#Could Synthetic Assets turn the Debt Default into an Economic Boom? | Explore Tumblr posts and blogs

ehyeh-joshua · 4 years ago

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Understanding the coming 2021 Economic Crisis.

TL;DR - the banks and hedgefunds have been screwing the US economy over and merely repeating what happened in 2008 is a good outcome at this point, with the worst case scenario being the complete collapse of the United States Dollar, and with it the entire global economy.

It's not an accident that Bank of America and JPMorgan have both issued Bonds totalling $15 billion and $13 billion dollars - both record breaking amounts - at the same time Warren Buffet has sold 100% of his JPMorgan stock.

To explain why goes back into the history of Wall Street greed; for decades they have been targeting companies to short-sell their stock (where a share is borrowed and sold, and replaced later at the lower price, causing a profit of the sale of the original share minus the cost of the replacement share and the interest fees on the borrowed share, which can be more profitable than holding the share for the person being borrowed from) on a massive scale; the goal is to make the victim company into a worthless penny-stock, and then force the company into bankruptcy by not having enough liquidity to pay off things like toxic debt, default on issued bonds.

They will even do it to their own; this behaviour was what truly killed Lehmann Brothers and Bear Sterns - Wall Street made hundreds of millions of dollars shorting those two all the way to the ground. In total, they made well over a trillion dollars shorting businesses that went bankrupt as a result of 2008.

There are hundreds of public companies - especially brick and concrete building based companies - that are affected by this, right now, on the stock exchanges; they've been hit hard during the last year, and Wall Street is betting that they will fail between Covid and the shift to online retail.

Then the second side of the attack comes in - they will replace the old leadership with their own team and blame the previous team for all the problems, ride the short term boost in confidence, then control the collapse of the business.

And knowing that the business will go bankrupt makes it safe to do a much more risky and profitable version of short-selling - counterfeit short-selling.

The difference between the two is that in a normal short sell, there is a share that is actually borrowed from someone else in order to be sold; in a counterfeit short-sale, they get a friendly market-maker - a company with the authority to create counterfeit shares as a normal part of trading (make a million of these IOU shares, and fill them with a million real shares milliseconds later in order to create liquidity in a stock, which is hedged by the sale of calls and puts options) to create these counterfeit IOU shares.

They can do this because in the actual transaction, although the money transfers instantly the actual shares transfer on a T+2 settlement system (day of the trade, plus two days) - it's a relic of the old days when physical share certificates had to be moved around.

The IOU share is treated as a legal share - to all legal purposes, you own the share. This is not a "Contract for difference" arrangement, in which you are just betting on the stock going up; this IOU, this synthetic share, is a legal share that is meant to be replaced by the real share during the T+2 system. When it doesn't deliver, it is called an FTD; a 'Fail to deliver".

But it is a fake share - instead of there only being X shares in existence, there are now X+Y shares in existence. This devalues the stock due to increasing the supply.

This is why the news media is going on about meme-stocks - a bunch of 4Chan and Reddit "retarded apes" figured it out and YOLOed their savings on these stocks, and because they refuse to sell the stocks and have bought as many of these counterfeit shares as they can afford (and a few actual retards have bought more than they can afford) and now Wall Street has been caught counterfeiting at least 140% of the shares (the absolute minimum, based on SEC fillings for institutional ownership of GME stock, which necessarily does not include the retail investors) ever issued by GameStop. If you go through the SEC's published data on FTDs, you see that typically hundreds of thousands of shares have failed to deliver each day in the case of GameStop. Hundreds of thousands of fake shares that have been sold and are now trading on the market, in dark pools or sat in some Ape's account.

Now, GME is not going to crash the economy, and this is from someone who fully believes the hype about a million dollars a share not being a meme; there aren't nearly enough retarded apes to make it so big that the dollar will crash, although I do think that GME will temporarily cause the dollar to halve or drop to a third of present value before it all gets spent as apes pay taxes and buy Lambos and houses and continue to make the badly judged options bets that made r/WallStreetBets famous.

The real big nuke is that Wall Street has been shorting the US Treasury Bonds market. Worst case scenario is seven times more Treasury Bonds - especially the ten year Bond - are trading than were ever issued by the Federal Reserve. Best case scenario they've only managed to double the Bonds in existence.

To explain just how terrifying this is:

Imagine that you are a major bank. You need liquidity - you have customers in so many sectors that you have departments to track what departments you have covering different sectors of finance.

So, you use the Treasury Bond; they are backed by the government so they can't go wrong. You buy them when you have money, sell them when you need cash; these things trade typically in total values of trillions of dollars each day. The whole system works because Bank A borrows from Bank B to pay Bank C who owe a Bond to Bank D who need a Bond for Bank E who owe Bank A a Bond; all the time all the members stay afloat, they can play hot potato with the Bonds.

