Maggie's Farm

Derivatives the new 'ticking bomb
Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen.

Derivatives bubble explodes five times bigger in five years
Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to 516 trillion by 2007. The new derivatives bubble was fueled by five key economic and political trends:

• Sarbanes-Oxley increased corporate disclosures and government oversight
• Federal Reserve's cheap money policies created the subprime-housing boom
• War budgets burdened the U.S. Treasury and future entitlements programs
• Trade deficits with China and others destroyed the value of the U.S. dollar
• Oil and commodity rich nations demanding equity payments rather than debt

more if you can take it.
http://tinyurl.com/2hea84


I'd say things are b bit out of hand. I've mentioned this since I began blogging. Derivatives have the likely potential to cause a depression, and that's not hyperbole.

Advice:

Go to the bank and take your money out now while you still can.
And remember from the Nixon administration, the nutritional value of ketchup.

And bear this in mind:

The FDA today has set down regulations of what exactly constitutes ketchup, and even regulates the thickness and consistency of the red sauce

Any government that has the power to regulate ketchup can regulate your very life.

Habu

Yeah

Can we take a second look at that number?

Sure dude.

516 trillion dollars

516 TRILLION DOLLARS

wow dude.

yeah.

Habu

yeah

What's with the ketchup thing?

Oh , just a lagniappe.

Ah..ok..sure

"We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction , carrying dangers that, while now latent, are potentially lethal."

Warren Buffett in a letter to investors in 2002 when the exposure was only 5 trillion...now it's 516 TRILLION DOLLARS

like I said...if you can take it read on.
http://tinyurl.com/2hea84

"This guy is an angry, ruthless man who used the law to crush people for his personal political advantage, dropping charges after the headlines faded, and eradicating billions of shareholder value (mostly pension fund) from the companies he assaulted. It seems his aggression was somehow sexually inspiring (wrong word) to him, that he sought a sexual outlet for his violent inner self. Scary man!"

So what's the beef with dis guy, huh? Hey he had a job to do , he's a f*ck'n lawyer, like whaddya x'spect? He just did what lawyers do.

Welcome to the Virtual Toilet Paper Museum , a tribute to that much-maligned material which plays such an important role (or should that be "roll"?) in our everyday lives. Come inside and view our extensive collection of brands from the mundane to the exceeding rare, wondrous toilet-paper-related artworks of unusual beauty, and myriad informational exhibits.

http://nobodys-perfect.com/vtpm/

Jappy,

I think you're right about it being a Reagan era ketchup-gate.

If you look closely you can easily tell those Ukrainians are one of their crack outfits.

Now I really must sleep.

Grasping some facts and urine cocktails

Not being snotty here Roger but did you read the article? It makes some rather striking comparisons ergo:

"To grasp how significant this five-fold bubble increase is, let's put that $516 trillion in the context of some other domestic and international monetary data":

• U.S. annual gross domestic product is about $15 trillion

• U.S. money supply is also about $15 trillion

• Current proposed U.S. federal budget is $3 trillion

• U.S. government's maximum legal debt is $9 trillion

• U.S. mutual fund companies manage about $12 trillion

• World's GDPs for all nations is approximately $50 trillion

• Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion

• Total value of the world's real estate is estimated at about $75 trillion

• Total value of world's stock and bond markets is more than $100 trillion

BIS valuation of world's derivatives back in 2002 was about $100 trillion

BIS 2007 valuation of the world's derivatives is now a whopping 516 trillion

Moreover, the folks at BIS tell me their estimate of $516 trillion only includes "transactions in which a major private dealer (bank) is involved on at least one side of the transaction," but doesn't include private deals between two "non-reporting entities." They did, however, add that their reporting central banks estimate that the coverage of the survey is around 95% on average.

Also, keep in mind that while the $516 trillion "notional" value (maximum in case of a meltdown) of the deals is a good measure of the market's size, the 2007 BIS study notes that the $11 trillion "gross market values provides a more accurate measure of the scale of financial risk transfer taking place in derivatives markets."

