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Unbelievable Connection Between LTCM, The GFC and What Lies Ahead in 2024: Jim Rickards' Deep Dive
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- Опубликовано: 8 авг 2024
- To watch the full interview you can access it with our deep dive or membership site www.eurodollar.university
This conversation wasn’t just an inside account of LTCM and a recall of history at of those famous crossroads, Jim Rickards and Jeff ruminate over the implications from the affair which are still reverberating through time right up to this day. The struggles to contain the fallout from the debacle are every bit as relevant now as it was shocking way back then.
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Pl@@wagashimanju
If you don't have a nickname yet. Can we call you The Messiah?
I'm a little confused. We create derivatives in real estate all the time. Buy a $100k house, have a private lender lend $80k at 12%, then that lender can borrow against their note at say 60k at 8%, then that person can borrow 40k at 5%, etc. But it's not $288k of debt on a single asset. It's just a series of leverage where if the original asset was sold each spread note would get paid off minus what they borrowed until you get to the one that hasn't borrowed and they just get their $40k.
So is what happens in Wallstreet different? Do they have a $1b bond that pays 5% and they borrow $7b against it without sufficient collateral from the original asset?
What struck me is how many times he mentioned risk. All of these bankers live to take risks and still sleep well at night because ultimately the losses get socialized.
Well not really Lehman Brothers didn't get bailed out, but Bear Sterns did. According to David Stockman that's cause BS was smaller and easier to understand, and the government wanted to play hero and have banks in their pockets. LB was much more complicated and far bigger and that was left to the market. The important lesson being that there was enough liquidity in the system to take care of it, and the various derivatives and "insurance" products took care of it. According to Stockman there was enough liquidity in the market and financial products to look after everything. But some private players were given cheap government credit to take advantage of things, while government would have Wall Street over a barrel. Which is handy for politicians and bureaucrats.
Easy to take risk when its not your money which is being gambled on
IF you are willing (nay, eager) to debase your currency, (especially the global reserve currency) THEN Liquidity is Unlimited!
And yet the SEC is mostly focused on “protecting” us from crypto gains 🙄
Great way to phrase
Two smartest guys on macro on the same podcast. Brilliant
Winston Churchill once said, "The farther you look back into history, the farther you can look into the future." IOW people and nations always do the same stupid things over and over again expecting a different result.
This guy is wild and sharp as ever. Fantastic
I think my eyes just got opened when he said that the derivatives were 6-1 and nobody knew about it but the insiders. How is this stuff even allowed to happen. Why isn't the derivatives market being regulated if it's this dangerous?
Well because The Regulators are just a corrupt doorway between Wall Street and the government they get cushy jobs after their time as a regulator.
Also how many government workers do you know that are smart? Most government workers are basically sheep with little ability for individual creative thought so how can we counted down to regulate many things that well
Some else is making loads of money.
That is why.
It's not a market. It's life. The only difference is that today it's not 8 to 1. It's 40 to 1, and it's an algorithm.
One of these days you may crawl to this realization: economic activity must increase.
The 4 top backs have over 300 trillion is derivatives exposure, people have no fucking idea how bad its going to get when the shit hits the fan, no fucking idea.
Just wait to see the cheating with a BTC ETF
Will go well beyond 6-1
What happened to Emil? Unsubbed.
Rickards reminds me of a Vegas card shark that knows every trick in the book.
And how does that help all of us?
@@rubicon3416 No one on youtube is here to help you. They're here to sell you content for ad revenue and course commissions.
If you know the rules you can play the game and in finance the better you understand the rules the better you are at the game. The problem is 90% on here don’t know the rules and it’s a game of the blind leading the blind
A collab I never thought I’d see 🙌🏻 This video is a dub for Independent Media.
Anything for those YT dollars.
Infomercial
In finance, risk is like energy. It cannot be destroyed, only shifted from one place to another.
Don’t forget that risk can also be transformed.
The most important interview in current financial history. Jim and Jeff are identical twins from different mothers. Oh, how I wish the two of them were running the Fed at this critical moment in history...!
Not how biology works...
