A Bubble World Ready To Burst

GREETINGS,

YOU HAVE GOT TO READ THE ARTICLE BELOW. IT DETAILS THE CURRENT ECONOMIC CRISIS AND THE IMPENDING WORLD WIDE ECONOMIC COLLAPSE NOW FACING THE WHITE WORLD. EVEN IF ALL OF THE NATIONS ON EARTH WHERE TO JOIN FORCES ECONOMICALLY, THEY WOULD NOT BE ABLE TO OFFSET THE COMING ECONOMIC TSUNAMI THAT IS ABOUT TO RAVAGE THE ENTIRE SPHERE OF WHITE CIVILIZATION AND WHITE POWER.

IT IS INDEED A FEARFUL SIGHT TO SEE THESE THINGS AS THEY ARE BEING EXPLAINED. IF I WERE OF THE CAUCASIAN RACE, ERSPECIALLY THOSE IN POWER, I WOULD IMMEDIATELY RENOUNCE WHITE POWER THEN GO TO A TEMPLE THAT TEACHES THE TRUE TEACHINGS OF MESSENGER ELIJAH MUHAMMAD AND THEN BOW IN SUBMISSION TO THEM.

….” THE TIME OF THE DEAD AND WHAT MUST BE DONE: SINCE IT IS THE TIME OF THE DEAD THAT THEY SHOULD BE JUDGED AND SHOULD BE GIVEN REWARD UNTO THE PROPHETS. IT IS TIME. THE RESURRECTION OF THE DEAD BRINGS ABOUT THE CLOSING OUT OF A WORLD.”–pg.63(THE SCIENCE OF TIME)

SO WHEN WE LOOK INTO THE PROBLEMS FACED BY THE LEADERS OF THIS WORLD, AND WHEN WE LOOK INTO PLAGUES THAT ARE BREAKING THIS WORLD DOWN BY DEGREES, WE LEARN THAT….”  The old world must be removed to make way for the new world. There is a universal struggle being waged by the old world against the beginning of the new world. Will the old world’s opposition prevent the establishment of the new world? According to recorded history, the efforts being made by the old world against the beginning of a new world will fail as did former opponents of Allah. “–pg.43(TFOA)

ONCE YOU LEARN THIS AND COME TO ACCEPT THIS TRUTH ,YOU WILL REALIZE THAT….” We are in a world that is passing out of existence — and she is putting up a fight (war) to destroy the nation of righteousness. Be aware! To try to oppose the success of Allah’s truth only hastens the doom of falsehood and its teachers.”–pg.189(TFOA)

JPMorgan’s $2B Loss: A Preview Of The Coming Derivatives Market Collapse

SOURCE: http://seekingalpha.com

When news broke of a 2 billion dollar trading loss by JPMorgan (JPM), 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. When the “too big to fail” banks make good bets, they can make a lot of money. When they make bad bets, they can lose a lot of money, and that is exactly what just happened to JPMorgan.

The bank’s Chief Investment Office made a series of trades which turned out horribly, and it resulted in a loss of over 2 billion dollars over the past 40 days. But 2 billion dollars is small potatoes compared to the vast size of the global derivatives market. It has been estimated that the the notional value of all the derivatives in the world is somewhere between 600 trillion dollars and 1.5 quadrillion dollars. Nobody really knows the real amount, but when this derivatives bubble finally bursts, there is not going to be nearly enough money on the entire planet to fix things.

Sadly, a lot of mainstream news reports are not even using the word “derivatives” when they discuss what just happened at JPMorgan. This morning I listened carefully as one reporter described the 2 billion dollar loss as simply a “bad bet”.

And perhaps that is easier for the American people to understand. JPMorgan made a series of really bad bets and during a conference call Friday night CEO Jamie Dimon admitted that the strategy was “flawed, complex, poorly reviewed, poorly executed and poorly monitored”. The funny thing is that JPMorgan is considered to be much more “risk averse” than most other major Wall Street financial institutions are. So if this kind of stuff is happening at JPMorgan, then what in the world is going on at some of these other places?

That is a really good question.

For those interested in the technical details of the 2 billion dollar loss, an article posted on CNBC described exactly how this loss happened:

The failed hedge likely involved a bet on the flattening of a credit derivative curve, part of the CDX family of investment grade credit indices, said two sources with knowledge of the industry, but not directly involved in the matter. JPMorgan was then caught by sharp moves at the long end of the bet, [it] said. The CDX index gives traders exposure to credit risk across a range of assets, and gets its value from a basket of individual credit derivatives.

In essence, JPMorgan made a series of bets which turned out very, very badly. This loss was so huge that it even caused members of Congress to take note. The following is from a statement that U.S. Senator Carl Levin issued a few hours after this news first broke:

The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making.

Unfortunately, the losses from this trade may not be over yet. In fact, if things go very, very badly the losses could end up being much larger, as a recent Zero Hedge article detailed:

Simple: because it knew with 100% certainty that if things turn out very, very badly, that the taxpayer, via the Fed, would come to its rescue. Luckily, things turned out only 80% bad. Although it is not over yet: If credit spreads soar, assuming at $200 million DV01, and a 100 bps move, JPM could suffer a $20 billion loss when all is said and done. But hey: At least “net” is not “gross” and we know, just know, that the SEC will get involved and make sure something like this never happens again.

And yes, the SEC has announced an “investigation” into this 2 billion dollar loss. But we all know that the SEC is basically useless. In recent years SEC employees have become known more for watching pornography in their Washington D.C. offices than for regulating Wall Street. But what has become abundantly clear is that Wall Street is completely incapable of policing itself. This point was underscored in a recent commentary by Henry Blodget of Business Insider:

Wall Street can’t be trusted to manage-or even correctly assess-its own risks.

This is in part because, time and again, Wall Street has demonstrated that it doesn’t even KNOW what risks it is taking.

In short, Wall Street bankers are just a bunch of kids playing with dynamite.

There are two reasons for this, neither of which boil down to “stupidity.”

• The first reason is that the gambling instruments the banks now use are mind-bogglingly complicated. Warren Buffett once described derivatives as “weapons of mass destruction.” And those weapons have gotten a lot more complex in the past few years.

• The second reason is that Wall Street’s incentive structure is fundamentally flawed: Bankers get all of the upside for winning bets, and someone else- the government or shareholders- covers the downside.

The second reason is particularly insidious. The worst thing that can happen to a trader who blows a huge bet and demolishes his firm-literally the worst thing- is that he will get fired. Then he will immediately go get a job at a hedge fund and make more than he was making before he blew up the firm…..MORE HERE

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