Hey Peasants: You May Have Each Just Handed $3,470 to the 1%. Enjoy, Suckers!!!

[MannyGoldstein]

So here's the story in a nutshell, as I understand it: Bank of America has made a ton of secret bets, better known as "derivatives". One of the coool things with derivatives is that you can actually win or lose a *lot* more than you bet. The 1% love 'em because they can make a lot of money fast if things go well. If they don't go well, gee, the 99% pick up the loss one way or another. It's a no-lose situation for the 1%, a no-win situation for us 99%.

A lot of BoA's bets involve the European economy, and it looks like their derivatives might lose a lot of money. Up to $53 trillion, which is four times the entire income earned by the all Americans in a year. It's a fuckload of money.

So Bank of America http://www.nakedcapitalism.com/2011/10/bank-of-america-deathwatch-moves-risky-derivatives-from-holding-company-to-taxpayer-backstopped-depositors.html">recently moved the ownership of these nuclear financial weapons from a part of the bank that's just for the 1% to make or lose money, to the part where the 99% keep their savings. As it happens, BoA has $1 trillion in peasant savings. So when BoA's needs to pay off losses on its derivatives, the first $1 Trillion will come from the bank accounts of the 99%. Those deposits are insured by our government (via the FDIC), so depositors will be OK, but the US Treasury will again end up being savaged to pay off the trillion, about $3,470 per peasant. And all this is cool with Washington.

Another trillion on the national debt, thanks to our cowardice to reinstate necessary oversight of the bankers.

Which will be followed by more demands to slash taxes for the 1%.

Huzzah!

Did you want money for extravagances like food and medical care? Well screw you. The 1% come first.

[dkf]

1. FDIC might have some authority to push it back.

[roguevalley]

16. if that hits the news and is explained in even the tiniest way there

will be fucking riots. I will go.

[rhett o rick]

24. I dont think the poster you are responding to remotely understands the problem.

Thinking that FDIC will rescue us from BoA is folly.

[johnnyplankton]

47. Wrong. They appear to be doing just that.

BTW, there are numerous reports on this, here's one from
Bloomberg.

http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit.html

[rhett o rick]

65. I hope you are right. But what happens to the $53 trillion bad debt? nm

[jerseyjack]

41. -- but its not hitting the news. Not a peep.

[johnnyplankton]

50. Here are multiple peeps. Plus I called Barney's office. Call your Congressman.

http://www.bloomberg.com/news/2011-10-18/bofa-said-to-split-regulators-over-moving-merrill-derivatives-to-bank-unit.html

http://problembanklist.com/fdic-to-cover-losses-on-trillion-bank-of-america-derivative-bets-0419/

Google: bank of america moved derivatives, fdic

You'll get hits. Then call your Senator.

[sabrina 1]

57. It's on the foreign cable networks also, but NOT on CNN or Fox

that I know of. Is it on CNBC?

I would take my money out of BOA as fast as possible, IF I had any in there.

Watch what's happening in Europe. They can't stop the coming collapse, according to every Economist in the world. They are desperately trying to save the Banks by passing the bill to the people, but it's getting harder and harder to do so.

As Max Keiser said today, 'we are in the middle of a war, an economic war'.

Today Greece erupted in violence again and there is now talk of Revolution there. They are the first. People are busy cheering on the death of Gadaffi, while the financial WMD are headed their way and no one is telling them much about it.

According to British economists, people need to get their money out of Banks now, and keep it under their mattresses. Before they get arrested, as happened here last week, for trying to do so.

[rhett o rick]

66. Not a NBC, CBS, NYT, Newsweek, MSNBC, etc.

And I already contacted both Senators.

[newspeak]

67. you really don't think our mcpravda media is going to report it?

Might see something on KO or rachel, but I don't think you're going to see it on faux news or CNN. There busy attempting to keep the plebes in line, dazzling them with insignificant BS.

[rhett o rick]

70. The poster I was replying to seemed to think it was out there. nm

[Stinky The Clown]

2. We're so fucked that stories like, which I don't doubt, elicit yawns

Sadly, that's exactly what they want.

By the way. K&R

[Brickbat]

3. Socialism really is OK in their book -- as long as what's being socialized is risk.

Privatized profit, socialized risk. K&R.

[Octafish]

43. Just as long as the profit stays privatized, it's not socialism.

In fact, it's business-as-usual: a planet run as a plantation, GOP-style.

[AzDar]

4. K & R

[OhioChick]

5. Rec n/t

[rurallib]

6. do you have a link?

I would like to reference these figures on my blog this weekend.

[MannyGoldstein]

10. Sure - from DU's front page:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x5031149

[Initech]

7. Derivitive trading like this should be a felony. It's legalized theft.

[Canuckistanian]

11. I have no problems with derivatives trading

As long as they're gambling with their own money. If they use my money, I get pissed off.

