The Beginning Of The End
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When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook

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 article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars.  But no matter how bad things get for JP Morgan, it will not be allowed to fail.  JP Morgan is the largest bank in the United States, so it is essentially the “granddaddy” of the too big to fail banks.  If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it.  Because of this “security blanket”, banks such as JP Morgan feel free to take outrageous risks.  Today, JP Morgan has more exposure to derivatives than anyone else in the world.  If they win, they win big.  If they lose, U.S. taxpayers will be on the hook.  Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis.  So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill.

Derivatives almost caused the complete collapse of insurance giant AIG back in 2008.  But instead of learning our lessons, the derivatives bubble has gotten even larger since that time.

A Bloomberg article that was published last year contained a great quote from Mark Mobius about derivatives….

Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”

Never in the history of the world have we ever seen anything like this derivatives bubble.

But instead of getting it under control, we just allowed it to get bigger and bigger and bigger.

Now JP Morgan is in quite a bit of trouble.  A recent Daily Finance article summarized how JP Morgan got into this mess….

Bruno Iksil, a trader working in the bank’s London office, placed a massive bet in the derivatives market. Derivatives “derive” their value from the value of an underlying asset, like stocks, bonds, currencies, or a market index. The specific type of derivative used in Iksil’s bet was a credit default swap index, known as “CDX.NA.IG.9.”

CDX.NA.IG.9 tracks a basket of corporate bonds. Iksil’s positions on the index were so big (one report put it at $100 billion) that they were moving the market and interfering with other traders’ positions. These annoyed traders — hedge-fund managers — dubbed Iksil “the London Whale” for his outsize bets.

So if the real number isn’t 2 billion dollars, how much will JP Morgan eventually lose?

Morgan Stanley says that the losses could eventually reach 5 billion dollars.

The Independent is reporting that the losses could eventually reach 7 billion dollars.

One author featured on Zero Hedge suggested that the losses could ultimately reach 20 billion dollars….

Simple: because it knew with 100% certainty that if things turn out very, very badly, that the taxpayer, via the Fed, would come to its rescue. Luckily, things turned out only 80% bad. Although it is not over yet: if credit spreads soar, assuming at $200 million DV01, and a 100 bps move, JPM could suffer a $20 billion loss when all is said and done. But hey: at least “net” is not “gross” and we know, just know, that the SEC will get involved and make sure something like this never happens again.

The truth is that nobody really knows.  Everybody agrees that the losses will likely far exceed 2 billion dollars, but the real extent of the crisis will not be known until the trades play out.

According to the Huffington Post, JP Morgan recently sold 25 billion dollars of profitable securities to raise some cash.  The profit on the sale of those securities will be somewhere in the neighborhood of a billion dollars.

A billion dollars will help, but it will not be nearly enough.

Many are interpreting this move as a sign of panic by JP Morgan.

Meanwhile, JP Morgan CEO Jamie Dimon continues to do quite well.  In fact, his 23 million dollar pay package was recently approved by shareholders at an annual meeting.

Wouldn’t you like to do your job badly and still make 23 million dollars?

Right now, JP Morgan is essentially in a “staring contest” with those on the other side of the derivatives trades that went bad.  This “staring contest” was described in a recent CNN article….

It’s clear from public data filed with The Depository Trust & Clearing Corporation that JPMorgan Chase hasn’t sold any of its positions yet. The DTCC tracks trading activity and sizes of positions on the IG9 and other indexes, and there haven’t been any big moves since last week.

“Whatever the size was, it’s clearly not something that you can call one or two dealers and sell,” said Garth Friesen, a co-chief investment officer at AVM, a derivatives hedge fund that’s not involved in these trades.

As soon as it becomes clear that JPMorgan Chase is unwinding its position, it will be obvious to players on every major trading desk. Hedge funds will immediately start piling into that index and buying protection, driving up the bank’s losses.

Until then, it won’t cost the hedge funds much to sit and wait.

JP Morgan is desperately hoping that the markets move in their favor.

If the markets move against JP Morgan in a big way it could potentially be absolutely catastrophic for the biggest bank in America.

An excerpt from an email that Steve Quayle recently received from an anonymous international banking source contained some chilling analysis of the situation….

The derivative market that JPM plays in is the CDX.NA.IG.9, when factions within their London office (London Whale) made overly leveraged swaps, hedge funds smelled blood and so did a few banks. You see any moves that JPM does here on out exposes their weakness further. Which they can not afford any more exposure thus they are not buying back any more shares which is the equivalent of cutting an artery in a pool full of sharks. The strategy they are taking right now is to sit through the storm and ride it out as they can do nothing else for any action will make them even more vulnerable. They can not absorb hits in both JPM SLV and CDX.NA.IG.9. Inactivity is not something they want to do it is something they have to do. There is no other choice for them.

So what will happen if JP Morgan loses too much money?

Well, it will beg the U.S. government and the Federal Reserve for money and the U.S. government and the Federal Reserve will comply.

There is no way that they are going to let the largest bank in America fail.

In addition, as I mentioned earlier, Dodd-Frank has put U.S. taxpayers on the hook for future bailouts of derivatives clearinghouses.  This was detailed in a recent Wall Street Journal article….

Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading — not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.

One of the things that Dodd-Frank does is that it gives the Federal Reserve the power to provide “discount and borrowing privileges” to derivatives clearinghouses in the event of a major derivatives crisis.

This is what our politicians love to do.

They love to have the U.S. taxpayer guarantee everything.

Our politicians look at us as one giant insurance policy.

Apparently they believe that if anything in the financial world goes wrong that U.S. taxpayers should be the ones to clean up the mess.

But will we really have enough money to bail everyone out when the derivatives market crashes?

Today, the 9 largest banks in the United States have a total of more than 200 trillion dollars of exposure to derivatives.

That is approximately 3 times the size of the entire global economy.

The U.S. government is already nearly 16 trillion dollars in debt.

How in the world can we afford to keep bailing out the huge messes that Wall Street makes?

Sadly, most Americans have no idea how vulnerable our financial system really is.

It is a poorly constructed house of cards that could come crashing down at any time.

If you still have faith in our financial system you are being quite foolish and you will soon be bitterly, bitterly disappointed.

  • Gary2

    Michael–that was not your car in the picture was it? I thought it may be as you were ranting about Obama being a Marxist when he is anything but and took your eye off the road.

    Glad your ok!

    • Michael

      Nope, not my car. :)

      Michael

    • Alasha

      imma lookin at the hook…. lol

    • Alasha

      i just borrowed $5,000… one sec i was broke and the next sec i had $5,000… the next min … i was broke again… i brought a cashier’s check for $5,000. lol

    • http://www.1913intel.com Matt

      Obama is a Marxist. Punish the successful and support the unsuccessful. That’s so we can all meet in the middle as equals. Sounds like Marxism to me.

      The rules of modern liberalism:

      1. All outcome for an individual or nation can be no better or worse than any other.
      2. If an outcome is found to be better, then they must have cheated.
      3. If an outcome is found to be worse, then they must have been victimized (by the cheaters).
      4. The amount a victim lashes out is directly proportional to the victimization.

      • Rodster

        “Punish the successful and support the unsuccessful.”

        That should be a campaign slogan against Obummer this November.

      • Ian

        What do you expect from the envious, lazy, class warfare loving parasites of the left?

      • http://deleted Phil

        Tell it like it is brother.

      • Gay Veteran

        uh, Matt, you do realize that Obama is a puppet for Wall Street, just like Romney

      • Gay Veteran

        anyone who still braying about “liberals” and “conservatives” are falling for the divide and conquer strategy of the Wall Street Banks and corporations who rule this country

        be good littel serfs and fight among yourselves

      • Ivan

        It’s adorable when people still think there’s a difference between the two (and only two!) parties

    • Syrin

      Why do you want to know? Because you like it and therefore “deserve” to have it taken from its owner and given to you because you’re “entitled”?

      hey GARY, did you know that democrats didn’t always used to be complete economic idiots? Witness:

      What has changed is the way liberals scheme to fund those programs. “They believed,” writes Caro casually, “the $11 billion tax cut would, by putting more money into people’s pockets, stimulate the economy and thereby increase tax revenues, and the money government would have available for these programs.”

      Read more: http://www.americanthinker.com/blog/2012/05/remember_when_liberals_liked_tax_cuts.html#ixzz1wMIIXZTl

      Imagine that. Let’s see what has happened historically. Well, that indeed worked under Coolidge, Kennedy, Reagan, Bush, in Canada, Sweden, Ireland, etc etc etc. So the logical conclusion if you’re a punitive jealous greedy regressive is to raise taxes on the successful, kill the economy, kill job growth and drop gov’t revenue. BRILLIANT !!

      • Gary2

        cato is a right wing hack organization being purchased by the koch brothers. They have zero creditability.

        • GaryToo

          wow after saying about a milliuon times tax the wealthy more, thats our answer to the history of cutting taxes working to stimulate economy. couldnt we at least say its not only right wing but also low information, with NO REASONING.

      • Gay Veteran

        U.S. tax cuts created LOTS of jobs………..in China, Vietnam, India, etc.

    • Gary3

      Obama is a marxist. What’s your point?

    • Winston Smith

      Interesting-we have a history behind us to show us what happens when marxists, true marxists, take power. Despite some similar things, we all still have not had our proerty directly seized and herded to collective farms and factories. Yet, Bush raises DOMESTIC spending 2000-2004 43%!!!! He is considered a conservative free marketeer, plus the large amount of jobs/work sent to COMMUNIST China and Vietnam. Obama just continues and is some cases, up the momentum, he is a marxist. So, in teh end then:
      -Republican-good
      -Democrat-evil, bad, marxist,etc.

      Despite them doing, largely, the same things….varying degrees, sure, but what points does massive Govt borrowing/spending go from good to marxist?

      Bare in mind, as of right now, I still ahve money in the bank, a home, paying down and a car paid off-no one today, right now, has taken those things, after 4 yrs of a supposed “marxist” in the White House.

