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Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad. Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars. But no matter how bad things get for JP Morgan, it will not be allowed to fail. JP Morgan is the largest bank in the United States, so it is essentially the "granddaddy" of the too big...

The Obama administration plans to arm Italy’s fleet of Reaper drone aircraft, a move that could open the door for sales of advanced hunter-killer drone technology to other allies, according to lawmakers and others familiar with the matter. The sale would make Italy the first foreign country besides Britain to fly U.S. drones armed with missiles and laser-guided bombs. U.S. officials said Italy intends initially to deploy the armed drones in Afghanistan. Lawmakers who question the planned deal say the decision to “weaponize” Italy’s unarmed surveillance drones could make it harder for the U.S. to deny similar capabilities to other...

Last week, Jamie Dimon, CEO of the nation’s largest bank, JPMorgan Chase, revealed that the bank had made a $2 billion-plus trading mistake. The bank has more than $2 trillion in assets and made a profit of about $20 billion last year. So it lost one-tenth of 1 percent of its assets and an amount equal to about 10 percent of its income for last year. No big deal, despite all the hand-wringing of the political and media class. Predictably, Sen. Carl Levin, Michigan Democrat and arguably the most irresponsible member of Congress, immediately issued a press release calling for...

The only Wall Street titan to emerge from the financial crisis without a black eye headed into the weekend with a concussion. JPMorgan Chase, fresh off the surprise news that it lost more than $2 billion in recent weeks to a complex trade in credit derivatives, saw its stock value plummet Friday more than 9 percent. The massive loss also reportedly led regulators to open up inquiries about the trading strategy and caused a downgrade of its credit by the rating agency Fitch, which in turn sent its stock lower in after-hours trading. To top it off, the reported loss...

When news broke of a 2 billion dollar trading loss by JP Morgan, much of the financial world was absolutely stunned. But the truth is that this is just the beginning. This is just a very small preview of what is going to happen when we see the collapse of the worldwide derivatives market. When most Americans think of Wall Street, they think of a bunch of stuffy bankers trading stocks and bonds. But over the past couple of decades it has evolved into much more than that. Today, Wall Street is the biggest casino in the entire world....

A major potential negative catalyst for financials globally is rapidly approaching as 114 banks are on review-for-downgrade by Moody's across 16 countries. Why do we care so much about ratings given their historical credibility?...In Europe, the fun heats up in the next few weeks as first Italian banks (4/16), then Spanish banks (4/23) and then Austrian (4/30) face from 1 to 4 notch downgrades and the potential to lose their short-term (funding-/CP-related) Prime-1 top rating, implicitly raising funding costs (and liquidity concerns) even further.

Every quarter the Office of the Currency Comptroller releases its report on Bank Derivative Activities, and every quarter we find that the Too Big To Fail get Too Bigger To Fail. To wit: in Q4 2011, of the total $230.8 trillion in US outstanding derivatives, the Top 5 banks (JPM, BofA, Morgan Stanley, Goldman and HSBC) accounted for 95.7% of all Derivatives. In some respects this is good news: in Q2, the Top 5 banks held 95.9% of the $250 trillion in derivatives. Unfortunately it is also bad news, because $220 trillion is more than enough for the world to...

On March 9, Lyndon LaRouche intervened in the economic crisis to propose a plan that is as simple and direct, as it is potentially effective in its execution: a sales or transaction tax on the turnover of ``financial derivative'' securities or financial instruments. Each time such a security or instrument is traded, he said, it should be taxed at 0.1 percent of its face value, or, as it is called in the derivatives trade, its notional principal amount. ... Talk to most people about ``derivatives'' and you pretty soon discover that they have no idea what they are. Still less...

Hendry's 'China Short' Fund Makes Big Returns Published: Monday, 12 Dec 2011 | 9:08 PM ET By: Sam Jones, Hedge Fund Correspondent Shorting the credit of companies positioned to do badly from a Chinese slowdown has proved to be one of the hedge fund industry’s most successful trades of 2011. Hugh Hendry, the outspoken U.K. hedge fund manager known for his bearish, often contrarian views on the global economy, has seen his ‘China short’ fund rack up gains of more than 52 percent so far this year, investors have told the Financial Times. The gains compare to a loss for...

Seven decades after Pearl Harbor and one decade after 9/11 we Americans dare not remain willfully oblivious to the threat of the Black Swan. Our grand American experiment is more vulnerable now that it was in 1941 and it is certainly more precariously balanced than it was in 2011. These conundrums are what Donald Rumsfeld might describe as the "known unknowns" but by definition a Black Swan event is as surprising as it is earth shattering. So all of these threats which beset us are by definition not Black Swan events. They are known risks. There are many more risks...

While everyone was focused on the impending European collapse, the latest soon to be refuted rumors of a quick fix from the Welt am Sonntag notwithstanding, the Bank of International Settlements reported a number that quietly slipped through the cracks of the broader media. Which is paradoxical because it is the biggest ever reported in the financial world: the number in question is $707,568,901,000,000 and represents the latest total amount of all notional Over The Counter (read unregulated) outstanding derivatives reported by the world's financial institutions to the BIS for its semi-annual OTC derivatives report titled "OTC derivatives market activity...

eCat Has European Certification October 24, 2011 | Author: admin Many of us have been wondering about Defkalion’s stated progress (or otherwise) regarding official certification of their eCat derivatives. Since their divorce, it is interesting to note that Andrea Rossi states that he has completed CE compliance: Andrea Rossi October 23rd, 2011 at 8:08 AM Dear Dario: The CE for the business to business has been done. For household applications not yet. Warm Regards, A.R . The following snips are from the wiki entry: CE marking (originally EC mark[1]) is a mandatory conformity mark for products placed on the...

Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.

Most people have no idea that Wall Street has become a gigantic financial casino.  The big Wall Street banks are making tens of billions of dollars a year in the derivatives market, and nobody in the financial community wants the party to end.  The word "derivatives" sounds complicated and technical, but understanding them is really not that hard.  A derivative is essentially a fancy way of saying that a bet has been made.  Originally, these bets were designed to hedge risk, but today the derivatives market has mushroomed into a mountain of speculation unlike anything the world has ever...

A plan by beleaguered Bank of America to foist trillions of dollars of funky Merrill Lynch derivatives onto its depositors is raising eyebrows on Wall Street. The rarely used move will likely save the bank millions of dollars in collateral but could put depositors’ cash behind the eight ball. The move also brought to light fissures between the nation’s top banking regulators, the Federal Deposit Insurance Corp. and the Federal Reserve, in the wake of new regulations meant to curb the free-wheeling habits that fostered the worst crisis in a generation back in 2008. At issue is BofA’s decision to...

A federal judge ruled on Wednesday that the approval process for Bank of America’s $8.5 billion mortgage put-back settlement should be moved to federal court, making it more vulnerable to attack from investors and public officials. William Pauley, a federal judge in Manhattan, said the case must be heard in federal court because it “implicates core federal interests in the integrity of nationally chartered banks and the vitality of the national securities markets.” Bank of America in late June struck the $8.5 billion deal with 22 big institutions like BlackRock that had invested in Countrywide’s mortgage-backed securities and claimed that...

In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller... The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist.

The still-neutral Club for Growth weighs in on Herman Cain's polling surge, in a statement suggesting that Cain has a chance of winning over the powerful advocacy group: “Herman Cain is surging in the polls because his clear message of limited government and economic freedom is resonating,” said Club for Growth President Chris Chocola. “Cain has articulated a strong vision for putting America back on the path to prosperity. A clear message promoting economic growth, like the one Herman Cain is presenting, is essential to defeating Obama. Republican primary voters ought to give Herman Cain a close look. We are.”...

The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaring format the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies), a mere...

