Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

JP Morgan and Goldman Sachs Trillions Deep In Derivatives or Dumbed-Down Reporting?

Stock-Markets / Market Manipulation Dec 30, 2009 - 12:10 PM GMT

By: Rob_Kirby

Stock-Markets

Best Financial Markets Analysis ArticleOn December 29, 2009 The New York Post [josh.kosman@nypost.com] published an article titled, Deep in derivatives, where scribe Josh Kosman ‘took-a-shot’ at explaining the ABSURDITY of the bind boggling derivatives positions amassed by financial behemoths such as J.P. Morgan Chase and Goldman Sachs.  In an attempt to explain how dangerously systemically-interconnected derivatives makes ALL banks, Kosman began;


“The amounts are so large that if the swaps and other derivative contracts the banks broker go bad because the parties on either side of the deal collapse, the banks could be in trouble.”

Kosman then goes on with some very superficial analysis of the latest Office of the Comptroller of the Currency’s, Quarterly Derivatives Report, attempting to scope out the magnitude of the excesses;

“As of Sept. 30, Goldman posted $42 billion in derivatives and had $115 million in assets.

JPMorgan brokered $79 billion in derivatives against $1.7 billion in assets as of Sept. 30.”

Finally, Kosman speaks of ‘a source’ close to Goldman who allegedly said or told him,

“ [the] numbers [in the Quarterly Derivative Report] include only Goldman Sachs [Commercial] Bank, and not the larger holding company Goldman Sachs Group, so the entire firm has less risk than it appears to in the OCC report. Goldman's investment banking is handled outside the federally insured Goldman Sachs Bank.

Factual Inaccuracies

First, Kosman states and characterizes the institutions involved in these derivatives trades as “brokers” when, in fact, they participate as PRINCIPALS. The amount of risk involved when one trades as a principal is materially larger than when one acts as a broker or agent.  Of course, if Kosman had bothered to read the rest of the Report, he would have known that these trade COULD NOT HAVE BEEN BROKERED because the report tells us there are empirically NO END USERS FOR THESE PRODUCTS:

source:  OCC Quarterly Derivatives Report, Pg. 9 of 33

Second, Kosman reports that J.P. Morgan and Goldman Sachs reported their outstanding derivatives positions as 42 and 79 Billion respectively.  THIS IS WRONG.  The real amounts are measured in TRILLIONS.  Maybe Mr. Kosman cannot conceive of the ABSURDITY of these institutions have proprietary positions in the TRILLIONS and thought it was a typo?

And finally, Mr. Kosman reported the derivatives holdings of J.P. Morgan and Goldman Sachs at the Commercial Bank level while citing “a source” close to Goldman who seemingly had knowledge of “larger positions” held at the Holding Company level.  Once again, if Mr. Kosman had actually read the OCC Report, he would not have needed to obtain such information from “sources close to Goldman” – he would have spotted the aggregate derivatives reported at the Holding Company level in the same OCC Report on the very next page [Pg. 23]:

source: OCC Quarterly Derivatives Report Pg. 23
 
Putting aside the notion that Mr. Kosman “missed” the larger point that we actually get some visibility on the constituent parts of the derivatives reported at the Commercial Bank Level and we get ABSOLUTELY ZERO breakout on the TRILLIONS of AGGREGATES presented as a lump-sum at the Holding Company Level - I bring all of this up for another very good reason which seems to have escaped our beloved Mr. Kosman:  Namely, the ABSURD amounts of derivatives these financial behemoths are swinging around – absent ANY OBSERVABLE END USERS – are CLEARLY being used for the expressed purpose of controlling / rigging Interest Rates, Currencies as well as Metals and other Commodities Prices – for the simple reason that THERE’S NOTHING ELSE THAT IT COULD BE. 

The ABSURDITY of it all is so very clearly demonstrated in Mr. Kosman’s inability to grapple with the scope of the numbers in front of his own eyes – tens and hundreds of TRILLIONS not BILLIONS.

By Rob Kirby
http://www.kirbyanalytics.com/

Rob Kirby is proprietor of Kirbyanalytics.com and sales agent for Bullion Custodial Services.  Subscribers to the Kirbyanalytics newsletter can look forward to a weekend publication analyzing many recent global geo-political events and more.  Subscribe to Kirbyanalytics news letter here.  Buy physical gold, silver or platinum bullion here.

Copyright © 2009 Rob Kirby - All rights reserved.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Rob Kirby Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules