tisdag 3 januari 2012

Kyle Bass On Rehypothecation And Other Keynesian Endgame Scenarios

I do thing Mr Bass is right on the money in most of his basic assumtions and analysis. However why does he only look at official debt when you get an entierly different picture when including also off balance sheet debt and how can he argue US banks already have taken the hit writing off their debt?

Instead isen't the US large banks, or in fact all the large anglo-saxon banks for that matter, situation very much worse of when you also take in to account what in lay mans terms is reffered to as the shaddow banking system? Or how about the totally unregulated and extensively leveraged in excess of$ 600 trillion derivatives market and considering that e.g. JP Morgan only is claimed to sit on some 40% of all the derivateives in the US?

Needless to say with a gray market that size with no oversight, levereged up to in some cases well over 200 times only what in fact may be very minute negative positions can blow up all the worlds largest banks in the blink of an eye.

The only thing that has been able to hold these markets up, and in fact the ww derivatives market has grown since 2008, has been the ability to create new debt creation via the central banks and extensive money printing. With now debt saturation becoming the real, ultimate and definitive showstoper not only in the private sector but for sure also in therms of goverment debt thats a now a ponzi scheme about to stop.

Bottom line when Greece defaults not only French and German banks will fail but for sure also JP Morgan as well as HSBC will become history..Question is what will happen to the sovergin states like Germany, UK and the US. Who will be hiot the most and who will be able to get out on top?

Today it seems as anybodys guess but myselfI'n more inclined to beleive the paper based anglo saxon banks and states will find themselves in more dire strates that what may be the case for Germanic svear..


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