Iko Ward: Guys, the banks just wiped out their derivative debt with the stroke of a pen. Shows how corrupt and controlled the system has been all these decades. We’ve all been living on funny money and it hasn’t been very funny for most of us. It’s a good sign what Forex has been doing since Sunday evening. Just remember, Forex isn’t THE indicator, it’s one of many, but very good when all of them line up in the same direction.
WTCutter: OK Iko how did they wipe it out?
Iko Ward: WT…by declaring it no longer exists
Hairdresser: Iko are you saying they DID wipe it out or they COULD with the RV?
TBirdd: Hairdresser: im gonna take that one from Iko as they DID just do it, with the stroke of a pen….. hmm — but good for us..
Iko Ward: They are re-writing derivative contracts, effectively wiping the debt and eliminating the “too big to fail” element in our banking system. They have already re-written trillions worth if these contracts and are in process of re-writing more. This is all in anticipation of an asset backed economy and the end of the fiat dollar.
Apexdinar: the ISDA re-write is NOT retro, so it does NOT, ‘wipe out’ derivatives. I deal in futures contracts, this does NOT change the framework for agreements in past-tense. these derivative traunches will continue to be an issue…..t ‘means’ this does not ‘allow’ for a ‘wipe out’ or ‘write-down’ of drivative ‘debt’
KMAn: Derivative positions on existing contracts would have to be wound down on an individual basis as the amounts involved are staggering.
OK ROcks: ” Additional banks are also expected to join JPMorgan Chase & Co., Goldman Sachs Group Inc. and 16 other lenders that agreed last year to give up their right to immediately yank collateral in derivatives contracts with a failed rival, said the people who asked not to be named before a planned announcement of the revisions later this month.”
BaldEagle: KMAN-So we’re saying this is for new contracts and old ones are still basically the same?
KMan: Pretty much Bald.
ApexDinar: KMAN, good on ya…the traunches are hard for the mind to comprehend, which is why they use supercomputers to calculate when the bubble bursts…simulations says 2016…so you see action being taken…there is a possibility congress secretly breaks all principles of contract law, and makes this retro – right now, it ain’t retro
Kman: Apex, Congress is always the wild card. If I had to take a guess at it, They probably would opt for a soft landing so as to not disjoint the worlds financial markets.
Apexdinar: KMAN – sure enough – of course, the market is bigger than any legislature…the market finds a way…the great unwinding has already started, and ‘we’ really do not know how this will be managed…purging the market of malinvestment is so critical, but PTB papers over stuff, perpetuates the issue with QE, and passes the buck to Joe/Jane Citizen…no accountabilities…
TBirdd: IKO – are u still nearby? Do you have any concerns that Zimbabwe doesnt have much of a government? j.a.
Iko Ward: Guys, don’t worry about Zimbabwe’s government. That’s a different game there and should not be compared to what is occurring in Iraq.
Tishwash: So Apparently this is a pretty big thing hahaha if this proposal goes into effect it essentially wipes away the derivatives some of us have been so worried about
Banks Rewrite Contracts Worth Trillions to Shed Too-Big-to-Fail
Wall Street is poised to expand a rewrite of financial contracts worth trillions of dollars in an effort to persuade regulators that giant banks can be wound down without hurting the broader economy.
The trading and lending agreements being reworked are part of the grease that makes the global financial system function. The changes are expected to allow certain securities and funding contracts to remain intact for as long as 48 hours after a bank fails, said three people with knowledge of the matter.
The extra time is intended to give a faltering bank’s home government time to jump in and set up a healthy version of the doomed institution, something that’s difficult to do when counterparties have terminated contracts and fled.
“If you don’t have all those contracts any more it’s hard to open for business,” said Darrell Duffie, professor at Stanford University’s business school. “Counterparties would wonder what’s going on — ‘Maybe I shouldn’t continue doing business there?”’
The goal is to prevent a recurrence of the messy bankruptcy of Lehman Brothers Holdings Inc. in 2008, which helped spark a broader crisis in credit markets.
Additional banks are also expected to join JPMorgan Chase & Co., Goldman Sachs Group Inc. and 16 other lenders that agreed last year to give up their right to immediately yank collateral in derivatives contracts with a failed rival, said the people who asked not to be named before a planned announcement of the revisions later this month.
A spokesman for the International Swaps and Derivatives Association, a group overseeing the rewrite whose members include banks, declined to comment. Spokesmen for JPMorgan and Goldman Sachs had no comment.
The new changes are expected to apply to securities financing contracts, including repurchase agreements — commonly known as repos — and securities lending transactions. While such trades are often very short term, some of them are in place long enough that instituting a pause could be crucial to regulators trying to manage a collapsing bank.
Repos typically allow a firm to get cash from another by handing over bonds, but with an agreement to buy them back at a premium after a certain period of time. Securities lending is similar, but focuses more on a firm’s need to acquire certain securities and is more likely to involve stock.