      • knightowl77

        Bush ( Sr or Jr) was neither conservative nor a free marketer despite how the MSM would describe him/them…

      • jaxon64

        I rarely to never see anyone on here laud the exploits of Bush. Most on here understand that the entire red VS blue, us vs them, etc is all a big distraction for people like you who choose a side and bash and hate on the other half of your country.

        Divided we fall. It’s time people admit that Bush, Obama, Romney–not a whole lot of difference. The ultimate objective is to collapse the economy, destroy the middle class and THEN you can institute the policies of a governing elite after everyone is hungry and desperate.
        The Russian marxist had enough fire power to cull the populace, Bolsheviks..not so much here in the US so it is necessary to take a more subtle approach. However subtle it is, it is proving to be equally as effective in making America-as happened in Russia- in making the citizenry all dependents of the State.
        So lay off the “blame Bush” pipe; you’ll find no fans here to take his side but you’ll also find few here who are drinking either the red state cherry kool-aid or the blue state dem kool-aid.
        The funny thing about Gary2 is he still doesn’t get that very few here are taking up a Republican banner. I don’t know of anyone who thinks Romney is going to come in and save the day–but what is sad is watching his myopic support of Obama as he sits at home unemployed, watches his property value decline, his gas and energy costs double, his food costs jump by 50%, his cable, internet, phone all get new regulations and increased taxes and his liberties and even right to speak out being slashed/torn away…yet he will follow and defend this man until the bitter end.

        Is Obama marxist?..you are darn right he is. Your whining is like a child, ” but he did it first” or ” your guy did it too, how come he isn’t getting in trouble.” well the truth is that Bush did and continues to get a daily beating by the media, dems and a lot of repubs. They are quite possibly 2 of the 3 worst presidents in American history OR they are both very successful at directing America away from super-power status just as intended so that a New Age of global equality can be ushered in.

      • Mal R.

        Give him time. Capitalism and whats left of the constitution are resilient b!tches aren’t they!

        Dont worry, it’ll all be over once WWIII starts.

        You’ll notice in history that once the HUGE progressives take office, There’s usually some kind of economic slump or collapse that’s followed by a MASSIVE war which allows the whole paradigm to shift dramatically.

        WWI – Progressives (Teddy Roosevelt and Woodrow Wilson) removed the small govt consitutionalists from the table. The small government version of both parties died here. From here on out, with the exception of Reagan, no one will really offer to shrink govt.
        WWII – Progressives (FDR) implemented the debt currency fed system, basically removed states from the equation (17th Ammendment) and the petro dollar system that is now “collapsing capitalism”.
        WWIII – (Obama) will be the final stage of the progressive agenda, which will usher out the US Constitution and usher in worldwide slavery and communism for the elites. Of course, worldwide population will be so DRAMATICALLY reduced, in combination with the technology available to the elites and I think it’ll be the longest/darkest period in human history.

        • Gay Veteran

          but conservatives are as pure as the driven snow

          I have some ocean front property in Kansas to sell to you

    • Mal R.

      “ranting about Obama being a Marxist when he is anything but”

      ******** Gary, is there anything you’re clueless about that you wont comment on? You should change your handle to “Clueless in Seattle”.

      • Rodster

        Even Gary2 admits you can’t fix stupid. There truly is little hope for him. :)

      • Gary2

        one has to be truley deliosanal to beleive Obama is a marxist. He is a moderatre republican

      • Gay Veteran

        you’re babbling about “socialism” when we’re dealing with crony capitalism(fascism)

    • El Pollo de Oro

      Gary2: No, Barack “Goldman Sachs” Obama is not a Marxist. He never met a corporate bailout or a Wall Street fascist he didn’t love. Nor is he a true capitalist because true capitalists do not believe in bailouts for criminal operations like Goldman Sachs. They believe in competition. No, the merger of state and corporate power, as Gerald Celente points out, is called FASCISM (Alex Jones, Paul Craig Roberts, Lew Rockwell and Justin Raimondo have made the same point). None other than Mussolini himself defined fascism as the merger of state and corporate power.

      “Fascism has come to America. I’ve said it over and over again: the merger of state and corporate power is called fascism.”—Gerald Celente

      “How about that wonderful National Defense Authorization Act? You know, the one Obama signed on New Year’s Eve. You can arrest Americans—no jury, no trial, no habeas corpus rights, no attorney. The military can come and take you away, and you can never be heard from again.”—Gerald Celente

      Granted, saying that the current administration (which Gerald Celente has been extremely critical of)
      is fascist instead of Marxist is like saying that the patient has terminal blood cancer instead of an inoperable brain tumor. We’re seriously screwed.

      • McKinley Morganfield

        de Oro has it right. Obama is not a marxist and what is taking place is not the implementation of socialism or communism; its fascism. DC & the multinational banks (and many corporations like GE) are in league to create a permanent, repressive fascist nation. The socialistic welfare programs are merely a cover to keep the masses busy eating potato chips, watching Idol, and talking about Lady GaGa or Brad & Angelina’s last vacation.

        • El Pollo de Oro

          McKinley Morganfield: You shall know them by the company they keep, and the unsavory company that Bailout Barack keeps includes the likes of Timothy Geithner, Ben Bernanke (or as Gerald Celente calls him, “Osama bin Bernanke”), the Goldman Sachs Gang, the Merrill Lynch Mob, and Jon “The Don” Corzine of MF Global infamy. This is The Banana Republic of America, not The People’s Republic of America (which would be a different form of hell). And the blueprint is Mussolini, Franco, Perón, Pinochet, Somoza, Noriega, etc. From corporate bailouts to the TSA goons to the Patriot Act to the National Defense Authorization Act, this is truly a banana republic on so many levels.

          “How about that wonderful National Defense Authorization Act? You know, the one Obama signed on New Year’s Eve. You can arrest Americans—no jury, no trial, no habeas corpus rights, no attorney. The military can come and take you away, and you can never be heard from again.”—Gerald Celente

          “It’s Fascism 2.0, the merger of state and corporate powers. Next train to Auschwitz, all aboard! No need to worry about those calories—kiss them goodbye.”—Gerald Celente

          And for those who don’t speak Spanish…….no os preocupéis, tios. They’re making telenovelas in English now, and you can have all the schlock entertainment you want while your neighbors are being dragged away by la policía militaria and tortured in the middle of the night.

      • Gay Veteran

        de Oro is right again! people babbling about “socialism” or “marxism” are useful idiots for the elites

        • El Pollo de Oro

          Gay Veteran: And the useful idiots are so devoid of reason and logic that they’ll even attack people on the right if a right-winger questions bailouts and corporate welfare or stands up to the criminality of Wall Street. Libertarian/paleoconservative Alex Jones put it best:

          “Why are mainline conservatives so into getting gangraped? Why do they love getting conned? They worship the corporate fascists so much. It’s just insane.”—Alex Jones

          But you can’t reason with neocons. They’re as clueless as the “progressives” who think this corporatist administration is going to lead them to the promised land.

    • Phil

      Your right obama is not a marxist.He is a lying coniving communist.

      • GaryToo

        Ohbummer is the best dam darnded didly president since george bubya bush Period.

    • Dariya

      Your right obama is not a marxist. He is a lying conniving communist”

      You totally don’t know the real classic theory of Marxism and principles of communism, if you are saying like that. Obama is pure neoliberal, product of corporation capitalism.

  • mark

    If or when this collaspe happens, the debt will be so large that we will have no choice but to walk away from it. The powers that be understand this and they will continue to play this ponzi scam as long as they can. I suppose that they hope to die from old age before the collaspe occurs. I sure hope that you are looking towards preparing for the coming mess.

    • Another Richard

      Mark, the “Powers That Be” own that Debt. Yes, they OWN that Debt thru the Printing or creation of Digital Dollars, they have Bought All that Debt and They Own It. Since they Own the Debt of the United States (and the Nations of Euroland as well), then They Own US. Remember the old Proverb, “The Borrower Is the Slave To The Lender”? That is the Plan. When the Dollar Collapse occurs and Nobody can pay their Debts esp. Nations, then they will call their loans and Dictate their Terms to the Nations. Like say, Your Constitution America is no longer valid. You must Now accept our Currency and our Government, etc. This has been their Plan from the Beggining, to Indebt the Nations, Corporations and Citizens to a point that is UNPAYABLE and Then Call their Loans and Dictate their Terms. Please exchange your federal reserve notes for SILVER and Gold today, while you still can. The “Powers That Be” have Already gotten out of All Paper Curreny and exchanged it for Gold and SILVER. Should you and I not do the same? They Know what REAL Money is.

      • JasonD

        Be that as it may, I think that when the time comes, you’ll find that Bankers have surprisingly little upper body strength!

      • shogun_01

        dam your right on

  • r.bitting

    If you have faith in anything other than Jesus Christ’s sacrificial death on the cross for your sins, you are being quite foolish and you will be bitterly, bitterly disappointed!

    • Nella Rogers

      I second this statement you are quite correct in that fact in fact you are better to have been born again and have no other preps than to have every prep imaginable and enough of everything you might possibly need for the next 100 years and not be born again or know Yeshua!!!

    • justamom

      So true!

    • Winston Smith

      I do and thankfully, I am in the one and only Body he gave us-not the made up, fake Talmudic black op creation better known as Protestantism……EENS

  • Antonio Gonzalez

    But the rich will more rich and it’s very good.

  • Paranoid

    How can it be a real problem, after all it’s only billions? Billion here, billion there, never be real money. Any of you ever want to just hide under the bed?

    • Mal R.

      hell no, the derivatives market ranges somewhere between 700 TRILLION to 1.5 QUADRILLION dollars.

  • Alasha

    “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 article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars. ”

    I believe I read something that said $30 Billion. And on and on….

  • Evie

    Derivatives are not real and neither is fiat currency. Money can be printed until paper runs out. In the book boomerang and other lewis books he said jp morgan,morgan stanley and goldman sachs would never fail. Bank of a is holding on by the skin of its teeth and lehman resurrected itself .

