Page 1 of 1
This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 11:04
by UndercoverElephant
This is a long post, but it is getting a LOT of traction on reddit's financial subs:
https://www.reddit.com/r/Superstonk/com ... orld_ends/
The London Metals Exchange has shut down, having
erased 12 hours of completed transactions. This is in breach of contract with major financial institutions.
https://www.ft.com/content/898b6f27-ea7 ... e6d8ae4c2e
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 14:58
by Stumuz2
The story is much bigger than most people realise.
https://tomluongo.me/2022/03/13/ins-out ... it-anyway/
"We found out that the LME was shut down because one Chinese tycoon was caught massively short and his counter-party was one of the most systemically-important banks in the world, JP Morgan Chase.
"Moreover, the LME didn’t reopen because he didn’t want to cover his short, but double down. And now the LME is trying to reverse all the trades that occurred on Wednesday.
"Who owns the LME?
It ain’t London. It ain’t New York. It’s China. And they bought it 10 years ago"
So a very, very long story short. A Chinese speculator betted against nickel, got the money to bet from JP Morgan, Nickel exploded in price, Chinese speculator now owes billions.Refuses to pay. Calls Chinese mates who own the LME to shut it down and rewind the trades. Job done.
But dishonesty has consequences.
https://www.zerohedge.com/markets/fiat- ... nce-lepard
Basically we are now in a new currency era, not backed by fiat, but by commodities. This is going to hurt a lot of people.
If the TPTB could just create something to distract everyone........
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 15:57
by clv101
Backed by commodities seems reasonable... It's just very different to now. The big winners are Russia et al, the big losers are the 'service' economics of the west, especially Europe.
Just looking at stuff with *real* values, energy, food, minerals etc, Russia is RICH, Europe is poor.
US is an interesting half way house, still having huge energy etc resources as well as service economy. A close economic/trade relationship between China and Russia would be a strong counter to USA.
Europe looks weak no matter the scenario.
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 16:16
by adam2
I am shocked to hear that the London metal exchange is owned by china.
Some countries would not allow that sort of thing, but in the UK we called it "inward investment" rather than a foreign takeover.
Also shocked that a chinese speculator placed a huge bet, lost the bet, then refused to pay out and appears to have been let of. And I though that "speculation" was confined to the wicked West and not done by the chinese !
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 18:12
by Stumuz2
adam2 wrote: ↑13 Mar 2022, 16:16
Also shocked that a chinese speculator placed a huge bet, lost the bet, then refused to pay out and appears to have been let of.
Exactly.
This clip superbly summarises the position.
Except.
1/ We are talking billions not millions.
2/ They turned the machines back on and cancelled the ' winners position', to make them 'losers'. Fraud pure and simple.
https://www.youtube.com/watch?v=j4SRsGn14PI
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 19:04
by clv101
LME will remain closed on Monday.
“Nobody loses money if we don’t open”
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 19:23
by UndercoverElephant
Stumuz2 wrote: ↑13 Mar 2022, 18:12
adam2 wrote: ↑13 Mar 2022, 16:16
Also shocked that a chinese speculator placed a huge bet, lost the bet, then refused to pay out and appears to have been let of.
Exactly.
This clip superbly summarises the position.
Except.
1/ We are talking billions not millions.
2/ They turned the machines back on and cancelled the ' winners position', to make them 'losers'. Fraud pure and simple.
https://www.youtube.com/watch?v=j4SRsGn14PI
Yep. But is there any mention of it on the BBC news website? I can't find it. The implications are mind-boggling. If this can be done, and nobody can stop it, then why not just cancel a whole days gold trading? Or stock market trading? Or
anything? If this is possible, then there aren't any rules any more. Capitalism is crumbling before our eyes, and most people are completely oblivious.
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 19:26
by UndercoverElephant
clv101 wrote: ↑13 Mar 2022, 19:04
LME will remain closed on Monday.
So...the short position still exists, as it was at the start of trading on Friday. Or was it Thursday. Doesn't matter...the point is that this Chinese tycoon is still massively short on the nickel market and the price of nickel is going to go to the moon the moment the exchange re-opens. Which means the underlying problem has not actually been fixed, and it is not obvious how it can be fixed.
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 19:42
by Stumuz2
There is an old saying in the precious metals world,
" Own gold and silver and hope you never need them"
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 21:19
by Catweazle
I think that the LME is a privately owned company. Probably, LME sets the rules and people who buy and sell through it agree to their terms and conditions. I assume somewhere in the small print there is a clause allowing them to take measures to prevent instability.
Re: This is how the financial world ends (from reddit)
Posted: 13 Mar 2022, 21:44
by UndercoverElephant
https://www.ft.com/content/067ee28e-037 ... 4330a9cc34
Beijing is exploring a plan to rescue the billionaire owner of Tsingshan Holding Group from billions of dollars of potential losses after a backfiring bet brought global nickel trading to a halt.
China’s leading stainless steel producer is at the centre of a surge in nickel prices, after its wager that the price would fall collided with a rally in the metal sparked by the war in Ukraine, forcing it to buy contracts linked to the metal in huge volumes.
The London Metal Exchange suspended dealings in nickel on Tuesday after prices doubled to a record above $100,000 a tonne, bringing global trading in the metal, used to make stainless steel, to a near standstill.
Now, Beijing, Tsingshan, its brokers and the LME are scrambling to find a solution. One option under consideration is for Tsingshan to swap some of the lower grade nickel it produces — which does not meet the LME’s quality standards — for refined metal held in China’s State Reserves Bureau, according to people familiar with the matter.
Tsingshan could then deliver the high-grade metal against its contract on the LME, pay off its brokers and close its lossmaking position.
The LME has not said when nickel trading will resume.
So there in no longer an international nickel market.
Re: This is how the financial world ends (from reddit)
Posted: 14 Mar 2022, 00:05
by BritDownUnder
Welcome to the heads-I-win-tails-you-lose world of the Chinese owned London Metal Exchange. Probably has some rules that says the house gets to make the rules. I would expect some disquiet from the other participants, a fairly limp enquiry by the Financial Services Authority, or whoever in the UK regulates the place, then some rather more threatening noises from the Securities and Exchange Commission in the US followed by the opening of a New York Metals Exchange for everyone else except China, who are actually a large part of the metals market I presume.
Commodities economies are OK - I live in one - but the divide and rule system seems to apply from the manufacturing economies which makes it strange why China is nailing its colours to the Russia mast. Maybe the strategic benefits outweigh the economic drawbacks for that move.
Re: This is how the financial world ends (from reddit)
Posted: 14 Mar 2022, 20:39
by Potemkin Villager
Amazing what you miss when you are busy.
Re: This is how the financial world ends (from reddit)
Posted: 14 Mar 2022, 20:42
by BritDownUnder
This story made it to the ABC Australia Business News segment last night.
Re: This is how the financial world ends (from reddit)
Posted: 21 Mar 2022, 21:28
by UndercoverElephant
An update
https://www.marketwatch.com/story/nicke ... 1647620536
Like many other commodities, nickel became a victim of the supply concerns brought on by the Russia-Ukraine war, as a price spike on the London Metal Exchange earlier this month led to the suspension of trading in the metal for more than a week.
The LME suspended nickel trading on March 8 after prices for the metal more than doubled in a short span of time. While the exchange officially resumed nickel trading on Wednesday, it hasn’t yet been successful in bringing order to the market, with prices continuing to hit daily expanded price-limit declines for three days in a row.
[continues...]