$5 Trillion Market
While the size of the repo market is well below its pre-crisis levels, it’s still at about $5 trillion, and securities lending stands at almost $2 trillion, according to a September estimate from the Office of Financial Research at the U.S. Treasury Department.
The Bank of England, Federal Reserve and Federal Deposit Insurance Corp. have spent much of the past two years encouraging banks to back the contract changes. In the U.S., regulators have said the shift is central to their upcoming decision about whether banks can credibly be wound down in bankruptcy. U.S. agencies have also signaled they’ll write rules that require the stays, while European regulators have already consulted this year on likely new requirements.
Post-crisis regulations, including more stringent capital and funding requirements, are beginning to shift market views. Standard & Poor’s said last week that it’s weighing a cut in banks’ credit grades, because it’s becoming less likely that the U.S. government will rescue a lender during a crisis. U.S. banking agencies have been using tools under the Dodd-Frank Act to encourage institutions to restructure and simplify.
Late last year, regulators and ISDA announced that swaps contracts worth trillions of dollars would be subject to a pause. That move, which applied to contracts that 18 banks have with each other, affected an estimated 90 percent of the swaps market. Under that agreement, lenders will wait as long as 48 hours before pulling collateral from failed lenders and canceling transactions.
Since that announcement, industry lawyers and regulators have held a series of closed-door talks to broaden the number of firms participating and add additional types of transactions. U.S. and European regulators, industry lawyers and lobby groups discussed changes to repo and securities contracts at private meeting in London in September, according to the people.
According to materials from the meeting, lawyers said that while they are making progress, the goal is to also encourage bank clients to participate. Non-dealers are a major part of the securities financing market, representing trillions of dollars in trades, according to the notes.
Hedge funds and other asset managers have been loath to sign up so far, arguing that the contract changes are restricting their rights and could threaten their clients’ investments.
The Managed Funds Association, a lobbying group for hedge funds, published a paper in September that says bank regulators are requiring the changes without adequately discussing the policies with industry or the U.S. Congress.
The group, which represents Citadel LLC and D.E. Shaw & Co. among others, said the changes are part of an untested strategy for winding down banks that also may be “detrimental to the financial markets during stressed market conditions.”
NoNo: GM TNT – has anyone shared this link yet? very interesting article… and the rates at the bottom of the Article are just INSANE,~!! wont believe it until I’m sitting across from a banker getting the exchange done… but OMGoodness, if thats it… ooooooooooooooooooooolawd, somebody call 911,~!
Originally posted at Dinar Recaps 10-9-15: http://www.dinarrecaps.com/our-blog/global-currency-reset-gcr-revaluation-of-currencies-rv-historical-overview-part-1-of-2
Dutchieflat: This is not meant to be political byany mean: Earlier this morn somebody posted a link to an article that stated that POTUS is wiping out the deficit. If that’s so, then we really ARE getting close. But I just looked and the US National Debit Clock and we’re over 18 trillion. It climbs at $100,000 every 9 seconds. hmmm…
RustyKat: Houston, do you believe O will reset the USdebtclock.org once the RV happens?
Houston: I have no idea. I just found it interesting that he said our debt is NOT 18 T, but it’s 9 T. Isn’t that what it was when he came into office?
Peaches1: looks like 18T to me…http://www.usdebtclock.org/
Houston: He mentioned that specifically Peaches. So perhaps some debt forgiving is going on and we haven’t been informed yet. The Chinese PM was here last week.
Dansmore: didn’t they stop the us clock a while back? so what is the real usa debt????
Dutchieflat: So…What is the difference between the actual deficit and the immediate debt on the US Debt Clock?
JWT4333: actual deficit is the rate at which the debt is incurred – if you cut the deficit, you slow down how fast you go deeper into debt
55Classic: when this happened on Clinton’s watch…they shut off the national debt clock displayed in NYC…It happened once and it’s happening again…hang on we’re coming into the station
Briona: It will be interesting how they explain the change in the national debt after the RV.
Hairdresser: so will they attempt to delay until they are closer to election time to make the Dems look great for fixing the deficit?
WtCutter: what possible story could make that massive change in debt look like anything but smoke and mirrors???? Rofl
Hairdresser: they can claim QE5 and QE6 fixed the debt…lol
WtCutter: So debt goes down 10T by borrowing lowered debt …. rofl …specially with 2% gdp???? (Gross Domestic Product)
JWT4333: U S debt clock – real time – http://www.usdebtclock.org/
DutchieFlat: jwt pray What I get from both those sites is there’s a clock we’re sposed to see (the one that’s stopped) and a clock that keeps on turning. I’m taking this as a sign that something cool our way is coming!
JWT4333: dutch – we see ONLY what they want us to see
Harambe: Dollar climbs toward 7-month highs, boosted by Fedhttp://www.cnbc.com/id/103153720
[xyz] “Too big to fail” Chinese banks face $400 billion capital call
[xyz] World economy’s ability to fight shocks dented: Moody’s
The warning signs around global economic growth are growing, with Moody’s, the influential ratings agency, adding its voice to a clamor of gloomy forecasts about the next couple of years.