Category Archives: DERIVATIVES (Financial Weapons Of Mass Destruction)($1Quadrillion)

Financial Weapons Of Mass Destruction: The Top 25 U.S. Banks Have 222 Trillion Dollars Of Exposure To Derivatives

The recklessness of the “too big to fail” banks almost doomed them the last time around, but apparently they still haven’t learned from their past mistakes.  Today, the top 25 U.S. banks have 222 trillion dollars of exposure to derivatives.  In other words, the exposure that these banks have to derivatives contracts is approximately equivalent to the gross domestic product of the United States times twelve.  As long as stock prices continue to rise and the U.S. economy stays fairly stable, these extremely risky financial weapons of mass destruction will probably not take down our entire financial system.  But someday another major crisis will inevitably happen, and when that day arrives the devastation that these financial instruments will cause will be absolutely unprecedented.

During the great financial crisis of 2008, derivatives played a starring role, and U.S. taxpayers were forced to step in and bail out companies such as AIG that were on the verge of collapse because the risks that they took were just too great.

But now it is happening again, and nobody is really talking very much about it.  In a desperate search for higher profits, all of the “too big to fail” banks are gambling like crazy, and at some point a lot of these bets are going to go really bad.  The following numbers regarding exposure to derivatives contracts come directly from the OCC’s most recent quarterly report (see Table 2), and as you can see the level of recklessness that we are currently witnessing is more than just a little bit alarming…

Citigroup

Total Assets: $1,792,077,000,000 (slightly less than 1.8 trillion dollars)

Total Exposure To Derivatives: $47,092,584,000,000 (more than 47 trillion dollars)

JPMorgan Chase

Total Assets: $2,490,972,000,000 (just under 2.5 trillion dollars)

Total Exposure To Derivatives: $46,992,293,000,000 (nearly 47 trillion dollars)

Goldman Sachs

Total Assets: $860,185,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $41,227,878,000,000 (more than 41 trillion dollars)

Bank Of America

Total Assets: $2,189,266,000,000 (a little bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $33,132,582,000,000 (more than 33 trillion dollars)

Morgan Stanley

Total Assets: $814,949,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $28,569,553,000,000 (more than 28 trillion dollars)

Wells Fargo

Total Assets: $1,930,115,000,000 (more than 1.9 trillion dollars)

Total Exposure To Derivatives: $7,098,952,000,000 (more than 7 trillion dollars)

Collectively, the top 25 banks have a total of 222 trillion dollars of exposure to derivatives.

If you are new to all of this, you might be wondering what a “derivative” actually is…

via Financial Weapons Of Mass Destruction: The Top 25 U.S. Banks Have 222 Trillion Dollars Of Exposure To Derivatives — Prepare for Change

Derivative Under Strain, Meltdown Ahead | Jim Willie 

Published on 7 Apr 2017

Jim Willie joins FinanceAndLiberty to reveal the danger created by interest rate swap derivatives. As foreigners accelerate their dumping of U.S. Treasury Bonds and the Fed moves interest rates slightly higher, the interest rate swap derivatives market is coming under strain. When word gets out about the strain in these derivatives, foreign dumping of U.S. debt and movement away from the dollar and towards gold will accelerate, Willie says.

Willie says China is getting ready to move to the “Gold Trade Note.” How will China move to a gold backed currency without killing their export market? Willie says China has to get a critical mass of support, say the entire Eurasian trade zone, to follow suit. If China can get this critical mass majority, then the rest of the world still trading with the U.S. dollar will be in the minority. That’s when U.S. dollar countries will face currency crises, Willie says.

Have We Reached A Turning Point For Stocks? Tuesday Was The Worst Day For The Stock Market In 6 Months | Stillness in the Storm

Wednesday, March 22, 2017


(Michael SnyderThe post-election stock market rally is officially over. After hovering near record highs for the past couple of weeks, U.S. stocks had their worst day in six months on Tuesday. For quite some time it has been clear that the momentum of the post-election rally had been exhausted, and a pullback of this nature was widely anticipated. But even though stocks fell by more than 1 percent during a single trading session for the first time since last September, it is going to take a whole lot more than that to bring stock prices back into balance. In fact, stocks are so overvalued at this point that it would take a total decline of about 40 to 50 percent before key stock valuation measures return to their long-term averages.

Related The stock market is 70% overvalued … crash now inevitable

SourceThe Economic Collapse Blog

by Michael Snyder, March 21st, 2017

So we are still in a giant stock market bubble. All Tuesday did was shave about one percent off of that bubble.

Let’s review some of the numbers from the carnage that we witnessed…

-The Dow was down 237.85 points (1.14 percent)

-The S&P 500 was down 1.2 percent on the day

-The Nasdaq was down 1.8 percent at the closing bell

-Financial stocks were down more than 2.5 percent

-Overall, it was the worst day for banking stocks since the Brexit vote

-Bank of America is now down more than 10 percent since Trump’s speech to Congress

-The Russell 2000 (small-cap stocks) dropped about 2 percent

Some prominent names on Wall Street were warning ahead of time that this was coming. Marko Kolanovic was one of those voices…

Marko Kolanovic has done it again.

Last Thursday, one day ahead of the massive quad-witching where over $1.4 trillion in options expired in relatively tame fashion, the JPM quant warned of “near-term market weakness” and suggested “reducing US equity exposure. And, sure enough, JP Merlin’s Gandalf timed it impeccably yet again. To be sure, the jury is still out on what caused the selloff – lack of votes to repeal Obamacare, fears about Trump’s fiscal policy agenda, the market’s sudden realization that it is at 30 CAPE, or just a technical revulsion – what matters is that once again, like clockwork, Kolanovic called a key inflection point just days in advance.

Source: Have We Reached A Turning Point For Stocks? Tuesday Was The Worst Day For The Stock Market In 6 Months | Stillness in the Storm

18 Years Later – Pam Martens Sends Another Warning To The Fed & The Clintons | Zero Hedge

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Below is the testimony of Pam Martens to the Federal Reserve on June 26, 1998, imploring it not to support the repeal of the Glass-Steagall Act and usher in an era where Wall Street banks like Citigroup could own both insured deposits at its commercial bank as well as engage in high risk trading at its investment bank

Tyler Durden's picture

It is the same players that we saw enabling reckless behavior in 1998: Citigroup, the Fed, and the Clinton-led Wall Street Democrats. And, as Jesse notes, here we are again, almost eighteen years later, watching the same short term, selfish characteristics by the big money banks putting the entire economy of productive individuals at risk again

“There’s something big and scary going on behind the scenes but, as usual, the public isn’t reading about it on the front pages of the newspapers.” Pam Martens and Russ Martens warn that big banks and big insurers send scary signals…

Yesterday, the broad stock market, as measured by the Standard and Poor’s 500 Index, declined a modest 0.29 percent while big Wall Street banks like Citigroup and JPMorgan Chase fell by triple that amount. Bank of America, which bought the big retail brokerage firm, Merrill Lynch, in the midst of the 2008 crash, fell by 8.6 times the rate of the decline in the S&P to give up 2.50 percent.

 

Equally noteworthy, two major insurers, MetLife and Prudential Financial, saw percentage market losses far in excess of the S&P. MetLife declined by 2.74 percent while Prudential Financial lost 1.68 percent. Prudential Financial has been named a Systemically Important Financial Institution (SIFI) by the Financial Stability Oversight Council. MetLife had received the same designation but won a court battle to rescind the designation. The U.S. government is appealing.

Continue reading 18 Years Later – Pam Martens Sends Another Warning To The Fed & The Clintons | Zero Hedge