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So, everything is rosey stock markets and property markets supposedly booming.

During 2007/8 risk was packaged off to investors in the form of mortgage backed securities, essentially spreading the risk to all banks. the banks thought their A rated MBS were safe, but following the rules of thermodynamics the risk was just hidden.

Where is the risk been hidden now? Bonds?

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So, everything is rosey stock markets and property markets supposedly booming.

During 2007/8 risk was packaged off to investors in the form of mortgage backed securities, essentially spreading the risk to all banks. the banks thought their A rated MBS were safe, but following the rules of thermodynamics the risk was just hidden.

Where is the risk been hidden now? Bonds?

No its everywhere. You can't differentiate it because everything is now the same deep risky colour.

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Analysis: Five years after Lehman, risk moves into the shadows

Reuters

http://www.reuters.com/article/2013/09/12/us-lehman-fiveyear-analysis-idUSBRE98B05620130912

Bill Winters, a former JPMorgan Chase & Co (JPM.N) executive, said shifting risk from regulated banks to unregulated entities is not necessarily a bad thing. Winters launched Renshaw Bay in 2011, a firm that makes investments in credit in areas where banks are withdrawing.

"This is all very healthy," he said. "Banks are supposed to be central to the transmission of credit, but not be the only game in town."

Fed: Hedge Funds, Banks Sell Crappiest Debt To Small Investors

Wolf Richter

http://www.testosteronepit.com/home/2013/10/8/fed-hedge-funds-banks-sell-crappiest-debt-to-small-investors.html

In its report on shadow banking, the New York Fed buried some nuggets: Hedge funds and banks are bailing out of the highest-risk “opaque” but now relatively low-yielding loans – low yielding thanks to the Fed’s repressive monetary policies – by selling them to small investors via harmless-sounding and conservative-appearing mutual funds and ETFs.

Plan B – How to loot nations and their banks legally

David Malone

http://www.golemxiv.co.uk/2011/12/plan-b-how-to-loot-nations-and-their-banks-legally/

So when a bank goes bankrupt, BEFORE even the most senior bond holders, the repo lenders and derivatives traders can remove, or keep all the assets pledged to them.

This amendment which was touted as necessary to reduce systemic risk in financial bankruptcies also allowed a whole range of far riskier assets to be used, making them too immune from the automatic stay in the event of bankruptcy. Which meant traders flocked to a market where risky assets would be traded and used as collateral without apparent risk to the lender. The size of the repo market hugely increased and riskier assets were gladly accepted as collateral because traders saw that if the person they had lent to went down they could get your money back before anyone else and no one could stop them.

It also did one other thing. Because the repo and derivatives traders ran no risk – they could get their money out of a failing bank before anyone else, it meant they had no reason at all to try to stop a bank from going under. Quite the opposite.

Help to buy? Yes please, say bankers – why use our cash to invest in property?

Gruarniad

http://www.theguardian.com/money/2013/oct/09/help-to-buy-scheme-to-benefit-bankers

Sandy Chen, banking analyst at Cenkos Securities, said he expected bankers to be some of the most eager to apply for the Help to Buy scheme. "Getting a 95% loan to value mortgage lets you speculate on the expected house price increases a lot more than a 75% mortgage," he said. "Bankers are speculative types and are likely to be highly attracted to the possibility of making lots of money."

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So, everything is rosey stock markets and property markets supposedly booming.

During 2007/8 risk was packaged off to investors in the form of mortgage backed securities, essentially spreading the risk to all banks. the banks thought their A rated MBS were safe, but following the rules of thermodynamics the risk was just hidden.

Where is the risk been hidden now? Bonds?

Essentially, the risk is now in holding money.

Since nation states have committed to act in concert with central banks to print money to cover the losses of the banks and indemnify them against future losses, it stands to reason that eventually inflation is going to run away and completely destroy the value of cash/credit/bonds.

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Essentially, the risk is now in holding money.

Since nation states have committed to act in concert with central banks to print money to cover the losses of the banks and indemnify them against future losses, it stands to reason that eventually inflation is going to run away and completely destroy the value of cash/credit/bonds.

But, that holding money.bears interest so the rish is now in rising interest rates?

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But, that holding money.bears interest so the rish is now in rising interest rates?

Interest rates don't come anywhere near to compensating for the loss in value due to inflation and that's not likely to change for a while, IMO.