While the dominant topic of conversation when discussing margin hikes (or reductions) usually reverts to silver, ES (stocks) and TEN (bonds), what everyone so far is ignoring is the far more critical topic of real margin risk, in the form of roughly $600 trillion in OTC derivatives. The issue is that while the silver market (for example) is tiny by comparison, it is easy to be pushed around, and thus exchanges can easily represent the illusion that they are in control of counterparty risk (after all, that was the whole point of the recent CME essay on why they hiked...

Heidi is the proprietor of a bar in Buffalo. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers' loans). Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any...

For those who care what the man whose corporate existence is intimately tied to the government's bailout of the financial system, has to say, below we present Buffett's 2010 letter to shareholders. The only section that is relevant to us, and which continues to demonstrate why Berkshire is a walking moral hazard (contrary to his conedmnation of financial weapons of mass destruction), is the disclosure on derivatives.

US Politicians Duped By The Brotherhood In the United States, one individual maintained a pretense of "moderation" which would later embarrass the left and the right. According to the testimony of Dr. Michael Waller to the US Senate Committee on the Judiciary, Abdurahman Alamoudi was a member of the Muslim Brotherhood. A man born in Eritrea in 1951, he arrived in the US in 1979 and became a naturalized US citizen on May 23, 1996. From 1985 onwards he became involved in many Muslim groups. In 1990 he founded the Washington DC-based American Muslim Council (AMC), which Waller states "has...

We’ve been over the numerous BS excuses that US Dollar destroyer extraordinaire Ben Bernanke has made for QE enough times that today I’d rather simply focus on the REAL reason he continues to funnel TRILLIONS of Dollars into the Wall Street Banks. I’ve written this analysis before. But given the enormity of what it entails, it’s worth repeating. The following paragraphs are the REAL reason Bernanke does what he does no matter what any other media outlet, book, investment expert, or guru tell you. Bernanke is printing money and funneling it into the Wall Street banks for one reason and...

If you took an opinion poll and asked Americans what they considered the biggest threat to the world economy to be, how many of them do you think would give "derivatives" as an answer? But the truth is that derivatives were at the heart of the financial crisis of 2007 and 2008, and whenever the next financial crisis happens, derivatives will undoubtedly play a huge role once again.So exactly what are "derivatives"? Well, derivatives are basically financial instruments whose value depends upon or is derived from the price of something else. A derivative has no underlying value of its...

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan. The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

My Dear Friends, Gold is clearly on its way to $1,650 and beyond. I have told you for many years that there was no PRACTICAL solution to the problems created by OTC derivative manufacturers and distributors namely our beloved “banksters.” By practical I meant a solution that itself would not cause more dislocations than the problem to which it was applied already has. Now you see political realities both in taxation and quantitative easing. Friends, there is no practical way out of this problem – none. We are going to inflate and spend as the entire Western world financial/political managers...

(snip) According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION. Five banks account for 95% of this. Can you guess which five? (snip)

Just because you have been making your mortgage payments on time and have great credit does not mean that you are not in default. Tens of millions of mortgage holders are making their mortgage payments to banks that cannot prove they own the mortgages to their homes. This is now a fact. Think about this for a minute. The odds are that the monthly payment you are making to your bank is being cashed by a bank that cannot prove ownership of your mortgage. This means that you are making payments to a bank that does not have the authority...

Harold Bradley, chief investment officer for the Kauffman Foundation, discusses the increase in derivatives held by commercial banks with CNBC's Maria Bartiromo and Herb Greenberg. Maria Bartiromo: Why do you think we should care much about derivatives that the banks are holding? Harold Bradley: Well, you know, I'm just sitting out here in the Midwest looking at government statistics, and the Bank for International Settlements is showing a chart that, to me, just seems so counterintuitive. When you look back at the last time they peaked in late '08 and early '09, when Ned Davis was issuing his first warnings,...

It was sickening enough when British oil giant BP set new standards for corporate scumbaggery in the Deepwater Horizon oil spill, turning the Gulf of Mexico into its own personal toilet and imperiling entire species of wildlife in an attempt to save a few nickels. But with the Gulf geyser finally capped, there's still a way for BP to cause an even more unthinkable disaster: an AIG-style, derivative-fueled financial shitstorm. If the company decides to declare bankruptcy — a very real possibility with these bastards — it could trigger chaos in our casino system of finance, underscoring the insane levels...

