Tag Archives: derivatives

The Brown Stuff Is Flying Closer To The Fan Blades – Derivatives Problem At Deutsche Bank

Before I start in on subject matter of the title, I wanted to post a comment someone sent me about the Martin Armstrong assertion that the decline in Swiss exports to Asia signals a decline in demand from China.  An assertion that I said was invalid and that – by design – the Chinese Government has made it impossible to track the amount of gold imported to China.    Here’s the remark from a very well-respected market analyst:

The decline of gold shipments from Switzerland to China can be due to a declining supply of gold at current prices.  And for a guy [Armstrong] who’s smart, he should be able to figure out the LBMA paper market fraud in a second but he just can’t seem to get it.

The co-CEOs of Deutsche Bank unexpectedly stepped down.  Recall that Deutsche Bank is now the largest holder of derivatives in the world.  LINK

The ONLY reason these resignations would have been unexpectedly coerced like this is if Deutsche Bank was have a potentially uncontrollable problem in its OTC derivatives holdings.  Because of accounting rules, we have no possible way of knowing what DB’s OTC derivatives book looks like.  Although Jain oversaw the build-up of the book, it’s likely that not only does he not know where all the bodies are buried, he has lied to the board of directors and shareholders about the riskiness of the bank’s holdings.

I know Jain from personal experience with him right after Deutsche Bank acquired Bankers Trust for BT’s derivatives capabilities.  It instantly put Deutsche Bank in the forefront of the fraud-based OTC derivatives business.   Jain has lost money wherever he worked .  He was brought over to DB from Merrill when Edson Mitchell assumed the reigns at Deutsche Bank’s US unit.

I just remember thinking Jain was about as sleazy as they come.   His sole charge was to build Deutsche’s derivatives book of business into the biggest in the world.   From there he sleazed his way into the CEO position, a few years after Mitchell went down in plane accident.  He then proceeded to climb to the top of Deutsche Bank by conspiring to “shoot” then-CEO Josef Ackerman in the back.

Deutsche Bank is sitting on a powderkeg of derivatives dynamite.  DB is also the entity that has leased out most of Germany’s sovereign gold.   From a good friend of mine who worked at DB and still keeps in touch with former colleagues:   “Deutsche Bank is sitting on a lethal amount of derivatives and everyone at the bank knows it.”

This is the quote from the person who sent me the article linked above:

Like I said many times over the past 6 months…the derivatives in Europe have gone SIDEWAYS and there is blood in the back rooms of the world’s biggest derivative traders! News yesterday that $6B in derivatives were being “internally investigated” at the world’s largest derivative holder, Deutsche Bank, is followed today by the resignation of BOTH of it’s CEO’s!!

Anshu Jain has thus overseen the world’s largest arsenal of deadly financial derivatives. When Deutsche Bank goes down in flames, the Jain’s bank account should be the first source of funding the losses.  May whatever Higher Power there may be up above help us all when the derivatives financial nuclear daisy-chain starts to blow…


A Big Problem Is Brewing Behind “The Scenes:” Pentagon Admits To Prepping For Mass Civil Unrest

It’s unfortunate that the majority of people in the United States refuse to accept anything that’s not spoon-fed to them by the mainstream media or admitted “trustful” by politicians and business elitists.  But the sign-posts of collapse are planted everywhere for anyone willing to put forth the effort to read them.  I have not fully decided if the mass-engendered impulse to ignore reality is a product of sheer stupidity, slothful ignorance or willful denial.

Most people have chosen either to overlook the Jade Helm 15 exercises which “officially” begin next month and run through mid-September.  Of course, there are been thousands of reports of ongoing military exercises and mass military equipment movement via rail from many States, including here in Colorado.  The mainstream media is fueling the public’s determined ignorance about Jade Helm by not reporting the event, for the most part.

However, now it has been reported that Department of Defense officials are now admitting that the Pentagon has been preparing for mass civil unrest:

A new US Department of Defense (DoD) research program admits that the Pentagon has long been concerned about widespread social break down. Even more striking of an admission is the fact that they have been funding universities to create models of the dynamics, risks and tipping points that would all be part of large-scale civil unrest in the United States.

You can read the details here:   Pentagon Admits They Are Preparing For Mass Civil Breakdown

The article references source material, so it would be impossible to impose skepticism on the evidence.   Anyone denying this reality is therefore hopelessly stupid or tragically naive.

