By Pam Martens and Russ Martens: February 29, 2024 ~
On Tuesday, the Vice Chair for Supervision at the Federal Reserve, Michael Barr, delivered a speech at a risk management conference in Manhattan. Barr’s objective was to convince conference attendees that the Fed has its eye on the ball when it comes to Wall Street mega banks and their counterparties who are sitting on the opposite sides of derivative trades totaling tens of trillions of dollars. (Yes, trillions.)
The most illuminating and dangerous elements of Barr’s speech are what he didn’t say.
To remind attendees of what could happen if counterparty risks were not managed properly, Barr cited Long Term Capital Management (LTCM) and Archegos Capital Management.
LTCM was a hedge fund stocked with the so-called “smartest men in the room,” including two Nobel laureates, who fed mathematical formulas into computers that generated trades using astronomical levels of leverage. Of course, this resulted in the brainiacs blowing up the firm in the fall of 1998 during the Russian debt crisis, putting their counterparties – the big trading houses on Wall Street – at grave risk. The New York Fed had to corral the big boys on Wall Street into its conference room and hammer out a multi-bank bailout of the teetering hedge fund.
What happened at Archegos can best be summed up with our headline of 2021: Archegos: Wall Street Was Effectively Giving 85 Percent Margin Loans on Concentrated Stock Positions – Thwarting the Fed’s Reg T and Its Own Margin Rules.
LTCM occurred in 1998, before Sandy Weill, the Bill Clinton administration, Robert Rubin, the New York Times and the Federal Reserve had ushered in the most dangerous banking era in U.S. history by repealing the Glass-Steagall Act and allowing the trading casinos on Wall Street to merge with giant, federally-insured, deposit-taking banks. This explosive situation continues to this day, as do the never-ending Fed bailouts.
The biggest explosions in U.S. banking history from derivatives and insolvent counterparties were, of course, neither LTCM or Archegos. They were Lehman Brothers and AIG – both of which owned federally-insured banks at the time of their demise in 2008, thanks to the repeal of the Glass-Steagall Act in 1999. Lehman Brothers filed for bankruptcy on September 15, 2008. The U.S. government seized control of AIG the following day and “made over $182 billion available to assist AIG between September 2008 and April 2009” according to a report by the Government Accountability Office (GAO). $90 billion of the $182 billion went in the front door of AIG and out the back door to pay 100 cents on the dollar on credit derivative trades that had been made between a dodgy unit of AIG and the major trading houses on Wall Street.
According to documents released by the Financial Crisis Inquiry Commission (FCIC), at the time of Lehman Brothers’ bankruptcy it had more than 900,000 derivative contracts outstanding and had used the largest banks on Wall Street as its counterparties to many of these trades. The FCIC data shows that Lehman had more than 53,000 derivative contracts with JPMorgan Chase; more than 40,000 with Morgan Stanley; over 24,000 with Citigroup’s Citibank; over 23,000 with Bank of America; and almost 19,000 with Goldman Sachs.
Below is a share price chart of what derivatives contagion looked like on Wall Street in 2008.
So why was Michael Barr not talking about 2008, Lehman Brothers, AIG or the insanely interconnected trading houses on Wall Street in his speech on Tuesday?
It’s because, as we reported on February 13, Barr has allowed five Wall Street mega banks to hold $223 trillion in derivatives today, 83 percent of all derivatives at 4,600 banks in the U.S.
For more than two decades, both Republican and Democratic administrations in Washington have shown a sycophantic subservience to tolerating the catastrophic level of derivatives at the Wall Street mega banks while simultaneously allowing them to own federally-insured, taxpayer-backstopped commercial banks.
This sycophantic tolerance has existed despite repeated warnings from academics and federal researchers. As far back as 2016, researchers have been sounding the alarms on counterparty risk and the failure of the Fed’s stress tests to properly measure that risk.
In a report issued in March 2016 by the Office of Financial Research (OFR), a federal agency created under the Dodd-Frank financial reform legislation of 2010, the OFR brought the illusory nature of the Fed’s oversight of counterparty risk into focus.
The OFR researchers who conducted the study, Jill Cetina, Mark Paddrik, and Sriram Rajan, found that the Fed’s stress tests are measuring counterparty risk for the trillions of dollars in derivatives held by the largest banks on a bank by bank basis. The real problem, according to the researchers, is the contagion that could spread rapidly if one big bank’s counterparty was also a key counterparty to other systemically important Wall Street banks. The researchers write:
“A BHC [bank holding company] may be able to manage the failure of its largest counterparty when other BHCs do not concurrently realize losses from the same counterparty’s failure. However, when a shared counterparty fails, banks may experience additional stress. The financial system is much more concentrated to (and firms’ risk management is less prepared for) the failure of the system’s largest counterparty. Thus, the impact of a material counterparty’s failure could affect the core banking system in a manner that CCAR [one of the Fed’s stress tests] may not fully capture.” [Italic emphasis added.]
In Barr’s speech on Tuesday, he stated that “…alongside this year’s stress test results, we will publish the aggregate results of several exploratory analyses, including analysis of the resilience of the globally systemically important banks to the simultaneous default of their five largest hedge fund counterparties.”
But according to an OFR study released in July 2021, it’s not hedge funds where banks have the largest counterparty risk. It’s corporations.
For just how long this insidious behavior between the Fed and the Wall Street mega banks has been going on, we suggest reading the seminal book on the subject, Arthur Wilmarth’s Taming the Megabanks: Why We Need a New Glass-Steagall Act.

By Pam Martens and Russ Martens: February 13, 2024 ~
According to the Financial Crisis Inquiry Commission (FCIC), derivatives played a major role in the financial crash of 2007 to 2010 in the United States, the worst financial crisis in the U.S. since the Great Depression of the 1930s. The FCIC wrote in its final report: “…the existence of millions of derivatives contracts of all types between systemically important financial institutions — unseen and unknown in this unregulated market — added to uncertainty and escalated panic….”
Americans believed that the Dodd-Frank financial reform legislation of 2010 would fulfill its promise of reining in concentrated risks like derivatives. It did not. (See our report from 2015: President Has His Facts Seriously Wrong on Financial Reform.)
According to data from the Office of the Comptroller of the Currency (OCC), the regulator of national banks, as of March 31, 2009, five bank holding companies held $277.57 trillion in derivatives (notional/face amount). At that time, according to the FDIC, there were 8,249 federally-insured commercial banks and savings associations in the U.S. but just five bank holding companies held 95 percent of all derivatives at all U.S. banks. Those financial institutions were: JPMorgan Chase, Bank of America, Goldman Sachs Group, Morgan Stanley and Citigroup.
Now flash forward to the most recent report from the OCC for the quarter ending September 30, 2023. According to that report, those same five bank holding companies hold $223 trillion of the $268 trillion in derivatives held by all banks in the U.S., or 83 percent.
Equally alarming, those same five bank holding companies control 96 percent of the most dangerous form of derivatives – credit derivatives. The five bank holding companies account for $5.8 trillion in credit derivatives versus $6 trillion in credit derivatives for all banks in the U.S.
The Federal Reserve secretly funneled $16 trillion in cumulative loans at below-market interest rates to prop up the Wall Street casino banks from December 2007 through June of 2010, in no small part because of the systemic contagion that spread from their concentrated positions in derivatives.
To prevent a replay of the Wall Street mega banks blowing themselves up as they did in 2008, federal banking regulators in July of last year released a proposal that would impose higher capital rules on just 37 banks (out of the 4,600 banks in the U.S.). The proposed new capital rules would impact just those banks significantly engaged in derivatives and other high-risk trading strategies.
The backlash has been fierce from Wall Street’s mega banks, with the banks even running television ads painting a bogus and distorted picture of what the capital increases would do.
Another major area of concern is who is on the other side of these derivative trades with the mega banks – their so-called “counterparty.”
According to federal researchers, there are both mega bank counterparties as well as “non-bank financial counterparties” – which could be insurance companies, brokerage firms, asset managers or hedge funds. There are also “non-financial corporate counterparties” – which could be just about any domestic or foreign corporation. To put it another way, the American people have no idea if they own common stock in a publicly-traded company that could blow up any day from reckless dealings in derivatives with global banks.
Wall Street has a history of blowing up things with derivatives. Merrill Lynch blew up Orange County, California with derivatives. Some of the biggest trading houses on Wall Street blew up the giant insurer, AIG, with derivatives in 2008, forcing the U.S. government to take over AIG with a massive bailout.
According to documents released by the Financial Crisis Inquiry Commission, at the time of Lehman Brothers’ bankruptcy on September 15, 2008, it had more than 900,000 derivative contracts outstanding and had used the largest banks on Wall Street as its counterparties to many of these trades. The FCIC data shows that Lehman had more than 53,000 derivative contracts with JPMorgan Chase; more than 40,000 with Morgan Stanley; over 24,000 with Citigroup’s Citibank; over 23,000 with Bank of America; and almost 19,000 with Goldman Sachs.
We are asking our readers to do their part to stop Wall Street mega banks and their legions of lobbyists from gutting the proposed capital rules. Please contact your U.S. Senators today via the U.S. Capitol switchboard by dialing (202) 224-3121. Tell your Senators to demand that banking regulators hold firm on the stronger capital rules for the casino banks on Wall Street.

