Custodial Risk in New York City

Guest Post by Martin Armstrong

There is about $17 trillion in outstanding negative-yielding bonds. It is far too complicated to go into great detail on a mere blog post. Suffice to say that the negative-yielding bonds are going to crash like something not witnessed since 1931. While a complete default is not likely prior to 2025/2026, we are going to witness the start of the collapse in 2020. These bonds have been bought by PUNTERS who are just trading them back and forth like a game of musical chairs. When the music stops, a lot of people will get caught holding these new 2.0 versions of financial debt bombs.

Nobody is buying these things to actually hold. It is more akin to trading commodities where people are not actually interested in taking deliveries of lumber, hogs, silos of wheat or bars of silver. These are trading instruments only.

 

I strongly urge people to write to the White House and demand LEGAL REFORM in New York City. The entire fate of both the world economy and the domestic economy rests on the integrity of the rule of law which no longer exists. President Trump has the power to address this problem. He could clean house in the SEC and CFTC who will ALWAYS protect the bankers, as is the case in the Department of Justice. The banks have blown up the entire world economy. M.F. Global was using their clients’ money for its own punting and lost big time. Not a single banker was EVER changed, no less Corzine.

GlennJudge Martin Glenn presided on M.F. Global bankruptcy and created the first BAIL-IN without Congressional Authority. He was the first one to engage in FORCED LOANS by abandoning the rule of law to help the bankers and protect Corzine from losses by taking client accounts to cover M.F. Global’s losses. That is no different from what we saw in Cyprus. He simply allowed the confiscation of client funds when in fact the rule of law should have been that the bankers were responsible and M.F. Global’s losses and it should have been reversed. Never should the clients’ funds be taken for M.F. Global’s losses to the NY Bankers.

What Judge Martin Glenn’s ruling warns is you should NOT trust any company based in New York City. No other circuit would uphold what Glenn did to protect Corzine. While Glenn could not prosecute Corzine, the Department of Justice closed its eyes as did the SEC and CFTC. We lack legal integrity and that leaves a COUNTRY RISK that we would have to warn a client about if we were dealing with a third-world country. This is part of the reason China is still lagging behind. There MUST BE a straight forward Rule of Law or capital that cannot invest if there are no definitive rules.

As far as Panama is concerned, it has been one place that people have moved. Another is Thailand if you are looking at Asia.

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old white guy
old white guy

What about the approximately 285 trillion in derivatives?

Steve
Steve

OWG,
Is $285T NY beded derivatives? Globally, the derivative nut has been estimated at a high of $1.4 Quadrillion. Which by the way, are a senior claim to the money the peons have invested.

FWIW, a You Tube guy named George Gammon. Deserves a look. He covers the madness with excellent analysis, brevity and a big smile while doing it. Really good stuff.

credit
credit

the bond duration calculator i used won’t allow interest rate input of 0% or below, but a 10 year bond paying .1% will lose 10% of its value for every 1% increase in market rates. so a $10,000 bond would drop to roughly $3,000 in a 7% market.

Vote Harder
Vote Harder
Anonymous
Anonymous

Thats not really what duration is used to measure since it is a linear plot, if you look to measure sensitivities to interest rates you would do better to look at the convexity of the bonds. Duration measures expected time to payback of the present value of the bond.

Vote Harder
Vote Harder

She tried to warn them but they didn’t listen then and they’re not going to now.
https://en.wikipedia.org/wiki/Brooksley_Born

grace country pastor

They would not listen
Their not listening still
Perhaps they never will.

Don McLean

ZigZag
ZigZag

Yes, the deregulation of the banks 20 years ago was the kiss of death for the world’s economy. Now there must be a global depression to clean out the excess and all the fraud and corruption allowed to accumulate . There will not be a political solution.

The safeguards put in place following the onset of the Great Depression are gone now. Sadly, the world is reliving a history of greed and recklessness that can’t possibly lead to anything healthy or sustainable. It is what it is.

Glock-N-Load

ZigZag, you said the word.

Anonymous
Anonymous

The Governments around the globe areclever enough to force their debt on to pension funds by law claiming they are AAA rated.

If the government didn’t force pension funds to buy, the price in terms of yield would be much higher. ( No I do not accept 4% for that 10 year, I want 8%)

Old people will be told their pensions will be halved. They won’t riot. But they won’t be able to spend as much money , nor afford to pay property taxes for schools.

Anonymous
Anonymous

There is no problems, just devalue the currency to repay the debt for pennies on the dollar. This is how the idiots in charge of the FED, and all other central banks, are dealing with the issue.

the way they calculate things, the system will hold until they retire with golden parachutes. Most of these psychopaths don’t even have children (Christine Laggard – ECB), or Muti Merkel, so they really don’t care what happens, they live for themselves, and their policies reflect this selfish attitude.

Right now, the US stawk market is rising not because business are doing well, it is because the EU is in such terrible shape that their leaders buying US equities because they return positive, unlike EU bonds that are negative.

this will end like it did in ’29, start converting your paper assets into metal, it won’t burn when you house gets hit by lightening.

and get about 50 credit cards now, while you have a job, so you can max those out in your golden years, and never pay it back.

That is how they live, so you might as well join the club.

Pacho (EC)
Pacho (EC)

Nonsense, our president is from New York City or was.

https://www.youtube.com/watch?v=mX2AyjVrrck

Lebowski
Lebowski

Yup and his mentor was Roy Cohen Nuff said

yahsure
yahsure

A house of cards.

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