I will have more on this later, but many have noticed some isolated events which indicate the global bond markets may be experiencing pre-collapse tremors.  A bond market selling avalanche is the worst nightmare of the Central Banks.

Many analysts have been pointing to September as the time period when the real brown stuff begins to hit the fan.  There are several possible trigger events, including the possible de-linking of the yuan from the dollar by China.   Perhaps it is no coincidence the official Jade Helm exercises have been timed to end on September 15…


Warren Buffet Is The Definition Of “Scumbag”

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”Warren Buffet, NY Times 11/26/2006

The “aura” of Warren Buffet is nothing more than the epitome of Orwellian propaganda.  Nothing is but what is not.  What Buffet “is not” is a good-ole rags to riches boy who has fulfilled the American dream.   Warren Buffet is the quintessential mascot of American hypocrisy, criminality and political corruption.

“A country that is now aspiring to an ‘Ownership Society’ will not find happiness in – and I’ll use hyperbole here for emphasis – a ‘Sharecropper’s Society.’ But that’s precisely where our trade policies, supported by Republicans and Democrats alike, are taking us.”  – Warren Buffet, 2005

Of course, Warren Buffet is one of the biggest beneficiaries of the U.S. trade policies.  I haven’t seen him lift a finger toward implementing reform…

I remember in the mid-90’s when I was working on Wall Street and was “pro” anything that could generate a profitable trade, including Greenspan’s money printing.  But I always cast a weary, suspicious eye on Warren Buffet.   I had read an article back then which detailed the myth vs. reality about Warren Buffet.

For instance, remember the auro of his “everyday man, wrinkled “sack” suits?”  It turns out that his suits were carefully tailored in Italy to cultivate that look and cost thousands of dollars.  How about the myth that he lived with his wife in the same small brick house in Nebraska that he started out in with her?  Total fabrication.  As it turned out, that house had been empty for years – although still owned by him – and Buffet had been mistress-jumping for years.  He also owns expensive homes in lesser-known hideaway places for the ultra-wealthy like Sun Valley and Sante Fe and other places all over the world.

Anyone/Everyone remember his “special” relationship with CNBC’s Becky Quick?  It was so obvious he was sleeping with her that CNBC never tried to deny it by planting disinformation in the alternative media world.

Warren Buffet is the “poster child” for hypocrisy and corruption in this country.  Remember when he made his “derivatives are financial nuclear weapons of mass destruction”  comment? (LINK)  As it turns out, Berkshire Hathaway’s insurance subsidiaries were and are among the largest users and beneficiaries of derivatives in the world.

How about when Buffet made the assertion that the wealthy should pay more in taxes and then it turns out the Buffet himself was paying a lower tax rate than his secretary?

This list is endless.  It has been said that Buffet has a direct line to the Oval Office. I have no reason to dismiss this.  Buffet is the kind of guy who would steal money from a homeless man and use it to get a shoe shine.

It did not surprise me that someone like Dan Loeb had enough backbone to issue harsh criticism of Buffet and Buffet’s overt hypocrisy:

I love reading Warren Buffett’s letters and I love contrasting his words with his actions…I love how he criticizes hedge funds, yet he had the first hedge fund,” Mr. Loeb said. “He criticizes activists, he was the first activist. He criticizes financial services companies, yet he loves to invest in them. He thinks that we should all pay taxes, yet he avoids them himself.  – Business Insider LINK

Warren Buffet is emblematic of everything that is wrong with our system.  The real Buffet is a cold-blooded greedy son of a bitch who would probably sell his kids for a chance to make money on a business deal.  Speaking of kids, the myth circulating in the 1990’s was that Buffet was going to put his wealth in a charitable trust and not leave most of it to his kids when he died.  Anyone hear any updates about the fraudulent story?

It’s ironic that Warren Buffet’s father, Howard Buffet, was a wealthy businessman and Congressman who was an ardent advocate of the gold standard.  In fact, that dispels another myth:  Warren was not a rags to riches investor.  He was born with a silver spoon in his mouth making money the Graham-Dodd way – he’s an inside elitist who uses his well-oiled political control to scheme  legislation that let’s him squeeze every last penny out of this country and trade on inside information…

The U.S. Dollar Is Going Parabolic – Something Somewhere Is Collapsing

Marketvane’s Bullish Consensus for the $US hit 90% yesterday.  At the beginning of March it was 83%.  Market bullish sentiment toward the dollar has not been this bullish since the turn of the millenium.  It is a very strong contrarian signal…

The US Dollar index is going parabolic.  More often than not, markets that go parabolic will crash.  This is what happened with the dollar in 2008 (click to enlarge):


The common “narrative” out there is that the dollar squeeze is being fueled by European sovereign and corporate entities scrambling for dollars in order to pay dollar-denominated debt obligations. Yes, this is part of the equation. But, just like in 2008, it is a sympton of a castrophic underlying systemic problem. After all, the Fed has created close to $4 trillion in new dollars, $2.6 trillion of which are sitting in the excess reserve account of the big banks at the Fed earning interest. That’s $2.6 trillion in excess dollars that can used to fund any excess demand for dollars.