@@lepton31415 That's like two neighbors in a small Mexican border town asking why they need the drug cartel that's in their village. The fact is it's there.
Are you referring to the combovers?
So, what’s the bottom line? What have we learned today Jeff? No lesson plan is complete without this. Derivatives are financial nuclear weapons. And the government is allowing the gamblers on Wall Street to have these weapons without any restrictions. So no need to watch Part 2. The end is coming soon. 😢
Actionable…long gold
@@isabelbozzo6945 Understand the fiat elite have been running around playing with the world like they owned without any intention of ever being responsible for the massive debt bubble and mess they made. And soon Bitcoin will grind them and their nation-states into dust. And many humans will be thrown into the organ meat grinder in the process of this transition and the massive, perpetual deflation that a Bitcoin standard will create.
If this guy is so good why he is living on selling courses?
Congress is for sale. On the take. BOTH PARTIES. And Congress mandates the Federal Reserve. What could go wrong?
I agree.. they are all owned.. so disgusting…
Bro this is like the greatest video you’ve ever made, and I’ve watched all of them for like 3 years now. Every day. This is nuts. How is this guys allowed to speak about this?
Been listening and reading Jim Rickards for a LONG time. Order he gets, more grandpa babbling he gets. Mumbling down side branches in memory lane like other grandpas do.
Yes, but a huge wealth of information that no one collects. Remember LTCM could have given us a good playbook to follow (like Jim told then to "collect the data") for what to prepare for in 2007-2008 for the mortgage crisis. All the "experienced help" will have retired when the next catastrophe comes and we have 30 billion in derivatives.
What more do you want from a youtube video? You want the guy to pick stocks for you?
Wow! I remember this. Great to hear it from an inside perspective.
Big Jim has a lock on whats happening. I really enjoy learning from intelligent people, thanks for the hard work you put in to educate those who want to learn.
Great episode! I haven’t been watching lately but this one is refreshing
One wonders what Rickards agenda is in appearing on this channel among others?
And you think 99% of the people could understand what He said? That whole LTCM thing is completely new to Me. And I know this stuff and I almost couldn't follow what he was talking about. Between the sang and jumping thru years at a time, This should all be broken apart and the blame laid where it belongs.
I could not follow either, but I know that ltcm had a new "brilliant" trading algorithm with derivatives that blew up. And still the fin system has not been fixed.
Great insight. The problem in finance is the mathematics taught at university is limited to regression analysis, and the rest is basic high school mathematics. When I was in markets I always skewed my risk analysis to be asymmetric to the downside. A number of my colleagues did not understand it and were dismissive - but I managed to avoid the blow ups and that made a massive difference to performance.
To see you excited and verbose Eurodollar University would add so much to your channel.
great content as always👍
This was one of your best!
Congrats on getting Jim on!
If 'what lies ahead for 2024' is not in the video, then you shouldn't put it in the title. That is false advertising.
OMG, Jeff interviews Jim Rickards!
Haha, exactly what I thought
These two have been consistently wrong about everything, I watvh Jeffs "analysis" to position my self contrary to it.
Broken clocks are right twice a day, and when these broken clocks are right, it’s big time. That’s the scary part.
Bond yields are going down. Inflation was transitory..... So Jeff was right
History repeats itself, why, because a new generation makes the same mistakes!
With different ‘products’ so to spk
Jim is the man. He doesn't get enough attention and respect. Thank you for having him on Jeff.
.. this discussion and the details mentioned is worth a movie!
thanks Jeff. Really good one with Jim
I cannot afford to subscribe in these hard times.
Jim Rickards has explained this before to other people on RUclips.
who let crazy jim on here? always entertaining. not always realistci
Yes, he is rather Hunter Thompson.
I understand your frustration. I've been in board rooms explaining how some scheme is going to play out, to be dismissed or laughed at, then it exactly plays out as I advised.
Yessss Jeff! More of this please.
This was amazing. 2 of the smartest minds together.
Love it when two brilliant dudes have a conversation.
Jim s such a treasure; it would be such a gas to have an after dinner whiskey with him in front of a roaring fireplace somewhere in Montana! He makes the Wall street stories very engaging. Thanks, Jeff for sharing the visit with us.