    • http://www.ronpaul.se RonPaul.se

      Correction. Money can be created until digital digits run out…and they don’t! :) :(

  • Barn cat

    To be precise, the US taxpayer will NOT be on the hook when the derivative market collapses. The Federal Reserve will create as much money as necessary to stabilize the world’s banking system. Everyone who holds US dollars will pay the price by having currency that’s suddenly worthless.

  • mondobeyondo

    Tick……..Tick………..Tick……..Tick……..
    [Now’s a good time to run/dig in/bug out/prep]
    This is where we are now, as a country.

    Tick…tick…tick…tick…tick…tick…
    [getting a bit late in the game, but there’s still time.]

    Ticktickticktickticktickticktick……
    [Duck and cover!!!]

    KA-BOOOOOOOMMMMMMM!!!

  • mondobeyondo

    In other words, are we doomed??

    Well – if we as a nation take evasive action to avoid what is so obviously coming towards us – no. We’re not doomed.

    BUT… BUT… We refuse to take the steps necessary to save ourselves.

    Nobody in high office, from the President on down, to the Congress, to your local municipality, to the school board – nobody is making any attempt to solve our fiscal issues. Their idea seems to be, “We can’t solve the debt crisis by pressing the brake pedal. We must press the accelerator. We MUST press the ACCELERATOR!! More gas, more gas!!”

    Okay, if you say so.

    Yeah, that’s it. Print more money, print, keep printing, print, print again and keep printing until you run out of paper, and then print some more.
    You want “Back to the Future”? How about Weimar Germany, 1923?

  • Jas.Smythe

    These politicians that have allowed this to continue ,for one ,since’08, need to lose thier offices, be prosecuted,convicted ,& imprisoned.
    The Bank’s officers & Stock swindlers need to be severely punished ,thier assets siezed , & spend the rest of thier lives in State penitentiaries, in general population;
    The laws governing Wall st. are nowhere near stringent enough to control these greedy, barbarous thieves, & need to be totally revamped with oversight performed by civillian , NOT Senate, NOT House , & not any individuals connected to the Banks, Congress or wall st orthe Gov’t.

    • knightowl77

      They have allowed this longer than 2008. It goes back a long long way….But these idiots should’ve learned from their mistakes by now…so it must be deliberate

    • estamos jodidos

      Is that since 1908? :)

  • Bruce

    Thanks to the Obamanable FDIC and his Dem BOA constrictor of Charlotte, North Carolina starting bailout bid for $75 TRILLION (Off US)! (US current GDP assets: ~15 TRILLION; this $ucker’s Going DOWN, folks)

  • DMyers

    A very sobering subject. To focus on one point, I would choose your finale.

    “If you still have faith in our financial system you are being quite foolish and you will soon be bitterly, bitterly disappointed.”

    One of the most terrifying things about our financial system is that it is based on faith. If faith is lost, all is lost. Faith can be shattered. At the same time, it is faith, a solid reliance on the abstract, that has sustained the system beyond rational expectations. The collapse should have followed Ravi Batra’s timeline, putting a sixty year depression in about 1999. Here we are still rolling along. In this view, faith is both a strength and a vulnerability. The strength of faith magnifies its vulnerability (to support this assertion I would refer to the Jonestown phenomenon).

    The derivatives casino is a leap of faith in which the leaper has ropes fastened to the rest of us, so all will go into the abyss together.

  • hoser

    But Larry (Butt Plug) Summers said derivatives are a good thing….

  • McKinley Morganfield

    “So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill.”

    No one knows the extent these worthless pieces of paper and digital tidbits have been traded, bundled, CDSed, rehypothecated, etc. But all of the big banks around the globe are chained together in one way or another and the total cooked book value of these toxic assets must be well north of $100,000,000,000,000. So IMO there is no amount of QE, stimulus, pump priming, or wishing on a star that can hold back the tsunami and there will be no ‘bill’ to hold simply because the global economy will crash. Of course the central banks and politicians will attempt to forestall the inevitable but this situation is beyond repair. Things will limp along until one day it will rapidly crumble.

  • Paranoid

    Lets see you have a hog. you butcher it, that makes pork, a derivative, you boil the fat and you get lard, that’s a CD Sq right? You ship the lard to London and they make a pasty out of it, that’s a rehypothecated, CD Sq?, then after you finish eating it it shortly becomes? A Spanish EURO BOND? Have I got it right guys?

  • James

    Well maybe we, the taxpayers will be on the hook if JP Morgan collapses. But, the bill will never be paid. Think about it, high unemployment equals no taxes being paid. Lower wage jobs being created leading to lower tax rates being paid. So, it will take a lot of time for JP Morgan to actually be bailed out if ever. With the deficit, low tax returns, no taxes being paid by the unemployed, and the biggy, the bills for all of these wars we have been fighting. There is really no hope for the U.S. to retain its stature as the richest, best educated country in the World. We will become a 3rd World country living a agrarian subsistence lifestyle.

  • Otown Right Guy

    Meanwhile, JP Morgan CEO Jamie Dimon continues to do quite well. In fact, his 23 million dollar pay package was recently approved by shareholders at an annual meeting.

    Wouldn’t you like to do your job badly and still make 23 million dollars?
    Well, yes! CEOs like Jamie and other executives of the big corporations can destroy shareholder value of their corporations and still walk away with a fat golden parachute. Meanwhile the rest of us have to continually prove our value to our employers, and keep our skills current. The CEOs are constantly searching for someone or something to do OUR jobs cheaper and will replace us in a second to save a buck. None of this applies to them. Socialism for them. Survival of the fittest for us.

  • sre

    Back min the 1960s, people were concerned that the national debt was several hundred billion dollars. Now, it’s several trillion dollars. Nothing happened then, nothing will happen now. Have you ever read The Snowball? It’s Warren Buffet’s biography. His father and uncle believed that the economy would collapse in the early 1950s for much the same reason.
    “As things are now, so they always have been, and so they ever shall be.”

    • Mal R.

      You do realize that we fought the Korean War and really got the cold war milt buildup going in the 50s and then in the 1960s, they basically made our money worthless fiat money and stopped paying off our debt dont you? Wars, fiat money and debt do what? Cause artificial prosperity.

      Those moves (esp 1964) have bought us decades of staving off (and making MUCH larger) what IS going to come here. You’re huffing hopium thinking otherwise.

  • Alasha

    i dunno …..

    (2 Timothy 3:1) But know this, that in the last days critical times hard to deal with will be here.

    i am having a hard time coping recently…. i work for a news station… jeepers… is this some kind of vortex…

    (Philippians 4:6, 7) Do not be anxious over anything, but in everything by prayer and supplication along with thanksgiving let YOUR petitions be made known to God; 7 and the peace of God that excels all thought will guard YOUR hearts and YOUR mental powers by means of Christ Jesus.

  • David G.

    Mike:

    Did you notice that when JPM announced their loss, Jamie Dimon went off on a little detour about VaR (Value at Risk). And then he stopped talking about it and so did the financial media. VaR is one of those ivoy tower models that simply says that risk is calculated by taking all the longs in the market and subtracting all the shorts in the market. So if JPM for example has 100 billion dollars of longs, and 99.99999 billion dollars of shorts, their portfolio has a risk of .0001. VaR is the reason that all the rating angencies failed to see the 2008 crash coming. They plugged all the numbers into their VaR model, and came up with an infantismally small risk in the market. And that’s why Jamie Dimon made the same mistake. And that’s why wall street will continue to make the same mistake. But the truth is that IT IS NOT A MISTAKE. Wall Street Bankers, and Central Bankers, and the few politicians who actually take fifteen minutes to figure this out, DO NOT WANT TO THROW away or fix the VaR calcualation. Right now they subtract the shorts from the longs. But every long and every short represents a risk. I you go long you’re taking a risk. If you go short you’re taking a risk. The fix of the VaR model is simply adding all the shorts and longs to calculate risk. But that would prevent Jamie Dimon and all the wall street bankers from making so many risky, outrageous bets because any new formula would expose their risk taking. They love VaR just like it is, even if they have to pay 2 billion or ten billion dollars when the formula comes around and bites them by keeping them blind to their own in-house risk-taking. The formula was exposed as foolishness in 2008. Its been shown to be foolishness again with the JPM losses. And it will become THE ISSUE when the derivaties bubble pops. VaR. Remember the model. Its supposed to act as a watchman on the tower, but instead, its become a trojan horse. And inside the belly of the beast is the largest pin seraching for the derrivates bubble ever concieved.

  • Dave

    What a bunch of idiots these bankers are. The JP Morgan CEO’s $23million is absurd.
    23 Million divided by 48 weeks work a year (these kind of people get the full four weeks off!)

    = $479,166 Per week!

    or (based on 70 hour week) $6845 per hour. So it only takes this man 5 hours to “earn” what I work hard for in a year.

    What possible value can a single person possibly bring to an organisation to be worth that much money?

    I always get told in my line of work, “if you don’t like it, Resign!” but what about these clowns? I’m sure if they get their exorbitant salaries cut down to actual market rates and want to leave, there would still be dozens of equally, if not more capable people who would gladly step up to the plate as a replacement for even just $1 million a year, or less.

    It’s the mates system at work, big time.

    What is the point of all this though? 80 years of accumulating “wealth” then you’re dead. what a miserable life.

    I’m never envious of their status and trappings though. I thank god every single day for being here in Australia with clean air, water, adequate shelter, safety and a meal every night. That is all I need.

  • Orac

    In a land that makes a lot of noise about the evils of socialism and promoting capitalism, I don’t understand why the government is so eagerly propping up corporations and companies. That’s socialism pure and simple. If it’s bad to give money to the poor, how much worse to hand it out to large corporations. They have a stranglehold on the media, want representation on government policy and demand concessions on state taxes and offshore profits. Things the average person could never do. The corporate stooges always say they can do things better than governments but cant fix their own problems. If they are so great give them all the dud loans they issued back and demand they repay. If they are so great let them pay above the market rate for loans and pay down their debt. You are subsidising their incompetence.

