Sunday , 19 November 2017


Attn. Bank Depositors: What Happened in Cyprus Could Never Possibly Happen in the U.S. – Really?

“Follow the munKNEE via Facebook or Register to receive articles via our Intelligence Report newsletter (Recipients restricted to only 1,000 active subscribers)

Supposedly “insured” depositors in Cyprus thought there was nothing to worrybe-happy about until they woke up on Saturday with a haircut between 6.75% and 9.9% on their money in the bank. Today the American Banking Association reminded Americans that there is absolutely nothing to worry about when it comes to the sanctity of US deposits. [Really?] Words: 385; Table: 1

So writes Tyler Durden (www.zerohedge.com) in edited excerpts from his post entitled US Deposits In Perspective: $25 Billion In Insurance, $9,283 Billion In Deposits; $297,514 Billion In Derivatives. 

This article is presented compliments of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Durden’s post goes on to say in further edited excerpts:

ABA’s Message to U.S. Bank Depositors

[In its release the ABA issued the following – supposedly reassuring – statement:]

While the crisis in Cyprus is a real concern for depositors in Cypriot’s banks, it has no implication for depositors in U.S. institutions. Depositors in U.S. banks are insured up to $250,000 and no insured depositor has ever lost money in a bank failure. The U.S. banking industry has rapidly returned to health with strong earnings, lower losses and significant increases in capital.

The FDIC insurance fund has over $25 billion in reserves and the banking industry – which bears all the financial costs of supporting the FDIC – pays over $12.3 billion each year to assure adequate funding.

 Simply put, U.S. insured depositors are safe and their deposits are protected by a strong FDIC fund, a financially secure banking system and the full faith and credit of the U.S.

The Truth of the Matter

Sadly, it may be the case that the ABA is being just modestly disingenuous in its statement. Why? Instead of explaining it in detail, here is a snapshot that does more than thousands of words ever could.

Chart drawn to scale.

Sourcse: OCC, H.8

The $25 billion in touted deposit insurance is supposed to preserve and protect (granted not in their entirety) some $9,283 billion in total US deposits. A far bigger problem, however, is when one considers the “asset” side of the US banks’ ledger: remember deposits are unsecured liabilities and for US banks, sadly, over the counter derivatives represent the vast majority of “off the books” assets.

According to the latest OCC quarterly report, the total derivative notional outstanding of the top 25 holding companies is $297,514 billion, or nearly $300 trillion.

Conclusion

In other words there are 32 times more notional derivatives than there are total deposits, while the ratio of gross derivatives to deposit insurance is a [disconcerting]…11,900-to-1. With that, we hand it back to the ABA to comfort all US depositors that Cyprus could never possibly happen in the US.

 Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.zerohedge.com/news/2013-03-19/us-deposits-perspective-25-billion-insurance-9283-billion-deposits-297514-billion-de

Advertisement

Want to do Business in China?

We can establish your products there – we’ve already done it for others
Chinese market is 4x bigger than those of the U.S. and Canada combined
There is a major need for:
– pollution treatment/prevention equipment (water & air),
– disease detection/treatments (diabetes & cancers),
– green energy products (heating & power).
Visit Global Linkages and then contact us to discuss opportunities
We’re off to Beijing & Shanghai again this month

Related Articles:

1. Coming Derivatives Crisis Will Cause Panic in Financial Markets With Horrific Consequences – Here’s Why

panic

Wall Street has been transformed into a gigantic casino where people are betting on just about anything that you can imagine.  This works fine as long as there are not any wild swings in the economy and risk is managed with strict discipline but, as we have seen, there have been times when derivatives have caused massive problems in recent years – the government bailout because of derivatives at AIG; the failure of MF Global because of bad derivatives trades; and the 6 billion dollar loss that JPMorgan Chase recently suffered because of derivatives – [but the next] derivatives panic that comes will destroy global financial markets, and the economic fallout from the financial crash that will happen as a result will be absolutely horrific. [Let me explain my contention.]  Words: 1485

2. America’s Derivative Market is Unbelievably Huge & Totally Unregulated  – Take a Look at Which Banks Own How Much

Derivatives #2

The derivative market has blown a galactic bubble…and since there is literally no economist in the world who knows exactly how the derivative money flows or how the system works,…we really don’t know what will trigger the crash, or when it will happen, but considering the global financial crisis this system is in for tough times. [If, and when, it happens it] will be catastrophic for the world financial system. If you ever wanted a tool to help yourself or others visualize the staggering magnitude of US debt and derivatives, the infographic below is a good one to share. It visualizes who those 9 too-big-fail banks are, what their derivative exposures are, and what scandals they’ve been lately involved in. Words: 1915

3. Derivatives: Their Origin, Evolvement and Eventual Corruption (Got Gold!)

The term “derivative” has become a dirty, if not evil word. So much of what ails our global financial system has been laid-at-the-feet of this misunderstood, mischaracterized term – derivatives. The purpose of this paper is to outline the origin, growth and ultimately the corruption of the derivatives market – and explain how something originally designed to provide economic utility has morphed into a tool of abusive, manipulative economic tyranny. Words: 3355

