Friday, October 2, 2015

Commodities Bubble Deflating....


Yesterday the Wall Street Journal reported:

Sarah Kent and Alex MacDonald, "Glencore Investors Zero In On Unit," The Wall Street Journal, C1:
"Glencore PLC's large trading division has moved into investors' cross hairs amid concerns that the $18 billion in short-term loans it uses to buy, sell, and ship goods is riskier than the company says"
 
The problem is that oil producers' debt is going to deflate oil traders' house of cards. One strategy deployed by traders that may come into play is rehypothecation:
DEFINITION of 'Rehypothecation' Rehypothecation Definition | Investopedia http://www.investopedia.com/terms/r/rehypothecation.asp#ixzz3nQIZBceU

The practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients. Clients who permit rehypothecation of their collateral may be compensated either through a lower cost of borrowing or a rebate on fees.
Rehypothecation could be a major factor in leading to out-of-control deflation of the commodities bubble. It is hard to tell how much fraud has infused the commodities bubble but the more one looks at companies such as Glencore and Trafigura (see here), the deeper the rabit hole goes.... I recommend reading the following:
Capitalist Exploits, "There Will Be Blood - Part I," ZeroHedge, October 2, 2015. Available: http://www.zerohedge.com/news/2015-10-01/there-will-be-blood-part-i

"Could debt tied to oil and gas become the new subprime crisis? What if I told you that the amounts involved are LARGER than all of subprime?"

Majia here: See my previous posts for background on the commodities bubble that is deflating::

http://majiasblog.blogspot.com/2015/09/financial-turmoil-warning-signs.html


1 comment:

  1. I trust ya majia. Marc Rich was busted and shouldve spent 300 years in jail but clinton pardoned him. I follow howard kunstler. I know you are not part of the spook conspiracy disiformation networks. Ben fulford is a known sppok and was is connectingdots2. adachi who is dead is listed as writer of educate-yourself.org which was formally a total fuku denial site like klemms. now it dabbles in conspiracy disnfo like fuku update and ian goddard. ian goddard is something else. first he says low level radiation is bad for ya then he says there was no fuku rads that reache europe. double agent spoks, counter agent spooks. At least you can tell where blatantly pronuclear people are coming from. The spooks play both sides of the fence. The both have deep pocket and unlimied support. So sickening and sad. clamsheller, dana, joyb got chased off enenews by them. so sickening. its no wonder dan durnford is so pissed. southern fried sciecne is a suposed marine biology webside affiliated with woods whole. how blatant can s sicko nuc authoritarian government go its all so sickening and antidemocratic

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