipe line through Syria, then became the Ukraine pipeline shenanigans. A big IMF loan to pay their gas bill and now all their gold is gone, funny as hell.

    Now if the banks are in real fear of rolling belly up then there will be a smoke screen for that. North Korean Hackers, Alien invasion, Big foot shooting it out with the cops, maybe a Russia conflict in Europe.

  • Priszilla

    China was busy in the last years to fill their strategic oil reserves to become independent from market fluctuations.
    It would seem that these reserves are now full and therefore Chinese demand is falling.
    China was also busy to build wind farms in the steppes of Inner Mongolia.
    Petrol burning motorcycles are being replaced with electro scooters.

    Germany extends her cycling paths between villages and towns. And mandates that all new buildings must be highly energy efficient.

    In other places people work on cost reduction measures as well. England has started to insulate her buildings. Europe mandates energy consumption in products.

    All these little things add up.

    • K2

      Such rapid drop in prices in such a short time will more-likely generally occur due to politics or other financial markets based reasons than actual fall in demand.

      Demand based fluctuations are a medium to long term factor.

  • dan

    Sorry but the show is run by the people at the top of the pyramid. They know exactly what their doing.

  • Richard

    Great article, Michael, superbly written. Well done.

    • MichaelfromTheEconomicCollapse

      Thank you for saying that Richard. :)

      Michael

  • PhDProfessor

    “Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives” >> Won’t happen. The Federal Reserve has created Moral Hazard. The Wall Street banking cartel and criminal syndicate know they can take mammoth risks and by the designation of ‘Too BIG to Fail,’ they have an implicit Fed backstop and bailout.

  • DJohn1

    I confess to be completely ignorant when it comes to oil.
    I would have bet the same way the banks did.
    But I think the oil industry is a dinosaur ready to fall.
    If we can switch to natural gas cars in the next 10 years or so, then I think we should do it. Mainly because natural gas does not pollute the atmosphere like gasoline does. But the price might be a problem.
    Instead of a gas tank, you have a prefilled tank exchange.
    I think much of the diesel across country semitruck vehicles are starting to switch over. At least that is what the internet said before the news industry shut down the information.
    The savings were substantial. On a fleet of trucks it could amount to millions of dollars a year.
    Who controls the natural gas industry?
    I think much of it is controlled by licensing by the government. That licensing has been held back by the Obama regime.
    Diesel engines are different than gasoline engines and that might be a problem. The change over for diesel was simple and cost less than $500 per vehicle if the articles were right.
    We have an abundant supply of natural gas right here in this country. That is besides the natural gas coming from Washington D.C.
    Up until recently it was at least half the cost of gasoline and diesel. Though diesel has been higher than gasoline for most of that time.
    If I were the people depending on gasoline for a living, I would be afraid, very afraid.
    The other day on the fictional HBO Series “The Newsroom” one of the fictional stories was about the atmosphere. In this story it had become too late to change our ways and the breathable atmosphere would be gone in a short period of time. They were talking about the end of life on this planet as we know it. All because the Carbon Dioxide level had reached a critical point where there was no way to conceivably change it before it became unbreathable. The example was running a gasoline engine in a closed space like a garage.
    Volcanoes often pollute many hundreds of times higher than anything that we can do. So the story was probably foolish at best. We still have a breathable atomosphere after the volcanoes are done.
    But fiction often mirrors the truth. We have far too many automobiles running full steam. In any one day, 10,000 cars travel to and from work on two of our major roadways right here in town.
    To change this the Environmental Protection Agency might have to do their job a whole lot better than they are capable of doing right now. And that is just here. China right now is in much worst shape.
    Part of the problem is that it is terribly expensive to make a change over that will work.
    I think that half the cars or better on the road would have to start breathing carbon dioxide and exhausting oxygen. That will take genius level engineering and government involvement on a level never seen before.
    That is assuming. Hopefully that planted story on a fictional series is entirely wrong.
    I think the gasoline industry is going to have to go away.
    That means that you and me are going to have to have an alternative way of transportation and that involves the entire planet, not just one country.
    It also involves a level of refinancing never seen before in the history of the entire world.

  • DJohn1

    The number of cars I referred to was an actual count of approximately how many cars crossed a trip wire on the road of one of our major highways in 1986 in a small town of 40,000 residents in a suburb of Dayton, Ohio.
    There are actually close to 200,000 people in the immediate Dayton, OH area. And that number is not really accurate because I haven’t seen a survey lately.

    The circulation in 1985 for the Dayton Daily News was approximately 125,000. So I can believe the number 200,000 is probably conservative.

    • linda Murphy

      So was the suburb Trotwood or Huber Heights?

      • DJohn1

        Huber Heights.

  • Rufus T Firefly

    More hysteria from chicken little

  • WVBORN56

    It is all coming together as the Word of God predicted! Revelation 6 and 13 make the case for a one world economy. Psalm 83 and Isaiah 17 make the case for Israel’s surrounding neighbors to attack and Ezekiel 38-39 make the case for Russia, Turkey, Northern Africa and Iran to attack Israel soon after the Psalm 83 war.