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Hi y'all....after seeing ringing bells' post on Nomura AND seeing the new bit on Norichunkin, I felt like posting what woulda been my notes for a fully fleshed out post on Japan's lost decade and how it might have related to Nomura and its growing push for risk and CLOs., as well as 2 mini adds to the end about Norichunkin per the WS OP find.
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https://preview.redd.it/3ku1cmvfnw7c1.png?width=1472&format=png&auto=webp&s=9efac61e02afc65f75b828e43a851380d9e93986
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This never became a full post, so it's bit scatterbrain but hopefully there's some useful info thus far:
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https://preview.redd.it/sey64vjgnw7c1.png?width=1400&format=png&auto=webp&s=652eb182a653e5f8d26ba276296f7d4f2cec3b17

1. Meet Japan

Japan is the world’s 3rd largest economy (last I checked). And in a world of super low interest rates, you go yield chasing.
One of the sexy places to go yield chasing are CLOs or collateralized loan obligations. And CLOs were almost approaching $1 trillion globally in the run-up to the infamous reverse repo spike.
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https://preview.redd.it/3ouyhjxhnw7c1.png?width=1354&format=png&auto=webp&s=1d80a48ec39aaebe7673f1843bb2e0f84d4bb6cf
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Wait CLOs? Where have I (kinda) heard of these before?
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hmmm

2. CLOs

Oh yeah, that's right even the fucking end of the Big Short said that things like CLOs were literally just CDOs in new makeup.
But anywho, back to yield-chasing. Here’s a crypto metaphor. Just like in most things in life, high risk = high rewards. Sure, you might not get…but…
At the time of the writing of this post, you might not be able (or have been able) to stake your Loopring (LRC). When you stake, you basically lend your Loops to earn money. Let’s start when LRC starts staking, they have very low interest, like 1% every day, or $1 every 24 hours.
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https://preview.redd.it/t9rrlq4lnw7c1.png?width=1288&format=png&auto=webp&s=8927f8421db1dec5b7299ef3e905378c8cbdb61a
That won’t be NEARLY as appetizing as some shitcoin promising a relative METRIC FUCK TON more for you buying their shitcoin instead. THAT’S “yield-chasing”.
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In the past, the Bank of England had warned about these CLOs (despite lower exposure than Japan). In August 2021, Japan’s NHK World News reported on everyone's growing concern.

“The ECB's worries aren't limited to leveraged loans. Financial products which are created based on these loans are another concern. Banks are pooling and securitizing these loans into "collateralized loan obligations" (CLOs). Like the loans they're based on, CLOs offer investors high yields. The market has been ballooning globally, nearing the one-trillion-dollar milestone, according to JPMorgan Chase & Co…

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Important to note, though, is that CDOs were pooled and securitized numerous times, making them more complex than CLOs, which only endure the process once.
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https://preview.redd.it/qx0437zlnw7c1.png?width=1348&format=png&auto=webp&s=d8e36936940d3964ed7979914619714e5b8f2c58

3. CLO Ratings

How CLOs are rated is another cause for concern. Most leveraged loans are rated as below investment grade, at BB or B... but once they're packaged into CLOs, over 60% are given the safest rating of AAA. The simple task of combining them raises their assessment on the premise that it leads to risk diversification. However, everyone doesn't see things that way. Why?
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"Of the estimated 3,000 leveraged loans that are securitized, just 250 account for half of the total value of all CLOs," analyst Shirota says.”

Yes, you heard that right. At the time of Shirota’s comments, just a little over 8% accounted for all the fucking weight of securitized CLOs mentioned.
Only further crazy fuck shit:“Many banks have large holdings of CLOs, so in effect, they own the major leveraged loans – which are rated at less than investment grade – packaged in the products.”
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Sound familiar everyone?
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https://preview.redd.it/9rhimx0snw7c1.png?width=1366&format=png&auto=webp&s=02bfba841465a3786eaa5bd7d05f3c31202b0ca6
In July 2020, experts warned Japanese banks of default risk in their CLOs. Back then, the secondary market was showing there weren’t as many buyers, but Japanese banks said “is ok bby, these r AAA they literally can’t go tits up”.
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https://preview.redd.it/sftjckhtnw7c1.png?width=1360&format=png&auto=webp&s=b8258e3f0261358ab0a79acf21002f697ab39e73

4. BOJ on Dumpster Fire Duty

The Bank of Japan told S&P Global that 13 big Japanese banks almost TRIPLED outstanding CLO holdings between March 2016 and–you guessed it–-September 2019. Japan’s central bank said in 2020, that Japanese banks held nearly 18% of the global CLO market!
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Pictured: bank of japan
They also AGAIN added “don’t worry your sweet giblets bby, these r AAA they PROBABLY can’t all go tits up”. Japan’s CLO’s are 99+% AAA vs. the US (77%) and UK (50%). Sound completely legit!
Now here’s the problem: analysts argued that Japanese investors though, are likelier to hold it to maturity i.e. potential bagholding, especially as post-pandy times continued and this all runs the risk of changing their ratings from AAA and closer to dogshit. In which case some experts warned Japan may try to head for the exits on their “AAA” CLOs.
Among the biggest holders that we saw in the charts above, Norichunkin is balls deep in CLOs. In May 2020, Norichunkin pinky promised it’d walk back from CLOs, especially as ‘There is always a bankruptcy risk for “borrowers of the underlying loans.” ‘
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https://preview.redd.it/u79uxurynw7c1.png?width=1298&format=png&auto=webp&s=f135d6ad16a2a7089da905a7a048a077898a3607
And despite Norichunkin's presence on the CLO stage in terms of percentage, there is a pivot here. Especially given the fact that it seems there is a wobbly base underneath Japan's uptake on CLOs.
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https://preview.redd.it/o0svdmm0ow7c1.png?width=1342&format=png&auto=webp&s=6d9574e1974b08768ec49caa5ea7cf1e2fe72508

5. Fox in the Henhouse

Surprise fucking surprise , Nomura’s CEO–a huge ETF fan btw–joined the Bank of Japan board in March of 2021, only months after getting their Instinet burst during the "sneeze" and a little over a year after getting some sweet stateside bailout money in Sept 2019.
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https://preview.redd.it/snmj17m1ow7c1.png?width=1630&format=png&auto=webp&s=f2a6ab6f77b4a1d0b1ac22b8be8d72c278be2c03
Now this might me useful information, especially relating to CLOs. Often times, tricky investments will be pegged with floating rates, such as the CLOs that Norichunkin enjoys:

"Risky assets like junk bonds, leveraged loans and CLOs usually have floating rates. That means that if central banks normalize policy, the businesses borrowing money will have to pay back more interest. This could significantly increase the possibility that the firms with low credit ratings would default."

It could also relate to the finance agreements, or covenants that tie into these types of sign-ups:
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"When making financing agreements, the lender and the buyer agree to rules called covenants. There are two types: maintenance covenants and incurrence covenants. The former requires routine checks. The latter is laxer, having fewer restrictions on the borrower and fewer protections for the lender. 80% of leveraged loans only have incurrence covenants. That means banks are in a tricky situation. Should something trigger a market crash, a large number of leveraged loans could default, and banks could be hit big time."

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“Kiuchi also doesn't believe banks are shouldering excessive risk. However, he has a darker assessment concerning other institutions. "Should we have defaults in high-risk assets, the biggest losers would likely be nonbanks," he says, citing the results of a stress test by the International Monetary Fund.

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In a scenario of a price shock similar in size to that of the global financial crisis, the world's hedge funds would lose as much as 41% of their assets based on their exposure to high-risk assets, according to the IMF's Global Financial Stability Report. Mutual funds and ETFs would follow with 39% and asset management firms with 25%. Banks would shed a mere 10%.”

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\"Investment banks are gearing up for a marked rise in Japanese fixed-income trading volumes as focus intensifies on whether the Bank of Japan is set to ease its vice-like grip on markets.\"

6. Echoes

It’s interesting that Nomura has come up in discussions between CLOs (in which Norichunkin is balls deep in) as well as the Instinet story.
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In Dec. 2018, Nomura hired ex-RBC Head of CLO Trading Florian Bita. The 15 yr. vet would lead Nomura’s CLO Origination/Syndication in the Americas, to “...grow Nomura’s primary CLO business…and develop a consistent pipeline of new issues and refinancing transactions.”

“At Nomura, the question of whether the bank fell down on client due diligence is especially acute after it fired risk and compliance professionals in the United States in 2019. One of the sources familiar with the matter linked those cuts to risks the bank took with Archegos.”