Your content is fantastic, I have been watching regularly since I found your channel. I want to learn more, and would even enroll in the EDU. However, before I do so, I'd like to know if the increased knowledge will help me prepare for any iteration of the looming crises that you assert are all but inevitable. If the powers that be won't listen but your students know problems are coming, can we avoid it? Where do we put our wealth while we watch, monitor and respond to everything?
@@wagashimanju Yeah I hear you, and agree,
thanks for sharing this.
This was amazing, your best video
Jeff, you are the new Jim!
Great Interview. Rickards verbose as usual. He could have summed up the whole problem. With two words. Moral Hazard. And explained what it is and why it's important.
Yes!
Thank you
Very good interview
Super duper interview!
Fantastic. Thanks.
Thanks Jeff.
Considering the Fed was complicit/content in the way the gold price was being suppressed through derivatives (even though the gold market is just a fraction of the whole derivative market) - could this have influenced their decision to keep derivatives unregulated?
One of the best financial vids…. This should be mandatory viewing in every high school Econ class in america
Fascinating discussion.
Thank you Jeff, thank you Jim
Great interview. I totally remember LTCM. It was proof of the old saying, “In theory there is no difference between theory and practice, but in practice there is.”
JR makes a great point,. Jeff, maybe the derivatives and bond markets and sovereigns are beauty contests too?
Did Jim call TLT a "bottoming pattern" all the way down from 171/share?
I belive this is the least understood, but also the most important, video you have ever made.
Where is the 2024 predictions? Otherwise this sucks!
We learning NOTHING from the GFC. Dirivates are 5 times as bad now as they were in the GFC. We are going to see a collateral (real asset) issue just like the GFC but at levels that are 10 times as high. We are already seeing this in the commerical real estate market and car market. When things are loaned on that don't really have the value they were purchased at with rates higher than when they were originally purchased, it means folks walk away from those "bad, underwater loans'. The debt levels super crazy, scary, high with all assets being WAY over valued. What do we think is coming? It's not hard to figure this out. Most folks don't study, they are sheeple, they listen to main stream media. Big mistake !
Wow. Great interview Jeff. I’m very curious how the derivative market will implode over the next few years and the impact of this.
Jeff could you do an episode on the RUclips grifter business model seeking subscribers?
The best interview ever
@@wagashimanju As far as I am concerned. History paves the way to the future. Year of the Dragon.
Best yet.
Humdinger! Thank you!
as always fantastic interview with Jim! Love that guy! Get him on another round of brain picking whenever you can :D
If the people don't know, then the government doesn't need to know. That's the theory of the political system. Why? Because then, the people won't blame the government when things break down.
Got it now?
insane interview
This was interesting and did not realise that 2007/8 was a repeat of 1997/98
And yet it keeps getting bigger.
24:18 Brooksley E. Born, CFTC 1996-1999. “In 2009, Born received the John F. Kennedy Profiles in Courage Award, along with Sheila Bair of the Federal Deposit Insurance Corporation, in recognition of the "political courage she demonstrated in sounding early warnings about conditions that contributed" to the 2007-08 financial crisis.”
Typical. Ignore the warnings about the burning smell until it’s too late then reward her for her good nose after the world is on fire.
I find the brooksley born story fascinating. She provided a warning to the world in front of congress that would have prevented the biggest financial crises since the depression. Yet I see very little reporting about how it unfolded. I’ve seen the frontline piece, a small mention in the book fed up and Jim’s short explanation in this interview “misogyny” A deep dive into why her warning was dismissed could be helpful in many ways.
Most people watching this have just seen you for the 1st time. They only clicked to watch you because you have jim on. And you start your 28 min interview with a subject. That we have heard jim talking about enough times. And this at a time when Their is a lot of stuff to talk about. Im moving on. As a lot of people probably will.
It was cool when rickards gave Jeff a shoutout in his latest book "soldout"
JEFF - This is the first "thumbs down" I have ever given you.
I did it because you didn't advise that this was Part 1 and that Part 2 was not available on
You Tube.
