23 Comments
User's avatar
⭠ Return to thread
baboon's avatar

Thanks again for the H/T 2ndSG. What the article doesn't go into much detail on is the enormous deleveraging that will take place in relation to rehypothecation.

This is a pretty decent article: https://www.thebalance.com/rehypothecation-investment-disaster-357232

What's going to happen is, instead of having one "bag holder" when the SHTF, there could be dozens, or hundreds, or thousands - and that's just for one asset/"asset"! Especially where assets have been rehypothecated dozens of times.

I can't think of a good example but maybe a casino goes bust and then every client who ever gambled there is on the hook for their debts would give you an idea.

As the author of the post accurately states, when you let criminals run profitable scams with no threat of punishment (the anarcho-tyranny I frequently refer to - anarchy for criminals, the rule of law with built-in-absurdities for the tax cattle) then you will never fix the problem and only get worse problems in future.

I know we all know that's a feature not a bug, but that's why I hate normies so much. If they stopped hiding behind their dislike of "conspiracy theories" and actually woke the hell up, we wouldn't be in this mess.

Let's call these people - bank CEOs, giant corporation CEOs, politicians, the global "elite" what they really are - a massive criminal gang who are above the law.

Expand full comment
2nd Smartest Guy in the World's avatar

worst rehypothecation is found in gold and silver. it's anywhere from 200:1 to 500:1.

but this is also a good thing to those that appreciate just how cheaply they are buying their metals for today.

Expand full comment
baboon's avatar

500:1...yikes.

Expand full comment
2nd Smartest Guy in the World's avatar

100%

Just received this from trading acct: URGENT DEADLINE: Regulators are trying to limit your ability to invest in leveraged & inverse funds

The timing is perfect given the crash to end all crashes is essentially here.

Expand full comment
baboon's avatar

Great, just in time for me to start trading my new system I just spent 200 hours creating...

I note in Australia where there seemed to be resistance to reducing leverage (unlike in Europe), they are now down to 100:1 on their Forex/CFD accounts.

In Europe it's much worse. The excuse of course is that the public need to be "protected" from themselves in case some idiots blow up their account by trading ludicrous position sizes.

Thank for the heads up, I'll keep an eye on this.

Expand full comment
2nd Smartest Guy in the World's avatar

Bernanke was warning about "cascading" from 3x leveraged ETFs. They know what is coming, and this is all for show.

Expand full comment
Tarn - mutual eye-rolling's avatar

Thanks for the heads up baboon.

(Maybe my comment needed some punctuation.)

Expand full comment
ErrorError