Bubbles, domino effects and the 'bad 2%'

Now Roger, your response has the flavor of one who is in highly skeptical that:

• depressions occur
• derivatives are ticking, unregulated time bombs.
• that wealth cannot simply "vanish"
• that what we saw happen to Long Term Capitol Management can’t happen again


You pose a series of questions in your second paragraph that seem to be not an inquiry but rather a mocking, “this is tin hat country stuff” manner.

I will happily remind you that no less than Warren Buffett and George Soros can explain the workings of derivatives, with Soros comment coming in sworn testimony before a Congressional Committee and Buffett in the referenced 2002 letter.
However we do know a few things, all centered around the huge crater in the ground that was put there by LTCM when it tanked…these things do crater, and badly, and now the number is huge beyond any number you have cited.

I suggest you consider stockpiling some urine.

I'm put in mind of the report that "farmland was lost to development."


and I am put in mind that Bikini Atoll was vaporized in an H-bomb test.... VAPORIZED ...gone...vanished .....one simply would have a difficult time developing that once piece of terra firma.

From what I've been told vintage urine is the best.

I understand Howard Hughes cascaded a few magnums you might be able to pick up ....for the right price.

You have not been adivised to take your investment advice from George Soros nor Mr. Buffett. I pointed out that they claimed to not know the workings of derivatives..get it right Roger.

However, since nothing succeeds like success what's your bank account look like compared to Buffett and Soros? Kinda puny? Seems to me you could prophet a great deal by taking their advice.

BIKINI ....you're citing a PADI publication... LMAO.
Once again let me help you.

"Bomb tests later resumed at Bikini, and between 1946 and 1958 the United States conducted 67 tests there and at Enewetak Atoll.9 A disaster orders of magnitude greater than Baker, dubbed the "worst single incident of fallout exposures in all the U.S. atmospheric testing program,"2 took place in 1954. The bomb Bravo vaporized 2 islands
of Bikini Atoll and part of Nam, the island at which it was detonated. (Today Nam remains so contaminated that during the mid-1990s, the Bikini Council entertained—but eventually rejected—lucrative proposals to make it a permanent US nuclear dump.1,10)"
http://tinyurl.com/33pn7q

Believe me, there are a lot of other confirmations that out credential PADI publications...all ya gotta do is look'm up. BTW did any of you sources suggest visiting the islands that aren't there anymore? The part of Nam that was vaporized for example?

How you feel'n about now about "farmland lost to development"?
Gaulng isn't it?

"Soros manipulates currency and makes money off the confusion. That makes you the confusion."

Roger,Roger you just won the quarterly award for the biggest non sequitur used by a writer who putatively knows more about derivatives than Soros and Buffett combined. Congrats. You do recognized it as a non sequiter...pas vous?

"And your Bikini Atoll information? About as timely as your advice about a depression"

I didn't realize that history had to be particularly timely to convey knowledge. Perhaps we should do away with Aristotle through Adam Smith?

From what I've been told vintage urine is the best.

Roger ... that would be galling, not gauling, apologies

Hey Habu

Yeah?

When Wall Street takes a big risk for a big reward, where do they get the money to take the big risk with?

It's OPM.

OPM?

Yeah OPM. Other peoples money.

So if the big risk falls flat like say Long Term Capitol Management of Enron who loses the money?

The people, the 401K Joe lunch bucket guy as well as the high rollers.

Were does the money go?

Actually it vanishes, but we have a non government entitty that controls our money to a huge degree. It's called the FED..they simply invent new money, the Treasury often times simply printing billions of new dollars to replace the lost money.

So the investor gets his/her investment back, right?

No

No?

Nope, but the WS pooh bahs get big raises cause they "took a risk" ..

But they lost money.

Yeah, but that doesn't matter, remember, it was OPM.

But these are smart people right?

Yeah, sure.

"A lot of people gamble - some on football, some on derivatives."

I see, so that makes the gravity of the situation diluted down to the size of football bet from a 516 trillion dollar exposure ...(Rufus..Johnny has two goats and Jimmy has two goats. How many goats do Johnny and Jimmy have if the combine their goats?)

Rufus, it's not easy to come up with such a pitiful analogy but you managed...good go'in. Oh, yeah and at least Roger offered up a skin diving magazine as his evidence. I would have thought you'd have thrown "Alternative Fuels and Animal Methane Quarterly" up as yours.