'Money' is being systematically trashed and interest rates repressed in order to relieve the debts of banks and governments. As part of the process there's a colossal wealth transfer under way from regular people with savings to those at the top of the money pyramid, and their associates.

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So, everything is rosey stock markets and property markets supposedly booming.

During 2007/8 risk was packaged off to investors in the form of mortgage backed securities, essentially spreading the risk to all banks. the banks thought their A rated MBS were safe, but following the rules of thermodynamics the risk was just hidden.

Where is the risk been hidden now? Bonds?

The surplus countries (China, Germany/North EU, Middle-east etc)

Financial assets (all of them, including bank a/cs)

Physical assets (all of them, incl. commodities, gold, silver, land)

The rich forced govts. to pretend to take on the risk via their central banks, but in reality this was/is nothing more than temporary forbearance.

The rich will have to hand over 20%, 30%, 40% of their assets eventually unless they somehow manage to implement some form of fascist global government and just shoot everybody else.

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The rich will have to hand over 20%, 30%, 40% of their assets eventually unless they somehow manage to implement some form of fascist global government and just shoot everybody else.

Why? In what way - devaluation? Revolution? A bit of both? Something else?

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Why? In what way - devaluation? Revolution? A bit of both? Something else?

Who knows.

Middle east countries appear to be going for a combo of revolutions, civil wars etc jollied on by the Imperial powers.

US appears to be going for the rich (via the nutters in the GOP) forcing the collapse of democratic govt. It doesn't seem to have dawned on them yet that they'll be the biggest losers from any default. My guess is a Bay of Pigs'esque version of game theory will resolve that in the near term.

EZ - Germany will leave the euro eventually, probably when Spain quits and forces a breakup. German proles will be called upon once again to subsidise their uberlords industrialists no doubt.

UK - We're in the early stages of fascism from what I can see. I have faith that most Brits will kick these people out eventually and again game theory probably will out.

The French aristocracy found out the hard way that it's probably less painful to give up 40% of what you thought was yours than hold out for the alternative. My guess is UK Royals, landowners and Russian tax exiles will agree.

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Who knows.

Middle east countries appear to be going for a combo of revolutions, civil wars etc jollied on by the Imperial powers.

US appears to be going for the rich (via the nutters in the GOP) forcing the collapse of democratic govt. It doesn't seem to have dawned on them yet that they'll be the biggest losers from any default. My guess is a Bay of Pigs'esque version of game theory will resolve that in the near term.

EZ - Germany will leave the euro eventually, probably when Spain quits and forces a breakup. German proles will be called upon once again to subsidise their uberlords industrialists no doubt.

UK - We're in the early stages of fascism from what I can see. I have faith that most Brits will kick these people out eventually and again game theory probably will out.

The French aristocracy found out the hard way that it's probably less painful to give up 40% of what you thought was yours than hold out for the alternative. My guess is UK Royals, landowners and Russian tax exiles will agree.

You mean that in any default the more you have financially the more you lose? So, just like in Cyprus where bank accounts were raided, the rich in the US, etc, will lose?

It would be nice to see that in the home of Capitalism - it really would - but the rich have such a control on power in the US and have brainwashed hundreds of millions into believing the 'American dream' despite huge debts, unemployment and no health care.

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Who knows.

Middle east countries appear to be going for a combo of revolutions, civil wars etc jollied on by the Imperial powers.

US appears to be going for the rich (via the nutters in the GOP) forcing the collapse of democratic govt. It doesn't seem to have dawned on them yet that they'll be the biggest losers from any default. My guess is a Bay of Pigs'esque version of game theory will resolve that in the near term.

EZ - Germany will leave the euro eventually, probably when Spain quits and forces a breakup. German proles will be called upon once again to subsidise their uberlords industrialists no doubt.

UK - We're in the early stages of fascism from what I can see. I have faith that most Brits will kick these people out eventually and again game theory probably will out.

The French aristocracy found out the hard way that it's probably less painful to give up 40% of what you thought was yours than hold out for the alternative. My guess is UK Royals, landowners and Russian tax exiles will agree.

On the other hand there's always mass starvation to keep the peasantry subdued. The Emperor's old clothes, you might say.

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On the other hand there's always mass starvation to keep the peasantry subdued. The Emperor's old clothes, you might say.

I also think we are in the early stages of fascism in this country. A few years ago I resigned myself to being one of the first up against the wall so have been taking a 'best to enjoy life' attitude in recent times.

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