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Jim Willie: Armageddon Coming to U.S. With Trillions Exposed In Derivatives
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While preparing to get the new year off to a great start and doing some organizing, I came across this show with Jim Willie as the guest, and I listened to the entire four hours before I looked at the date. I could tell based on some early comments made that it wasn’t his most recent guest appearance, but I knew it wasn’t too far back either. It turns out it was just before the fall.
Despite the timing, not one thing Jim says is incorrect. He does make a few predictions that the dollar will full on collapse come October/November, which obviously did not come to pass… YET… and what’s so funny, is just because the dollar hasn’t crashed… yet, Jim’s opposition will use that as a tool to say Jim’s incorrect with what he forecasted. WRONG! He just forecasted early. He wasn’t even close to wrong. They’ll learn that the hard way.
Having been a former stock broker myself, there is one thing all money men know, and that is that you can’t predict the exact timing of the markets… not with a shred of consistency anyway. No one can. Jim talks about the decline of U.S. Treasury Bond trading by 60% over the summer and what that means for the Dollar moving into the new year. He also beats the same drum I’ve been beating for 2+ years when he says Americans better enjoy spending the Dollar now, while it barely maintains the privilege of being the world reserve currency. Jim’s prediction in this interview about the Chinese RMB sliding in to at least take it’s place in the interim turned out to be spot on.
The host asks him, “If we lose Global Reserve Currency Status, does that mean…. “ and Jim replies, “Yes, it means third world for the U.S.” Personally, I’ve often referred to when the Dollar crashes as “Mad Max” time, and yet people have the nerve to laugh. What part of third world do people not get? Third world doesn’t mean only watering the grass two days a week. It means there isn’t enough food and water to begin with. It means riots. It means massive violence, so I sure hope you’re doing what you can now to prepare… because it IS coming.
Look, the facts are simple, even if the mainstream media and academia refuses to tell the American people the truth, so they can cover their own hides: It simply is NOT sustainable to go on a Zimbabwe like printing of Dollars for the purpose of monetizing our debts around the world, not when as the reserve currency, dozens and dozens of countries are holding their savings denominated in U.S. Dollars. With every Dollar printed, their savings do down, and the world isn’t stupid… not anymore. They’ve learned since 2008.
WITH THE DERIVATIVE BUBBLE 20-25% BIGGER THAN IT WAS IN 2008, AS MICHAEL SNYDER POINTS OUT BELOW, THAT MEANS THE CRASH WILL BE THAT MUCH WORSE, BUT WITH ONE MAJOR DIFFERENCE: 94 MILLION WEREN’T ALREADY OUT OF WORK LAST TIME.
Americans are set to see financial destitution like no one in this country ever has in their lifetime. It’s time to prepare for you and your loved ones. Be smart. Educate yourself, and understand that no matter how well you prepare, the imbeciles who refused to look at the tidal wave of warning signs are going to be coming after YOU when they run out. Be prepared in all ways.
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Did you know that there are 5 “too big to fail” banks in the United States that each have exposure to derivatives contracts that is in excess of 30 trillion dollars? Overall, the biggest U.S. banks collectively have more than 247 trillion dollars of exposure to derivatives contracts. That is an amount of money that is more than 13 times the size of the U.S. national debt, and it is a ticking time bomb that could set off financial Armageddon at any moment. Globally, the notional value of all outstanding derivatives contracts is a staggering 552.9 trillion dollars according to the Bank for International Settlements. The bankers assure us that these financial instruments are far less risky than they sound, and that they have spread the risk around enough so that there is no way they could bring the entire system down. But that is the thing about risk – you can try to spread it around as many ways as you can, but you can never eliminate it. And when this derivatives bubble finally implodes, there won’t be enough money on the entire planet to fix it.
A lot of readers may be tempted to quit reading right now, because “derivatives” is a term that sounds quite complicated. And yes, the details of these arrangements can be immensely complicated, but the concept is quite simple. Here is a good definition of “derivatives” that comes from Investopedia…
A derivative is a security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
I like to refer to the derivatives marketplace as a form of “legalized gambling”. Those that are engaged in derivatives trading are simply betting that something either will or will not happen in the future. Derivatives played a critical role in the financial crisis of 2008, and I am fully convinced that they will take on a starring role in this new financial crisis.
And I am certainly not the only one that is concerned about the potentially destructive nature of these financial instruments. In a letter that he once wrote to shareholders of Berkshire Hathaway, Warren Buffett referred to derivatives as “financial weapons of mass destruction”…
The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.
Since the last financial crisis, the big banks in this country have become even more reckless. And that is a huge problem, because our economy is even more dependent on them than we were the last time around. At this point, the four largest banks in the U.S. are approximately 40 percent larger than they were back in 2008. The five largest banks account for approximately 42 percent of all loans in this country, and the six largest banks account for approximately 67 percent of all assets in our financial system.
So the problem of “too big to fail” is now bigger than ever.
If those banks go under, we are all in for a world of hurt.