I'm sure Roger will enjoy your company. As I said the old Hughes man cascaded magnums of by now vintage piddle. You two can share some while siting on the vaporized beach at Bikini Atoll. Cheers !

Buddy,

I think hanging in there is all we can do. If, if, the derivatives problem is as big as described in the article I cited and just one fifth, 20%, of it comes unraveled that would be more money than the total value of world's stock and bond markets which are valued at $100 trillion.

If we get lucky and only 1% comes apart that's still one and three quarters times the current proposed U.S. federal budget at $3 trillion dollars.

No country on Earth, no FED or Treasury can monetize us out of that size pain.

But just remember the wisdom of the Rufus......" A lot of people gamble - some on football, some on derivatives."

You know I wonder how Rufus figures this sub prime mess, which is still devastating the real estate market, with no one able to even guess it's true size yet, got so FUBAR?

Habu

yeah?

So who regulates these derivative things?

You mean like the SEC or some other government agency or something?

yeah, who regulates them?

NOBODY.

nobody?

NOBODY...ZIP ... NOBODY

wow.

yeah wow.

Whoa hoss ...when and where did I call for more gov't regulation? If you're referring to the #19 post that was simply put up there to inform people that unlike the development of the SRO SEC after the Depression there isn't any regulation on derivatives. I'm sure that comes as a surprise to many many people. But I never called for another SRO.

"The core problem ain't the derivatives, it's the friggin house prices "

House prices are falling and in turn crushing the credit markets because WS fears one thing above all else ...uncertainty..and they are uncertain to this day where the bottom is on the securitization in the sub prime area, which has in turn focused some people on valuations of derivatives in general. They are not, and chances are huge they will not, ever be able to value what they have out there. Consequently housing prices will continue to fall until the publics psychology on where things are is calmed. This is now way out of WS hands.

The central banks have reached for the big club in the bag...the FED, which is their baby, to rescue them but I'm sticking to my statement that this time they cannot monetize this problem away. Why? They can't define the problem's scope. They can't even bracket the scope. Every day is a new revelation on how much deeper the problem is than they originally thought. Soon they will be out of ammo and we'll be facing wheel barrow inflation, Zimbabwe style inflation.
That should be followed by the honorable thing for most of the WS chieftains. Big Brain Defenestration.

Here's another voice. This one not known as any doctor of doom, but rather a genius..Pimco's Bill Gross

Recently Pimco's bond fund king Bill Gross said What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August ." In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't "figure out" the world's $516 trillion derivatives

So now how's that "farmland was lost to development." look now Roger, ( who must have encountered bad regulator problems on his diving tanks or is suffering nitrogen narcosis) cause like the dude just vaporized.

If house prices fall another 10 %

Nationally, 20 million households will be in an upside-down
condition.

Will home prices nationally fall by 10%? There are no
signs today that they will not fall this year through 2009
because of ARM mortgage interest rate re-sets. At the
margin, home prices will fall, which will force appraisers
to lower appraised value, which will lower what lenders are
willing to lend.

The Federal government and its licensed agency, the
Federal Reserve System, have combined to create the
ultimate economic bubble: the residential housing market.
Other national governments have done the same thing. The
housing bubble is now international, but especially in
English-speaking nations.

The U.S. government has created an economic illusion,
namely, that the two government sponsored enterprises
(GSE's), the Federal National Mortgage Association (Fannie
Mae) and the Federal Home Loan Mortgage Corporation
(Freddie Mac), are agencies of the U.S. government. They
are not.

One piece of evidence for a bubble that I take
seriously is provided in the 2007 annual report of Freddie
Mac. The Chairman began his lengthy message with this
admission, signed on February 28, 2008.

In 2007, our sector suffered the most severe
housing correction since the Great Depression.
In my 35 years as an economist, central banker,
regulator and businessman, I have never witnessed
a situation quite like this one -- in which a
housing bubble has played such a central role in
bringing the world's largest economy to the brink
of recession.


Illusion that GSE's are legally protected by the Federal government

The Federal government created both organizations,
then let them become private, profit-seeking corporations.
They both can borrow at below-market rates because of their special relationship with the Federal government. The
question is this: To what extent will Congress be pressured
by constituents to bail out these forms in a true freeze-up
in the mortgage credit markets?