There’s also a repo collateral short squeeze plus a vicious Treasury short-squeeze going on, especially in the middle of the curve, where the Fed has removed most of the supply. But again, these are all “symptoms” of an underlying problem. Let’s not forget that the price of oil, along with many other key economic indicators are collapsing right now.

I believe that the collapse in the energy sector has triggered a silent derivatives counterparty bomb that we can’t see because of the intentional opacity of the OTC derivatives market. But you don’t have a 50% collapse in a key economic commodity like oil – a commodity which has $100’s of billions in OTC derivatives securities wrapped around it – without some kind of counterparty default tsunami that has been triggered. Throw on top of that the Greece situation and you have a recipe for a derivatives financial nuclear meltdown.

Wall Street has been stunningly silent about the meltdown in the energy sector. There has not been one utterance about any derivatives connected to the situation. But we’ve seen at least two big energy junk bond issuers blow up. One of them did not even make the first interest payment on its debt. Without question there were OTC credit default swaps connected to this debt.

The parabolic dollar “short squeeze” storyline is what they want you see. I would suggest that something much bigger and catastrophic unfolding behind that curtain…

Bob Moriarity: The New Bull Market Will Look Like 2009-2011 On Crack

CEO Technician: What do you see over the coming years in the junior resource        space?

Bob Moriarty: I think it will look like the early 2009 to 2011 period on crack, take that 2 year period and amplify it 2 or 3 fold. With the number of black swans floating around I believe that 2015 will be the year that people realize the system is utterly broken.

321gold.com’s Bob Moriarity did an interview with Scott Armstrong of Energy and Gold that is a must-read.  Like Bob, I believe the gold and silver have bottomed and are marking time and building a big base from which to launch to eventual new all time highs:

I would put at least 50% into physical precious metals. I see things on a daily basis that absolutely shock me; the change in the US dollar today for example, the change in the Swiss franc a few weeks ago, the instability of the Middle East and the banking system. I think it was Richard Russell who came out and said there is $199 trillion in debt worldwide. Much of that is not going to be paid back. We have $700 trillion of derivatives which is all leveraged bets, there are a lot of terrible things happening that are invisible to most people…

You can read the rest of it here:  Gold Bottom Is In…

As Bob states, a lot of people are oblivious to what’s really going on behind the fairytale news thrown at us daily by the mainstream media.   What IS becoming more obvious is the extreme manipulation by the Fed/big banks in the precious metals market.  This is why silver eagle sales set a new record in sales in 2014 and have started off 2015 at a higher pace than 2014 started off.


Trillions In Paper Silver

Now that it’s been clarified that the gold and silver markets are indeed manipulated (see this LINK), we can examine the absurd size of the paper gold and silver markets in relation to the underlying physical supply of gold and silver.

I was invited to join Sean and Rory and SGT Report to discuss our corrupt fiat paper system.  Here is Part 1:

Argentina And Banco Espirito: What About The Derivatives?

Argentina is interesting because of the legal issue surrounding the specific Government bonds on which it might default.  I called Banco Espirito as a likely bankruptcy after the stock exhibited Enron-esque characteristics.  As that one unfolds, it looks like the entire corporate structure above the bank and with the bank itself is engulfed with fraud.

And now we find out that Goldman Sachs plugged its client base with BES bonds and stock:  LINK.  Classic

The more interesting question in both cases has to do with the credit default swap derivatives.   While the default could trigger $29 billion in bondholder claims, Bloomberg ran a story a couple days ago that suggested the default on  this one bond issue could trigger $120 billion in credit default claims:  LINK.

The details are buried in the bottom of the news report.  Since I have not seen anyone mention the $120 billion, I assume that – just like with the footnotes to financials statements – I guess no one read the full article.