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Are you bily boy?
Interestinggggg…so they fucking fired a shit ton of their risk and compliance professionals in 2019…just before that infamous repo spike in the markets as well as around the time that they were in their dealings with Archegos.
Remember, in Sept. 2019, Nomura was the BIGGEST recipient of Fed’s “get out of money-jail free” card with $3.7 TRILLION thrown at it like a nubile stripper. This happened around the same time the overnight repo rate went six to midnight like an SEC lawyer on Pornhub.
I tried looking at what their derivatives looks like, based on WSOP figures as well as their own documents. Here’s what WSOP/I found:
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September 30, 2017: $10 billion derivatives written/sold, $62 billion derivatives bought/sold

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March 31, 2018: $8 billion derivatives writ ($10B protec?), $111 b derivatives guaranteed/bought

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September 30, 2018: $12 billion derivatives written/sold, $37 billion derivatives bought/sold
March 31, 2019: $14 billion derivatives written/sold, $97 billion derivatives guaranteed/bought
September 30, 2019: $15 billion derivatives written/sold, $48 billion derivatives bought/sold
March 31, 2020: $20 billion derivatives written/sold, $109 billion derivatives guaranteed/bought

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https://preview.redd.it/g674kfcbow7c1.png?width=4313&format=png&auto=webp&s=d60883fe7cab527d4302fc8109829fc554e81010

September 30, 2020: $12 billion derivatives written/sold, $50 billion derivatives guaranteed/buy
March 31, 2021: $8 billion derivatives written/sold, $42 billion derivatives guaranteed/bought
September 30, 2021: $7 billion in derivatives written, $41 billion derivatives guaranteed/bought

In the span from Sept. 2017 to 2021, some interesting things that stick out are the fairly low derivatives bought/sold in 2019, but their 2nd highest numbers showed up in early March 2020. This could be attributed to the early pandy financial crash, or their repo shit.

7. Archegos, Nomura and Leverage

Recall most of the leverage given to Archegos was by Credit Suisse AND Nomura, through contracts for difference (“I sell it to you now with an IOU, buy it back later but cheaper”) and swaps. Archegos had Nomura as one of its prime brokers with CS (alongside Morgan, Jefferies, Wells Fargo, Deutsche and UBS to a lesser extent).
On March 27, 2021, Nomura pulled some phone tag shit with these other brokers to talk Archegos fucking up.
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“Archegos then exited the call and its prime brokers remained on the line. The possibility of a managed liquidation without Archegos was discussed, whereby Archegos’s prime brokers would send their positions for review to an independent counsel, government regulator, or other independent third-party, who would freeze holdings for the entire consortium when the aggregate concentration reached particular levels, and give the lenders a percentage range within which they would be permitted to liquidate their overlapping positions…Ultimately, several banks including Deutsche Bank, Morgan Stanley, and Goldman determined that they were not interested in participating in a managed liquidation, while CS, UBS, and Nomura remained interested.

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https://preview.redd.it/01swpsbfow7c1.png?width=800&format=png&auto=webp&s=868ec99814d0adff46c33cd5bbb617ab93b37206
Can anyone legitimately answer why CS, Nomura and UBS were the interested parties, while everyone else was not?
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Perhaps this helps. While Nomura got some money back, as of this year it lost nearly $3 billion total from Archegos’ blowup (compared to CS’ 5.5 B). UBS lost nearly $800 million, while fellow CLO fan Mitsubishi LFJ lost $300 million.
And don’t forget that Nomura had connects to Hwang’s Tiger Asia back in the day. They wanted to run it back with Hwang like it was their ex hitting them up at 3 AM with a “u up?’ text.

"It was 'They paid their fines, everything's settled ... they are open for business'" said a former Nomura employee with knowledge of the revived relationship. "It was like 'OK ... what are you looking to do?'"
“I’m not afraid of death or money. The people on Wall Street wonder about the freedom that I have," Hwang said in a video posted by his foundation in 2019. "Ultimately, the most important thing is the Bible."

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https://preview.redd.it/nxtrsohgow7c1.png?width=1440&format=png&auto=webp&s=dc45daaa060a2511c3ef966c25b8d7049b47fff1
Nomura still has its dreams despite these fuckups:
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“[Archegos] has rekindled tough questions about whether Nomura has what it takes to achieve its goal of breaking into the top league of global investment banks by expanding in the United States…
Before Archegos' collapse, Nomura had been on track for record annual profit, bolstered by a buoyant U.S. trading business. That was set to have been a hard-fought victory in its decade-long, stop-start efforts to successfully expand outside Japan. …Prior to its collapse, Archegos had grown to become one of the ten most profitable clients for Nomura's U.S. operations, people familiar with the matter have told Reuters, adding that the bank had seen increased business with Hwang as a strategy to win more business from other large U.S. hedge funds.”

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What I had originally wanted to arc a lot of these little pieces into a bigger piece perhaps was this: the existence of Japan's lost decade and negative interest rates meant yield-chasing was the only way that Japan and many of these firms could survive. My theory (shared with many of you), was that as Japan faces pitiful growth, they loaded up on risky af shit including these CLOs in search of things to offset their low interest rates. Its your guess being as good as mine how Instinet might factor in, but this is what I saw from my CMBS sided view.
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One last fun fact: In Oct. 2021, Nomura asked the SEC pretty plz if it can not have such harsh capital requirements. This was weeks after it reported on Sept. 30th that it had upped its puts on GME.
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https://preview.redd.it/wweiv7bhow7c1.png?width=1472&format=png&auto=webp&s=d572391e2f50932152840d28ccdca07ec9b4e69e

8. Dr. Burry Revisited

84 years ago, Alarmed-Citron pointed out something about Dr Burry's old profile picture on Twatter: https://www.reddit.com/Superstonk/comments/mlyj5e/michael_burrys_japanese_big_short_norinchukin/
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https://preview.redd.it/nwus3zcuow7c1.png?width=1500&format=png&auto=webp&s=a31062e340067bc3dcbaf416c8fd04ebc581942f
Which led him into digging into Japanese banks like Norichunkin:

But then I stumbled upon this Forbes Article by a Consultant for Bank-Regulation, you could probably say an expert:
"According to Fitch analysts, “A few Japanese banks, particularly Norinchukin (unrated), have been very active in buying CLOs. While banks are often selective with CLO managers, we believe the correlation of CLO investments means the asset class will largely move together irrespective of manager selection. Mid-sized banks are more likely to have riskier positions relative to their expertise and overall financial strength.”

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Of concern is that Norinchukin’s CLO holdings are “equivalent to 103% of its CET1 capital and it has accelerated its buying in the past year.” Japan Post Bank also increased its CLO purchases significantly in 2018, although its overall exposure is lower than Nornichukin's. Japanese mostly hold their CLOs as available for sale. Hence, those banks with large CLO exposures would be adversely affected by mark-to-market losses if CLO tranches are downgraded."

There was much hype about this change to his profile picture back then, wondering if there was something we had missed.
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But then..nothing. A lot of people seemed to have thought that perhaps Burry was off the mark here by a longshot.
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But that was perhaps before we started having users learning more about the links between other big Japanese banks like Nomura, Instinet, and the ECP waivers. And now...this just moments after great users like RhysThomas2312 have been noticing that the OTC Derivatives Calendar has a number of items all coming up, including Japan's cross check back in October 2023 (https://www.reddit.com/Superstonk/comments/17r8v61/been_looking_at_the_occs_otc_derivatives/).

9. A New Challenger Approaches (to the NY Fed's Standing Repo Facility Counterparties List)

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https://preview.redd.it/cg8kmso6qw7c1.png?width=1144&format=png&auto=webp&s=c5d48a4bd907c615a45a1be1d740850ace2d1cf9
The goddamn legends at WSOP and the goddamn legend themselves welp007 came to splash across our screens the following new surprise: Norichunkin, the Japanese bank that was balls deep in CLOs this year, got added to the standing repo facility.
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If you have never heard of Norinchukin Bank, don’t feel badly. Neither have we and we’ve been monitoring global banks for decades. According to Norinchukin Bank’s financial statement for its fiscal year ending March 31, 2023, it had $708 billion in assets. If it were a U.S. bank, it would be the fifth largest by assets, just behind JPMorgan Chase, Bank of America, Wells Fargo and Citibank.
The notice from the New York Fed about adding Norinchukin Bank to its bailout facility grabbed our attention for two reasons. First, it came out on a Friday, which is typically when financial entities dump bad news they hope will disappear over the weekend. And also because the Standing Repo Facility was the successor to the trillions of dollars in still unexplained emergency repo loans the Fed had to pump into Wall Street in the fourth quarter of 2019.

And what's something that many of us have all found out about Norichunkin as to why they are questionable as fucking fuck? CLOs:
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According to its most recent financial statement, Norinchukin Bank does not appear to be heavily involved in derivatives. However, it has been heavily involved in CLOs – Collateralized Loan Obligations, which frequently include high risk debt.

Even further, there might be links to the dollar milkshake theory (?!), as they are a huge buyer of bonds:

The Fed may have another particular interest in making sure Norinchukin Bank has ample access to liquidity. The bank has typically been a large buyer of U.S. Treasury securities. At today’s conversion rate, dumping 12 trillion yen in U.S. government bonds amounts to dumping $84.6 billion. When U.S. government bonds are sold in large quantities, it puts downward pressure on the price of the bond in the secondary trading market, resulting in higher yields. Higher yields, in turn, raise the debt service cost to the U.S. government.