This is a crucial question. These firms together own
40% of all mortgages in the U.S. The total value of these
mortgages is equal to the total annual production,
including government, of the United States -- over $11
trillion.

The Investopedia site provides these insights into the
two organizations.

Both companies have a board of directors made up
of 18 members, five of which are appointed by the
president of the United States.

To support their liquidity, the secretary of the
Treasury is authorized, but not required, to
purchase up to $2.25 billion of securities from
each company.

Both companies are exempt from state and local
taxes.

Because of these ties, the market tends to
believe that the securities issued by Fannie Mae
and Freddie Mac carry the implied guarantee of
the U.S. government. In other words, the market
believes that if anything were to go wrong at
Fannie Mae or Freddie Mac, the U.S. government
would step in to bail them out. This implicit
guarantee is reflected by how cheaply they are
able to access funding. Fannie Mae and Freddie
Mac are able to issue corporate debt, known as
"agency debentures", at yields lower than other
institutions.

The idea that $2.25 billion could do anything to bail
out a pair of companies holding mortgages with over $4
trillion gives some idea of the bubble mentality of
investors in the two organizations. That Congress would
add to this credit line in a national crisis is politically
obvious. That Congress could and would pony up an extra
trillion dollars is something else again.

The GSE's primary role is to provide liquidity in the
secondary mortgage markets. Loan originators sell the
mortgages to the GSE's. What happens of investors in these agencies decide that these two behemoths are too illiquid to continue to make purchases of mortgages? That will end the mortgage market's liquidity overnight.

In the first week of March, the interest rate spread
between agency-backed mortgage bonds and T-bonds reached the highest level in 20 years. Twenty years ago, the United States was in the middle of the S&L crisis.

Meanwhile, non-GSE lenders have ceased to lend. In
2000, the GSE's accounted for 40% of mortgages. According
to the Housing Wire site,

Both Fannie Mae and Freddie Mac accounted for a
record 76.1 percent of new mortgage-backed
securities issued in the fourth quarter, a number
than industry sources say is likely to reach well
above 80 percent to start 2008. Some have even
suggested that the GSEs may end up owning as much
as 90 percent of the lending market before this
year is out.

The American housing market is now almost completely
dependent on two non-government agencies that are widely regarded as government agencies. These two agencies are facing the most risky market in their history.

William Poole, president of the Federal Reserve Bank
of St. Louis, offered this assessment on February 29: "I am
more skeptical of the financial strength of the GSEs, and
believe that we could see substantial problems in that
sector." He is concerned about the fall in home prices in
cities such as Phoenix, San Diego, Las Vegas, Miami, and
Detroit. These declines have not been offset by increases
in other cities.

I do not have any information on the GSEs that
the market does not also have. Nevertheless, in
assessing the risk of further credit disruptions
this year, I would put the GSEs at the top of my
list of sources of potentially serious problems.
If those problems were realized, they would be a
direct result of moral hazard inherent in the
current structure of the GSEs.

But can't the Federal Reserve intervene and bail out
these agencies? He doesn't think so. "As I have
emphasized before, the Federal Reserve can deal with
liquidity pressures but cannot deal with solvency issues."

Solvency issues are at the heart of this recession:
the solvency of home borrowers and, by implication, the
solvency of Fannie Mae and Freddie Mac.

The FED can always monetize both organizations'
inventory of mortgages. This would solve the solvency
problem of both organizations, if such insolvency ever
threatens their survival. Poole has not yet discussed in
public this fall-back position of the Federal Reserve.

We are now facing the previously unthinkable: a real
lock-up of the mortgage market, followed by a sharp decline
in housing prices. This would produce dramatic capital
losses. It would reverse the wealth effect. The wealth
effect is the emotional effect of a person's equity any
party of his portfolio. He feels richer. He spends more.
He saves less.

The poverty effect reverses this mentality. He spends
less. He saves more.

The transition period is what we call a recession.
Capital values in formerly booming markets fall rapidly.
There is a rush for liquidity and safety.