4. Alf Field: Will Derivative Losses Be Black Swan Event Propelling Gold to $4,500?

Gold_intro

To achieve the EW target of $4,500/ozt. on the next upward move [in gold that I laid out in my article Alf Field: Correction in Gold is OVER and on Way to $4,500+!] will require something to trigger substantial new buying of gold. What could that event be? By definition, it will be a surprise to all market participants, a “black swan” event. That doesn’t prevent us from making a guess [and] one likely area from which problems could emerge…[would be] derivatives. [Let me explain why that might well be the case.] Words: 591

5. The Government May Soon Force You to Include U.S. Treasuries In Your IRA and/or 401(k) Plan

IRAs

There are huge amounts of money in the IRA ($3.5 trillion) and 401(k) ($5.1 trillion) retirement plans in the U.S. (another $9.9 trillion in assets held elsewhere) according to a recent Investment Company Institute study which makes it very tempting for government to try and get at it. [While] the government may, or may not, tax the money, they may force you to include a sizable percentage of the retirement assets in your IRA and/or 401(k) in U.S. Treasury securities, which may be among the worst investments in the years ahead as interest rates go up and price inflation eats away at the buying power of those IOUs. [Let me explain.] Words: 802

6. U.S. Continues to Lead the World — In Debt!

10623945-the-word-debt-in-the-american-flag-colors-americans-in-debt

The USA continues to decline economically relative to some parts of the world, most notably those in Asia yet we still lead in many areas. Unfortunately being number one is some categories is not a good thing and our level of debt is one of these areas. In fact, our debt burden leads the world. [A look at the charts below illustrates that all too clearly.] Words: 272

7. Will U.S. Gov’t Eventually Mandate that ‘x’ % of IRA/401K Funds Be In Treasuries?

IRAs

The notion of government raiding personal retirement accounts for funds may seem extreme…but other governments have done it. Argentina did in 2008, Ireland has indicated it might [and the U.S. might well do so as it’s] financial crisis worsens. This article puts forth reasons why it is possible they would undertake such a grab or ‘confiscation’ of your retirement accounts and how they likely would go about implementing such an event. Words: 700

8. Is Your IRA or 401K a Target of Government Appropriation?

Will the laws and rules in place to protect individuals in their attempt to set something aside for retirement be safeguarded by the representatives elected to advocate for them in Washington? Will the principles and moral integrity of the political class keep them from appropriating the trillions of dollars held in 401k’s and IRA’s? I’m not so sure! Words: 1207

9. It’s in Your Own Best Interest to Learn Just How Bad America’s Debt Problem Is – So Read On!

crisis

America is quickly approaching a catastrophic economic collapse. Before you dismiss this as hype or paranoia, take a few minutes to review the facts … The numbers don’t lie

10. A Hypothetical Look At What Could Possibly Be In Store for the U.S.

dollar down drain

The economic condition of the country continues to decline toward its rendezvous with an, as yet, unknowable catastrophe. As economic and political matters become more desperate, so will what the government considers acceptable. If a debt default cannot be engineered via continuous inflation, it will occur via a direct repudiation of obligations or a quasi-surreptitious one like the hypothetical one presented in this article…a look (not a prediction) at a series of not improbable events that could develop [and which] would change our economic world overnight. Viewed from this perspective, I don’t think such a move or something approximating it is out of the question. Words: 1300

11. Will May 2013 Be the End of the Road for the U.S.?

Financial_Armageddon_3

Anybody who thinks the U.S. is in a so-called recovery isn’t listening to economist John Williams. He expects a negative reaction to the U.S. dollar in the next 3 or 4 months leading up to the mid-May deadline for Congress to get the budget and debt ceiling under control. If they do not get their financial house in order by then he believes “it will be the end of the road….as they are not going to have another opportunity”.

12. U.S. Debt 101: If the U.S. Were A Stock Few Investors Would Own It – Here’s Why

10623945-the-word-debt-in-the-american-flag-colors-americans-in-debt

There has been a lot of media coverage about the United States’ debt issue these days. Why should we care? Because as U.S. citizens, we all own stock in this “company” called the United States of America (let’s say the ticker symbol is USA). We purchased this stock through the various taxes we pay every year (income tax, payroll tax, corporate tax) and we receive dividends through the various benefits we receive every year (security provided by defense budget, Medicare/Medicaid benefits, Social Security benefits, etc.). This article attempts to explain the U.S. national debt in simple layman’s terms by analyzing the United States and its debt issue as if it were a stock investment. Words: 1929; Charts: 5; Tables: 1

One comment

  1. Tip of the hat to Tyler Durden for saying what the ABA did not!

    Yet another reason to sign up for munKNEE daily newsletters…
    Thanks