Tuesday, May 28, 2013

US Bank Bail-In Averted Tuesday

By Jim Sinclair

The entire Western World banking system just missed the need for a bail-in by a hair's length.

The next crisis in finance in North America will be a product of the FASB, the Guardians of Auditing, allowing banks to value OTC derivative paper at whatever the bank wishes.

This is a camouflaged black hole loss unstated that Western Banking system deposits could fall into to disappear partially or wholly, made up of your deposits.

Washington made moves to override the CFTC, mandating proper valuations which the FASB has run away from.

Had the banks been required by the CFTC to value these derivatives at anything resembling a real market (there isn't any markets for the legacy OTC derivatives of 1991 to 2008), we would have had another banking crisis in the USA on Tuesday after Memorial Day.

The USA just missed another banking crisis by a hair's length.

Next time it will be closer.

If the banks had to realize the real loss in this paper, now valued way above real worth, facing that loss would vaporize the bank's entire capital, impacting the next line of financial defense which is the funds of the depositors, seriously reducing to totally wiping out your deposits.

This distance between the bail-in of Cyprus and of the entire Western financial world stands on the question of honestly valuing OTC derivatives or not lying about the value of the legacy paper banks are carrying.

This is the real PONZI of not just the century but all written history in finance.

The real number of notional value of OTC derivatives outstanding is not $700 trillion but rather over a quadrillion as it stood and was reported by the BIS printed hear before the BIS reduced the number to $700 trillion by adopting a new computer program for valuation named "Value to Maturity," a total cartoon.

We, the entire Western Financial World, are a bankruptcy just waiting to happen.

Had the CFTC implemented this regulation before it's alteration, which is in fact a cancelation, you would have been bailed-in.

Without this cancellation of this standing regulation, the USA would have had to have Bail-In Tuesday.