We are seeing this in T-bill rates, which have been
under 1.5% this month. This does not compensate investors
for losses to inflation and income taxes. When people move
to T-bills below the Fed Funds rate, they are scared. This
includes bankers who are borrowing from the FED at 3% and lending to the Treasury at 1.5%. They are taking a beating on their profit and loss statements, but not so great a beating as their balance sheets will take if they hang onto
the mortgages that they are unloading on the FED at the TAF (term auction facility) window.

The housing bubble has burst where it was most
prominent. There is no sign that housing prices have begun
to rise there. When they do, and when this lasts a year,
the rest of the country will be able to breathe more
easily. That is not now.

#25 sourced from many brains other than Habu.

Press Conference at Maggies Farm

Mr Habu, I believe you have a question.

Yes, thank you. Do you think it would be possible for Roger to do some new articles on economics using PADI publications?

Why, Habu?

Well, his colloquy with me was a hoot and I think in these tough times we can all use a robust laugh.

Well Mr. Habu, I'll check with our editorial board and colloquy coordinator and get back to you on that.

That would be great, and thank you again.

http://tinyurl.com/ynvt8r
sound on pls.

Thanks Buddy,
yeah it's difficult to get out that much information without calling on others efforts. I guess we all regurgitate other ideas and pieces for I see such little in the way of inventive new theory...but it's important for the readership to get the story and I'm happy to utilize others work to do so. I'm glad I made that apparent in the very next post. Even though it was mentioned in the body of the piece I should
have given greater credit to Investopedia's valuable contributions.
But thanks for the kind acknowledgment on the effort.

Roger, Did hou read that in PADI on parade?.


Lot's of questions for you out their Roger that your day could have been filled with answering but I guess when you run with PADI as your source you are severely limited.

You came up looking like a chump. No disgrace. Some are born as chumps and others have to work at it. Good work.

The floor , BTW remains open for any cogent refutation of the facts I've cited that apparently had you catatonic last evening. Or was it PADI Prom night?

Be that as it may, with your writing abilities and logic in play the future is ripe with opportunities to embarrass you. I guess you've just gotten fatigued at producing anything meaningful...but nice job on the Elliot Spitzer pic. I did note with some pity how few responded to your effort so I punched it up a bit with some wit.

Take a dive there my good friend, you artful dodger you.

I do hope you took the bludgeoning you took in the spirit in which it was administered.

Roger my boy...what happen, did you just take a dive last night. I mean one minute you're there and the next into the deep six. Too much to digest? Crow can be difficult.

I especially liked this part of my contribution from #22

Recently Pimco's bond fund king Bill Gross said What we are witnessing is essentially the breakdown of our modern-day banking system, a complex of leveraged lending so hard to understand that Federal Reserve Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August ." In short, not only Warren Buffett, but Bond King Bill Gross, our Fed Chairman Ben Bernanke, the Treasury Secretary Henry Paulson and the rest of America's leaders can't "figure out" the world's $516 trillion derivatives

So now how's that "farmland was lost to development." look now Roger, ( who must have encountered bad regulator problems on his diving tanks or is suffering nitrogen narcosis) cause like the dude just vaporized.

BTW how do you stack up against Buffet and Soros in the money area? You should keep an open mind to their knowledge even if you disagree.

Buddy,
This isn't sparing. Roger already got totally trashed yesterday. This is just rolling back over the carcass.
He's not equipped to spar....take a dive maybe, but no sparring.

Magic potion

Hey Habu

yeah


Ethanol doesn’t really make any sense economically...it’s too expensive to produce per unit of actual energy. Not really competitive with oil. And it doesn’t make sense environmentally either. By the time you figure out all the damage to the environment done by planting corn...harvesting it...transporting it...and then turning it into fuel, it’s more than you get from oil. No...ethanol only makes sense politically. Iowa votes early. And Iowa raises corn. No politician wants to oppose ethanol.”

Well, how did we make money in ethanol if it doesn’t make sense?

Look, this is America, it doesn't have to make sense, ask Rufus, he's got two years invested in becoming an ethanol dinosaur.

Just ’cause it doesn’t make sense doesn’t mean there’s no money in it. The government’s been subsidizing ethanol on the one hand...and inflating the dollar on the other...

Then, why are we sticking with it ,or are we?

