The Next Crisis Is The Mother Of All Counter-Party Risks (Part 2)

[This is a long article – part valuable information and part rant. -Bob]

By Gijsbert Groenewegen – Re-Blogged From http://www.Gold-Eagle.com

In Part I I explained the counter-party risk that is all around us – and will come to the fore in the next financial crisis. In this second part I reflect on the rescue operations of the Fed following the 2008/2009 recession and the following QEs and ZIRP policies that have led to diminishing returns and that will ultimately weaken the US dollar: the biggest counter-party risk of all counter-party risks.

Addendum 8 – CDS, Credit Default Swaps. Ultimately it should be considered that when we encounter these systemic events that it will impact the underlying currency.  For example when the pension underfunding gets so problematic that the Government has to print more money to meet and rescue the obligations the counter-party risk will be reflected in the devaluation of the currency or the loss of purchasing power, the goods that you can buy with the same amount of nominal money will tumble.

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The Preservation of Perks, Privileges, and Power: The PPPP

By Gary Christenson – Re-Blogged From Deviant Investor

The picture is clear: The Powers-That-Be in Wall Street and Washington, the “Deep State,” military contractors, Big Pharma, Big Ag, The Federal Reserve, Mainstream Media, the DNC and RNC and others want to maintain the transfer game…because the following will continue:

  1. The transfer of wealth to the political and financial elite
  2. Payoffs to the President, Congress, and lobbyists
  3. Military adventures – very costly adventures – must be maintained to feed the massive military-industrial-security complex
  4. Ever increasing debt
  5. Power and influence over institutions and other countries

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Here Comes The Next Trillion-Dollar Bailout

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

As boxers like to say, it’s the punch you don’t see that knocks you out.

In a world where a growing part of the financial system is hidden from view and excluded from official statistics, those are words to remember. A couple of examples from the 2008-2009 crisis:

  • Fannie Mae and Freddie Mac were private companies through which the federal government funneled a lot of mortgage debt and to which it granted a kind of de facto backing, though it asserted confidently that this would never be needed. When the real estate bubble (inflated in large part by Fannie and Freddie) popped, government — read taxpayers — had to assume responsibility for pretty much the whole $10 trillion US housing sector.
  • Over-the-counter derivatives are largely hidden by bank and hedge fund accounting tricks, but when that market blew up in 2008 it turned out that AIG, the world’s biggest insurance company, had enough of the instruments to bring down the whole financial system. The result was another huge bailout with taxpayer cash.

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