    I think the Bilderbergs must be laughing at the moment. Who is going to be their next “bitch” fawning and throwing money at their cabal of con-artists!
    [Restaraunts here call the people who wash-up dish bitches]

    • Mal R.

      “That’s socialism pure and simple.”

      Actually, it’s more fascism.

      Giving the money to the poor is socialism.

      And BOTH are damned unconstitutional and done by both parties and should stop. Wake up to the paradigm. Washington wants all the dems and repubs to stay at each other’s throats so we dont realize that both of them are trying to talk you out of/get you past your constitution. The greatest political document in the history of the world. So, dont forget that mucho power in few hands, whether corporate or political is goign to end poorly. The 1 difference is that you dont have to do bidness with a company and the govt will kill you for trying to do that.

  • SidDavis

    The thought that crosses my mind is, “What taxpayers?” As this depression deepens, certainly the number of people paying tax will go down. And if things get bad enough, there will be revolution and there may not be any more government to bail out anyone. The USSR closed up shop from debt problems back in the 1990’s, and it might just happen here, too.

    Revolution has a way of wiping many different slates clean, including government debts and the obligations that arise from derivatives that cannot be paid.

  • Alex

    There was a video loaded on youtube I recently saw, it was from BBC I think, the hosts were talking to a trader and what he said sounded like ‘Run for your lives’. He litarrly said something like ‘ The trade is going nowhere, the EU will not be saved, get yourself and your family prepared in the best way you can’. The newscasters were like o_O.

  • chiller

    This is why I teach all my children how to use fire arms. They will need to be able to hunt down all of the political and financial criminals when they attempt to make our children pay for their play. I’m not sure who is more cowardly, the criminals for screwing us like this or us for not acting against them. Land of the free and home of the brave? Hardly….more like land of the sleaze and home of the slave.

  • http://www.1913intel.com Matt

    The derivatives market is not priced correctly. Unfortunately, not in a way that you can easily take advantage of. Here’s the problem:

    Derivatives’ models are priced assuming that people act randomly. They never act in unison. In reality, that’s not true.

    Most of the time this assumption is effectively true, but occasionally it’s not true. Just ask JP Morgan. Also, a big crisis somewhere comes along that gets everyone acting in unison.

    When the smart guys, like the guys behind the AIG Credit Default Swap Market, tell you that the likelihood of a major crash is 1 in 200 years, in reality it’s 1 in 10 years or 1 in 20 years. That’s because of the random versus unison assumption.

    What this means is that the derivatives market is a time-bomb waiting to go off. When there is a crisis somewhere on the planet (Europe?) the market will act in unison and crash the derivatives market.

  • justanoguy

    When everybody understands that all it takes is a couple of keystrokes by the Fed to print up a couple of hundred trillion dollars with the blessing of our idiotic politicians that are puppets of Wall St…. maybe they’ll understand that fiat currency is pretty much worthless and the ponzi scheme will end.

    Get your dollars out of Wall St. because it’s going to be the next Atlantis when the music ends and the cards come tumbling down.

    Nevada Law requires the casinos to have money on hand for taking bets… Not so for Wall St. and that’s pretty sad.

    As far as I’m concerned when it comes to D.C. …. good luck collecting taxes from me to pay the beese bills because I’m insolvent.

    I am NOT paying for the excess of others when I’ve been living well within my means…. PERIOD.

    The big banksters and the politicians that support them need to go down. The sooner… the better as far as I’m concerned.

  • Chris

    As far as I can see the only hope for your country is to default on its debts, abandon globalisation, adopt policies of non interventionism, become self sufficient in food and energy, practically close the borders to non-skilled immigration, return to your Constitution and Christian roots. To do this will require electing completely new parties not the same revolving door scam as at the moment. Your country has a great deal of natural scientific and engineering talent and innovation and productive land. Globalisation is killing the USA and the West.

  • Trix Indonesia

    I still can’t believe how the financial system in this world to be this dumb designed. Aren’t these people who build this system supposed to be smart, top of the class, and so on? If so, why did they made such an idiotic system? Unless of course they made it the way it is by design for a specific purpose.
    Looks like those conspiracy theorists do stand in some solid ground, although they are not 100% correct. The financial system is deliberately made to be this weak in order for them to have the old world crumbles and brought forward “new world order” to us as solution.
    I wonder if what they say about UFO conspiracy is also true? It will be fun to see a world, already devastated by the freeze of global trade, being invaded by “aliens” on flying saucers, and then see the “elite” people come to the rescue. Besides, the world has been barraged by this scenario through multiple films, from “Independence Day” to the newest “Avengers” and “Battleship”.
    The ride to “The New World Order” is going to be fun. Just remember to leave your 3D glass when you leave the theater.

    Cheers

  • Paul

    So the WORLDWIDE losses are estimated at about just half of Bill Gates’ wealth?

    That not so bad.

    Bill could pay for it all and still be immensely rich beyond any imagination.

  • Paul

    “How in the world can we afford to keep bailing out the huge messes that Wall Street makes?”

    There is no need to pay those trillions in losses.
    Just need to provide welfare for those who lost everything.

    Send the Lehmans, Morgans and Templetons to farms and into sewage pits to repay their debts by working.

  • andrewleiner

    LEINER DICTIONARY AND WORD STUDY GUILD

    OPTIMISM : OPTIMIST

    1. A dangerous mental disorder.
    2. An incurable form of insanity.
    3. Foolishness.
    4. Denial of reality.
    5. One who votes thinking he is doing something meaningful.
    6. Madness.
    7. Expecting an outcome that will never happen.
    8. Moonbat.
    9. To be unprepared for the future.
    10. A very annoying person.

    The Apocalypse is all laughs and giggles until it gets pe

  • Evie

    Weimer germany was better than what will happen here. At least wages kept going up. Here wages remain stagnat while prices go up and poverty rises. The centrsl planners here worry about garage sales where people may make 10 dollars for the summer. The elite are concerned as a purchase will not end up in the executive pay trough. They are frightened the free market will work as well as it did durinh the rationing in ww2.

  • karen

    I just read an article where the poverty rate for women and children is at a 17 year high, over one million children in the streets, and then on the main page of yahoo all this stupid crap that means nothing, a joke and super rich people up- grading their fancy car to a 1.1 million dollar’s. A child begging for help on the streets of the US, we are such a mindless race, so selfish, in this short span of time we have on this earth none of us are promised tommorrow, or today it’s the NOW you live for, and when it’s time to meet your maker and WE WILL ALL GET THAT CHANCE what will you say?? Because you know lies won’t do God already knows, can you say that your time here was spent to fullist, that you had compassion for your fellow human beings, that you lived each day to be the best you could be, to take responsibility for your thoughts, deeds, and actions. what would your words be to God ???

    • GaryToo

      whats the poverty rate for men karen? No there is no federal and state dept of mens interests is there, Only these depts of womens interests to do something as irrational as ignoring the men and making the suggestion they are fine or dont matter. Im sure the poverty rate for men is at a 17 year high as well. Lets halve the figure for the children, since half of them are boys who will become men so do not count.

  • Note from Idaho

    Ask 100 people on the street and one may be able to give a definition of derivatives.

    This economic ignorance and belief or yet worse, trust in politicians to take care of us will lead us to the inevitable collaspe.

    • mondobeyondo

      You’d be lucky to find even one person.

  • Ryan

    Good read however some of the comments seem to be lacking in integrity about what derivatives are and used for. Derivatives are a phenomenal tool for wealth creation and protection.

    As wealth protection they are used as a hedge to short and long term down sides. Say you own SHLT stock bond whatever and you feel the price is o er valued currently. You would used a COVERED derivative ( a bet against something you own) to on paper sell that asset today and buy it back I. The future ( usually with and end maturity date of execution). This creates only a tax event on the derivative and allows you to maintain your original position. This tactic will lock in gain from the long asset while capturing a small premium from the sale of the paper derivative. Should asset go to 0 you will have already sold it. Should it double in price you will have only gained what you sold derivative for. No downside and limited upside. Hmmmm makes sense.

    Conversely you can use derivatives as wealth creation. You can trade derivatives without the backing of the underlying asset. This allows you to place much larger bets and gain/loss much more in a shorter period of time. Much more risk.

    The problem with CDS’ is such that I can sell you a CDS on SHLT bond with a face value of 1 billion for 1mm a year. I can do this naked which has been the practice for many years. But what if there is an event to trigger said CDS and I need to make good on 1billion? I declare bankruptcy and CDS holder is left with worthless issuance on their asset.

    The problem is not derivatives. They are necessary and valuable in all markets. The issue is naked derivative trading without any reinsurance or regulation that the issuer of a CDS can pony up in a credit event.

  • http://TheEconomicVoice Gregge Johnson

    JP Morgan is owned by the Federal Reserve, Think about it??? Were did the lost digital Money go??? Back to the World Bank and then back to the Federal Reserve>>>>SWIFT in Belgium wher the compcontroller HIT the DELETE button. Shazam $2 billion dollars gone The $2 billion Dollars were made from air and went back into the air. Perfect Pozi DEAL.

  • Cinderella Man

    Should have listened to Brooksley Born when she warned about the derivatives in the mid 90s but oh no Greenspan, Rubin, and Summers “the commission” told her to go to hell. Not only has her warning come true it hasnt fully manifested itself yet. And the safeguards have still not been put in place almost 15 years later…This truly is a house of cards and it will only take another Lehman Brothers moment to knock it all down. Will it be Greece? Spain? China? Everyday its getting closer and I think that after TARP Americans have just about had enough of bailing out banksters and their buddies. I think if they try to shove it down our throats this time they are going to get alot more resistance. But then again who knows? If peoples biggest concern on the social networks continues to be what they ate for breakfast and updating their cat’s status maybe nothing will happen. In other words do what the govt. wants you to do Shut up Dumb down and pay your taxes you stupid serf!!

