Glock Talk banner
1 - 20 of 27 Posts

·
Banned
Joined
·
397 Posts
Discussion Starter · #1 ·
I'm in a hotel on a lap top and so "technicaly challenged" I can't post links to this. Google the title of this thread or go to Zero Hedge to read the letter that went out after markets closed on Friday from the CME. They apparently changed all margins from a small percentage to "1". If understood correctly by those I've read, on Monday many many billions $$$$ will have to be coughed up or stocks sold off to make the margin increase. Some are looking for a MAJOR fall/collapse in stock prices if this is not stopped by the Feds before Monday opening. There are some that seem quite panicked by this totally unforseen action. Some feel the letter has a "clerical error" and meant 1/10 not "1". I'm no stock guru so just passing it along.

As an aside, several months ago I sold everything and went to 50% Treasuries and 50% Sprott & CEF Gold Trust, along with Sprot & CEF Silver Trust. I guess we'll see if they are "real" or paper crap. Supposedly they are audited and real. Maybe being Canadian will offer some protection. Good luck to all and hopefully this is nothing. But some think it REALLY A BIG THING.
 

·
Registered
Joined
·
891 Posts
Here's a link to the Zero Hedge article.

I'm not sure I understand the whole thing and I don't trade in futures but the CME seems to have two margin levels and they vary by product. There's the initial margin, which you must meet to buy, or take contracts. And there's a maintenance margin, usually lower than the initial margin. This allows you to take some paper losses due to price fluctuation before you have to cough up some more cold hard cash.

As I read the change they are locking the maintenance margin percentage to the initial margin percentage for all products. It appears that those margins will still vary by product based on risk and perhaps other discriminators.

The author of the article speculates that the increased margins are a reaction to the MF Global collapse and that inter-bank liquidity is very low right now. So this could be the start of a chain reaction that exposes which emperors have no clothes or not but we will all have a ring side seat.

ETA for clarity: As I read it they are setting the ratio between the initial and maintenance margin to one (1), or said another way equal to each other. If you read the article you'll see a PDF posted containing all CME products and the current margins for each. You will see that they vary wildly across product groups and somewhat less within a product group. How the margins are set or even what units they're in I couldn't tell you. Are there any futures traders in the S&P forum that can explain how to read the products list?
 

·
Registered
Joined
·
33,625 Posts
It's not a "times ten" thing, they said traditionally the maintenance margin is about 26% lower then the initial margin but now they will be equal.

We'll see come Monday but any effect will be short-lived
 

·
Registered
Joined
·
7,246 Posts
Guys - please go chat in a financial room. Or tell me how this helps me prep or survive. All i see is financial speculation.

Let's just assume financial collapse and get on with some meaningful discussion.
 

·
Registered
Joined
·
12,324 Posts
It's not a "times ten" thing, they said traditionally the maintenance margin is about 26% lower then the initial margin but now they will be equal.

We'll see come Monday but any effect will be short-lived
The effect may not be short lived. It could set up a spiral for those that do nt have much liquidity. Think this way. On Monday some will have to sell a protion of their position to cover the margin. If enough sell, then the price will go down, cause more margin calls, creating over-supply and falling prices, more margin calls, more declines, wash , rinse and repeat.



As how this relates to survival and preparing, is that being financially prepared is the most likely preparation you will use in your lifetime. Most of us will retire, many will face a job loss, a medical condition requiring money to treat, Temporarily displaced from our housing and needing money stay in a hotal. We would all be benefitted in our lifetimes by being financially prepared.
 

·
Banned
Joined
·
397 Posts
Discussion Starter · #8 ·
Seems CME issued a clarification letter. Alls well, just an insanely poorly written first letter. Margins are actually being lowered for the MF Global investors temporarily. Zero Hedge has a new post up. The comments are interesting. Some believe the first letter and think the second letter was
a "forced" explanation to avoid problems Monday. I surely don't know enough to even have an opinion.
 

·
Tread Lightly
Joined
·
13,286 Posts
I surely don't know enough to even have an opinion.
Not that that's ever stopped you from posting needlessly alarmist and inflammatory threads before.

Like the on-the-hook for 77 trillion thread when there isnt that much money in the world economy.

You're basically here to start trouble, we get it.:upeyes:

Anything else you don't have a single fact about that you'd like scare with a made up story while you're here?

Reminds me of Gilda Radner...never mind…
 

·
Registered
Joined
·
639 Posts

·
Unreconstructed
Joined
·
10,067 Posts
Like the on-the-hook for 77 trillion thread when there isnt that much money in the world economy.
I'm not privy to the history of the apparent feud between you and the other poster. However, it is worth noting that the economic crisis, credit destruction, and debt deflation we are experiencing is largely a function of there being more leverage throughout the system than there is "money". Coincidently, Zero Hedge posted a good primer on this yesterday before the recent CME clarification:

http://www.zerohedge.com/news/guest...gical-financial-system-necessary-and-positive

Please remember that the terms "inflation" and "deflation" refer to changes in the overall supply of money and credit. In the case of our modern, international, fractional reserve, fiat economy, the supply of credit (including debt instruments and derivatives) vastly outweighed that of money. As such, the credit destruction of the past 4-5 years has vastly outweighed central banks' ability to create equilibrium with changes in money supply. Hence the deflation we are experiencing and the failed but desperate attempts of governments and central banks to reinflate. Add to that further that inflation is at least as much a function of velocity of money as it is supply, and we have the situation we are is: one where there are more leveraged trades & assets SIVs, derivatives, and CDS exposure than there is "money in the world".