As soon as one goes down, the dominoes fall.

"But what on earth could take out a Bank?"

The Mother Of All Short Squeezes.

GameStop going boom to a thousand dollars a share might take out a single hedgefund, but the damage stops there. And back in January, $1k per share was a meme amount even to the most dedicated autistic retard ape. These days, the apes realise that the economy is as screwed as it was in 2008, and they are using GME to hedge against another global financial crash, which contributes to why they want millions - it's no longer about Lambos and YOLO options bets, but about making sure their families don't lose their homes when banks go boom and the housing market crashes because the bubble pops. Its about having support systems for people who will be left with nothing.

Back in January, apes thought that it was just Melvin Capital - a single, not particularly big hedgefund only worth ~$20 billion in Assets Under Management. Subsequently, they discovered how deep in this Citadel group are; a group of companies that is ultimately worth a trillion dollars and handles 46% of all trades on the New York Stock Exchange.

Citadel are backed by Goldman Sachs and JPMorgan. Bank of America is involved as part of their own short-selling position on GME.

When GME squeezes, the US stock market will crash as the Depository Trust Clearing Corporation margin call small fry like Melvin Capital, large players like Citadel and eventually major banks like Bank of America and JPMorgan. (Goldman Sachs have hedged their short position and will survive, the other two however...)

How do I know this?

Last week, the Biden administration appointed Gary Gensler - who oversaw the fallout from 2008 - to being the head of the Securities Exchange Commission; the organisation who regulates the US securities markets.

Six months ago, the Trump administration gave the US markets a respite on collateral to be deposited to be held to cover investments on margin.

The SEC has been kept up to date with the situation - once apes figured out that this was going to cause a 2008 style collapse they started sending it all in to the SEC; sure, they want Lambo and tendies, but they also want the economy to survive. They've watched The Big Short, and serveral times a day you'll see the Don't ****ing dance" quote cited because they've realised that they have discovered what Michael Burry found out back in 2005. They are terrified. I've had sleepless nights over the last month, and I'm long GME because I think it is the only hedge against the economic collapse that could be on it's way. I don't want to imagine what someone who knows about this stuff and isn't long GME is thinking.

What gives me hope is that the SEC are rapidly changing the rules - there have been three massive legal developments since I started following the situation - in order to contain the damage that can be done from GME going off. I believe that the SEC is coordinating with long institutional investors - particularly BlackRock and Fidelity - GameStop's leadership (who are pushing to turn the company around and need this dealt with so that they can move forward) crypto-currencies experts and the Federal government to ensure a situation where retail gets paid (roughly a hundred thousand Chinese people and a Chinese investment fund are long GME - the US government cannot afford to give the CCP the propaganda coup of betraying the principle of free markets, the US economy would never recover from the blow) and the system has a systemic crash this year and rebuilds much better now that a decades old criminal practice is gotten rid of and the shares system is converted to blockchain and instant settlement to make sure the factors that led to this disaster aren't repeated. I.e. I become a millionaire and retire at 28, buy the dip knowing that things are going to recover from a massive but temporary crisis.

A "normal" bad situation, where this does not completely worst nightmare wrong? I walk away from GME a billionaire, but a loaf of bread costs a million dollars.

Worst case? Well, the bit before Jesus' return in glorious victory is seven years of hell on earth, under an economy where no one can buy or sell without the beasts involvement. How you get that is you arrange a global financial crisis to bankrupt nations all over the world and make your centralised one world economy look like the saviour.

Whatever you do, don't rush to pull money out the banks - that only screws everything over guaranteed because if everyone has a run on the banks you immediately get a short squeeze on the Treasury Bonds, which nukes everything. If everyone pretends that life goes on as normal and the Fed gets away with giving Treasury Bonds to those who need them to complete their chains then only GME goes boom, and the economy survives, and therefore hundreds of thousands of people will not lose their jobs and houses. But they need GME to go boom so that they can use it as a cover story so that they can get away with covering up the Treasury Bonds problem.

As always, none of this is financial advice, and while I'm not a cat, I'm also not a financial advisor, and this is written by a guy who has 19 tickets on rocket built by self-proclaimed retarded apes knowing he only knows of one actual physicist among them, having YOLOed his savings on hope that his affordable investment won't lose value even in the event of 10,000% inflation.

This is going to be my last post on the subject, because frankly, I'm scared. I've seen the Cthulhuoid monster lurking in the depths, and I hope and pray I'm wrong.

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