His real income is subscriptions. His theories aren't any good even for him
@@togoni That's fine. However, he shouldn't waste my time by not telling me it was part 1 of 2.
Boo, makes me want to stop watching you totally
whats the over under on gates and buffet being on an epstein retreat type trip rather than "fishing in alaska" w/ no lines of communication
why did the SEC allow this to get out-of-hand in the first place? 🤔
PONZI
a key take away here was right from the very beginning. “the fed didn’t call us we called the fed” how many calls do you think the fed is getting right now and how many people should be calling the fed but aren’t? Two big questions that’ll get you thinking. Things are never quite what they seem, good today extremely bad tomorrow!
This was great Jeff, thanks for sharing it with us.
Jim's sporting Jeff's future hairdo. 😂
He's taken a lot of "haircuts".
In this RUclips transcript, Jim Rickards discusses his experiences during the LTCM (Long-Term Capital Management) crisis in 1998 and the lessons learned from it. He explains how the Federal Reserve and regulators didn't fully understand the risks posed by derivatives and how the crisis could have been averted if they had better insight into the complex financial system. Rickards also highlights the importance of recognizing that financial markets don't always follow normal distribution patterns and that rare events can happen more frequently than expected. Overall, he emphasizes the need for better regulation and understanding of financial markets to prevent future crises.
The 200 PHd’s at the Fed drink coffee all day and follow the 2-year T rate on the free markets by about 6 months late. That’s why they never crisis the crisis coming, they are always late.
Very interesting and shocking. 😮
Jeff, you mentioned Glass Steagall, was LTCM one of the reason they ditched it?
The derivative market has grown to such an enormous size that it has become a systemic risk to the global financial system. The interconnectedness of banks and financial institutions through complex derivative contracts has created a web of risk that is difficult for anyone to fully comprehend.
When this market blows, it will trigger a chain reaction of defaults and financial instability that will be nearly impossible to contain. No doubt that when this financial storm finally hits the destruction will be like that of a category 5 hurricane.
Mysterious?
wasnt Jim Rickards a CIA operative at some point? and wasnt LTCM a front for some shady business?
Jim dropping names makes it seem like he is a little proud of it all.
Watch Frontline "the warning" and realize this is/was a predictable event and our current global standing relative to this very minor event in comparison puts us at 1,000,000:1 short on collateral.
Where can you watch that ?
@@mattsenica5227 Google: Frontline "The Warning" RUclips last I checked....PBS is another location
@mattsenica5227 bare in mind that if the "warning" was an AI rendered picaso of our current geo political financial situation that when you view it first time its gonna render a horrible visual however; when you have had a moment to absorb it and perhaps watch the big short again and maybe Kyle Bass The Hudson Institute " China prepares for war" or Kyle bass and Erik bethel the China conundrum and then return to the picaso and see the brush strokes at a granular level and realize there is a million data points embedded in each stroke further and each begging a new question further...you might begin to understand the gravity of our current condition. Dr Michael burry has compared us to Weimar Germany in which the mark went from 4.7 to the dollar to 1.3 trillion to the dollar between 1919 and 1923...
yup i work for SB in 89
Well back in the Go-Go 1990s
Blah blah blah everybody already knew this stuff why is this supposed to be special information?
If you think anything run in dollars is legitimate or should be trusted you are absolutely insane!!
It's hard to believe how clueless the people runiing our system are. Unbelievable but sadly and eventually tragically true.
Did the LTCM bailout fuel the dotcom bubble and the sub prime bailout fuel the bond bubble? What will the next bailout be fuel for?
The rub of these dark interactions seems to be the lack overall awareness to the wider derivative leveraged off-book situation that occurs. As Jim said, 'They just write it up', out of fat air. So in the future there has to be some kind of Global recording for all these trades. Maybe some kind of AI generated warning to non-bank institutions and the Fed whenever derivative leverage is too high? This behaviour is most definitely a source for boom and bust cycles.
We're all in big trouble.
Interesting stories, won't put a dime in your pocket though
good interview - allowed the guest to speak for once.
Legend
Get Martin Armstrong’s thoughts on the LTCM fiasco.....