  • http://TheEconomicVoice Gregge Johnson

    Tex measage on your phone $100,000,000.00 dollars to a friend..Your friends talks investers into investing on that digital . Your freind then Texs you back $100,000,000.00..Lies are made up and leaked into the news media! you Hit the Delete button on your phone the $$$$ are gone and then your freind hits the Delete button, the $$$ are gone!!!! A very good friend works at the World Bank.

  • http://N/A HapHarris

    Backed by: “The Faith and Credit of the United States of America.” The true figure is: $1,200,000,000,000,000 [that’s Quadrillion]. Don’t worry it simply can’t be repaid, but, the sun will come up the next day…provided the fallout from Fukushima hasn’t already solved all our problems. “Between optimist and pessimist the difference is droll…the former sees the doughnut…the later sees the hole.” Cheers-! God love you, Hap

  • justamom

    “…the real extent of the crisis will not be known until the trades play out.”

    When will the trades play out, Michael? When will the world know the actual cost of this blunder?

    • Michael

      Right now JP Morgan and the hedge funds are in a long “staring contest” and nobody knows how long it is going to last.

      But if the stock market starts tumbling badly that could force JP Morgan to do something.

      Michael

      • markthetruth

        Or like you said THE FEDS…..

  • karen
  • erheault

    In the backround our friends the Chinese are slowly sinking the dollar they just announced that Australia and Japan another good friend will start exchanging their own currency in their trades excluding the dollar standard, This makes around 7 diffrent countrys that are dropping the dollar standard for their trades,
    When the american public keeps people like Barney Franks in office they are going to be sold down the river this goes for most of what we have allowed to rule our nation so we are going to pay the price which is now due, We have now a dope smoking Socialist who has never had a steady job in his life as a President and has added trillons of national debt on the taxpayers backs that is what is left of the taxpayers and the people are trying to get him back for another 4 years, Apperently we never learn untill it is too late.

  • MadeinAmerica

    Read, “Aftershock”, then prepare.

  • karen
  • William

    The criminal banksters that created the toxic derivatives monster OWN your US Representative and US Senators. Be sure to vote for them again in November.

  • http://worldendsar5newsat11.blogspot.com Roberta Lamb

    The ONLY answer to derivatives
    Print money like there is NO TOMORROW, Print ONLY on one side & one color on the bills to save time & money, print 24 hrs, have every print shop in amerika printing legal tender and then use that mony to pay off the 1.5 Quadrillion we owe in derivatives. Time is short PREP hard & fast.
    Gold will NOT feed you, Silver will NOT keep you warm and Diamonds will NOT protect your family. See a Real FREE survival plan for you and your family at:
    surviving12-21-2012.blogspot.com

  • http://www.magnifiedview.com Yoda

    Great feature!

    A communist revolutions is coming to your neighborhood.

    Be aware – be prepared

    Right on Economic Collapse – WRITE ON!

    Respectfully, Yoda

    http://www.magnifiedview.com/2010/09/17/yodas-little-known-tactics-to-avoid-being-a-target/

  • goldnguns

    Easily solved by 115 million taxpayers showing up with torches, pitchforks, and a couple of hundred feet of ******************.

  • Diane C

    Gee – I seem to remember Obama saying “they” revised the financial system so this would not happen again. Wasn’t that the Frank-Dodd plan? I guess he lied.

  • patriot alice

    When the derivative market falls apart, we won’t even afford the hook…All we can do at this point, is print, print, print…It’s too late to save our country, because our leaders are too afraid to lead…Just continue on the road to ruin, until there’s nothing left, and too many people to blame and nobody specifically to hold responsible…When it is all done, all of our leaders are to be blamed, yes all of them…

  • sre

    Ever heard of the boy who cried wolf? Or Chicken Little? “The sky is falling! The sky is falling!” AWk!Awk! Nothing is happening, really. All the “money those folks play with is fake anyway. Chin up.

  • a lot more trouble…

    Derivative Market for dummies

    For those of us who are bamboozled by the derivatives market and its meaning here is one of the best ways to understand how it works;

    An Easily Understandable Explanation of Derivative Markets

    Heidi is the proprietor of a bar in Detroit . She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans)….continued (read more)
    http://www.city-data.com/forum/investing/721720-derivative-market-dummies.html

    Not only is Japan cutting workforce in major companies
    Olympus Layoffs Could Reach 2500 As Company Looks To Sell …
    ‎Huffington Post – 5 hours ago
    Japan, unaccustomed to mass U.S.-style layoffs, is awash with news of job losses as big companies look to cut costs amid weak demand and a …

    Japanese electronics sector teetering on brink of collapse
    ‎동아일보 – 17 hours ago
    Japan electronics, which once ruled the world, is undergoing large-scale restructuring. Three years after massive layoffs in the wake of the …

    Here in the USA things are getting so bad we are laying off prison guards;
    Inmates Released At Josephine County Jail
    ‎KDRV – 15 hours ago
    As layoffs continue to trickle down at the Josephine County Sheriffs Office, the jail is beginning to make preparations for those cuts, including …

    Guards at Dwight, other prisons get layoff notices
    ‎Morris Daily Herald – May 23, 2012
    DWIGHT (MCT) — Prison guards at Dwight Correctional Center and other state facilities slated for closure this summer received layoff notices …

    How bad do things have to get before Governments declares we are in a financial emergency and that a collapse is imminent?

  • karen

    http://www.straightdope.com/columns/read/2589/does-pcp-turn-people-into-cannibals SOMETHING SMELLS FISHY ABOUT THE 31 YEAR OLD MAN IN MIAMI, YOU CAN GO TO THE DAILY MAIL AND READ THE NEWER STORY ON THIS CASE. SOMETHING IS WRONG, i THINK WE WILL SEE A LOT MORE OF THIS SORT OF INCCIDENT.

  • erheault

    Gee do you mean they ever had a plan other than grab as much funny money that they could and then run off to a diffrent country when we crash?
    our election process is nothing more than liars poker played against the semi illerate and dont care as long as the gov check is in the mail crowd which now encompases half of the families in the USA it is time to CYA as the mess is coming to a head soon.

  • El Pollo de Oro

    “The problem is not capitalism. It’s monopoly capitalism.”—Alex Jones

    “Prices are going up. Unemployment is continuing to go up. And we have not had the necessary correction for the financial bubble created by our federal reserve system.”—Ron Paul

    “The New York Fed is one of the linchpin crime syndicate hubs. Timothy Geithner comes out of that crime syndicate.”—Max Keiser

    “We’re getting raped in broad daylight by the money changers and the loansharks—or as they like to call themselves today, bankers.”—Gerald Celente

    It’s only a matter of time until the ultimate welfare parasites, The White Shoe Boys of Wall Street, are begging for more bailouts from the taxpayers of The Banana Republic of America (the Third World snakepit that used to be the United States). But you can’t get blood from a stone, and the reality is that American taxpayers are tapped out. The IRS’ favorite cash cow, the American middle class, is being annihilated—and millions of formerly middle class Americans (now the neo-poor) don’t have the funds to bail out the Wall Street mafia. So get ready for the crash of crashes.

    “The mainline Tea Party got corrupted by Republicans.”—Alex Jones

    “Why are mainline conservatives so into getting gangraped? Why do they love getting conned? They worship the corporate fascists so much. It’s just insane.”—Alex Jones

    “If you want to get into a good entrepreneurial business, guillotines may be in fashion.”—Gerald Celente

    “This is a collapse of empire. One thing that is an ingredient of all collapses of empire is an absence of justice. There is no justice. There is no (accountability) for the 1%, and therefore, there is no justice at all.”—Stacy Herbert

    “How can a country have a world empire when it can’t finance its domestic budget? It’s not possible.”—Paul Craig Roberts

    “For many, the American dream became a nightmare long ago. It’s little wonder that Americans are afraid and angry.”—Michael Fumento

    This Third World Ponzi scheme cannot be salvaged. A horrific crash is inevitable—much worse than 2008, and as Gerald Celente predicts, even worse than 1929. When that happens, there will be an absolute bloodbath in the BRA. There will be major social unrest and food riots combined with a horrifying escalation of violent crime to Third World levels. Get ready for the violent crime of Venezuela, Mexico and Honduras, the widespread rioting of Greece, and the tribalist violence of the former Yugoslavia all rolled into one. The bloodbath that awaits the BRA will be horrific.

    Welcome to the new dark ages. Welcome to collapse of empire. God help The Banana Republic of America.

  • JJ The Fed

    I am moving alot of my $ to Asia.

    JJ The Fed

  • Pingback: When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook | Economy In Crisis()

  • mondobeyondo

    When the derivitaves bubble bursts, you know what’s going to happen. And NO – I’m not posting that Tsar Bomba link again.

    Listen to “When the Levee Breaks” by Led Zeppelin. It’s basically the same thing. Is it the soundtrack to our imminent collapse? Maybe.

  • mondobeyondo

    “Lemme tell ya the story of a cat named Bill
    Poor country kitty, barely kept his tummy fill..”

    Oh, how I miss Berke Breathed and his cartoon strips, “Bloom County” and “Opus”.

    Okay, back on track!
    Is JP Morgan going down? Not likely. They are one of those “too big to fail” banks. They SHOULD fail, but they won’t, because they’re “too bi

    Whoops. I hate repeating myself.
    What about Bank of America? How are they doing?
    Every major U.S. bank is standing on quicksand. JP Morgan, Wells Fargo, Bank of America, Washington Mutual… Oh wait, they already went under.

    How much longer until they sink, is anyone’s guess. It could be tomorrow, or a month from now, or January 24, 2013. I have no idea. But it’s going to happen.

  • Washington
  • Rodster
  • Evie

    Soon who will be left to pay taxes? Why all of the people forced to buy health care or pay a fine.

    • Guest

      Because of the voters that wanted change without knowing anything about the traitor that promised the change.

  • Washington

    20,000 apply for 877 jobs at auto plant.

    http://www.cnbc.com/id/47614988

    • mondobeyondo

      The recession is over!!! Yaaay…I suppose

  • Old Man

    “So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill.”

    No we don’t.