I don’t know...I just smell a change coming on. People don’t like to think about kids starving in Africa and Asia while we’re burning corn in our gas tanks.

oh yeah , ok man

Habu

yeah

you know Rufus is gonna go ballistic and beat you with a corn stalk.

yeah, sure

Rufus the evidence is quickly mounting that your name will soon be spoken in th same sentence with Martin Fleischmann and Stanley Pons.

Hey remember Rufus and the silage and rutabaga age fuel scam?

You mean the ethanol deal?

yeah, the one that jumped food prices by a factor of ten.

yep, remember that.

Didn't get the info from API but it must scare you given ethanol is now you life.

Ethanol doesn’t really make any sense economically...it’s too expensive to produce per unit of actual energy. Not really competitive with oil. And it doesn’t make sense environmentally either. By the time you figure out all the damage to the environment done by planting corn...harvesting it...transporting it...and then turning it into fuel, it’s more than you get from oil. No...ethanol only makes sense politically. Iowa votes early. And Iowa raises corn. No politician wants to oppose ethanol .”

Buddy, help me out here.

I'm missing where the quote: If something bad happens, then something bad will have happened! is coming from...can you give me a bearing? post XXX or whatever? Thx

Thanks, I thought he was using a quote or statement I had referred. But this was his retort. He's a killer with those. I mean his #33 is easily grammar school quality. I guess he couldn't handle the Bill Gross comment or others posed in some of my postings ... waxy buildup is a danger.

Think there's a chance he could become a self submersible bottom feeder?

The equivalent of a kindergarteners sticking their fingers in their ears and then with tongue wagging , saying la la la la la la la......bratty behavior.

But it's fine in your case because all those things you missed are adult based conversation topics. And you're not up to speed on them so your behavior was the best thing for you to do.

The I wet myself was for you, apropos, cause friend you did indeed.

Rufus, your perspicacity on biofuels is enough to bore the ears off a mule.

I wouldn't know if you've been right or wrong since I haven't read any of your writing in about a year, maybe a year and a half. Plus it's like , hey just let me know when we get there cause it's not like I need the money or knowledge. Frankly the knowledge bores me.

What I have seen is a marked increase in the number of critical pieces in the media about biofuels being less than what the mania about them was two-three years ago. I'm sure they were all co-conspirators for API however so they can be easily discounted as dupes.

I hope the biofuels industry grants you the hard earned "Ear of Corn" award for helping them pass gas, so to speak.

But knowing how things work I figure it'll take well over a decade for the infrastructure of the oil industry to change sufficiently for corn oil and beet juice to start flowing from the pumps...I'll bet ya we're drilling the Anwar before that happens. Stay tuned in and up to date though, Washington may need another energy person.

Me, I think I'll become a more highly skilled FL/MT retiree.

The human race can come live with me. I promise the rates will be reasonable. Just a few rules. No kids or grown ups under 150 years old. See, I' m a damn humanitarian taking in the old folks. They can't be incontinent and must be able to chop fire wood and haul drinking water.

Knowledge...I already know more than I need to ...what good is it gonna be in another five years anyway according to you?

Now, Rufus, right now, in Africa, tribes are slaughtering each other. It's been that way for hundreds of years ..do I care?..should I care...should I care that millions over there have AIDS and will die.....I have compassion fatigue so I don't really give a flip..you might recall I wanted to char broil in an hydrogen explosion about 1.5 BILLION Islams...I still do.....that would be worth the price of admission.....

I owe the world .... poo...you worry for me, in the meantime I'm hav'n fun with my easy life which gets better and better ..see I bought a good deal of gold about a year ago, and a thousand onces of silver ..take a gander at those graphs and tell me how worried I am ..I'll make out, and I'll help out my friends....but I owe the world......get real. I'm converting out of dollars at the moment although it takes time since I want to stay under the radar. I'm also taking my USD out of the banks but here again that takes time..in another year I'll have it where I can get to it on my terms. I've also converted about 200,000USD not loose gem quality diamonds..they travel easy....I chaos breaks out over no gas and the hoards of bad men come I'll kill em. I have an arsenal you wouldn't believe..it's all out there you just have to be able to buy it..i can and did.....life is good....things get bad get to Townsend, MT..Deer Path Road... I'll help you and yours as much as I can....just pick up Buddy and his folks in Tx along the way....we should be able to make out ok.