Fortunately, in Canada, we're protected from that. We have permanent, built-in Glass-Steagall type protection for all of our 5 major banks.

[russspeakeasy]

31. BOA and others like them, are giant parasites and need to be

"treated" as such.

[Initech]

37. Couldn't agree more.

[pa28]

8. Who could have predicted this?

There are trillions of unused backstops and bailout programs still available and banks will continue to pass losses onto the public balance sheet until we say "no". They will bonus themselves and pile on risk as long as it's good business.

[abelenkpe]

9. Have read that trillions of dollars

In US assets could potentially disappear if the world economy continues to get worse.

Personally favor a global jubilee of all debt over the decision of governments to pursue austerity measures basically starving and enslaving everyone to pay for an economic crisis brought about by wall street.

[Remember Me]

12. Boy, i needed that. I'd read two articles earlier today and just

didn't quite understand. Now I understand much better. Thanks.

[Major Hogwash]

13. No big deal. I'll just put it on my PayPal account

And then transfer it to another credit card.

[midnight]

14. K&R

[inna]

15. this country is fucking insane. It's as if the majority of the population are just sleep walking.

Seriously, it doesn't take a genius to figure out what's going on (hey, it's all out in plain sight, they don't ever bother to fake it at this point, fcs!)

What assault will come next and what will it take for people to wake the fuck up? Or is it too late?...

The parallels with Germany some 80 years ago keep coming to mind... except that we're infinitely more dangerous, by virtue of military power alone.


Damn. :nuke:

[SteveM]

36. When pirates get enough $, they go for sport, then public sport. nt

[inna]

62. fail to see any relevance; am i missing something?

[lonestarnot]

17. Won't be stopped until we stop them.

[Scuba]

18. This is why Germany outlawed derivatives. How's their economy doing? Boomtown!

[MannyGoldstein]

21. Oh sure, but their nanny-state workers are not competitive in the world economy

Six weeks vacation to start? A living minimum wage? Universal health care! Unsustainable!

That's why their products can't sell in the world market.

What's that you say? Germany is the second-largest net exporter of goods in the world, after China? Ooops. Then I guess nanny states that work for the 99% are viable after all!

[Pacifist Patriot]

23. +1,000

[moomin]

44. Small correction, though I agree

Germany doesn't actually have an official minimum wage, though there are certain professions that have their minimum wages set by collecting bargaining agreements. For the most part, though, even low-end jobs pay a living wage.

I've been hearing a lot about people in places like Berlin (with a large number of foreigners and very high unemployment) taking advantage and hiring immigrants for as little as 400 euros a month for full time labour... but I live just over the border in Poland, and even 400 euros is more than our minimum wage (for full time) here, and we go to Germany to shop because it's cheaper. So even Draconian exploitation by German standards is better than honest labour for many people here...

All this to say, Germany's not a bad place to live.

(Now, back to lurking.)

[MindandSoul]

53. You're kidding, right?

Germany is doing A LOT better than we are on the world economy, if you consider the per capita GDP!

Are you a troll or something?

[MannyGoldstein]

58. The subject line is sarcasm

Did you read the message portion?

[MindandSoul]

71. Sorry! I was in a hurry and I didn't read the whole thing. ..I know I shouldn't say anything

before I get the full info. . .

Thanks for calling me out on this.

[Lucky Luciano]

27. What on the world are you talking about?

You could trade DAX options if you wanted to quite easily. An institution could easily trade DAX variance swaps too. Deutsche Bank trades LOOOADSS of derivatives.

[girl gone mad]

39. No one is talking about the vanilla products you are referring to.

No one cares about that stuff because it's not a real threat. The derivatives we're talking about here are not even in the same league. Please don't try to conflate standard hedging tools with weapons of mass financial destruction.

Germany banned naked short selling and CDS last year.

[Lucky Luciano]

52. Deutsche still trades plenty of the toxic stuff. They are probably not selling naked sovereign CDS.

[City Lights]

19. Privatize profits; socialize losses. It's corporate 'Murika's way.

Absolutely infuriating.

[xchrom]

20. recommend

[Pacifist Patriot]

22. I have to enthusiastically K & R because this is the first time....

I've actually been able to understand what the hell is going on. Thank you for putting it in terms a useless liberal arts major like me can understand!

[rhett o rick]

25. Is this being covered at all in the Corp-Media? nm

[redqueen]

30. Very little.

And what is out there is stated in the most indirect language possible.

[DeSwiss]

26. K&R

- It is always darkest before the dawn. Keep your chins up, because the dark cabal is on its way out......









http://www.youtube.com/watch?v=g6bUUmelbyw">It All Goes Back In The Box

[stockholmer]

32. I wish I shared your optimism, my friend! Here's hoping we....

crush the systemic controllers, before they kill us all.

[DarwinCares]

59. That's the norm in this nation.

Economy tanks, comes up, tanks.

