Goldbug

Yes Virginia, it CAN get worse

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You just thought we were screwed by the first bailouts! Pffft!! Pocket change compared to this!

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives Trades

Read all about it! (Full article here):

HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion Of Bank Of America's Derivatives*Trades - Home - The Daily Bail

This story from Bloomberg just hit the wires this morning. Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.

This means that the investment bank's European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.

This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.

What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.

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$492,584 per each man, woman, and child, in the United States (based on both BOA and JPM exposure as listed in the article, divided by the 312,637,000 current population estimate according to Wikipedia).

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The Europe crisis has made me go to cash for the time being...it's not ideal, but inaction can lead to some serious losses.

Whatever is not in cash is in physical gold and silver.

Well, have nothing and looks like never will at my age.

Only have a couple ounces of pure silver left...

The banks got it all long ago...

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I saw the numbers in that article and thought it had to be complete BS because the numbers were too high. $250 trillion (notional) in derivatives? There isn't that much money in the world!

Then I looked at the OCC's quarterly report. It's enough to make your head spin. It's enough to completely destroy every major currency in the world.

http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq211.pdf

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This is the problem with derivatives...there's so MUCH leverage on them, that yes -they can collapse a currency - or an economy.

Recently, BofA moved its derivatives to the deposit taking bank in order to be able to go to the Fed's discount window - a way of backstopping potential losses. Bank of America Derivatives Transfer Draws Lawmaker Scrutiny - Bloomberg

That transfer was $53 trillion in notional value...that's about 3 times the 2010 GDP of the US.

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Glad to see that somebody gets it - and cares. If enough of us checked it out, and did just a small amount to protect ourselves, we could turn this thing around. It ain't pretty, but at some point we've got to face the facts.

If you will not fight for right when you can easily win without blood shed; if you will not fight when your victory is sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may even be a worse case. You may have to fight when there is no hope of victory, because it is better to perish than to live as slaves._ Winston Churchill

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I just want to point out that I have heard here and there that various of the hedge fund big boys are not so much interested in gold and silver anymore, they want remote farmland, particularly if a fenceline borders Canada (so they can flee the U.S. without having to pass through customs).

Noted futurist Gerald Celente lost six figures in the MF Global collapse. His gold futures position had been put on with a different broker, and he intended to take physical delivery of the gold. In the meantime, MF bought the broker he was using, and when they went bust his money went poof.

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This is the problem with derivatives...there's so MUCH leverage on them, that yes -they can collapse a currency - or an economy.

I have seen Europe's capital flows described recently as a Klein Bottle (that's a mathematical concept of self-referentialism that is somewhat like a three dimensional Mobius strip). That is not a hopeful characterization. For those not mathematically inclined, the term would be "circle jerk."

And the notional value of the derivatives is not in the trillions. It's in the quadrillions.

Go long Ambien.

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Food

Land

Lead

Silver

Gold

Best get your prepping done. It is hard to tell how long this game can continue, in the very near future I think we will see the inflation rate increase dramatically.

Scary economical swings have already started. The Sovereigns are BK'd, it just has not been declared yet, and the big money knows this, it will be milked until there is none left.

The Great reset is coming, whether it will be a slow burn or a chaotic mess remains to be seen. If this country loses the reserve currency status this will cause a automatic 25% decline in living standards across the board.

Eventually Gold and Silver will once again back whatever Fiat currency remains, this is the only way to prevent any government from printing the wealth of the people away and remain solvent regardless of the political party in control.

History is a lesson we often forget, and we are about to see it repeat itself once again. Personally I am heavy in silver starting to hold some gold fractional's in hopes that I Never Ever need it. I am not looking forward to what has a very great possibility of happening.

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UK is making plans for the collapse of the euro...Italian and Spanish debt is priced well over 7% in the latest government bond sales from last week.

How does this bode for the USA? Not too sure yet...I think that any collapse of the Euro will not be good for us... perhaps force us back into recession (if you believe that the recession officially ended already).

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How does this bode for the USA? Not too sure yet...I think that any collapse of the Euro will not be good for us... perhaps force us back into recession (if you believe that the recession officially ended already).

My prediction is the US will bail out the Euro, kicking the can down the road for a few months, then the world economy will collapse.

My question is this: If we are willing to abuse each other on "Black Friday" for a chance to purchase junk, what is going to happen when things get really bad?

PS- Here's something to think about: Corzine, of MF Global fame, designed the US economic policy:!::!:

Edited by Goldbug
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Bailing out the Euro would be economic suicide for the US... the figure I keep hearing is about 11 trillion euros to completely bail them out...that's about 15% greater than the M2 money supply of about $9.5 trillion.

If that were to happen, the US would be paid back in inflation - possibly as high as 30%.

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If we bailout the rest of the world, do you think for one second they will help bail us out? If your answer is "YES" proceed directly to your nearest Insane Asylum and check yourself in.

They should at least give us paper and ink for the printing press!

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If we bailout the rest of the world, do you think for one second they will help bail us out? If your answer is "YES" proceed directly to your nearest Insane Asylum and check yourself in.

We don't need bailing out. We'll tell you what our money's worth and if you disagree men with guns and boots will come change your mind.

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Wow. These coordinated moves are really powerful. I agree, this causes inflation- just delayed. I don't know how much CNBC or Bloomberg you guys watch but they constantly run a commercial by Interactive Brokers where it shows world central banks competing with each other to deflate their currency by spitting out as much cash as possible. It is more true than not. Some of my natural resource stocks are up +10% this morning. They're pricing in future inflation of their commodity products.

I'm now thinking we'll make new highs on the S&P before year's end. That's great if you happen to be in the top 10%. But for most, they get to feel the effects of the inflation on their monthly expenses without the benefit of asset inflation (ie stocks, real estate, gold). :(

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The coordinated moves have a half life. And it gets shorter each time the central banks goose the markets.

Meanwhile, biflation does take hold. Necessities go up in price, nonessentials go down.

Eventually faith in fiat money is completely gone, and hyperinflation takes hold.

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by we do you mean china?
Exactly. We're still borrowing 35 cents of every dollar we spend. Our debt per person is larger than Greece's. :shock:

Despite that mess, after sitting in bond funds for 20 months, I've been long and strong global equities since late August 2011. Timing this crap has been tough, but I think I nailed this one. The jobs #s and much anecdotal data helped. Corporations have cut to the bone. They're sitting on amountan of cash earning next to nothing. We're about to enter into the virtuous cycle of increased jobs -> increased revenues -> better housing #s -> and back around again.

Consider this about all this worry about Greece: China creates another Greece's worth of GDP every 60 days. Greece could blow up tomorrow and we'd have a slught hiccup, but they're so irrelevant at this point its not worth focusing on and missing the global expansion.

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