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Bob's Daily Buzzword: 'Rehypothecation'

How do you spell Ponzi...

Eveyone danced and stuffed their faces on the abundance of credit, not unlike flying pigs on bath salts with the keys to Mister Rogers Neighborhood.  Then the music stopped.

Bob Rice is one of Chris Whalen's partners at Tangent Capital.

Nov. 29 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners, explains Rehypothecation.


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Reader Comments (4)

They're coming for your 401k's!

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Nov 30, 2012 at 12:34 AM | Unregistered CommenterLadyLiberty

I know you are an advocate of lowering the deficit. In the case of 401Ks and Roth plans, the deductions might be lost, but so what. Worst case scenario is that you might just lose some of your tax-free gains in a Roth. We all need to make some sort of sacrifice. Doesn't seem like a big deal to me.
Nov 30, 2012 at 2:05 AM | Registered CommenterDailyBail
Here in the good ol' US of A we like our fiat money, ponzi scheme privatized central bank.

We like our toxic mortgage scam that impoverished the world, the central bankers who did it to us and are now calling for us to suck it up and work even harder without our social safety net, police and fire services, that was taken from us by our political leaders who bailed out the banks with our money, and then took our jobs overseas to China.

We like our jobless, homeless, 9/11 inside job NWO police state, drones flyin' overhead, and our new ObamaCareĀ® Death-Panel-Mobilesā„¢, the FEMA troops and their 1.5 billion hollow-point bullets.
Nov 30, 2012 at 1:18 PM | Unregistered CommenterGreg Burton
Just another explanation and example, of many, of the immense leverage in our financial system. It's just over-borrowing, which continues unabated. When there is so much borrowing, no amount of assets exist in the world to securitize that borrowing. In other words, there is and cannot be any collateral at some point when the borrowing snowball get too big.

For example, on squawk box not too long after ARS started his new TV gig, Greece debt was still in the forefront of the CNBC chit-chat sessions. Some expert along the lines of Kyle Bass (not him, but you get the idea if you know Bass' positions) was explaining the how/why of the Greece slippery slope and that Greece was already well down the slope of no return. ARS, in his infinite wisdom, suggested that Greece could just sell some of its islands to pay back its debt (seriously). This guy first looked at ARS like he was stupid (which he is), and then calmly explained to ARS that Greece does not have enough sovereign islands to sell to pay its debt. In fact, there were probably not enough available islands in the world to sell to pay back this debt. The ARS "I AM STUPID" face was priceless.

Same thing here with "rehypothecation." At some point, there are not enough available islands (assets) in the world to offer as security for the amount of loans put forth. So when it hits the fan and all this unsecured junk comes due, only 1 thing can happen: default. Default is messy and on a REAL large scale, it's frightening to think how it plays out.

Please chime in to give me your thoughts on default armegeddon...
Dec 3, 2012 at 7:02 PM | Unregistered CommenterJosie

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