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I wouldn't know offhand is 84B in US Treasuries would be a lot (would hope many of you could answer that).
This brings us to where we stand on this little known bank that seems to handle funding to fisherman and the like. A quiet small Japanese bank, balls deep in CLOs, with heavy US Treasury purchasing power, is now seemingly being bailed out by the US gvt with no congressional or public oversight.
As always, my question to y'all (apart from 'any digging that might help us understand?') is ...why?
And was Burry, yet again, the definition of early not wrong?

This is a direct continuation of this post: https://www.reddit.com/Superstonk/comments/17jbm3w/gamestopswapdd_p4_xrt/
that led me to this site and to this pension.. https://pitchbook.com/profiles/limited-partne119718-01#overview…
https://preview.redd.it/ktobyypm08xb1.jpg?width=911&format=pjpg&auto=webp&s=ccf9f73445a4992f993b9692250dd4e1c5363f2f
. which did in fact show me there was a corporate pension plan from state street offered at a time that the lehman bond existed. So then I went to a list of ILS's issued over time and saw there were 3 lehman Insurance Linked Securities.
https://preview.redd.it/c6pqhixm08xb1.jpg?width=1129&format=pjpg&auto=webp&s=a41e89eb7081816ca17110de042a92ed6b2adfde
I had found a clue in one of th ILS descriptions. Structuring agent for this ILS was lehman and says they were issued by a cayman company.. partnered with SWISS RE.. k.. we got a breadcrumb. For the record > https://artemis.bm/deal-directory/ < GREAT site. so i went to swiss re's [annual filing. ]shows that they use ILS to hedge risk.
https://preview.redd.it/rzj0n8in08xb1.jpg?width=479&format=pjpg&auto=webp&s=ec7f202101731ba1072bef85a32ae646ae4abf9c
ALSO shows that a 30 year GBP loan from 2007 is their biggest subordinated debt per '21 annual filing
https://preview.redd.it/rc14e60o08xb1.jpg?width=1396&format=pjpg&auto=webp&s=c07d88efe09bc543fc171f5890560056f33dc6ef
ALSO shows 90x increase in rmbs cmbs from 2020-2021
https://preview.redd.it/9g0v1b7o08xb1.jpg?width=1433&format=pjpg&auto=webp&s=6ee0d78b88f59af10d77a31c3a25b47d3b4ab8fe
and to bring this to the lehman bond > xrt spike.. https://artemis.bm/news/catastrophe-bonds-among-top-performing-assets-since-lehman-bankruptcy/…
https://preview.redd.it/oc33o0oo08xb1.jpg?width=680&format=pjpg&auto=webp&s=6888a119cb7247c6d73cba0cfd1b69df88dd69ab
When going through a sec search, you can find CCA's offering that lehman bofa and stanley purchased. From CCA in 2005. src >https://www.sec.gov/Archives/edgadata/1070985/000095014405002294/g93694e8vk.htm I'll let the other redditors go into collateralized loan obligations, which are highly involved. they're like CDO's but worse but same. Fit those in here, with the archegos counterparties names who were all heavily invested in the instruments that led us to our financialpocalypse..
https://preview.redd.it/6y3gt9zo08xb1.jpg?width=573&format=pjpg&auto=webp&s=a3ed21484d3324ab4f00ba3b49c83c07b134df11
So, if you go back, read that whole top part of this again, you will notice a pattern here. Everyone involved so far worked with lehman, and is also archegos counterparty. I'd say coincidence but we're past 2 coincidences by a lot. I'm thinking 2 coincidences is a pattern. Add in that they all held shorts on gamestop, it is for sure a pattern of factual standing, thus far. But let's keep going. back to the funds. only another fund to go through. (since im not gonna go through the etf that is naked shorting xrt. it is a different story with its connection to huntington national bank and HNB showing 0 shares of XRT, yet having MILLIONS in its 13fs of $XRT PRN's, even though huntington shorted GME.) (https://www.sec.gov/Archives/edgadata/49205/0000049205-23-000004-index.htm < :D )
decmx
for this fund I searched their annual for "ownership" [https://www.sec.gov/Archives/edgadata/1556505/000158064221004060/bcmdecathlonncsrs.htm ]
https://preview.redd.it/zdblcxmp08xb1.jpg?width=576&format=pjpg&auto=webp&s=c6420771f63456b4535449bd24b2a1138142500b
sure enough, this fund too is majority owned by fidelity. go team.
​
https://preview.redd.it/39ibrfwp08xb1.jpg?width=576&format=pjpg&auto=webp&s=d4b191c02c71ef8fdf3b9fe87670edc41743ae02
their holdings show they are in the most on XRT, and that they are 1.8% in excess liabilities. 🐼 wonder how they gonna make that back 😂🚀
https://preview.redd.it/j8qm784q08xb1.jpg?width=576&format=pjpg&auto=webp&s=0a1fa014e7082a82430ccf2e9e9231fa3fe5471c
​
They purchased $spy $xrt and $qqq puts, which were all due 2/2021 as shown. (yes amc is everywhere. Focus) from this fund are above., and neatly, they shorted a whole slew of REIT's,
https://preview.redd.it/ogw1bpfq08xb1.jpg?width=576&format=pjpg&auto=webp&s=dc71de6a2c1110a5efb7dfddc2c8cb21eeeb7459
okay okay. I think you get the gist tbh. I can go farther in that fund if needed, but, to be honest I think theres a bigger and greater corrolation to make.
what always got me was that the economic bubbles happened in cycles of 7. that always threw me off. 1972 1979 1987 1994 2001 2008 2015 > crashed bad 3/2020
Personally I think there are 5 year swaps that keep things going, then every time they do a 2 year swap that makes something crash under the weight of the counterparty agreement while they short companies to death. And in this way they can harvest companies every 7 years, just like mutt ramney says in this video[https://www.youtube.com/watch?v=0EsxNYXW5i8 ] Could bankrupt companies without any part of the company having any influence or chance of surival. It's literally weaponized debt through leverage, and then leveraged buyouts happen, after corporate boards experience hostil takeovers.
https://www.bizapedia.com/ky/babbages-inc.html Would very easily explain the next two companies having this man on the board of babbages registered in KY yet foreign corporation status.
https://preview.redd.it/0klbw3vq08xb1.jpg?width=420&format=pjpg&auto=webp&s=1b9eaf17dfb82f51c3434c14d7af5fd9d17270d6
or having him on the successor at a time of chapter 11 events. https://www.corporationwiki.com/Texas/Grapevine/neostar-retail-group-inc/29978314.aspx#people shows romney on neostar board as well.
Skip ahead just a couple years, and this next article becomes VERY VITAL. You see, in the Corrections Corporation of America's bankruptcy in 1999, It was more than evident that our Salomon was in financial trouble.(one of 2 of our joint lead managers for $GME 2002 ipo).
this becomes vital because of some valuable information this article shows us [https://www.prisonlegalnews.org/news/2000/jul/15/prison-realtycca-verges-on-bankruptcy/ ]
“On December 27, 1999, Prison Realty announced an agreement with a leveraged buyout group to infuse up to $350 million into the company. The investors included The Blackstone Group and Fortress Investment Group and Bank of America.
That same day, December 27 1999, Doctor R. Crants resigned as PZN's chairman and CEO. His son, D. Robert Crants III stepped down as PZN's president. Stockholders would have to approve the deal, and if they did it was expected that CCA would get a new $1.2 billion credit line from Credit Suisse First Boston and Lehman Brothers.
Nobody seemed to know what would happen to CCA's prisons if the company defaulted..."
https://preview.redd.it/h9ktt4fr08xb1.jpg?width=1900&format=pjpg&auto=webp&s=3b7a03be32de48e78d4fb61e94a1abe9ef9276b3
When going through a sec search, you can find CCA's offering that lehman bofa and stanley purchased. From CCA in 2005. src >https://www.sec.gov/Archives/edgadata/1070985/000095014405002294/g93694e8vk.htm I'll let the other redditors go into collateralized loan obligations, which are highly involved. they're like CDO's but worse but same. Fit those in here, with the archegos counterparties names who were all heavily invested in the instruments that led us to our financialpocalypse..
Consider the fact that buffet was the hero of the salomon scandal situation when he acquired a $700 million preferred equity position in Salomon, through Berkshire Hathaway. A news video from 1991\[https://www.youtube.com/watch?v=Ebo8w6PIkE8\\\] explains it some. 20 years later with the collapse of Lehman, Berkshire Hathaway, Inc. bought $5 billion of Goldman Sach's perpetual preferred stock in a private offering. The finance system again escaped collapse. In fact, In 2008, Buffett became the richest person in the world.
Now “hypothetically” with Lehmans placement into MBS and CDS categories, and also being a major part of the 1999 CCA bankruptcy situation, and also being manager with state street.. I feel like something should be mentioned, and that's a few of The Lehman board and their coincidences with salomon that put this picture together. Lehman guys kinda ran all the institutions that buffet invests in. Hes into BofA as his #1 largest investment, and American Express is his #4 largest. This ONLY matters if you know a neat time in Lehmans history. Allow me to explain the thumbwar.
>Lehman Brothers Kuhn Loeb, which itself was the merger of Lehman Brothers and Kuhn Loeb in 1977 was led by Pete Peterson, a former United States Secretary of Commerce and future founder of the Blackstone Group. < (oof, 2 of the entities in the 1999 CCA bankruptcy REIT?) 3 lehman execs REALLLY worth mentioning are :
1 Pete Peterson was #149 richest in 2008 and was chairman of the CFR until 2007. David Rockefeller was his predecessor, consider him financial royalty or sumthin. Peterson served as U.S. Commerce secretary under President Richard Nixon From 1973 to 1984 he was chairman and CEO at Lehman. Co-Founded The Blackstone Group with Stephen Schwarzman, and served as the Blackstoned chairman.
2 Joe Plumeri Citigroup executive, Chairman & CEO of Willis Group Holdings, and owner of the Trenton Thunder. Plumeri worked for Citigroup from 1968 to 2000. President and Managing Partner of Shearson Lehman Brothers President of Smith Barney < GME UNDERWRITER PREDESESCOR. Vice Chairman of Travelers Chairman and CEO of Primerica and CEO of Citibank, North America.
3 Sanford I. Weill Sanford I. Weill, CEO of Citigroup Who consolidated numerous investment banking firms under the Shearson brand before selling the company to American Express. While working at Bear Stearns, Weill was a neighbor of Arthur L. Carter who was working at Lehman Brothers. In September 1997 Weill acquired Salomon Inc., the parent company of Salomon Brothers Inc. for over $9 billion in stock. In 2001, Weill became a Class A director of the Federal Reserve Bank of New York.
a neat fact on weill and his placement with american express is given on Shearson_Lehman_Brothers
https://preview.redd.it/wsakudqr08xb1.jpg?width=576&format=pjpg&auto=webp&s=ab3726e9dde743fbafd54ca5f185573a0e1e19b8
and that all becomes relevant because they are the predesecessor to our underwriter :D And if i can add one last fact before we bring this talk back to normal, NEVER FORGET that the largest tenant of WTC 7 was Salomon Smith Barney, the company that occupied 37 of the 47 floors in WTC 7. Donald Rumsfeld was the chairman of the Salomon Smith Barney advisory board until 2001, when he had to resign upon his confirmation for being Secretary of Defense.
That is unfortunately 2 of the cabinet members from nixon, and 2 other individuals, that have together, been leadership roles of every instituion that criminally manipulated our economical bonds into the situation that they are today. Covered, never closed. A 50 year coup, one might think of it. Alot of fucking coincidences huh
to be continued.. #CANTSTOPWONTSTOP -ASBT.

