As we await the coming Tribulation...
The financial news spin-doctors are attributing today’s abrupt sell-off to a report of a Bloomberg terminal outage and to a report that China has expanded its list of stocks available for shorting. This explanation for the plunge in stocks globally is so absurd it almost leaves me speechless.
I have been postulating since mid-December that the strange volatility we’ve been experiencing in the markets – combined with the most intensive effort I’ve ever seen by the Plunge Protection Team (the Fed + the Treasury’s Working Group on Financial Markets) to prop up the stock market and keep a manipulative cap on gold – is occurring because there’s is a massive derivatives melt-down going on behind the scenes. The volatility reflects the turmoil and the market intervention in stocks and precious metals reflects the effort to keep the problem covered up.
But a good friend and colleague showed me graph this morning that shows my thinking about a derivatives collapse may be correct – click to enlarge:
That graph shows the Fed’s Reverse Repurchase Agreement operations with foreign Central Banks and big foreign banks. A reverse repo is an operation which generally is thought of as being used as a tool to remove short term liquidity from the banking system. However, as you can see from the timing of the first massive spike up, which occurred in early September 2008, it is an absurd notion to think the Fed would have removed liquidity from the system. (Note: the second spike up in 2011 coincided with the Fed’s “Operation Twist” which was essentially a huge QE extension disguised with a “twist” – but nonetheless was done to keep the system from collapsing).
No, instead the massive operation was conducted to INJECT Treasury collateral into the global banking system. Treasuries are used as collateral against derivatives positions. It’s in a sense margin collateral for the big boys. When an entity (typically a bank or hedge fund) takes on a derivatives bet, it needs to post collateral to protect the counterparty from a decline in the value of the bet. Treasuries are the de rigeur collateral, although the ECB now allows everything for collateral except loans to lemonade stands.
When the value of the derivatives bet declines because the value of the underlying asset declines (think: Greek debt, oil debt), more collateral has to posted. Eventually, the market runs out of collateral and there’s a collateral short squeeze. The use of hypothecation exacerbates the situation by several multiples. Please note that Zerohedge intermittently reports big spikes up in Treasury settlement fails. This reflects the extreme shortage of collateral. When collateral has been posted but not hypothecated, it can be called and used for settlement. When that Treasury has been hypothecated by the custodian of the collateral, it becomes harder to call, especially when it’s been hypothecated several times. Big spikes up in settlement fails occur.
Circling back to my postulation that a massive, ongoing derivatives melt-down has started, as the derivatives lose value, more Treasury collateral has to be posted. When the situation becomes extreme, collateral isn’t posted and counterparties begin to fail, especially if the counterparty can’t come up with the cash needed to remedy a derivatives bet gone bad. My bet is that the Greece situation ignited the problem and the collapse in the price of oil threw millions of gallons of napalm on the situation.
The reason I believe this explanation is correct, is from the graph above. We know that in 2008 we were told that a big derivatives accident started in Europe and spread to the U.S. Lehman filed for Chap 11 on Sept 11, 2008. We also know that AIG and Goldman experienced a massive counterparty default collapse in September 2008 that was remedied thanks to rather explicit lies circulated by Ben Bernanke and Henry Paulson about systemic collapse if TARP wasn’t approved.
The only reason the Fed would need to inject massive amounts of Treasuries into the global banking system is because there’s an extreme shortage. A massive derivatives accident requiring massive amounts of collateral to be posted has developed. If Treasuries are not available to post as collateral, while at the same time a massive amount of hypothecated (Treasuries out on loan, several times over) collateral fails are occurring, it will cause the banking system to seize up. The giant spike up shown in the graph above is occurring because the Fed is engaging in an enormous reverse repo operation in order to prevent the global financial system from collapsing.
Remember I suggested some time ago that the elitists like give us a warning before something bad is about to happen. As my colleague John Titus states: “the true elite aristocracy are polite criminals – they consider it gauche to flush the toilet while we’re in the shower without giving us a heads up.”
This is why the IMF issued this warning yesterday for the financial media to publish:
The so-called ‘flash crash’ on US bond markets last October and the collapse of the Swiss currency floor in January showed how quickly liquidity can vanish, acting as “a powerful amplifier of financial stability risks.” LINK: IMF tells regulators to brace for global ‘liquidity shock’
THIS is why stock markets globally are selling off hard today. The S&P 500 is now down over 1%. Typically the Plunge Protection Team has been able to prop it up by noon EST when it falls at the open. So far today the sell-off has accelerated.
