| User Info
| The Newest Bank Fraud Scheme ("Risk Hiding") in forum [Market-Ticker]
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Hogman
Posts: 7874
Incept: 2008-02-18
Derby City, USA
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I'll give 'em credit, they are relentless  |
Debtpie
Posts: 534
Incept: 2009-12-17
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Quote:They find a loophole in the law and exploit it, making billions and reversing the alleged "stability" that was supposed to be provided. Well, they paid for the law...shouldn't they get something for their money? It's a win, win! Politicians can crow about actually "fixing" something and "protecting" the consumer while the banks can open the back door and rob the place. From 40,000ft, this is all 'legal' to Obama...but where's Mittens on this...silence is telling.
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A Leader, or an Opportunist? "A leader has the capacity of vision, the ability to see where things are headed before people in general see those things." Mitt Romney --- DebtPie's definition: a leader decides where "things" should head and "leads" us there.
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Bagbalm
Posts: 4247
Incept: 2009-03-19
Just North of Detroit
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Why is it even necessary to explain why this is crooked?
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Blurtman
Posts: 563
Incept: 2009-01-24
Banned
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Perhaps this is a tacit recognition that UST's are, in fact, junk. ;>)
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I have a reading comprehension problem and the owner banned me for repeatedly displaying it after being warned.
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Matt_bear
Posts: 6324
Incept: 2008-07-15
a week early on spy puts
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is this laying the ground work for the bond swap for 401k?
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In terms of real-world fundamentals, I expect that most of the people around me, whom I work with day to day, and whom I pass on the street ... will be dead within five years.
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Hogman
Posts: 7874
Incept: 2008-02-18
Derby City, USA
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^^^^
Hmmm, not a bad call at all
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Debtpie
Posts: 534
Incept: 2009-12-17
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Quote:Perhaps this is a tacit recognition that UST's are, in fact, junk. ;>) In the future, yes...but today, they're as good as gold..actually better because they offer a "low risk" yield...lol! All is fine now, but wait till everyone wants to "lock in" their Treasury profits...a lot of bodies will be found in the doorway. US Banks and their HFT machines will sell first. Foreign governments will sell second. The little guy (mutual fund/ETF holders) will sell last and at a huge loss. That is, of course, only if Bernanke cannot adsorb these sales; which he must..or the interest on the National Debt will balloon and threaten to consume the entire IRS take in short order...it's gonna get ugly. ~~~~~~~~~~~~~~ Wait...second thoughts...I guess it's not so bad...according to Steve Goldstein, MarketWatch Washington bureau chief: "Moody’s, S&P fighting last, wrong war" "Stung by their failures in assessing the risk of mortgages, the rating agencies seem to be taking it out on sovereign governments. With a yield of 1.68% on 10-year bonds (ICAP.SD:10_YEAR) , the market already has given its verdict: Wrong." Did the Market drive the rate to 1.68%...or was it the Fed? If the Fed (through it's banks) bought Zero Treasuries, what would the 10 year be sitting at...hmmm....what would happen if the Fed unloaded its $1,643,594,000,000 (1.64 Trillion Dollar) stockpile of Treasuries?...dumbass. http://finance.yahoo.com/news/moody-p-fi....http://www.federalreserve.gov/releases/h....
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A Leader, or an Opportunist? "A leader has the capacity of vision, the ability to see where things are headed before people in general see those things." Mitt Romney --- DebtPie's definition: a leader decides where "things" should head and "leads" us there.
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Azusgm
Posts: 2379
Incept: 2010-12-02
East Texas
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What an interesting article to come out right along with a threatened possible Treasury downgrade and on 9/11 to boot.
Looks like a liquidity trap getting ready to spring. This time the trap is many multiples of what was in play in 2008. The banks need more Treasury paper and Congress needs to authorize much, much less. The .gov almost certainly would need to issue more Treasury paper in order to backstop the FDIC. At the same time, the insured depositors' claims would be inferior to derivatives. The GSEs will be wrapped up in this mess too.
Before or after the election?
Either Moody's will back off or they can downgrade only to watch Treasury paper go higher. JMO.
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Mannfm11
Posts: 3530
Incept: 2009-02-28
DFW, Tx
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why do you think they have their dicks in one hand and a sign that says "More QE coming soon"? This crap couldn't go on without a steady dose of QE to keep the cash flowing so the banksters can buy an unlimited supply of treasuries. Think the Chinese could dump their treasuries? If the banks could handle the flow of cash, in 10 seconds.
This stuff isn't going to stop, because it allows the government to get more and more cash to run their banana boat Republic system. Every discussion in government is really about how they are going to divy up the loot. Just remember, when you are getting yours, about $2 falls through the cracks into their hands for every dollar net you get. They get yours back when you spend it.
Hopefully they open the can to shine their shoes in a few months or years and the banks find out the can isn't Shinola. Hopefully this time, we take a fire hose and wash the whole group out in the street, liquidate these evil outfits and bring in some sanity. I would advise the FSA to have an exit from the hell bound train on which they ride by that time.
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The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
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Marvinmartian
Posts: 744
Incept: 2011-03-16
Pasadena, CA
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Look, the TBTF banks are doomed when/if derivatives blow up.
One more fee garnered from customers wont make much difference, and it provides income that goes to pay for insider's stock options and other perks.
For the insider's its a win/win. For the FDIC, its a disaster.
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Lowbeyond
Posts: 16864
Incept: 2008-02-11
CO aka West NJ/East CA
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all you need to end all of this, is not more regulation by the porn surfers.