TL;DR: Citadel has a bargaining chip to keep the GME price at bay—the threat of a market crash if GME were to MOASS. This bargaining chip, however, is only valid until the market actually crashes. And based on several indicators, the market has a few years left max before it collapses and massive liquidations begin.
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Recommended Prerequisite DD:

1. Burning Cash Part II

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Burning Cash Part III
§1: Citadel's Bargaining Chip
§2: The Inevitable Market Crash
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§1: Citadel's Bargaining Chip
Citadel, along with SHFs in general, have a primary bargaining chip to ensuring cooperation towards keeping the GME price at bay, and that it the threat of a market crash.
If the government (DTCC, SEC, regulatory agencies, etc.) prevent SHFs from continuing to keep the GME price low to sustain their margin (whether the shorting is via synthetic shares, short ladder attacks, dark pools, etc.), and GME squeezes as a result, the market will defacto crash.
No administration or government agency wants to be responsible for a market crash.
This is why Reagan signed EO 12631 in 1988 [establishing the "Plunge Protection Team" (Working Group on Financial Markets)], which is designed to keep the market artificially propped up, if possible, which really only delays a market crash until the hot potato is passed to an unlucky successor. While the government may temporarily stave off a market crash for the time being, the disconnect in the market will accumulate until it cannot be supported anymore, and the crash will be much worse than it if hadn't been artificially propped up to begin with [e.g. 2008].
The government knows GME squeezing threatens the stability of the financial markets as a whole, and as such, they will not vehemently act to step in and prevent the publicly obvious manipulation of GME, whether or not it's illicit manipulation. Their priority is to protect the infrastructure of the financial system, a system that would be at high risk of collapse if they stepped in to shut down the chronic manipulation of GME. This is why it's not as easy for gov. agencies to ascertain a solution when someone says "why doesn't the government do anything about the manipulation against GME"?
Citadel recognizes this and has played into it in the past by equivocating buying GME to helping wipe out teacher's pension plans:
https://reddit.com/link/17cc2yd/video/mli4z3bmncvb1/player
And let's not forget when IBKR Chairman Thomas Peterffy said the GameStop rally in Jan 2021 almost crashed the entire market and complained that the SEC didn't take action against GME:
https://preview.redd.it/3rc9qbyolcvb1.png?width=1322&format=png&auto=webp&s=04078f482735313a108c1ad6ba02f0509346b22d
It's highly likely that SHFs have been and continue to remind the government the 'danger' that GME poses to the market, when in reality it was their actions hyper-synthetic-shorting GME that put the market at risk of collapse.
Regardless, GME (and "meme stocks" in general) do pose a risk to the stability of the greater financial market, which is why the government is being very careful here.
The Federal Reserve's Financial Stability Report in November 2021 illustrates this succinctly. The report talks about the risk "meme stocks" pose on the financial stability of the market, going over how the GME run up in January 2021 was, luckily for them, limited, and "did not leave a lasting imprint on broader markets," but they do address the possibility that GME could become more volatile in the future, and that financial institutions should be more resilient with their risk-management systems to protect the financial system:
pg. 21 of the Fed Financial Stability Report
Again, the government's priority is to protect the financial stability of the market. Protecting the collapse of the financial market, while shutting down illicit manipulation of GME (which would initiate MOASS [i.e. crash the market]), are both mutually exclusive.
That's why you don't see the government taking heavy action to protect retail invests (yet), despite the publicly obvious fraud and manipulation on GME, but you see SEC ads like these instead designed to discourage retail from purchasing GME (or other "meme stocks" which have the potential to collapse the market if they were to short squeeze).
https://i.redd.it/057q92brkdvb1.gif
Their obligation is to protect the market, which is understandable. That's why I don't see MOASS happening until the market crashes (or GME were to reach ≥ 90% DRS, but the market will likely crash before then).
This is Citadel's bargaining chip.
This is why the government lets GME continue to stay under SHF's critical margin levels, as I discussed in SHFs Can & Will Get Margin Called, which isn't actually such a bad thing for new and veteran Apes, especially when it comes to locking the float, as I had previously illustrated.
If you look at GME's entire price timeline, you realize how crazy stupid the current price of GME really is.
For instance, 1 GME share was worth approx. $10.63 on December 24, 2007, which is actually $15.74 when adjusted for inflation:
https://preview.redd.it/80bdpirvlcvb1.png?width=752&format=png&auto=webp&s=13f13b8619dea701d7d6c9508a28d96c793cee02
This means that GME was worth more in 2007 ($15.74) than yesterday's price of $13.16 at market close (October 19). 16 years ago GME had a significantly higher price than the price now.
GameStop currently has significantly more cash than it had in 2007. In 2007, there was no Ryan Cohen, there were no millions of Apes, and 30% of all GME shares [50% of the free float] weren't locked and inaccessible to the open market.
How can anyone look at the current GME price and think "yup, this is definitely Adam Smith's invisible hand playing out. No manipulation whatsoever..."?
Even Yahoo Finance agrees that GameStop is significantly undervalued, based solely on fundamentals. But, of course, GME's price can't stay too high, or SHFs' collateral drop and they might not meet their margin requirements for their prime brokers.
The GME ticker price is completely artificial. Citadel & Co. have had GME on this continuous downwards slope since they were able to establish tight algorithmic control over the stock in 2021, and I do think we can deduce when they established this algorithmic control over GME by examining Citadel's tweet history, believe it or not.
If you actually noticed with Citadel's tweet timeline, the last time they tweeted before the GME Jan 2021 run up was on January 26, 2021. After that, they stopped tweeting for 8 months, until late September (September 27, 2021), when they went full defensive tweet mode, sending several tweets in the span of a few days denying any allegations which linked them to Robinhood shutting off the buy button, all while comparing Apes to "Twitter mobs", "moon landing deniers", and "conspiracy theorists" for no reason. They didn't start tweeting normally until mid November (November 17, 2021).
If you were to superimpose Citadel's tweet timeline to the GME price timeline, it tells us a story.
https://preview.redd.it/s3uji4wwlcvb1.png?width=1920&format=png&auto=webp&s=4ad78e771222019f010648fa4fa4be615710ad15
Citadel stopped tweeting amid and post-Jan run up, because they were unsure if they were even going to survive anymore if they weren't able to control the GME price. If you remember, the period from January, 2021-September, 2021 was the most highly volatile period for the GME price. Citadel's algos were most likely still working on establishing control of the price around that time. There was one more run up that happened in November, but by then Citadel had their algos locked in on the price, able to manipulate it in a downwards trend, compatible with their critical margin levels (at that point Citadel begins tweeting normally again). After November, 2021 GME's price continued on a progressive downwards slope, and you can see they now have a tight grip on the price, regardless of the FOMO. Kenny knew what he'd do to GME's price, he knew its future, which is why he hired a Top Secret Service Agent to protect him in the beginning of December 2021, worried that GME investors might freak out about the price drop and potentially 'go after him'. But nobody really cares. We recognize that his algorithmic control over GME merely bought him years of delaying MOASS, but eventually he'll lose algorithmic control if the price goes too low and the float gets DRS'ed, or when the market crashes.
GME won't be properly valued until SHF manipulation against GME stops. The government is not incentivized to stop it, because in doing so GME will MOASS, which will beget a market crash. Citadel uses this information as leverage, being able to continue being allowed to naked short GME, as doing so "protects the market". It's moreso about politics and ensuring financial market stability than "providing liquidity to the market".
The good news is that once the market crashes, Citadel loses their bargaining chip. The government will no longer have any incentive to allow the continued naked shorting of GME to "protect the market from destabilization" if the market is already destabilized. Now, one could argue "what if the government still wants to continue keeping GME low to protect the market from 'further' collapsing?". And I'd say that there's no point, because when the market crashes, you'll already have major firms defaulting and getting liquidated. The domino effect will already be present, and at least a few of those major firms will have GME shorts tied up, which will need to be liquidated (e.g. UBS—see Burning Cash Part II). If there is a bailout (and that's a big if considering the government is very hesitant of any sort of bailout since the backlash in 2008), the bailout wouldn't be for SHFs to keep holding those GME shorts so that they can keep kicking the can. It would be for them to be able to close those short positions without going bankrupt. That way all the toxic overleveraged shorts are gone, and this shit will be less likely to happen again. The government definitely don't want this shit to happen again, that's why regulatory agencies were approving new rules primarily in 2021 after the Jan GME rally, such as NSCC-002/801, which switched a monthly requirement of supplemental liquidity deposits to a daily requirement for short positions, making it highly risky and much more challenging for any hedge fund to ever want to go crazy naked shorting a company post-MOASS/market crash.
Until the market crashes, however, the government will try to keep things under wraps, and that means keeping the GME price at bay. This delay allows them to preserve the financial integrity of the market for the time being. But make no mistake, the bubble is only getting larger and larger until it there's no other alternative but for the market to crash.
Before I move onto §2, there is another critical edge that SHFs have on their side, one much more obvious, that I feel should be taken into account and properly discussed, which is their ability to allocate their massive resources into lobbyists, and, essentially, buying out politicians.
For anyone that disagrees that these high-level politicians can't be bought, I should point out that the elite buying out politicians is part of American history.
Take, for instance, the U.S election of 1896. This election was amid the industrial revolution, when elite businessmen like John D. Rockefeller (who owned a monopoly on the oil industry), J.P Morgan (banking mogul who also owned a monopoly on electricity via General Electric), and Andrew Carnegie (who owned a monopoly on the steel industry), were thriving while most workers under their plants were getting paid miniscule amounts and dying under their harsh working conditions. Williams Jennings Bryan, a southern Democrat, ran for the Presidential election in 1896, promising to dismantle the monopolies. This made the elites nervous, which prompted them to fund their own presidential candidate, Republican William McKinley. Their money and influence outweighed Bryan's, and he ended up losing the election. It wasn't until Theodore Roosevelt became President many years later when the monopolies began getting dismantled.
The History Channel's series "The Men Who Built America" do a good job of illustrating the election of 1896:
https://reddit.com/link/17cc2yd/video/ycfly42q5dvb1/player
Any politician has the potential of getting bought out—representatives, senators, heads of regulatory agencies, even the President of the United States. Ken Griffin, Jeff Yass, Steven Cohen, etc., they are some of the wealthiest people in America; they have a lot of influence in the political world, and they most likely have a fair amount of politicians in their pockets. For example, SEC Commissioner Hester Pierce, who voted "no" for market transparency, used to work for a firm that has worked as legal counsel for Citadel in the past (WilmerHale). Although I obviously can't confirm 100% that she's bought out, I can make a reasonable inference that she is, based on her links to Citadel, the fact that lobbyism is still thriving in the political sphere, and because it's illogical to vote against market transparency for no reason.
As for SEC Chairman Gary Gensler, I actually don't mind him. Prior to being appointed to SEC Chair in 2021, he was teaching at MIT. In uni I've been taught by professors that have served as significant or high-ranking politicians in the U.S and abroad, and what I've noticed personally is, just like with regular professors, they can form strong connections with students; they empathize and care about the futures of the next generations. Unlike Hester Pierce, Gary voted "yes" for market transparency. He admitted that 90-95% of retail trades get sent to Dark Pool. Gary's SEC Report in 2021 on GME stated that there was no GME short or gamma squeeze in Jan 2021 [see pg. 29 of the SEC Report for reference], which is what many of us knew, and why we're waiting for the real squeeze. Gary talked directly to SuperStonk. He's even tweeted about DRS, and he recently brought forth a new SEC Rule designed to add more transparency to short sale-related data, although their rule (Rule 10c-1) only applies to securities lending (not synthetic shorts), and only certain terms of the securities lending transaction will have to be made public (not to mention the reports will be anonymous); regardless, it's a good step forward to market transparency. Gensler also specifically mentioned the SEC GameStop Report in his press release.
That's why I get standoffish seeing calls to remove Gensler, whether on SuperStonk or elsewhere, because that's what hedge funds want. There's even some Congressmen that have been trying to get Gensler removed from the SEC. And if you look into the Congressmen going after Gensler, such as representative Warren Davidson, you'll notice that their funding is tied to Citadel and friends.
If Gensler hated Apes and was working for SHFs, there were many options he could've taken to go after us. He could've tried to shut down this sub, saying that Apes are engaged in market manipulation, but instead he defended retail investor activity on online forums, deeming it free speech. His support was further shown by reaching out to SuperStonk. I think that Gensler just can't do as much for retail as he'd like to, because, while he's head of the SEC, he's probably surrounded by colleagues and other agencies infested with lobbyists and possibly working against him. So, while politicians can get bought out, I think Gensler isn't against us, and if WallStreet does end up getting him removed in the future, the alternative SEC Chair to Gensler would probably not be good for Apes.
