Donnerstag, 4. August 2011

The Next Bank Bailout Bloodbath is Here

Gold will never ever have to be bailed out. If someone else lends out HIS Gold and can`t get it back, it won`t affect MY Gold. That`s why I like my money hard and shiny, let the Banks and the States gamble with their "Credit".

"Doesn't look like Berlin can carry the entire EU on its shoulders. But then, it never could. The fact is simply becoming more pronounced and obvious now.

So where do the derivatives come in? Remember AIG. Billions of American taxpayer dollars went to foreign banks like Deutsche Bank and Société Générale. There were a lot of voices raised in protest stateside. But they were simply counterparties to derivatives deals AIG had written -and never meant to pay-. In the murky world of derivatives there are many known unknowns, and one of them is that most credit default swaps still originate in US financial institutions, and tons of them, on Greek and Italian debt, for instance, were sold to European banks.

If Greece -or, heaven forbid, Italy or Spain- were to default, and let's make that a "when, not if" for Greece, Société Générale et al will be desperately gasping for air because of their bond losses, the EU and ECB won't be able to come to all the rescues, the only way for these banks to come out alive will be their legitimate claims on CDS written on Wall Street once a credit event has been declared, and the US Treasury and/or Federal Reserve will once again be called upon to save the Mediterranean day at the cost of Joe and Jane Main Street, My Town, USA.

No, I think I do understand why Washington didn't talk about jobs when discussing the debt ceiling (even though Obama goes on a "jobs tour" soon, talk about timing, but Happy Birthday all the same, sir)".

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