    These all take place in close succession to one another and they all take place around the time the church departs in the harpazo also known as the rapture for those with trust and faith in Jesus for the forgiveness for their sins. Trust in him alone is what saves a person… not their good deeds. This is the best road to take as you prepare for an uncertain future. Blessings!

    • GS

      And if no pre-trib rapture happens the church will just have to adjust their teachings a bit and huddle together through the calamities.

      • JustSayin’

        GS: If the pre-trib rapture does not happen, there will be TONS of hungry Christians running around w/the rest of the country who thought they would never go hungry.

  • CharlesH

    Sometimes it’s just best to admit defeat – tear it all up – and start all over again. Anyone in business has been through that exercise. Untold millions will suffer through no fault of their own but the current system can NOT be reformed or ‘fixed’. One can only pray that whatever replaces this system is much improved upon and that we never, ever let politicians and bankers become as greedy and all powerful as they are at this moment. Honestly – the first inclination that a banker or politician acts up – shoot them on the spot – instantly – no questions asked.

  • Max Meister

    Such a hefty drop in the oil price in such a short time looks engineered to me. The US Gov. found it a cool thing that the oil price is plummeted beause they thought it would hurt Russia but now they start to realize that it could become a shoot in their own knee. Not sure this couldn’t trigger a burst of the tremendesly inflated derivatives bubble and that is what the US Gov. have supported over decades. If that pops we could have arrived at this black swan some people are expecting for years. We could also arrive at the demise of the Dollar as a reserve curreny and the following reset of the workd currency system. Everything is possible at any time now.

  • Snake Plissken

    no doubt things are heating up. BRICS will put more pressure on dollar. everybody wants their gold back. the gold went east and we are screwed. and guess what? 2008 brought the bailouts. not going to be that easy dumb Americans. bail-ins cypress style are ready to go!

  • tresmegistus

    bring it on and about time too. back to cowry shells. then ALL loans/mortgages can be cancelled with immediate effect meaning people will then OWN their homes. remember mortgages (fractional reserve lending) is phoney money anyway . citizens will be better off and future loans can be made WITHOUT interest as it should be.

    • http://ttstblog.blogspot.Com/ Really20

      Personally, I would only keep interest (at rates less than 2% annually) for home and auto loans, which should be issued by banks owned by the several states. I would also maintain interest for government debt, again at a rate of less than 2% or so, but would limit ownership of bonds to $250,000 per private individual. All future business investments should be equity in which both parties bear the risk and the reward.

  • http://www.mindbodygreen.com Kim

    find a way to nullify those contracts! it will be a lawless act but I figure someone is going to try it

  • Antonis

    TBTF in the case of the super banks also means TBTSupport! There can be no bail-out but there will be a bail-in. Google “Bail-in Cyprus” for the nightmare scenario that is about to unfold. The G20 have earlier this year already signed off on the bail-in law.

  • Sickoffearallthetime

    We complain if oil is high worry when it’s low gosh man enjoy life once in awhile!

    • digriff

      So your approach to life’s trials are “eat drink and be merry for tomorrow we die”? Sorry, I am a bit more of an action type of person than that.

  • ron17571

    I wonder if the American public will be on the hook to bail the banks out again? If thats even possible. I think the raiding of retirement accounts is more likely. Funny,how many sites have people talking about how good things are and the president is doing a good job. Super denial going on.

  • http://ttstblog.blogspot.Com/ Really20

    About time that these corrupt institutions fell and were dismembered into smaller, less powerful entities. Hopefully the light at the end of the tunnel is that we move to a sovereign money system with money issued by a popularly legitimate government, not by unaccountable private banks.

  • Name

    It’s going to be really interesting watching things unfold over the next couple of yrs.

  • robertmmccall

    Makes sense, supports peer to peer economy, banking, btcoin and the oncoming creative economy due to hit 2015, alng with the banking collapse – brilliant. Debt free here.

  • robertmmccall

    Iceland for the world – and check out Iceland today. Wipe the slate clean and start again. It aint workin.

  • BarryBarry

    “At this point, the five largest banks in the country account for 42 percent of all loans in the United States”

    The loans actually come from the feds. The bankers are just middle men.

  • NewbieJames

    The other side of the hedge for crude are oil refiners. They buy crude futures. However they sell product futures (gas/diesel) to lock in their spread, and thus are also protected. So the losers are probably end users of petroleum products like airlines, trucking companies, rail roads, heating oil wholesalers, and the like.

  • NewbieJames

    The big stake holders are pension funds and life insurance companies.

  • Reuben James

    It’ll be a lot easier for broke people who have honed their survival skills to survive during the coming hard times than it will for the gilded class which of course includes politicians. Don’t think it will turn out well for the rich.

  • evader2014

    Better that humanity perish than live under oligarchic tyranny.

  • socalbeachdude

    Those are obviously totally absurdly false assertions.

  • nick kelly

    Continental’s ‘oops’ early cashing out its oil hedge may turn out to be smart if the counterparty goes bust.

  • nick kelly

    An anecdote about the Depression: A guy’s dad had a hardware store. When the 29 crash hit he said ‘Good. About time those banksters got hit”
    Six months later he lost the store.
    The big D also took out THE iconic US car: Duesenberg.
    How anyone could not understand that a financial crash will hurt the middle and lower income folks is beyond me.