However, it’s not the $120 billion in CDS claims that are visible.  The real danger lurks in the “daisy-chain” of hidden counterparty default that could trigger a big meltdown.  Remember AIG/Goldman?  That melt-down – which triggered the big bailout banks – was likely triggered either by the Bear Stearns or Lehman collapse.  The former happened several months before AIG and Goldman.  When Bear collapsed, Bernanke assured us it was isolated and contained.  “Shalom Ben!” – how did the statement work out for you?

The S&P futures are down 15 points right now on the back of the Argentina/BES news.  It’s not because of the news itself.  It’s because of the related skeletons in the closet that are connected to the events that may be poised to jump out…

Better check the bond and derivatives holdings of your favorite bond fund – you know, the bond funds that your genius investment advisor has you invested in because “they have a good yield.”

Derivatives Meltdown Part 2 + Let’s See How Obama/Kerry Respond To This…

[Update on MH17]:  It’s starting to not look so good for the Ladies who doth protest too much (Obama/Kerry/Biden/Feinstein/McCain/etc).  Russia has satellite images showing Ukrainian troops deploying the type of missile involved and wonders why the U.S. won’t release satellite photos from a U.S. satellite that was directly overhead at the time, among other questions raised by Russia:   10 Questions From Russia For Obama

Oops – Obama pisses off China on MH17 now: China Condems Obama’s Response to MH17. That’s not good, given that China is America’s largest lender and enables the hoi polloi here to borrow and spend…

If you’re bored by the that topic already, then maybe Part 2 of our derivatives Armageddon series will interest you.  In this video we discuss some of the insanity that lies behind U.S. derivatives accounting rules and how they favor the banks at our expense:

The coming derivatives collapse is one of the primary reasons the price of gold (and silver) is going to the moon. Gold will start moving well in advance of this event but it will go parabolic once it becomes obvious to everyone.

Assuming the markets remain functional in the aftermath, the junior mining stocks will move even more than gold/silver.

Banco Espirito Santo Holding Company Takes A Dirt Nap – Files BK

Please note how this news was not reported until late in the afternoon EST time and well after all the markets around the world were closed for the weekend except  the NYSE.  It would have definitely rained hard on the European markets if the news were released during those market hourse:   BES Files BK

The Wall Street Journal reported it at 3:28 p.m. EST.

Interestingly, it would seem that the ratings were given a heads up yesterday, as S&P and Moody’s “coincidentally” downgraded the credit ratings a day ahead of the filing:   BES credit downgrade.

My only question is:  “Who holds the credit default swaps, baby?!”   Better check your bond mutual fund SEC filings…

How Derivatives Will Trigger A Bond Market Melt-Down (Part 1)

Get your money out of the bond market.  Once the default-contagion starts, it will spread faster than the bubonic plague which caused the Black Death in the 14th century.  I just got off the phone this morning with a source in NYC who confirmed that several Wall Streeters he knows all believe a far bigger “Long Term Capital” collapse triggered by derivatives defaults could occur at any time:

Long Term Capital, for those of you who are unaware, was the infamous hedge fund run by an ex-Salomon Brothers bond “guru.” He assembled a Dream Team of Nobel Prize Winning professors who claimed to have figured out how to produce “alpha” (excess returns) without any “beta” (systematic risk). One of the professors was Merton Miller. I was at the University of Chicago when Miller received his Nobel Prize. We bought his snake-oil hook, line and sinker. So did the large pension funds and wealthy investors who threw their money a Long Term Capital.

To cut to the chase, it didn’t take too long before LTCM imploded. I guess the Nobel “Dream Team” had not figure out how to turn lead into gold after all. LTCM was bailed out by the Fed plus several of the big Wall Street banks who also faced collapse if LTCM was allowed to incinerate to the ground. These banks had all plugged LTCM with the derivatives trades that blew up LTCM. I was at one of them, Bankers Trust, which was one of the guiltiest perpetrators and which had been found guilty several years of earlier of ripping off Proctor and Gamble with derivatives.  Bankers Trust is now part of Deutsche Bank, one of the two most risky banks in the world (JP Morgan is the other).

Back then it was the Wall Street banks who were required to put up “equity” to keep their businesses alive. In 2008 it was the Taxpayers and the “equity” put up  by Taxpayers was 8x greater. Only that equity went into the pockets of the people running the banks.

Don’t let your “equity” sitting mutual funds and money market funds get taken from you in the next stage of bailouts, which will be the nefarious “bail-ins.” “Bail-in” means your money that will taken from your pocket and given to the entities who face collapse.