That being said, going back to my point that SHFs can buy out politicians, I want to point out that it can only go so far. Sure, Citadel can pay some regulatory agencies to turn a blind eye for the time being, or SHFs can use their vast resources to convince regulators/legislatures that they're trying to stave off a market crash by shorting GME, but once the market crashes, that's it. The GME shorts have to close, so even if Citadel and friends were able to, with all their money and influence, convince the U.S government to bail them out, that bail out would only be for them to close their positions and still keep their heads. It wouldn't be free money to keep shorting GME down and keep holding onto toxic swaps and synthetic short positions. And that's in the small probability of the U.S bailing out these SHFs when the market crashes.
Moreover, the DOJ has been honing in on SHF activity since 2021, as I pointed out in Part I of my Burning Cash DD (Attorney General Merrick B. Garland specifically called out market manipulation as a DOJ priority). Although most of the arrests and federal indictments will likely take place once the market crashes, the federal probes will no doubt make SHFs more paranoid and keep them more risk averse from trying out anything too openly fraudulent that'd catch unwanted federal attention. The DOJ did recently announce a "Corporate and Securities Fraud Task Force" designed on combatting fraudulent activity from WallStreet. This is on top of the DOJ probe that was previously launched. Here's an excerpt from the DOJ press release on Oct. 4th:
https://preview.redd.it/x2yxqzlylcvb1.png?width=1047&format=png&auto=webp&s=b2588cf2492731173000888cb823e61e1295919d
Don't expect to hear much from their investigations until the indictments start coming in, like with Archegos' Bill Hwang. However, multiple federal prosecutors are working jointly on this probe. Market manipulation and securities-related fraud is a threat to national security, and although it's a challenging situation to prosecute now, considering everything we've went over, the DOJ is definitely preparing to make prosecutions once the market crashes and the bargaining chip dissipates.
§2: The Inevitable Market Crash
Considering how everything is revolving around the market crashing, it's imperative to evaluate how close we are in terms of the financial market's proximity to a market crash.
There's a variety of ways we can look into why the market is bound to crash. Firstly, we can look at the perpetuity growth formula to get a better idea of why, mathematically, the market is currently overvalued.
Here's the simplified version of the perpetuity growth formula:
https://preview.redd.it/utmoy701mcvb1.png?width=1366&format=png&auto=webp&s=25225f3cc4473986b380a007ddde7cdb3bf56723
Essentially, the value of a company (P₀) is equal to how much cash flow they generate (C₁), how risky they are (R), and how much they're expected to grow in the future (G).
"R" is really just the discount rate (or "required rate of return"), which goes up when the cost of capital required goes up. But we can just look at "R" as "risk" for simplistic purposes.
In the past 1 and a half years, the Federal Reserve has raised interest rates 11 times. Rates have been the highest since early 2001. And yet, the market remains resilient. The S&P 500 is up approx. 17% in the past year. This alone violates economic principles.
Interest rates have gone up, meaning that the opportunity cost for investors go up when they choose to invest in a company. Furthermore, lending rates for companies are going up, so their capital required to manage their business/projects goes up, and as such investor's required rate of return has to go up as well. In other words, "R" (risk) has gone up. If "R" goes up in the perpetuity growth formula (and all other independent variables have remained consistent), P₀ has to be smaller; hence, the valuation of companies must decline. But we are not seeing this. In fact, we have continued to see the exact opposite.
It's clear to me, as well as most economists for that matter, that there's a big disconnect in the market. Whatever's going on that's making the market violate economic principles and continue to inflate like this, it's not natural. It's most likely artificial pumping, whether from the PPT (government intervention), big firms, or both.
Although the market might not be reacting to the substantial increase in interest rates (yet), the NAR (National Association of Realtors) has already recently voiced their concern to Fed Chairman Powell:
https://preview.redd.it/23msn242mcvb1.png?width=1170&format=png&auto=webp&s=5966981f1349e9dd4ff02456d777767db0df39c1
The NAR's concerns are accurate. 30-year fixed mortgage rates alone have risen exponentially in the past few years, opening the doors to a potential housing crisis:
https://preview.redd.it/gok91xe3mcvb1.png?width=613&format=png&auto=webp&s=024a36539fd254ced4fd6e56b390a0bc61252390
The NAR sees how devastating the Fed's current monetary policy is to the housing market, as well as the potential crisis looming from these rate hikes. But this isn't merely limited to the housing market. The Fed's rate hikes have been adversely affecting banks as well as households.
If you look at the Federal Reserve's Economic Data on the Delinquency rate on Credit Card Loans for most banks, there have normally been spikes in delinquency during a recession or period of economic turmoil (e.g. 2001, 2008, 2020). Delinquency rates have spiked once again, signaling another potential adverse financial event in the horizon.
https://preview.redd.it/rpeqg9f4mcvb1.png?width=1138&format=png&auto=webp&s=1d3529168cfad6cfce47b7874bc17bb6ee52aeac
Goldman Sachs further corroborates these reports, stating that "Credit card companies are racking up losses at the fastest pace in almost 30 years, outside of the Great Financial Crisis".
But Goldman Sachs really isn't in a position to be talking, since they're one of the big banks putting the financial market at risk of collapse, as they're overleveraged by a factor of 110:1, which brings me to my next point— analyzing bank derivatives to assess our proximity to a market crash:
We can further analyze our trajectory to a market crash by taking a look at the the Office of the Comptroller of the Currency (OCC) "Quarterly Report on Bank Trading and Derivative Activities", this being for Q2 2023, on page 17 you can find the derivatives of the top 25 commercial banks, savings associations, and trust companies as of June 30th, and the top ones (JP Morgan, Goldman Sachs, Citi Bank, & Bank of America) are heavily overleveraged. I added the leverage ratio to the right of "total derivatives" column:
pg. 17 of OCC Report
JP Morgan is leveraged at a ratio of 17:1, Goldman Sachs at 110:1, and Citibank 32:1.
The top 4 banks hold about 85% of the total derivatives (and swaps as well, in particular) compared to the other 21 banks listed in the report. If even one of those top banks collapses, it's game over. The domino effect will be catastrophic for the rest of the market:
https://preview.redd.it/cxw5dtl8mcvb1.png?width=882&format=png&auto=webp&s=c98f49989c0245196c419244b5feae27ea7864fa
Another critical sign that signals we're heading towards a market crash is the T10Y3M Chart (10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity).
To understand what the chart entails, it's important to recognize investor preference. Investors will prefer the 10-Year T-bonds if the future of the U.S looks stable and they don't think their T-bonds will lose value in the future. Investors, however, will prefer the 3-Month T-bills if they feel the future of the U.S economy is uncertain and they think there's a significant risk that the Fed will continue to hike rates (T-bonds lose value when the Fed hikes rates).
As the Fed continues to hike the rates, investors will feel more concerned having their money locked up in T-bonds, or having to trade them for a lower valuation, and investors will gradually prefer the 3-Month T-bills which have a lower risk, short-term commitment, where they're in a better position to pull their money out before anything more drastic happens to the market.
The T10Y3M Chart is the 10-Year T-Bond minus the 3-Month T-Bill. If the chart is positive, that means investors generally prefer the T-Bonds, which signifies trust in a stable U.S economy. If the chart is negative, that means investors generally prefer the T-Bills, which signifies that investors view the U.S economy's future as uncertain (potentially unstable).
This is the T10Y3M Chart today:
https://preview.redd.it/gipjkfo9mcvb1.png?width=3703&format=png&auto=webp&s=2a950c8cf1c3e6bcb57cc31689745897b082d81d
We have an inverted yield curve (T-bonds [long-term debt instruments] have a lower yield than T-bills [short-term debt instruments]). Every single period we've have an inverted yield curve was amid or in the cusp of some recession or bubble burst. And now here we have it once again.
The 4 week moving average for bankruptcy filings is also spiking, as it does in periods of distress in the financial market, with the 12 week moving average tagging along:
https://preview.redd.it/3mpgnttamcvb1.png?width=1366&format=png&auto=webp&s=33dc6b474a41b86a068cdc45190532b66f6770bd
Despite all this data, the concern from the NAR, etc., the Fed is planning to potentially continue increasing the interest rates, citing that inflation is still a threat (to be fair, their massive quantitative easing in 2020 did threaten the stability of the dollar, which of course was going to have adverse effects in the long-run).
So where does this leave us? Well, according to Billionaire Investor Jeremey Grantham, who correctly predicted the dot-com crash in 2000 as well as the financial crisis in 2008, the situation is dire, and the market has a 70% chance of crashing within the next 2 years [this was stated in his interview with WealthTrack].
He stated that his probability of a market crash was even higher, but only decreased with the emergence of artificial intelligence, which may slightly delay the crash, due to new speculative investments that could possibly keep this bubble going a bit longer. 70% is still a strong probability of a market crash within the next 2 years, as he pointed out, and the advent AI in the market won't be enough to prevent the coming crash.
How hard will the market crash? Well, Grantham stated on an interview with Merryn Talks Money that the market will crash between 30-50%, possibly over 50% (the S&P 500 will likely hit 3,000, but can go down to 2,000, depending on the circumstances):
https://reddit.com/link/17cc2yd/video/jsw624lzncvb1/player
Even Citadel's Ken Griffin is "anxious" about the potential market crash, and is hoping for a soft landing, as he states in an interview on CNBC:
https://reddit.com/link/17cc2yd/video/l94bf26focvb1/player
I'm sure he'd like a soft landing. With a soft landing, you can avoid big players in the market from collapsing, but that's not going to happen here. This bubble should've been deflating by now, but it hasn't. The stronger the disconnect in the market grows, the worse it's going to be when it all comes crashing down.
Now, in terms of signals that will tell us we're in a market crash, I'd argue that the market crash has begun when a big firm or bank goes bankrupt (and doesn't get absorbed), but there are other indicators that can allude that we're in a market crash, such as the VIX reaching and maintaining a at least 40. With every adverse financial event in the market, the VIX will normally maintain 40+.
https://preview.redd.it/bsoydozbmcvb1.png?width=900&format=png&auto=webp&s=ae4c141fc0c48d2e6df3b823911f551536dab2b9
I do believe that past 40, these hedge fund trading algorithms are programmed to begin significantly auto-liquidating, due to the market being deemed as "high risk". Now, I'm sure someone could argue that investment firms could simply recalibrate their algorithms to not auto-liquidate past 40, but that wouldn't change the fact that the market is still high-risk if the VIX is 40, and many of these firms are going to get risk averse, wanting to be the first ones out. The liquidations past 40 will be a snowball effect that even the government would have trouble slowing down, which is why we haven't seen a VIX past 40 in a long time. For reference, the VIX reached a high of 37.51 on January 29, 2021 (the day after the buy button for GME was shut off). The last time the VIX passed 40 was in 2020, during the time of the coronavirus crash.
Now, how will GME play out during the market crash?
I believe that GME will crash while the market is crashing, and I'll explain why.
You can take a look at GME and the S&P 500 back-to-back whatever trading day you'd like. Generally, if the S&P 500 rises 1% on any given day, GME will normally after go up a few percentage points as well (or will at least remain green). If the S&P 500 drops 1% on any given day, GME will normally drop a few percentage points as well. As long as shorts haven't closed, GME is still, in many respects, linked to major stock indexes. GME joined the Russell 1000 in 2021. The stock gets traded in bundles with other ETFs, so it very much is linked to the future of other stocks, and so if the market crashes, and investment firms liquidate these index funds/ETFs, GME, which can be packaged in these funds, will go down as well.
Below is a chart to illustrate my theory on GME's price behavior during the market crash.
https://preview.redd.it/xuxr135dmcvb1.png?width=1920&format=png&auto=webp&s=86b91abb1a50c60393cfa7526d23dc2bf9b7c53f
So, yes, GME will crash amid a market crash. I already know that when the market crashes, and GME crashes as well, this sub will be at peak FUD levels, shills posting "see? GME crashed! There is no short squeeze", or "I give up, the SHFs have won". No, GME won't MOASS until short positions start closing. In the firsts months in the market crash, GME will tank, but as these SHFs begin getting liquidated and the regulatory agencies determine how to proceed and begin the process of closing of these toxic shorts, GME will have its short squeeze. It will be so massive, the government may end up trying to settle it when GME reaches 7 figures (not trying to spread FUD, but, yes it will be that massive). This is a spring that's been coiling up for years, and never got unwinded, even in 2021.
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Additional Citations:
“Federal Reserve Board - Home.” Financial Stability Report, Board of Governors of the Federal Reserve System, Nov. 2021, www.federalreserve.gov/publications/files/financial-stability-report-20211108.pdf
“Quarterly Report on Bank Trading and Derivatives Activities.” OCC.Gov, Office of the Comptroller of the Currency, 14 Sep. 2023, www.occ.gov/publications-and-resources/publications/quarterly-report-on-bank-trading-and-derivatives-activities/index-quarterly-report-on-bank-trading-and-derivatives-activities.html
Sec.gov. 2021. Staff Report on Equity and Options Market Structure Conditions in Early 2021, 14 Oct. 2021, https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf

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Happy Friday One Trader’s! We can almost smell the weekend.
Here is your latest insights from the world of crypto and finance: 🤑👇
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Happy Friday One Trader’s! We can almost smell the weekend.
Here is your latest insights from the world of crypto and finance: 🤑👇
🌐 General Macro News: Tesla, UK petrol ban, and more.
💼 TradFi Pulse: Fed’s interest rates, housing market, and bankruptcy filings.
🚀 Crypto News: Citibank’s blockchain, Google Cloud, and Xbox crypto wallet.
💹 Market Highlights: #BTC at $26,198 and #ETH at $1,595.
📈 Bitcoin Updates: #SEC decisions, MicroStrategy’s #BTC buy, and Nasdaq’s #ETF.
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Get up to date: Read now 👇 https://onetrading.com/blogs/weekly-commentary-september-29th
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Does USAA have a hardship program?
Are you overwhelmed by credit card debt from USAA and unsure how to negotiate and settle it? Don't worry, we've got you covered with a comprehensive guide on how to navigate this process successfully.
Understanding Debt Settlement Debt settlement is a strategy to consider when dealing with overwhelming credit card debt. Settling debts with banks like USAA follows similar principles as with other large credit card issuers. Addressing debt early on is key to finding relief.
The Pros and Cons of Debt Settlement Before delving into the process, let's explore the advantages and disadvantages of debt settlement. While it can provide financial relief and help you avoid bankruptcy, be aware of potential impacts on your credit score and legal actions from creditors.
Key Steps to Navigating USAA Credit Card Debt Settlement