Michael Snyder writes: Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it. When you say the word "derivatives" to most Americans, they have no idea what you are talking about. In fact, even most members of the U.S. Congress don't really seem to understand them. But you don't have to get into all the technicalities to understand the bigger picture. Basically, derivatives are financial instruments whose value depends upon or is derived from the...

"America cannot afford a Trillion Dollar disaster. That’s what this will cost, count in Trillions not Billions. The cost in lives, displaced people and destruction to the Eco System is on a scale Humanity has never encountered in its recorded history."

The financial reform that is about to be passed is a farce. Like so much in Washington, it is strictly for the tourists. The following article from Sox First provides commentary on the legislation: "You think the Obama administration's legislation to fix US financial regulation is going to change Wall Street? You're dreaming! Nothing has changed, investment banks are a protected species in the US. Hailed by some sections of the media as something that will put banks on a bigger leash, the reality it does nothing of the sort. It's just a massive con because of the way the...

President Obama was quick to claim victory at week’s end, after congressional negotiators hammered out a final bill regulating the financial sector, saying it provides “90% of what I proposed.” But just how the nearly 2,000-page bill will affect New York — which relies upon financial institutions for a major share of its tax base — remains unclear. After all, as Senate Banking Committee Chairman Chris Dodd admitted: “No one will know until this is actually in place how it works.” Which is why Rep. Jeb Hensarling (R-Texas) warns of “three unintended consequences on every page of this bill.” Not...

Washington in the Obama era seems bent on imposing "solutions" that not only fail to solve Americans' problems, but make us poorer in the bargain. In a direct attack on Wall Street, the president and his ally, Sen. Blanche Lincoln (D-Ark.), are bent on imposing the "Volcker rule," which would prohibit banks from making speculative investments with their own funds, and on requiring banks to divest their derivatives trading desks, or at least put them in a separate subsidiary owned by a parent holding company. Five major banks -- Bank of America, Citigroup, Goldman Sachs, JP Morgan and Morgan Stanley...

Blanche Lincoln may represent Arkansas in the US Senate -- but given the pain she's trying to inflict on New York's financial sector, she might as well hail from London or Hong Kong. With talks under way to reconcile House and Senate financial-reform bills, the powerful Agriculture Committee chairwoman is reportedly working overtime to resurrect a plan that would force banks to part ways with their lucrative derivatives-trading operations. Which, in turn, would separate New York from a healthy chunk of its tax base -- and a whole lot of jobs. Few would dispute, of course, that the market for...

Soros: The Crisis Is Far From Over, And Derivatives Are A "License To Kill" Vince Veneziani Jun. 10, 2010, 4:14 PM George Soros is sounding a lot like Warren Buffett these days. In a conference in Vienna, the famous investor said that Europe's worsening debt situation is just "Act II" of the crisis, according to Bloomberg. Bloomberg: “The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.” Soros, 79, said the current situation...

One of the biggest risks to the world's financial health is the $1.2 quadrillion derivatives market. It's complex, it's unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost -- and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so. A quadrillion is a big number: 1,000 times a trillion. Yet according to one of the world's leading derivatives experts, Paul Wilmott, who holds a doctorate in applied...

From Greece to Britain and the USA – trillions in bailouts disappear into the black holes of the overspending government bureaucracies and irresponsible corporations. It is amazing that the stock markets are still functioning. May be it is because the Wall Street stopped reflecting the reality long time ago. Instead the market invented the new dimension of reality – the derivatives of all kind. Wall Street is trading crap – the derivative markets are like trading shares for vacations on asteroids, because Obama said he has a plan to go there, when the economy recovers and he gets revenues from...