    What will happen is people will rise up. For real. It has happened before, around 1776. They ‘took care’ of England stranglehold on tax and finance real good.

    • OLd Man’s son

      Really?…

      NO we don’t/ we have got football in the idiot box.

  • Frank

    I will commit seppuku (hari kari) if my facebook stocks become worthless. Nah, I’ll just move on.

  • TheButler

    How interesting it is that not a single comment in this “intellegent” conversation considers that perhaps there might really be a “God” who is very much interested in the afairs of mankind.

    This “God” does address the subject now and then with the words spoken by One called “Jesus”, who claimed to be speaking the very words of God. This Jesus tells us not to be fearful as are the “gentiles” (those who do not yet believe in Him). Jesus tells us, “they(the gentiles) eagerly seek for what they will eat and drink and what they will wear. But seek first the Kingdom of God, and He will provide all these things, for the Father knows that you have need of such things.”

    Folks, it is “Faith” that will sustain you, not the dollar or the government in whatever form or shape it may morph into. It is only the government of God, i.e, God’s kingdom that will provide you with these things that the gentiles eagerly seek.

    I made this choice in my own life nearly 38 years ago, and have not been disappointed of made fearful even once since that day in Feburary of 1974. All it takes is the choice to believe in the One who came to explain to us that there is a better way. It is the way of the cross of Jesus Christ.

    May God bless you each one who reads this post and decides to read the words of Jesus for themself. Then you make your choice.

    “He who comes to God must believe that He is and that He is a rewarder of those who dilligently seek Him” (Hebrews 11:6)

    • bugjackblue

      Excellent sarcasm there. But it’s probably wasted as I fear that most who read your comment will think you’re being serious and not get the joke.

      • noIMspartacus

        yeah, great joke, freakin hilarious!

        meanwhile in the land of the fee and the home of the slave…

        “Oxygen gets you high. In a catastrophic emergency, you’re taking
        giant panicked breaths. Suddenly you become euphoric, docile.
        You accept your fate. It’s all right here. Emergency water landing –
        600 miles an hour. Blank faces, calm as Hindu cows.”

        – Tyler Durden

  • propel7

    What PEOPLE will rise up? All those focused on their SPORTS, VIDEO GAMES, AMERICAN IDOL? How about those who have been raised by TV rather than their parents? How about all those who have sat in a One World Order AGENDA Classroom all their lives? Maybe all those who are on welfare? What is it about 48% now?. They will surely all rise up against their paychecks. How about all those who have taken the bait from Obama about DIVIDING the Races, Sexes, Classes, Ideologies? We are no longer a UNITED STATES, therefore there are none left to rise up. Those who do rise up will be squashed by the One World system quietly put in place while we were all focused somewhere else. NO? Read about Albert Pike and the Blueprint for 3 world wars, written in 1871. Seems they have accomplished just about ALL they planned. ALMOST. WAKE UP MORONS!!!

    • noIMspartacus

      too late – man oh man! that ‘blue pill’ REALLY works!

  • http://e-watchman.com Robert King

    People can see that the entire system is going to collapse. What is less appreciated is that the collapse of the system is exactly what Bible prophecy points forward to. http://e-watchman.com/home/2011/12/17/2012-the-conclusion-of-a-system-of-things.html

  • Robert J. Cable

    I don’t see why everybody’s so worried… I’m looking forward to the big crash and excited for it to happen. It’s the only way we will ever see change. When money holds no value and the playing field is leveled between to rich and the poor, only then will we experience equality. We can never have equal rights without equal buying power.

    Embrace the collapse, Embrace change!

    • Simply Sue

      Careful what you wish for Robert; unless you have a cache of buying power buried under your level playing field. The poor will always be with us, and the rich will always have an edge. We in the midst will bear the sins of both.

  • http://www.theparanormalnews.com/Archives Malaria_Kidd

    I wonder if there are any night owls here who listened to Coast to Coast AM’s host George Noory with his guest speaker Lindsey Williams, the Prudhoe Bay oil field preacher. Lindsey echoed the OP’s topic at the top. The whole show was spooky economicaly wise or unwise.

  • Pingback: When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook | BY THE BLOOD OF THE LAMB()

  • Cristine

    I’m sad to see that the economy will crash. We were once the cream of the crop. Everyone wanted to get into the United States…Land of the Free We have known what was coming for so long. The media candy coats it and citizens deny a reality they hope will not transpire.We allowed the government to take too much control over every aspect of our lives. This was never intended by the writers of the Constitution. Then… the moment we turned things over to the federal reserve we were doomed. We have lost almost all our Constitutional rights. Major changes are coming and it’s sad the future our children are left with. God Bless America

    • deegee

      I think it should be “God help America…and the world”

  • Cheri

    Also watch The Baltic Dry Index; if prices rise, then that’s a good sign. it means demand for shipping space is increasing. If prices drop, there is an excess of shipping capacity and right now the BDI is in the tank.

  • someguy

    So here’s my idea in steps:
    -Grab all your guns and ammunition as well as a large supply of water, food, gas, camping supplies and so on, load them into the back of your truck
    -Go to each of your neighbours’ houses armed to the teeth, and convince them that you are going to go make a “civilians arrest” on the bankers and politicians and tell your neighbours that they can either join you, stand out of your way or stand in your way and face the consequences…
    -With the voluntary recruits you have gathered from your neighbourhood, begin convoying your way through town, and any person you meet/talk to; just tell them the same thing you told your neighbours
    -Any police or security who try to stop you, tell them the same thing
    -Do this all the way from your community to Wall Street, anyone who dares stand in your way and try to stop you must face the wrath of the convoy
    -Go and arrest the Wall Street criminal scum, if they resist, make an example out of them
    -With said arrested criminal bankers tied up in the backs of the convoy’s trucks and vans, continue on to the Federal Reserve, while continuing to recruit volunteers to join the convoy
    -Do the same thing with the FED crooks as you did with the Wall Street scum (by this time the convoy should be big enough to hold many prisoners)
    -Continue on to Washington where you will confront the politicians and show them their bosses tied up and gagged
    -Give the politicians a choice: either hold their bosses accountable for their crimes against the constitution or accept forced resignation
    -If they choose the latter decision, then elect citizens to take their places who will hold all of them responsible for their crimes

    From there, everything should be in place for you to get your country back…
    Best of luck to you brave Americans, I wish I were there to join the convoy, but sadly I am not American, and I don’t own any guns. :(

  • JamesL

    Summer of Recovery! The question now is what do we do if we can see it coming? I am trying to pay off debt so I can prepare for a crisis, but its slow-going. I just hope we have time…

  • lyndon eaton

    when things collapse there will be no arrests made, no recovery, and no changes made in politics. This time the collapse will be so bad that the next batch of elected politicians won’t be able to fix it. what to do? I’m not telling. No one would listen to me on this for years, so…

  • johnd

    COLOUR REVOLUTION AND THE ECONOMICS OF A THIRD WORLD WAR. CUI BONO?
    “You can’t simply parachute Karl Rove into a country and manufacture a revolution.”
    In the 90/00s we had the Orange Revolution in Ukraine, the Rose Revolution in Georgia, both of which it is now confirmed were backed and coordinated by NATO/CIA elements straight out of the Albert Einstein institute/Gladio Handbook. Dr Gene Sharp’s protégé Colonel Bob Helvey (1) being in overall command of the recruitment, organization and activation of “Otpor, Kmara and Pora” (OKP) resistance cells tasked with inciting insurrection and non-violent revolt in major urban population centers.
    This was all coordinated on the ground from the Marriot and Hilton hotels where OKP apparatchiks got their marching orders from the trickle down tyranny officers tasked to spearhead the timing of the uprisings. It is no different in the Middle East currently except this time Al Qaeda (AQ), who were present as a destabilizing element in Serbia’s subversion are now more prevalent than ever before. It is fitting that AQ, translated as The Database, is an American creation utilized to destabilize Russian occupied Afghanistan in the late 70s and is now being rolled out as the boogeyman/patsy once again. But this time with the added benefit of eroding civil liberties domestically in the US while acting as the meme to affect change geopolitically. 




    The Elitists main geostrategic goals are: 



    – Maintain energy dominance in the Middle East, Gulf, African regions.
    – Support NATO’s further advance against perceived Russian protectionism.
    – To drive the price of oil upwards aggrandizing Wall St speculation while artificially buoying demand for US treasuries. 

