My bank is gone. Long live the new bank.

Until that one is gone too. Do yourself a favor and consider finding a credit union and some gold stocks. It wasn't over when Chase took over Bear Stearns, and it's still not over:

Bear Stearns had total positions of $13.4 trillion ... Under the rescue deal, JP Morgan Chase will take over Bear Stearns' $13.4 trillion contracts - lock, stock, and barrel. But JP Morgan is already up to its neck in this soup, with $77 trillion of contracts. It will now have $90 trillion on its books, a sixth of the global market.

Risk is being concentrated further.

This weekend's meeting of four heads of central banks communicates the size of the OTC derivative disaster. It is a system that is broken. A bailout will require the printing of trillions of dollars worth of monetary stimulation making Bernanke's helicopter drop look like chump change.

The dollar number of pending derivative bankruptcies is the size of the mountain of garbage paper issued by just those who are to be bailed out. That number is greater than the total world economies.

There simply isn't enough money in the world for central banks to buy up the mountain of worthless paper sold by those who need bailouts; all of which made fortunes for their directors, officers and key people.

When an OTC derivative fails to perform, notional value becomes real value.

http://forum.cromalternativemoney.org/viewtopic.php?p=398

Naturally, Chase's acquisition of WaMu only increases its exposure to the credit derivatives market.

That's bad. Let's talk about that.

"It's the derivatives, stupid!"

“The point everyone misses,” wrote economist Robert Chapman a decade ago, “is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing.” They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve “risk management.” Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.

Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that’s 1,000 trillion dollars.

http://www.webofdebt.com/articles/its_the_derivatives.php

Warren Buffett famously described derivatives as "weapons of mass financial destruction". A complete failure of the 1200-trillion-dollar house-of-cards derivatives market could easily overwhelm the 60-trillion-dollar global economy.

And now that the profits and assets of derivatives speculators have been exposed as accounting fictions, they want you to make up their losses for them, using as much of the 60-trillion-dollar real economy as necessary.

The sheer size of the derivative market shows why all the previous hundreds of billions in bailouts have had no effect - and why additional hundreds of billions will not and cannot solve the problem.

The problem with the Bush Bailout 'plan' is that it still attempts to salvage the 1200-trillion-dollar derivatives market and tries to push the inevitable catastrophe into the future. A proper plan would be to systematically analyze and dismantle the derivatives market while minimizing the damage to the real economy.

Naturally, this would impoverish a lot of bankers, but so what? Keeping them rich and out of prison comes with the grave danger involved in continuing the derivatives market - which never should have been legal in the first place. It's not helping anybody but the bankers allow 1200 trillion in fake 'assets' to threaten the global economy with severe damage. But that's what the Bush Bailout 'plan' does.

Dismantling the derivatives market is the only way.

Morgan Chase bought WaMu's banking assets, all of the federally insured accounts and commercial branches, for $1.6Bn.

Plus WaMu's credit derivatives positions. The most important part, catastrophically speaking. Along with its acquisition of Bear Stearns, this puts Chase's exposure to the derivatives market at somewhere over $100 trillion. Chase acquired WaMu and Bear Stearns to preserve those derivative positions, lest all that hot air turn into real losses. Customer deposits are too small to be a consideration.

Chase needs to find a way to unwind, or legally vacate, its derivatives exposure before it joins the list.

Believe it or not, we're just getting started.