The New ‘Too Big To Fail’ – EU Proposes Taxpayer-Funded Derivatives System Bailout

Original source: Zero Hedge

It would appear the powers-that-be have just stumbled on to the ugly fact that all the bailed-in depositor money in the world won’t stop the novated, rehypothecated, collateral chain collapse contagion that Deutsche Bank’s $40 trillion-plus derivatives book’s Damocles sword hangs over the status quo. However, being the problem-solving types, the European technocrats have a ‘fair-share’ solution – back a derivative clearing-house with taxpayer money to solve the new too-biggest-to-fail problem “that no one saw coming.”

While the “rules” right now are that everyone from shareholders, bondholders, and depositors alike on up the capital structure are supposedly “bailed-in” to save an ailing bank, this problem is just way too big.

Here’s the problem… in 3 charts…

Derivatives book – yuuge…

Global contagion – yuuger…

Counterparty risk – yuugest…

And so, as Bloomberg reports, the dear old European taxpayer is about to save the world… The European Union plans to give authorities sweeping powers to tackle ailing derivatives clearinghouses to prevent their failure from wreaking havoc throughout the financial system

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