Understanding this helps to understand the otherwise inexplicable motivations and actions of sovereigns as they attempt to defend their own interests and that of their economic sponsors. Hence, for but one example, the absurdity of the "voluntary" haircut on Greek sovereign debt in an attempt to bypass a defined Credit Event that would trigger CDS payments from functionally insolvent counterparties.

Finally, to add to what SilverCity is saying above, an IOU is also a liability. That's the whole point of "unfunded" mandates or exposure to legacy costs of entitlement guarantees. Yes- there is more debt than there is "money in the world". That's the whole point of the sovereign debt crisis. It's not like there is some entity or entities sitting on a dollar to match every leveraged dollar. There are more leveraged debt instruments (and derivatives and CDS) than there is money. Hence, the crisis. And hence the "solutions": TARP, TALF, Maiden Lane type SIVs, various rounds of QE, etc. And hence why countries unable to run the presses full-time are coming unglued.
 

·
Banned
Joined
·
397 Posts
Discussion Starter · #12 ·
Ignore G29's animosity toward me. He thinks I am a fool. He doesn't know that I think myself a fool. Heck, I've spent 61 years proving it!! The major difference is I KNOW a part of my foolishness was listening to propaganda and voting the way I have. Talk radio and Party hacks are not your friend. I may be a fool but I'm no longer blind - I know a train wreck when I see it. And I realize my votes help derail the train! Both Dems and Repubs drove the train into the ground.
 

·
Registered
Joined
·
256 Posts
I think you are a fool also.

An educated person understands their ignorance. A logical person always has a reasonable level of doubt or skepticism.

You have started two threads that are complete false flags, and one is just a joke (77 trillion).

Have a nice day and good luck with life. Also remember that your Deity of Choice loves you.
 

·
Registered
Joined
·
7,246 Posts
I'm still waiting to hear how completely obtuse and obfuscated financial BS is helping me to be better prepared or survive. Take the Economichat and Finacial ************, and the feud, somewhere else.

Tell me something useful.
 

·
Tread Lightly
Joined
·
13,286 Posts
I think you are a fool also.

An educated person understands their ignorance. A logical person always has a reasonable level of doubt or skepticism.

You have started two threads that are complete false flags, and one is just a joke (77 trillion).

Have a nice day and good luck with life. Also remember that your Deity of Choice loves you.
This.
 

·
Banned
Joined
·
397 Posts
Discussion Starter · #19 · (Edited)
Liff & Gotplastic, I'm open to you explaining it to me. Actually I'd appreciate it. I'd also like to know your Bonafides as why your take on it is superior to say, Michelle Foss or Max Kieser, or Rawles, etc.etc.etc. If there is absolutely no potential consequences for the FDIC. To have Bank America move it's CDS exposure, to the Banking side of the ledger. Why did FDIC greatly oppose it? As an aside, the smallest number I've seen is exposure for 55 Trillion dollars by Bloomberg. I think our GDP is about 14.7 Trillion. Some articles have appeared stating that other pseudo Banks have since followed suit. Thanks in advance for sharing your understanding of what took place, and how it's good for all the readers here. I know both of you are brilliant sharp people. As for the self effacing comment on my being an idiot "praise from your own lips is not praise - it's vanity" thats why I try to avoid it (that's why the Donald was off putting to me and perhaps a few others). That's a paraphrase from scripture ie Proverbs.

As for CME Margins see this http://www.zerohedge.com/news/every...-non-cme-mf-global-transfers-get-monday-blues Very interesting to read the comment section.
 

·
Registered
Joined
·
317 Posts
Liff & Gotplastic, I'm open to you explaining it to me. Actually I'd appreciate it. I'd also like to know your Bonafides as why your take on it is superior to say, Michelle Foss or Max Kieser, or Rawles, etc.etc.etc. If there is absolutely no potential consequences for the FDIC. To have Bank America move it's CDS exposure, to the Banking side of the ledger. Why did FDIC greatly oppose it? As an aside, the smallest number I've seen is exposure for 55 Trillion dollars by Bloomberg. I think our GDP is about 14.7 Trillion. Some articles have appeared stating that other pseudo Banks have since followed suit. Thanks in advance for sharing your understanding of what took place, and how it's good for all the readers here. I know both of you are brilliant sharp people. As for the self effacing comment on my being an idiot "praise from your own lips is not praise - it's vanity" thats why I try to avoid it (that's why the Donald was off putting to me and perhaps a few others). That's a paraphrase from scripture ie Proverbs.

As for CME Margins see this http://www.zerohedge.com/news/every...-non-cme-mf-global-transfers-get-monday-blues Very interesting to read the comment section.
You're combining about 5 different issues here. On BAC, they moved the counter party to their FDIC insured side of the house. It does not put the FDIC on the hook for 55T. What it means, is that if the 55T goes bad, BAC can basically use their depositor assets to pay their liability. If BAC can't refund their depositor accounts, the FDIC is on the hook. Closest recent amt I've seen is just over 1T, potential FDIC liability.

The Merc articles are not the same issue. The second is only for MFGlobal accounts going to a single broker. The first one you listed extrapilated that for all Merc accounts. That's about a 1,000% exageration. And of course, as we all know since Monday has come and gone - IT WAS WRONG.
 
1 - 20 of 27 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top