    – To further consolidate private Anglo/American central banking control over independent states. Only 3 left. Iran, North Korea and Cuba.
    – Continued balkanization of all politically and ideologically nonaligned states to maintain destabilized political environment via proxy. E.g. Afghan Helmand AQ pushed south into Baluchistan, pinch point of the Iran Pakistan China energy corridor, and to destabilize the port of Gwadar, main China Sea link to Middle East oil.
    – Continued Global “Harmonization” through policies such as the United Nations policy paper Agenda 21, Codex Alimentarius, Nafta, GATT, SPP, synthesized in tandem with global economic governance through agencies such as the IMF, BIS and The World Bank.
    – To get rid of the “strong men” in the Middle East and Africa in order to install democratic (false left/right paradigm) elections through which pro US puppets like Mamdouh Hamza will bring false HOPE AND CHANGE, while they acquiesce to US policies and rubberstamp no bid contracts to US, UK, French corporations while shutting out Russian, Chinese access to Gulf States and African oil. Watch South Sudan as they supply China with 5% of their energy requirements.
    The precursors to WW3 are all basically summed up in these objectives with the resultant cause and effect of the major spheres of influence countermoves creating potential flashpoints. We had two world wars last century and anyone who thinks that there is no risk of another ever again is living in Obamesque delusion. Unfortunately, in nuclear proliferation the key element is Rationality, it is the cornerstone upon which all other assessments are derived. We need look no further than the biographies of the Obama White House staff to know that Mutually Assured Destruction is no deterrence to these people and money is no obstacle, for now at least.
    Naturally, propping up the dollar is key to the overall implementation of the wider objectives mentioned, although it can be argued that in the ashes of a dollar melt down lays the false imperative for global economic governance. With US debt currently at $57 Trillion and a further $119 Trillion in unfunded liabilities, Social Security, Prescription drug liability, Medicare, Medicaid and federal pensions, we can be assured of a USD Black Swan moment within the decade.
    US Treasury bill commitments are predominantly foreign held, China tops the table with +$3.2 trillion. And so rather than having to honor these, the open policy is to deny China et cie easy access to African and Middle Eastern oil reserves, fund and train local destabilizing elements and drive oil to $200 a barrel through high frequency trading and off balance sheet oil reserves accounting to preserve the dollar as the world reserve currency.
    As a consequence of this, foreign held US dollar and treasury reserves will go into oil purchases rather than back to the US Treasury, which even now can’t fully sell their Bond auctions without the fed stepping in and purchasing them.
    Oil is, for now, traded internationally in Dollars. We recall that they went back to get Saddam when he started selling oil in Euros, wmds and links to AQ being an insult to our intelligence. But even this global monopoly is not enough to sustain the egregious debts of the Military Industrial Complex, TARP, TALF and $75 trillion in Federal Deposit Insurance Company backed derivatives from BoA and Meryl Lynch and a further $79 Trillion from JPMs investment arm to top it all off. Funny how Sheila Bair has time to close hundreds of small regional banks that fail to meet tier 1 capital requirements, but puts the taxpayer in hoc to the tune of 150 Trillion Dollars to save three insolvent firms. Liquidity issues being an affront to our intelligence.
    http://www.examiner.com/article/2008-redux-taxpayers-to-help-bailout-merrill-lynch-and-bank-of-america
    Special thanks for this should go to Bob Rubin and Larry Summers for the dismantling of the Glass Steagle act in the 90s, which separated investment banking from the commercial side. And the encore goes to Blythe Masters, the creator of the ignominious Credit Default Swap, she is now busy in JPMs metals division denying the ten-ton elephant in the room that is JPMs massive net short position in the Silver futures market.
    As a footnote on JPM, 78% of their derivative holdings are in Interest Rate Swaps, forget about CDSs. IRSs are a financial instrument sold to states, municipalities as a hedge against risk exposure to prime interest rate fluctuations sold from the same desks where leaked emails describe the recipients, i.e. clients, as, “dumb motherfuckers.” The munis bought them assuming that they could project their future debt repayments in context of a narrow band of oscillation cushioned by this marvelous product designed with them in mind.
    Then along came Zero Interest Rate Policy triggering inbuilt commitments in the IRS where if rates went up then the issuer took the hit. Conversely rates going down to current levels involve the IRS holder to pay out 97.8% of the spread from the initial buy in. For example, Deutsche Bank sold IRSs to Chicago munis who had to sell off their trains, trams, fire brigades, etc to stave off default as a direct result of buying a product designed ostensibly to insure them against the same risk. They now lease their own infrastructure back from the new owners, Deutsche Bank. It must be stressed, this is a pan global phenomenon.
    If this wasn’t bad enough, there is the small matter of a massive foreign Dollar reserve overhang, outstanding bond interest obligations, Sarkotrade Long Term Refinancing Operations, the inevitable failed Bond auctions and don’t forget the $763 trillion in soon to be FDIC (ergo Joe Public) backed derivatives debt. Current Trillion+ yearly dollar budgets are being profligately wasted with over 42% blown annually on defense spending alone, and the solution is the Federal Reserve buying up 60% of all US treasuries issued! (i.e. TECHNICAL DEFAULT).
    It becomes obvious why China et cie are divesting their US treasury assets back from whence they came. With this in mind, it is my opinion that it is only a matter of months until we see bilateral or multilateral regional agreements between BRIC and or Shanghai alliance and non aligned states to trade oil in their respective currencies to mitigate against the increasingly inherent risk in Americas inability to honor its debt. From this we will see the forging of a newly defined multipolar world.
    When this happens en masse, and it is guaranteed at this point, petrol will hit 20 dollars a gallon and pretty soon after that there will be bank holidays followed by martial law in America. As absurd as this sounds, the reality is that America with a regional as opposed to a world reserve dollar will see this scale of adjustment to price levels which are already standard across Europe. As goes the dollar so goes America and its people.
    As stated, the PRIVATELY OWNED FOR PROFIT Federal Reserve is buying up US Treasuries at an alarming rate; short-term debt is selling as a hedge against a schismed risk on/ risk off market even though it equates to an inflation adjusted negative interest rate but who wants to hold a 30-year bond at 3%? Current yields don’t reflect anticipated inflationary risks especially as the debt ceiling doesn’t seem to have meaning anymore. And who wants Goldman Sachs or Morgan Stanley Bonds with their balance sheets full of “Risk Free” sovereign bills, bonds and notes waiting to explode into one huge write down. But it’s the insiders who benefit either way while the goyim masses take the hit every time.
    However despite their best efforts, America’s protracted economic woes and shifting tides of public opinion will eventually belie the grand deceptions of both the economically and geopolitically contrived realities. That is if the people can cast off the cognitive dissonance and normalcy bias that blinds them from the reality. Economically the US calls China currency manipulators for pegging the Yuan to the Dollar while they concurrently destroy the Dollar through hyperinflationary policies QE 1.2..3…Ad infinitum.
    Geopolitically the US through the empty suit Obama and the State Dept Clinton are waxing lyrical, “We need to listen to the people of …“Where ever”, these strongmen in the Middle East must go”. Yet America has been instrumental in installing most of these men, they have openly funded their regimes and supplied them with arms for decades. This is ultimately a CIA/shadow government/foundation funded/ takeyourpickPAC/Private Central Banking Power coup.
    Just as Mossadeq was ousted by a CIA/SIS US/UK power coup followed by the installing of the Shah in 1953, which ultimately led to the upheaval that swept Ayatollah Khomeini and the mullahs into power in Iran during the late 70’s. The same geostrategic policies saw Sadat installed in Egypt giving rise to the radical wahabi and jihadist ideologies of Sayyid Kutb and Zawihiri in the Middle East and the neocon Cheney-Wolfowicz-Perle faction in the west.
    Considering that the further entrenchment of these policies under the Obama regime continues unabated, the demoralization, destabilization, crisis and normalization game play will continue to be waged on the entire Middle East and everywhere else for that matter for decades to come.
    This is, in part, the Zbigniew Brzezinski (Obama’s main foreign policy advisor, he also ran the Carter administration back in the 70′s) methodology of microstates and ministates. His strategy ultimately results in China and Russia starved of Middle East energy going to war over mutual reserves and destroying each other, leaving America to maintain energy dominance for the rest of the century.
    Prescribed reading: The Grand Chessboard, Between Two Ages, The Clash of Civilizations, Tragedy and Hope, Confessions of an economic hit man.
    The people of the African, Gulf and Middle Eastern states will realize in about 3-5 years that they have been duped into believing that they have won their freedom. Democracy is unfortunately a cruel hoax and the global players are using every weapon in their arsenal to achieve it.
    Mubarak was ousted primarily because he stopped price controls on wheat, the staple food in Egypt, no thanks to the SCAF interlopers who now control the country at the behest of the very same masters. Wheat like most of the fundamental elements of life is a securitized commodity in the futures markets. It has been speculatively driven up to nearly double its price in less than a year well above historical highs bar the 2008 peak High Frequency Trading computerized bonanza through Wall st, who cares that it results in starving millions of people. Future expectations are that water will be traded in about twenty years, going long on clouds shouldn’t sit well with the average consumer who will find themselves priced out of a bath.
    The price of potatoes on the other hand has remained relatively stable in spite of weather effects on yields, what is important is that potatoes are not traded in the futures markets. Being Irish, I rather enjoy the odd spud; I wouldn’t want to be paying €50 a bag for them though.
    Who cares that wheat futures paper derivatives market; CBOT (notwithstanding legitimate hedgers who are among the worst affected) supposedly backed by the Chicago Mercantile Exchange vastly distorts the natural price discovery mechanism of a staple food commodity to the detriment of the world’s poorest people on the verge of acute poverty and the aggrandizement of traders and hedge fund operators.
    Who cares that the same CME turns a blind eye to ex Goldman Sachs CEO John Corzine blowing up MF Global due to bad bets on European debt, 40/1 leveraging and comingling of segregated customer accounts whose $1.5 + Billion has vanished in one big margin call yet he walks off scott free.
    The very same John Corzine who penned Obama’s economic recovery plan, he gets a pass and walks off with hundreds of millions of dollars as do the Koch bros et cie who got the call to get out before it blew up.
    Don’t forget that MF Global had primary dealer status and access to the fed discount window and the Primary Dealers Credit Facility i.e. toxic shit in, US Treasuries out. Where was the SEC or the CFTC? Well the SEC head Schapiro was CEO of Finra and CFTC head is ex Goldman Sachs CEO Gary Gensler. Nuff said. Where was the fiduciary responsibility? Where were the backstops? Where is the justice instead of the Just Us.
    That is not my idea of a fair society. It is no different in Libya currently, the people do want a better way of life and believe that democracy is the answer, it is not the answer but it is what will happen. What will they have gained? The selling off of all their state assets to corporate interests through Public Private Partnerships and the introduction of a debt based fractional reserve fiat monetary system. And what have they lost? Well a short list in Libya would be:
    1. All newly weds used to receive $50,000 from the state. 

