Financial analyst, Ann Barnhardt, says that Citigroup is adding an astounding $10 trillion per quarter to its derivatives portfolio.

January 18, 2015 in News by Slad

Source: Investment Watch Blog

Submitted by IWB, on January 17th, 2015

In the event of a drop in value, this now is covered by the FDIC, which transfers the high risk of derivatives to US taxpayers. The largest private shareholder of Citigroup is Prince Alaweed Bin Talal Bin Abdulaziz Alsaud (Mr. Saudi Arabia). Barnhardt thinks that Citigroup, on behalf of the US government, is laundering money to Saudi Arabia to compensate the oil producer for the current drop in prices, which is engineered by the US government as an economic strike against Russia and Venezuela.

How could trillions of dollars be laundered from the Wash DC regime to Saudi Arabia? Why, through Citigroup, of course.

A clever reader with probably more knowledge of the Middle East than they would care to have put before me a very interesting question.  Is the US laundering money to Saudi Arabia through Citigroup in order to “hedge” against, or compensate Saudi Arabia for the drop in oil prices?

Well, it sure as hell looks like it.

I recently tweeted the reportage on the massive derivatives position being accumulated by Citigroup (the parent Holding Company) and Citibank (the bank held by Citigroup HoldCo) – $135 TRILLION.  Citi is adding roughly $10 TRILLION PER QUARTER, and the bank is now holding MORE derivatives than the parent HoldCo, which is unprecedented and shocking.  Even worse, the bank – the derivatives holdings of which are now “guaranteed” by the FDIC, which is to say the US TAXPAYERS, thanks to the Cromnibus bill – is where the exposure is being added – $9 TRILLION was added to the Citibank portfolio within the third quarter of 2014 alone – the latest available data.  Citi is the only big bank that is INCREASING its derivatives position, all the other big banks have modestly reduced their derivatives exposure in the same time period.  But Citi is piling it on as hard and fast as it can – NINE TRILLION $ IN ONE QUARTER!!

Do you know who the largest private shareholder of Citigroup is?

Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud.  Mister Saudi Arabia.


Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives


Panic Button - Public DomainCould rapidly falling oil prices trigger a nightmare scenario for the commodity derivatives market?  The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than 40 dollars in less than six months this time either.  If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses.  In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts.  The companies enter into these derivatives contracts for a couple of reasons.  Number one, many lenders do not want to give them any money unless they can show that they have locked in a price for their oil that is higher than the cost of production.  Secondly, derivatives contracts protect the profits of oil producers from dramatic swings in the marketplace.  These dramatic swings rarely happen, but when they do they can be absolutely crippling.  So the oil companies that have locked in high prices for their oil in 2015 and 2016 are feeling pretty good right about now.  But who is on the other end of those contracts?  In many cases, it is the big Wall Street banks, and if the price of oil does not rebound substantially they could be facing absolutely colossal losses.

It has been estimated that the six largest “too big to fail” banks control $3.9 trillion in commodity derivatives contracts.  And a very large chunk of that amount is made up of oil derivatives.

By the middle of next year, we could be facing a situation where many of these oil producers have locked in a price of 90 or 100 dollars a barrel on their oil but the price has fallen to about 50 dollars a barrel.

In such a case, the losses for those on the wrong end of the derivatives contracts would be astronomical.

At this point, some of the biggest players in the shale oil industry have already locked in high prices for most of their oil for the coming year.  The following is an excerpt from a recent article by Ambrose Evans-Pritchard

US producers have locked in higher prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over three-quarters of their output for 2015.

Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production.