Yesterday, I wrote about how the Federal Reserve has implemented new rules that would limit the ability of the Fed to loan money to these big banks during the next crisis. So if the survival of these big banks is threatened by a derivatives crisis, the money to bail them out would probably have to come from somewhere else.
In such a scenario, could we see European-style “bail-ins” in this country?
Ellen Brown, one of the most fierce critics of our current financial system and the author of Web of Debt, seems to think so…
Dodd-Frank states in its preamble that it will “protect the American taxpayer by ending bailouts.” But it does this under Title II by imposing the losses of insolvent financial companies on their common and preferred stockholders, debtholders, and other unsecured creditors. That includes depositors, the largest class of unsecured creditor of any bank.
Title II is aimed at “ensuring that payout to claimants is at least as much as the claimants would have received under bankruptcy liquidation.” But here’s the catch: under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured.
The over-the-counter (OTC) derivative market (the largest market for derivatives) is made up of banks and other highly sophisticated players such as hedge funds. OTC derivatives are the bets of these financial players against each other. Derivative claims are considered “secured” because collateral is posted by the parties.
For some inexplicable reason, the hard-earned money you deposit in the bank is not considered “security” or “collateral.” It is just a loan to the bank, and you must stand in line along with the other creditors in hopes of getting it back.
As I mentioned yesterday, the FDIC guarantees the safety of deposits in member banks up to a certain amount. But as Brown has pointed out, the FDIC only has somewhere around 70 billion dollars sitting around to cover bank failures.
If hundreds of billions or even trillions of dollars are ultimately needed to bail out the banking system, where is that money going to come from?
It would be difficult to overstate the threat that derivatives pose to our “too big to fail” banks. The following numbers come directly from the OCC’s most recent quarterly report (see Table 2), and they reveal a recklessness that is on a level that is difficult to put into words…
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Citigroup
Total Assets: $1,808,356,000,000 (more than 1.8 trillion dollars)
Total Exposure To Derivatives: $53,042,993,000,000 (more than 53 trillion dollars)
JPMorgan Chase
Total Assets: $2,417,121,000,000 (about 2.4 trillion dollars)
Total Exposure To Derivatives: $51,352,846,000,000 (more than 51 trillion dollars)
Goldman Sachs
Total Assets: $880,607,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $51,148,095,000,000 (more than 51 trillion dollars)
Bank Of America
Total Assets: $2,154,342,000,000 (a little bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $45,243,755,000,000 (more than 45 trillion dollars)
Morgan Stanley
Total Assets: $834,113,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $31,054,323,000,000 (more than 31 trillion dollars)
Wells Fargo
Total Assets: $1,751,265,000,000 (more than 1.7 trillion dollars)
Total Exposure To Derivatives: $6,074,262,000,000 (more than 6 trillion dollars)
As the “real economy” crumbles, major hedge funds continue to drop like flies, and we head into a new recession, there seems to very little alarm among the general population about what is happening.
The mainstream media is assuring us that everything is under control, and they are running front page headlines such as this one during the holiday season: “Kylie Jenner shows off her red-hot, new tattoo“.
But underneath the surface, trouble is brewing.
A new financial crisis has already begun, and it is going to intensify as we head into 2016.
And as this new crisis unfolds, one word that you are going to want to listen for is “derivatives”, because they are going to play a major role in the “financial Armageddon” that is rapidly approaching.
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And Now Read This…
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http://themillenniumreport.com/2015/12/an-abridged-history-of-the-united-states-psychopathocracy/
most people are poor so who cares
No man you should care because when it all goes bang then all that money you owe to banks for your mud hut if you have broght a home becomes null and void, it’s yours for keeps.
Not only that but all the interest your government pays to jewish bankers also gets thrown in the bin.
if the bankers think they can screw everyone and come to take the house back then light it up, look towards the lamp post and ask them what are they going to do now about it.
Possesion is 9/10th of the law so long as you don’t hand the guns in and are ready to fight for whats right.
Derivatives are any financial asset or liability that derives its value from tangible assets or other financial assets. Because of the extreme volume of bets on bets that have been made, the system itself is at risk.
To fully understand the problem, however, one must consider what the world’s combined balance sheet looks like. Options offset each other. I can buy an option to purchase 100 shares of GE for a certain amount from someone selling that option. Only those parties are affected. The parties are somewhat assured from counterparty risk in that the exchange will cover losses from any party that doesn’t deliver the cash or securities.
Futures are similarly side bets. The final physical seller and buyer of goods hope to minimize price swings by locking in prices before actual delivery. Their loss is the gain of the one providing the futures contract and vice versa.
So when we strip away the offsetting bets, we are left with tangible assets (business assets, real estate, personal property) that are funded by loans and claims of ownership. A normal stock is worth more than the book value of its assets less liabilities. This is because investors consider the future earnings of that stock — certain undefined or intangible assets are not reflected on its books.