If you pay attention to who was President when these tankings and rises occurred, you'd understand why I still support Obama and remain slightly left of center.

[Fuddnik]

28. Time for a tax payer strike.

Why pay them when they're just going to feed it to the sharks anyway?

[Douglas Carpenter]

29. very well said!! kick and recommend!!!

[Bozita]

33. “The lesson we learned from Lehman is we have not yet learned that lesson" - Lehman examiner

I'm shocked, shocked I tell you!


Lehman examiner: Financial oversight not tough enough
By Barry B. Burr
September 27, 2011, 2:58 PM ET


Regulation and other oversight measures have not been strengthened enough to avoid another financial company failure the size of Lehman Brothers Holdings, the largest bankruptcy in U.S. history, Anton R. Valukas, examiner of the Lehman downfall, told the conference of the Council of Institutional Investors in Boston.

“I don’t see that things have changed greatly, and we cannot have another Lehman Brothers,” Mr. Valukas said Tuesday.

“The lesson we learned from Lehman is we have not yet learned that lesson,” said Mr. Valukas, chairman of the law firm Jenner & Block firm and, as examiner appointed by the U.S. trustee to the Lehman Chapter 11 bankruptcy case, author of a 2010 report on the company’s demise.

The Dodd-Frank Wall Street Reform and Consumer Protection Act and other regulatory changes have not been enough to prevent such a massive failure, he said.

more...
http://www.pionline.com/article/20110927/DAILYREG/110929894

[Goldstein1984]

34. Another reason to divest from BofA

[BeHereNow]

35. Okay, it's time to bring back the guillotine.

How is it possible that they get away with this?????
BHN:mad: :mad: :mad:

[bertman]

38. Huge REC. nt

[99th_Monkey]

40. I really am hoping that OWS uses it's bully pulpet to shout this out over the airwaves pronto!!!

OWS is perfectly poised, having gained national attention, to make LOTS OF NOISE about this,
so it doesn't just slip by mostly un-noticed by general public.

[anamandujano]

63. OWS Bully Pulpit====great concept!

edit---too late to rec.

[99th_Monkey]

64. Thanks for noticing.

I swear this OWS phenomenon is quickly taking on a life of it's own.

Hold on!! Seat belt advisory may be in order.

[Cali_Democrat]

42. Thanks for the information

Very eye opening.

[Cannikin]

45. Wall Street practices like this amount to nothing more than casino gambling, except

when it's a bad bet, WE are the ones that lose the shirts on our backs....and we don't even get to pull the lever. :wtf:

[rucky]

48. They're the gamblers AND they're the house. n/t

[econoclast]

46. Actually it's about half that number and an FDIC payout would go to DEPOSITORS

FDIC insures deposits up to 250,000

According to the FDIC website a little over 50% of BoA deposits are insured
That leaves the FDIC risk at about 550 billion dollars. Still a very big number.

The FDIC insures the depositors, so technically, if it happened the FDIC would be paying out mostly to the 99% not to the 1%

But that assumes that BoA just evaporated and there were zero recoveries.

Those are the numbers.

Most importantly though is the fact that the FDIC has risk ONLY if the DEPOSITORS sit still for this! Any BoA insured depositor who leaves their funds at BoA is complicit. By their inaction they are saying, in effect "I'd be happy to provide the capital for your derivatives book ... No worries ... I'm insured by FDIC!!!!!"

The ball is now in the depositors' court. They didn't ask for it. But the responsibility for 550 billion in FDIC risk has been thrust upon them. And it is now up to them to decide.

[MannyGoldstein]

51. Yes, but the taxpayers are left holding the bag for what the FDIC insures

So, by your numbers $500 billion would be taken from depositors and not reimbursed by taxpayers. Another $500 billion would be reimbursed to depositors by the taxpayers.

Recovery is a good point, but taxpayers will probably be last in line to recover assets - that seems to be the way it always is - and the losses could be staggering.

[econoclast]

55. As stated above, it's up to the depositors now

[WillyT]

49. K & R !!!

:kick:

[McCamy Taylor]

54. BofA steals a trillion in individual accounts to pay off huge European losses.

Say it that way and it makes more sense.

[Blaze Diem]

56. BOA figures thats about what Bank Transfer Day will cost them

If this intentional theft is allowed to take place without our govt stepping in on the side of the taxpayers.. then the current OWS will look like a kids birthday party - it will be the absolute straw that breaks the back. Be prepared

[Devil_Fish]

60. EVERY ONE MOVE YOUR MONEY AWAY FROM THESE VAMPIRE BANKS!!!! NT

[underpants]

61. Great summary and analysis

:thumbsup:

[Autumn]

68. Who in our government is allowing this?

This shit needs to stop K/R

[sarcasmo]

69. Making derivatives illegal would be the smart thing .