http://www.barnabyisright.com/2011/06/29/rba-says-our-banks-are-stuffed-in-other-words/ I did not realise that our banks were playing the Derivative Casino just like the other greedy morons.Our banks have $16.8 trillion (or 15 times our GDP) in off balance sheet derivative transactions and only $2.86 trillion assests.$ 1.76 trillion of these assests are loans often based on inflated asset values.

Our Govt gave Aust Banks guarantees in 2008 that they would be under written by the tax payer but they continued this gambling to maintain share price and their enormous salaries.Where was the RBA in making sure that they reduced their exposure to derivatives?

If our banks collapse,there is no way they can be bailed out.

http://tarpley.net/ As Webster Tarpley observes,15 of the top worlds banks are virtually insolvent.They too have the same derivative cancer.
In The Great Depression of 1932 the Glass Steagall Act separated the casino economy from the real productive one.There is not a single leader in the USA or Europe that have any intent of saving real productive wealth.

We are absolutely stuffed!

These two sentences from Barnaby's page are positively cringeworthy.

"$1.76 Trillion (65.56%) of these 'assets' are actually loans. That’s right – your loan is considered the bank’s 'Asset'."

What else could it possibly be?

The bank lends you ten bucks. At that point, an asset and a liability come into being. You have in your hand ten bucks (which you would surely consider to be an asset) and in the other hand you have an IOU. Which must by definition be a liability. After all, you are "liable to pay" ten bucks at some point.

Meanwhile, the bank has the other part of the IOU. It is worth ten bucks. That is most assuredly an asset, no? After all, if you don't pay it back, they would have lost ten bucks. And if they reckon at some point that they will only get half of it back, they "write down" the asset to five bucks, and record a loss on their P&L.

What else can a loan to you be on their balance sheet, except an asset?

That fundamental misunderstanding is, sadly, the high point of the article. It is all downhill from there. Complete with a misconception of the derivative market that is even more inaccurate than his breathless shock at learning that a loan is an asset.

The "staggering $16.83 Trillion" he gasps over is made up, almost equally, of puts and calls. Any actual financial exposure can only be measured by determining the difference between those numbers. Derivatives, as I have explained before, are a form of insurance, not of gambling.

Mr Joyce at least had the grace to admit that he hadn't the first clue what his "analysis" signified:

"Let us not even bother going into the huge question marks over this"

No, indeed. If you did, you'd quickly discover what a farrago of nonsensical claptrap it is.

Once again, Arjay, I can only suggest that you take a quick course in Finance 101, and stop reading stuff written by hysterical people with a "we're all rooned" agenda, who understand nothing about the mechanics of banking.

No Australian bank is in any danger of falling.
If America and all of Europe gos bankrupt we still may be ok.

I have not read the whole article, I just HATE those light blue text
on white background web pages. It has become a fashion. Very hard to read.

First the blog is not written by Barnaby Joyce.
I am not sure if Barnaby Joyce has any connection to it.
I have often thought that he should ask to have his name removed.
The blog often gives quotes of Joyce in columns in the Canberra Times.
They are always shown as authored by Joyce and this is not shown as a quote.

So far I think the author is making the point that in the present
situation any lending assets the banks may be holding could be really
dodgey if the banking system in Europe or US collapses as those assets
are insured via those derivatives against US and European banks.
This of course is the exact situation that got the US banks into trouble.

When my eyes recover I'll go back and continue reading.

percul-ionary/intrest quote""The bank lends..At that point,
an asset and a liability come into being.""

not so fast[the asset presumable mortgauged]..pregsisted
yes it created a lie-ability..but a promise aint no asset

buty it neatly bypasses..the fact on the banks book its an asset
[when its not a true asset]..only realisable MAYBE as an asset]

""ten bucks/you would surely consider to be an asset""

yes the bank had that 'asset'[of ten bucks]
but not any big money[it gets that money by the fed monetising credit]
AFTER YOU APPLY FOR THE LOAN*

you allready SIGNED[creating THE asset]
then it was monetised[banbk actually LENT nuthing
it got your promise on its books[asset],..thus accessed more credit[IT DIDNT HAVE PRE ITS PUTTING YOUR POMISE..*AS A VALUE[..on its books]

chicken egg
first you beg/ap;ply..that asset is booked
credit is created[they didnt have the tem bucks..TILL YOU GAVE THEM AN ASSET[mark of the beast]

which get bundled.and secritised..on sold
but in court only the ORIGONAL promise has value
BUT..that POTENTIAL*value was exploited..to leverage extra credit

show me how the banks
lent its own money[by your own admission it couldnt be an asset..till it was booked[put onto the books]

bank double dips..cassing in on debt..then onselling its promise of repayment

but also has franchise
OVER how many of that physical MONey/assets..is isued[monetised]
i hold its our promise to pay..

that.""in the other hand you have an IOU.""

the value that was monetised[aproved]

"" Which must by definition be a liability.""

\egsactly

""if you don't pay it back,
they would have lost ten bucks.""

the joke is follow the value*[that created the money]
i contracted with you..not who you onsold the asset to


""What else can a loan..to you be
on their balance sheet,..except an asset?""

a instrument that..that got onsold
or devalued bit by bit..but got OVERVALUED*

[when the promise[to pay]..was in real gold/silver coin
money was a promise to pay in value[an iou]..

now inflation has stolen the value from ther coin[and notes cost only 7 cents each]..and monetisation creating cyber credit..is free

My advice to you one under god is the same as for Arjay: learn a little more from factual textbooks, and a little less from conspiracy web sites.

>>not so fast[the asset presumable mortgauged]..pregsisted
yes it created a lie-ability..but a promise aint no asset<<

Of course a promise - in this context - is an asset. It may come in the form of a simple overdraft facility at your local bank, or a twenty-page loan document describing the terms and conditions, but they are still both assets.

You are confusing the document itself with the security behind it. One of the most well-known forms of loan is indeed the mortgage, where the borrowed money, and its repayment terms, are "secured" against physical property. You default on the loan, the property is no longer yours to dispose of. If you didn't accept that, you wouldn't have the money, and the bank wouldn't have its asset.

It is the same with currency, of course. Once upon a time, the security for a pound note was a fixed amount of a mined mineral deposit. Which of course is a nonsense, as people came to realize that the mined mineral deposit did not itself have a real value, only the artificial one that governments arbitrarily fixed upon.

Floating the currencies to compete against each other was a necessary move. Ask yourself this: what would have been the impact on the economy if gold were still pegged at $35 an ounce?

These days, it is just another mineral, with prices that fluctuate with demand. If you bought a ton of gold this time last year and hidden it away, you would have "earned" 4.43% on your investment.

http://www.goldprice.org/

If you had bought silver over the same time period, you would have lost 23.03%

And each time, the only way you could actually spend that money is to convert it into a negotiable currency. How does that make sense?