I guarantee that the reason for this is unequivocally NOT because the Chinese Government is letting the public short a few more stock issues OR because Bloomberg experienced a widespread terminal outage. But it does go a long way to explaining THIS: LINK
Along with Tax Day, this year April 15th marked Holocaust Remembrance Day, to remind us of the horrors perpetrated by Nazi Germany and its European allies against the stateless and hapless Jews a mere 70 years ago. The largest Jewish cemetery in the world is called Europe.
Before the Second World War, there were some 18 million Jews. After the war there were only 12 million remaining. The six million who perished soaked the benighted soil of Europe with their blood and filled the skies with their ashes.
But these were the Jewish victims of the 20th century. For nearly two millennia, millions more had died and suffered cruel martyrdom.
Yet the continued existence of the Jews throughout terrible and persistent persecutions remains one of the greatest of all miracles, surpassed only by the rebirth of Israel.
We often call the horrors inflicted upon the Jewish people and faith by its nineteenth-century term: anti-Semitism. But it is a poison within humanity, a persistent virus that remains impervious to eradication. Simply put, it is Jew hatred. It has erupted again throughout Europe and mirrors in its perversions and mindless violence the stark memories of the Third Reich.
France has given us great literature and wondrous music. But that nation also gave us the notorious Dreyfus Affair and the Vichy regime that happily rounded up its Jewish citizens and sent them to the German death camps. That same nation is now submerged under a vast influx of Muslim immigrants who spew Jew hatred learned by rote from the Koran and the Hadith.
Many Frenchmen and women joined them in an orgy of utter hate against the embattled but reconstituted Jewish homeland: Israel. That ugly spectacle contained within it the old virus: Jew hatred.
The Muslim thugs are terminally corroded by their ideology wrapped in a religion (to quote Winston Churchill) and not until they jettison their adherence to Islam will they be free from it. But non-Muslims who attack Israel and the Jews are the useful idiots who have drunk the Kool aid, which is the relentless propaganda war waged against the Jewish state.
The hypocrisy of the shrieking anti-Jewish and anti-Israel mobs in Paris was apparent When we consider that last week, the Syrian regime dropped barrel bombs upon civilians and destroyed the Palestine hospital in Yarmouk, a southern suburb of Damascus, populated by Arabs who call themselves Palestinians.
Hundreds were killed and injured. One Yarmouk resident said: “They slaughtered them in the streets.” This was not in Gaza or in any areas occupied and controlled by the Palestinian Authority.
Now compare this massacre in Syria to the false stories of a “massacre in Gaza” in 2014.
Hamas propagandists filled Facebook feeds with pictures of dead children, most of whom were not even in Gaza and some who were later seen getting off their stretchers and walking away.
The mainstream media shamefully did not check or verify the false claims made by Hamas who cynically manipulated the foreign “reporters” who now admit their abandonment of objectivity for fear of violent reprisals by Palestinian terrorists.
But the damage was done and the Jewish state was unjustly demonized.
In Syria there are real massacres of Palestinians. But where are the Muslim mobs and their European useful idiots? Where are the drones chanting in the streets of Paris? Where are the thousands of tweets we saw in 2014? They don’t exist because Israel was not involved, which reveals the utter hypocrisy and malevolence behind the execrable anti-Jewish and anti-Israel campaign.
Shelley Neese, who is Vice President of a Christian Zionist website called “The Jerusalem Connection”, has produced a remarkable music video "There is a Storm Coming",about the rise of anti-Jewish prejudice and bigotry.
She compares it to the horrors of seventy years ago. She also warns the French Jewish community that time is short and their future lies in the ancestral and biblical Jewish homeland: Israel.
She was assisted by Andrew McKain, a talented musician and rapper whose hard-hitting lyrics should particularly appeal to young people who so desperately need to learn the past and what the present may foretell.
They should know how the totalitarian movements defeated in the 20th century have mutated and how the Islamo-Nazis and today’s far left are making common cause to the same end as their predecessors -- the destruction of the Jews and of freedom worldwide.
US President Barack Obama on Friday left open the door to “creative negotiations” in response to Iran’s demand that punishing sanctions be immediately lifted as part of a nuclear deal, even though the initial agreement calls for the penalties to be removed over time.
Asked whether he would definitively rule out lifting sanctions at once as part of a final deal aimed at keeping Iran from developing a nuclear weapon, Obama said he didn’t want to get ahead of negotiators in how to work through the potential sticking point. He said his main concern is making sure that if Iran violates an agreement, sanctions can quickly be reinstated — the so-called “snap back” provision.
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