Humor: Central bankster “watchdog” BIS warns of seizure at heart of financial clearing system despite “well meaning regulators”

They’re going to milk the public’s gullibility down to the last drop.   And the MSM is happy to cooperate.  It’s a hell of a business model.   But it’s gone beyond insulting.

Friends don’t let friends think this was all a terrible mistake.

The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain-reaction in the next crisis, the world’s top watchdog has warned.

Giant “central counterparties” (CCPs) that clear much of the $540 trillion (L428 trillion) nexus of derivatives are themselves vulnerable to failure in times of extreme stress.

This is a worry looming ever larger as rising US interest rates expose the weak links in global debt markets.

The Bank for International Settlements said in its quarterly report that the CCPs could cause “a destabilising feedback loop, amplifying stress.”

The implicit message is that well-meaning regulators may have made the financial architecture more dangerous by mistake….

The notional value of the derivatives cleared worldwide is 4.4 times world GDP, up from 2.8 times in 2008. JP Morgan alone has a $30 trillion book.

The BIS warned that regulators have inadvertently created a “CCP-bank nexus” — somewhat akin to the sovereign/bank doom loop in the eurozone — in which the two feed on such other.

The rotten apple contaminates the healthy banks. A fire sale of assets spreads contagion. Banks may be forced to hoard liquidity to protect themselves. The BIS said “balance sheet interlinkages” and what it calls the “CCP default waterfall” could unravel with “potentially system-wide effects.”

It is just one of many late-cycle pathologies highlighted by the Swiss-based watchdog, the bank of the central banking fraternity and the high priest of orthodoxy….

There are no “healthy banks”, all banks are bankrupt by design, that’s what fictional reserve banking is all about.   That’s why it’s unstable.   The whole structure is built on a foundation of deception.  Sigh.

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“The powers of financial capitalism had [a] far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences.”
— Quote from Caroll Quigley’s Tragedy and Hope, Chapter 20

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