"-- The notional value of derivatives held by U.S. commercial banks increased $8.5 trillion in the fourth quarter, or 4.2 percent, to $212.8 trillion." "-- Derivative contracts remain concentrated in interest rate products, which comprise 84 percent of total derivative notional values. The notional value of credit derivative contracts, at $14 trillion, represents 7 percent of total notionals. Credit derivatives notional totals increased by 8 percent during the quarter." Imagine: an increase of $8.5 trillion in notional value of derivatives in just three months."

As the Senate moves forward with debate over financial reforms this week, New Yorkers should remember one thing: Weak rules may let Wall Street rake in big profits in the short term, but they will erode confidence in US markets, hurting the financial institutions -- and the city -- in the long run. What's vital is to preserve the global perception that American markets treat everyone fairly. At issue are unrestrained derivatives. These are financial instruments whose value goes up and down if the value of something else goes up or down -- so if you think pork-belly prices are...

BEVERLY HILLS, California (Reuters) - Financial services executives are apprehensively watching regulation reform make its way through Washington, worried measures such as a bailout fund and restrictions on derivatives would hurt business. But executives, investors and advisers at the Milken Institute'sGlobal Conference agreed on the need for reform of financial regulation to prevent crises in the future. "We need a bipartisan bill here because we need both sides to contribute their best ideas to this reform. And we need reform," said Kenneth Griffin, the chief executive of hedge fund Citadel Investment Group. "It will hurt business if we end up...

Tucked away on the 10th floor of South Beretania apartments in Honolulu, Hawaii is quite a woman, the one engineered profile online suggests for Madelyn Lee Payne Dunham, the grandmother who raised Barack Hussein Obama when he was abandoned by his mother, but for the wonder woman profile which was created online, the one question jumps out that no one has noticed: If Madelyn Dunham was thee woman as her profile states who paved the way for all women in banking, thee woman who raised Barack Obama, then why is Barack Obama running away from this woman, why is she...

Lobbying by Warren Buffett’s Berkshire Hathaway on proposed financial reform as it impacts the treatment of derivatives has helped the famed investor avoid a financial hit, the WSJ claimed. Derivatives reform has been folded into broader legislative measures, senior Democrats told the paper.

<p>As interest rates begin to rise worldwide, losses in derivatives may end up bankrupting a wide range of institutions, including municipalities, state governments, major insurance companies, top investment houses, commercial banks and universities.</p> <p>Defaults now beginning to occur in a number of European cities prefigure what may end up being the largest financial bubble ever to burst – a bubble that today amounts to more than $600 trillion.</p>

"At today’s Financial Crisis Inquiry Commission hearing, Brooksley Born, the former head of the Commodity Futures Trading Commission, declared Alan Greenspan’s tenure at the Federal Reserve an unmitigated failure – to his face. Greenspan accords a certain degree of respect on Capitol Hill, despite Born’s accurate take on his many failures, and so this outburst was highly unusual – and gratifying. Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Alan Greenspan, told the former Federal Reserve chair that his agency “failed to prevent housing bubble, failed to prevent the...

Two new futures exchanges will let studios spread the financial risk of creating films. Welcome to Hollywood's newest version of risky business: movie derivatives. Two trading firms, one of them an established Wall Street player and the other a Midwest upstart, are each about to premiere a sophisticated new financial tool: a box-office futures exchange that would allow Hollywood studios and others to hedge against the box-office performance of movies, similar to the way farmers swap corn or wheat futures to protect themselves from crop failures. The Cantor Exchange, formed by New York firm Cantor Fitzgerald and set to launch...

Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. more at link.

Behind each great historical phenomenon," Niall Ferguson has written, "lies a financial secret." So it is with Europe's latest identity crisis. Greece's euro troubles have a lot to do with its fiscal irresponsibility and the instability at the heart of European Monetary Union—a group of countries that sometimes behave like "the United States of Europe" and at other times revert to nationalistic petulance (witness German resistance to a Greek rescue). But the Greek panic—and fears of a euro collapse and another financial contagion—also have a great deal to do with secret derivatives deals orchestrated by big American banks. As a...