In a major revaluation of asset values, the mechanics are as follows. The exchanges cannot cover all the counterparty losses and some parties seek bankruptcy protection. This cascades because the winning party can’t collect. And if overleveraged, that entity must declare bankruptcy.
Equity (stock) investors will come to realize that their holdings are not worth as much as they thought if they desire to sell that stock.
But what happens under this scenario, a prescribed scenario, individual parties are affected. Everyone is not affected.
With bailouts, however, instead of simply declaring failure, pressure is brought to bear on fearful government officials who are told that all hell will break loose. All banks will collapse, ordinary citizens will lose their life savings, people will riot in the streets, blood will be shed. World War III will start.
So the fearful succumb and will make loans to the failures, who thus succeed. That is the heart of crony capitalism. Profits are awarded to those with massive borrowing capability who can lend at higher rates (a “positive carry” type trade), but losses are paid for by all. Losses are socialized.
The antidote is to fear not that the system will collapse unless loans are made to the unworthy.
It would be better for government officials telling such failures that it is unjust for everyone to pay for their foolish bets.
If a bank fails, both the accounts and the loans should fail instead of having the pain go on through the FDIC. Overheated real estate prices can be paid for by a particular region of the county though bank failures.
We as a county should NOT take on more debt. We should, as do many households, live within our means. The damage done since 2008 has sown the seeds for the destruction of the nation. Republican leaders can believe that lower taxes means a stronger economy better able to grow its way out of problems (supply side economics) while Democrat leaders can believe that spending is required to grow the economy. Either way, the nation adds more debt. $1 trillion when Reagan was in office and $18.8 trillion now. And unfunded retirement liabilities (social security, Medicare) estimated at over $100 trillion now.
We do NOT have competent or courageous leadership in Washington.
Everyone needs to work, pay down/settle/renegotiate debt, take on no new debt, save and invest. And to take on their own losses when they bet wrongly. Don’t seek government bailouts.
There are those that seek to have government take care of their and everyone else’s problems. In the extreme, this results in one world government and there are those seeking this result.
But keep in mind that this violates a scriptural principle:
Psalm 118:6-9
6 The LORD is on my side; I will not fear: what can man do unto me?
7 The LORD taketh my part with them that help me: therefore shall I see my desire upon them that hate me.
8 It is better to trust in the LORD than to put confidence in man.
9 It is better to trust in the LORD than to put confidence in princes.
Put your trust in the Lord Jesus Christ and you have nothing to fear. All they can do is take away your body, but not your soul. Too many will fear, however, to lose their lives and will succumb to false saviors that do not say that Jesus is Lord.
was all in ’til you went on the bible trip–a person can fill their brains with what ever belief they want-hey if it works for you,go for it–without a doubt every person on a doomed airliner is praying like crazy–when I was on a doomed 707 freight hauler years ago my co-pilot and I got are chutes on and saved ourselves! the guys with their bible rants and interpretations act like they are god themselves-whereas I imagine god looking at them,scracthing his head,wondering how another f,ing human comes up with this conculusions!–difference between the average Taliban and a christain? 1 is in the middle east and the other lives next door to you!
Thanks. The world does not follow biblical principles in general.
You know the difference between the “average Taliban” and those truly following Christ by their fruit. It is clear the former yields death based on their reported actions. But it takes faith to see Christ or a real Christian. Too many see defects, and thus cannot see Christ. Without faith, it is impossible to please God.
Good explanation thanks!
Once the free energy technology is implemented all will be ok. It may need the monumental collapse till they realize that there was a solution waiting for the collapse. Free energy for all. Energy is gold, currency, cash.
After all, we are on the verge of the new scientific revolution. Read the book “Physics of the New Millennium, Birth of the New Paradigm” written by the Korean physicist Dr. Eue Jin Jeong. The blue print for the new civilization has already been laid out.
Logically Jim was correct to predict the dollar downfall. In a world full of various currencies it would be ridiculous to expect the dollar to remain firm after the US vamped up the printing presses thereby significantly diluting the dollar’s value. In effect, all the other currencies are now having to subsidise America’s economic mistakes.
We can lay a lot of this on Obama. Instead of punishing banksters, he protected them with Total Bankster Forgiveness, Zero Prosecution, and Waivers. With no fear of jail, they proceeded to do even worse. The first thing that will happen is Bail-Ins. They’re already happening in Europe and are allowed here, although most don’t realize it. If a bank goes broke it can legally steal your savings, offering you worthless stock in exchange.
Bail-ins are true. Here we are poor working slobs, who will suffer for what the fabulously rich have done to the country & us. The politicians have saddled us with the gambling debts on derivatives the banks have lost. We the People have not lost it, but the banksters have lost $1.5 QUADRILLION, which Bill Clinton made legal, and we have to pay. Hmmmm? Sounds like the globalists have intentionally bagged us?
simply put the US Government is not going to allow any of the too big to fail banks go bankrupt even if that means every man woman & child become penniless & Broke. You can take that to the bank.