I spent this morning trying to parse through a long and very detailed article over at ZeroHedge. It’s one of them devilishly-long articles with hardly any pictures at all and lots of big words (hyper hypothecation) that sound funny when you say them four times fast. It took me several passes through the article and I had to turn on my magic translator, but it confirms in real big words a tragic reality I see every single day…..THE BANKING SYSTEM HAS CRASHED.
Foreclosure- The Intersection of International Finance and The Law (There’s a big wreck in the intersection)
How do I see it first hand every single day? Because the big shots of international finance are suing my clients in foreclosure and they cannot get a single thing right. Deustsche Bank, Bank of America, Chase….I see them every single day turning courtrooms into chaos. (Notice of Non-Reliance on Affidavit, Motion to Substitute Party Plaintiff, Motion to Correct Nun Pro Tunc) The biggest mess of them all is Bank of America, which has so much dark voodo and toxic sludge sloshing around that Satan himself is embarrassed….but I’m sure customer deposits are secure….right?
Anywhoo, back to the mess. All their cases are an utter disaster. They have in turn created chaos in our courtrooms which in turn are woefully underfunded, understaffed and unequipped to deal with the gigantic, steaming mess that has been dumped into them by the Wizards of World Finance.
(Maybe gutting the entire third branch of government and de-funding courts past the point where they are on life support was part of the grand plan of the brilliant minds that have been running this state for the last 18 years. Rick Scott is all hollerin that he wants to put Florida back to work again, but his boys Harri and Cannon and the rest of his gang have been hard at it for almost two decades and things ain’t doin so well.)
But I digress. Back to the Meth Addict in Vegas. A few months back, I met up with a meth addict in Vegas. He was a HOOT! Wow, what a good time we had…we stayed up for days shooting meth, drinking vodka and throwing chips down on every table we could find. But when I finally woke up a few days later, my pants were around my ankles, my shirt was ripped off and I was laying in a gutter way off the Strip behind Circus Circus. I stumbled to my feet, dusted myself off and realized we had run up two million dollars worth of charges on my American Excess cards, and I’d somehow managed to take out a home equity loan on my home back in St. Petersburg for $500,000. We apparently blew everything. $2.5 million dollars, just POOF! Gone.
Luckily though, my parents are benevolent types. They paid off my American Excess balance, redeemed my home out of foreclosure and paid off the balances. They propped me back up on my feet, got me all clean and fixed up and straightened out. Little did they know, I immediately went back to shooting meth and gambling! Immediately! And because they weren’t even looking, this time I doubled down on my crazy bets and meth…when I crash this time, my Amex bill is gonna hurt a whole lot worse than the last time.
But wait, this isn’t all about me and my sob story. Let’s talk about how the blue-blooded, white-shirted, buttoned up banking class lives…..(from ZeroHedge):
In an oddly prescient turn of events, yesterday we penned a post titled “Has The Imploding European Shadow Banking System Forced The Bundesbank To Prepare For Plan B?” in which we explained how it was not only the repo market, but the far broader and massively unregulated shadow banking system in Europe that was becoming thoroughly unhinged, and was manifesting itself in a complete “lock up in interbank liquidity” and which, we speculated, is pressuring the Bundesbank, which is well aware of what is going on behind the scenes, to slowly back away from what will soon be an “apocalyptic” event (not our words… read on).
Why was this prescient? Because today, Reuters’ Christopher Elias has written the logical follow up analysis to our post, in which he explains in layman’s terms not only how but why the lock up has occurred and will get far more acute, but also why the MF Global bankruptcy, much more than merely a one-off instance of “repo-to-maturity” of sovereign bonds gone horribly wrong is a symptom of two things: i) the lax London-based unregulated and unsupervised system which has allowed such unprecedented, leveraged monsters as AIG, Lehman and now as it turns out MF Global, to flourish until they end up imploding and threatening the world’s entire financial system, and ii) an implicit construct embedded within the shadow banking model which permitted the heaping of leverage upon leverage upon leverage, probably more so than any structured finance product in the past (up to and including synthetic CDO cubeds), and certainly on par with the AIG cataclysm which saw $2.7 trillion of CDS notional sold with virtually zero margin.
IT IS ABSOLUTELY ESSENTIAL that you keep reading this article over at ZEROHEDGE