Glencore Could Trigger A Global Derivatives Nuclear Meltdown

The middle class in America is like the housewife who knows her husband is cheating on her but she chooses to ignore it and pretend it will stop.   – Anonymous FOD – Friend of Dave’s

The system has been totally hijacked.  Make NO mistake about it, gold was hit hard when the paper trading in London cranked up after the SGE had turned off its lights for the day. The reason:  Glencore.

Anyone remember Enron?  Probably not.  Most people have already forgotten, mostly, that their taxpayer dollars were used by ex-Goldman CEO Henry Paulson to bail out Goldman Sachs in 2008 when he was Treasury Secretary.  His primary motive was to preserve the value of the $250 million in warrants he still owned after he got to unload $500 million in stock – tax-free.  Recently Zerohedge found a snapshot of Paulson laughing about the entire matter.

Glencore is going to make Enron look like a polite tea and cake break.  Gold was smashed when paper London opened because the Fed, BoE and ECB can not under any circumstances let the price of gold spike up – like it should be doing – and thereby alert the world that there’s a big problem in the world of derivatives related to Glencore, among other “things” (Emerging Market FX contract, energy, Biotech ETFs, etc).

The issue with Glencore, since we all saw it coming which means the Central Banks saw it coming, is the degree to which the CB’s have been able to “brace” for its impact.  The problem, however, is that just like Enron and the big banks before it, there is  100% probability that Glencore upper management has:  a)  lied about the market value of its assets, both on and off balance sheet;  b)  has lied about the true amount and nature of its derivatives exposure;  c) has been lied to by rank and file who are in charge of accounting and reporting the data to upper management (trust, me I know this goes on because I saw it first-hand at Bankers Trust;  and foremost, e)  has NO idea the true nature of its total exposure to the full lunar eclipse world of OTC derivatives.

Given that  Glencore management has fed the Central Banks a big bag of lies about the size of the risk exposure at the Company, it’s not probable that the Central Banks are properly prepared to put out the fuse on the nuclear derivatives bomb that has been lit.  This is why the stock market is shitting the bed today and this why the price of gold was bombed like an ISIS camp by a joint effort of London and NYC bombers.

Just ask Jamie Dimon about this regard in reference to the London Whale blow up.  Dimon admitted that he had no idea how large JPM’s exposure was at the time.  The London Whale is a sea-algae molecule in size compared to Glencore and the entire body of OTC derivatives connected to anything Glencore has touched.

Can you smell middle class flesh burning yet?  It’s starting to burn my nostrils…

15 thoughts on “Glencore Could Trigger A Global Derivatives Nuclear Meltdown

  1. Dave, I can’t believe you call these guys liars. They are honest persons, well educated and skilled in mathematics (especially statistics) and just use seasonal-adjusted numbers. Everything will be fine. Move on. Nothing to see here.

  2. What happened to Boaz Weinstein the guy who took the opposite side of “the whale” ?
    Did he “accidentaly” fall out of a window on a top floor office in Manhattan?
    This guy for sure did cost JPM a lot.

    1. Weinstein’s Saba Capital Under Fire for Allegedly ‘Mispricing’ Assets Prior to Redemption

      Sep 25 2015 | 8:12pm ET

      Boaz Weinstein’s Saba Capital Management has been accused by the Canadian Public Sector Pension Investment Board (PSPIB) of manipulating the value of its portfolio before paying out a redemption request.

      The PSPIB invests primarily for retired Canadian military, police officers and public service employees.

      The allegations, contained in a lawsuit filed Friday in New York State Supreme Court, contend Saba lowered the value of its portfolio before paying out the PSPIB’s redemption, then marked it back up again shortly afterwards.

      PSPIB invested approximately $500 million into Saba’s offshore fund in 2012 and 2013, according to The Wall Street Journal. However, the $112 billion public pension fund began to lose confidence about a year ago and asked for its money back earlier this year.

      Under additional pressure from other redemptions, Saba allegedly marked down the value of certain bonds in its portfolio using lowball bids instead of external pricing sources, then abruptly marked them back up again one month later, according to the lawsuit. The result, alleges PSPIB, was a material loss on its investment in the fund.

      New York-based Saba was founded by Weinstein, the former co-head of Deutsche Bank’s credit trading business, in April of 2009. It started out well, booking gains in 2010 and 2011, but has faced headwinds since, losing 3.9% in 2012, 6.8% in 2013 and 11% in 2014, according to Bloomberg.

      http://www.finalternatives.com/node/31800

    1. I believe you are correct…if the CB’s could summon trillions in 2008 to paper over trading excesses almost unseen why the hell not now if it means keeping the system of economic looting and class warfare going. The CB system is a long way from being overwhelmed as confidence in the system continues, albeit at lower levels.

      1. Printing trillions of paper currency
        I look forward to such a move by these clueless bankers and FOMC, maybe then the populace will see through how these so called gurus are debasing the currencies when the people go to buy a loaf of bread costing $25. Those same people will eventually realise that Central Bankers and Governments couldn’t ‘run a bath’ let alone the world.
        World debt $200 trillion
        PS. 1 Trillion seconds was 31,000 years ago.

    2. To coin a phrase by John Mcenroe “You cant be serious”
      The first dominos are about to fall and there will be no stopping it this time round.

  3. Yes. Weird, about “the gold price”. DOA.

    All we can assume is that the offloading of bullion by intelligent, perspicacious parties is ongoing…

  4. Dave, its now official. Press release:

    Horizonte consolidates Araguaia Nickel project through acquisition of Glencore project.
    Price $8 million USD

    Glencore is now eating itself in search of liquidity. It will continue until nothings left.

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