  • Foster Patterson

    ISKCON v Rothschilds, the modern version of Good versus evil playing out before our eyes. The only story of the day. Everything else is distraction.

  • jack loach

    Sods —–
    Law.

    Dec.—-
    2014.

    For almost two
    decades we have strived to get justice for the injustice we have
    suffered at the hands of a world renowned bank— PICTET & CIE.
    BANK.

    Two yorkshiremen
    both running their own small family businesses trying to resolve the
    problem by taking all the correct legal procedures to recover their
    monies.

    The matter was
    raised in Parliament – twice– the FSA investigated the matter
    concluding that PICTET had rogues operating in their London Bank —
    but the rogues had left —saying no one left to prosecute.??? —–
    so there.

    We then
    approached the Financial Ombudsman Service. (FOS) — our case was
    dealt with by seven different people —- then our numerous E-Mails
    were ignored — nobody would speak to us ——-so there.

    We then asked the
    SFO ( Serious Fraud Office.) to investigate our case —- the
    criteria of our case ticked all their boxes. — we were instructed
    not to send them

    any
    documents/evidence.—— in fact they wrote to us advising us to go
    to the Citizen’s Advice Bureau.(CAB.)

    Richard Alderman
    the SFO boss —- who responded to our letter was the same man who
    would not investigate the “ Madoff” scandal or the “Libor”
    fiasco.

    The MP’s
    committee —- said he was sloppy— and the SFO was run like “
    Fred Karno’s Circus” —– it was an office of fraud.—– so
    there.

    Our M.P.
    approached our local Chief Constable to investigate—– he was
    called—- Sir Norman Bettison— Chief Constable of West Yorkshire
    Police —- a force that made “ Dad’s Army” look like the S.A.S.
    They were inept – corrupt —malicious — from top to bottom. We
    were criminally dealt with by the Forces Solicitor—- the Head of
    the Economic Crime Unit —-and the Chief Constable —– so there.

    We were then
    advised to pass our complaint against West Yorkshire Police to the
    I.P.C.C. – which we did — they advised us to make our complaint
    to —- the West Yorkshire Police — we did with reluctance — all
    we got was abuse and obfuscation. —– so there.

    Sir Norman
    Bettison —- The Forces solicitor— and the Head of the Economic
    Crime —- have all been removed from their posts and facing criminal
    allegations.

    —— so there.

    We even sought
    justice through the Courts — culminating in a visit to the Court of
    Appeal-London.— On leaving the Courts of Appeal that day our
    barrister a “rising star” informed us — that if that was
    British Justice then you can keep it. He quit the law and moved to
    Canada —– so there.

    A few years later
    we learned that one of the judges ( Lord Justice.) in our case at the
    Court of Appeal was related to a senior executive of the Pictet Bank
    —–so there.

    The Ministry of
    Justice passed our case to Lord Myners to investigate — we would
    rather have had Mickey Mouse or Donald Duck do it. — to this day we
    don’t know

    —whether he did
    anything or not —- probably not — seeing that his wife was on the
    Pictet Prix Board.

    Pictet & Cie
    .Bank — voted private bank of the year 2013.

    Ivan Pictet —-
    Voted banker of the year 2012. —- the senior partner — lied on
    numerous occasions and had documents destroyed — also said genuine
    documents were forgeries. —– so there.

    Ivan Pictet in
    Oct. 2013 —- Given the Legion of Honour — but saying that —-
    honours were given to Hitler — Eichmann — Mussolini —Franco
    — he’s in fitting company. —-so there.

    MONTY
    RAPHAEL.Q.C. — Peters & Peters.London. They were the banks
    lawyers.

    Monty
    Raphael.Q.C. along with Ivan Pictet withheld crucial documents
    requested by the High Court —- the FSA —- and the police Fraud
    Squad. —-so there.

    Monty
    Raphael.Q.C. became an Honorary Queens Counsellor in March. 2012.

    Monty
    Raphael.Q.C. became a Master of the Bench in Nov.2012.

    An expert in
    Fraud —the Doyen of Fraud Lawyers. —– so there.

    This says a lot
    about Banks — the consensus of opinion is that they are highly paid
    “crooks” —- no wonder they voted Ivan Pictet banker of the
    year.

    It appears that
    crimes in the “establishment.” are honoured by their peers.

    “HONOURS
    AMONG THIEVES.”

    Full Story.—-
    “google ”

    Insert.—– The
    Crimes of —– Pictet & Cie Bank.

    or
    insert

    Ivan Pictet/
    Monty Raphael Q.C.

  • c

    The banks will ask for a bailout and raise interest rates.

  • c

    the banksters vs the tygoons, should be a good fight.

    Bummer for the people of Venezuela when the banksters hire nato to take over their oil though.

  • MchlMcPhillips

    What’s to stop the banks investing in oil now at the low price, waiting for the price to rise, and regain any losses then?

  • Robert

    Then lets just throw up our hands and thank the Lord for the vampire squid that lets us live….

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