    2. A private home was the basic right of every citizen of Libya. 

    3. There were no electricity bills in Libya. Electricity was free. 



    4. The people of Libya paid 0% interest on all loans according to Law. 

    5. Gadhafi increased the literacy rate from 25% to 83%. Education in state universities was free. 


    6. Medical expenses in state hospitals were free. 



    7. The price of the petrol was 14 cents. 

    8. When Libyan citizen bought a car, 50% was paid for by the state. 



    9. A large loaf of bread used to cost 15 cents. 



    10. A Libyan mother used to receive $5000 just for giving birth.
    I’m not saying Libya was perfect but it was not as it was portrayed in western media. The fact that Gadhafi was to receive a UN international award for human rights endorsed by dozens of countries such as Italy, Holland, Denmark, Sweden, Spain, Norway, Germany and Australia could hardly be ignored by accident.
    This should be a smoking gun to anyone with the faintest vestige of critical thinking, this obviously doesn’t include mainstream reporters, Sky, Fox, BBC et al who went into turbo spin mode on reality.
    The resultant false left/right paradigm that will be foisted on the Libyan, Algerian, Egyptian, Syrian, Yemeni, Iranian and Jordanian peoples will facilitate the cooption, outsourcing, asset stripping and balkanization of these once independent nations and deliver them into the hands of the controlling oligarchies. The stratagems of obfuscation, omission, subversion, distraction and deception being prevalent elements in its implementation.
    The same masters fund both sides of the political spectrum, because through control of the central banking system, the international financiers and the myrmidons of finance capital dictate and control the actions of governments imposing budgetary and economic constraints at will.
    Back in the 90s Turkey had 40% of the value of its currency, the Lire, wiped out in 4 days through the foreign exchange mechanism in the City of London and a paid off controlling faction of the Turkish general staff to enforce it. This was done because the incoming government threatened to close down the Central Bank of Turkey and create a new system of public credit separate from the Red Shield controlled alternative, a prima facie case of economic terrorism in a modern context.
    It comes as no surprise so that the Libyan National Transitional Council set up a new Central Bank of Libya no longer independent of the Bank of International Settlements controlled hegemonic global banking cartel as it had previously been. After all, as John D Rockefeller said, “Competition is a sin.” They even managed to set up a new national oil company and struck an oil deal with Qatar yet Gadhafi was still in power at this time. These guys ran a revolution by day and set up Central Banks and oil companies at night, these guys should think about Management Consultancy because they have talent. This rabble band of Libyan heroes (AQ who blew up Americans in Afghanistan are now on the NTC) achieved this miraculous feat a mere 13 days into their insurrection. 13 I hear the freemasons among you say, just a coincidence I’m sure.
    (1) Source: Obama, The Postmodern Coup. By Webster G Tarpley. Page 253.

    • geri

      I enjoyed reading your comments JohnD, you have a good handle on how the game is being played. Yes we are being played for fools, it’s been going on for decades. Democracy is a sham and not everything it’s cracked up to be. We think we have a choice but we don’t, our leaders are merely puppets doing their master’s bidding.

      It’s always been about banking systems, the US dollar,oil and drugs. I did some reading on Gadhafi and yes he was a brutial Dictator with solid grip but he also did do some good for the people of Libya. The Western Media never talked about those. It’s all a sad bloody game I’m afraid, there’s a game being played….why over our heads that we have little say in.
      Rich spoiled men who send our children off to war to increase their profits… they are Devils.

      Thanks for sharing JohnD!
      gerry

    • http://theeconomiccollapse jimmy g

      You sure have a way with words.. it’s frightening to realize that although these things you say are factual, not many of the main stream media seem to want to talk about any of this.. perhaps it’s a way to control the herd so to speak.. thanks for sharing your insight.. I’ll have to come back and reread it in order to decipher much of it.. thanks again.. jimmy

  • Jeff

    I’ve read many financial gurus state that the global banking/investment system is strung out 700 trillion dollars in derivative instruments.. (isn’t it interesting that that is the estimated wealth of the Rothschild’s fortune?) so what is the big deal about JP Morgan even if it lost 20 billion? Madoff even punked that number like a bitch and only a few scumbag billionaires got pinched..it seems that the media has people worrying over the wrong stuff 24/7 to me

  • geophysique

    The problem is not (just) the gambling of debt, it is the creation of debt in the first place, because it gives us outlandish funding to destroy the planet in the name of profit, but the profit is not realized because the money was fake it is all garbage credit so the matter is not us paying…the matter is that everybody on this planet pays every day, and even more so, the other inhabitants of this planet that are driven to extinction and suffer for our ‘economic growth’

  • geophysique

    the result is not that taxpayers eat the bill. the result is that there are no resources left for humanity. no old growth trees, depleted and sick populations of all life forms, poisoned and irradiated lands and waters, no oil, no iron, everything tapped out to build enormous temples to consumerism and banking in our major cities, buildings which are entirely useless and unsustainable under an energy crunch. we have wasted everything

  • ndrainmkr

    why do i never hear the most obvious question being asked? i’ll finally have to just ask it. Where did the money go? if money is lost, who found it? did it go into orbit or get put under a big rock? if money is lost here on earth it is still here. if the money is lost from one major banker to another, there should be some very happy bankers out there. truth is, the money went from the left pocket into the right pocket. one definition for a derivative is that it is a gamble leveraged on and derived from something of value. sounds to me like that is us. we are the cows for the system, collateral if you wish. we have no say even though we are the value from where the trade is derived. our cusip number tells us how much skin we have in this game. the bankers have no skin in the game. we are just the pawns in this big game of life. let’s wake up and demand a halt to the foolishness. let’s let them know we are on to their deceit. the only thing they fear is the mass’s awakening. there are legion of us and few of them. those of us who read these blogs know the truth. if we don’t spread the truth now that we know it it becomes our responsibility for the coming disaster.
    the rainmkr from north dakota nb.
    remember, all contracts require full disclosure to be valid. no one told me i was party to this fraud.

  • Bradley

    I can only say what I have learned from my dreams. The collapse isn’t the end of the world. Maybe a devaluation of 90 to 95% (pretty standard for a collapsed economy) but life goes on. The fed becomes a bad footnote in history, talked about the way people today talk about the Nazi regime. People pull together, pool resources, and make life happen. Those are my observations, anyway.

  • DomRat

    Some wag sharper than I once wrote to the effect that ‘this is all a game of musucal chairs and too many players with far too few chairs so everyone is still waltzing around humming after the music has stopped hoping no one will notice while the sidle up to any available chairs’.

  • http://None Leland Mellott

    There are no moneylenders in the House Of The Word. So that, we must save the doomed souls of the Powerfully Rich and the Richly Powerful by assuring that they die destitute and powerless.

  • http://www.whatreallyhappened.com Ben Dover (America)

    Time to load up, on silver and gold, baby!

    It’s July 4th, 2012 – Do YOU KNOW what time it is?
    (It’s time to pass H.R. 459, and AUDIT THE ‘FED’!)
    http://chooseliberty.org/auditrphf3.aspx?pid=0703

    http://www.chooseliberty.org/mailin/audit_donate1_mail.htm?i=CL090077-0703

  • Doc Holliday

    Alright then.
    How do you reconcile the burning desire on the part of so called “Conservatives” to completely deregulate the fiancial sector with the damage of an unregulated derivatives market.
    Can’t have it both ways.
    Either there are rules of no rules.

    • Donald Foster

      I’ll take no rules then. As long as the Corporations and Big Business dont have physical force on their hands (guns/military). Losing money is horrible, losing life is worse.

  • marc

    Everything is money even love sometimes…and since money is about creativity America will be just fine, I just hope I have money to invest when comes the big bull market of the 21st century…soon

  • http://www.infowars.com Anon

    These financial scandals, and the ‘Fed’ won’t be going away anytime soon, UNLESS YOU GET UP OFF YOUR FAT, LAZY A**ES, and DO SOMETHING!

    HR 459 passed by an overwhelming majority in the House, by a vote of 327-98!
    Now, this bill (S.202) needs a vote in the Senate!

    CONTACT YOUR SENATORS HERE:

    AUDIT THE ‘FED’!
    http://www.auditthefed.com/?mode=actionpage

    End the Fed! Whether Congress Wants Us To or Not!
    http://www.lewrockwell.com/boldin/boldin22.1.html
    http://tenthamendmentcenter.com/2012/07/25/end-the-fed-whether-congress-wants-us-to-or-not/

  • AnotherAnon

    What is very interesting is the shear amount of money involved in financial speculation. I’ve heard it put that for every $2 coin in your pocket, there is about $100 betting on where you are going to spend it. This might not be entirely accurate, but with the derivatives market at over 1 Quadrillion dollars, it really shows that the majority of decisions made about where money moves in the economy are not being made by people buying and selling physical items, or even the mega-rich buying and selling private jets, but rather by a small number of traders ‘trying to outsmart the people in the building next door’. There is much evidence that these traders act in a far from rational manor. This seems to invalidate the assumptions of classical economic theory – that markets are composed of consumers and producers of physical products and services.
    In the equilibrium theory popular in economics, the size of the futures and derivatives market can be considered to contribute to instability – causing large overshoot at the peaks and troughs.

    A second point of interest is the US budget, which in 2011 was paying back into the US economy about $1.3Bn more than it took out. This is allowing citizens and banks to de-leverage and corporations to amass large amounts of cash-on-hand. On the one hand, continued high spending will eventually hit a limit, but on the other hand, that deficit spending is probably a major contribution to the current economic growth. Any significant cut to spending (ie. enough to close the gap on the deficit) will probably send the United States into a recession.
    The only bit of good news is that taxes as a percentage of GDP are quite low, particularly in comparison to spending. so any move to fix the deficit – should it be required, will be best accomplished by relatively mild spending cuts, and relatively large (but easily achieved) tax increases. The current euro zone crises is leaving risk-averse investors with few places to put their money, so there should be capital available for quite significant bailouts in the near future.

    In regards to how the US might actually fail, my bet will be on a Greece style failure. The entire economy is adjusted to a government sector that is spending well beyond its means. Eventually, the politicians, in competition for votes and campaign funding – will push the debt beyond the limit of the capital markets, but will continue to have low interest rates until the next financial ‘blip’. At this point, there will be a run on treasuries, forcing steep austerity measures, and sending the US economy into a prolonged recession.

  • Barry Kelly

    $7bn isn’t even 2 days worth of borrowing for the U.S. so will it really make much difference to their debt?

  • ofe_2002

    Governments all of the world for thousands of years have FORGAVE entire trade balances, and so on and so forth. Solution dissolution of the machinations … DONE.

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