1. Assess Your Situation: Start by evaluating your financial standing to determine if debt settlement is the right option for you.
2. Cease Payments: Stopping payments can provide leverage during negotiations. Delinquency can be used as a negotiation tool.
3. Initiate Negotiations: Reach out to your creditors, including USAA, and propose a lump-sum payment to settle your debt. Clearly communicate your financial difficulties.
4. Reach an Agreement: If your creditor agrees to a settlement amount, ensure you have a written agreement confirming the settlement satisfies the entire debt and removes derogatory information from your credit report.
5. Make the Payment: Once an agreement is reached, make the negotiated payment within the specified timeframe.
6. Monitor Your Credit Report: Regularly check your credit report to ensure derogatory information is removed as agreed.

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Addressing Challenges Dealing with multiple creditors like Bank of America, Chase, Citibank, Capital One, and USAA can be complex. Prepare for potential challenges during negotiations.
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Pros and Cons of USAA Credit Card Debt Settlement
FAQs: Your Questions Answered

• Can USAA settle credit card debt? Yes, USAA, like other creditors, is open to debt settlement negotiations.
• What percentage can you settle credit card debt for? Aim for around 50% or less, though better savings can often be achieved when negotiating USAA credit cards.
• How does USAA credit card debt settlement work? The process involves ceasing payments, negotiation, reaching an agreement, making payments, and monitoring credit reports.
• What's the impact of debt settlement on credit score? Debt settlement may lower your credit score as settled accounts are often reported as "settled" rather than "paid in full."
• Does USAA have a hardship program? Yes, inquire about hardship programs that USAA may offer to assist customers facing financial challenges.
• Is accepting a credit card settlement a good idea? While it offers relief, consider the impact on your credit and financial situation before accepting a settlement.

Navigating Settlement with Multiple Creditors Your situation involves debts with various creditors. Prioritize negotiations based on availability of funds. Early settlements can prevent additional collections from affecting your credit reports.
Conclusion: Achieving Financial Freedom Successfully settling credit card debt with USAA requires planning, negotiation skills, and understanding the process. Seeking professional advice can enhance your chances of a favorable settlement. Remember, with determination and the right approach, you can achieve financial freedom and a brighter future.
📊 Reddit.com Poll: How Do You Plan to Handle Credit Card Debt? 📊
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View Poll

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https://preview.redd.it/spbth5grxugb1.png?width=296&format=png&auto=webp&s=8bf99aaca2177ce817cdd307868a9951e1841a2b
Photo above - this APPEARS to be a meth addict who accepts credit cards while panhandling. But let's not leap to conclusions, okay? Not shown - Meth dealers who accept credit cards.
Credit card debt set to hit $1T as inflation continues squeezing Americans Fox Business What Is The Average Credit Card Interest Rate? – Forbes Advisor
Wow . . . credit card debt is waaaaay lower than the national debt. “Only” $1 Trillion. (see link above). So hey Miss Smarty Pants – why don'cha stop pestering everyone with all this economy apocalypse talk, okay? The national debt is over $30 Trillion, and things couldn't be better.
Okay – maybe things COULD be better. Although the stock market and employment numbers are near record highs, so are inflation, interest rates, apartment rents, home prices, homelessness, fentanyl use, student loan debt . . . Pundits will say all the GOOD stuff comes from federal spending deficits. And if we continue to run federal budget deficits, we can make all the bad stuff go away too, right?
Good news – help is on the way. Americans' credit card balances are at an all-time high. Consumers are doing their part to keep the economy humming. Even if they have no idea how they will pay for all this stuff. Uber rides, Starbucks, new Nike's, Taylor Swift tickets. It's all good. Sure, I'd love to finance my everyday expenses at . .. wait . . . .what did you say my interest rate was? 24.98% !! WTH !!! (see second link at top). I would have guessed, like,14%.? Just yesterday I drove by a bank with a sign that bragged “rates as low as 9.9%”. If I was some bank regulator, I'd make them prove it. Not just in theory. Did Betsy Banker actually issue any new cards last month at 9.9%? How many were over 20%?
Back to the Trillion. If card balances are being financed at an average nationwide rate of 24.9%, the interest on that will be - $250 Billion a year, I believe. Please double check my math - these are surprisingly large numbers. How much interest is that per person? For that matter, how much of the $1 Trillion outstanding is owed by each American?
Here's where it gets tricky. Each “cardholder” has approximately 4 accounts. We know how many accounts there, and how many unique names. (183 million). But since the 183 million is WAAY MORE than the number of eligible adults, something is fishy here. From this 183 million we need to subtract people under 18, people who filed bankruptcy within the past 7 years, the unemployed, the homeless, people in prison (5 million!!), and so on. Credit agencies should just admit they don't have a clue how many people owe how much.
Anyway, a Trillion in card balances. $250 billion a year in interest. Plus late fees. Over limit fees, Bounced check fees. Cash advance fees. ATM withdrawal fees. Annual fees. Someone in the back is screaming: “Geezus . . . stop it already!” Gotcha. Kill the messenger. Check . . . .
America now has the highest credit card debt in our history. Probably the highest credit card interest rates too. And this is AFTER the Obama era congressional hearings and banking reforms. Who says banks don't know how to play this game? The seem to be winning, big time, no?
You and I can play too. Personally, I'm not loading up on stocks which are dependent on perpetual credit card growth. You know - the usual suspects. American Express. Visa. MasterCard. Citibank. Bank of America. Chase. Wells Fargo . . . well, there are dozens, actually. The big banks are already getting hit with big FDIC assessments ($8 billion more in the past 24 hours) to replenish the war chest used to bail out this year's failed banks . .
Wait until full employment is no longer a thing. When the higher fed funds rates really start to work. Higher fed rates – in every circumstance – are a strategy to “cool” the economy by creating unemployment. It's true. You can google it. Stand by for more mortgage defaults, evictions, homelessness, auto repos, and credit card charge offs. It's all part of the official plan . . .
Okay! Rising unemployment, rising interest rates, and zooming credit card balances. There's no danger here, right?
I'm just sayin' . . .
Full disclosure – the column is NOT advising readers which stocks to buy or sell. This writer is not a registered financial advisor and holds NO SHARES of any of the companies mentioned above. However, there are undoubtedly some shares of these companies included in my favorite S&P 500 index funds. This writer is not recommending that you purchase index funds either, for that matter. Good luck, and may the gods protect us all . . .