Just remove the backstop and it ceases.
But of course you cant do that. Obama, Congress, and most of the people ab-so-fukking-lut-ly love public losses and private profits.
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Maybe it was a birdy bread-bomber from the future?!
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Flappingeagle
Posts: 1224
Incept: 2011-04-14
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Be careful or it will be your checking/savings accounts that are repo'd as collateral when the thing collapses. You'll be left standing with your dick in your hand because that's all you'll have left.
Flap
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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
"You can't build a house of cards on a shaking table." - Tony Johns
The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
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Atlasrocked
Posts: 362
Incept: 2009-03-23
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"Starting next year, new rules designed to prevent another meltdown will force traders to post U.S. Treasury bonds or other top-rated holdings to guarantee more of their bets. The change takes effect as the $10.8 trillion market for Treasuries is already stretched thin by banks rebuilding balance sheets and investors seeking safety, leaving fewer bonds available to backstop the $648 trillion derivatives market."
Now – does everyone see why rating treasuries as AA adds to our problems? Banks are using it to secure loans. If US bonds were rated junk, this wouldn't be used as loan collateral right?
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5755hsa
Posts: 643
Incept: 2008-09-07
North of 40 in the land of pathetic highways
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"At least seven banks plan to let customers swap lower-rated securities that don’t meet standards in return for a loan of Treasuries or similar holdings that do qualify, a process dubbed “collateral transformation.”
This is akin to the Jack and the Bean Stock story.
Collateral Transformation indeed LMFAO....
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Ineptocracy (in-ep-toc'-ra-cy) - a system of government where the
least capable to lead are elected by the least capable of producing,
and where members of society least likely to succeed, are rewarded with goods paid for by the
confiscated wealth of a diminishing number of producers.
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Grashopa
Posts: 2607
Incept: 2009-02-03
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This is exactly what Spitzer was going after people for in the 80s. It is flatly illegal. Read his book. I am freaking astounded how no one is willing to make a career out of prosecuting these guys.
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Theft is evil
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Azusgm
Posts: 2379
Incept: 2010-12-02
East Texas
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Collateral Transformation = Repo -> Lehman
Is this right?
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Wtf_247
Posts: 52
Incept: 2011-11-01
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Maybe someone can answer this question for me, maybe I am missing something.
There are only 16T in US treasuries outstanding and issued - that is the total US debt. I will venture a guess that at least 50% of this total is already tied up in in some manner (or the banks do not have access to them) and is NOT available for the banks to "swap".
This leaves 8T in possible swaps. The derivatives market is 650T, 8T is a very small percent of that total. Even if we give the market the benefit of the doubt (and a BIG one) that 75% of the market is adequately secured by current collateral methods, that leaves 160T that has to be covered somehow.
I am not sure what % collateral they have to put up, but 8T is only 5% of the remainder, again assuming the banks have control of 50% of the outstanding bonds issued.
Unless the banks do the same crap as they did before and re-pledge the same bonds 3,4 even 10x, I cannot see how "swapping" can actually succeed - there are not enough bonds out there to pull it off.
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Bertdilbert
Posts: 2649
Incept: 2008-12-22
CA
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Holy ****! They just found a way to turn silver into gold! Or maybe a turd into apple pie! This of course would not be necessary if the Fed had not bought up all the T paper creating a shortage in the first place! Create the problem, offer the solution...
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Dear Euroland: Relax, Germany has a plan for your money!
Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro.
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Bsfootprint
Posts: 960
Incept: 2011-02-27
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Flappingeagle wrote..You'll be left standing with your dick in your hand because that's all you'll have left. Don't worry, they'll find a way to take that from you, metaphorically if not in reality.
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When I hear central bankers are blowing bubbles, I like to picture a large, happy and well-endowed male chimp named 'Bubbles'...
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Bagbalm
Posts: 4247
Incept: 2009-03-19
Just North of Detroit
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Wtf - don't matter how many times they pledge it out - they are not planning on getting called so it's all cool.
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Brewcrew2
Posts: 149
Incept: 2011-02-18
New Jersey
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Bsfootprint, ever hear the phrase "They want their pound of flesh"? A dick is a good start.
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Bsfootprint
Posts: 960
Incept: 2011-02-27
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Brewcrew2 wrote..Bsfootprint, ever hear the phrase "They want their pound of flesh"? A dick is a good start. Wait, I'll go weigh mine. 
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When I hear central bankers are blowing bubbles, I like to picture a large, happy and well-endowed male chimp named 'Bubbles'...
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Ben
Posts: 6163
Incept: 2009-10-09
The Distant, Glorious, Past
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Where does the swapped risk asset go? Who takes it from the bank?
Let me guess...
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"Why are you going to learn French?"
"Because I'm going to France," says Joe.
"I'm from the future. You should go to China."
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Debtpie
Posts: 534
Incept: 2009-12-17
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Quote:
Bsfootprint, ever hear the phrase "They want their pound of flesh"? A dick is a good start.
Wait, I'll go weigh mine.
If you need a gram scale, I sell them! This one weighs up to 3 ounces...From what your wife's told me, that's way more than enough. http://www.thelashop.com/pocket-digital-....
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A Leader, or an Opportunist? "A leader has the capacity of vision, the ability to see where things are headed before people in general see those things." Mitt Romney --- DebtPie's definition: a leader decides where "things" should head and "leads" us there.
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